Since Russia's invasion of Ukraine in February 2022, the United States and its partners in the more or less enlarged Western architectures (EU, NATO, G7 and some OECD and G20 countries) have been remarkably united in their support for Kiev, but they were much less able to convince others to join their cause, especially in the so-called "Global South" (mainly MENA - Middle East/North Africa - Middle East/North Africa -, Sub-Saharan Africa, Latin America, South Asia).
Governments and peoples across the developing world are increasingly voicing their objections to the globalized media narrative on the European conflict by pointing out double standards and hypocrisy about decades of neglect of the issues most important to them, the escalating costs of the war and on the exacerbation of geopolitical-economic tensions. Therefore, above all in the context of the votes, which although symbolic, have their weight, at the UN General Assembly, support for Moscow seems to be more a sign of intolerance towards the United States (and 'client' states) than full ideological alignment with Russia, with some notable exceptions (e.g. Belarus, North Korea, Eritrea, Nicaragua).
This situation appears more and more as a window of opportunity for China, which seeks to consolidate its penetration of the international system.
For years, Beijing has already launched various initiatives and architectures such as BRI (Belt and Road Initiative) and SCO (Shanghai Cooperation Organization), focused on building a network of client states. In the past, superpowers, and even middle-sized powers, have used trade tariffs and forced allies and enemies to achieve their geopolitical ends, creating tensions and leading to confrontations, such as US trade policy against Japan before the World War II exasperated Tokyo and eased the path of the conflict.
In large part, companies - and not countries - are now at the heart of China's campaign to regain influence over the West and keep the door open for trade to flow and ease tensions over critical commodities and products. China suspended its economic coercion of countries and started another one against businesses. With new tactic, but the same goal, i.e. achieving long-standing political goals such as building strong domestic technology capabilities or accepting its "one China" (read "absorb Taiwan") policies or easing domestic grievances in Tibet, Sinkiang/East Turkestan, Hong Kong, religious minorities, etc...
Russia's weakness on the Ukrainian front allows China to increase its influence within the BRICS (initially BRIC, grouping Brazil, Russia, India and China established in 2006, formalized in 2009 and with the accession of South Africa in 2011, renamed BRICS). This group of states has been working to transform the BRICS into a stable architecture rather than a diplomatic conference and now looks close to a major turning point.
However, it is useful to analyze the approach of the founders and their views for the future of BRICS. Russia and China have the same goal, given the differences in their respective economic systems (incomparable, given that Russia has only raw materials and a limited advanced industrial capacity), that is to use the BRICS as a tool to face the "other side" (i.e. the Western economic and security system), but their scope is different.
If before the war in Ukraine, Moscow and Beijing could be considered not so unbalanced, Russia's poor political and military performance has changed the scene and China has emerged as the real power and Putin increasingly appears as a junior partner of Xi Jinping. As a consequence of this, the BRICS appear to be transforming themselves on the stage of the increasingly decisive (and effective?) Chinese assault on world power.
For Moscow, the BRICS are a tool that can help re-propose itself as an alternative basin of attraction towards the (mentioned) pro-Western architectures. For India, South Africa and Brazil, albeit with different extensions and sizes, it is a space for maneuver for their own autonomous policies, to raise the price of the monetization of cooperation with the pro-Western part of the international scene, to maintain a dedicated communication channel and trade (this especially applies to India) with China and Russia.
To date, despite growing signs of weakness in the Chinese economy and society, Beijing is today the real main promoter of BRICS enlargement and, in parallel, as part of the main assault line on the backbone of US-led influence in the world revolving around the dollar (the euro would be a secondary target, the yuan, the pound and the Swiss franc are not considered challenges for China in this field) and Washington's influence in the management of world affairs.
As mentioned above, the BRICS still have an informal character. There is no funding card, he does not work with a fixed secretariat or have funds to finance his activities. But slowly, and not fully reported and analysed, the BRICS are on the way to establishing it.
The first tool of the futuristic BRICS-led architecture is the New Development Bank, founded in 2012 with an initial capital of US$100 billion with the aim of mobilizing resources for infrastructure and sustainable development projects in the BRICS and other emerging market economies and developing countries, “complementing the efforts of multilateral and regional financial institutions for global growth and development”.
In 2021, the NDB (known informally as 'BRICS Bank') expanded its membership and admitted Bangladesh, Egypt, the United Arab Emirates and Uruguay as new members and is led by former Brazilian President Dilma Rousseff, designated to this position in the month of April of this year and the ground is being prepared so that, at least in expectations, it becomes an alternative to the IMF/WB (International Monetary Fund/World Bank) pair, which, although included in the so-called 'UN' system, in reality they are instruments of US policy globally.
