Against the backdrop of a contentious struggle to maintain U.S. financial stability, senior officials from BRICS nations gathered in South Africa on June 2 to strategize an economic defense against the perceived Western opposition. Since South Africa's inclusion in 2011, the BRICS alliance, composed of Brazil, Russia, India, China, and South Africa, has maintained a steadfast five-member collation. But this may soon change as the group considers adding new members, including Kazakhstan. Emerging propositions for a new currency and an expansion of the BRICS bloc is posing a threat against U.S. economic security, and Kazakhstan’s growing engagement with the bloc is looking to complicate U.S.-Kazakhstan relations. 

Representing Kazakhstan at the June 2 summit was First Deputy Foreign Minister Kairat Umarov, who engaged in discussions centered on bolstering economic cooperation with BRICS and exploring the possibility of Kazakhstan's membership. During the ministerial panel, Umarov delivered an address emphasizing the significance of collectively resolving urgent geopolitical issues. Particularly, Umarov highlighted the burgeoning trade relations between BRICS members and Kazakhstan, noting that its trade turnover with member states exceeded US$50 billion in 2022.

Driven by the aim of fortifying ties with BRICS member states, Umarov also held a meeting with South African Minister of International Relations and Cooperation, Naledi Pandor, to explore areas of mutual interest. South Africa is one of the few countries in Africa that holds a Kazakh embassy, and although economic and security cooperation is limited, they have notably developed a joint venture, Kazakhstan Paramount Engineering (KPE), to create the Barrys 8X8 infantry combat vehicle (ICV).

Kazakhstan's growing inclination towards BRICS can be attributed to its multi-vectored foreign policy. But, with rapidly growing engagement with China in this past year, concerns are beginning to arise regarding Kazakhstan's divided loyalties. Despite Kazakhstan’s economic cooperation with the United States, the nation is coincidentally seeking to strengthen its relations with BRICS and has repeatedly expressed its desire to join the bloc. 

"The Republic of Kazakhstan is interested in joining BRICS, which has already become an effective and efficient platform for the discussion of current issues, serving as an example of cooperation among developing economies," said Umarov on the sidelines of the June 2 summit.

However, at the same time, officials from Kazakhstan are voicing interest in an enhanced U.S.-Kazakhstan relationship, bolstered by U.S. investments and infrastructure projects. Although Kazakhstan’s ambassador to the United States, Ambassador Yerzhan Ashikbayev, stated at the 7^th Trans-Caspian Forum that “the Caspian Region should not become an environment for geopolitical battles,” Kazakhstan’s inclination to join BRICS is signaling a trend towards U.S. adversaries, a move which is bound to draw a response from the United States. 

While Kazakhstan's expressed interest in joining BRICS is not a recent development - the country has been vocal about its willingness to join the group for several years - the current geopolitical landscape, particularly China's recalibration of its foreign policy, presents a potential opportunity for Kazakhstan to realize its aspirations. A significant indication came on May 19, 2022, one year prior to the June 2 summit, when China's former Foreign Minister, Wang Yi, expressed the hope of incorporating new members into the bloc. He stated, "China proposes to start the BRICS expansion process, explore the criteria and procedures for expansion, and gradually form a consensus." This signal from the Chinese side underscored the intent to broaden the scope of BRICS.

For China, a strengthened BRICS alliance holds multifaceted advantages, including the ability to navigate trade restrictions, bolster the implementation of the ambitious Belt and Road Initiative, and grant greater economic autonomy to member states. As the bloc expands, the interests of China and Russia stand to be further consolidated, potentially placing other member states in an intricate position vis-à-vis their Western counterparts. The implications of such an expansion extend beyond economic considerations and delve into the realms of geopolitics and international power dynamics. 

Although Kazakhstan has witnessed a discernible departure from Kremlin influence since the onset of the conflict in Ukraine, it appears that the nation is increasingly turning towards China and its partners who oppose the West. Chinese influence has long permeated Central Asia, but its present scope is unprecedented. 

However, this trend toward BRICS isn’t specific to Kazakhstan. Bloomberg reported that up to 19 countries have expressed interest in joining BRICS, with 13 having received formal invitations to join the coalition. Among the potential future members are Argentina, Indonesia, Iran, Kazakhstan, Türkiye, and Saudi Arabia, all of whom are part of the 'Friends of BRICS' coalition. As BRICS deliberates on the possibility of a common currency to facilitate international trade, emerging economies find compelling incentives to align themselves with this counter-West bloc.

In March 2023, speculation began to circulate regarding the initiation of a new currency within the BRICS framework. The St. Petersburg International Economic Forum in New Delhi, India served as a platform for State Duma Deputy Chairman Alexander Babakov to underscore the significance of establishing an alternative to the US dollar for intra-bloc transactions. 

