The total GDP of the BRICS countries exceeded the GDP of the G7 member countries, according to data from last October, but recently released by Refinitiv Datastream (https://lipperalpha.refinitiv.com/2022/04/news-in -charts-g7-no-longer-flying/#).
GDP in itself is not an indicator of quality, but it is a relative indicator of power. The gap is expected to widen as China and India experience strong economic growth and more countries are interested in joining the BRICS. Almost 40% of the world’s population lives in these BRICS countries and immediate enlargement of the organization is expected with Algeria, Argentina and Iran as candidates.
BRICS demographics are what generally drive global growth, especially India and China at the moment. However, the demographic situation is changing in the world, since there is a serious demographic problem in the industrialized countries, in the G7.
One of the consequences of this demographic decline is that industrialized countries are in the process of deindustrialization. The decline of industrialized countries is expected, especially European countries and the United States.
It is even predicted that by 2050 the situation will change completely, because most of the existing BRICS countries will be among the 10 best performing economies in the world. In particular, it is expected that the number of African countries within the BRICS will increase.
China and the other BRICS countries would like to see more African countries because there are some major African powers that would like to join the BRICS. BRICS was founded in 2009, when it seemed that the confrontations were over and that there was now a space exclusively for cooperation and trade. BRICS member countries (since the economic model of equal and mutually beneficial cooperation proved attractive) intend to create their own common currency for the settlements.
A Russian official admitted a few days ago that the BRICS are working intensively to create their own currency to challenge the dominance of the United States dollar and as soon as possible dethrone it and replace its hegemonic position in international trade.
Moscow has found itself reeling under an avalanche of Western-backed sanctions and restrictions against its ability to trade freely in the global market. In this context, Russia has taken a leading role in strengthening ties between the BRICS nations and creating a common currency to prevent Western economic warfare from affecting them.
During the two-day “St. Petersburg International Economic Forum” held in India, State Duma (Parliament) Deputy Speaker Alexander Babakov called for the creation of a common Indian-Russian common currency to create stronger economic ties between the two nations.
“Our goal should be to draw up new rules in the financial sector in order to make it possible to use an already common currency,” Babakov said. “It doesn’t matter if it’s a digital ruble, a digital rupee, a digital yuan or some other currency. But that currency must follow the laws of our respective nations.”
Babakov noted that this proposed new currency would have to be backed by gold or other precious metals. He pointed out that the US dollar does not benefit the common goals of India and Russia and their dependence on the dollar continues to give the US “air” to unfairly leverage both nations.
The drive for de-dollarization
The drive to create a common currency is part of the ongoing de-dollarization campaign. The US dollar was called the “currency king” because it became the world’s official reserve currency in 1944, a decision made by a delegation of 44 Allied countries called the Bretton Woods Agreement.
Since then, the dollar has enjoyed a strong position in the world as the most important currency in use today, a situation that has greatly benefited American elites and caused much pain to US enemies around the world due to the disproportionate influence it has given the dollar in the US versus other economies.
This influence has allowed America to use sanctions and other tools of economic warfare as a means to achieve its foreign policy goals. But in recent years, America’s main rivals, including Russia and China, have been calling for an end to the dollar’s hegemony. This process, known as de-dollarization, is the process of replacing the US dollar as the currency used for international trade.
The main proponents of de-dollarization emphasize how reducing other countries’ dependence on the dollar and the US economy would help mitigate the effects of economic and political changes in the US on their own economies.
De-dollarization also reduces nations’ exposure to fluctuations in the value of the dollar and changes in interest rates, which can help improve global economic stability and reduce the risk of financial crises affecting more nations.
De-dollarization moves have been gaining momentum in recent years, but especially since 2022, when an International Monetary Fund (IMF) document noted that the dollar’s share of global foreign exchange reserves fell below 59% in the fourth quarter of 2022, extending the process of decline which lasted two decades.
In addition, the IMF noted that the dollar’s decline was not accompanied by a rise in the holdings of its Western allies, such as the British pound, the Japanese yen or the euro, which are “other long-term reserve currencies.”
“Rather, the dollar shift went in two directions – one-quarter to the Chinese renminbi and three-quarters to the currencies of smaller countries that played a more limited role as reserve currencies.”
Biden’s devastating Russia sanctions destroy the dollar’s decade-long dominance as the world’s reserve currency. Former Secretary of Defense Robert Gates has famously said on more than one occasion that, although he personally liked Joe Biden, Biden has been wrong on every major foreign policy issue throughout his half-century political career.
And he and his handlers are handling the war between Russia and Ukraine exactly the wrong way as well. In particular, Russia’s policies of economic isolation are creating a divided world in which the United States will no longer dominate.
The process ensures that the US dollar will no longer reign as the world’s reserve currency – “which will lead to the collapse of our economy when countries stop buying our debt.” An eloquent example comes with India’s bulk purchases of cheap Russian fossil fuels increasingly being made in currencies other than the dollar.
The demand for the dollar will decrease, which will lead to a depreciation of its value. This would make imports more expensive and increase inflation in the United States, which would lose the privilege of being able to borrow in its own currency, meaning it would have to pay higher interest rates to borrow money from other countries. This in turn would lead to a decrease in foreign investment in the United States, which would slow down economic growth.
