For a man in isolation, Vladimir Putin sure has a lot of company. “Putin the Pariah’” threw a BRICS party and 32 heads of state and government showed up. The UN Secretary General António Guterres somehow forgot he’d accused Vlad of “unleashing a nexus of horror” on Ukraine and, perhaps not wanting to miss out on a free BRICS tote bag and pen, went along to the conference in the Russian city of Kazan.
He joined the leaders of Turkey, Iran, Ethiopia, Saudi Arabia and many others at Russia’s biggest gathering of international politicians since the invasion of Ukraine. The debate about the morality of Guterres’s presence is fierce. The Estonian Foreign Minister said the UN chief had handed “a clear propaganda victory to Putin’s regime.” It is unlikely Gutteres has repeated his view that the butchers of Bucha must be held “accountable”. Nevertheless, his attendance is another example of how Putin is not “isolated” as most Western leaders claim – he’s just isolated from them. It also shows that BRICS is a forum demanding attention.
The dozens of countries attending the 16th BRICS conference are not necessarily pro-Russian, many are simply interested in a grouping of nine countries which account for about 25 per cent of the world economy and 45 per cent of the world’s population. The original members of BRICS were Brazil, Russia, India, China, and South Africa. They have now been joined by Egypt, Ethiopia, Iran, and the UAE, while others, such as Nicaragua, Thailand, Cuba, Bolivia, Belarus, and even NATO-member Turkey are interested in membership.
So, who’s afraid of the Big Bad BRICS? No-one. Who’s watching carefully in case it becomes, as Russia hopes, a political and economic powerhouse opposed to the West? Everyone, especially the G7 countries.
Moscow faces an uphill battle. There are several tensions within what is now often called BRICS+. India, UAE, and South Africa, all current members, do not want the grouping to position itself as hostile to the West, nor do some prospective members. This is why India is against more countries joining as full members and instead wants them to be offered “BRICS partners” status without voting rights.
Another split within both the nine members and those who may join is over “de-dollarisation” – reducing the use of the dollar in trade and other international transactions. Russia is pushing the idea as part of its attempt to escape the sanctions it faces due to the invasion of Ukraine. De-dollarisation also fits Moscow’s long-term strategy of weakening and then dismantling the Western-led global order.
It is taking action. Russia has already cleared out US dollar-controlled assets from its sovereign wealth funds and encourages the central banks of other countries to reduce the number of dollars held in their reserves. It helped set up the New Development Bank which it hopes one day will rival the World Bank. It backed the BRICS Contingent Reserve Arrangement which is designed to rival the International Monetary Fund and give countries in the Global South an alternative source of capital. The newly launched BRICS Pay allows members to avoid using the international SWIFT system and Putin is on record as wanting countries to use the Chinese yuan for cross-border trade. BRICS Pay attracts some countries because it lacks the level of compliance checks and transparency required by SWIFT.
However, the creation of a BRICS currency as a credible substitute for the dollar is highly unlikely, and even the measures taken above are not a real threat to the global dominance of the US currency. This is primarily because China is an exporting country, heavily reliant on a global financial system that is underpinned by the dollar. It cannot risk seriously undermining it. The yuan is not a viable alternative for several reasons including that there are a lot of dollars circulating around the world and not many yuan.
If a country or major company wants to raise capital, the bonds and debt securities it issues in return for money are backed by the dollar. It is a known and trusted quantity with which to calculate the value of the exchange. There is no alternative and trying to create one would be a very risky business especially if major economies didn’t get on board.
This brings us to the political splits within BRICS. India is not exactly a friend of China and would oppose attempts to promote the yuan as an alternative to the dollar because that might strengthen its biggest rival. India, China and the US will be the three largest economies in the world for much of this century and India would be joined by other serious players such as Germany, Japan, the UK, Italy, France and Canada in sticking with the dollar.
Other BRICS members have serious difficulties with each other, notably Ethiopia and Egypt who are at daggers drawn over the Grand Ethiopian Renaissance Dam. China has smoothed over the difficulties between Iran and Saudi Arabia, but there is no trust between the two and tensions are likely to resurface.
BRICS+ as a coherent bloc willing to act with unity on the global stage is a chimera. It is more a loose association of countries, many of which have diverging ideas about the world. Its threat to the dollar’s dominance is small although BRICS Pay, the New Development Bank, and the Contingent Reserve do mean BRICS as an entity will try to slowly chip away at the level of dominance. Blockchain technology is already allowing secure payment transactions to be made which bypass sanctions and that is a system which will attract some countries.
BRICS+ can also be an alternative forum for co-operation on climate change, renewable energy, and technology, but to date it lacks a coherent unifying political ideology about systems, values, and economic policies. With that, it can become a genuine global player. Without it, it will remain an interesting anacronym to keep an eye on.