Saudi Arabia and BRICS: The Consequences of Joining, Multilateral Trade and Prospects

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Saudi Arabia’s Membership Process in BRICS

“BRICS Plus” was created in 2017 and provided an opportunity for the multi-dimensional presence of Saudi Arabia in BRICS mechanisms. After the beginning of some changes in foreign policy, Riyadh participated in meetings and summits of the bloc. Over the past two years, leaders and officials of BRICS countries have also welcomed Riyadh’s presence in BRICS or had meetings with the country regarding Saudi Arabia’s attendance and potential membership process.

Riyadh’s good relations with BRICS members assisted with the 15th BRICS summit invite Saudi Arabia to become a full BRICS member from January 1, 2024.

Consequences and Opportunities of BRICS Membership for Saudi Arabia

Saudi Arabia will be considered an official member of BRICS from January 2024. With a soft and cautious reaction to BRICS membership, Saudi Arabia, despite welcoming acceptance, is considering further study and consideration in detail for an “appropriate decision” before the proposed date of accession.

Saudi Arabia used to be one of the main allies of the United States in the Middle East region, but in the past few years, it has been following a non-committal path for various reasons. However, with about 26% of the area and about 42% of the world’s population, BRICS has an indisputable role in the future of the world’s economy and geopolitics.

Riyadh views BRICS and other structures such as the Shanghai Cooperation Organization as key to increasing its geopolitical influence.

For some actors such as Saudi Arabia, multilateralism and attention to national interests, creating a more neutral world order, strengthening the multipolar world order, being comprehensive, and working with everyone play a role in paying more attention to BRICS. Also, the BRICS members’ close ties with the Gulf Cooperation Council have expanded with both China and India currently negotiating free trade agreements.

Apart from the areas of convergence, the BRICS Plus-GCC partnership to promote geopolitical and geo-economic cooperation, BRICS’ attention to anti-terrorism, disarmament, and nuclear non-proliferation have provided more incentives for Saudi Arabia to participate in BRICS.

The approach of the BRICS New Development Bank in granting loans and focusing more on infrastructures is happening now, while a full participation of Saudi Arabia in the bank and gaining voting power will probably lead to a greater role of Saudi Arabia in financial and technical assistance, granting soft loans, supporting sustainable development, together with mutual investment in BRICS projects.

Saudi Arabia, with its strong financial support and the possession of huge reserves of gold and foreign currency (at the end of 2022 reaching US$693 billion), can be a significant weight in BRICS.

Of course, Riyadh does not want to be just a cash fund for weaker countries, but financial win-win benefits in the form of BRICS can also be an important motivation for Riyadh.

The previous and future efforts of BRICS in forming alternative payment systems, non-dollar financial systems, increasing trade with domestic currencies, and creating a common currency can benefit Saudi Arabia and reduce reliance on the US dollar.

With BRICS, Riyadh can have access to cost minimization, e-commerce development, and market integration. Saudi Arabia is the largest Arab economy with an annual GDP of more than one trillion dollars in 2022, with a population of more than 34 million.

Riyadh imports part of its food needs, and with BRICS, it can achieve an easy supply of raw materials, and grains, reducing supply chain costs and meeting strategic and food needs.

Along with the “Saudi Vision 2030” program, an important part of Saudi economic diplomacy is transforming the structure of the economy into a diverse and stable economy, fundamental reforms, improving the position of becoming a global trade and investment hub, and connecting Asia, Europe, and Africa.

The contribution of BRICS in achieving Saudi Arabia’s 2030 vision and development goals and increasing the volume of GDP will be obvious.

Also, Saudi Arabia’s future membership in BRICS may be a step to develop trade with emerging economies, benefit from countries’ experiences and assistance, open new markets, and sign new trade agreements (in Saudi Arabia’s currency and BRICS countries) for faster economic growth of the country.

This can also stimulate Saudi exports, increase trade exchanges, and attract direct and joint investment. The entry of the power of Saudi Arabia into the BRICS club with reserves of about 267 billion barrels has an impact on the global energy market and stability. Saudi Arabia is also a major player in the global petrochemical industry (with a production capacity of over 70 million tons per year).

By joining BRICS, Riyadh can have better access to benefits such as increasing non-oil exports, significant investments in renewable energy, and access to the latest technologies of BRICS members. By joining of Saudi Arabia to the BRICS, its tourism industry will benefit from BRICS membership, and it can improve tourism and increase tourists from the main and new BRICS countries.

Many in Riyadh do not want BRICS to become a purely political and geopolitical club, but of course, the official joining of Saudi Arabia to the BRICS group will increase the economic power of Saudi Arabia in the Middle East and the world.