“The benefits of Iran’s membership in BRICS group of nations will surely go down in history,” Iranian President Ebrahim Raisi said addressing a summit of member states in Johannesburg on August 24.
His remarks came after the five-nation alliance announced that it is adding six new members, namely Argentina, Egypt, Ethiopia, Saudi Arabia, the UAE along with Iran, as of January 2024. Iran’s inclusion in the BRICS+ is already seen as a big win for Tehran.
But what exactly does this new membership mean for Iran and what “benefits” the country is looking to gain? The answer is set against the backdrop of decades of sanctions the Islamic Republic has been enduring, some in place ever since the revolution that ousted the Pahlavi dynasty in 1979.
The sanctions, mainly spearheaded by the United States after the takeover of its embassy by revolutionary forces in Tehran and an ensuing hostage crisis, later evolved into an all-out blockade of the Iran’s economy as the country began to pursue nuclear ambitions. That led to other members of the UN Security Council to throw their weight behind the US with the aim of bringing Iran to its knees and prevent it becoming a nuclear power.
Iran was the most sanctioned country in the world until Russia snatched this dubious accolade from Iran, following its invasion of Ukraine in February 2022.
The consequences of sanctions truly wreaked havoc on Iran’s economy though the country never really abandoned its nuclear program. What happened in reality was that Tehran has increasingly mastered the art of dodging the barrage of embargoes.
Consider the case of sanctions on Iran’s oil sales, a traditional lifeline for the energy-rich nation. Despite all the punitive measures against buying Iranian crude, it was recently reported that China is expected to import as much as 1.5mn barrels per day (bpd) from Iran in August, the largest volume since 2013. And yes, Tehran has had to pay the price by underselling its natural resources.
Economic alliance with regional powerhouses
Another dimension of Iran’s countermeasures, which has gathered pace under the incumbent government of President Raisi, is Tehran’s efforts to forge economic alliance with other regional powerhouses.
Iran officially became a full member of the heavyweight Shanghai Cooperation Organization (SCO) during a virtual summit hosted by India on July 4 this year. It is also in free trade talks with the Eurasian Economic Union (EEU) and a deal is said to be within reach by the end of 2023.
The new BRICS membership is more of the same as Iran attempts to emerge from its diplomatic isolation and builds up a set of new international relations amongst the non-aligned world.
A major step towards re-joining the regional community was made on March 10, when Iran and Saudi Arabia announced the normalization of ties in a deal brokered by China, ending years of tensions between the two neighbouring countries and re-establishing diplomatic relations that were broken eight-years previously.
All these developments should give the US policymakers a pause when it comes to analysing the effectiveness of anti-Iran sanctions.
Signs of a softening US stance
Tehran has been effectively chipping away at the US embargo on its economy and the first signs of Washington softening its stance on Iran are already visible as it concedes the realities of the situation.
The Central Bank of Iran recently announced that the US government has released $6bn worth of Iranian assets frozen in South Korea in exchange for the release five American nationals held in Tehran. News of similar releases of billions of dollars, which buyers of oil have owed to Iran over years due to sanctions, have also emerged.
The perceived upper hand Iran has been gaining was obliquely reflected in Foreign Minister Amirabdollahian’s remarks lately made at a press conference in Tehran.
He said the current Iranian government has simultaneously pursued two approaches of neutralising sanctions on the one hand and working to lift them on the other.
“As for our diplomatic efforts, we have been engaged in indirect talks with the US for months. We have never believed in an interim deal or a less-for-less arrangement.”
BRICS, in its current five-nation format, accounts for 42% of the global population and about 26% of the world’s economy, according to the South Africa-based Institute for Security Studies.
According to the Islamic Republic of Iran Customs Administration (IRICA), the value of Iran’s non-oil trade with BRICS hit $38.43bn in the last Persian calendar year (March 2022-2023) to register a 14% increase compared to the same period a year earlier.
China was Iran’s main trading partner in the bloc with $30.32bn worth of trade, followed by India ($4.99bn), Russia ($2.32bn), Brazil ($466.55mn) and South Africa ($322.04mn).
Iran’s new membership can pave the way for further increase in its commercial exchanges with BRICS through ease of bilateral trade tariffs and facilitated customs procedures. For the sanction-bound Iranian economy, any opportunity to boost trade will be a boon and oil exports to India have already soared this year as global energy trade routes are being remade en masse as a result of the sanctions on Russia.
Meanwhile, the group recently revealed its plan to move away from the US dollar and settle trades in the national currencies of its member countries – something that Tehran, along with Russia and China, is very keen to see happen. There is chatter about a “common currency” or a “unit of exchange” among BRICS member states for trade and investment between each other, as a means of reducing their vulnerability to the dollar.
On the political front, it should be seen as a serious shift of balance in a world dominated by the West.
"We condemn the unipolar world order which makes it possible for the United States and some three to four other countries to feel the rulers of the world,” Raisi said in an interview with Lebanese television channel Al Mayadeen back in May.