And where is the plan of BRICS setting up their own currency?
They have been trying for the last three years, and learned the hard way that a confederated currency cannot possibly work among the different countries. If anything, it will only lead to an internal fracturing and the result is the dollar becoming even more hegemonic. This was the key lesson from Russia’s Kazan proposal on dedollarization at the BRICS summit in 2024.
The only way out is to use a federated currency backed by a strong economy. Euro and yen were two good, internationalized currencies that have the potential to challenge the dollar, but the US already pre-empted the dominance of the euro by destroying the European economy through the Ukraine war. The Japanese economy isn’t growing fast enough and isn’t up to the task anymore.
This brings us to yuan, which is backed by China’s strong economy, but since China refuses to give up its net exporter status, it cannot become a reserve currency that others can use for saving. China seems content with reaping the benefits of the dollar hegemony, so it’s a no go on that front either.
The keyword missing from the entire article is “neoliberalism”.
The global trade over the past few decades has been sustained by the US running a permanent trade deficit and becoming the global debtor (as opposed to the previous superpowers e.g. British empire that ran a global creditor strategy), which allowed productive capacity to migrate into the developing world to drive global wages down and destroy domestic labor union movements that had grown very powerful in the post-war industrialization era.
The end result is a global overcapacity of production from the Global South, which is what made cheap goods possible. Trade is no longer used for exchanging goods between countries, but as a deliberate strategy to accumulate financial assets (US dollars) to make their budget deficit look small, as advised by the IMF. In other words, Global South labor produce real goods and services for the wealthy Global North countries to enjoy, in exchange for a number in their bank accounts.
The Euros had been enjoying the benefits of this US imperial strategy and it is only now that they are being outplayed by the US, their industries are uncompetitive against the Chinese, that they start worrying about “international trade is unfair”. Well, it has always been.
Yes, and the preservation of this world order (or rather, the new iteration of this world order) requires Europe to make the sacrifice. The long-term deindustrialization of the US had intensified the contradictions of American capitalism, and the most prominent trend over the past decade has been the rise of Trump MAGA movement on the right and Bernie Sanders and now Zohran Mamdani’s movement on the left, after the great financial crash in 2008.
This contradiction cannot be resolved internally, but it can be exported to other parts of the world. The Europeans are being disciplined because after the fall of the USSR, the euro has emerged as a major competitor to the US dollar, which threatened the hegemony of the US financial empire. You can imagine what the US has ready for the Europeans now that their economic sovereignty has been strangled after the Ukraine war, and totally outplayed by the US.
Without examining the contradictions of global capitalism, geopolitical analysis is reduced to arguing which sport team is better or more fun to watch (which is what this article essentially is), but ultimately unable to understand the fundamental driving force of capital that shapes geopolitical tensions around the world.
Until China has finally come to the realization that neoliberalism needs to be abandoned, we will not see any fundamental changes.
The excitement about the rise of BRICS a few years ago only made it so much more disappointing when literally none of the BRICS countries shows any will to abandon neoliberal policies.
Where is the new economic doctrine proposal? You won’t find any, and certainly none in all of the BRICS summits since 2022.
How is the foreign currency-denominated debt of the Global South countries going to be resolved? Meanwhile, China is hoarding trillions and trillions of dollar reserves which has become an obsession, rather than putting them into good use. If a solution to this key issue cannot be found, the finance capital led by the US will continue to reign supreme.