The coiner of the BRICs acronym, Jim O’Neill, has made a point of arguing that the bloc is for now little more than a platform for political posturing, even with its expansion over the summer from 5 members to 9. (O’Neill advocates a revivification of the G20 instead.) There was certainly posturing at the most recent meeting of the group, now known in its expanded form as BRICS+. As host, Vladimir Putin did his best to use the event to rebut the idea that Western sanctions and political enmity, due to Russia’s invasion of Ukraine, mean that he is isolated. But most of the meetings and readouts were exceedingly practical, focused on currency issues and security. SIG’s view is that there is an inescapable political momentum behind de-centering the West and particularly the United States. This political trend is increasingly an economic one, as continuing US dominance of global financial institutions (IMF, World Bank) and American use of the dollar’s global indispensability for political purposes combine to alienate a large portion of world markets: the new BRICS+ dwarfs the industrialized G7 not just demographically but also in GDP terms. Even if it is not yet doing it very well, BRICS+ answers a genuine need.
The biggest BRICS+ news was the announcement by Xi and Modi that India and China had reached an agreement of sorts about their border dispute, which shredded India-China ties in 2020. Negotiations had been ongoing and will continue. It is not clear what the two leaders were really agreeing to. What was clear was that Modi and Xi wanted to use the BRICS+ venue to highlight their diplomacy and an easing of tensions. In that sense, BRICS+ proved its worth.
From the Russian perspective, the big push was for a set of policies with a single goal: freeing the global financial system from its vulnerability to US political pressure. These included alternative ways for setting grain prices, the increased use of national currencies to settle trade, and the use of digital currencies by national central banks. In the short term, as ING noted in an excellent paper, none of this is very plausible, but in the long term the use of digital means to depoliticize international transactions by de-centering the US dollar is highly likely.
What BRICS+ showed was that such a de-centering would itself happen along political lines. The goal is not to “displace” the dollar but to escape its political hold — for political reasons. It is not a neat business. Western sanctions against Russia have led to the sinification of Russian finance. Chinese payments for Russian resources, for example, are often in Chinese currency and parked in Chinese banks, which, with state support, are using Russian events as an opportunity for an experiment in financial innovation. Even Putin does not want Russia to become a ward of China, but sanctions have made that unavoidable. China, for its part, is not about to share any control over its own accounts. “De-dollarization,” in other words, means different things to different states, but they mostly come back to wanting to preserve financial sovereignty, not to share it with some alternative entity that is not the US government.
Meanwhile, Donald Trump in his campaigning has caused near panic in Europe. His comparison of Europe to China is extraordinary. When combined with his and his team’s views on Ukraine — which amount to cutting a deal and insisting Europe do as much of the work as possible — Trump’s tariff threats begin to appear as part of a larger move to split the West. There is no indication at all that this is a deliberate choice, but it is likely to be a real effect. At that point BRICS+ will not look so eccentric.