Southeast Asia’s recent shift toward the BRICS nations (Brazil, Russia, India, China, and South Africa) marks a significant change in global geopolitics, one that has caught many by surprise, especially in Washington.
Malaysia has openly expressed its desire to join BRICS, with Thailand and Vietnam also showing interest. This move reflects a broader trend among ASEAN (Association of Southeast Asian Nations) members, who see potential benefits in aligning with BRICS. This includes countries like Argentina, Egypt, Ethiopia, Iran, the UAE, and Saudi Arabia, which have also expressed interest in joining the group.
Malaysian Prime Minister Anwar Ibrahim, in an interview with Chinese media, highlighted his country’s ambition to join BRICS. He emphasized the appeal of BRICS for countries in the Global South, noting the promise of financial access and a political stance that operates independently of U.S. influence.
This shift is particularly concerning for U.S. President Joe Biden. Since 2021, Biden’s administration has focused on building a regional alliance to counter China’s growing influence and efforts to diminish the role of the U.S. dollar in global trade and finance.
Analyst Hung Tran of the Atlantic Council’s Geoeconomics Center notes a potential democratization of the global financial landscape, where more local currencies could play significant roles in international transactions. Tran suggests that while the U.S. dollar would remain prominent, it could be complemented by other major currencies like the Chinese renminbi, the euro, and the Japanese yen.
Malaysia’s trajectory under Prime Minister Anwar Ibrahim illustrates this shift. Anwar, once a pro-Western finance minister, has now turned toward BRICS, moving away from the policies inspired by Adam Smith that he previously championed. Anwar’s recent statements show a clear support for BRICS and its goals, particularly in challenging the dominance of the U.S. dollar.
Thailand has also declared its intent to join BRICS, aiming to enhance its global presence. Thailand’s Foreign Ministry spokesperson, Nikorndej Balankura, stated that joining BRICS aligns with Thailand’s national interests and would strengthen its international cooperation, particularly in trade, investment, and food and energy security. Soumya Bhowmick of the Observer Research Foundation sees Thailand’s move as supporting China’s broader strategic goals of increasing its economic influence in Southeast Asia.
The BRICS group, initially coined by economist Jim O’Neill in 2001, formally came together in 2009, adding South Africa in 2010 to become BRICS. The group expanded significantly in 2023 by including more Global South nations. Currently, BRICS+ nations represent half of the world’s population and a substantial portion of global trade, including major energy producers and importers.
Analyst Daniel Azevedo from Boston Consulting Group suggests that the expansion of BRICS+ could give the Global South a stronger voice in global affairs and challenge existing international institutions. He believes that BRICS+ provides a platform for emerging markets to collaborate on global issues and promote mutual economic development.
However, the BRICS group faces skepticism about its cohesiveness. Some analysts argue that the group mainly serves to facilitate access to China’s economy. Paul McNamara of GAM Investments questions the economic rationale behind the BRICS without China’s involvement.
In the broader geopolitical context, Vietnam’s recent participation in the BRICS summit in Russia underscores the region’s growing interest in BRICS. Deputy Minister of Foreign Affairs Nguyen Minh Hang expressed Hanoi’s willingness to collaborate with other developing nations.
The shift towards BRICS comes as the U.S. faces its own financial challenges, with national debt nearing $35 trillion. Political dysfunction in Washington has further strained the situation, affecting the government’s ability to fund and implement necessary economic upgrades. This situation contributed to Fitch Ratings downgrading the U.S.’s credit rating in August 2023, citing governance deterioration.
Moody’s Investors Service, which still rates the U.S. AAA, may also reassess its rating amid political chaos and economic uncertainties. These issues put U.S. Treasury securities at risk, particularly given the significant holdings by Japan and China. Any major sell-off could drastically impact U.S. bond yields.
As the Federal Reserve maintains high interest rates, developing economies face increased financial pressures. This environment reinforces the appeal of BRICS for pooling resources to provide financial stability for its members, avoiding reliance on institutions like the International Monetary Fund.
The BRICS currency project, which has gained momentum since mid-2022, aims to create a new global reserve currency. Leaders like Brazil’s President Luiz Inacio Lula da Silva advocate for a BRICS currency to facilitate trade among member countries, reducing dependency on the U.S. dollar.
Economist Vikram Rai of TD Bank sees potential for a multipolar international financial system within the next few decades. This would involve regional currencies and potentially new financial instruments, challenging the dollar’s dominance.
As Southeast Asia pivots toward BRICS, the U.S. risks losing not just economic influence but also its strategic position in a rapidly changing global landscape.
