Receiving 22 membership applications, the BRICS group of emerging economies is expected to create a new common currency that will be able to challenge the US dollar’s global reserve status.

Gathering on Tuesday in Johannesburg, South Africa, the BRICS countries — Brazil, Russia, India, China and South Africa — will evaluate the membership applications.

Increasing the number of its members, expanding its overall population and economic power and strengthening alternative institutions such as the New Development Bank (NDB), BRICS aims to topple the US’s hegemony over the global economy.

The five-member exclusive platform already accounts for 40% of the world’s population and more than 30% of global GDP, which is forecast to reach 50% by 2030.

BRICS nations account for 18% of global trade and own 22% of the foreign investments on the world scale.

Around 27% of the world’s land surfaces are also owned by these countries.

The Tuesday meeting is expected to announce a new BRICS joint currency. China, the most powerful economy of the community, stands out as the biggest supporter of the idea of a common currency.

New potential members

Argentina, the UAE, Bahrain, Bangladesh, Belarus, Algeria, Indonesia, Iran, Kazakhstan, Cuba, Egypt, Nigeria, Senegal, Saudi Arabia, Thailand, Tunisia, Uruguay and Venezuela are among the countries that have made formal applications for BRICS.

All member states, China in particular, are welcoming new members to the community; enlargement is one of the main agenda items of the summit in Johannesburg.

Especially Saudi Arabia, the UAE and Egypt come to forefront among membership applications with their strong economies and potential.

Expanding the platform’s economy with new members such as oil giants Saudi Arabia and the United Arab Emirates may facilitate the adoption of a new common currency in most of the world.

BRICS, as both the major consumer and producer of energy sources, could also be the determinant body in the energy field.

New Development Bank

The NDB, established by BRICS countries in 2015, and formerly the BRICS Development Bank, stands out as an alternative actor in the global system to the International Monetary Fund (IMF) and the World Bank.

Headquartered in Shanghai, China, it was established with start-up capital of $100 billion and has so far provided $32.4 billion in funding for a total of 98 projects.

It is anticipated that 280 million people will benefit from these projects.

Increasing the number of members to nine in 2021 with the participation of Bangladesh, Egypt, UAE and Uruguay, the bank is expected to expand with new members such as Saudi Arabia and Algeria in the future.

Potential crisis

The US meanwhile sees the common currency idea as a pipe dream.

Paul O’Neill, a former US Treasury secretary, said recently that the idea of replacing the US dollar is a “kind of madness” and “ridiculous.”

Around 90% of international transactions conducted in US dollars, with the dollar also comprising around 60% of global foreign exchange reserves.

Reducing dependence on the dollar not only means an economic shift. Russian reserves worth around $300 billion were held in Western countries due to its war on Ukraine.

Changing the reserve currency is also expected to change the conditions of economic wars and Western countries’ dominance in this field.

South African President, Cyril Ramaphosa Tuesday called for fundamental reforms in global financial institutions at the opening of the 15th BRICS summit held in Johannesburg, BRICS’ first in-person gathering in four years after the COVID-19 pandemic.

Ramaphosa said the BRICS New Development Bank is leading the way as an alternative by offering funds for developing nations without conditions.

He said the 3-day summit will also discuss how to use national currencies instead of the US dollar.

The expansion of BRICS group would not undermine the G-20 or create new divisions, German Foreign Minister Annalena Baerbock said on Tuesday.

“No, no, I’m not disappointed. I don’t see that G-20 is being weakened or divided,” Baerbock told reporters, when asked if she was concerned about the intention of Indonesia, Argentina, and dozens of other regional powers, to join the BRICS, an economic bloc comprising Brazil, Russia, India, China and South Africa.

BRICS is widely seen as a counterweight to Western-led forums such as G-20.

The US, meanwhile, said it does not see the BRICS bloc turning into a geopolitical rival.  “This is a very diverse collection of countries … with differences of view on critical issues,” White House national security advisor Jake Sullivan told reporters.

Chinese President Xi said today on arrival in Johannesburg, “Today, standing at a new historical starting point, inheriting friendship, deepening cooperation, and strengthening coordination are the common aspirations of the two countries, and are also the important tasks entrusted to us by the times’, Xi said.

Indian Prime Minister Narendra Modi said that over the past 10 years, the BRICS Business Council has played a very important role in “enhancing our economic cooperation.”

“When the first BRICS summit was held in 2009, the world was coming out of a major economic crisis, BRICS was seen as ‘a ray of hope for the global economy’.

​​​​​​​”In the present time as well, amid the COVID pandemic, tensions and conflicts, the world is grappling with economic challenges,” he said. “In such times, the BRICS nations once again have a significant role to play.”

Modi arrived in Johannesburg on Tuesday to attend the 15th BRICS Summit. From South Africa, he will travel to Athens, Greece on Aug. 25, India’s Foreign Ministry said earlier.

Brazilian President, Luiz Inacio Lula da Silva said BRICS is not meant to challenge other international coalitions but to “organize” the so-called Global South.

Over 50 leaders from around the world are attending BRICS meeting in Johannesburg including China’s President Xi Jinping, Indian Prime Minister Narendra Modi, Iran’s Ebrahim Raisi and Indonesia’s President Joko Widodo.

Russian Foreign Minister Sergey Lavrov is leading his country’s delegation to the BRICS summit in South Africa.

President Vladimir Putin will not attend the meeting in Johannesburg in person as South Africa was compelled to arrest him on an International Criminal Court arrest warrant over alleged war crimes in Ukraine.

He would, however, speak via video link to the delegates at the gathering.

At least 40 countries have shown interest in becoming members, with 23 having submitted their applications.