theThe “non-Western” world is raising the bar Challenging economic hegemony The financial institution of the United States. As of January 1, 2024, six countries Iran, Kingdom of Saudi Arabia, Egypt, Argentina, The United Arab Emirates And Ethiopiawill join the «Brics» group, i.e. BrKindergarten, Russia, India, China And South Africa. It will be the first step in a kind of “big bang” that aspires to change the geoeconomic balance of the world. At least 40 other states have already asked to join the clubfromAlgeria In the Democratic Republic of the CongofromIndonesia to Cubafrom Kazakhstan to Gabon. Therefore, an alliance is being formed that unites great powers, such as China, India and Russia, with African and Asian countries and South Africa, which are still developing. There was also this message at the summit held on Wednesday, November 15, between Chinese leader Xi Jinping and US President Joe Biden in San Francisco. “The world,” said Shi, “is big enough for both of us. “China and the United States are fully capable of achieving growth, despite their differences.” After meeting with Biden and the large American delegation, Xi Jinping went to dinner with some of the most important American businessmen, from Elon MuskFor executives at ExxonMobil, Apple, Citigroup and Microsoft. At the same time Xi Jinping He has been a staunch supporter of BRICS expansion. In other words: the doors are open to Western capital, but it is an open competition with Washington for global supremacy.
The birth of BRICS
The abbreviation Bric was coined in 2001 by Jim O’Neillchief economist at the US Investment Bank Goldman SachsTo point out four facts that must be emphasized for high-potential investments, in light of their turbulent development. In fact, O’Neill’s predictions did not take into account that a political-diplomatic process had also begun. The governments of Brazil, Russia, India and China They have already begun a dialogue that has reached maturity with the first summit hosted in southern Russia YekaterimburgJune 16, 2009. The picture with these leaders today seems a bit blurry. president of brazil, Luiz Inacio Lula da SilvaHe is the only one remaining in his position. He was at the head of China Hu Jintaonow there Xi Jinping; from Russia, Dmitry Medvedevnow Russian President Vladimir Putin; India, Manmohan SinghNow is the time Narendra Modi. In 2010, the four founders decided to open up about the dynamic South Africa. And with “q” South Africa i Brick They became BRICS.
Hand of Goldman Sachs
By 2040, O’Neill wrote to Goldman Sachs clients BRICS would have climbed the planetary economic hierarchy. China’s GDP would have matched that of the United States; India will overtake Japan to occupy third place. And Overall, the BRICS countries would have grown more than the G7The global capitalist elite consists of… USA, Japan, Germany, UK, France, Italy and Canada. The great start to the first decade of the 2000s was followed by a phase of slowdown. But on the whole, things went as the Goldman Sachs financier had envisioned.
Comparison between the G7 and BRICS
The International Monetary Fund indicates this in 2022 The five BRICS countries produced 31.5% Of the gross world product at purchasing power parity. Starting next January, with a squad consisting of 11 players, “Brix plus», their share of total wealth will rise 37.3% It will continue to expand: 37.7% In 2025, 38.5% In 2028. Just for a point of comparison: in 2022, the EU covered 14.5% of world GDP (always at purchasing power parity); While the G7the 30.3%. In 2028, their share of wealth will fall even further: share European Union (13.7%), that of G7 (27.7%).
800 million people live in the G7That is, a quarter compared to 3.2 billion From residents Brazil, Russia, China, India and South Africa. The gap will widen in 2024, with the contribution of the six new entries: Others 400 million residents. the total 3.6 billion: the 44.4% of the total population will live in the “BRICS Plus” area.
The G7 can count on gold reserves of 17,527 tons. The BRICS countries have 5,493 tons. But “start-ups” already have 21% Subordinate Oil stock And with the arrival Arabic SaoFingers, The United Arab Emirates And Iran They will reach a threshold 41%. On the Western Front the only two producers United State And Canadarespectively worthy 20 And the 6%. So far the basic data for the two blocks. But the important point here is: What are the goals, where does the BRICS Plus group want to go, and most importantly, is it possible to go?
Their stated goal is to build an alternative economic, commercial and financial system To those created by the United States at the end of World War II. The first step has already been taken: the creation of the New Development Bank. It started its work in 2016, from the main headquarters ShanghaiUnder the guidance of a person very close to Lola, Dilma Rousseff, former President of Brazil (a position from which she was relieved due to a series of scandals). The institute was born with the ambition to become Monetary Fund for Emerging CountriesLending money to troubled governments without demanding radical reforms. The program can be summarized in the same way Lola“Saving countries, not drowning them as the International Monetary Fund does.” The bank’s shareholders are the five BRICS countriesto which it was added Egypt, Bangladesh And The United Arab Emirates. In seven years of activity, NDB has established the equivalent of 30 billion dollars To finance about 100 infrastructure projects with the aim of reaching 350 billion by 2030surpassing the International Monetary Fund which, according to figures updated to November 15, 2023, administers loans for approximately 110 billion dollars. NBD mainly moves local currencies, as part of a broader strategy: to get rid of the “dictatorship of the dollar.”
