Iran’s membership in the BRICS group of emerging economies is a significant national, regional and international development, which is important both to Tehran and BRICS members, including China and Russia.
In recent years, there has been a lot of focus on Iran’s membership in global political and economic organizations, institutions and groups in order to spur economic growth and provide a ballast in the face of geopolitical and structural changes.
BRICS has gained a special place in Iran’s foreign policy due to its increasing importance in the international political economy and geopolitical developments.
The Islamic Republic has good political relations with all five main members of the BRICS group consisting of Brazil, Russia, India, China and South Africa.
Tehran is motivated by the international prestige, the geopolitical and geoeconomic linkage with the emerging world powers, and the regional and international status which joining BRICS can potentially bring in.
New economic partners are about to come out of the woodwork after membership in BRICS and access to new financial resources, technological findings, knowledge-based production methods in agriculture, food security and trade could enable Iran to better deal with the hobbling impact of sanctions.
BRICS is developing internal institutions for integration and increasing effective economic power in order to support development programs of its members and strengthen their regional and international position.
The establishment of financial institutions independent from Western institutions can be considered the most important success of BRICS in promoting convergence and its most important advantage in the new global economic structure.
Two financial institutions within BRICS are the pillars of the group’s power, which also offer opportunities for Iran.
The New Development Bank of BRICS is the most important economic pillar of BRICS, created with the aim of forging convergence among the members in the world economy.
The bank was established in 2014 with the initial authorized capital of $100 billion to finance infrastructure projects in BRICS countries and other emerging markets. It is headquartered in Shanghai, China.
According to the agreement, the bank “shall support public or private projects through loans, guarantees, equity participation and other financial instruments”.
Another key institution established with the aim of strengthening financial convergence among the members is the BRICS Contingent Reserve Arrangement (CRA).
It is a framework for the provision of support through liquidity and precautionary instruments in response to actual or potential short-term balance of payments pressures.
Although U.S. financial sanctions make it difficult for Iran to access the resources of these two institutions, BRICS has adopted various methods under its de-dollarization scheme to provide loans and services to members, which can reduce the impact of the sanctions.
The New Development Bank uses methods such as providing loans in the national currency of BRICS powers, cryptocurrency and currency swaps.
Bear in mind that Iran’s integration into the BRICS economic framework is fraught with challenges as regards alignment with the economic policies, regulatory mechanisms and commercial laws and regulations of the main and new members.
Ensuring the coordination and synching of the domestic bureaucracy with BRICS institutions in areas such as customs, tariffs and investment regulations requires time and complex expert reviews.
Nevertheless, the geoeconomic benefits of the membership are so many that any misgivings are roundly misplaced.
As a full member, Iran would have closer economic relations with other member countries, which can gradually lead to increased business and investment opportunities.
This cooperation can include various sectors including energy, production, agriculture and technology and provide access to new markets and potential sources of foreign direct investment.
Joining BRICS would also give Iran the opportunity to diversify its economic partners beyond the current circle.
The BRICS countries have an overall population of more than 3 billion people, which potentially provides a vast consumer market for Iranian goods and services. This diversity would reduce Iran’s dependence on a limited set of business partners and increases its economic resilience.