Paris, France – The BRICS summit that was held in Johannesburg, South Africa on August 22-24 went largely unnoticed by the American media. A lot of American citizens may not be aware of the BRICS or its potential to influence their economic wellbeing.
In existence since 2002, the BRICS, comprising Russia, China, Brazil, and India, was expanded to include South Africa in 2010. The group identifies as a global economic entity of advancing nations. However, it has wider implications beyond economics.
The BRICS, under the guidance of Vladimir Putin and Xi Jinping, has been driving the de-dollarization of global economy over the years, with the pace dramatically speeding up after Russia’s invasion of Ukraine and the unsuccessful US attempts to economically restrain Russia through sanctions. This development should raise American eyebrows.
Since 1971, the American dollar has been used for oil transactions globally, leading to the term “Petro dollar”. For countries desiring to buy oil or other commodities, the possession of adequate American dollars was mandatory. This came about through an agreement between the US and Saudi Arabia, the world’s largest oil producer. In return for the king of Saudi Arabia accepting payment exclusively in American dollars, the US pledged to protect and support the House of Saud.
This arrangement has benefitted the US immensely, both economically and in terms of global influence, because it requires worldwide usage of the American dollar for transactions. The US dollar turned into the global currency of choice and largely constitutes the world’s reserve currency.
These circumstances have led to an insatiable global demand for the American dollar, leading to a situation where there are more American dollars outside the US than within. This agreement has also led to an economic boom in the US and has allowed for a continuously growing deficit. This was evident in 2008 during the mortgage crisis when the US printed more dollars as and when needed, knowing that the world’s demand for dollars would always guarantee its value.
But the BRICS wants to put an end to this global dependence on the American dollar, contending that the dollar has been manipulated by the US, thus making it an untrustworthy partner on a global scale.
Over the last two years, spearheaded by Putin, the BRICS has been looking to end the economic domination of America. This objective was on clear display during the latest international summit, hosted in South Africa, and Americans should take note.
At this summit, Saudi Arabia, Iran, UAE, Argentina, Ethiopia, and Egypt were added as BRICS members, a tactical plan aimed at controlling global oil flow and transforming the Petrodollar as we know it. The new additions bring six major oil producers into the BRICS fold.
Since more than 90 percent of oil transactions are conducted using American dollars, this is a clear indicator of impending change. Particularly troubling for the US is Saudi Arabia’s deviation from accepting payments in American dollars.
The shift toward local currency transactions within BRICS leaves little room for doubt about the group’s intentions. Notably, India recently procured worth of a billion dollars of oil using rupees, its local currency.
Iran and the UAE are expected to contribute significantly to this de-dollarization endeavor, considering their status as major oil producers. The machinations of the BRICS cannot be ignored as they can potentially alter the global economic balance, impacting the US economy adversely.
The 2023 BRICS Summit was more than an international gathering; it was a targeted diplomatic endeavour to speed up de-dollarization by accepting at least three top oil-producing nations as members. These new inclusions send a clear message that the BRICS is determined to alter the global economic order, and the ones likely to lose from this shift are ordinary Americans.