ALASTAIR CROOKE, BRITISH SENIOR DIPLOMATIC
Until recently, the West had ridiculed the BRICS project. But it is finally realizing that the initiative has the potential to turn both geopolitics and the international monetary system on its head.
The geopolitically seismic event of this era is the explosion in the number of BRICS members, and the even greater number of potential members. This move has crossed a key threshold. It has gone from ‘soft’ multipolarity to being an anti-colonial expression, a change that should not be underestimated. It is an ethos that draws energy from deep layers of passions that were quelled in the immediate postwar years, but which are resurfacing to give the multipolar framework an evident dynamism.
Currently, there are eight countries that have formally applied for membership and another 17 that have expressed interest in joining. If Saudi Arabia and Russia are members, two of the three largest energy producers are in the same camp.
If Russia, China, Brazil, and India are all members, there will be four of the world’s seven largest countries measured by land mass, (owning 30% of the earth’s dry surface and related natural resources) as members. of the BRICS.
Almost 50% of the world’s production of wheat and rice, as well as 15% of the world’s gold reserves are found in the BRICS.
Meanwhile, China, India, Brazil and Russia are four of the nine countries with the most inhabitants on the planet, with a combined population of 3.2 billion people, that is, 40% of the earth’s population.
«China, India, Brazil, Russia and Saudi Arabia have a gross domestic product (GDP) of 29 trillion dollars, that is to say 28% of world nominal GDP. If purchasing power parity is used to measure GDP, the BRICS share exceeds 54%. Russia and China possess two of the three largest nuclear arsenals in the world.
“Wherever you look at it – population, land mass, energy production, GDP, food production and nuclear weapons – the BRICS are not just another multilateral debating society. They are a substantial and credible alternative to Western hegemony.”affirms Jim Rickards.
With a new trading currency framework likely to be announced in August at its next summit, the currency will descend on a very receptive crowd. It will fall into an increasingly sophisticated network of capital and communications. This network will greatly increase your chances of success.
The main mistake is not to distinguish between the respective functions of a (commercial) payment currency and a reserve currency. Payment currencies are used in the trade of goods and services. Nations can trade in whatever payment currency they want; It doesn’t have to be in dollars. However, by doing so (to a large extent) the demand for the dollar is progressively depleted. Ultimately, this loss of foreign demand for dollars limits the ability of the United States to continue spending well in excess of its income.
What has defined a reserve currency has been a large and well-developed sovereign bond market. No country in the world comes close to the US bond market in terms of breadth and convertibility.
This is why Western financial staff scoff at the possibility of the dollar losing its hegemony. But perhaps they forget that there was no US bond market until World War I, when Woodrow Wilson authorized Liberty Bonds to help finance the war. There were rallies and liberty bond parades in all the big cities. Buying bonds became a patriotic duty. The effort worked and gave birth to the US bond market.
In short, the way to create an instant reserve currency is to create an instant bond market using your own citizens as willing buyers. As Jim Rickards previously pointed outif the BRICS “used a patriotic model” (taking advantage of the current anti-colonial spirit that runs through these countries) it would be possible to create international reserve assets denominated in the (commercial) currency of the BRICS.
In addition, recent experiments led by the Bank for International Settlements (BIS) on real-time and digital currency transactions of the Central Bank promise to transform this project and substantially reduce the need for a large asset pool.
Until recently, the West had significantly ridiculed the BRICS project. But he is finally realizing that the move has the potential to turn both geopolitics and the international monetary system upside down.
This month, the president of the Eurasia Group, Cliff Kupchanwrote in Foreign Policy magazine that “Six pendulum states will decide the future of geopolitics.”
“Today, the middle powers have more influence than ever since World War II. They are countries with significant influence in geopolitics. Far more interesting, however, are the six major powers in the Global South:
«Brazil, India, Indonesia, South Africa and Türkiye. These swing states of the Global South are not fully allied with any of the superpowers and are therefore free to create new power dynamics. These six countries are also a good barometer of general geopolitical trends.
«(…) the question remains whether the BRICS states are going to become a more formal institution under the leadership of China… That prospect is a clear challenge to the West… But the threat is unlikely to materialize. Those countries may have distanced themselves from the United States, but that is not the same as joining a Chinese-led, Russian-assisted body that actively opposes the United States. At the moment, the BRICS have not demonstrated the ability to develop and implement a common agenda, so there is very little institutional force for China to co-opt.”
The gringolas are on. The Western ruling class doesn’t “get it.” Kupchan’s article concludes that “the United States has been playing catch-up and hasn’t even done it very well.” You need a well-crafted energy for each of the major pendulum states (to stop their “move away” from the US to the Russia-China axis), he warns. Weaponry, threats and coercion, presumably, business as usual.
Catch up? The horse has already escaped. the barn is empty
