Author: Silvia Boltuc
Iran’s membership in BRICS could shape novel prospects for Tehran’s foreign policy and economic strategy, solidifying the growing geopolitical paradigm of a multipolar world, where nations like Russia, China, Iran, and India endeavor to provide a counterbalance to Western influence.
The 15th BRICS summit successfully concluded on August 23rd, 2023. BRICS chair president and South Africa President Cyril Ramaphosa announced the outcomes of the summit hosted in Johannesburg, South Africa. The five BRICS members have agreed on the guiding principles, standards, criteria, and procedures of the BRICS expansion process and have reached a consensus on its first phase.
Member countries have invited the Argentine Republic, the Arab Republic of Egypt, the Federal Democratic Republic of Ethiopia, the Islamic Republic of Iran, the Kingdom of Saudi Arabia and the United Arab Emirates to become full members of BRICS from 1 January 2024.
During the summit, BRICS countries also reiterated the commitment to inclusive multilateralism and upholding international law, including the purposes and principles enshrined in the United Nations Charter.
It is the first BRICS Summit to be hosted in-person since the COVID-19 pandemic and the subsequent global travel restrictions. Before the Summit, there was a BRICS business program that aimed to encourage investment and collaboration and highlight opportunities in South Africa, Africa, and BRICS nations.
Ms Dilma Rousseff, the President of the New Development Bank (formerly called the BRICS Development Bank), explained the vital role that this financial institution should play to support infrastructure and sustainable development in Africa and the Global South.
Notably, the group underlined that there is global momentum for the use of local currencies, alternative financial arrangements and alternative payment systems. The Summit agreed to ask the BRICS Finance Ministers and/or Central Bank Governors, as appropriate, to consider the issue of local currencies, payment instruments and platforms and report back to the BRICS leaders by the next summit.
BRICS: Background Information
In 2010, Brazilian President Lula da Silva, during his speech at the BRIC summit in Brasilia uttered the famous phrase, “We have a fundamental role in creating a new international order”. What is envisioned today is effectively a shift in the global geopolitical status quo. With several Western countries entering a recession because of the consequences of the COVID-19 Pandemic and the sanctions on Russia, which have heavily hit the driving economies of Europe, Southeast Asia is registering the largest emerging economies.
Although the Ukraine conflict seems to recreate the division of the world into two blocks as during the Cold War period, the Western world appears cohesive while a second block is formed by a heterogeneous set of powers with very different political systems, economies, cultures, and religious profiles. The goal of these powers is to sit at the negotiating table as equals and create economic growth and a balance for the benefit of the interests of all countries involved.
Against the backdrop of these momentous changes are new organisations such as the BRICS. In 2001, Goldman Sachs economist Jim O’Neill coined the original acronym ‘BRIC’ to describe fast-growing economies that would collectively dominate the global economy by 2050. According to Aaron O’Neill, combined, the BRICS bloc had a GDP of over 26.03 trillion dollars in 2022, which is slightly more than the United States. It is predicted that China’s GDP will overtake that of the US by the end of the 2020s to become the largest economy in the world. Meanwhile, some estimate that India will also overtake the US around the middle of the century.
One of the key topics on the BRICS agenda is to conduct more trade among member nations in local currencies and reduce the reliance on the US dollar. As a consequence of Washington removing Russian banks from SWIFT, several Eurasian countries already exchanged gas with local currencies last year.
According to Jo Sullivan, a former White House economist, BRICS countries collectively export more than they import. They do not need to borrow money from non-BRICS nations like the US or the EU to import goods. So, the rest of the world would have no source of leverage on them.
Iran’s Membership to BRICS: Geopolitical Evaluation
At the closing ceremony of the BRICS summit dubbed “Iran and BRICS: Prospects for Partnership and Cooperation” at the Foreign Ministry’s Institute for Political and International Studies in Tehran on August 8th, 2023, Iran’s Foreign Minister Hossein Amir-Abdollahian renewed the country’s interest in joining the economic bloc, saying the Islamic Republic can be a “reliable and influential” partner.
He also emphasised the need for collaboration among developing nations and the global south in his speech. In this regard, it is important to recall Iran’s renewed African policy. Although Tehran is still working to revive the 2015 nuclear deal, the continued failures in the talks and the general lack of trust in the European interlocutors — who failed to maintain the pact alive when the US unilaterally withdrew — have pushed the Islamic Republic to emerge from Western isolation and reorganise a network of contacts with non-aligned countries.
In line with this approach, in March 2023, the inaugural Economic Cooperation Summit between Iran and West African countries took place. Subsequently, President Ebrahim Raisi embarked on a three-country trip to Africa in mid-July, marking the first time an Iranian president has undertaken such a visit in over 11 years. Cooperation has increased also with Latin American countries and Eurasia, including Central Asia, the Caucasus, and recently, the Gulf.
Amir-Abdollahian further added that the economic and political alliances in the developing world aim to strengthen their bargaining power during international negotiations, especially at the United Nations.
Recent Iranian foreign policies marked an improvement in the country’s economic performance despite decades of sanctions. The development of existing free trade zones and the establishment of new ones has become one of the major economic approaches of the Iranian government.
Secretary of Iran’s Free Zones High Council Hojatollah Abdolmaleki said the value of exports from Iranian free trade and special economic zones last year was close to 18 billion dollars, with a trade balance of these zones reaching 700 million dollars positive for the first time. Oil export has also increased, and Iran secured membership or free trade agreements with important economic organisations, such as the Shanghai Cooperation Organisation and the Eurasian Economic Union.
Undoubtedly, Tehran has proved an unexpected resilience, developing an ability to positively leverage the unique set of circumstances surrounding the Islamic Republic, particularly isolation, caused by international sanctions.
Joining BRICS, which includes Russia and China, could help Tehran bypass economic sanctions and take part in global growth. Vice versa, for BRICS, Iran represents a great opportunity. Europe has long looked at the Islamic Republic with interest given its enormous unexploited potential but wasn’t able to access it because of sanctions.
The Islamic Republic has the second worldwide reserves of gas and is rich in oil. It shares borders with 13 states and has strategic access to the Caspian Sea, the Persian Gulf, and Central Asian and Caucasian regions, in addition to being part of international transit corridors. Its strong commitment to multilateralism.
Its focus on the growth of production and trade, and its enhancement of economic ties with regional actors despite ideological or political friction proved the country might be a valuable candidate for the bloc and contribute to balancing the Group of Seven (G7) sphere of influence.
It is also important to underline that in the MENA area, Saudi Arabia is the first trading partner of the BRICS countries and is discussing joining the New Development Bank (NDB), as the UAE did in 2021. The normalisation of relations between Riyadh and Tehran in addition to Beijing’s investments in both countries will further increase the success possibility of the BRICS bloc, reduce disputes, and increase Iran’s international presence.
Notably, Saudi Arabia was also invited to join the BRICS bloc. The effort made by regional countries to overcome historical division was pushed by the need both of Riyadh and Tehran to improve their country’s economic performance and attract new investments. We can expect that growing economic ties between Eurasian countries will serve the stability of the region.
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