Is Saudi Arabia A Step Closer To Joining BRICS?

The BRICS countries, which consist of Brazil, Russia, India, China, and South Africa, are considered to be the leading and emerging oil-producing economies in the world. Back in October of 2022, Saudi Arabia’s Crowned Prince Mohammed bin Salman Al Saud indicated it is Saudi Arabia’s intent to join the BRICS group, which could have significant implications for the global economy.

What is BRICS?

BRICS is an acronym for the five leading emerging economies in the world: Brazil, Russia, India, China, and South Africa. The group was established in 2006 to promote economic cooperation and development among its members. The BRICS countries account for approximately 42% of the world’s population, 23% of global GDP, and 17% of world trade.

If Saudi Arabia were to join the BRICS group, it would significantly increase the group’s economic and political influence in the world. Saudi Arabia is the world’s largest oil exporter, and its inclusion in the group would almost certainly see the implementation of a new currency proposed by Russia, called the BRICS currency. The BRICS currency would be backed by both gold and oil. This would make it the world’s most valuable and stable currency and could potentially threaten the US dollar’s status as the world’s reserve currency. Seeing as the US is a major importer of oil, and if the major oil-producing countries were to switch to the BRICS currency, it could lead to a significant loss in the value of the US dollar.

The US dollar has been the dominant reserve currency since the end of World War II, and it has been the standard for international trade and finance. However, there has been growing concern about the US dollar’s stability in recent years, and many countries are looking for alternative currencies to use in international trade.

Furthermore, the inclusion of Saudi Arabia in the BRICS group could have significant implications for the global oil market. The major oil producers and consumers would no longer have to buy and sell oil in US dollars, which would stand to further weaken the US dollar’s position in the world economy.

The notion of Saudi Arabia joining the BRICS group has Western and European nations on edge. The US has long considered Saudi Arabia to be a key ally in the Middle East, and its inclusion in the BRICS group could potentially undermine US influence in the region.

For decades the U.S. and Saudis have had an agreement to trade oil in U.S. dollars in exchange for security and military weapons. However, Saudi Arabia and other Middle Eastern and African nations are drifting away from the U.S.; China has stepped in to become the power broker in the region. This is significant as the relationship between the U.S. and Saudi Arabia has strained; Saudia Arabia can turn to other nations for security. Hence having no real reason to trade oil in the U.S. dollar as it will no longer be in the country’s best interest.

While the U.S. is concerned about the Saudis gaining entrance into BRICS, they are terrified that Iran is also looking to gain admission into the group, and its inclusion could be a serious blow to the US. The US has been isolating Iran for decades and has imposed sanctions that have crippled its economy. The inclusion of Iran in the BRICS group could further undermine US efforts to continue doing so.

The BRICS group is currently debating the application of Saudi Arabia and Iran, and a decision is expected later in the year. It remains to be seen what the outcome will be, but one thing is clear: the inclusion of Saudi Arabia in the BRICS group could have significant repercussions for the global economy and the balance of power in the world.

There are concerns about the stability of the BRICS group itself. The five countries have very different economies and political systems, and concerns about their ability to work together effectively exist. Moreover, there are concerns about the economic stability of some of the BRICS countries, particularly Russia and Brazil, which have been hit hard by economic crises in recent years. Even more so as Russia has waged war upon Ukraine.

Despite these challenges, the BRICS group has made significant progress since its inception and has remained intact. They have established The Development bank, which provides financing for infrastructure projects in member countries and increased their trade and economic cooperation. The inclusion of Saudi Arabia in the BRICS group could further strengthen the group’s economic and political influence in the world.

It is important to note that the inclusion of Saudi Arabia in the BRICS group does not necessarily mean the end of the US dollar’s dominance as the world’s reserve currency. The US dollar is deeply ingrained in the global economy, and any shift away from it would be a gradual process. Moreover, the US has significant economic and military power, which it can use to maintain its influence in the world.

Image source Wikipedia – Alan Santos/PR