September 15, 2023
by Warren L. Nelson
Iran joined the BRICS international grouping in August, a development the regime is touting as having life-changing impact, meaning that Iran has defeated the United States and emerged from isolation to gain a major role in running the world.
Actually, however, Iran’s membership in BRICS is unlikely to have much meaning at all for Iran and certainly won’t help bail out its struggling economy.
BRICS stands for Brazil, Russia, India, China and South Africa, the members of the group until it invited six other countries in August to join as of next January 1. It was founded in 2000.
Iran is telling its people that BRICS is THE major organization of non-Western powers poised to stand as an alternative to the Western way of doing business.
Nour News, an outlet of Iran’s Supreme National Security Council, said Iran’s membership in the group “signifies the breakdown of the old order that was rooted in geopolitics and the rise of the new order founded on geoeconomic cooperation.” But the old order is very much grounded in economics; that is what the United States brought to the fore after World War II with such institutions as the World Bank and the International Monetary Fund (IMF).
But BRICS is little more than a letterhead organization. Even after 24 years in existence, it has no secretariat. In others words, it has no staff that can take action to carry out policies. It does little more than meet annually at the chief of state level and pontificate. Then the chiefs go home. BRICS doesn’t even have a logo.
In August, the five BRICS members invited six countries to join one from Latin America (Argentina); one from Africa (Ethiopia); and four from the Middle East (Iran, Saudi Arabia, UAE and Egypt).
The 11 old and new members do not share the same goals and outlook on the world, though they do agree they want to have more say in how things are run by the global elite of Western Europe, North America, Japan and a few others like Australia. Iran tells its people that BRICS will advance the Islamic Republic’s goal of destroying the global power of the US dollar. But while many of the old and new BRICS members complain of the dollar’s role, few economists believe BRICS is in any position to do anything about it. The two BRICS members who are most adamant about destroying the US dollar are Iran and Russia the two countries under US sanctions.
Iran presents its non-use of the dollar as its initiative to hurt the US. But US sanctions bar Iran and Russia from using the dollar. Iran and Russia now want the rest of the world to stop using the dollar. Most finance ministries around the world see this as a prescription to reduce their economies to crumbs, not to empower them as Iran and Russia say.
BRICS is trying to rival the World Bank and IMF. It formed what is called the New Development Bank a decade ago. Iran applied to join in 2017. But it is still talking to the bank and hasn’t been able to resolve all the issues to become a member. That doesn’t bode well. (The August BRICS summit didn’t provide any role for the bank, which has said it won’t consider any projects in Russia while it is under sanctions.)
The New Bank long ago pledged to make much of its lending in local currencies to reduce countries’ vulnerability to dollar exchange rate fluctuations. But of nearly $33 billion in loans approved by the bank, two-thirds have been denominated in the US dollar.
Thomas Lodge a professor at the University of Limerick in Ireland, said, “An awful lot of the hype about BRICS is aspirational. If they want a rebalancing of economic power and credit institutions not controlled by Western countries, BRICS has achieved very little frankly toward that goal.”
The Islamic Republic seems to think that much international business is conducted in US dollars because the United States throttles the global economy and forces others to deal in dollars. It sees its mission as one of freeing the oppressed from the nasty Americans. Actually, however, most people conduct most transactions in dollars simply because it is easier and cheaper for them. It is an administrative decision, not an ideological decision.
Speaking during the annual BRICS summit, President Raisi said, “The benefits of the Islamic Republic of Iran’s membership in BRICS will be surely historic. It will open up a new chapter and constitute a new step in the direction of promoting justice, equality, ethics and sustainable peace worldwide.” Strangely, he didn’t say anything about economics.
Ali Larijani, former speaker of the Majlis and a one-time conservative leader who has been moving in recent years more to the center, said the problem with the establishment’s foreign policy is that it has a major goal of gaining influence in foreign capitals when the paramount objective should be to ensure Iranians enjoy stable lives and are enabled to chart their future with confidence.
Many critics, both within Iran and outside, see the Islamic Republic as panting to join BRICS mainly as a prestige move, believing that membership will confer status on the Islamic Republic and its leadership. Four decades ago, the revolutionaries who toppled the Shah accused him of pursuing policies for prestige purposes. In fact, it was one of the main rationales given for deprecating and overthrowing the monarchy. Kouroush Ahmadi, a retired Iranian diplomat, told the Entekhab website (since shuttered by the regime), “I can hardly contain my laughter when I hear Iranian officials suggesting that BRICS will undermine the international dominance of the US dollar.” He said Iranian officials must come to understand it is not membership in such groups as BRICS that Iran needs, but rather to sort out the nuclear issues through negotiations and accept the terms of the Financial Action Task Force (FATF), on whose blacklist Iran remains.
