UAE and Saudi Arabia Officially join BRICS
In a historic step last year, the United Arab Emirates, Saudi Arabia, and Egypt were among the six states that issued invitations to join the BRICS.
The United Arab Emirates and Saudi Arabia officially joined this powerful economic partnership on January 1, 2024.
A Coalition for Economic Growth and Global Influence
BRICS, comprising Brazil, Russia, India, China, and South Africa, aims to bolster economic growth, amplify geopolitical influence, and collaboratively address global challenges. Despite limited recent trade agreements within the group, historical economic interactions among existing members suggest that significant surges in trade and investment flows for the newcomers are not imminent.
Challenges and opportunities
The new entrants, spanning diverse developmental stages, face distinct economic hurdles. From Ethiopia's GDP per capita at $1,220 to the UAE's substantial $51,456, this diversity highlights the varied economic landscapes. Experts suggest that while geopolitical advantages may surface in the short term, immediate economic gains for the UAE and Saudi Arabia might be constrained.
BRICS as a geopolitical challenger
Diverse political aspirations among the members of the BRICS give rise to a multifaceted terrain. Countries such as Russia and China view it as a geopolitical rival to the West, whereas oil-rich nations like Saudi Arabia and the UAE seek to extend their influence beyond the Middle East and Africa.
Trade prospects and bilateral cooperation
Zahabia Gupta, Director of Sovereign Ratings at S&P Global Ratings, suggests that while higher bilateral trade cooperation is conceivable, it's not guaranteed given the track record among the original BRICS members. For the UAE, joining the bloc offers opportunities to broaden economic collaborations globally, particularly with China and India.
Strategic Benefits for the UAE
The UAE, with its well-established financial sector and diverse investments, anticipates advantages in trade and investment within the BRICS framework. Joining the alliance opens avenues for development finance, crucial for funding ambitious projects and reducing reliance on oil.
Saudi Arabia's Vision 2030
Saudi Arabia, a dominant force in oil production, sees its inclusion in the BRICS as aligned with its broader geopolitical strategy. This move supports the kingdom's Vision 2030 program, aiming for economic diversification beyond oil. Joining BRICS positions Saudi Arabia to strengthen collaborations in energy, trade, and infrastructure with fellow member states.
Moreover, the UAE and Saudi Arabia's formal entry into the BRICS signifies not just economic shifts but geopolitical and strategic realignments, opening doors to new collaborations and opportunities on the global stage.