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By Manus Cranny, Jennifer Zabasajja and S’thembile Cele of Bloomberg
Adding countries to the BRICS bloc will matter economically if Saudi Arabia is one of them but otherwise it’s hard to see the point, said Jim O’Neill, a prominent economist and veteran of Goldman Sachs Group Inc.
Saudi Arabia joining would be a “pretty big deal,” he told Bloomberg Television on Monday, noting that the nation’s traditionally close links with the US and its role as the world’s largest swing oil producer would add heft to the club.
Expansion of BRICS membership is top of the agenda for the summit being hosted this week by South Africa in the commercial capital of Johannesburg.
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There have been more than 20 formal applications to join and President Cyril Ramaphosa on Sunday night gave his formal backing to the goal of expanding the club. Russia Foreign Minister Sergei Lavrov in June declared that Saudi Arabia, the United Arab Emirates, Algeria and Egypt were all strong applicants.
The Saudis, who are set to send a delegation to the meeting, are interested in cooperating with BRICS and discussing the possibility of joining as a member, people familiar with the discussions said.
O’Neill said an important question if Saudi Arabia does sign up is what it means for its oil sales to other members.
“The first thing is whether they then start actually pricing the oil in all these local currencies and not in the dollar,” O’Neill, now a cross-bench peer in the House of Lords, said.
A key BRICS goal is to lessen dependence on the dollar by boosting payments in members’ currencies, alongside a long-term ambition to launch a common currency to challenge the greenback. O’Neill said the idea of a BRICS common currency displacing the dollar any time soon was “madness.”
O’Neill, who coined the acronym BRIC in 2001 to describe the rising might of Brazil, Russia, India and China — South Africa joined in 2010, a year after the founding four got together — said making it bigger could make it harder for the club to get things done.
“They’ve had enough difficulty trying to agree just between the five of them,” he said. “So beyond the admittedly hugely powerful symbolism, I’m not quite sure what having a lot more countries in there is going to achieve.”
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