Political Economy Journal: BRICS; Risk or Opportunity

BY: Daniel Ranjbar

The BRICS countries flags

PEJOURNAL – The BRICS countries are trying to get other countries that are almost in a similar situation to join the group in order to achieve their collective goals with more power. The group currently covers more than 40% of the world’s population, including Brazil, Russia, India, China and South Africa. But one of the main problems of the BRICS countries in expanding relations and strengthening their position is the small number of members and the geographical distance of the member countries of this group.

The BRICS group symbolizes the imbalance created by Western countries in the world system and is the leader in changing the pattern of economic development and globalization. Thus, the growing population of the BRICS countries gives them the advantage to increase their share of world economic production in the future and to strengthen their position in this regard. Under the group’s new plan called BRICS Plus, Pakistan, Bangladesh, Iran, Nigeria, South Korea, Mexico, Turkey, Indonesia, the Philippines and Vietnam were recently considered for BRICS membership. 

But Iran did not become a member of the BRICS:

The member states of BRICS, the affiliation of five important rising economies, have each upgraded Iran’s risk rating to pre-sanctions levels, the deputy head of Export Guarantee Fund of Iran said.

“Export credit agencies of Brazil, Russia, India, China and South Africa have each gradually improved Iran’s rating in their own risk classifications since the nuclear deal was implemented [in January 2016],” Arash Shahr-Aeini also told Financial Tribune.

Referring to data provided by export credit agencies of BRICS countries, “ the official noted that China Export and Credit Insurance Corporation, the major state-owned enterprise also known as Sinosure, has given Iran a BB risk rating of five from a scale of nine.”

Any bout of monetary crisis or political insecurity skilled by way of oil exporting international locations has a direct influence on China’s power security and monetary growth. Thus, political and economic steadiness has usually been strongly supported by means of Beijing. China is now not pleased with American supremacy over strength resources and electricity transmission routes in the Middle East and Chinese officials concern that in the event of any battle between the two countries, the United States has the strength to reduce China’s materials in one fell swoop. Thus, the relationship between China and Iran has a hazard of blossoming in the international Community, very better than Iran’s relationship with the West.

The Export Insurance Agency of Russia, well known as Exiar, has designated a “risk rating of four out of seven to Iran while the nation has managed to acquire a B+ or three out of seven from the longstanding Export Credit Guarantee Corporation of India (ECGC) founded in 1957.” Russian agencies are geared up to participate in the energy enterprise of Iran. An alternate mindset in foreign coverage and an attempt to take away anxiety with neighbouring countries would mark a step toward attracting overseas investors, however regardless of political ties and gestures in harmony with Iran, Russia in reality benefits greatly from the sanctions regime, given it is one of the world’s biggest producers of petroleum and gas.

“The Export Credit Insurance Corporation of South Africa, added Shahr-Aeini, has put Iran’s risk classification at five out of seven.” Over the past decade, the Iranian government has been making an attempt to make more of a political impact on the African continent. The number of trips between high-ranking Iranian and African leaders has improved dramatically over the years. South African businesses are eager to cooperate with Iran and have an accurate platform in place of joint investments – one of which consists of oil producing units.

The official, who also serves on the EGFI board of directors, did not possess any confirmed internal reports on the nation’s standing with the Agencia Brasileira Gestora de Fundos Garantidores e Garantias, better known as the Brazilian Guarantees Agency,” but data on their official website shows that a risk rating of six out of seven has been allotted to Iran.” US sanctions on Tehran have particular meaning for Brazil, which sells Iran ninety percentage of its agricultural imports. Iran is Brazil’s primary trading associate in the Middle East, with a trade extent of $2.6 billion – mostly helped via the foothold the USA offers to the 600 million people in the surrounding markets, together with Central Asia, the Caucasus, Iraq and Afghanistan.

In recent months, the US has multiplied its oil exports to India, and has signed a twenty-year contract to export LNG to the world’s largest democracy. Iraq and Saudi Arabia are additionally seeking to increase their share of the Indian market. Saudi Arabia, as a US ally, is struggling to decrease Iran’s role in the Indian energy market. Indian private agencies have accurate journey and enough financial resources to entice the Iranian market.

In recent years, Iran-India family members have warmed in addition to strength sectors in the transit areas, and the Chabahar port of Iran has become a bridge to the markets of Afghanistan and Central Asia, imparting India with an fantastic probability to bring forward its change relations. The port of Chabahar is of one of a kind significance for the nations of Iran, India, Afghanistan, Pakistan and, generally, Central Asia, and enables change and gets admission to these countries.

Chabahar has a strategic importance for India, at the factor of connecting this emerging economic electricity to its goal markets in the international locations of Central Asia, and onwards with Eastern Europe and the Caucasus.  For example in 10 of July 2020, Tehran – IRNA – Referring to the Chabahar railway connection to Zahedan, the Managing Director of the Railways of the Islamic Republic of Iran said: “Iran can use this route to transfer cargo to the countries of the CIS zone to Oman Sea as well as the rail transit of India and Russia.”

Analysis showing that Brazil, Russia, India, China and South Africa all offer potential markets for Iranian oil, but all will be wary of US retaliation. Interesting facts is that BRICS on time understand that Iran can be very useful member and can solve many problems that already BRICS facing it, but in other side of this Opportunity, The big Risk from US that made everything harder and complicated for international community, made the decision of BRICS countries difficult about Iran.

One of the main goals of the BRICS group is to challenge the central power of the United States in global equations. The BRICS countries work together to change the world power system and break free from US domination and related institutions. The elimination of the dollar from trade has been the most important agreement of the BRICS group in recent years in this regard.

In the initial plan to form the BRICSPlus group, which was to be formed with the addition of new countries to the BRICS group, Iran was also considered as one of the suitable options for membership in this group; But with the formation of BRICS Plus in the new summit of this group, the name of Iran was not mentioned among the new countries. Only the leaders of the five countries, Egypt, Mexico, Thailand, Tajikistan and Guinea, were present at the recent summit, along with the five main members of the BRICS group, and China has officially invited the leaders of the five countries to join the BRICS group.

The BRICS Group:

The BRICS Group can be considered as the most influential institution in designing a new world order that is expanding and developing day by day due to the combination of member countries, allies and actions it has taken so far. Future for sure is hard to predict but BRICS will be one of important groups and organizations in the global community in case of Economy and Politics. For sure having Iran in BRICS can be beneficial for all members and for Iran but the Risks that made by the West are still in their place.

For the Future of BRICS there are some scenarios but I think better to mention just one of them; BRICS will be more powerful in the global community that can manage these Risks and can fight west as mentioned before. The interesting fact about BRICS is that all countries that are members, somehow before or now Sanctioned by the west and especially the US, the scenario of bringing together sanctioned countries to make the world a better place is always one of beautiful goals and ideas that I think will be possible and will work very well.

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