Initially it emerged as a group of countries with emerging economies. However, the members of the group BRICS (Brazil, Russia, India, China and South Africa) became in the last decade a group that seeks to consolidate an alternative geopolitical model to that of the seven main economies of the world (G7). Venezuela, drowning in a new recession, sees in this group an alternative to its financial problems and especially, an option to evade the trade sanctions imposed by the United States and the European Union.
The BRICS group represents more than 40% of the world’s population and around 26% of the global economy and offers an alternative forum for countries outside diplomatic channels that are seen as dominated by traditional Western powers.
BRICS in the crosshairs
Not in vain, Nicolás Maduro has been talking for months about the need for Venezuela to join the BRICS group. On his recent visit to Brazil, he took advantage of the meeting with President Lula Da Silva to reiterate his intention to include Venezuela in the group of emerging economies. In these meetings, the Venezuelan president explained to his peers that he requires more economic and commercial support in view of the sanctions that the United States maintains on Venezuela.
It should not be ignored that, since the invasion of Ukraine, the distance between the West and the BRICS countries has increased. None of the members of the group participate in the sanctions against Moscow.
Maduro also sees an opportunity in Lula’s proposal to create a common currency for South America, firstly to try to evade sanctions and secondly, because today 53% of commercial transactions in Venezuela are carried out in dollars, despite the efforts of the Venezuelan regime to de-dollarize the economy.
The formal request to join the BRICS group was presented by the Venezuelan regime during the first days of August. Now it only has to wait for the approval that must take place during the summit of the group scheduled to take place from August 22 to 24 in Johannesburg.
However, to date there are no clear criteria for admitting new members to the group, except in the case of large, rapidly growing economies with a high level of economic development.
Currently, China is the 2nd economy in the world; India, the 5th; Russia, the 11th; Brazil, the 12th; and South Africa, the 32nd.
But divisions among BRICS members over the criteria for admitting new members may prevent any major announcements at the summit, as the bloc operates by consensus.
Together with Venezuela, they have presented their petition to include Algeria, Argentina, Bahrain, Bangladesh, Belarus, Bolivia, Cuba, Egypt, Ethiopia, Honduras, Indonesia, Iran, Kazakhstan, Kuwait, Morocco, Nigeria, Palestine, Saudi Arabia, Senegal, Thailand, United Arab Emirates and Vietnam.
Venezuela looks at the development bank
The BRICS founded the “New Development Bank” (NDB) in 2014 with an initial capital of US$50 billion as an alternative to the World Bank and International Monetary Fund. In addition, a liquidity mechanism, the Contingent Reserve Agreement (CRA), was created to support affiliates with payment difficulties.
The BRICS NDB bank has already been opened to new members. In 2021, Egypt, the United Arab Emirates, Uruguay and Bangladesh subscribed to shares in the institution, although well below the initial $10 billion in deposits from each of the founding members.
In the case of Venezuela, it is not clear if to enter the bank you will have to buy shares of the institution, or the promise of giving the founding members access to Venezuelan oil will suffice.
As Caracas tries to enter the BRICS group, the internal dynamics deteriorate. According to the Center for Documentation and Analysis of Workers of the Venezuelan Federation of Teachers (Cendas-FVM), the minimum monthly salary in Venezuela does not reach four dollars. According to the economic analysis body attached to the Venezuelan Federation of Teachers (FVM), the minimum salary of 130 bolivars, in force since March 15, 2022, is equivalent to about $3.90.
Oil as collateral
To justify joining the group of countries that make up the BRICS group, despite the economic recession, Venezuela promises to make its oil deposits available to this instance.
According to Delcy Rodríguez, executive vice president of Venezuela, the leadership that runs the country is ready to offer “the largest oil fields in the world at the service of the BRICS energy commission. The country will assist in the development of new cooperative relations and the creation of a new multipolar world.”
According to Rodríguez, Venezuela is “at the forefront of the process to build international relations free of hegemony, blackmail and unilateral restrictive measures that flagrantly violate international law.”
“The people of Venezuela demand that the illegal sanctions be lifted,” Rodríguez explained. This world order is finished. Venezuela is “building a new multipolar world” together with the BRICS, Rodríguez said.
common currency
Although the consolidation of a common currency among the BRICS is still premature, the president of Brazil constantly insists on this idea. “We must work on a common currency between our countries, in such a way that we can be independent of the dollar, it is not possible that we do not have more freedom to negotiate, my dream is that the BRICS have a currency just like the Union has European with the euro”.
The idea of an alternative currency to the dollar is very attractive to the Venezuelan regime. The vice president of the government recently explained at the summit of countries of the Eurasian Economic Union that “a currency that serves the world is necessary (…) Like the BRICS countries, we are heading towards the creation of a new international financial scaffolding that allows give freedom to commercial and financial economic relations”
The summit without Putin
The Johannesburg summit will not be attended by Russian President Vladimir Putin. As indicated by the President of South Africa, Cyril Ramaphosa, his Russian counterpart, Vladimir Putin, will not attend the summit of the group of emerging economies to avoid the execution of an international arrest warrant by the International Criminal Court that weighs on the head of the Kremlin.
