Why does Algeria want to join BRICS?
Having applied to join the BRICS group of emerging economies last year, Algeria is now trying to get its pending membership finalised.
Following his state visit to China last month, Algerian President Abdelmadjid Tebboune announced that his government had officially applied to join the BRICS Bank, requesting to be a shareholder member with an amount of $1.5 billion.
Set up by the BRICS bloc in 2015, the New Development Bank (NDB) needs to increase its local currency fundraising and lending, especially as founding shareholder Russia is under international sanctions following its invasion of Ukraine.
Initially established with $10 billion in paid-in share capital from each BRICS country, the NDB could do with more funding, and capital from new members is welcome.
"Algeria's enthusiasm is primarily about its economic relationship with China, which Algiers regards as a critical alternative to Western nations as a source of foreign investment"
Comprising Brazil, Russia, India, China, and South Africa, ‘BRICS’ is an acronym coined by a Goldman Sachs economist. Currently, the bloc represents 25% of the world economy and 42% of the global population.
Since around 40 countries have expressed interest in joining the BRICS grouping, its expansion will be the hot topic at the forum’s annual summit in South Africa next week. However, there is a lack of clarity over whether new countries will be added to the core membership or will be given an observer status in a BRICS+ format.
“Around 22 countries have formally approached BRICS for full membership, and an equal number have informally inquired about joining. Notable candidates include Argentina, Iran, Saudi Arabia, and the UAE,” Ashok Swain, Professor of Peace and Conflict Research at the Uppsala University in Sweden, told The New Arab.
“BRICS, representing 31.7 % of global GDP by purchasing power parity, is seen as a powerful force as it has established a bank and increased trade among its members, but opinions on its achievements vary.”
Since China is the largest BRICS economy, convincing Beijing to let Algiers join the forum may have been one of the motives for Tebboune’s recent visit. Encouragingly, Tebboune was given an assurance of investments worth $36 billion in Algeria in the manufacturing, technology, and agriculture sectors. Having a comprehensive strategic partnership with China since 2014, Algiers is well within Beijing’s sphere of influence.
“Algeria’s enthusiasm is primarily about its economic relationship with China, which Algiers regards as a critical alternative to Western nations as a source of foreign investment,” Michael Tanchum, non-resident Fellow in the Economics and Energy program at the Middle East Institute (MEI), told The New Arab. “Algeria has formally partnered with China in its Belt and Road Initiative.”
But Tanchum says that “Algeria needs to jump ahead of the herd so as not to get lost in the shuffle among the many nations that have applied for BRICS membership. This is particularly true regarding Algeria’s regional rival Morocco. While the development of Algeria’s manufacturing sector has stalled, Morocco’s industries have been gaining speed”.
He noted, “Although China is careful to balance its relations between Rabat and Algiers, Beijing is eager to deepen its involvement with Morocco’s rapidly advancing automotive industry as recently evidenced by a leading Chinese EV battery maker deciding to open a new plant in Morocco”.
Despite economic setbacks, the North African country’s proximity to the European Union and the Middle East, a large consumer market, and good terms with all the BRICS member countries, all work in its favour.
As early as last year, Moscow had indicated that it had no objections to Algeria’s membership bid, so there should be relatively few hurdles in acquiring membership.
"Algeria needs to jump ahead of the herd so as not to get lost in the shuffle among the many nations that have applied for BRICS membership. This is particularly true regarding Algeria's regional rival Morocco"
The pros and cons for Algeria
Firstly, the North African country would be able to strengthen its partnership with China as well as Russia, which Tebboune also recently visited. At the virtual BRICS summit in 2022, Tebboune was the first guest to address the gathering and he called for “a new economic order where parity and equity between countries will reign”.
“The application of Algeria to be a member of the BRICS is part of its strategy to align with China in order to free itself from the pressures from the West, particularly France,” Swain told TNA.
“Algeria is also one of the few countries in Africa which has opposed any military intervention in Niger. Like the other 40 odd countries, Algeria sees China as the other superpower and wants to be part of the BRICS, so it can manage to negotiate its national interest among the global powers well.”
Secondly, loans would be available from the NDB once Algiers becomes a member, giving it an alternative option to the International Monetary Fund (IMF) and the World Bank. As Tebboune said in an interview in April this year, “Joining BRICS will make Algeria stronger economically”.
If Algeria succeeds in joining the BRICS, it will be the second African country to become part of the group. But while South Africa had a GDP of $353.26 billion in 2021, Algeria’s GDP will only reach around $206 billion in 2023, as per IMF predictions.
Thirdly, Algeria’s entry into the BRICS could bring it even closer to Russia, creating further controversies. Only last year, there were calls from 27 bipartisan American congress members last year to sanction Algiers due to its arms imports from Moscow. At the same time, Algeria was accused of financially supporting Russia by being among its “top four buyers” by 17 members of the European parliament.
In the meantime, Algeria has also quadrupled its wheat purchases from Russia in 2022, compared to the previous year. However, none of the countries in the BRICS bloc have taken part in sanctions against Russia as they all have some degree of economic interdependence with Moscow.
Finally, Algiers may be hoping to diversify away from the US dollar as most BRICS economies have been going in that direction. Looking for alternatives to the US-dominated SWIFT payment system by using digital or physical currencies, the BRICS group is looking for a way to avoid the threat of sanctions.
Practically though, de-dollarisation is not possible as most of the BRICS economies, and even its aspiring future members, remain reliant on the US dollar and there is no real alternative in the near future.
Realistically, the BRICS group only offers a support system for emerging economies that have had a tough time dealing with the IMF’s structural adjustment and austerity programs.
In the larger picture, a stronger BRICS could increase Beijing’s political and economic clout in the global order. The original four countries in this bloc - Brazil, Russia, India, and China - are all emerging markets with massive potential for industrial growth and China leads as the biggest economic power.
"BRICS, representing 31.7 % of global GDP by purchasing power parity, is seen as a powerful force as it has established a bank and increased trade among its members, but opinions on its achievements vary"
“As BRICS celebrates its 15th year, analysts assess its progress differently, with some emphasising its impact on global geopolitics and economics,” Swain observed. “The group’s potential as an alternative to Western dominance and its efforts toward global multi-polarity are subjects of ongoing discussion.”
Representing more of the Global South, the BRICS grouping was seen as an alternative to G7 countries, but it is not a threat to the Western bloc as yet. So far, the group’s focus has only been on developing options for better commercial ties.
Sabena Siddiqui is a foreign affairs journalist, lawyer and geopolitical analyst specialising in modern China, the Belt and Road Initiative, Middle East and South Asia.
Follow her on Twitter: @sabena_siddiqi