By Somar Wijayadasa*
NEW YORK, 1 June 2023 (IDN) — The 15th BRICS Summit is scheduled to take place in August this year in Durban, South Africa at a time of great upheaval—both political and economical—throughout the world. BRICS is an acronym for five regional economies: Brazil, Russia, India, China, and South Africa.
The first four were initially grouped as “BRIC” in 2001 by Goldman Sachs economist Jim O’Neill, who coined the term to describe fast-growing economies that would collectively dominate the global economy by 2050; South Africa was added in 2010.
BRIC was founded at United Nations headquarters in New York in September 2006 during the 61st UN General Assembly session.
Heading into the Summit, many countries are yearning to join BRICS to access lucrative trade and investment opportunities.
At the end of his State visit to Russia in March 2023, China’s President Xi Jinping said “There are changes happening, the likes of which we haven’t seen for 100 years” and said to Russian President Vladimir Putin “Let’s drive those changes together.” Putin responded, “I agree”.
Since Russia and China have been the impetus for the successes of the BRICS since their first summit in 2009 in Yekaterinburg (Russia), I am optimistic that under their guidance, BRICS nations will find solutions to cope with the provocative challenges taking place around the world.
Though the theme for this year’s summit is partnership for growth, sustainable development, and multilateralism, BRICS is already flashing headlines across the globe for what they plan to achieve during the Summit.
If the BRICS membership is increased, that would form a strategic alliance that would endeavor to create a BRICS currency in an effort to dethrone the US dollar from its decades-long role as the world’s reserve currency.
Ultimately, it may bode well for the countries that aspire to create a multipolar world order.
The impending expansion of BRICS
Earlier this year, Russia’s Foreign Minister Sergey Lavrov said that “more than a dozen” nations have expressed an interest in joining BRICS.
The latest list includes Algeria, Argentina, Bahrain, Bangladesh, Indonesia, Iran, Egypt, Mexico, Nigeria, Pakistan, Saudi Arabia, Sudan, Syria, Turkey, the United Arab Emirates and Venezuela.
The BRICS group, comprising the world’s five major developing economies, currently represents 42% of the global population, 27% of the territory and 18% of the global trade.
UK-based macroeconomic research firm Acorn Macro Consulting says, “BRICS has overtaken the Group of Seven (G7) by making up a larger share of the global gross domestic product (GDP). It claims that “the bloc of BRICS countries contributes 31.5% of the world’s GDP. Meanwhile, the G7, consisting of the US, Canada, France, Germany, Italy, Japan and the UK, and considered the most advanced economic bloc of countries on the planet, add up to 30.7%”.
According to reliable estimates “An expanded BRICS of that magnitude would possess about 45% of known global oil reserves and over 60% of global gas reserves. Its combined GDP as at today would amount to US $29.35 trillion, making it considerably larger than the United States economy at $23 trillion and double that of the European Union’s $14.5 trillion”.
The new members identified above would add just under 1 billion consumers to the BRICS+ family, for a total of 4.257 billion, or just over 50% of the total global population in 2022, and their combined GDPs would race ahead of the US and other Western powers—signifying the continuing shift of global power.
Developing a new global currency
Already a growing number of countries that belong to BRICS as well as the ASEAN (Association of Southeast Asian Nations) and SCO (the Shanghai Cooperation Organisation) have relinquished the US dollar in favor of their local currencies in order to push back against American dominance over the global financial system.
Many countries are determined to ditch the US dollar—primarily due to aggressive US sanctions targeting many countries, and growing efforts by Washington to use its currency punitively against countries which fail to align to the Western economic and geopolitical order.
Recently, denouncing that Cuba has been embargoed for six decades by the US, its President Miguel Diaz-Canel said that “Giving up the US dollar will free developing countries from Washington’s sanctions, blackmail, aggression, and slander”.
For example: Over 12,000 sweeping sanctions on Russia—imposed by the US and the EU—including the freezing of its Central Bank reserves (worth over $640 billion in gold and FX), severing it from SWIFT, seizing Russia’s and its citizens dollar deposits and properties across Western countries have alarmed many developing nations.
