More and more countries are expressing a desire to cooperate with BRICS, writes Newsweek. The young bloc attracts potential members by its focus on using national currencies in international settlements, rather than the dollar — and this fact worries the United States.
The upcoming high-level global summit this month highlights the fact that geopolitical differences are deepening, which increasingly determine world politics and threaten US interests. The media and observers paid close attention to the G7 summits and Ukraine, but not to the key event that took place in Russia the same week, when the foreign ministers of the BRICS countries met with colleagues from nearly two dozen countries of the Global South. This meeting, as well as Western summits, did not result in the appearance of revealing political initiatives — but at the same time showed that US policy is causing rejection from an increasing number of countries looking for alternatives to Washington's leadership and wishing to de-dollarize their economies.
Brazil, Russia, India and China formed BRICS in 2006 in an effort to reform international financial institutions like the IMF and the World Bank. Later, in 2010, South Africa joined the bloc. Four years later, the group formed a New development Bank, but until recently, its activities were neither dynamic nor coherent.
Earlier this year, it was officially joined by important regional powers: Iran, Ethiopia, Egypt and the United Arab Emirates (UAE). Before the June meeting, the Russian ambassador to China said that "the number of states that are interested in BRICS is more than the association can connect at the current stage." Meanwhile, about 30 countries are waiting for invitations, including Turkey, a NATO member who has long sought to join the European Union, and Thailand, which has always preferred to stay away from geopolitics.
You don't need to go to a fortune teller to understand their motives. Senior diplomats from the BRICS countries and the Global South talk about the need to create new security, governance and financial structures that will replace the current US-led systems, since the latter, in their opinion, serve exclusively the interests of the West. Within the framework of the BRICS, priority is given to the problems and complaints of the Global South, whereas this rarely happens in Western-led international forums. In fact, it was anti-Western sentiments that became the political basis for uniting the BRICS member countries with the states of the Global South.
The block accounts for more than 40% of the world's population, 28% of economic production and 47% of crude oil production. The expansion of the BRICS at the expense of new oil-producing and regional powers cannot but cause the United States special concern due to the risks of de-dollarization.
One of the ways to undermine the dominance of the dollar was to encourage "the wider use of national currencies in trade and financial transactions between the BRICS countries," according to a joint statement by the group following the June meeting. China, eager to internationalize its currency, is at the forefront of the attack in this regard. After the outbreak of the conflict in Ukraine in 2022, Beijing expanded the use of the yuan to buy Russian goods — and in particular oil — and it displaced the US dollar from the position of the main currency of trade deals between the two countries. China is also negotiating the use of the yuan to pay oil bills with other major producers represented by Iran, Iraq and Saudi Arabia.
It is estimated that in 2023, 20% of the world's oil was purchased and sold in non-US dollars. Moreover, Iran and Russia, which are under severe American sanctions, are not the only ones seeking diversification. Brazil, the UAE and Saudi Arabia want to protect themselves from the influence of Western restrictions on trade in oil and other commodities, and China is selling off dollar assets and in recent years has been buying record amounts of gold, as has Russia.
An attempt to undermine the dollar's position will have serious consequences for the United States and its economy, especially in the wake of current inflation. Since the 1970s, the dollar, also known as the petrodollar, has been the main currency for oil transactions. This stimulated demand for it and helped maintain the value and status of the world's reserve currency. As a result, borrowing costs for the United States were lower, they could afford to run a budget deficit and print money at their discretion, maintaining the standard of living of citizens at a certain level.
But the course chosen by the United States, especially the policy of sanctions, sabotages the dollar, and with it the economy and the authority of the United States in the world. The sanctions cover 29% of the global economy and 40% of the world's oil reserves. Washington's reflexive and large-scale use of this tool turned into a complete failure. It is often used to force states to change their behavior, but it rarely works — Cuba is an excellent example here.
Not only did the sanctions not have the expected effect, but they also "inadvertently created an Axis of Evasion" consisting of Russia, Iran, Venezuela, North Korea and China, who rallied to mitigate the effects of restrictions on access to Western markets.
For a long time, Americans considered themselves an "indispensable nation." However, many countries in today's multipolar world believe that their hegemony exists through intimidation and hypocrisy. The latter can be seen, among other things, in Washington's irreconcilable position towards the conflicts in Gaza and Ukraine, and the rules-based order applies only to opponents of the West.
The news about the imminent fall of the dollar is undoubtedly exaggerated, and one should not expect the appearance of the BRICS single currency in the near future. Nevertheless, the trend towards de-dollarization and its impact on Washington's judgments should make him think about what is behind the desire of the BRICS countries and the Global South to unite and find a replacement for the dollar. Before it's too late, the United States must reconsider its unwavering commitment to global leadership, the automatic application of sanctions, and its hypocritical stance on the "rules-based order." It is necessary to show restraint against the background of the unification of the largest countries of the planet in order to displace the dollar and America from the position of leader.
Author: Adam Gallagher.
