Why can BRICS reduce U.S. dollar’s hegemony?

Published: August 20,2023

BRICS, a group comprising the emerging economies of Brazil, Russia, India, China and South Africa, is set to convene its 15th annual gathering – the BRICS 2023 Summit – next week in South Africa, which experts say can hold significant implications for global geopolitics and reduce the U.S. dollar’s hegemony.

“To form a hedge and balance against the hegemony of the United States and the West, and to promote the reform of the global multilateral mechanism is an important mission of the BRICS countries. It is also the expectation of many developing countries from the BRICS mechanism,” Sun Yanfeng, a research fellow at the Institute of Latin American Studies of the China Institutes of Contemporary International Relations, told China Media Group recently.

The expert pointed out that the BRICS countries have the willingness, the basis and the ability to cooperate on the issue of establishing and maintaining a fair and reasonable international political and economic system.

“In the future, the BRICS countries will accelerate exchanges and cooperation among member states in the fields of economy, trade, finance, energy, and science and technology. At the same time, the BRICS countries will make their voices heard in the reform of the World Bank, the International Monetary Fund and the United Nations,” the expert said.

As an important platform for cooperation among emerging markets and developing countries, BRICS is committed to upholding multilateralism, reforming the global governance system, and increasing the representation and voice of emerging economies and developing countries. Altogether, the BRICS nations account for over 40 percent of the world population and about 26 percent of the global economy.

The BRICS has overtaken the Group of Seven (G7) in terms of gross domestic product based on purchasing power parity, according to data published by the UK-based economic research firm Acorn Macro Consulting this March.

The five BRICS nations now contribute about 31.5 percent of global GDP, compared with 30.7 percent by G7 countries, according to Acorn.

Altering the status quo

The upcoming summit has its central agenda revolving around the launch of a common currency among the member nations, Modern Diplomacy reported on August 11, adding that the move, aimed at reducing the dominance of the U.S. dollar in international trade, has the potential to reshape the geopolitical landscape and challenge American supremacy.

“For decades, the U.S. dollar has reigned supreme in global trade and transactions, affording the United States unparalleled economic and geopolitical leverage. The U.S. has been using (the) dollar and economy as tools to coerce and pressurize its adversaries,” it said. “Imposing sanctions was a common tool against its rivals to achieve political goals.”

There has been a growing sentiment against U.S. hegemony, supremacy and coercion. “The proposed launch of a BRICS common currency or de-dollarization aims to alter this status quo, potentially diminishing the American influence and power that is closely tied to the dollar’s dominance,” it said.

“BRICS is a strong alliance and plays a huge role in global trade and investments, and above all, it is above American influence,” it added. “BRICS is in a position to transform the global economy in total. This move represents a growing discontent with the U.S. dollar’s global dominance and a push toward Eastern superiority.”

“Many countries want to join the BRICS system, as it can help establish an international power system commensurate with their economic size and break the imbalance in the current global governance system,” Wang Youming, director of the department for developing countries studies at the China Institute of International Studies, said in an interview with CGTN.

Wang noted that building stronger solidarity and deeper economic cooperation, including the establishment of an independent global financial and payment system, will be on the agenda of the BRICS nations.

The 15th BRICS summit will be held in South Africa’s Johannesburg between August 22 and August 24. The summit will be the first in-person BRICS gathering since the COVID-19 pandemic.

According to the government of South Africa, more than 40 countries have expressed interest in joining this bloc of developing nations. So far, over 20 countries have formally applied to become new BRICS members, including Saudi Arabia, Iran, the United Arab Emirates, Argentina, Indonesia, Egypt and Ethiopia.

source: CGTN