The August summit of BRICS, an economic-centric alliance between Brazil, Russia, India, China and South Africa, in Johannesburg, would have been a normal summit event, void of rhetoric and focused on economic development between members. However, the ongoing Russia-Ukraine war has made it special.
It has happened often that international political events got paced up or accelerated due to other events. The death of Julius Ceaser was instrumental in transforming the Roman Republic into an Empire. Similarly, the assassination of Archduke Franz Ferdinand of Austria led to World War I. The ongoing Russian conflict may have the same effect on world politics but in the contemporary spectrum of gaining economic superiority.
The Russian-Ukraine war is seen differently by Russia, the West led by the USA and emerging economic giant China. Russia views it as safeguarding its sovereignty and considers it a war for its survival. It cannot afford Ukraine to join NATO and thus bring the NATO arsenal on its western borders.
The USA considers it a direct challenge to its hegemony and the right of Ukraine to choose its political and military alliances out of its free will and military preferences. Europe is sandwiched between its economic interests, intermingled with Russian oil and gas provision and its strategic compulsions associated with the USA and NATO.
A lingering war in the region is detrimental to the long-term economic interest of Germany and France. The same was evident in Germany’s recent reluctance to contribute toward war efforts against Russia. For China, however, it is an opportunity to advance its agenda of economic parity with the USA.
Economic statistics generally indicate that China might become the world’s biggest economy by 2035-2040; however, it will not be able to challenge the USA’s hegemonic status, at least for the next four decades. The Dollar’s dominance through the SWIFT banking system, with particular reference to Oil trade through this system, is a gauge which controls the USA dollar’s superiority over all other currencies.
The Russian invasion of Ukraine in February 2022 led to the USA’s freezing of $300 Billion of forex reserves and severely disrupted Russia’s banking system. This weaponisation through the ‘King Dollar’ was viewed suspiciously by all growing economic powers like India, Brazil and Argentina. However, China took it as an opportunity to be the reliable currency of the East and Russia started trading with China in Yuan. India followed and started paying Russia in rubles for its oil export. Thus, the emergence of an alternative financial system, stirred by the geo-political environment, is ahead of its time and an opportunity for China’s emergence as a superpower.
Encashing the opportunity, Beijing has also furthered its relations with Saudi Arabia as its strategic partner, one of the world’s biggest oil exporters. In addition to the oil trade agreement with China in Decrmber 2022, Riyadh is also inclined to be a full member of the SCO. Additionally, Saudi Arabia is growing toward BRICS and financial collaboration with its New Development Bank (NDB). Reportedly, most of the South Asian countries are also inclined to join the BRICS financial system, along with a few other Middle Eastern countries.
In this background, the 15th BRICS summit 2023’s top agenda of considering a new gold-backed currency, an alternative to SWIFT, clearly indicates the world’s growing economies’ desire to reduce reliance on the US dollar. BRICS countries are also contemplating crypto-currency and alignment of central Bank digital currencies for interoperability and trade payments. Although it’s a long way from dethroning the dollar, it will be led to the beginning of its weakness.
If human history proceeds, it is a natural process of balancing that another power challenges a superpower in a century or so. However, instead of the reluctance to accept reality, a pragmatic approach is to adjust to new realities. It is accepted that China is a challenger to the USA hegemony. However, USA strategic thinkers do not perceive a lone China as a threat; however, the Sino-Russian alliance is real. The present Ukraine war is weakening Russia more than the West and the USA and, if not stopped, can damage Russia’s economy internally. Thus, a weak Russia suits the USA.
However, the present offshoot of it is pointing toward a new reality. It’s not the big three anymore; but the ‘economic powers to be’ inclination would also help set the pace for world politics in years to come. With its alternative financial system and soft power projection, the emergence of BRICS has all the ingredients to attract small nations towards it. The bipolar world is now a reality. Although no king has been assassinated, the economic war is looming ahead.
