BRICS Summit Implications for the European Union
Indian Prime Minister Narendra Modi, Russian President Vladimir Putin and Chinese President Xi Jinping attend the BRICS Summit in Kazan, Russia, Wednesday, Oct. 23, 2024 (Source: AP Photo/Alexander Zemlianichenko).
Last week, Russian president Vladimir Putin hosted the annual BRICS summit where the coalition sets priorities and welcomes new members. The BRICS coalition was founded in 2009 by Brazil, Russia, India, China, and South Africa; In 2023 five member states joined — Iran, Egypt, Ethiopia, Saudi Arabia and the United Arab Emirates. The group was created to challenge the monopoly the West has on economic and political power and to offer an alternative source of aid, besides the World Bank and International Monetary Fund (IMF), to emerging economies. As this coalition continues to assert its influence, the European Union (EU) must carefully evaluate the implications of its growth. The summit's outcomes hold particular relevance for the EU, given the bloc's strategic interests and increasing involvement in global affairs, including the ongoing conflict in Ukraine. How is BRICS going to impact the EU's strategic interests?
The recent BRICS summit was a platform for significant discussions and decisions, particularly concerning currency dynamics. One of the summit's main outcomes was a proposal to reduce reliance on the US dollar in international trade. This decision reflects the bloc's ambition to create a more multipolar world order, less dominated by Western financial systems. Russia and China played pivotal roles in steering these discussions, with both nations advocating for alternative trade currencies to enhance economic sovereignty and resilience against Western sanctions. This move is a direct response to the geopolitical tensions that have arisen, including those involving Ukraine and to a lesser extent Taiwan.
For the EU, the evolving dynamics within BRICS present both challenges and opportunities. Geopolitically, the EU is keen on maintaining its influence in a world where power is increasingly distributed among multiple blocs. Economically, the EU has vested interests in stable global markets and is wary of disruptions that a shift away from the dollar could entail. The growing influence of BRICS challenges the EU's global standing, particularly as BRICS nations seek to expand their economic networks and influence in regions traditionally aligned with the EU. As BRICS draws more and more emerging economies, the EU seems to be getting left behind. Currently, BRICS member states make up 45% of the global population and their combined economies are worth 28% of the global economy. Conversely, EU member states make up 5.6% of the global population and have an outsized share of 15.2% of the global economy.
Chinese President Xi Jinping and New Development Bank President Dilma Rousseff during a reception to mark the BRICS summit (Source: AP Photo/Alexander Zemlyanichenko).
The initiatives put forth by BRICS have significant economic implications for the EU. A move towards alternative trading currencies could alter global trade dynamics, potentially impacting the EU's export-driven economies. The EU must also consider how changes in international trade policies might affect its economic relationships and competitiveness. Furthermore, the possible shift in global currency dynamics poses a challenge to the euro's position as a major international currency. In response, the EU may need to strengthen its financial structures and explore new economic partnerships to maintain its economic stability and influence.
In response to the growing influence of BRICS, the EU has several strategic options. One potential strategy is to enhance its economic and diplomatic ties with emerging markets, thereby counterbalancing BRICS' influence. The EU can also focus on strengthening internal economic cohesion to ensure resilience against external economic pressures. Long-term, the EU must evaluate its foreign policy and alliances, potentially seeking new collaborations or reinforcing existing ones to maintain its global standing. The EU faces opportunities for both collaboration and confrontation with BRICS, depending on how it chooses to engage with the bloc's initiatives. Collaborative efforts in areas such as climate change and sustainable development could yield mutual benefits, while competition in economic and geopolitical arenas may demand a more assertive stance.