BRICS 11 establishes a pole of influence and global heft that has the potential to eclipse in scope that of the G7.
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Whilst it has become clear to increasing numbers of people in the West that something has gone terribly wrong with the élites’ Ukraine project, and that the exaggerated predictions and expectations of Russian forces being ‘knocked for six’ by an armoured ‘fist’ have proved spectacularly wrong, those same élites are going wrong again – on another strategically decisive issue: They again largely ignore ‘reality’ – for the sake of control of the ‘narrative’. In this case, the West prefers to sneer at the implications of the new accessions to BRICS (let alone the other 40 states ready to join): ‘Nothing to see there’.
The BRICS is just a jumble of states lacking any cohesion, or common thread, western MSM proclaims. It can never challenge the U.S. global power, nor the sheer financial weight of the dollar sphere. However, China’s Global Times explains in mild tones, a different backdrop:
“The reason why the BRICS mechanism has such great appeal … reflects a general disappointment of many developing countries with the global governance system dominated and interfered by the U.S. and the West. As China has repeatedly emphasized, the traditional global governing system has become dysfunctional, deficient and missing in action, and the international community urgently expects the BRICS mechanism to strengthen unity and cooperation”.
Others in the Global South say it more starkly: The BRICS mechanism is seen as a means to slough off the last vestiges of western colonialism and to acquire autonomy. Yes, of course, BRICS 11 initially will be more cacophony than smooth opera, but nonetheless, it represents a profound shift of global consciousness.
BRICS 11 establishes a pole of influence and global heft that has the potential to eclipse in scope that of the G7.
The ‘mess’ in Ukraine is commonly attributed to mere ‘miscalculation’ by the western élites: They did not expect Russian society to be so robust, nor so steadfast under pressure.
Yet this was no minor ‘slip up’ by the West, since the recognition of NATO’s doctrinal contradictions, its second-rate weaponry and its inability to think rigorously – beyond tomorrow’s sound-bite – has (inadvertently) shone the spotlight on the deeper dysfunction within the West – one that runs far deeper than just the situation around the Ukraine project. Many in the West see major institutions of society locked within suffocating orthodoxy; in an intense level of political and cultural polarisation; and with political reform effectively locked-down.
The proxy war on Russia nevertheless was launched through Ukraine, precisely to reaffirm western global vigour. It is doing the opposite.
The financial war (as opposed to the ground war in Ukraine) was the counter-play to generating regime change in Moscow: Financial war was intended to underline the futility of opposing the sheer ‘muscle’ that dollar hegemony – acting in concert – represented. It was the jealous hegemon demanding obeisance.
But this back-fired spectacularly. And this has directly contributed not just to the expansion of BRICS, but to the energy resources of the Middle East and the raw materials of Africa sliding out of western control. Rather than the western scatter-gun threats of sanctions and financial ostracisation creating fear and reaffirming obsequiousness, the threats contrarily, have mobilised anti-colonial sentiments across the globe; fed the understanding that the western financial construct amounted to tutelage, and that any acquisition of sovereignty required the act of de-dollarisation.
And here, again, egregious mistakes were committed: Errors of geo-strategic magnitude were embarked upon almost casually, and without due diligence.
The primordial mistake was that of Team Biden (and the EU) illegally seizing Russia’s overseas reserve assets; expelling Russia from the financial clearing system, SWIFT; and imposing a trade blockade so complete that (it was hoped in the White House) its effects would tear down President Putin. The rest of world understood – they easily could be next. They needed a sphere that was resistant to western financial predations.
Yet, the second strategic error by Biden (& Co.) magnified the error of their initial ‘unprecedented’ financial blitz. This blunder marked the ‘second shoe to drop’ in Biden’s de-fenestration of the American financial imperium: He treated Mohammad bin Salman (and the Saudis generally) with contemptuousness: ordering them to increase oil production (in order to bring down the price of gasoline before the mid-term Congressional elections), and disdainfully threatening the kingdom with “consequences”, were it to fail to comply.
Perhaps Biden, so consumed with his electoral prospects, did not think it through. Even now, it is not clear that the White House understands the consequences of it having treated MbS as some aberrant underling. There is an eleventh-hour attempt to dissuade Saudi from joining BRICS, but it is too late. It’s application to join has been approved and will take effect from 1 January 2024. The West misread the mood.
The shared ethos within Gulf states is one of self-assured, assertive leaders, who are no longer willing to accept binary ‘with us or against us’ U.S. demands.
For the avoidance of mis-understanding, Biden, through the combination of these two strategic mistakes, has launched the West’s financial hegemony onto a slipway leading to incremental unwinding of much of the $32 trillion of foreign investment in fiat dollars which has accumulated in the U.S. system over the last 52 years – with an implicit acceleration towards ‘own currency trading’ amongst the majority of no-western states.
Ultimately this likely will lead to a BRICS trade settlement medium – possibly anchored to gold. Were a trading currency to be anchored in some way to a gram of gold, that currency would, of course, acquire status as a store of value, based on that of the underlying commodity (in this case gold).
The point here is that when inflation was zero-bound, U.S. Treasury bonds were seen as a store of (enduring) value. However, wide de-dollarisation undermines the synthetic (i.e. the imposed) demand for dollars that owed entirely to the Bretton Woods and the Petro-dollar frameworks (that demanded that commodities be traded only in U.S. dollars) and to the implicit understanding that U.S. Treasuries offered a certain store of value.
But what did Team Biden do? They have driven Saudi Arabia – the lynchpin to the Petro-dollar, and one of the pillars (together with other Gulf States and China) underpinning the huge holdings of U.S. Treasury debt – into the arms of BRICS. Put simply, the BRICS 11 incorporates six out of nine of the top global energy producers, as well as the principal energy consumers. OPEC+, in effect, has been swallowed to make a self-enclosed, self-sufficient circle of trading in energy (and raw materials) that does not need to touch dollars. And over time, this will amount to a major monetary shock.
The ‘consequences’ threated towards Saudi Arabia by the White House have been rendered inconsequential. Saudi and Iran can sell their oil to other BRICS consumers (in non-dollar currencies). Members no longer need to be so concerned at western threats – one of the key provisions of BRICS is the joint refusal of all members to permit or facilitate any ‘regime change’ manoeuvres against BRICS members.
To be clear, what this all means is further price inflation in the West, reflecting the falling purchasing power of fiat currencies as dollar-demand subsides. Inevitably, a weakening dollar will lead to higher interest rates in the U.S. This – simply – will be one major consequence of de-dollarisation. Higher interest rates will impose great stress on the U.S. and European banks.
The first BRICS 11 summit is set for October 2023 in Kazan. By ‘coincidence’, full membership of the new states will coincide with Russia taking the rotating annual presidency of the BRICS on 1 January 2024. Putin already has made clear his determination to move towards resolving the complexities of a separate BRICS currency – “one way or another”.
