At the Kazan summit, the BRICS displayed their ambition to reshape the world economic order by challenging the hegemony of the dollar and, at the same time, Western influence.
BRICS: A lever to reshape the global economic order
The 16th BRICS summit, held in Kazan (Russia), marked a major milestone for the group of states. In addition to the participation of its five founding members (Brazil, Russia, India, China and South Africa), the alliance welcomed five new members in January 2024: Iran, Egypt, Saudi Arabia, Ethiopia and the United Arab Emirates. To this were added twenty-five other invited countries as well as several international organizations. Among notable personalities, United Nations Secretary-General António Guterres was also in attendance. This summit highlighted the growing ambitions of the BRICS, which wish, in the medium term, to become an increasingly competitive player vis-à-vis the G20.
In terms of geographical representation, the current alliance and its partners present an interesting balance, with a diversified distribution by continent: eight Asian countries, three countries from the Near and Middle East and three European countries (including Turkey), six African countries and three countries in Latin or Central America. However, Asia remains the real center of gravity, home to both three-quarters of the population and three-quarters of the GDP of the broader BRICS and partners group. This concentration reflects the strategic importance of Asia, both for its economic dynamism and its demographic weight, giving the BRICS a growing global leadership potential in the years to come.
The idea of turning away from the dollar for the settlement of commercial transactions is not new, but it is gradually becoming a reality, particularly between “willing partner” countries.
With this expansion, BRICS seeks to strengthen its geopolitical and economic influence on a global scale, while providing an alternative to institutions dominated by Western countries. The group could thus play a crucial role in rebalancing global economic and political powers, disrupting the world order established since 1945 by Westerners.
A “petro-dollar” crisis in sight, really?
The idea of turning away from the dollar for the settlement of commercial transactions is not new, but it is gradually becoming a reality, particularly between “willing partner” countries. This practice, which concerns sensitive sectors such as energy, is becoming commonplace. Countries like Saudi Arabia, Russia and Iran accept payments in yuan for deliveries to Beijing, or in rupees for those to New Delhi. These revenues are often converted into gold on the Shanghai market before being repatriated into their national currencies.
Furthermore, some countries use the Chinese interbank payment system, CPIS, an alternative to the Western SWIFT model. If this transition is made relatively easily with China, the situation remains more complex with India. On the Washington side, the rise of these non-dollar payments does not go unnoticed and is closely monitored, particularly within the energy sector. As long as the war in Ukraine persists, the proportion of payments in currencies other than the dollar is expected to continue to grow. However, the energy independence recently acquired by the United States, thanks to the explosion of its internal oil and gas production, has changed their position. Now less dependent on energy imports, the United States seems less concerned about the rise of dedollarization, especially as it continues to supply Europe with liquefied natural gas, billed in dollars.
The hypothetical emergence of a common BRICS currency
Russia’s proposal to create a common currency for BRICS represents a bold initiative, but it is far from simple to implement. This initiative aims to establish a real parallel financial infrastructure, allowing the countries of the Global South to free themselves from the influence of the dollar and the West. However, this idea did not meet with the enthusiasm hoped for. The question of controlling these monetary flows remains problematic: who would agree to see Moscow in action?
Abandoning the dollar also presents high risks for partners exposed to increased currency volatility, with the risk of capital being difficult to convert or invest. To make this common currency viable, the idea would be to back it with a basket of assets, including gold, cryptocurrencies or central bank digital currencies. China, already well advanced in the development of its digital currency, would in theory be a key player in making this vision a reality. But the other members of the BRICS, in particular India, Brazil and South Africa, are struggling to follow this path.
In the meantime, dedollarization will continue to feed off the rise of the yuan on the international scene. However, faced with China’s complex economic situation, Beijing is in no hurry to accelerate the internationalization of its currency, which slows down the overall dedollarization process somewhat. The idea of a BRICS currency, although attractive to some, will still have to overcome many obstacles before becoming a reality.
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