The announced BRICS summit for next August in South Africa (South African President Cyril Ramaphosa, the country that chairs the group in 2023, has announced that the theme of the summit will be "BRICS and Africa: partnership for mutually accelerated growth, sustainable development and inclusive multilateralism.") is heralded as a critical moment in the project to undermine Western domination (or influence) over the world. One of the keys to this meeting, as announced by the pro-Beijing/Moscow media galaxy, is the expansion of BRICS membership and, in parallel, the launch of a new currency for the group and other potential members.
China leads the process of developing a new currency, to undo the dominance of the US dollar and make it lose its position as the leading currency for purchase and trade around the world. Although it appears as a collective initiative, it is actually a solitary project since the only economy that has the ability (and the will) to set up this monetary mechanism is China. Russia, despite the unexpectedly positive performance of the ruble in the face of Western sanctions, does not have the skills to be a leader (or even co-leader) of the initiative, but only a partner.
India is not interested in leading it and wants to maintain an autonomous space and is reluctant to have the large financial burden that this initiative could entail. Brazil and South Africa are even weaker than Russia from this point of view and therefore, like Russia, they could participate with minority stakes and show their international facade.
A long list of nations are now seeking to join, according to a South African diplomat; at least 13 countries that have reportedly formally applied to join the BRICS while six other countries have informally applied to join the alliance. The pool of potential adherents would include Saudi Arabia, Iran, Argentina, the United Arab Emirates, Algeria, Egypt, Bahrain, Indonesia, two as yet unnamed East African nations and one West African nation. More details are likely (or assumed) to emerge by the summer.
According to ostensibly Beijing/Moscow-inspired media sources, talks will progress before and during this summit, with yet more countries outside the BRICS reportedly looking to join the project. As the days go by, the number of alleged adherents increases further (first with 24 and to over 30 as early as early June) they are now looking to build a strategic alliance that will challenge the US dollar's decades-long role as the world's reserve currency.
Beyond that the BRICS are (still) an informal understanding without a stable architecture, the timing of the BRICS expansion project, the anti-Western narrative of its members (regardless of whether they are actual, potential, aspiring or simply curious adherents) , the repeated visits of senior Russian and Chinese diplomats to Africa and other regions of the Global South, etc., indicate that Beijing (with Moscow in tow due to its limited capabilities relative to China) is targeting those countries as a platform for their geopolitical, economic and diplomatic drive.
According to various analysts, if this adhesion to the Chinese initiative to expand the BRICS to new members and the adoption of a new unit of account for exchanges on international markets, in reality it would be a temporary measure to facilitate exchanges with Beijing and Moscow but without abandon the 'network' of the dollar (and of the other western currencies and of Japan) in order not to close one's markets to this group of states, which, although weakened, still have an important weight in world markets.
Thirty years ago, the global multipolar system, despite the collapse of the USSR, did not emerge as a reality and was replaced by a US-led Western hegemony. Now, this system is increasingly challenged by the growth of China as a global competitor, re-proposing a new concept of bipolarity. Functional for the establishment of a bipolar world, where China hopes to lead the alternative poles, Beijing needs to set up a group of client states, possibly linked by strong financial ties. In this project Russia would play an essential role of junior partner and decoy, attracting the attention and hostility of the West to the aggression against Ukraine and dragging political, financial and military resources and distracting (at least trying to ) their concerns about the dynamics underway in the Indo-Pacific macro-region and elsewhere.
As mentioned above, the project of a new currency is one of the major opportunities and challenges facing the BRICS. Which with the current format is already the largest GDP in the world, contributing to 31,5% of global GDP (the lion's share is in the hands of China and India), ahead of the G7 of the USA, Great Britain, France, Germany , Japan, Italy, Canada and the EU (excluding France, Italy and Germany), which contributes 30,7%.
The attractiveness of the new BRICS-led international currency is based on another aspect of the growing hostility, in the so-called Global South (but not only), for the policies of the IMF and the WB. These two institutions are known to stipulate their monetary support to countries, especially in the Global South, always with strict (and now even stricter) political conditions, centered on tough fiscal adjustment policies, privatization of public services and the opening of foreign markets (above all towards western investors). To these harsh terms, the IMF and the WB have more recently begun to add further conditions for the defense and promotion of human rights, minorities, liberal democracy, and acceptance of openness towards migration policies (the latter is very recent and operates in collaboration with UNHCR and IOM).
