My Take | Time for Brics to prove it’s a force for good
- Besides leading the way to de-dollarisation against US abuses, the bloc of five nations can expand its membership and take on greater responsibility for the common good within the Global South
People always try to hang too much or too little on the idea of Brics. The problem has always been that members Brazil, Russia, India, China and South Africa have little in common other than being the wealthier of the developing countries. Neither their economies nor their political systems converge. Indeed, China and India are at loggerheads, and Russia is now practically untouchable over the war in Ukraine.
While it need not be a mere talking shop, its leaders usually talk big rather than try to be more realistic. Perhaps they may do better during their summit this week in Johannesburg.
There has not been a lack of grandiose visions. Brazilian President Luiz Inacio Lula da Silva has even called for some form of currency union. One currency, supported by a Brics central bank, like the euro? The idea was so preposterous that South Africa has reportedly refused to put it on the agenda for the summit. And rightly so.
Lula is no doubt motivated by the same need of many emerging economies, especially those facing sanctions imposed by the United States, to move away from the US dollar-dominated systems of global trade and finance.
Of course, the Brazilian leader is right that countries need to carry more transactions through local currency settlements. They are already doing it, but still it will be a long process. As dozens of developing countries have expressed a desire to join Brics or have already applied for membership, the grouping may indeed work as a foundation to devise the technical mechanics for trade and financial transactions outside the dollar-dominated world.
That has become imperative because the US has recklessly weaponised the dollar to wage economic warfare, so the rest of the world really has no choice but to “de-dollarise”. The yuan can play a greater role here as China is the No 1 trading partner of more than 120 countries around the world. But that will always be a work in progress so long as Beijing insists on capital controls and actually doesn’t want to fully internationalise its currency. It has as much to do with whether the rest of the world wants to use the yuan for trade and as a reserve as whether the Chinese themselves want to make it more widely available.