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BRICS Summit’s Three Decisions to Shock the West
The recent BRICS summit, held in Kazan, Russia, marked a significant turning point in global geopolitical dynamics.
The decisions made during this meeting have the potential to profoundly disrupt the current world order, dominated by Western powers. In particular, two key decisions have caught the attention of analysts and political leaders worldwide: the expansion of the BRICS group and the creation of a new common currency for international trade.
Founded by Brazil, Russia, India, China, and South Africa, the summit confirmed the membership of Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates.
Argentina, which had requested to join, decided under the presidency of Javier Milei not to join the group, while the membership requests of several other countries that have expressed interest or have formally requested to join the BRICS group are being evaluated.
Among these are Algeria, Azerbaijan, Bahrain, Bangladesh, Cuba, Ecuador, Indonesia, Kazakhstan, Mexico, Nigeria, Pakistan, Senegal, Thailand, Turkey, Uruguay, Vietnam.
Venezuela, which had requested to join, faced a veto from Brazil.
The BRICS are strengthening, and the group’s global influence is already beginning to counterbalance Western powers, particularly the United States and the European Union.
The expansion of the BRICS group will have several geopolitical and economic implications.
Firstly, it increases the economic and political weight of the group, which already represents a very significant portion of the world’s population and global GDP.
This could enhance the group’s ability to influence economic and political decisions at the international level.
Secondly, the expansion could strengthen economic cooperation among the group’s members.
The new members bring with them natural resources, emerging markets, and potential investment opportunities.
For example, Saudi Arabia is one of the world’s largest oil producers, while other countries have rapidly growing economies.
Cooperation among these countries could lead to new economic development opportunities and greater market integration.
Finally, the expansion of the BRICS group could have significant implications for the current world order.
The presence of countries like Iran, which has long been subject to Western sanctions, could reinforce the idea of a multipolar world order, in which emerging powers play a more significant role.
This could lead to a rebalancing of global power dynamics and greater competition between Western powers and emerging countries.
The decisions made at the BRICS summit in Kazan, especially in the insurance and international payments sectors, highlight that a new global economic system is being created, with different balances and positions of strength.
With the creation of a new common currency for international trade, financial services will be particularly affected.
The new currency, which will be used primarily for trade among the group’s members, could have significant implications for the global economy.
This move is seen as an attempt to reduce dependence on the US dollar and create a more equitable and stable financial system.
Currently, the dollar is the dominant reserve currency globally and is used for most international transactions.
However, this dependence on the dollar makes countries vulnerable to fluctuations in the dollar’s value and US monetary policies.
The new common currency could offer an alternative to the dollar and reduce the vulnerability of member countries to currency market fluctuations.
Secondly, the new currency could strengthen economic cooperation among BRICS members.
By using a common currency, member countries could reduce transaction costs and facilitate trade among themselves.
This could lead to greater economic integration and increased trade among the group’s members.
Finally, the creation of a new common currency could have significant implications for the global financial system.
If the new currency were to gain popularity and become widely accepted, it could challenge the dominant position of the US dollar and lead to a rebalancing of the global financial system.
This could have far-reaching implications for the monetary and fiscal policies of countries worldwide.
Additionally, the creation of the BRICS clearing system for the settlement and clearing of trades, both for intra-BRICS trade and trade between BRICS and “partner” countries, aims to surpass the SWIFT system, which is under Western control.
Transactions will be settled by a “stablecoin” managed by the New Development Bank.
BRICS Clear could potentially “de-dollarize” between 70% and 80% of world trade in the next five years, representing between 19.5% and 25.5% of world trade.
Mechanically, the share of the dollar in international transactions would consequently decrease.
The share of the euro would be much less affected because the euro is currently used mainly for intra-EU trade and trade with the EU’s immediate partners, while, apart from Turkey, the impact of trade with the “BRICS zone” is low.
However, the impact would not be limited to the sharp decline of the dollar and the rise of “other currencies.”
In fact, the amounts in dollars held by central banks are held in the form of US Treasury bonds.
A reduction in Central Bank reserves would result in a massive sale of Treasury Bonds, causing a collapse in the public securities market and significant difficulties for the US Treasury in refinancing US debt.
Therefore, it can be assumed that the establishment of the BRICS Clear System will have important implications for the stability of the global monetary system, and more specifically for the “Western” part of that system.
The decision to establish a Reinsurance Company will disrupt positions that are considered established, which are limited for Russia by the oil price cap system.
This is a direct attack on the oligopolistic position in global insurance services that will put many in trouble. The “de-westernization” of the world is taking hold.
The BRICS already represent over 33% of the world’s GDP, compared to 29% of the G7.
One of the most emblematic decisions made at the Kazan summit was the institutionalization of the “partner countries” category of the BRICS, a “BRICS zone” around the BRICS to expand the organization without creating uncomfortable political ties.
The decisions made during the BRICS summit have elicited mixed reactions internationally.
On the one hand, many emerging countries have welcomed the group’s expansion and the creation of a new common currency.
They see these moves as an opportunity to strengthen their position in the global economic system and reduce their dependence on Western powers.
On the other hand, Western powers have expressed concern about the implications of these decisions.
They fear that the expansion of the BRICS group and the creation of a new common currency could undermine their global influence and lead to greater economic and political competition.
In particular, the United States and the European Union have expressed concern about the potential impact of the new common currency on the global financial system and economic stability.
These moves could lead to a rebalancing of global power dynamics and greater competition between Western powers and emerging countries.
Misusing a position of strength in an attempt to impose one’s will has been the main mistake of the West.
Western states must return to doing what they did well: producing wealth without destroying that of others, overcoming the concept of a zero-sum world.
Otherwise, someone will explain to them that they are no longer the kings of the world, and this could be very painful.
