Straight to the point

Last week’s Brics summit was supposed to herald the dawn of a new world order. It would announce the end of the American era and the rise of another, this time belonging to developing nations. It would even, according to excitable analysts, be remembered as another Bandung Conference, the 1955 meeting that paved the way for a non-aligned movement during the Cold War.

And on that front, the gathering in Johannesburg succeeded. The organisation announced its first expansion since its founding in 2009: next year, the five original Brics members — Brazil, Russia, India, China and South Africa — will be joined by Saudi Arabia, the United Arab Emirates (UAE), Egypt, Iran, Ethiopia and Argentina (provided the current government wins the upcoming elections, which seems unlikely). Even more significantly, the summit underscored the bloc’s inclination to use its increasing economic clout to challenge the Western-dominated global order. The combination of these two elements — growing economic muscle and political boldness — means that the bloc (to be renamed Brics Plus) has become a full-blooded geopolitical actor that can longer be ignored.

In demographic and economic terms, the power of the Brics, especially in light of its recent expansion, is all too evident. With its new members, the bloc will represent almost half of the global population. In terms of purchasing power parity (PPP), the most appropriate measure for comparing the relative economic size of countries, it already represented nearly one third of global GDP — more than the US-led G7’s economies, which account for 30%. The latest additions will bring its share up to 37%.

This gap with the West will only widen, considering that emerging and developing countries are predicted to grow at much higher rates in the coming years, and that more countries are likely to join. More than 40 countries have reportedly expressed interest in joining, and 22 of them have formally asked to be admitted. In other words, the overwhelming majority of the world’s population lives in countries that are either already in the Brics or aspire to be.

The importance of this becomes even more apparent if we look at what countries produce, rather than just how much they produce. Over the past decades, Western economies have become increasingly financialised and seen their industrial production stagnate, meaning that a large part of their GDP doesn’t represent the production of actual goods but rather of financial assets. If we look at actual production — manufacturing — the gap between the West and the Brics is even starker: the G7 countries as whole contribute to global manufacturing output roughly as much as China does on its own.

But the growing power of this new alliance is about much more than just GDP and the production of stuff; it’s also about resources. The integration of two of the world’s top oil producers — Saudi Arabia and the UAE — means that the Brics members will account for more than 40% of global oil production. The fact that two of America’s staunchest allies in the Persian Gulf have decided to join a China-led (and increasingly politicised) alliance exemplifies better than anything else the paradigm shift underway. US officials can downplay the significance of the event as much as they want, but its symbolic value is clear — especially if we consider that the two Gulf countries are joined by Iran, one of America’s most notorious arch-enemies.

For the US, however, the consequences are likely to be more than just symbolic. The move potentially represents a serious threat to the petrodollar system. During the Seventies, Saudi Arabia made a deal with the US in which it agreed to list its oil on the global market in dollars; the dollars received by Saudi Arabia for its oil sales — the so-called petrodollars — would then be recycled back into the US in the form of deposits and purchases of US Treasuries. This, combined with the fact that any country that wants to buy oil has to purchase dollars to do so, has allowed the US to run a massive trade deficit for decades without seeing the dollar depreciate. It has been one of the keystones of America’s post-war global hegemony, allowing Washington to sustain a regime of perpetual war, on top of exercising financial dominance over much of the world.

In recent years, however, cracks have started to appear in the petrodollar system. Not long ago, Saudi Arabia announced that it was considering pricing its oil in other currencies — first and foremost the Chinese yuan — while the UAE has already sold oil to China using the yuan. Saudi Arabia and the UAE’s entry into the Brics is therefore likely to provide further momentum to this gradual shift away from the petrodollar system.

