Economic prospects and challenges for the Arab countries in the BRICS group

Date: 29 - 08 - 2023

Abu Dhabi

Source: Mufakiru Alemarat

Dr. Ali Mohamed Al Khouri

The BRICS summit, hosted in Johannesburg, South Africa, resulted in a decision that would reshape the dynamics of the global economic map. The leaders of this group have opened the doors for three Arab countries – including the United Arab Emirates, Egypt and Saudi Arabia – to join it, along with Argentina, Ethiopia and Iran, starting in 2024.

The BRICS group, which originally consists of Brazil, Russia, India, China and South Africa, is an international bloc of emerging economies that analysts believe may play an important role in shaping the global economic, political and global scene, undermining Western hegemony, and ending the unipolar system.

The group, which began negotiations for its formation in 2006, and held its first summit in 2009, aims to strengthen economic, trade and investment relations among its members, coordinate positions on global and regional issues, and form a driving force for a new world order. What is influencing this bloc is that it will cover, with its new members, 26 percent of the world’s area, include 43 percent of its population, and account for nearly 30 percent of the global economic output.

Potential recovery in the Arab region

The expected integration of the Arab countries into the BRICS scope of work may reveal a myriad of potential gains, foremost of which are the financing, trade and investment benefits, which are capable of enabling economic reform plans, implementing national projects, and providing major areas for expanding the vision of Arab economic cooperation and unifying trends. And Arab economic strategies to deal with global crises, in a way that ensures the achievement of economic growth and sustainable development goals, and improves the quality of growth by encouraging innovative economic development based on advanced technology and skill development.

Other gains are related to the group’s goals centered on enhancing participation and cooperation among member states, and improving the conditions of developing and emerging countries around the world, whether in terms of representation in international financial institutions, or improving the performance of the multilateral trading system, and the international trade and investment environment that aims to restore balance. to the global system.

This membership may prepare the Arab countries to benefit from the “New Development Bank”, which is managed by the countries of the group, and its capital amounts to 100 billion dollars, and it can represent a pivotal resource for the development of infrastructure, especially in vital areas such as transportation and energy, especially in light of the expansion of influence and capabilities. The bank’s lending, and its focus on sustainable development and renewable energy technology, which are areas that are considered up-to-date, and permanent and haunting issues on the international decision table.

This partnership can also enhance models of trade exchanges in Arab countries to shift towards local currencies, strengthen financial sovereignty, and reduce dependence on current monetary systems that are essentially based on the US dollar, at a time when many of these countries are suffering from the decline in the value of their local currencies against foreign currencies, and the scarcity of dollar in their markets.

Looming challenges

As the Arab countries prepare to integrate into the influential economic fabric of the BRICS group, they stand – without a doubt – in close proximity to promising opportunities. However, moving forward towards the required transformations may be obscured by potential challenges that necessarily require a smart and balanced lens to evaluate the scene, overcome challenges, and take advantage of opportunities.

Among the most prominent of these challenges is the issue of economic harmonization. Understanding how the economic goals of Arab countries match those of the current BRICS countries is crucial. The cultural nuances of the BRICS countries may impede common understanding over time. Therefore, Arab countries will need to consider how to seamlessly integrate into this cultural fabric, or if there are dynamics that require more coordination and collective efforts to address them.

Regulatory environments may constitute a great burden that forces Arab countries to adopt regulatory structures consistent with the established frameworks of the BRICS group. Differences in this field may impede effective operations and investments between the countries of the group. This necessitates various national measures to bridge these gaps.

In terms of infrastructure, which is a recurring focus of the BRICS group; Therefore, a question arises centering around the readiness of the Arab countries in terms of the infrastructure and technology necessary to benefit from the infrastructure initiatives within the current BRICS models, and their capabilities. This will require considering the development of strategies that promote integration and inter-integration at the system level.

As for the management of common resources, whether human resources or capital, it may represent another maze full of complexities. Formulating the necessary mechanisms to ensure the equitable benefit of all members, and to anticipate potential conflicts over resources, is an undeniable necessity.

And we come to the pivotal part, which is the shift towards trading in local currencies; Although it may be promising; But it is hardly without complications. Arab countries will have to gauge the readiness of their national systems to deal with such trade mechanisms effectively.

In parallel with these interwoven challenges, the importance of synchronizing the individual strategies of countries with the comprehensive vision of the BRICS group cannot be overlooked, especially since each country will bring its own political background, and it will be of great importance to align these policies in order to achieve collective growth.

All this raises another question about how the Arab countries will cooperate with their counterparts in the BRICS group, especially in developing strategies related to crisis management, in light of the changing nature of the global scene, which is unpredictable and full of economic and political paradoxes. This confirms the importance of establishing strong and transparent channels of communication with the current members of the BRICS group, as this is the cornerstone of successful integration between the Arab countries and the group.

Attention must be paid to the fact that the new joining countries have entered this group bearing political differences that range from intensity to latency, especially those related to their positions and trends regarding economic and political dominance, and control over key resources such as water and energy. Here, work should be done to review successful regional and global economic alliances, such as the European Union, the Organization for Economic Cooperation and Development, and the Group of Seven industrialized nations. Benefiting from its experiences in capacity-building to contain differences, curb them, and turn them into an issue that can be managed calmly, away from the media clamor and excitement, and here these economic alliances may come with solutions that politics failed to provide.


Arab countries and the industry of the future

The accession of Arab countries to the BRICS group represents an important milestone in the global economy. The Arab countries must be aware that this geopolitical and economic bloc carries commitments that may work to reset the global economic dynamics, which places the responsibility on policy-makers in the Arab region to direct the alliance to ensure its sustainable growth, and the joint commitment to advancing national and international peace and security at the same time. . The way forward must be guided by wisdom and the values ​​of openness, tolerance and cooperation. The alliance is – inevitably – on a path that will reshape the features of international trade, development and diplomacy, amid international anticipation for the expansion of this alliance, and the accession of new countries to it. There is no doubt that the expected future promises possibilities and opportunities that will only be limited by visions and endeavors.