BRICS, or how to live without the USA

Originally composed of five countries, the BRICS group accounted for over 40 percent of the world’s population, occupied 30 percent of the world’s population. the surface of the globe and produced approximately 25%. industrial production

Tomasz Deptula

A summit of countries trying to show that the world can develop without the rich West was held in South Africa. The BRICS group, which includes Brazil, Russia, India, China and South Africa, will grow even larger. Whether quantity turns into quality is a completely different matter. This does not mean that initiatives taken in opposition to the US and the Atlantic world should not be watched closely.

Prior to the summit, the media was mainly speculating whether Russian President Vladimir Putin, for whom an international arrest warrant had been issued, would appear in Johannesburg. South Africa guaranteed immunity, but since the country is a signatory to all civilized agreements and conventions, the Kremlin decided not to risk it. It turned out to be much more interesting what they wanted to talk about and why. Because the BRICS cannot be underestimated. In its original composition of five countries, the group comprised over 40 percent of the world’s population and occupied 30 percent of the world’s population. of the world’s surface and produced about 25% of industrial production. So on paper, it was a power that will increase its potential even more after joining countries such as Argentina, Egypt, Ethiopia, Saudi Arabia and the United Arab Emirates. Of the latter group, the biggest surprise is the inclusion of the Saudis, US strategic allies in the Middle East.

TO BE AFRAID OR NOT?

Should the Western world (USA, Europe, Canada, Australia, etc.) be afraid of BRICS expansion? The answer to this question is not simple. On the one hand, the growing potential of the group may facilitate its competition with the United States, the European Union and other entities that until now belonged to the part of the world economically dominant over the poorer Third World or the South. It is an attempt to circumvent the West politically and economically – to show that the world can do without the richest billion inhabitants, often burdened with the stigma of former colonizers.

The BRICS, despite the media-lauded summits and anti-Western, or rather anti-American declarations, has serious weaknesses. First of all, it still remains a not fully formalized group. The only common institution is the New Development Bank created by the agreement, the purpose of which is to support the economies of the countries included in the group and to create an alternative to financial institutions controlled by the US and the West – the International Monetary Fund and the World Bank.

THE WAR ON THE DOLLAR

One of the tasks facing the BRICS financial institution is the “de-dollarization” of the world economy, i.e. creating the foundations of a new financial and international system without the US dollar as the global reserve currency. BRICS countries are already trying to settle transactions between themselves in their own currencies instead of “green” currencies. BRICS has even begun to talk about creating its own financial system for international settlements. However, this is not an easy task, because none of the participants in the agreement has a currency that could replace the “green”. The closest would be the Chinese yuan, but it is subject to manipulation by the PRC government, so it is difficult to use it for free market transactions. Using gold or cryptocurrency quotations for settlements is also unlikely due to rapid exchange rate fluctuations. Moreover, some of the currencies of the BRICS countries are not fully convertible, which blocks the creation of an alternative financial system from the very beginning.

During the summit, Russian President Vladimir Putin urged to abandon the dollar in a speech broadcast from Moscow, because it would allow him to mitigate the effects of Western sanctions. However, it is hard to believe that in the foreseeable future it will be possible to abandon the basic basket of currencies based on the US dollar, euro, British pound, yuan and Swiss franc. For the time being, New Development Bank has even refused to finance several Russian projects, although Moscow maintains that these are only temporary difficulties.

EXPANDING… PROBLEMS

There are many indications that the BRICS format will be further extended. South Africa boasted that up to 40 countries could be interested in entering the agreement. However, the expansion of the group does not mean its consolidation. Most commentators and experts say it will be exactly the opposite.

The BRICS countries have more differences than similarities in many aspects. India is still the world’s largest democracy, as is Brazil (with great problems, however). However, it is difficult to say the same about Russia, China or the countries aspiring to join the group – Iran, Saudi Arabia or the UAE.

The BRICS members are not friends, which is evident from the limited trust they have in each other. China and India share not only territorial disputes in the Himalayas – both countries compete with each other for primacy in the Asian continent and for influence in other parts of the world. The target visions of BRICS development are also different. Putin sees BRICS as a commercial alliance, and Beijing as a political alliance. Brazilian President Luiz Lula, in turn, spoke of the need to organize without open opposition to the US or institutions such as the G7 and G20. The list of discrepancies is therefore long, which in the future may make it impossible to give the initiative a more measurable format than just one bank and summit meetings attracting media attention.

BRICS is therefore an attempt to organize the most populous and rapidly developing countries in the world outside the Western sphere of influence. It could start working against the United States in the near future if more OPEC countries and African countries, where Beijing’s influence is expanding, are part of the deal. However, as China uses the format to expand its influence, there may be a reflection that the countries of the global south are replacing one hegemon (USA) with a new one (China). India will certainly not agree to such an arrangement for the reasons discussed above. Resistance may also arise in other countries. This is one of the chances for the West to weaken the nascent alliance, provided, however, that the richer part of the world will actually have something to offer.