BRICS, 22,000 Sanctions and Blockchain
How expanded BRICS+ is reshaping the global economic architecture
Despite massive sanctions, Russia is currently the fourth largest economy, IMF
Last week, the regular summit of BRICS+ states took place in the Kazan Palace of Congresses. The 16th BRICS summit, attended by an unprecedented number of heads of state from 37 countries, showed how deeply the center of gravity of the global economy is shifting. Taken together, these leaders represent 46.9% of global GDP (in 2023 purchasing power parity) and 57.4% of the world’s population. However, the numbers reflect only part of the story.
Driven by this summit, our team decided this week to study the economic potential of the BRICS states, and particularly Russia.
Chart 1.
As of 2023, the BRICS+ states provide 34.73% of global GDP (in purchasing power parity), already surpassing the G7 states’ figure of 28.22%. This indicator reflects a fundamental realignment of global economic powers. China is the leading economic member of BRICS+, providing 18.2% of global GDP, while India provides 7.7% and Russia 3.4%. These figures attest to a significant change compared to the 1990s, when G7 economies dominated, accounting for almost half of the global economy at 46.4%. This year’s summit is also special for the expansion of the BRICS partnership framework. Thirteen new countries received the status of BRICS partner country, including strategically positioned economies such as Turkey, Indonesia, and Saudi Arabia.
Chart 2.
Perhaps the most memorable economic argument is Russia’s economic resilience. Despite the unprecedented application of more than 19,000 international sanctions since 2022, according to the latest data from the International Monetary Fund, Russia has become the world’s fourth largest economy, taking purchasing power parity into account. This raises certain questions about the effectiveness of economic sanctions in a multipolar world.
Purchasing Power Parity (PPP) is an economic indicator used when comparing the economies of different countries. It takes into account price differences between countries, measuring how much the same basket of goods and services costs in different countries. For example, if the same consumer basket costs $100 in the US and 25,000 AMD in Armenia, then the PPP exchange rate will be $1 = 250 AMD. This allows for a more accurate comparison of the true economic potential of countries, with which economies can acquire equivalent goods, services, and also pay wages.
Chart 3.
While Western countries have applied thousands of sanctions, they have inadvertently accelerated the development of alternative financial mechanisms. The BRICS Pay system announced during the summit is perhaps the most concrete step towards creating a parallel financial infrastructure. This blockchain-based payment system aims to facilitate transactions in local currencies, potentially reducing the dependence of BRICS+ member states on SWIFT.
Armenia in the Context of the BRICS+ Summit
The implications of the summit for the regional economic architecture are particularly interesting in the Caucasus region. Turkey’s entry into the BRICS partnership framework, as one of thirteen new partner countries, is a significant shift. With its substantial GDP of $3.77 trillion (in purchasing power parity) in 2023, Turkey’s participation could fundamentally alter regional trade patterns. Armenia’s position is also noteworthy. As an EAEU member, Armenia is located at an important crossroads. Neighboring Iran’s status as a full member of BRICS+ creates new opportunities for economic cooperation. The existing preferential and zero-tariff trade agreements between BRICS+ and EAEU members offer Armenia concrete ways to diversify its export markets through Iranian trade routes. Azerbaijan’s presence at the summit adds another layer to this regional economic transformation. The potential for expanding regional trade cooperation within the framework of BRICS could reshape traditional economic relations in the Caucasus.
The New Financial Architecture
At the BRICS summit, the Russian President announced the creation of a grain exchange, which is a concrete step towards the creation of alternative mechanisms for commodities trade. This exchange, which “will contribute to the formation of fair and predictable price indicators for goods and raw materials”, is envisioned as a prerequisite for a broader system of commodity and resource exchanges.
Chart 4.
The creation of alternative means of payment among BRICS+ members is also telling in the context of the steady decline of the Group of Seven’s (G7) share in global GDP, dropping from 46.4% in 1990 to 29.6% in 2025, while the BRICS countries have recorded steady growth. This is not just about relative economic weight; it is about creating parallel economic institutions and mechanisms. The summit presented a number of concrete economic initiatives:
- BRICS Pay system: This blockchain-based payment mechanism is more than just a technical innovation. It is a strategic move towards reducing dependence on Western-dominated financial infrastructures. The system’s focus on transactions in local currencies could significantly alter the patterns of international trade. The symbolic banknote presented below, which was gifted to the President of the Russian Federation during the summit, symbolizes the BRICS Pay system.
- Infrastructure for commodities trade: The proposed grain exchange, which could evolve into a broader commodity exchange, has the potential to reshape global commodity markets. This initiative directly addresses one of the main vulnerabilities of developing economies: their dependence on dollar-denominated commodity trade.
- Mechanisms for settlements in local currencies: The summit’s emphasis on expanding trade settlements in local currencies reflects a broader trend of reducing reliance on the dollar. The idea is not to completely replace the dollar, but to create viable alternatives for international trade.
Conclusion
The Kazan summit was already more than just another gathering of emerging economies. It proposed steps toward an alternative economic architecture where traditional Western-led institutions are complemented, and perhaps eventually competed against, by parallel structures.
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