Economics and politics: What BRICS membership means for Iran

By Syed Zafar Mehdi

TEHRAN, Iran (AA) – At the recently concluded BRICS summit in Johannesburg, Iran’s President Ebrahim Raisi hailed the country’s inclusion in the geopolitical bloc of emerging economies as “a new chapter.”

He emphasized Iran would support the bloc’s de-dollarization drive and use of national currencies.

Upon his return to Tehran, Raisi told reporters that Iran’s induction will tremendously boost the country’s political and economic clout.

He termed the “enhancement of political and economic power” as one of the advantages of BRICS membership and said it promotes convergence and multilateralism.

Foreign Minister Hossein Amir-Abdollahian, in a lengthy social media post, said Iran’s membership strengthens multilateralism and provides a basis to pursue goals of dynamic diplomacy.

He referred to the US withdrawal from the 2015 nuclear deal, the war in Ukraine and other global developments that indicate the era of unilateralism is over, while stressing cooperation with other “independent” bodies, including the Shanghai Cooperation Organization (SCO), Eurasian Economic Union, Central American Integration System and the Association of Southeast Asian Nations among others.

Statements from the two top Iranian officials carried a tinge of celebration and triumph as Iran was finally included in an influential bloc seen as a counterweight to the US and its allies.

For sanctions-hit Iran, which became a full member of the Shanghai Cooperation Organization in July 2022, accession to BRICS is seen by pundits as a new and significant milestone.

“BRICS has in recent years emerged as a viable counterweight to US-led blocs such as G-7, and for a country like Iran reeling under Western sanctions, this announcement is like a whiff of fresh air,” Ebrahim Moqaddam, a Tehran-based economic affairs analyst, told Anadolu.

“More than economic gains, which is the key focus here, it also carries a political message.”

- ‘A large-scale movement’

BRICS has officially invited Iran, Saudi Arabia, Egypt, Argentina, the UAE and Ethiopia to become new full-time members, expanding from five to eleven states.

The original five members of the bloc – Brazil, Russia, India, China and South Africa – are expected to have a combined gross domestic product (GDP) of $27.6 trillion this year, accounting for 26.3% of global GDP.

With the new six members included, the figure jumps to $30.8 trillion, or 29.3% of global GDP.

Iran formally applied for full membership to BRICS – an acronym coined by Goldman Sachs in 2001 – in June last year, barely a week after Raisi virtually addressed the BRICS Plus summit.

Raisi, at the time, voiced his country’s readiness to share its “vast capabilities and potentials” to help the bloc accomplish its goals, while referring to challenges such as “conflicting global trends, unilateralism, nationalistic partialities, sanctions, and coercive economic action.”

Before leaving for South Africa to attend the summit, Raisi described BRICS as a “new emerging power in the world” that brings together “independent countries.”

Farshid Bagherian, a political analyst based in Tehran, said the BRICS bloc, which has now spread its wings to include other emerging economies, is a “large-scale movement.”

What is bringing these countries closer together, he noted, “is not economy as a primary reason but the changing political trajectory” in the world, which calls for cooperation.

- Economic dividends

Earlier this month, at the BRICS: Prospects and Partnership Cooperation conference in Tehran, Amir-Abdollahian described Iran as a “reliable and influential” partner for the BRICS bloc.

He pointed to the country’s strategic geographical location, large oil and gas reserves, affordable transportation and transit, skilled manpower and modern tech as key economic advantages.

On Friday, his deputy for economic affairs, Mehdi Safari, who was part of the delegation to South Africa, said the BRICS accession can pave the way for improved trade ties with member states.

“Iran’s BRICS membership will promote multilateralism and strengthen the country’s political, economic and trade power, and will also weaken unilateralism,” said Safari.

He announced that Dilma Rousseff, the head of the New Development Bank (NDB), will visit Tehran “in the near future” to discuss Iran’s bid to join the multilateral development bank founded by BRICS member states in 2015.

Safari held wide-ranging talks with Rousseff on the sidelines of the summit, discussing among other things, Iran joining the bank, which has been under process since 2017.

“The NDB represents the cornerstone of economic convergence among old and new BRICS members, and opens up a myriad of opportunities for Iran,” Moqaddam told Anadolu.

Iranian state-run news agency IRNA said the NDB can be an alternative to SWIFT, the cross-border interbank payment system that expelled Iranian banks following the reinstatement of sanctions in 2018.

As one of the biggest producers of oil and gas and a transit transportation hub for regional countries, experts opine Iran’s BRICS membership can be a “win-win proposition.”

In terms of total oil reserves, Iran stands on top along with Saudi Arabia and Venezuela among BRICS members and is expected to meet the growing energy needs of the bloc’s member states.

Importantly, non-oil trade between Iran and the five BRICS members surged to $38.43 billion in 2022-23, according to Iran’s Customs Administration, up 14% from the previous year.

Of the five BRICS members, China was Iran’s main trade partner with $30.32 billion, followed by India at $4.99 billion, Russia $2.32 billion, Brazil $466.55 million and South Africa with $322.04 million, according to official data released recently.

- Political benefits

While the focus of BRICS and the SCO is on economics and trade, experts believe Iran joining the two non-Western alliances essentially represents political achievements for the country.

Moments after the bloc revealed its potential new members, Raisi’s deputy chief of staff and close aide, Mohammad Jamshidi, hailed it as a “strategic victory for Iran’s foreign policy.”

His message had political undertones, pointing to the Raisi government’s “Look East” policy, which seeks to evade the effects of US sanctions and explore new political alliances in the neighborhood.

Pertinently, the expansion of BRICS and Iran’s inclusion comes amid heightened tensions between Tehran and Washington in the Persian Gulf after a series of close encounters between their navies.

The situation has become more complex due to the standoff concerning the 2015 nuclear deal and stalled talks amid serious disagreements, despite the two sides signing a prisoner swap deal recently.

On the sidelines of the BRICS summit, Raisi met his Chinese counterpart Xi Jinping and asserted that Iran’s inclusion will “strengthen” the bloc’s plan of confronting “American unilateralism,” a political message from two allies against a common foe.

“Iran’s BRICS entry has both economic and political aspects,” said journalist and researcher Mojtaba Mansouri.

“Economically, Iran stands to benefit if other members demonstrate will to engage with it in practical terms, and politically, Iran wants to show that it cannot be isolated with sanctions.”

He hastened to add that relations between Iran and its neighbors, especially Saudi Arabia and the UAE, will be tested in real terms if all three accept the BRICS invite.​​​​​​​