Africa -China Review Africa -China Cooperation and Transformation
Published: August 24,2023
By Altaf Moti
The BRICS (Brazil, Russia, India, China, and South Africa) grouping of emerging economies has been growing in importance in recent years. The combined GDP of the BRICS countries is now larger than that of the G7 (Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States), and their economic and political influence is only likely to grow in the years to come.
The BRICS countries have a combined population of over 4 billion people, which is more than half of the world’s population. These countries have a combined GDP of over $20 trillion, which is about 25% of the world’s GDP. They are major producers of commodities such as oil, gas, and metals and are increasingly investing in each other’s economies. The BRICS countries have been working together to reform the global financial system.
In recent months, there have been reports that Saudi Arabia and the United Arab Emirates (UAE) may be considering joining the BRICS grouping. If these countries were to join, it would be a major development with far-reaching implications for the global balance of power.
There are a number of reasons why Saudi Arabia and the UAE might be interested in joining BRICS. First, the two countries are major oil producers, and they would benefit from closer economic ties with China and India, which are both major consumers of oil. Second, both Saudi and the UAE want to balance American power in the Middle East by joining BRICS. Third, both countries are looking to diversify their economies away from oil, and they would see joining BRICS as a way to gain access to new markets and investment opportunities. Fourth, it would make it more difficult for the United States to unilaterally impose its will on the global stage.
The accession of Saudi and the UAE to BRICS would also be a major challenge to the dominance of the US dollar in the global financial system. The US dollar is currently the world’s reserve currency, which means that it is the currency of choice for international trade and investment. This gives the United States a significant amount of economic and political power.
If the BRICS group of countries add Saudi as a member, it will stop the practice of recycling petrodollars. It is known fact that apart from other benefits, Saudi sells oil to the United States for dollars, which helps to keep the value of the dollar high. If BRICS countries stop buying oil from Saudi Arabia in dollars, it will weaken the dollar and make it more difficult for the United States to borrow money. This could have a significant impact on the US economy.
China is one of the largest holders of US Treasury bonds. If China stops buying US Treasury bonds, it will make it more difficult for the United States to borrow money. This could lead to higher interest rates and a slower economy.
If Saudi and UAE join BRICS, it is likely that other oil-producing countries will follow suit. This could lead to a significant decline in the demand for dollars, which would further weaken the dollar.
If BRICS were to create its own currency, it would reduce the demand for US dollars and would therefore weaken the US dollar’s position as the world’s reserve currency. This would make it more difficult for the United States to finance its budget deficits and would also make it more difficult for the US government to impose economic sanctions on other countries.
The creation of a BRICS currency would be a major development with far-reaching implications for the global balance of power. It would weaken the dominance of the US dollar and would give emerging economies like China and India more economic and political power. It is therefore likely that the United States would resist any attempt by BRICS to create its own currency.
Overall, the potential implications of Saudi and UAE joining BRICS are multifaceted. While it could provide significant economic benefits to the country, it could also lead to increased tensions with the United States and other Western powers, and could raise questions about the values and principles that underpin the group. As such, any decision about whether to join BRICS would need to be carefully considered and weighed against a variety of factors.
In short, the prospect of these two countries joining BRICS highlights the complex web of factors that shape the global oil market and the ongoing competition for influence among major oil-producing nations.
Altaf Moti writes on diverse topics such as politics, economics, and society.
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