The term BRICS stands for Brazil, Russia, India, China, and South Africa. It was coined by the Chief Economist of Goldman Sachs in 2001 as a reference to the emerging economies of the world. Initially, it was referred to as BRIC, with the ‘S’ added later when South Africa joined the group officially in 2010.
According to recent financial reports, BRICS is already the world’s largest gross domestic product (GDP) bloc in the world, currently contributing 31.5% to the global GDP, ahead of the G7, which contributes 30.7%.
BRICS begin taking serious steps towards greater integration in 2014 when the nascent alliance launched the New Development Bank with seed money of $50 billion. The group became poised to take practical measures to challenge the Western dominance over international monetary institutions, specifically the World Bank and the IMF.
The organization experienced a resurgence following the ongoing geopolitical conflict that arose from the Ukraine-Russia war, with Russia and China making moves to extricate themselves from western control structures, including the U.S Dollar which is a powerful element in global trade and hegemeony.
As recent as April 2023, Russian President, Vladimir Putin, and Chinese President, Xi Jinping, agreed to adopt the Chinese Yuan as a settlement currency with emerging economies. At the same time, data from China’s State Administration of Foreign Exchange (SAFE) shows that China’s RMB Yuan overtook the US dollar to become the most-used currency in the country’s cross-border transactions in the month of March 2023, the first time ever.
China and Brazil have also agreed to use their own currencies to settle trade over the dollar while India is also taking steps to shift from the dollar.
In addition to the bi-lateral measures, the BRICS nations are working on a new currency with details set to be unveiled at an upcoming summit meeting to be held in South Africa in August 2023, a senior Russian official revealed.
The 5-nation bloc may also increase in size soon, with many more countries expressing interest to join, including:
- Argentina
- UAE
- Mexico
- Egypt
- Algeria
- Saudi Arabia
Egypt’s Parliament has also given the green light for the country to join the New Development Bank with lawmakers saying they were positive about the country’s membership in the BRICS Bank viewing it as a means of reducing reliance on the U.S dollar.
While developing countries are affected by the Ukraine-Russia war due to its disruption of normal supply chains, developing country economies also see the opportunity to loosen the grip the U.S dollar has on their economies with rising interest rates in the west suppressing economic activity back home.
Developing countries are also wary of the American-led system whereby economic support comes alongside a self-serving political agenda, or indirectly manipulating and controlling local economies. This position is often justified under the guise of human rights and democracy, though is entirely related to privatization and opening markets for foreign investor–led western corporations.
The impact of the U.S dollar is also felt within the G7, and none other than France President, Emmanuel Macron, recently asked Europe to focus on lowering its dependence on the U.S dollar.
Over the past few years, the U.S has imposed sanctions on countries such as Russia, China, and Iran, which have been aimed at restricting their access to the primary dollar-denominated global financial system. Some in Europe have criticized the ‘weaponization’ of the dollar by the U.S which has forced European companies to sever ties with third countries or risk facing crippling secondary sanctions.
The more successful BRICS will become, the weaker western hegemony over the South will grow. Though some western politicians and media insist on downplaying BRICS’ role in shaping the new world order, the change seems to be real and irreversible.
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