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By: Narek Margaryan | Published 29 August 2025
Why was BRICS formed?
Why was BRICS formed?
When the BRICS grouping was first coined by economist Jim O’Neill in 2001, it was meant as an investment acronym for Brazil, Russia, India, and China—fast-growing economies poised to challenge the West’s dominance. With South Africa joining in 2010, the acronym became a political bloc rather than just a financial label, and for more than a decade BRICS was seen as a symbol of the “Global South’s” rising ambition. Now, in 2025, the bloc is undergoing its most ambitious transformation yet. Saudi Arabia, the United Arab Emirates, Egypt, Iran, and Ethiopia have joined, and other countries from Latin America, Africa, and Asia are signaling their interest. This expansion has sparked a debate: is BRICS turning into a real counterweight to the G7 and Western-led institutions, or will it remain a loose coalition with impressive statistics but limited action?
The timing of expansion is no coincidence. Over the past decade, frustration has grown among developing countries with a global financial system dominated by the IMF, the World Bank, and above all the U.S. dollar. Many argue that these institutions serve Western interests disproportionately. At the same time, geopolitical shifts—the intensifying U.S.-China rivalry and the West’s confrontation with Russia over Ukraine—have created space for alternative alignments. For Beijing and Moscow, BRICS is a platform to challenge Western hegemony; for countries like Saudi Arabia and the UAE, it is a way to diversify partnerships and strengthen their roles in energy markets; for African states, it is a chance to gain visibility in a multipolar world. Expansion is both a reaction to dissatisfaction with the old order and a pragmatic recognition that global power is no longer monopolized by the West.
The 3rd BRICS summit took place in Sanya, China, and was the first since South Africa was inaugurated into BRICS in 2011
The G7 has "long strayed from its original purpose of coordinating for stability in the global economic environment, and has increasingly become a political tool to perpetuate US and Western supremacy" (China's Foreign Minister Spokesperson Lin Jian)
On paper, the expanded BRICS looks formidable. Even before enlargement, the original five accounted for around 40% of the world’s population and nearly a quarter of global GDP. Now, with heavyweight oil producers like Saudi Arabia and the UAE, plus Egypt and Ethiopia as African anchors, and Iran adding geopolitical weight, the group’s significance only grows. If other potential members such as Argentina, Indonesia, or Nigeria were to join, BRICS could easily represent over 40% of global GDP in purchasing power parity terms—more than the G7. But raw numbers can be misleading. The G7 economies, despite differences, share broadly similar political systems and strategic goals. BRICS is a mosaic of democracies, autocracies, monarchies, and theocracies, often with conflicting interests. That diversity makes it both interesting and fragile.
a BRICS currency illustration that Could Shake the Dollar’s Dominance
BRICS Mission
BRICS Mission
Perhaps the most discussed question is whether BRICS will create an alternative to the U.S. dollar. For decades, the dollar has been the backbone of international trade, giving Washington enormous leverage through sanctions and monetary policy. Russia, heavily sanctioned, has been eager to reduce reliance on the dollar. China, meanwhile, has promoted the yuan as a global currency.
With oil giants like Saudi Arabia and the UAE now in BRICS, there is speculation about energy being priced in non-dollar currencies. Still, reality is less dramatic. A shared BRICS currency is almost impossible in the near term, as members have vastly differen inflation rates, debt burdens, and exchange systems. Even the euro, created by relatively similar economies, required decades of integration. What is more plausible is a gradual increase in trade settled in local currencies. Russia already sells oil to India in rupees, and much of its commerce with China is now in yuan. If more BRICS members follow this path, the dollar’s dominance may weaken slowly. It will not disappear, but its grip may loosen.
Conflicting Interests
Conflicting Interests
Another key area where expansion matters is energy. With Russia, Saudi Arabia, Iran, and the UAE in the same club, BRICS now encompasses an enormous share of the world’s oil and gas supply. This creates the potential for coordination that could rival OPEC or even merge with it in function. Yet again, interests diverge. Russia and Saudi Arabia often compete for market share, while China and India—the biggest importers—want cheaper, not costlier, energy. Iran’s sanctions complicate matters. Full coordination may be difficult, but the symbolism is powerful: many of the world’s top energy players now sit together in a forum outside Western control, a reminder that global energy decisions are no longer made only in Washington or Brussels.
