Why you should care about BRICS
The alternative world order led by China and Russia could change the world profoundly
In March of this year, the Chinese president Xi Jinping traveled to Moscow to meet with Russian president Vladimir Putin. Standing in the Kremlin doorway as they departed, Mr. Jinping said: “Right now there are changes – the likes of which we haven’t seen for 100 years – and we are the ones driving these changes together.” The Russian president responded: “I agree.”[i]
Jinping and Putin represent the “C” and “R” in BRICS, respectively, which is a group of emerging nations made up of Brazil, Russia, India, China, and South Africa. Together, they make up over 30% of the world’s economy and 40% of the world’s population. Over 60 other countries attended the BRICS summit in South Africa today, and many have expressed interest in joining. The implications for the acronym, however, remain uncertain. One of the goals is to reduce their dependence on the US dollar for trade, which would threaten the US’ ability to take on debt, with potentially major implications for average Americans. In this post I will explain what BRICS is, their goals, and why you should care.
What is BRICS?
BRICS came about after the financial crisis of 2008, which America exported to the world, as a group of up-and-coming countries trying to band together to advance their interests. It’s since become a behemoth, with China and Russia as unquestionably great powers and India as an emerging great power. It’s part of the shift to a multipolar world order, with multiple “poles” of power or superpowers. During the Cold War, the world was bipolar, with the US and Soviet Union as the poles. After the collapse of the Soviet Union and end of the Cold War, the world was unipolar, with the US as the only pole. The world order today is emerging multipolarity.
New Cold War
Amidst this emerging multipolarity is the New Cold War: a superpower competition between the US and China. Unlike Cold War I, where the only two powers with a say were the US and Soviet Union, this time the world is multipolar. Other great powers, like Russia, and even “medium” powers, like Saudi Arabia, also have a say. To illustrate the point, Russia crashed an unmanned probe into the lunar South Pole over the weekend, and India successfully landed an unmanned probe on the lunar South Pole, typically a great power gambit, while this article was being written.
A reason the Ukraine War is so significant, besides it being the largest land war since WW2, is that it is accelerating the shift to multipolarity. By arming their Ukrainian proxies and separating Russia from Europe, the West has pushed Russia into China’s open arms. And by weaponizing the US dollar through sanctions on Russia, the US has created an incentive for all other countries to stop using the dollar for their trade. Any country whose foreign policy may diverge from US wishes in the future runs the risk of being sanctioned if they continue to use the dollar.
Figure 1: Russian President Vladimir Putin calls on BRICS members to abandon US Dollar and settle trade in local currency (8/23/23)
The US Dollar’s status as universally used for global trade is called the prime reserve currency. There have been other prime reserve currencies in the past, most recently the British Pound until the British Empire lost the status after WW2. Being the prime reserve currency is an exorbitant privilege, as it allows the currency owner to take on virtually unlimited debt by printing money. The US is currently in over $30 trillion of debt as it imports most manufactured goods (see American Deindustrialization) and unsustainably funds growing Social Security and Medicare obligations.
Currently, global markets allow America to borrow at cheap rates, but if the BRICS alliance develops a credible competitor currency, that could change. Were the US Dollar to lose its status as prime reserve currency, US citizens would face inflation, cuts to Social Security and Medicare benefits, and other challenges. BRICS has been rumored to be creating their own currency backed by gold, oil, or other commodities.
If the world de-dollarized, American citizens everyday lives would be worse.
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