[News] The rise of the South: can BRICS weaken the dominance of the World Bank and IMF?

[Anti-Imperialist News]

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The rise of the South: can BRICS weaken the dominance of the World Bank and
IMF?
Dr Ramzy Baroud - April 13, 2023
------------------------------

Who would have expected that the BRICS nations could rise
<https://thefinancialexpress.com.bd/views/g7-and-brics-in-the-emerging-world-order-1657983387>
and become the potential rival of the G7 countries, the World Bank and the
IMF combined? That once seemingly distant possibility now has real
prospects which could change the equilibrium of world politics.

BRICS — an acronym for Brazil, Russia, India, China and South Africa — was
supposedly coined
<https://www.goldmansachs.com/our-firm/history/moments/2001-brics.html> by
the Chief Economist of Goldman Sachs in 2001, as a reference to the world's
emerging economies. It was then known as BRIC; the "S" came later, when
South Africa formally joined the group in 2010.

The group's first official summit was held
<http://www.brics.utoronto.ca/docs/090616-leaders.html> in 2009. Back then,
the discussion seemed largely abstract. It wasn't until 2014 that BRICS
began taking serious steps towards greater integration, when the nascent
alliance, now including South Africa, launched
<https://www.ndb.int/about-ndb/history/> the New Development Bank with seed
money of $50 billion. This decision meant that the group was now ready to
take its first practical steps in challenging the dominance of the West
over international monetary institutions, namely the World Bank and the IMF.

The geopolitical global conflict resulting from the Russia-Ukraine war, has
proved to be the driving force behind the massive expansion underway at
BRICS, especially as financially powerful countries have started to show
interest in the initiative. They include Argentina, the UAE, Mexico,
Algeria and, particularly, Saudi Arabia.

Recent financial reports
<https://news.bitcoin.com/asean-countries-take-steps-to-reduce-reliance-on-us-dollar-for-trade-settlements/>
suggest that BRICS is already the world's largest gross domestic product
(GDP) bloc in the world. It currently contributes 31.5 per cent to the
global GDP, ahead of the G7, which contributes 30.7 per cent.

One of the greatest opportunities, and challenges, facing BRICS now is its
ability to expand its membership base while maintaining its current growth.
The issue of helping new members maintain economic and political
independence is particularly vital.

The IMF and World Bank are notorious
<https://www.leftvoice.org/in-ghana-an-important-movement-is-forming-against-the-imf/>
for basing their financial support of countries, especially in the Global
South, on political conditions. This is often justified under the guise of
human rights and democracy, although it is related entirely to
privatisation and opening markets for foreign investors, for which read
Western corporations. As BRICS strengthens, it will have the potential to
help poorer countries without pushing a self-serving political agenda, or
indirectly manipulating and controlling local economies.

With inflation hitting many western countries, resulting in slower economic
growth and causing social unrest, nations in the Global South are taking
the opportunity to develop their own economic alternative. This means that
groups like BRICS will cease being exclusively economic institutions. The
struggle is now very political.

For decades, the US's greatest weapon has been the dollar which, with time,
stopped being a normal currency per se, and became a commodity. Wars have
been fought to ensure that countries like Iraq
<https://www.rferl.org/a/1095057.html> and Libya remain committed to the
dollar. Following the US invasion of Iraq in March 2003, Baghdad returned
to selling oil in US dollars. This struggle over the dominance of the
dollar was also felt painfully
<https://www.ibanet.org/article/5584F623-6456-4287-8C34-1907B97F3C23> in
Venezuela, which has the world's largest
<https://www.worldometers.info/oil/venezuela-oil/> oil reserves and yet was
reduced to abject poverty for attempting to challenge the supremacy of
Washington and its ubiquitous currency.

Although it will take time, the process of reducing international reliance
on the US dollar is now in full swing. On 30 March, Brazil and China
announced
<https://www.foxbusiness.com/markets/brazil-china-strike-trade-deal-agreement-ditch-us-dollar>
a trade agreement that will allow them to use their own currencies, the
real and the yuan respectively. This step shall prove consequential, for it
will encourage other South American countries to follow suit. The move was
neither the first of its kind, nor will it be the last.

One of the main decisions
<https://news.bitcoin.com/asean-countries-take-steps-to-reduce-reliance-on-us-dollar-for-trade-settlements/>
taken by finance ministers and central bank governors of the Association of
Southeast Asian Nations (ASEAN) at their 30-31 March meeting in Indonesia
was to reduce their reliance on the US dollar. They agreed to "reinforce
financial resilience… through the use of local currency to support
cross-border trade and investment in the ASEAN region." This too is a game
changer.

The BRICS countries are leading the charge
<https://www.news.com.au/finance/markets/world-markets/brazil-china-ditch-us-dollar-for-trade-payments-favour-yuan/news-story/682a517c37ba14f306e65ad0e83f6307>
and are set to serve as the facilitator of the rearrangement of the world's
economic and financial map.

While the West is busy trying to keep its own economies afloat, it remains
wary of the changes underway in the Global South. Washington and other
western capitals are worried. They ought to be.

Following a meeting
<https://www.washingtonpost.com/politics/2022/12/12/biden-africa-ukraine-coalition/>
between US President Joe Biden and 40 African leaders at the White House
last December, it was clear that African countries were not interested in
taking sides in the ongoing war in Ukraine. Consequently, US Vice President
Kamala Harris flew
<https://www.brookings.edu/blog/africa-in-focus/2023/03/30/vp-kamala-harris-visit-to-africa-delivering-on-us-commitments-or-countering-china-and-russia/>
to Africa on 26 March to meet regional leaders with the sole purpose of
pushing them away from China and Russia. That effort is likely to fail.

A perfect demonstration of Africa's refusal to abandon its neutrality was
seen at the press conference between Harris and Ghana's President, Nana
Akufo-Addo, on 28 March. "There may be an obsession in America about
Chinese activity on the continent," Akufo-Addo told
<https://www.washingtonpost.com/politics/2023/03/27/harris-ghana-africa/>
reporters, "but there is no such obsession here."

To argue that BRICS is a purely economic group is to ignore a large part of
the story. The timing of its expansion; the stern political discourse of
its members, potential members and allies; the repeated visits by top
Russian and Chinese diplomats to Africa and other regions in the Global
South; and so on, all indicate that BRICS has become the South's new
platform for geopolitics, economics and diplomacy.

The more successful that BRICS becomes, the weaker that Western hegemony
over the South will be. Although some western politicians and media insist
on downplaying the group's role in shaping the new world order, the change
seems to be real and irreversible.

The views expressed in this article belong to the author and do not
necessarily reflect the editorial policy of Middle East Monitor.
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