UAE, Saudi Arabia Officially Join BRICS
As of January 1, 2024, the UAE and Saudi have officially joined the economic group but what does this mean?
The UAE, Saudi Arabia, and Egypt, are among six nations that received invitations to join BRICS, last year. As of January 1, 2024, the UAE and Saudi have officially joined the economic group but what does this mean?
BRICS, an acronym for Brazil, Russia, India, China, and South Africa, is a coalition of economic powerhouses, founded to foster economic growth, enhance geopolitical influence, and collectively address shared global challenges.
Given the lack of recent trade agreements within the group and considering the historical economic interactions among existing BRICS nations, limited increase is anticipated in trade and investment flows for the new entrants.
The new participants exhibit diverse developmental stages and confront distinct economic hurdles. This diversity is evident in their GDP per capita, spanning from $1,220 in Ethiopia to $51,456 in the UAE.
The UAE and Saudi Arabia’s entry into the BRICS coalition may wield geopolitical advantage in the near term but promises limited economic gains, experts told Arabian Business in a recent interview.
Upon their official inclusion in the bloc, the UAE and Saudi Arabia, as significant emerging economies, will wield increased influence in global affairs. While this is anticipated to enhance their economic collaboration with fellow member states, the immediate benefits for their individual economies may not be as pronounced.
Differing political ambitions exist among BRICS members, with nations such as China, Russia, and Iran viewing it as a geopolitical challenger to the West. Conversely, oil-rich producers like Saudi Arabia and the UAE aim to broaden their influence beyond the Middle East and Africa.
“Higher bilateral trade cooperation and investment links with BRICS countries are possible but not certain given the track record among the original BRICS members. China and India are already key trade partners and importers of Gulf oil,” said the Director of Sovereign Ratings at S&P Global Ratings, Zahabia Gupta.
Joining the bloc will enable the UAE to broaden its economic collaborations with nations globally.
Given its well-established financial sector and substantial investments in diverse fields, including energy and infrastructure, the UAE stands to gain from expanded trade and investment prospects within the BRICS framework.
BRICS inclusion: UAE and Saudi advancements
Additionally, becoming a part of the alliance could provide the UAE with access to development finance, essential for funding ambitious projects and initiatives geared toward diversifying its economy, lessening its reliance on oil.
“We respect the vision of the BRICS leadership and appreciate the inclusion of the UAE as a member to this important group. We look forward to a continued commitment of cooperation for the prosperity, dignity and benefit of all nations and people around the world,” Sheikh Mohamed said.
On the contrary, Saudi Arabia, a dominant force in oil production and a significant regional influence. The kingdom’s inclusion, backed by countries within the BRICS group, aligns with Saudi Arabia’s broader geopolitical strategy of broadening its alliances and achieving the long-term objective of economic diversification beyond oil.
Moreover, this presents an opportunity for the kingdom to strengthen its collaborations with fellow BRICS members, particularly in the realms of energy, trade, and infrastructure.
By joining the group, Saudi Arabia stands to enhance its standing in the global energy market and gain access to development funding for its ambitious Vision 2030 programme, aimed at reshaping the nation’s economy for a post-hydrocarbon era.