– Undermining the dominance of the dollar
This topic was the focus of the last BRICS summit, on August 24, 2023, in Johannesburg, South Africa. Xi Jinping, Lola, MethodsRussian Minister Sergey LavrovPresident of South Africa Cyril Ramaphosa They started from the centralization of the dollar. The US currency regulates 60% of international trade and 89% of transactions in the foreign exchange market, i.e. buying or selling the currency. In the financial sector, the signals are more mixed. Central banks are working to reduce the weight of the US currency in the formation of monetary reserves. According to the International Monetary Fund, this proportion was equal to 65% of the total in 2016, but today it has fallen to 59%.. However, at the same time, issuances of dollar-denominated Eurobonds have risen: from 38.5% in 2003 to 48.5% in 2023. This means that in the past 20 years, more and more countries and more and more public or private companies have relied on the currency. America to search for resources in foreign financial markets.
Beijing nominates the yuan
But BRICS Plus will actually be able to launch a single currencyMaybe on the Euro model, conceived and tested from scratch? The widely accepted answer in global financial circles is “no.” And it will be this way for a long time.
The “emerging” group is highly heterogeneous, as public budgets and trade and economic policies often do not align. It’s hard to think of a lowest common denominator between a heavily indebted country like Argentina and a power awash with capital like China, just to make the case.
Hence, in practice, “de-dollarization” is interpreted in two different ways. The first is Beijing. Xi Jinping’s government is pushing for its currency, the yuan, to become an alternative to the US currency. But it starts from a very distant place, perhaps too far away. Today it covers only the yuan 2.6% of the world’s foreign exchange reservesagainst the 5.8% Subordinate JPYthe 4.8% from British poundthe 20% Subordinateeuro And as we saw 59% of the dollar. the Remaining 7.8% It is expressed in Canadian dollar, Australian dollar, Swiss franc and other coins. Since 2005, Beijing has concluded a series of agreements with central banks, among others, Malaysia, Argentina, Nigeria Introducing the yuan as a currency for foreign exchange reserves.
Moreover, the Chinese have developed a banking platformIn cooperation with Thailand, Hong Kong And The United Arab Emiratesto be used as an alternative SwiftIt is the system most used by global credit institutions to regulate financial and commercial payments. However, Beijing’s activity faces strong resistance among its partners BRICS. India And IndonesiaFor example, they have already declared that they are not interested in replacing dollar dominance with yuan dominance. Here, then, is the second possible development of “de-dollarization,” as the Brazilian president explained Lola“When we trade with each other, we can easily do so using our own currencies, so we don’t need to resort to the dollar.” But this scheme may have a limited impact on the global trade map. Unless mutual trade between all BRICS countries increases significantly. Starting with the one between the two giants: China And India. In 2022, traffic between the two countries increased by 8.2%, reaching a threshold $135.9 billion. But major trade routes still passed through United State And for the West. There are two data that point back to 2022: the exchange between United States of America And India was equal to $191.8 billion; The one between USA and China Even for 758.4 billion. Hence, after testing the facts, BRICS is in no position to do without it United State And fromthe WestIts products, technologies and main reference currency, the dollar.
But there is another important complication: It is difficult to imagine that these 11 countries and the coming countries can move in a combined manner at the political level and thus influence discussions in international bodies, starting with the United Nations. Or in the G20, the group that periodically brings together the leaders of the 20 largest economies on the planet. The trends are very different. The wars in Ukraine and Gaza have highlighted stark divisions and contradictions. there China He did not explicitly condemn Putin’s aggression Kyiv. to’India He did it. Disagreements over the definition of national borders between Beijing And New Delhi It is fixed. Xi Jinping It aims to hide American influence in the Indo-Pacific region. Indian Prime Minister, MethodsInstead, cultivate a dialogue with Joe Biden. On the Mediation Guidance:l’Iran He wants to cancel Israel from the face of the earth; to’Kingdom of Saudi Arabia It was ready to sign an economic cooperation agreement with Tel Aviv (The Abraham Accords), in exchange for Washington’s military protection, as well as American civilian technology. there warGaza However, the Israeli backlash has united the Muslim world, at least for now, against the government it leads Benjamin Netanyahu. Therefore, the challenges of BRICS Plus will be two-fold. This is towards the West, and in parallel, the settlement of conflicts Policy Internal and strategic sharing related to money and trade, Investments to question the geoeconomic centrality of the West.
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