BRICS Explained: What It Is and Why It Matters

The Origin: An Acronym That Became an Alliance

In 2001, Jim O’Neill, then chief economist at Goldman Sachs, published a paper titled Building Better Global Economic BRICs. The thesis was straightforward: Brazil, Russia, India, and China were on trajectories that would make them dominant economic forces by 2050. The acronym was a forecast, not a political programme.

But ideas have consequences. By 2006, the four countries had begun informal diplomatic consultations on the margins of UN General Assembly sessions. In 2009, the first formal BRIC summit was held in Yekaterinburg, Russia. South Africa joined in 2010, completing the acronym as we know it — BRICS.

The shift from analyst’s shorthand to diplomatic reality tells you something important about the early 21st century: the countries that were supposed to be objects of Western economic analysis decided they would rather be subjects of their own institutional architecture.

What BRICS Actually Is (And What It Isn’t)

BRICS is not a military alliance. It has no mutual defence clause, no integrated command structure, no shared threat perception. It is not NATO for the Global South. Anyone who describes it that way is either selling something or misunderstanding the basic structure.

What BRICS is: a coordination mechanism among major emerging economies that share a common interest in reforming — or circumventing — the institutions that have governed the global order since 1944. The IMF, the World Bank, the SWIFT payment system, the US dollar’s reserve currency status — these are the structures that BRICS members view as disproportionately serving Western interests.

“BRICS is not about being anti-West. It is about being pro-options. The distinction matters more than most Western commentators acknowledge.”

The group operates on consensus, holds annual summits, and coordinates through working groups on finance, trade, agriculture, science, and increasingly, security. But its institutional output is what matters most — particularly the New Development Bank (NDB), established in 2014 with $100 billion in authorised capital.

The Members: A Coalition of Contrasts

China is the gravitational centre. With a GDP exceeding $18 trillion and manufacturing capacity that dwarfs every other member, Beijing provides the economic mass that makes BRICS consequential. China’s interest is structural: it wants a multipolar financial system that reflects its economic weight.

India is the demographic giant. With 1.4 billion people and a GDP growth rate consistently above 6%, India brings population, market potential, and — critically — the credibility of being the world’s largest democracy. Delhi’s interest is hedging: it maintains strong ties with both the US and Russia while positioning itself as indispensable to any non-Western grouping.

Russia provides the geopolitical edge. Sanctioned and partially isolated from Western financial systems since 2022, Moscow has the strongest motivation to build alternatives to SWIFT, dollar-denominated trade, and Western-controlled payment networks. Russia’s interest is survival: BRICS is not a preference, it’s a necessity.

Brazil represents Latin American economic ambition. As the largest economy in South America and a major agricultural exporter, Brasília brings commodity power and regional influence. Brazil’s interest is diversification: reducing dependence on any single trading partner while amplifying its voice in global governance.

South Africa serves as the African gateway. Though smaller economically than other members, Pretoria provides continental reach and moral authority as a post-apartheid democracy. South Africa’s interest is representation: Africa has 1.4 billion people and virtually no voice in existing global institutions.

The 2024 Expansion: From Forum to Force

At the Johannesburg summit in August 2023, BRICS invited six new members: Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE. Argentina’s newly elected president Javier Milei declined the invitation. The other five joined on 1 January 2024.

This expansion changed the character of the bloc fundamentally:

The inclusion of Saudi Arabia is perhaps the most significant. Riyadh has been a cornerstone of the petrodollar system since the 1970s. Its decision to join a bloc that is actively exploring alternatives to dollar-denominated trade represents a hedging strategy that would have been unthinkable a decade ago. Saudi Arabia is not abandoning the dollar — but it is ensuring it has options. (See: The Last Grip — How the Petrodollar Is Fighting to Survive)

The New Development Bank: Building Parallel Infrastructure

The NDB, headquartered in Shanghai, is BRICS’ most tangible institutional creation. With $100 billion in authorised capital and a mandate to fund infrastructure and sustainable development in emerging markets, the NDB is a deliberate alternative to the World Bank.

By 2024, the NDB had approved over $35 billion in loans across member countries. Its lending focuses on transport infrastructure, clean energy, urban development, and water sanitation — the exact categories where developing countries have historically struggled to secure Western financing without onerous conditionality.

The critical difference: NDB loans come without the structural adjustment programmes, privatisation mandates, and governance conditionality that have made the IMF and World Bank controversial in the Global South. Whether this is a feature or a bug depends entirely on your perspective.

De-Dollarisation: The Slow Revolution

The most consequential BRICS project is not an institution but a process: the gradual reduction of US dollar dependence in bilateral trade among members.

India and Russia now settle a significant portion of their trade in rupees and roubles. China and Brazil have established yuan-real swap lines. Saudi Arabia has signalled willingness to accept yuan for oil sales to China. The UAE is developing its own digital currency infrastructure with cross-border payment capabilities.

None of this amounts to “killing the dollar.” The US dollar still accounts for approximately 58% of global foreign exchange reserves and 88% of international trade transactions. But the direction of travel is unmistakable: BRICS countries are building the plumbing for a world in which the dollar is one major currency among several, rather than the singular backbone of global commerce. (See: De-dollarisation and the Future of Reserve Currencies)

“The dollar will not be dethroned by a single dramatic event. It will be gradually bypassed by a thousand bilateral agreements, each one too small to trigger alarm, collectively transforming the architecture of global trade.”

Internal Contradictions

BRICS is not a monolith, and pretending otherwise misses the structural tensions that will define its trajectory:

China-India rivalry: The two largest members share a 3,488-kilometre disputed border, have fought armed skirmishes as recently as 2020, and compete for influence across South and Southeast Asia. Their cooperation within BRICS is pragmatic, not natural.

Saudi-Iranian tensions: Although the Chinese-brokered rapprochement of 2023 reduced direct confrontation, Riyadh and Tehran represent fundamentally different visions of Middle Eastern order. Their coexistence within BRICS requires continuous diplomatic management.

Democracy-autocracy spectrum: BRICS includes the world’s largest democracy (India), a communist one-party state (China), a federal autocracy (Russia), and various points in between. There is no shared political ideology — only shared institutional grievances.

These contradictions are real, but they are not necessarily fatal. The Western alliance system also contains deep internal tensions — the difference is that NATO and the EU have had seven decades to develop institutional mechanisms for managing them. BRICS is still in its first decade as an expanded bloc.

What BRICS Means for the Global Order

The most accurate way to understand BRICS is not as a challenge to the Western order but as an insurance policy against it. Member states are not attempting to destroy the institutions that have governed global commerce since Bretton Woods — they are building alternatives so that compliance with those institutions becomes a choice rather than a necessity.

For the United States and its allies, this represents a slow-motion erosion of structural power. Sanctions become less effective when alternative payment systems exist. Dollar dominance weakens when major commodity producers accept other currencies. International institutions lose legitimacy when the majority of the world’s population sees them as serving minority interests.

The question is not whether BRICS will replace the current order — it almost certainly won’t. The question is whether the current order can adapt to accommodate the legitimate demands of countries representing nearly half the world’s population and a growing share of its economic output. If it cannot, BRICS will continue to grow not because its members agree on everything, but because they agree on one thing: the existing system was designed by others, for others, and the time for alternatives has come.