Boubacar Amadou Cisse
The 2023 Spring Meeting of the International Monetary Fund (IMF) and the World Bank was marked by a strong comment by Kristalina Georgieva, Managing Director of the IMF; the economic pundit said allowing the global economy to split into self-sufficient trading blocs could trigger another Cold War. The conflict between Russia and Ukraine that erupted in 2022 revealed just how fragile the global political order is. However, the conflict also seems to portray the paradigm shift in the economic order. With BRICS pushing for more economic balance, the emergence of two economic blocs in the world is becoming evident. Many believe that countries like China are taking this situation to their advantage to position themselves for more power and influence. The real question is how this change will affect the global economy and geoponics.
A Brief History of the BRICS
It is important to note that the change did not begin with the ongoing war in Europe; in fact, it seems to have always been so. With the collapse of the Soviet Union in the 1990s and the steady rise of China, the United States and its allies remained vigilant about the potential of these countries. BRICS is an acronym that began as BRIC in 2001, coined by Jim O’Neill (an economist at Goldman Sachs) for Brazil, China, India, and Russia.
South Africa was then added to become BRICS in 2010. Indeed, Goldman Sachs has claimed that the global economy will be dominated by the four BRIC economies by 2050 (India Times). The bloc was first identified as a hub for investment opportunities and, eventually, the transition to become a global economic alliance. Today, the European conflict (Russia-Ukraine) has proved that the bloc also has a growing political stance.
The union represents more than 39 million square kilometres (26.7% of the world’s land surface) and 3.21 billion inhabitants (41.5% of the world’s population). In addition, Brazil, China, Russia and India are among the ten largest countries in the world, with the largest population, area and GDP; Russia, China and India are considered current emerging superpowers. With this economic and political influence, it is safe to say that the future lies in the BRICS’ intention to decentralize the economic and political monopoly held by the US and its allies.
Over the years, the end of US hegemony and the dollar is increasingly apparent. China and Russia have embarked on a policy of de-dollarization to protect their interests. They first started this process by changing their central banks’ dollar reserves with gold.
Last summer, at the annual BRICS summit, President Vladimir Putin mentioned the creation of a new world reserve currency that would contain member states’ currencies. This new reserve currency will serve as an alternative to the IMF’s popular Special Drawing Rights (SDR).” The decision was preceded by an already weakened US dollar due to the reduction of it as reserves in many countries, the use of other currencies in international transactions and the rise of cryptocurrencies that seek to modify the classic international financial system.
Moreover, it is clear that the Russian-Ukrainian conflict has forced Russia, as well as China, to take full steps towards their full financial freedom. Alongside the other BRICS countries, the two states have concluded numerous international contracts in their local currencies.
In addition to the BRICS, Iran has signed an oil deal with India with the Iranian rial as the underlying currency. December 2022 was marked by Saudi Arabia’s oil deal with China in yuan. All of this, in one way or another, shows the end of a key advantage of the United States in the international economic and financial system: the petrodollar. Many statistics estimate that between 2023 and 2028, the current BRICS countries alone will account for nearly 40% of the growth of the world economy. While China will lead with 22.6%, the United States comes in third with 11.3%, behind India (12.9%). Together with other candidate countries, the bloc’s role promises to become even more important. Egypt was granted access to the bloc’s joint banks; Algeria, Iran, Saudi Arabia, Argentina, and others have also applied for permanent membership; a total of 19 countries have applied, 13 of which have done so officially. Together, these countries are capable of changing the world as we know it today.
There are some who argue that China, as the dominant member of the BRICS, is exerting undue influence over the bloc. However, it's important to remember that all member countries of the BRICS are committed to the idea of a multipolar world. In fact, the formation of unions and alliances is a common way for nations to protect their shared interests. For example, due to the ongoing conflict with Europe, Russia has sought closer ties with China and India, leading to a wave of investment and development along their shared border. While China is certainly a major player in the bloc, it's important to recognize that all member countries have a say in the group's decision-making process and that they are all working towards a more balanced distribution of power in the world.
To sum up, it is undeniable that the BRICS are a rising superpower both politically and economically. Europe, with an ageing population, is facing a conflict that will have sequels for years to come; as far as the United States is concerned, its economic and political dominance has been mainly challenged by China and Russia. Maybe it was too ambitious, or maybe that’s just the way things are.
Everything that exists has a life cycle; power and authority are no exception. Just like the hegemonies of ancient Egypt, Rome, the Byzantine Empire, the Ottoman Empire, and the British Empire, to name a few, the dominance of the United States and its allies over the world began to have cracks and breaches. It just so happens that the BRICS countries regularly make the right move at the right time. The transition to a multipolar world seems inevitable. As is often said, “Change is inevitable, but the wisest decision is one that accepts and accommodates change.”