BRICS SUMMIT 2024: De-Dollarization and the New World Order – By Umar Osabo, PhD.

 

“The 2024 Summit has provided a crucial platform for discussing de-dollarization strategies. Member nations unveil plans for currency swaps, trade in local currencies, and develop payment systems called “BRICS Pay” and designed “BRICS currency which has the names of all the member nations on it to obviate the need for dollar transactions”


PEGASUS REPORTERS, LAGOS | OCTOBER 28, 2024

As the world grapples with an increasingly multipolar landscape, the significance of the BRICS Summit 2024 looms large on the global stage. The emerging economies of Brazil, Russia, India, China, and South Africa converged for the 15th time. This summit has not only addressed economic cooperation among member countries but also represented a significant shift towards de-dollarization and a redefined world order.

The Evolution of BRICS

Since its inception in 2009, BRICS has evolved from an economic forum into a powerful geopolitical alliance. The member countries are characterized by their diverse political systems, economic strengths, and cultural backgrounds. Initially, BRICS served as an alternative bloc in response to Western dominance codified by institutions like the International Monetary Fund (IMF) and the World Bank.

However, as global geopolitics shift, the formation of BRICS is increasingly viewed as a bulwark against U.S. hegemony. The motivation for collaboration is no longer merely economic; it has expanded to include a collective stance on political issues, security concerns, and cultural exchange. The 2024 Summit has addressed crucial themes centered around de-dollarization and the evolving dynamics of international economic relations.

The Case for De-Dollarization

The concept of de-dollarization, which refers to the reduction of the U.S. dollar’s dominance in global trade and finance, has garnered traction among BRICS nations. Various factors have propelled this movement forward.

Economic Dependence

The U.S. dollar has long been the world’s primary reserve currency, accounting for about 60% of global reserves. This dependence allows the U.S. to impose economic sanctions effortlessly, as seen in recent decades against countries like Iran and Russia. BRICS nations have increasingly recognized that such dependency undermines their economic sovereignty.

Geopolitical Motives

With rising tensions between the U.S. and other global powers, particularly China and Russia, BRICS countries find themselves motivated to explore alternate currencies for trade settlements. For countries facing sanctions or unfavourable terms imposed by Western financial institutions, moving away from the dollar represents a matter of national interest.

Economic Realities

Global trade has seen an uptick in bilateral agreements aimed at transacting in local currencies. This trend is being augmented by initiatives like China’s Belt and Road Initiative (BRI), which encourages trade in renminbi, further nudging countries to reconsider their dollar dependence.

BRICS members who attended the plenary in 2024

BRICS as a Platform for Change

The 2024 Summit has provided a crucial platform for discussing de-dollarization strategies. Member nations unveil plans for currency swaps, trade in local currencies, and develop payment systems called “BRICS Pay” and designed “BRICS currency which has the names of all the member nations on it to obviate the need for dollar transactions.

Currency Cooperation

A focal point in the summit discussions is centred around establishing a BRICS digital currency. Such a measure would facilitate intra-BRICS trade without requiring conversion to dollars, thus allowing member nations to sidestep the complexities of traditional banking channels. Collaborations could extend to building a joint payment system that rivals SWIFT, further enhancing the bloc’s financial autonomy.

 

Strengthening Multilateral Discussions

Moreover, the summit has emphasized a more coordinated approach to global economic governance. By promoting a multipolar financial landscape, BRICS aims to advocate for reforms within existing international institutions, addressing imbalances that prioritize Western interests.

Trade Alliances

As the BRICS nations strive for self-sustenance, expanding partnerships with other emerging economies will also be a priority. The 2024 summit witnessed BRICS’s apt approach with nations in Africa, Latin America, and Southeast Asia to create a broader alliance against dollar hegemony.

Challenges Ahead

Despite the anticipated momentum towards de-dollarization, BRICS nations face several obstacles which will resolve themselves the moment the BRICS Pay and the newly designed currency become fully operational and circulated.

Internal Disparities

The members of BRICS are widely divergent in terms of political ideology, economic development, and strategic interests. For instance, while China envisions itself as a dominant economic power, Brazil and South Africa are still grappling with developmental challenges. This disparity could hinder consensus-building on policies aimed at de-dollarization.

Geopolitical Tensions

We thought tensions between BRICS members, especially between India and China, could further complicate cooperative endeavours. But the two countries have signed a pact to end the border dispute. The summit has also witnessed more giant efforts to solidify relationships among members.

Dependence on the Dollar

Despite the envisioned transition away from the dollar, many BRICS countries still rely heavily on dollar-denominated assets for international trade and reserve holdings. A rapid shift could destabilize financial markets and economies that are not entirely prepared for this transition.

The New World Order

As the BRICS summit deliberates on these pressing issues, observers must consider what the new world order will look like. While it is uncertain how swiftly de-dollarization will be realized, the existing momentum is undeniable.

An Asymmetric Power Shift

If BRICS successfully institutes mechanisms for currency transition, the world could witness an asymmetrical shift in power dynamics. The dominance of the U.S. dollar may gradually wane, paving the way for a more decentralized economic paradigm in which emerging economies wield substantive influence.

The Rise of Alternative Institutions

In the long run, the BRICS Summit 2024 has acted as a catalyst for establishing institutions that rival Western-led blocs. Initiatives like the New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA) may evolve into viable alternatives to the IMF and World Bank, fostering greater collaboration among non-Western nations.

Cultural Renaissance

Beyond economics, BRICS galvanizes cultural ties among its members. With the summit providing a space for the exchange of ideas, literature, art, and technology, the diverse cultures represented in BRICS may find common ground. This cultural renaissance could reshape narratives around identity and influence in a globalized world.

Conclusion: The Road Ahead

The BRICS Summit 2024 cannot be viewed in a vacuum; it is part of a broader narrative of the rise of emerging powers and the profound shifts occurring in the international order. As member countries navigate the tumultuous waters of de-dollarization, they must remain cognizant of their unique challenges while being resolute in their commitment to collaborating for mutual benefit.

The outcomes of the summit have echoed far beyond the five member states. As BRICS strives for a reimagined world order, the implications for global geopolitics, economics, and cultural identity will be felt worldwide. The road ahead may be fraught with complexity, but the promise of a more equitable global system is tantalizingly within reach. Through unity and innovation, the BRICS nations may yet carve a new path—a path marked by independence, cooperation, and shared prosperity.

************************************

THIS SPACE IS RESERVED FOR YOUR ADS

************************************

Tell us you were here by replying to this story in the comment section below. You can share it, too.

Pegasus Reporters: making news that reaches your audience | Advertise with us! | Join our Readers’ Channel on Telegram (+234 815 444 5334)) Follow us on Twitter11@pegasusreporter | We are on Facebook; The PegasusReporters | Chat with us on WhatsApp (+234 815 444 5334) | Contact the Editor, Mallam Oyakhamoh Y. Carl-Abu’Bakar with your adverts and articles via editor@pegasusreporters.com

Read Our Preceding Story: Rivers crisis: How Fubara can resolve the stalemate without firing a shot – By Ehichioya Ezomon

EXPLORE PEGASUS REPORTER

Leave a Reply

Your email address will not be published.