Thus, under these circumstances, the struggle to build alternative tools to the IMF and the WB is political, understanding that the Global South demands, like it or not, a different political agenda in terms of rejecting attempts at external meddling and/or control of local economies.
However, a BRICS-issued currency still has a long way to go and holds many questions and difficulties (technical and political, rather than purely political, which are already important). The first is to identify which currency will be used. As mentioned above, for different reasons, the most likely would be yuan/renminbi Chinese, which is already the fifth most traded currency in April 2022, while rubles, rupees, rand (South Africa) and real (Brazil) will play a minor role, if not a purely symbolic role in this 'basket' of currencies.
With many countries likely to support him in their search for an alternative to the US dollar, the upcoming BRICS summit could be a major stepping stone towards de-dollarisation and one of the most important steps in world policy following the Bretton Wood conference and undermining the system in place since 1945 for the entire planet.
It seems clear that the call to join the BRICS and its alternative economic and financial system has an anti-Western (anti-US) political value which is not at all implied.
The Chinese-led project is already meeting stiff resistance from the United States, which are really worried about losing economic hegemony (and political influence) and are multiplying initiatives and contacts with potential, declared or otherwise, adherents of the BRICS to counter the project and antagonize powers of equivalent size, such as India, against Beijing as the main antagonist.
The dark side of the moon
Like all things, China's assault on world financial power also has its dramatic implications. This is the harsh reality for a number of countries, which are facing economic instability and even collapsing under the weight of hundreds of billions of dollars in foreign loans, many of them taken from China. Those countries most indebted to China — such as Pakistan, Kenya, Zambia, Laos and Mongolia — have found that debt eating up an ever-increasing amount of tax revenue needed to keep schools open, provide electricity, and pay for food and fuel. And it's draining the foreign exchange reserves these countries use to pay interest on those loans, leaving some with only months before the money runs out.
This originated from the ostinata Beijing's resistance to forgive the debt and extreme secrecy on the amount and terms of the loans. Zambia and Sri Lanka are already in default, with serious impact on internal stability with political and public turmoil, depletion of foreign exchange reserves, rising costs and inflation.
In Pakistan, the textile industry sector has been shut down because the country has too much external debt and cannot afford to keep the electricity on and the machines running, while the Kenyan government has stopped paying salaries to civil servants for save money pay off foreign loans.
The persistence of this hard line on the part of Beijing will generate further defaults and will negatively impact the prospect of the credibility of a financial system, alternative to the dollar, hegemonized by Beijing. Zambia, which has borrowed billions of dollars from Chinese state banks to build dams, railways and roads, boosting the country's economy but also increasing foreign interest payments, is drastically cutting public spending. Like Zambia, Pakistan and Congo-Brazzaville and other countries, such as Indonesia, Laos, Uganda in the past, too, with difficult conditions, by the International Monetary Fund, World Bank (and regional development banks) they obtained agreements to forgive some debts and making these institutions, known for their harshness in demanding loans and the imposition of domestic economic policies with little regard for the consequences for the populations, look like pious works.
All this is upsetting domestic politics and overturning strategic alliances.
In March, heavily indebted Honduras cited "financial pressures" in its decision to establish formal diplomatic ties with China and sever those with Taiwan. China has firmly rejected allegations of strangulation of its customers and stressed that it has forgiven 23 interest-free loans to African countries; however independent sources said these actions are focused on very old loans and less than 5% of the total lent. The position of Sri Lanka is similar which, by dint of loans from Beijing, is moving further and further away from its historical partner, India, albeit problematic, and is contributing to the constitution of what New Delhi (although adhering to the BRICS [sic ]) call her 'pearl necklace' that could strangle her.
An example of this progressive slippage of Colombo was the transformation of the tourist port of Hambantota into a naval base, a decision that dates back to 2018 but which in this context of heavy financial conditioning, takes on a different value. The news in itself would not even be relevant if the port was not already managed by a Chinese company and that it is part of the BRI mega-project. Although then Sri Lankan Prime Minister Ranil Wickremesin denied the possibility that Beijing could use the installation as a naval base in the future, Indian (but also US and Japanese) fears remain, given the importance of this port in regional shipping routes and that the possibility that Beijing, given the financial, economic and political weakness of Sri Lanka, could impose the presence of a military installation to protect its trade routes and its merchant shipping. Or how, more recently (two months ago), Beijing, still counting on the difficulties of Colombo, which does not seem to emerge from financial instability, has requested to open a SIGINT installation in the southern part of the island, with the aim of constituting an alternative to the US base on the (nominally British) Chagos Islands.