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Actu Anglais juillet 2024

Décrypté par Jean-François Allafort, co-auteur des Fiches DCG UE12 Anglais des affaires, collection « Expert Sup », Dunod, et présenté par Ian Waddelow

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The BRICS 2023 Summit : The emergence of a new bloc to rival G7 leadership ?

Welcome to the series of DUNOD podcasts designed to help improve your English in your own time on topics related to your studies.

The announced expansion of the five-nation BRICS club of emerging economies was described as "historic" by Chinese President Xi Jinping, although the member-countries may not share the same interests.

So let’s recall some definitions.

The term BRICS was created by Goldman Sachs economist Jim O’Neill in 2001. It is an acronym for Brazil, Russia, India and China. South Africa was added in 2010. It was claimed that the five BRICS countries would dominate the global economy by 2050.
BRICS is an informal grouping of emerging market countries that seek to establish deeper ties between their nations and cooperate on economic expansion, including trade. The countries seek to depend on each other for growing influence in the world.
The BRICS countries are often seen as a counterweight to the Western-led world.

So what happened during the BRICS 2023 Summit in Johannesburg, South Africa ?

Well, Brazil, Russia, India, China, and South Africa have invited six other nations to join the BRICS grouping next year to create a geopolitical counterweight to the G7 (which includes Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States, as well as the European Union). Twenty-three countries submitted applications to join the BRICS bloc and leaders selected six : Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates (UAE). This is a significant change for a bloc that added its only members 13 years ago
The new BRICS could potentially create a framework to reduce dependence on Western financial systems. The expansion of BRICS could also have important implications for energy investment and trade. Indeed, it brings together large mineral resource holders and major oil producers, as well as some of the fastest growing energy consumers.

So what about the BRICS’ diverging and converging views

According to an expert from London’s SOAS China Institute, the BRICS members do not have much in common on the surface but they do share the same view of their future : none of them want to live in a Western-dominated world.
It is likely that the expanded BRICS will take an initiative to strengthen critical energy security. The addition of Argentina will strengthen the bloc’s lithium supply. According to an August 2022 JPMorgan forecast, Argentina’s share of global lithium supply would rise from 6 percent in 2021 to 16 percent by 2030, surpassing Chile to be the second-largest lithium producer in the world by 2027.
BRICS will also seek to increase public and private investments in critical minerals supply chains among allies. Saudi Arabia, another new entrant, is already making significant investments in lithium and other critical minerals in Brazil. It recently made a $2.6 billion deal to buy a 10 percent stake in Brazil’s largest mining company, Vale’s base metals division. This is to access various critical minerals, including nickel and copper.

What does the enlargement of BRICS mean for oil and gas trade ?

Well certainly an enlarged BRICS would include both oil and gas exporters and two of the largest importers, China and India—both of which refused to join the “price cap coalition” targeting Russia. Producers and consumers in this group have a shared interest in creating mechanisms to trade commodities outside the reach of the G7 financial sector.

Will this lead to a new common currency ?

Many of the world’s largest oil exporters peg their currencies to the dollar. But a growing number of bilateral energy deals are being settled in other countries and in other currencies such as the Chinese renminbi or Indian rupees. And Brazilian president Lula’s push for a common currency is being taken seriously.
The US reaction with White House National Security Advisor Jake Sullivan attempting to play down the bloc’s expansion plans said that due to BRICS countries’ divergence of views on critical issues, he did not see it as "evolving into some kind of geo-political rival to the United States or anyone else".
To conclude, enlarging BRICS may largely be symbolic for now—but it is another sign that countries are exploring ways to skirt the U.S. financial system and reach beyond the might of the US dollar.