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<h1 class="gmail-reader-title">The rise of the South: can BRICS weaken the dominance of the World Bank and IMF?</h1>
<div class="gmail-credits gmail-reader-credits">Dr Ramzy Baroud - April 13, 2023</div></div>
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<p>Who would have expected that the BRICS nations could <a href="https://thefinancialexpress.com.bd/views/g7-and-brics-in-the-emerging-world-order-1657983387" target="_blank">rise</a>
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.</p>
<p>BRICS — an acronym for Brazil, Russia, India, China and South Africa — was supposedly <a href="https://www.goldmansachs.com/our-firm/history/moments/2001-brics.html" target="_blank">coined</a>
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.</p>
<p>The group's first official summit <a href="http://www.brics.utoronto.ca/docs/090616-leaders.html" target="_blank">was held</a>
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, <a href="https://www.ndb.int/about-ndb/history/" target="_blank">launched</a>
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.</p>
<p>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.</p>
<p>Recent <a href="https://news.bitcoin.com/asean-countries-take-steps-to-reduce-reliance-on-us-dollar-for-trade-settlements/" target="_blank">financial reports</a>
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.</p>
<p>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.</p>
<p>The IMF and World Bank are <a href="https://www.leftvoice.org/in-ghana-an-important-movement-is-forming-against-the-imf/" target="_blank">notorious</a>
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.</p>
<p>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.</p>
<p>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 <a href="https://www.rferl.org/a/1095057.html" target="_blank">Iraq</a>
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 <a href="https://www.ibanet.org/article/5584F623-6456-4287-8C34-1907B97F3C23" target="_blank">painfully</a> in Venezuela, which has the world's <a href="https://www.worldometers.info/oil/venezuela-oil/" target="_blank">largest</a>
oil reserves and yet was reduced to abject poverty for attempting to
challenge the supremacy of Washington and its ubiquitous currency.</p>
<p>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 <a href="https://www.foxbusiness.com/markets/brazil-china-strike-trade-deal-agreement-ditch-us-dollar" target="_blank">announced</a>
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.</p>
<p>One of the <a href="https://news.bitcoin.com/asean-countries-take-steps-to-reduce-reliance-on-us-dollar-for-trade-settlements/" target="_blank">main decisions</a>
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.</p>
<p>The BRICS countries are <a href="https://www.news.com.au/finance/markets/world-markets/brazil-china-ditch-us-dollar-for-trade-payments-favour-yuan/news-story/682a517c37ba14f306e65ad0e83f6307" target="_blank">leading the charge</a> and are set to serve as the facilitator of the rearrangement of the world's economic and financial map.</p>
<p>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.</p>
<p>Following a <a href="https://www.washingtonpost.com/politics/2022/12/12/biden-africa-ukraine-coalition/" target="_blank">meeting</a>
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 <a href="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/" target="_blank">flew</a>
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.</p>
<p>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 <a href="https://www.washingtonpost.com/politics/2023/03/27/harris-ghana-africa/" target="_blank">told</a> reporters, "but there is no such obsession here."</p>
<p>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.</p>
<p>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.</p>
<p>The views expressed in this article belong to the author and do not
necessarily reflect the editorial policy of Middle East Monitor.</p>
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