The expansion of BRICS, a coalition of emerging national economies, is stirring up a financial storm, particularly for the U.S. and the global SWIFT payment system. The growing influence of BRICS, now encompassing nine nations, is poised to reshape global financial dynamics. This alliance isn’t just expanding its membership; it’s challenging the long-standing dominance of the U.S. dollar in international transactions. The move to settle cross-border payments in local currencies rather than the U.S. dollar could significantly undercut the volume of global SWIFT transactions.
The Shift Away from Dollar Dominance
Florida Senator Marco Rubio highlighted the potential impact of BRICS’s expansion on the U.S. dollar and SWIFT. His concerns aren’t unfounded. BRICS countries are gradually shifting away from U.S. dollar-based transactions, eyeing alternatives for cross-border settlements. This change is not just a financial strategy but also a geopolitical maneuver to reduce reliance on Western-led financial systems. The expansion essentially doubles the size of the alliance, making it a formidable counter to the American and European financial dominance.
The BRICS members are not only pooling resources but also exploring new avenues for financial interactions. The aim is to offer developing nations viable alternatives to the Western financial model. This approach is not just about diversifying economic ties but also a strategic move to create a more balanced global financial landscape.
A New Landscape of Global Finance
The impact of BRICS expansion is far-reaching. In 2024, the group evolved into BRICS+, adding significant economic and strategic weight with new members like Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates. Each of these countries brings substantial resources and geopolitical influence to the table, significantly enhancing BRICS’s collective economic and strategic posture.
Egypt, with its control of the Suez Canal and substantial natural gas reserves, adds a critical strategic dimension to BRICS+. Ethiopia, despite its economic challenges, contributes significantly with its vast water resources and agricultural output. Iran, a major player in global energy policy due to its oil and natural gas reserves, strengthens BRICS’s position in global energy markets. Saudi Arabia and the United Arab Emirates, both major oil producers, not only bring economic heft but also signify a shift in traditional alliances, indicating a trend toward autonomy from Western influence.
This expansion is not just about adding new members; it represents a shift in the global balance of power. The BRICS+ countries now account for a significant portion of the world’s population, landmass, oil production, and global GDP. This collective strength poses a direct challenge to the G7 nations.
BRICS’s approach to de-dollarizing international trade includes the New Development Bank (NDB) and the promotion of trade in national currencies. Discussions about a common currency and alternatives to the SWIFT system further signal a move toward a new financial order. This shift is a clear indication of the group’s intention to create a polycentric world order, moving away from a unipolar world dominated by Western powers.
The upcoming BRICS+ summit in Kazan symbolizes this shift. The potential addition of other energy-rich countries could further consolidate the bloc’s control over the global energy market. This development is more than just an economic alliance; it’s a geopolitical reconfiguration that could redefine the international order.
