The BRICS Juggernaut

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>>> Why does Saudi Arabia want to join BRICS


Modern Diplomacy

June 18, 2023


https://moderndiplomacy.eu/2023/06/18/why-does-saudi-arabia-want-to-join-brics/


Saudi Arabia has become a dialogue partner in the SCO. She also intends to join the BRICS, which will bring certain advantages to Riyadh, the online ‘Maaal’ newspaper reported. According to the author of the article, BRICS intends to put an end to Western hegemony, which is precisely in the interests of the Arab monarchy.

The Cabinet of Ministers of Saudi Arabia approved a Memorandum on granting the Kingdom the status of a dialogue partner in the Shanghai Cooperation Organization (SCO), founded in Beijing in 2001 to oppose Western institutions. It consists of nine permanent members: China, Russia, India, Pakistan, Iran, Kazakhstan, Tajikistan, Kyrgyzstan and Uzbekistan. Egypt and Qatar have the status of observers or dialogue partners.

The decision to join Saudi Arabia to the SCO came less than three weeks after Riyadh and Tehran agreed to resume diplomatic relations mediated by China. The Shanghai Cooperation Organization seeks to secure a privileged place for itself in the new world order.

Saudi Arabia occupies a high position in the Islamic and Arab world. Saudi Arabia is the largest player in the global energy markets – 19% of the world’s oil reserves; 12% of world production; more than 20% of oil exports on world markets. Proved oil reserves are approximately 267 billion barrels, and production is more than five million barrels per day, both domestically and abroad.

The volume of gold and foreign exchange reserves, according to statistics from the Central Bank of Saudi Arabia, amounted to $693 billion at the end of 2022. Therefore, it is an important player in the global financial and investment markets. Every international organization seeks to get the Kingdom as an ally, as this ultimately has a positive effect on their strength and global influence.

The entry of Saudi Arabia into the BRICS will benefit the participating countries and strengthen the position of the organization on the world stage. The Kingdom will not be left out either. It will benefit from the markets, opportunities and resources of the BRICS countries. This organization includes the main developing economies of the world (about 41% of the world’s population). BRICS is a huge market that can absorb the exports of any economy, not to mention huge investment opportunities. In 2022, the total nominal GDP of the BRICS countries was $24.2 trillion (25% of total world output). China alone accounts for almost 70% of the total output of the BRICS group.

China and India, members of the BRICS, are the main markets for oil imports from the Gulf countries, as well as the main trading partners for Saudi Arabia and the Gulf countries. Joining the BRICS will strengthen economic cooperation between the Kingdom and the participating countries, and will contribute to the growth of the Saudi economy in the future.

Despite the obvious advantages, Riyadh’s accession to the BRICS may lead to an aggravation of relations with the West, especially with America. Therefore, he must carefully weigh all the pros and cons before making a final decision, and also take into account the following factors.

The United States is the fifth largest trading partner of Saudi Arabia with a trade volume of 151.4 billion rials. Washington considers the Kingdom to be its strategic ally in the Persian Gulf region. He is Riyadh’s largest arms exporter and largest foreign investor. US investment in Saudi Arabia is $800 billion, while China is only $100 billion.

The accession of Saudi Arabia to the BRICS will accelerate the economic diversification and development of the country and reduce its dependence on Western blocs. On the other hand, there are potential risks and challenges, the most important of which is the intensification of geopolitical competition between the West and the East, led by the BRICS, which will have a negative impact on the Kingdom, which has long been part of the Western camp.

In 2022, the global trade volume of the G7 countries amounted to $6.3 trillion (28.1% of total world exports), while imports amounted to $7.6 trillion (33.5% of total world imports). The volume of world exports of the BRICS group amounted to $4.6 trillion (20.7% of total world exports), and imports – $3.9 trillion (17% of total world imports).

Saudi Arabia wants to increase the share of non-oil exports to 50%. Thus, the possible accession of Riyadh to the BRICS will help increase Saudi energy exports in exchange for opening the Kingdom’s markets to Chinese imports and reducing dependence on imports from Western countries.

The escalation of the conflict in Ukraine into a global confrontation involving the West, on the one hand, and China, on the other. Inevitably, there will be a division of countries into eastern and western camps. No one can remain neutral. BRICS will become a kind of Eastern ‘umbrella’ that will not leave small states to be torn to pieces by Western powers.

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