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BRICS Summit: Keeping Expectations in Check

The world is buzzing with rumours as the BRICS summit, which will take place in Johannesburg, gets closer. The BRICS group consists of Brazil, Russia, India, China, and South Africa. The summit has sparked both hopes and anxieties among Western elites due to predictions of a new counterbalancing force in international affairs and the potential for challenging the dominance of the US currency. However, it's important to look at the historical framework and internal forces that have defined the bloc's trajectory before we go into the possibilities of a BRICS currency to compete with the dollar.

The BRICS network's visibility has reached previously unheard-of heights as a result of negotiations about a "BRICS+" expansion that would include around two dozen new member nations and a "de-dollarization" objective. After the bloc's potential had previously been dimmed and there had been internal strife, interest has now increased.

Challenges and Shifts

The BRICS summits and other crucial conferences were postponed during the latter three years of the Covid-19 pandemic, which hampered the bloc's cohesion and development.

From 2019 to 2022, the BRICS bloc's cohesion and development were hampered by the right-wing extremism of Jair Bolsonaro's Brazilian administration. His allegiance to Western interests had a significant impact on significant issues like patent waivers for Covid-19 therapies, emphasising internal strife.

Due to a lack of resolution in the past, territorial conflicts between China and India erupted in the Himalayas. Relations within the BRICS were strained by these controversies as well as disagreements involving Pakistan.

Vladimir Putin's invasion of Ukraine in 2022 resulted in political and economic difficulties around the globe. The leadership of South Africa and its international connections were hampered by this incident.

Internal leadership rifts were reported in a number of BRICS member nations, ranging from political disputes to claims of corruption. The bloc's stability and focus were impacted by these internal conflicts.

Despite these difficulties, the BRICS nations of Brazil, Russia, South Africa, and China all outperformed forecasts in terms of economic growth. However, even as the notion of challenging the dominance of the US dollar gained traction, several factors suggest that a BRICS currency to challenge the dollar's supremacy may not be feasible in the near future.

Obstacles to a BRICS Currency

Complex geopolitical dynamics: The various nations that could run for the BRICS+ organisation bring together nations with various political beliefs and interests. It is difficult to build a cohesive approach to currency concerns due to the disparate member nations.

Carbon Intensity and Economic Priorities: A lot of prospective BRICS+ members largely rely on the fossil fuel industry, which makes it difficult to reach an agreement on a new currency. These nations' economic objectives frequently conflict with their social and environmental concerns.

Sovereignty and Capital Controls: Important BRICS economies, like China, place a high priority on capital controls and currency sovereignty. This strategy restricts the creation of a new currency in an effort to subvert the dominance of the dollar worldwide.

No Consensus on Currency Mechanisms: It would need extensive talks and time-consuming agreements to establish a new currency or trade settlement mechanism. Such a change is difficult because of the conservative tendency of financial institutions and the complexity of the world's financial systems.

The Sub-Imperial Duties of the BRICS: The BRICS group has frequently fallen into the trap of adhering to established global financial arrangements, despite its objectives for multilateral reform and alternative economic power. This is seen by the way organisations like the New Development Bank operate and by how little the world's financial systems have changed overall.

Although the idea of a BRICS currency challenging the US dollar's dominance is intriguing, the reality of global geopolitics, economic priorities, and the intricacies of international banking indicate that such a transition is unlikely to occur anytime soon. The BRICS bloc's internal problems and reluctance to confront the fundamentals of financial power make it much more difficult to create a workable alternative currency.

It's critical to keep expectations in check as the BRICS conference in Johannesburg draws near and to understand the difficulties of completely changing the world's financial system. Although there are still calls for a more equitable global system, getting there is difficult and unclear.


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