Last month, addressing the UN Security Council, Russia’s Foreign Minister Sergey Lavrov reiterated that the UN system is going through a deep crisis caused by some members’ desire to replace international law with their “rules-based order”, and said that they are enforced through means ranging from military force to embargoes, financial sanctions, the confiscation of property, “destruction of critical infrastructure”—likely a reference to the sabotage of the Nord Stream gas pipelines—and “manipulation of universally agreed norms and procedures”.
Referring to similar sanctions and diktats to many other countries, Sergio Rossi, Professor of macroeconomics and monetary economics at the University of Fribourg, Switzerland opined “The weaponization of the US dollar against specific targeted currencies and governments [that] the United States doesn’t agree with has been going on for some time”.
This is precisely what many countries are afraid of and what may have induced them to move away from the US dollar in mutual transactions.
It is evident that BRICS nations are determined to establish a common single currency to circumvent the US dollar and better serve their economic interests. It could be based on a basket of currencies of the BRICS countries and could be backed by gold or additional rare earth metals.
Also, using their own currencies could mitigate the impact of potential sanctions, and lower their dependency on the dollar in international transactions.
The New Development Bank (NDB): BRICS ingenious creation
The most remarkable achievement of BRICS was the establishment of the New Development Bank, in 2014, as an alternative to the World Bank and the International Monetary Fund.
The developing countries all over the world silently watched how the loans and other forms of funding from the World Bank and the International Monetary Fund (IMF) trapped poor countries in recurring debt, austerity measures, and privatization programs for decades.
The NDB was created as an alternative source of development funding specifically meant for the BRICS and other developing countries, and it is focused on eliminating poverty and building infrastructure to support “a more inclusive, resilient and sustainable future for the planet”.
It began with a modest $50 billion as an alternative source of development, and thus far, it has lent $33 billion to more than 96 projects in the five founding member nations.
Currently, the NDB is well-capitalized, with $100 billion to fund its projects.
The NDB is open to new members, and in 2021, the bank admitted Bangladesh, Egypt, the UAE, and Uruguay as new members. The NDB is contemplating admitting Saudi Arabia as a member, and that would strengthen its funding options.
The emerging multipolar world order
BRICS nations are not alone in the quest to form a multipolar world order. Many world leaders from the Global South from Asia, Africa to South America have warned of the “undeniable danger” of US unilateralism, and its “rules-based international order”.
The European Union Foreign Policy Chief Josep Borrell describes the transition: “Over the last three decades, we have seen a rapid transformation in the distribution of power around the world. We went from a bipolar configuration between 1945 and 1989 to a unipolar configuration between 1989 and 2008, before entering into what we today could call ‘complex multipolarity’.”
As countries strive to distance themselves from the Western world by using simple mechanisms as strengthening their regional alliances with more members, dump the US dollar in international trade to diminish the Dollar hegemony, and counteract the Western-dominated international order, the world will eventually form a more inclusive, equitable and representative multipolar world order.
Almost all countries—especially those in the Global South—are beset with multiple problems ranging from global warming, natural disasters, hunger, poverty, human rights violations, inequality and health-related issues.
It would bode well for the whole world if BRICS nations (including newcomers) prioritize on how to solve some of today’s burning issues such as climate change, resolving international conflicts (e.g., Ukraine) by peaceful means, and abolishing nuclear weapons by partnering with the United Nations to bring the nuclear ban to fruition.
* Somar Wijayadasa, an international lawyer was a Faculty Member of the University of Sri Lanka (1967-1972), worked for IAEA and FAO (1973-1980), delegate of UNESCO to the UN General Assembly (1980-1995), and was the Director of the UNAIDS Office and simultaneously, the Representative of UNAIDS at the United Nations from 1995-2000. [IDN-InDepthNews]
Photo: 14th BRICS summit in Beijing. Credit: China’s Ministry of Foreign Affairs.
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