DUBAI: With a clear vision to dominate the global market by increasing its economic influence, the UAE will join the BRICS grouping formally on January 1 along with four other countries – Egypt, Ethiopia, Iran and Saudi Arabia.
The BRICS, originally comprising Brazil, Russia, India, China, and South Africa, had extended invitations to six nations. While Argentina has not accepted the invitation so far, the entry of the remaining five is already making waves in the global financial market.
With the entry of the new members, India-UAE oil trade has taken a new stride with US dollar no longer required. India recently made the first-ever payment in rupees for crude oil purchased from the UAE. After the UAE, India is determined for similar deals with other suppliers as well.
Payments to Russia
“Internationalisation is a process and there are no targets,” an Indian official was quoted by media on the issue while confirming that India plans to settle all its payments to Russia in its local currency ignoring the US dollar.
In August this year, the current members had extended an invitation to six nations to join their group. The move was aimed to bringing together major energy producers and developing countries with significant energy consumption bypassing their dependence on US dollar for mutual transactions.
The term ‘BRIC’ was coined in 2001 to highlight the robust economic growth rates in Brazil, Russia, India, and China. The group held its first leaders’ summit in 2009 and later invited South Africa to join, expanding its reach to another continent and adding the letter ‘S; to become BRICS.
Approximately 30 countries have expressed their desire to establish ties with BRICS over the years.
The UAE’s entry to BRICS attains special significance for India-UAE relations, as it marks a major leap in the Indian strategy of looking to settle trade in rupees instead of dollars in a bid to cut transaction costs.
The UAE’s entry has also increased its diplomatic and economic options. The development is expected to strengthen its economic ties with China and India, the Emirates’ two largest trading partners. It could also lead its larger role on the world stage.