“Its composition should be based on inducting new monetary ties established on a strategy that does not defend the U.S.’s dollar or euro, but rather forms a new currency competent of benefiting our shared objectives,” said Babakov. 

As BRICS leadership begins to doubt the United States’ ability to responsibly govern global economics, they have begun searching for an alternative trade medium that can function without the US dollar, SWIFT, or U.S.-led sanctions and trade regulations. South African Minister of International Relations and Cooperation, Naledi Pandor, added that the aim of this economic reform is to reduce the dominance of the US Dollar and offer emerging economies the option to avoid being dependent on a single currency. 

“The systems currently in place tend to privilege very wealthy countries and tend to be really a challenge for countries, such as ourselves, which have to make payments in dollars, which costs much more in terms of our various currencies”, said foreign minister Naledi Pandor.

There's been back-and-forth debates over the medium of the currency and how the currency will be backed. One idea is to back the currency with gold, another is to make the currency digital. Either way, what has been made clear is which country will likely dominate the tender as a BRICS-backed tender would likely require a centralized bank. 

With the New Development Bank (NDB), formerly known as the BRICS Development Bank, set to be the holder of the bloc’s monetary reserves, the planned BRICS currency is poised to fall under the shadow of China's dominance, with Shanghai positioned at its center. The NDB was created in 2014 by BRICS (later, joined by Bangladesh, the United Arab Emirates, and Egypt) as an alternative to the U.S.-based World Bank. And, in March 2023, the former President of Brazil, Dilma Rousseff, took leadership of the NDB. With his new appointment, Rousseff announced plans to give 30% of its loans in the local currencies of the financial institution’s members, pushing the BRICS currency into the bloc’s framework. 

Should this vision of a common currency materialize, BRICS senior leadership will invariably converge in Shanghai, granting China a pivotal role in shaping the financial landscape of the coalition. While the allure of a common BRICS currency persists, concerns are emerging regarding equitable representation and safeguarding the interests of all member nations.

Kazakhstan, with its growing relations with Beijing, must carefully balance the global powers to avoid the same dependencies that many nations have succumbed to. If Kazakhstan is accepted as a BRICS member and chooses to utilize a Shanghai-centralized currency, it may unsettle U.S.-Kazakhstan relations and push Almaty further towards Beijing. 

Over a dozen countries have formally applied to join BRICS, and if they are to be accepted, this would create an international entity with an estimated GDP 30% larger than the United States. This is especially dangerous for the United States and its allies as it would place 45% of the world’s oil reserves, 60% of all known gas reserves, and strategically important minerals and metals in the hands of the BRICS coalition. The potential expansion of the bloc presents a new geopolitical dynamic with far-reaching implications.

While the planned currency aims to strengthen infrastructure and economic linkages within the bloc, concerns persist regarding the expansion of the NDB and its potential to foster economic reliance on China and Russia. Despite 84.3% of cross-border trade currently being conducted in US dollars, the introduction of a new currency within an enlarged BRICS could displace the dollar as the reserve currency of choice, thereby devaluing its prominence in international transactions. Although BRICS has emphasized the importance of encouraging the use of local currencies in international trade, member countries will likely opt to utilize the BRICS currency instead of their own currencies and the US dollar. Although some analysts have expressed skepticism regarding the successful implementation of the BRICS currency, if the tender is formally implemented it has the potential to surpass other currencies in terms of self-sufficiency in international trade. This is primarily attributed to the fact that a BRICS currency union would encompass a broader range of exporting states compared to any previous trade alliance. Consequently, such a union would facilitate the production and exchange of a wider variety of goods, cover greater geographical distances, and witness increased transaction volumes.

However, significant challenges must be overcome before the BRICS currency can be fully operational. Diplomatic challenges between India and China, adding complexities to supranational banks, and trade regulations on Russia are just a few of the challenges the currency will face before it can go into circulation. But, regardless of its complications, the mere existence of the BRICS currency framework poses a potential threat to the United States. The expansion of the New Development Bank, which was conceived with the aim of providing a financial institution for developing nations and supporting their joint development agenda, serves as a catalyst for BRICS to seek an alternative to the US-backed dollar. This pursuit not only enables the bloc to explore complex methods of evading sanctions but also has the potential to alter the geopolitical landscape.

Furthermore, the prospect of Kazakhstan's accession to BRICS introduces a dynamic that could strain its existing Western partnerships. As Kazakhstan grapples with the uncertainties of the current geopolitical framework, it must carefully calibrate its alliances to safeguard its sovereignty, regional influence, and effectively manage its economic and security interests. The emergence of an alternative currency within the BRICS framework presents Kazakhstan with a delicate balancing act, necessitating thoughtful considerations in navigating its future course.