BRICS: Brick by Brick

Photograph Source: 15th BRICS SUMMIT – 9YAN_5350 – PDM-owner

South Africa assumes the helm of the BRICS alliance, propelling an epoch-defining summit next week in Johannesburg. Amidst the post-pandemic landscape, this beacon of progress resounds with the theme ‘partnership for mutually accelerated growth, sustainable development, and inclusive multilateralism,’ ushering in a new era of global collaboration. The BRICS coalition resonates as a powerhouse across economic, political, and geopolitical realms. Evolving from the global South, it burgeons into an unparalleled force, harnessing the economic might and expansion of its constituent nations to reshape the global landscape. It is within alliances like BRICS that the fulcrum of power balance in our increasingly polarized global order resides, proving the vitality of collective actions for the common good.

Undoubtedly, the ascent of BRICS nations onto the global stage is indisputable. Their influence resonates in areas spanning international negotiations, peacekeeping, and conflict resolution. It’s vital to grasp that the BRICS coalition doesn’t sow divisions in principles, despite some Western perceptions. Rather, it seeks to recalibrate global power dynamics, dismantling the dominance of any one perspective. Rooted in a quest for impartial global economic and political architecture, BRICS’ emblem signifies equilibrium. Their upcoming summit is poised to spotlight pivotal dialogues on structural, economic, and political transformation, echoing their preceding endeavors.

The intrigue deepens as BRICS nations forge an innovative global governance paradigm, challenging the unipolar status quo. Imagine if they were to bolster trade with a shared currency, a bold maneuver potentially weakening the US dollar’s hold. Economists believe this ‘de-dollarization’ could magnify BRICS’ global footprint and reshape international dynamics. By 2030, their expanded coalition is projected to command over half of global GDP. Within this complex tableau, factors like dollar weaponization, colossal US debt, and BRICS+ talks about a new currency resonate, as this global alliance teases a promising future. However, beneath this allure lies a narrative of historical clashes and personal rivalries. While past attempts against dollar supremacy were systematically dismantled, the quest endures, propelled by determination and strategic precision.

Furthermore, the proposition of a unified currency among the BRICS nations poses an intricate quandary. This notion stirs the pot of challenges, beckoning us to question the state of these nations’ economic frameworks and political architectures. With entrenched structural dilemmas demanding resolution and ideological divergences simmering within the coalition’s ranks, the notion of diverting substantial resources towards a shared currency appears somewhat quixotic in the current juncture.

Financial analyses underscore the enduring dominance of the dollar in the sphere of issuing debts, encompassing both private corporations and governments. A staggering 45 percent of the global debt landscape is still cloaked in dollar denominations, an augmentation from the 40-45 percent range that prevailed over the preceding decade. The crossroads of strategic rivalry between China and the United States often transpire in emerging markets, and there lingers a widespread speculation that China’s burgeoning economic ties might inadvertently undercut the United States. Intriguingly, research by economists underscores that despite China’s concerted endeavors to universalize the yuan through global lending the lion’s share of syndicated loans still finds solace in the mantle of the US dollar.

Hence, while palpable enthusiasm might surge for a BRICS currency within certain echelons of the coalition, the ultimate realization and subsequent supplanting of the dollar appear as a mirage on the distant horizon. Within this landscape, the labyrinth of strategic competition—China versus India—forms a formidable barricade against any form of voluntary monetary union. Vital in this equation is the imperative of addressing the border dispute and nurturing tranquility between China and India, a task of paramount significance for both nations wielding nuclear power and pivotal for the alliance’s triumph.

Added to this tapestry are the intricacies of liberalizing capital flows, a challenge tinged with improbability due to the deeply embedded protectionist leanings of nations like Russia and China. Furthermore, the BRICS nations are juxtaposed in an economic patchwork of disparities, replete with unbalanced trade relations and distinct economic hurdles. These fault lines, akin to the tribulations endured by deficit-bound states within the alliance, create a complex and knotty path toward establishing a common currency.

In this poignant context, it behooves us to heed the words of a discerning commentator from a prominent Indian newspaper: “The BRICS countries, however well-intentioned, convene in August to deliberate a BRICS currency. The irony is, China might champion its yuan, while India’s response could echo, ‘over my dead body.’ The others’ voices, it seems, might fall on deaf ears. These aspirations, though noble, often swivel in the realm of pipe dreams. The Chinese assert that the dollar has been weaponized, a currency weapon that has been unscrupulously unleashed, while draped in the guise of soft power and values. This paradox raises the question: why does US’s faith endure? The riposte lies, perhaps, in its soft power, anchored in bedrock values that are safeguarded by institutional bastions.”

In this intricate ballet, India and its kindred nations appear far from ready for the abrupt economic overhaul of de-dollarization, given their pivotal reliance on dollar reserves and palpable aversion to destabilization. For instance, China, boasting the world’s largest foreign exchange reserves, reached $3.4 trillion by the beginning of this year, while India’s reserves stand at around $600 billion, with the significant portion held in US dollars. As economists assert, neither country is inclined to disrupt the stability associated with the dollar. However, as the tide shifts toward the ascendance of national currencies in international trade and a reduced dependence on the dollar, a strategic reorientation becomes increasingly apparent.

While the BRICS member nations have undeniably sustained impressive economic growth rates, this trajectory alone may not suffice for the formidable trials that lie ahead. These countries, while basking in the glow of prosperity, are not shielded from the impending challenges that loom large. In fact, the BRICS collective, already marked by regional and societal disparities, is poised to further amplify concerns tethered to social inequality and environmental sustainability. Navigating this intricate terrain demands a nuanced approach—embarking upon prudent choices, cultivating robust infrastructure, overhauling education, healthcare, and innovation frameworks, while fostering steadfast institutions and legal assurance. A pivotal question surfaces: to what extent do these member states’ political architectures uphold the sanctity of institutional tenets? Does each nation wield the essential institutional scaffolding requisite to advance its developmental voyage and deftly navigate requisite reforms through enduring solutions? How does the political narrative interlock with this grand endeavor, and what structural impediments shroud the path toward sustainable development within each unique political matrix?

Central to this discourse is the understanding that the journey of the BRICS alliance is intricately woven with challenges, demanding internal quandaries’ resolution before a shared currency vision takes center stage. Rushing heedlessly toward this goal risks eroding future prospects and mirroring ill-fated offline business endeavors. Yet, an alternative course emerges: fostering trade through local currencies, sidestepping the complexities of introducing a common currency prematurely.

Amidst these intricate considerations, an even more profound query surfaces: what footprint shall these emerging powerhouses etch upon the grand mosaic of international power equilibrium and the intricate tapestry of the global economic order? These queries resonate at the heart of academic deliberations surrounding the “ascendancy of emerging economies” and the conjectured “ebb of the United States.”

The prevalent assumption often sways toward an uninterrupted perpetuation of the economic vigor witnessed within the BRICS sphere in recent years. Yet, the path is far from unblemished. Political terrain poses formidable challenges, ranging from economic and social facets to environmental and demographic sustainability. Pervading uncertainties tether these nations’ continued evolution, dictating that viable solutions must be harnessed to counter these challenges. The efficacy of their response hinges upon their adeptness at political reform and the qualitative resonance of their governance structures—an axis upon which their collective destiny pivots.

Nilantha Ilangamuwa is a Sri Lankan born author. He was the-editor of Sri Lanka Guardian, an online daily newspaper. He was also the editor of the Torture: Asian and Global Perspectives, bi-monthly print magazine, co-published by the Danish Institute Against Torture ( DIGNITY) based in Copenhagen, Denmark.