As a group, too, the Brics has leaned towards an explicitly pro-de-dollarisation stance. Last year, for instance, they announced plans to develop an international currency along the lines of the synthetic alternative proposed by Keynes 70 years ago, the bancor. At last week’s summit, Brazil’s President Lula reaffirmed it as a priority, though it is unlikely to happen anytime soon. In the meantime, the Brics’s plan is to encourage the use of local currencies in international trade, as well as increasing the percentage of the bloc’s loans financed in local currencies.

Equally symbolic, in political more than economic terms, is the admission of Ethiopia. Not only is Ethiopia Africa’s second most populous country, after Nigeria; it is also where the headquarters of the African Union are located, in the capital Addis Ababa. The move here should be read as a message to the entire continent that the Brics is open to any African country that may want to join, as well as an affirmation of the bloc’s commitment to helping developing countries — Ethiopia is also one of Africa’s poorest countries. In his speech (read by the Chinese commerce minister), Xi Jinping in particular insisted on the role of the Brics as a fundamental vehicle for the development and emancipation of the Global South — primarily Africa.

Not that these countries need much convincing. Many African nations have already asked to join the Brics, along with several more in the Middle East and Latin America. There are strictly economic reasons for this: the bloc’s approach to global affairs and development — based on the principles of inclusive multilateralism and sovereign equality, and opposition to economic coercion — is seen by many nations as a better alternative to the current Western model, and as an opportunity to break away from economic and financial Western control.

As ever, there are deeper factors at play, too. For some, the Brics represents a “geopolitical umbrella” ostensibly offering a degree of protection in the face of the West’s increasingly aggressive foreign policy, epitomised by the Biden administration’s “dual containment” strategy against China and Russia, and the expansion of Nato and Nato-like alliances around the world. For others, the motivation might be the opposite: they might, as Branko Milanovic suggests, view the Brics as “the only place where nations not interested in participating in the new Cold War, or even in a possible hot war between the superpowers, can ‘runaway’ in order not to have to choose sides”. For others still, the motivation is more ideological: it is about explicitly challenging and weakening the West’s 500-year-old grip on global affairs, in what may be likened to a new decolonisation movement. This is particularly evident in some African countries.

On this issue, however, not everyone in the bloc is on the same page. Russia and China, for obvious reasons, favour transforming the group into a full-blooded political organisation speaking up for the Global South, countering US and Western hegemony, and spearheading the creation of a more equitable multipolar world order. In his speech, Xi said that the US “has gone out of its way to cripple emerging markets and developing countries; whoever is developing fast becomes its target of containment; whoever is catching up becomes its target of obstruction”.

South Africa’s Cyril Ramaphosa, meanwhile, drew a direct parallel between the Johannesburg summit and the Bandung Conference of 1955: “The Conference called for the recognition of the equality of all nations, large and small. We still share that common vision of a fair and just world.” Isaias Afwerki, the President of Eritrea, one of the many non-member countries invited to the summit, was even more scathing: “US exceptionalism — or pax americana — has unleashed malaises that have gravely impaired global progress for almost a century now. Illegal and unilateral sanctions; weaponisation of US dominated financial, economic and judicial institutions; as well as other punitive instruments in their toolbox are routinely invoked [by the US and its allies] to punish those who do not toe the line…”

Yet not all members agree with this confrontational approach. Modi’s India, in particular, which has very good relations with Washington and the West, including in the security field, is concerned about the Brics’s evolution into an explicitly anti-Western organisation led by China and Russia, and favours a more neutral approach — non-Western but not anti-Western. For the time being, however, it appears to be losing ground to the latter two, whose anti-hegemonic stance enjoys widespread support in the Global South.

Next year, then, will prove crucial for the future of the Brics — and of the world as a whole. Not only will membership of the new countries become effective, but Russia will also assume the annual presidency of the bloc. In other words, a country engaged in a de facto military confrontation with the West — assuming the war is still ongoing — will be representing an organisation encompassing half of humanity. If last week’s summit didn’t mark the start of a new world order, it will certainly start then.

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Source: UnHerd Read the original article here: https://unherd.com/