BRICS Consortium
Updated 2023-12-31
2023: The Year the Bubble of US Leadership Burst If Ukraine exemplifies yet another iconic U.S. military failure, and BRICS the changing of the guard in the economic realm, the sadistic savagery in Gaza repudiates the moral right of the U.S. to lead… anything.
Ukraine is an epochal failure for the U.S. in all dimensions, the worse for having been entirely self-inflicted. Then, Ukraine accelerated the growth of the BRICS consortium. This group, originally made up of Brazil, Russia, India, China, and South Africa (hence, the acronym) aims to bypass the U.S.-dominated global trading system, instead building one that allows nations of the Global South to not simply be milked of their wealth by the West, but to prosper in their own right. In August, it named six new nations for membership: Argentina, Egypt, Ethiopia, Iran, United Arab Emirates, and Saudi Arabia.
These now-11 nations contribute a combined 37% of global GDP, versus 30% for the Western G7 bloc. They are explicitly committed to dethroning the dollar as the world’s international reserve currency, by, among other things, trading with each other in non-dollar currencies. Russia and China, for example, no longer use dollars in trade between themselves.
Of key significance is the composition of the new members. Half of them are major oil exporters, among them, importantly, Saudi Arabia, a formerly staunch U.S. ally. With Russia, they produce 44% of the world’s oil. Why is this important? The dollar’s status as international reserve currency is closely tied to oil. Until recently, oil was only sold in dollars, meaning that all of the world’s nations had to acquire dollars to be able to buy oil. So, when BRICS+ oil exporters begin accepting payment for their oil in non-dollar currencies, it is the dollar that will be damaged. Nations will no longer need dollars to buy oil. That means they will not need to “buy” dollars by purchasing U.S. Treasury securities. That will make it almost impossible for the U.S. to fund its massive budget and trade deficits, which are financed—that’s right—by selling treasures to other nations. That day is fast approaching, as seen in Saudi Arabia announcing this year that it will begin accepting payment for oil in Chinese yuan.
The growth of BRICS, its economic clout, its explicit de-dollarization agenda, and the centrality of oil-exporting nations in its members will prove like the water shifting in the bottom of a rowboat. It will decisively reverse the primacy of the U.S. and the West in global economic affairs. The damage isn’t all landed, yet, and won’t be for many years, but the direction is clear and irreversible. There’s a new economic sheriff in town. https://www.commondreams.org/opinion/2023-us-leadership-bubble-burst
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