Coin World News Report:
The BRICS countries (Brazil, Russia, India, China, and South Africa, as well as new member countries such as the United Arab Emirates, Egypt, Ethiopia, and Iran) are angry about ending their dependence on the US dollar.
At this year’s BRICS summit in Kazan, Russia, President Putin vigorously promoted de-dollarization, but attendees were told to carry dollars or euros. Non-Russian Visa cards did not work, and it was suggested to use dollars for simple currency exchange.
Despite the member countries’ urgent desire to break free from the dollar, the dollar remains the currency in everyone’s pocket. Putin’s de-dollarization dream faces severe resistance. Since World War II, the dollar has been the global reserve currency.
Russian Finance Minister Anton Siluanov announced a new plan to bypass Western platforms, but dismantling the dollar-dependent system is no easy task. While the BRICS countries do have economic influence, the infrastructure built on the basis of the dollar remains tight.
Different goals, new alliances
Putin’s goal of “building a multipolar world” sounds good, but uniting countries with different political orientations is another matter. Russia hopes to compete with the West through this alliance, while India values its relations with both the West and the BRICS countries.
India’s participation in the summit is to maintain its relationship with Russia, rather than sever ties with the West. The BRICS countries have also attracted the interest of Turkey and Indonesia, both of which have many reasons to avoid a complete alliance with the West, while Saudi Arabia has formally refused to join.
For India, the BRICS countries bring diplomatic benefits. India can ease its border tensions with China by meeting with Xi in a neutral position. Modi and Xi met in Kazan after two years of tension. The BRICS countries help India maintain a “strategic autonomy” policy.
This means balancing relations with both the West and the East, without favoring either side. This arrangement allows India to maintain allyship with the BRICS countries while staying connected with the United States in the Quad.
BRICS countries won’t easily move away from the dollar
Currently, the BRICS countries have three options: using their own currencies, adopting digital currencies, or relying on China’s renminbi. But each comes with its own headaches. Local currencies have low liquidity, Bitcoin is too volatile, and the renminbi? China hopes for its global spread but wants to maintain strict control.
China is also not ready to inject enough renminbi into Russia or other BRICS countries. It has its own problems to deal with. Xi called for strengthening “financial security” and enhancing the New Development Bank’s lending tools for the BRICS countries. However, the bank’s role in multilateral finance is limited and is not yet ready to compete with the Western system.
On the other hand, the West firmly keeps the dollar in first place. The United States consistently uses the dollar as a weapon. When Putin called on the European Union to oppose dependence on the dollar, the United States and its European allies discussed how to provide more assistance to Ukraine using frozen Russian assets.
Even during President Trump’s tenure, Washington helped allies with dollar swaps during crises. As former US Treasury Secretary John Connally said, the dollar is “our currency, but your problem.” Currently, the United States is still the only country capable and willing to provide dollar swaps to allies when needed.
The BRICS countries are trying to show that they are moving forward and increasing their influence by adding new members. But the path to a truly alternative financial structure is long. Western critics have been dismissive of this organization for years, but its latest expansion challenges that view.
With 36 countries and the Secretary-General of the United Nations attending this year’s summit, the BRICS countries hope to have a more prominent position on the global stage.
Although India leans towards the West, it benefits from the growth of the BRICS countries, as it balances a policy of not aligning completely with any one side, keeping its influence in Asia, Africa, and Latin America from being tied to one camp. The BRICS countries also provide a platform for India to maintain relations with Russia and resist Western pressure to isolate Moscow.
