By FLAVIO AGUIAR*
The BRICS challenge the global financial hegemony of the United States and its close allies
In addition to the two main ongoing wars, the one in Ukraine and the one in the Middle East, during the past week the news and commentary in the international media has been significantly occupied with the BRICS summit in Kazan, Russia, under the chairmanship of the Moscow government.
In addition to the statements contained in the final joint document, which were already expected, speaking of peace, expressing humanitarian concerns about Gaza and the West Bank, condemning the regional expansion of the conflict in the Middle East by Israel, suggesting the construction of a new world economic order, the meeting left as a result some very significant evidence.
The first is that Russia is not as isolated as the United States and its allies would like it to be. In fact, it may be isolated from the countries of the “broader West,” but outside this circle, sanctions against it find no support. On the contrary, the rest of the world either ignores them or condemns them, even if only as inappropriate.
The second is that interest on the part of other countries in joining or remaining close to the group has grown considerably. In addition to the four founding countries of the group, Brazil, Russia, India and China, and South Africa, which was admitted in 2010, the BRICS now includes five other countries as full members or invited members in this capacity: Egypt, Ethiopia, Saudi Arabia, the United Arab Emirates and Iran. And there are dozens of countries interested in joining or associating with the group, notably Turkey, which is a member of NATO, an organization that supports Ukraine against Russia, and Serbia, which is also applying to join the European Union, which has the same position as NATO in that war.
This year's summit invited 13 more countries to join the group as Partner States, that is, without the right to veto or vote: Cuba, Bolivia, Nigeria, Uganda, Thailand, Vietnam, Indonesia, Algeria, Belarus (also called Belarus), Malaysia, Uzbekistan, Kazakhstan and the aforementioned Turkey.
The strength of Brazil's position in the group was also evident. Russia and China expressed their desire to include Venezuela in the invitation. Brazil vetoed it and the other countries accepted this veto without complaint. The Brazilian government's position is controversial even among its supporters. Many of them argue that Brazil should unconditionally support Venezuela's entry into the group. Brazilian presidential advisor Celso Amorim stated that there had been a breakdown in trust between the two governments.
The fact is that Brasilia and Caracas have been exchanging diplomatic barbs for some time now. Brazil has yet to recognize Nicolás Maduro’s reelection as president, claiming that the electoral records were not made public, contrary to what he had promised. And Venezuela’s Attorney General, Tarek William Saab, accused President Lula of “being a CIA agent, co-opted while he was in prison.” The Venezuelan Ministry of Foreign Affairs was quick to reject the accusation.
But the Attorney General returned to the attack, saying that the Brazilian president had fabricated the version of his domestic accident as a pretext for not attending the summit.
For this columnist, the issue is thorny and the tension will only be resolved through gestures of diplomatic reciprocity. It involves other aspects, such as the fact that Brazil has taken over the administration and protection of the Argentine embassy in Caracas, after relations between the latter and Buenos Aires collapsed following President Javier Milei's order to hand over a Venezuelan plane to the United States.
Global interest in the BRICS project has grown significantly since the United States and its close allies, such as the European Union, began using the international payment system and maintenance of financial reserves in US dollars to punish those they consider adversaries or enemies through economic sanctions, as in the case of Russia.
The latter had its international reserves frozen and reinvested in the financial market by the agents that hold them, so that their dividends could serve as collateral for loans to its enemy, Ukraine. Before this decision was made, it was reported that the outright confiscation of Russian reserves was considered. And as part of this version, it was also reported that it was the IMF that prevented the confiscation, claiming that this move would cause unlimited panic in the international market.
In any case, the application of resources in financial roulette without the consent of its owner and its use as collateral for a loan to a third party is still a postmodern act of piracy.
The insecurity generated by the war in Ukraine and the conflict in the Middle East also contributed to increasing interest in BRICS projects.
One of the central projects of the BRICS is the creation of a parallel system, independent of the dollar, for international transactions between member countries and other interested parties.
This is a clear challenge to the global financial hegemony of the United States and its close allies, maintained through the hegemony of the dollar as a means of payment since the Bretton Woods conference in 1944, which also created the International Monetary Fund and the World Bank.
At that time, the dollar was backed by the gold reserves of the United States. In the early 1970s, the Nixon administration abolished the convertibility of the dollar into gold. The US currency became “fiat,” in financial jargon, that is, maintained solely by the trust of users in the credibility of its issuer.
At the same time, the proposal for a new currency as a means of international payment is a challenge for the BRICS group itself, as the creation of such a parallel system requires large-scale, long-term financial engineering.
Although the hegemony of the dollar subjects the financial system to the United States, which issues the currency, and its close Western allies, it guarantees a certain stability in international transactions that would otherwise be subject to the numerous exchange rate variations and other vagaries of other national currencies.
The success of this BRICS project therefore depends on the creation of an alternative means of payment, even if it is entirely virtual, that is recognized by all interested parties. It would make no sense to replace the hegemony of the dollar with that of another national currency, such as the Chinese renminbi, often called by the name of its unit, the yuan, which is easier to pronounce. I mention the Chinese currency because China is the most dynamic economy among the BRICS.
The creation, issuance and administration of this currency or virtual means of payment, which would not replace national currencies but would run parallel to them, as the US dollar does, would be the responsibility of the BRICS Bank, currently chaired by former president Dilma Rousseff, or another body specially created for this purpose.
Given the heterogeneity of the member countries and/or those targeted by the BRICS, this task will not be easy to carry out. This heterogeneity is the strong point of the BRICS project, pointing to a truly multipolar world. But it is also a complicating factor, requiring, more than financial engineering, a highly sophisticated political architecture. Not to mention that there will certainly be resistance and possible retaliation from those who currently hold hegemony, that is, the United States. We will see.
* Flavio Aguiar, journalist and writer, is a retired professor of Brazilian literature at USP. Author, among other books, of Chronicles of the World Upside Down (boitempo). [https://amzn.to/48UDikx]
Expanded version of an article published in the “O Mundo Agora” section of Radio France Internationale (Brazil).
the earth is round there is thanks to our readers and supporters.
Help us keep this idea going.
CONTRIBUTE
