BRICS

BRICS is the name for a group of states that meet regularly and cooperate economically and politically. The letters stand for the initial letters of the five founding members: Brazil, Russia, India, China, and South Africa. All five are considered emerging economies, meaning states that are growing strongly economically but are not yet as wealthy as, say, Germany or the USA. BRICS is not an alliance with fixed treaties, nor is it a common market like the European Union. There is no parliament, no shared currency, and no obligation to abide by resolutions. What holds the group together is above all a shared goal: less dependence on the Western industrialized nations.

A counterweight to the USA and Europe

The BRICS states together are home to significantly more than a third of the world’s population. Their share of global economic output is, depending on how it’s calculated, roughly a quarter to a third. Nevertheless, they have comparatively little voting weight in important organizations such as the International Monetary Fund. This gap between economic size and political influence is the group’s real driving force.

A second issue is the US dollar. A large share of world trade is settled in dollars, even when the USA is not involved at all. This gives Washington a lot of power, for example when it comes to sanctions against individual countries. Several BRICS states therefore want to trade more often in their own currencies. There is frequent talk of a joint BRICS currency, but for the foreseeable future it is not realistic.

The group is also relevant for technology and AI. China and India are building their own chip factories and data centers, partly because Western export restrictions make it harder for them to access certain high-performance chips. Anyone talking about the future of AI infrastructure cannot ignore these countries.

Summits instead of treaties

The core of the cooperation is an annual summit of heads of state and government. Each year a different member takes over the chairmanship and sets the priorities. At the end there is usually a joint declaration, which, however, is not legally binding on anyone. Decisions are made by consensus, so each country can block a decision.

There is, however, one genuine institution: the New Development Bank, headquartered in Shanghai, founded in 2015. It grants loans for roads, power grids, or water supply in member countries. It is conceived as an alternative to the World Bank, in which the USA and Europe traditionally hold a lot of influence. In addition, there is a shared emergency pool of foreign currency reserves that a member can draw on during a currency crisis.

Since 2024 the group has grown, among others by Egypt, Ethiopia, Iran, and the United Arab Emirates. That is why it is sometimes referred to as BRICS+. The expansion makes the group bigger, but also more divided. India and China, for instance, are rivals with an unresolved border conflict, while Brazil and Iran pursue very different interests.

Putting BRICS in context in the news

The term appears most often around the summer summits. At that time, media report on candidate countries for accession, on raw material agreements, or on plans for a dedicated payment system. The name also comes up in discussions about oil and gas prices, since with Russia, Iran, and the Emirates several major producing countries are part of the group.

On the stock market, you’ll encounter BRICS as a category for funds. A BRICS ETF bundles stocks from these countries into one product. Interesting to know: the term was coined in 2001 by an analyst at the bank Goldman Sachs to describe high-growth markets to investors. Only years later did the countries turn it into an actual political format.

A common misconception is that BRICS is a kind of counter-NATO or a military alliance. It is not; there is no mutual defense obligation. Equally mistaken is the notion that the members act as a united front. A more realistic picture is that of a community of interests in which each participant primarily pursues its own goals.