Commentary
Much of the commentary on the motives behind the expansion of the BRICS trading alliance—Brazil, Russia, India, China, and South Africa—announced last month has been centered on the anti-American bias of the coalition.Specifically, behind the smiley-faced façade of an ostensible economic cooperation community lies a deep-seated opposition to the U.S.-dominated global financial system and the weaponization of economic sanctions against any nation that opposes the U.S.-led world order. De-dollarization—i.e., the imminent demise of the U.S. dollar as the world’s reserve currency—has become an increasingly common topic of discussion.
All of that may certainly be true over the long run. But there’s another nearer-term and highly pragmatic motivation for the original members, especially China (the dominant, first among equals in the group), to expand the club in the way that they are—and that motivation is oil.
For background, the original BRICS community was formed in 2010 with five member nations: Brazil, Russia, India, China, and South Africa. In recent years, some 40 nations have expressed interest in joining the group, with some making a formal application. In August, at the 2023 annual BRICS summit, six countries were approved to officially join BRICS in 2024: Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates.
The addition of these six nations does little to augment BRICS’s economic might, share of global trade, or even its portion of the world’s population. The original BRICS constitute nearly a quarter of the world’s gross domestic product (GDP), with China alone comprising 18.4 percent. The six new countries will add a mere 3 percent to the BRICS+ share of global GDP.
Similarly, China represents 14.4 percent of global trade, with the other four original members adding another 4.4 percent. The new members will contribute just under 5 percent. The original BRICS comprises more than 38 percent of the world’s population, with the new members contributing an additional 5 percent.
The real difference is in oil, the lifeblood of the modern economy. Today, the BRICS nations represent 17.1 percent of global crude oil production. With the addition of new members, especially Saudi Arabia, Iran, and the United Arab Emirates, BRICS+ will control 43.4 percent of the world’s supply of oil.
For China, which has only 4.4 percent of global crude oil production, this is an enormous boon. The alliance, and its most-favored nations’ trading provisions, represents a substantial step toward ensuring the large and growing nation’s energy security and economic strength, thereby preserving the political stability of the Chinese Communist Party (CCP).
Over the past decade, China has built the world’s second-largest crude oil refining capacity (only the United States has more), but without access to crude from the rest of the world, it will do them little good.
The lessons of history haven’t been lost on the CCP. In particular, the CCP is well aware of how, during the 1930s, the United States and its Western allies cut off imperial Japan, an island nation completely devoid of petroleum and other natural resources, from access to their sources of industrial supply. The trade embargo and other sanctions imposed by the United States left Japan vulnerable and isolated and led to the ascension of radical nationalists and an expansionist military to dominate the political power of the era. The result was a war that Japan was destined to lose—for want of resources.
Watching the United States impose sanctions on other energy-producing nations such as Iran, Russia, and Venezuela has only affirmed China’s suspicions and strengthened its resolve.
While other nations such as India, Russia, and South Africa may bristle at China’s dominant hand within BRICS+, the reality is that China is setting the tune, and they’re forced to hum along.
For Saudi Arabia, the alignment with China and the other BRICS members is similarly pragmatic. Saudi Arabia, which produces 13 percent of the world’s oil, is highly dependent on crude exports as its most important revenue source. Saudi Arabia’s long-standing relationship with the United States has been under increasing strain in recent years. The United States, along with the nations of the European Union, have gone out of their way to tell the world that they want to eliminate dependence on fossil fuels, and oil in particular, within a decade.
Being no fools, the Saudis have wisely determined that they will focus their attention on those client nations such as China and India who have made it clear that they have no intention of reducing their reliance on oil as the driver of their economies.
To this end, the Saudis are willing to get into bed with Iran, their historical enemy and regional competitor, under the rubric of “the enemy of my enemy is my friend.”
While the United States has abundant crude oil production capacity, as well as refining, the nations of Europe and the West are now increasingly at risk. This could eventually lead to geopolitical instability that should concern us all.