Beyond resources, BRICS has also tried to build its own institutions. The New Development Bank, founded in 2014 and headquartered in Shanghai, was created as an alternative to the World Bank and IMF. With expansion, the bank has access to more capital and new markets. For countries wary of IMF conditionalities, it presents another option. Still, it is relatively small compared to the World Bank, and its growth depends on whether members are willing to invest more heavily and strengthen governance. For now, it is more of a complement than a competitor.
The real challenge for BRICS is politics. Expansion makes the bloc stronger economically but more complex diplomatically. India and China remain rivals, with disputed borders and competing regional ambitions. Saudi Arabia and Iran, though currently reconciling, have been adversaries for decades. Democracies like Brazil, India, and South Africa may find it awkward to align too closely with authoritarian Russia or Iran. Unlike the EU, BRICS has no binding treaties, no shared budget, and no common institutions. Decisions are made by consensus, which often results in vague declarations rather than concrete action.
BRICS Significance
BRICS Significance
Still, even with its contradictions, BRICS matters. Its expansion is significant not just economically but psychologically. For decades, the world’s agenda was set by the West—through the G7, NATO, the IMF, and the World Bank. BRICS offers a counter-narrative: the global South can and should play a larger role. Even if the bloc does not function as a perfectly unified organization, it sends a signal that Western monopoly is over. That in itself reshapes the conversation. The IMF and World Bank may now feel greater pressure to reform their governance structures, while Western governments may need to listen more closely to emerging economies.
Looking to the future, three scenarios are plausible. In the first, BRICS expands further but remains fragmented, unable to act cohesively, more symbolic than structural. In the second, which seems most realistic, BRICS grows gradually in influence by promoting local currency trade, strengthening the New Development Bank, and exerting modest pressure on energy markets. It does not replace the West but forces it to share space. The third, and least likely in the near term, is radical transformation: a BRICS currency, deep institutionalization, and coordinated energy policy that truly shifts the global order.
So, will BRICS expansion reshape the global economy? The honest answer is yes, but with limits. Expansion gives BRICS more demographic and resource weight, challenges the dollar’s dominance, and strengthens the Global South’s confidence. But it will not replace the West overnight, nor create a fully coherent alternative system. Instead, it will gradually push the world toward multipolarity, where influence is shared, contested, and negotiated.
Final Thoughts
Final Thoughts
On a personal level, I see this expansion as a kind of reality check for the 21st century. For too long, the assumption was that a handful of Western capitals set the rules. That was never sustainable. Emerging economies deserve a seat at the table, and BRICS gives them one. I don’t believe BRICS will evolve into a rival “superpower” organization, because its internal contradictions are too great. But its value lies in the way it forces global institutions to recognize the changing balance of power. If the G7, IMF, or World Bank become more inclusive and fairer because BRICS exists, that alone is meaningful.
At the same time, I find BRICS fascinating precisely because of its contradictions. Can India and China put aside their deep mistrust? Can Saudi Arabia and Iran cooperate beyond photo opportunities? Can democracies like Brazil reconcile with authoritarian partners on shared goals? These are open questions, and their unpredictability makes the story compelling. For me, the true impact of BRICS expansion is not about whether it “defeats” the West, but about how it rebalances a world that is already far too complex to be managed by one side alone. Multipolarity is messy and sometimes frustrating, but it is also more representative of the real world we live in.
So yes, BRICS expansion will reshape the global economy—not through sudden revolutions, but by slowly shifting us toward a stage where power is dispersed, voices are more diverse, and no single bloc can dictate the rules. That may feel unstable, but in the long run, I believe it is healthier. It forces compromise, it acknowledges diversity, and it makes the global system more reflective of humanity as a whole. In that sense, BRICS expansion is less about replacing the old order than about reminding us that the world has already moved beyond it.
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