De-dollarization campaign gaining ground
Amidst an undeclared economic war going on between the developed countries and the developing nations of the world, the former with a mere 10% of global population but controlling over more than 42% of global wealth and the latter with 47% of world population but possessing only 30% of global wealth, the de-dollarization campaign launched by BRICS and ASEAN, the two economic alliances of the developing countries, seems to have made a significant progress to get rid of reliance on US dollar and to promote trade in local currencies.
A two-pronged strategy of de-dollarization is being adopted by 21 developing countries to neutralize the crippling impact of US dollar on their economies. These countries make two different economic blocks/alliances. One block is called Association of Southeast Asian Nations (ASEAN) consisting of 10 countries established in August 1967 in Bangkok which includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam, while the other block is called BRICS, initially having five members as the acronym suggests and now BRICS+ which will be formalized after the 6 additional members formally join the group in January 2024 enhancing the number to 11. This block includes Brazil, Russia, India, China, South Africa, Saudi Arabia, The UAE, Egypt, Ethiopia, Iran and Argentina.
These 21 countries have officially agreed to trade in local currencies and ditch the US dollar for global trade. In March this year (March 2023), ASEAN block was the first one to abandon the use of US dollar for cross-border trade that induced BRICS to follow suit. The leaders of ASEAN block singed a declaration to stop using US dollar and promote trade in their local currencies.
The two-pronged strategy as mentioned above are: Firstly, BRICS is mulling over introducing its own currency, and if the move succeeds, it could rock the US economy to its foundations.
Second strategy is an alternate measure suggesting trade in local currencies and sideline the US dollar completely. If this strategy is successfully implemented, it could have a far-reaching implications on not only US economy but on the economy of the entire West too.
Moreover, it could have serious impact on 10 different major US sectors including banking and finance, trade and investment, tourism, energy and IT, etc. All these sectors operate globally in USD. It could also change geopolitical dynamics that could in turn, alter world trade relations. Besides, it could have a domino effect on all other sectors bringing turmoil into the US economy which remains invincible till today.
If the strategy adopted by these two economic alliances of 21 countries succeeds, it could tilt the balance of power in favor of the East, thus making the US and its Western alliance lose their Iron grip over world affairs.
It seems that BRICS+ which makes an economic block of 11 developing countries after the recent auspicious inclusion of Saudi Arabia, the UAE, Iran, Egypt, Argentina and Ethiopia into the block spearheaded by China is successfully progressing with its core objective of de-dollarization which is likely to pull the rug from under the US feet.
Although the proposal to introduce BRICS currency couldn’t get unanimous consent from BRICS’ members, and has a slim chance to get through, given the opposition from India and Brazil, the prospects of settling trade in local currencies among 21 countries forming two blocks as mentioned earlier, ditching the US dollar, seem quite bright. The move is aimed at completely abolishing reliance on US dollar or at least slash it down to a considerable level that could help the developing countries get rid of the exploitative tactics employed by the US and its Western alliance in their sweet way which comes in the form of ruthless economic sanctions against the developing countries, thus crippling their economies to the core and divesting them of their economic sinews.
The decision to launch a de-dollarization crusade against US dollar by BRICS which has now become a common objective of both the blocks consisting of 21 countries as already mentioned, has come on the heels of its recent summit meeting held in Johannesburg, the provincial capital of one of the provinces of South Africa, a founding member of BRICS representing the last letter of the acronym, i.e. BRICS. It’s objective is to ditch the US dollar and promote trade in local currencies.
Initially, the proposal presented jointly by China and Russia met with resistance from India and Brazil, but now it seems that after the inclusion of 6 more countries into the block, BRICS+ members have prevailed upon India and Brazil to shed their support of US and toe the line adopted by BRICS+, which augers well for the future of the block.
It’s worth mentioning here that the global share of US dollar in foreign reserves was 72% in 2001 which has shown a gradual decline over a period of time, and according to a recent economic survey, has dipped to 60% as of September 2023.
To sum up: Escaping US sanctions became a uniting factor for BRICS and one of the main reasons for its expansion. The plan picked up momentum soon after Western sanctions on Russia following its invasion of Ukraine. Seen in this context, inclusion of Iran in the group makes sense as it has already been hit by Western sanctions. However, it remains to be seen how far BRICS becomes successful in achieving its objective as the additional six members have yet to formally join the group in January 2024, although they have accepted the invitation from BRICS to join it, thus turning block into BRICS+.
Last but not the least, the inclusion of three major oil producing countries, i.e. Saudi Arabia , the UAE and Iran belonging to OPEC, possessing almost 50% share of global crude oil reserves, would bolster the aggressive economic strategy being adopted by BRICS+, and it’s likely to make a huge dent in the US economy.
Nonetheless, the US leadership is not oblivious to the obvious and will not allow its opponents an easy walkover. In order to safeguard US interests and to stop its economy from rolling down to any inferior position, US leadership may take any extreme step before the balloon goes up.