Egypt strategically placed to join Brics
Egypt joined Ethiopia and South Africa as one of the three African countries in the Brics group at the beginning of January when its membership was officially activated by Russia, the current president of the group. Egypt is among countries seeking to free themselves from the Western stranglehold by diversifying partnerships in step with shifts in the global order. Joining Brics is a logical move for a country whose foreign policy had become largely China-facing over the years.
It is also a testament to the West’s rapidly declining global influence. The West has not been able to save Egypt from an economic recession. The country’s joining of Brics coincided with its worst economic crisis in decades, characterised by record inflation at 38%, a shortage of foreign currency that has affected food imports, reduced access to international finance, and exorbitant interest payments.
Millions of Egyptians have been left facing the risk of falling into poverty as their real incomes have been eroded by inflation. The crisis was caused by a combination of the government’s reckless spending on mega infrastructure and the disruptions caused by the pandemic, the RussiaUkraine war and the Israel-Palestine conflict.
The country has been forced to take an $8bn (R150bn) loan from the IMF, accompanied by the usual onerous conditions including the liberalisation of exchange rates, cutting public expenditure, deregulating the economy and liberalising trade. These are conditions that have been repeatedly imposed on developing countries whenever they find themselves in a financial crisis.
Egypt is joining Brics hoping not only to find economic salvation but to participate in the creation of a global economic architecture in which developing countries will be more immune to recurring financial crises such as the one it is going through. As the third biggest economy in Africa, with a gross domestic output of more than $420bn, and one of the most influential powers not only in Africa but also in the Middle East and the broader Arab and Muslim world, Egypt was perhaps an obvious pick for Brics membership. Its belonging to a multitude of circles will make Brics a diverse, inclusive and more representative grouping. This is critical because as a bloc that aspires to be the voice of the Global South, Brics must accommodate all the diverse constituencies of the developing world.
Egypt’s diplomatic heft in the Middle East and North African regions gives Brics a direct channel to address the endemic instability and violence that have affected these regions since time immemorial. The alternative global order that Brics countries seek to forge cannot be realised without peace and stability. Egypt will play a crucial role in ensuring that Brics has a handle on a region that is home to most of the world’s hotspots of violence and conflict. The country was already in the Brics fold, having been a regular attendant at the Brics Outreach meetings that take place on the sidelines of the group’s summits and having joined the Brics New Development Bank (NDB) in March 2023.
Egypt possesses immense geostrategic value because of its unique location. It sits on the confluence of the Red Sea and the Mediterranean and has sovereignty over the Suez Canal connecting the two seas, thus facilitating the flow of goods between Asia, Africa and Europe. According to the UN Conference on Trade and Development, about 12-15% of world trade passed through the Suez Canal in 2023, making it one of the most critical waterways for global trade.
As Brics seeks to enhance South-South trade, few countries are better placed to become a hub than Egypt.
The North African country is also a potential energy powerhouse with natural gas reserves of 77-trillion cubic feet (which ranks 16th in the world) and a production of more than 1.7-trillion cubic feet, making it one of the top 20 producers in the world. However, a lack of investment has suppressed Egypt’s natural gas production potential. This is an area in which Brics is likely to come in handy through potential foreign direct investment in the sector.
It is important for Brics to invest in its members’ energy resources to increase its influence on the global energy markets. Egypt offers export market and investment opportunities to companies in Brics countries, including South Africa. It is one of the countries with a high concentration of middle-class people, with about 80% of its 111-million people falling into that classification. The high consumption and spending patterns associated with the middle class make Egypt a potentially significant export market for Brics countries and the broader Global South. Egypt already enjoys trade worth $31bn with Brics countries. Trade relations have the potential to grow significantly. However, this will not be realised without an action plan being put in place.
The Brics 2025 economic partnership strategy that was adopted in 2020 aims to boost intra-Brics trade and investment. Disappointingly, not much has been done to turn the strategy into an action plan. Perhaps the presence of countries that are hungry for investment and trade opportunities, like Egypt, will spur the group into implementing its trade and investment frameworks. As it faces a forex crunch, Egypt has been actively involved in discussions with the Brics members such as China, Russia and India over the use of local currencies in trading critical commodities such as rice, wheat and oil. Hence, its coming into Brics is likely to accelerate the group’s de-dollarisation plan, which is a key step in migrating away from the Western-dominated global order.