The Brics, composed of Brazil, Russia, India, China, and South Africa, have emerged as a powerful force in the global political arena. And with the expansion of its membership to include Iran, the UAE, Saudi Arabia, Ethiopia, and Egypt on January 1st, the Brics are set to become an even more formidable entity.
The growth of the Brics has not gone unnoticed by the United States, as it poses a challenge to American hegemony and the dominance of the US dollar. Analysts argue that the Brics, with their primarily economic foundations, have transformed into an influential force that seeks to create a world economy less dependent on the dollar.
Brazil, in particular, has been vocal in its support for de-dollarization. President Luiz Inácio Lula da Silva has been a staunch advocate for a world with more currency options besides the dollar. Currently, 90% of Brazilian transactions are conducted in dollars, highlighting the country’s dependence on the US currency. By diversifying its trading partners and reducing its reliance on the dollar, Brazil aims to increase its political and economic influence globally.
The burgeoning power of the Brics also offers economic advantages. As the global financial system shifts towards a multipolar structure, countries like Brazil and India stand to benefit from increased bargaining power. By avoiding the imposition of their currencies as hegemonic, they can navigate the changing dynamics of the global economy more effectively.
However, the idea of establishing a unified currency for international commerce within the Brics seems unlikely in the near future. The convergence of economic policies among the member nations and the creation of a central bank or an international institution pose significant challenges. The euro, as an example, took decades of discussions and promises to become a reality in Europe. The Brics, with their varying degrees of development, face similar obstacles in reaching a consensus.
While a unified currency within the Brics may be difficult to achieve, the growing recognition of the Chinese yuan as an alternative to the dollar is noteworthy. Argentina, for example, has turned to borrowing money from Beijing to settle its obligations, highlighting the increasing importance of the yuan in international transactions. However, the acceptance and adoption of the yuan as a global currency face hurdles, including persuading economic actors to accept it as payment.
Despite the obstacles, the growth of the Brics signifies a shift in the global order and a challenge to the dominance of the dollar. Some argue that the establishment of a new multipolar order, with de-dollarization as a key agenda item, is being solidified. However, toppling the dollar’s dominance would require a much larger force and a significant geopolitical shift, comparable to historical events such as the triumph of the pound sterling after Britain’s victory over Napoleon or the American triumph in World Wars I and II.
In conclusion, the Brics’ expansion and their push for de-dollarization showcase their growing power and their aim to create a more multipolar world economy. While challenges lie ahead, the Brics have the potential to reshape the global financial system and challenge American hegemony. The rise of the yuan as an alternative currency further underscores the shifting dynamics in the international arena. As the Brics continue to grow and assert their influence, the world will witness a new chapter unfold in global politics and economics.