BRICS is now the big boss in managing trade, commerce, and payment settlements across the developing world, showing the US the exit door in these regions. The once formidable grasp of the US among non-Western countries is slipping, and BRICS is filling up this power vacuum fast. It’s the only game in town seriously challenging the almighty US dollar, making it an attractive club for a growing number of developing countries.
The US is watching its global domination slip as fears mount in these countries about three major headaches: harsh sanctions, the giant mound of US debt, and their own currencies taking a nosedive. Real-time economic shifts are pushing these countries to rethink their cozy relationship with the US dollar.
Janet Yellen spilled the beans earlier that the US’s habit of slapping sanctions left, right, and center is what’s pushing countries towards BRICS and others to snip their dollar ties.
The US debt clock is now ticking past $34 trillion. That’s right, trillion.
So, holding onto the US dollar is looking riskier by the minute for the economies of developing nations. This massive debt is messing with their economic growth and making life tough for local businesses by dragging down their currencies, as they end up holding chunks of this US debt in their reserves. Basically, they’re importing America’s financial headaches along with its dollars.
Now, let’s talk fireworks in the Middle East. Iran decided to light up the skies over Israel with over 300 missile drone attacks last Sunday. Thanks to the Iron Dome, all these were intercepted, but that doesn’t ease the tension one bit, with the war drums getting louder. Amidst this chaos, BRICS is playing its own game, calling for the Middle East to kick the US dollar to the curb for oil settlements.
Russian President Vladimir Putin is out there urging Middle Eastern countries to really show the US and Israel what’s up by ditching the dollar in oil trades. According to him, that would bring the two countries to a screeching halt economically.
This year, BRICS got strategic and welcomed oil biggies like the UAE, Egypt, Ethiopia, and Iran into their fold. They even gave Saudi Arabia an invite, though the kingdom is still playing hard to get. The big plan? To knock the US dollar off its perch by getting these oil-exporting countries to accept local currencies for their oil and gas trades. If Saudi Arabia jumps on this bandwagon, BRICS could really tighten its grip on the global oil and energy markets.
My mN Putin’s betting big on this.
He’s said loud and clear, “If oil producers in the Middle East stop using the US dollar, it will be the end of the dollar.” But despite this bold call, Middle Eastern countries haven’t yet ditched the dollar in oil settlements. It’s still the go-to currency for oil and gas, with local currencies just picking up the scraps in global trades.
Let’s rewind to 2001.
That’s when Jim O’Neill of Goldman Sachs cooked up the idea of BRIC (before it expanded to BRICS with South Africa and the newbies in 2024). He saw Brazil, Russia, India, and China as the future big players in the global economy. Fast forward, and his predictions aren’t just hot air. From 2012 to 2022, China alone has been behind about a quarter of global GDP growth, with BRICS collectively outdoing themselves, contributing over 45%.
Launched officially in 2009 and rebranded as BRICS in 2010 when South Africa joined, this group has seen its trade relations bloom, though China has been hogging the limelight. The trade growth within BRICS has been uneven, mostly powered by China, while the others haven’t seen much action until India started picking up the pace recently. Their positions at the UN are getting pretty cozy with China’s line, whether it’s on human rights in Xinjiang or more global spats like Ukraine and the Israel–Palestine mess.
Brazil was the odd one out, sticking with the West on Ukraine back in March 2022, but even they’ve blurred the lines since and are now singing from China’s hymn sheet on Gaza.
China’s leading the charge to puff up BRICS even more to be a louder voice for the developing world. They’ve thrown invites to a lot of countries, including some big oil players and others in shaky financial spots. This crew includes net creditors like Saudi Arabia and the UAE, alongside net debtors, which sets up a diverse group that could either mix well or clash.
BRICS is shouting for big changes at the IMF and World Bank to make these bodies more about everyone, not just the usual heavyweights. They’re pushing for a shake-up at the UN too, arguing that its old-school club of five with veto power isn’t cutting it anymore.
The goal of course is to make BRICS a solid platform for developing countries to air their gripes and push for trading in local currencies, especially with China, promoting a more open and fair global trade system.
