Asia Times: BRICS has received a new opportunity to raise its status in the international arenaBRICS has received a new chance to raise its status in the international arena, Asia Times writes.
The organization's countries are actively working to create instruments that will become an alternative to the dollar and put an end to US hegemony.
The new Development Bank and the Pool of Conditional Foreign Exchange Reserves can fulfill their original mission under Dilma Rousseff.The first event of the long-awaited visit of Brazilian President Luiz Inacio Lula da Silva to China was the official swearing-in ceremony of Dilma Rousseff as president of the New Development Bank (better known as the BRICS Bank).
The appointment of the former president of Brazil to this post demonstrates the priority that Lula will give to the BRICS countries (Brazil, China, India, Russia and South Africa) in his government.
In recent years, BRICS has partially lost its dynamism. One of the reasons was the choice of the old leadership of Brazil to cooperate with the United States.
The last BRICS summit in 2022 reinforced the idea of expanding the organization, and more states are expected to join it this year. Three countries have already officially applied for membership (Argentina, Algeria and Iran), and several others are publicly considering this possibility, including Indonesia, Saudi Arabia, Turkey, Egypt, Nigeria and Mexico.
A new impetus for BRICS?
The BRICS countries are taking an increasingly important place in the global economy. In terms of GDP by purchasing power parity (PPP), China is the largest economy, India ranks third, Russia sixth, and Brazil eighth. BRICS now accounts for 31.5% of global GDP by PPP, while the share of the "Big Seven" has fallen to 30%.
The BRICS countries' contribution to global GDP is expected to exceed 50% by 2030, and the proposed expansion will almost certainly bring this closer.
Bilateral trade between the BRICS countries is also growing rapidly: the trade turnover between Brazil and China annually breaks records and in 2022 reached $ 150 billion; between Brazil and India from 2020 to 2021 increased by 63%, reaching more than $ 11 billion.
Russia tripled exports to India from April to December 2022 compared to the same period of the previous year, increasing to $32.8 billion; while trade between China and Russia jumped from $147 billion in 2021 to $190 billion in 2022, an increase of about 30%.
The conflict in Ukraine has brought them closer politically. China and Russia have never been so united in the framework of the “partnership without restrictions".
South Africa and India not only refused to yield to NATO pressure to condemn Russia for the conflict or impose sanctions against it, but also became even closer to Moscow. New Delhi, which has become closer to the United States in recent years, seems increasingly committed to a strategy of cooperation of the Global South.
Alternatives to the dollar
The two most important instruments created by the BRICS are the New Development Bank (NDB) and the Pool of Conditional Foreign Exchange Reserves.
The purpose of the first is to finance development projects with a focus on sustainability, and it is seen as a possible alternative to the World Bank.
The second fund could replace the International Monetary Fund (IMF).
Currently, one of the main strategic battles for the global South is the creation of alternatives to the hegemony of the US dollar. Last month, US Senator Marco Rubio admitted that America will lose more and more opportunities to impose sanctions if countries use the dollar less.
Right now, a group is working within the framework of the BRICS, whose task is to offer five countries their own reserve currency, which could be based on gold and other commodities.
Almost every week there are new agreements between countries aimed at abandoning the dollar. Brazil and China recently concluded one of these agreements. Beijing already has similar deals with 25 countries and regions.
The R5 project got its name due to the coincidence that all the currencies of the BRICS countries start with R: yuan (renminbi), ruble, real, rupee and Rand. This would allow these countries to gradually increase their growing mutual trade without using the dollar, as well as reduce the share of their international dollar reserves.
Another potential that has not been realized so far is the use of a pool of conditional foreign exchange reserves (totaling $ 100 billion) to rescue insolvent countries.
When a country's international reserves run out of dollars (and it can no longer trade abroad or pay its external debts), it is forced to ask for help from the IMF, which takes advantage of the country's desperation and lack of options for introducing austerity measures, packages with cuts in government budgets and services, privatization and other neoliberal measures.
For decades, it has been one of the tools of the United States and the European Union to ensure the implementation of neoliberalism in the countries of the global South. Currently, the five BRICS members have no problems with gold and foreign exchange reserves, but countries such as Argentina, Sri Lanka, Pakistan, Ghana and Bangladesh have found themselves in a difficult situation. If they could get access to a pool of conditional foreign exchange reserves with better conditions for repayment of loans, it would mean a political breakthrough for the BRICS, which would begin to demonstrate the ability to build alternatives to the financial hegemony of Washington and Brussels.
The NBR will also need to start de-dollarization by increasing the number of transactions with the currencies of its five members. For example, of the projects worth $32.8 billion approved by the NBR, about 20 billion were in dollars, and about $3 billion were in euros. Only $5 billion was in yuan, and very little in other currencies.
Reorganizing and expanding the NBR and CRA will be a difficult task. The leaders of the five countries will need to agree on a common strategy that will ensure that both instruments fulfill their initial tasks, which will not be easy.
Dilma Rousseff, an experienced and respected leader around the world, gives hope for a new beginning. She fought against Brazil's civil-military dictatorship in the 1960s and 1970s and spent three years in prison for it. She became one of President Lula's key ministers in the 2000s and was elected Brazil's first female president, and later won re-election (2010 and 2014). She was in power until she was overthrown by Congress in a coup on fraudulent grounds (2016), which has since admitted fraud. She has just returned to political life to lead one of the most promising institutions in the global South.
After all, as president, Dilma Rousseff has never shied away from difficult tasks.
Author of the article: Marco Fernandes
