Brics: The Rise of a De-Dollarization Movement and Political Rivalry with the United States
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The Brics, an acronym for Brazil, Russia, India, China, and South Africa, is a group of developing nations that have been growing in power and influence in recent years. As of January 1st, the group has expanded to include additional countries such as Iran, the UAE, Saudi Arabia, Ethiopia, and Egypt, further solidifying their position as a formidable force on the global stage. This expansion has not been without controversy, with some countries viewing it as a de-dollarization movement and an enemy of the United States.
Brazil still conducts 90% of its transactions in dollars
One of the main reasons why each member nation wants to see the Brics grow is to challenge the dominance of the US dollar. The group aims to create a world economy that is not dependent on the dollar, which would give them more bargaining power and reduce their vulnerability to fluctuations in the currency’s value. Brazil, in particular, has been vocal about the need for more options besides the dollar in international transactions. Despite having China as its biggest trading partner, Brazil still conducts 90% of its transactions in dollars.
However, the establishment of a unified currency for international commerce, as advocated by former Brazilian President Luiz Inácio Lula da Silva, remains improbable due to various factors. One major obstacle is the need for a Central Bank or an international one to oversee the operation. The nations would also have to align their macroeconomic policies, which could be challenging given their varying degrees of development. Additionally, persuading economic actors to accept a new unified currency as payment presents another challenge.
While there is discussion about the possibility of using the Chinese yuan as an alternative to the dollar, there are also obstacles to its internationalization. The Chinese government continues to implement regulations on the circulation of the yuan, hindering its full potential. Despite this, some experts believe that the growth of the Brics is solidifying a new multipolar order that aims to challenge the dominance of the dollar.
Expansion of the Brics
It is important to note that the expansion of the Brics has not been met with universal support. Argentina, for example, recently resigned from the organization, citing ideological differences. The United States has also expressed concerns about the rise of the Brics and its potential impact on US hegemony. However, it remains to be seen how the Brics will navigate these challenges and further establish themselves as a significant force in the global political and economic landscape.
In conclusion, the Brics are growing in power and influence as they aim to challenge the dominance of the US dollar and establish a new multipolar order. The expansion of the group to include additional countries further solidifies their position on the global stage. However, the establishment of a unified currency remains improbable due to various obstacles. Despite this, the Brics continue to work towards their goal of creating a world economy that is not dependent on the dollar. The implications of this growth and their impact on the global political and economic landscape remain to be seen.
