Introduction: What is BRICS?
BRICS, an acronym for Brazil, Russia, India, China, and South Africa, represents a powerful coalition of non-Western nations. Established in the aftermath of the 2008 financial crisis, the group initially comprised four founding countries: Brazil, Russia, India, and China. South Africa joined in 2010, expanding the bloc. Together, these nations account for approximately 25% of the world's land area and 42% of its population.
BRICS is not just a political group but an economic force. The combined trade of these five nations accounts for 17% of global commerce, and the group has drawn interest from 23 other countries seeking to join, including key players like Saudi Arabia, Iran, and the UAE.
The core mission of BRICS is to challenge the dominance of the West, particularly the U.S., in global affairs. By collaborating, these nations aim to reshape the global economic order and assert their influence.
The Rise of BRICS
The foundation of BRICS emerged from the shared desire of these nations to have a greater say in global governance. The group's establishment came during a time when the global financial system was dominated by the U.S., leading to a need for alternatives. As geopolitical dynamics shifted, BRICS began to take shape as a response to Western influence, with a focus on economic cooperation, political alignment, and long-term strategic goals.
BRICS Economic Master Plan
In recent years, the group has expanded its objectives, with a clear focus on ending the global dominance of the U.S. dollar. The Russian-Ukrainian war has highlighted the weaponization of the dollar, as the U.S. imposed sanctions on Russia, freezing its foreign reserves and excluding it from the SWIFT system. This move highlighted the vulnerabilities in the current financial system, prompting BRICS countries to explore alternatives.
Approximately 59% of global forex reserves are held in U.S. dollars, and 80% of global trade is conducted in the dollar. This dependency on the dollar exposes countries to risks when geopolitical tensions escalate. BRICS, with its diverse and rapidly growing economies, is now exploring the idea of a new global currency backed by gold to challenge this system.
De-Dollarization and the Future of Currency
De-dollarization is at the core of the BRICS agenda. In recent years, especially after the 2022 sanctions on Russia, BRICS nations have increased their gold reserves significantly. India, Russia, and China have collectively added hundreds of tons of gold to their reserves in an effort to back a new currency.
Drawing parallels with the creation of the Euro, the BRICS countries are planning a similar long-term strategy. The Euro, launched in 1999, took over a decade to establish, with a careful process of economic integration and currency stabilization. BRICS intends to follow a similar approach—gradually building up economic ties, creating institutions for financial stability, and ensuring that the currency has the trust of the member nations and beyond.
The Idea of a New BRICS Currency
A new BRICS currency would require significant cooperation and a shared vision for economic integration. Unlike the Euro, which has strong political and economic unity among EU countries, BRICS will need to overcome internal differences to create a successful currency. The currency will likely be gold-backed, providing it with intrinsic value and stability in the global market.
BRICS has already started taking steps toward this goal by increasing its gold reserves and expanding trade agreements among its member states. The success of this plan will hinge on the ability to expand BRICS membership, gain the acceptance of its currency in international markets, and ensure long-term trust in its stability.
India and China: The Key to BRICS Success
One of the most significant challenges for BRICS is the relationship between India and China. While these two countries are pivotal to the success of BRICS, their historical rivalry has posed a challenge to deeper cooperation. However, recent developments, such as military de-escalation talks and diplomatic initiatives, suggest that the two nations may be willing to collaborate on economic issues, especially in the context of challenging U.S. dominance.
In 2020, clashes between Indian and Chinese forces in the Galwan Valley worsened relations. Despite these tensions, both countries understand that cooperation within BRICS is vital for their economic and geopolitical interests. By improving bilateral ties, India and China could play a central role in the success of BRICS' economic and political objectives.
Conclusion: The Road Ahead
The creation of a new currency by BRICS is an ambitious but potentially transformative goal. Just as the Euro took years of preparation and cooperation, BRICS will need time, trust, and a shared commitment to economic collaboration. If successful, a BRICS-backed currency could challenge the dominance of the U.S. dollar, marking a significant shift in the global financial system.
As BRICS expands and deepens its economic ties, the world will be watching closely. If India, China, and the other member nations can overcome their differences and work together, the group could redefine global economic power for the future.
In geopolitics, there are no permanent friends, nor permanent enemies, only shifting interests
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