Renee Parsons
As a believer in reckoning; what some might call karma, it is a given that what is put out into the world is coming back, sometimes in full force and other times just enough to get our attention to straighten up and fly right. And that includes legislative karma. That knowledge has not stopped the Federal government or the Congress from being on a roll when it comes to economically ‘sanctioning” less prosperous nations or a tendency to believe in the fiction that the US is still ‘leader of the free world.’
These are topics that led to formation of the BRICS geopolitical alliance and remain especially interested in. At a recent BRICS meeting of finance ministers and heads of central banks, it came as no surprise that representatives of its nine member states expressed support for moving away from the dollar and in favor of trading in national currencies. That position comes decades after the US exploited its status as holder of the world’s reserve currency for its own benefit. That exploitation has not gone unnoticed by some of the larger, more knowledgeable and sophisticated nations who continue to recruit for BRICS.
The Dollar as we know dates back to adoption of the Federal Reserve in 1913 with gold-backed currency used to purchase weapons for WW I. At the Bretton Woods conference in 1944, forty four nations agreed to designate the US Dollar which was backed by gold to be the world’s official reserve currency. As a result, those countries monitored US monetary and fiscal policy to assure that the value of their reserves were not being negatively affected by the US abusing its privilege. Serving as default world reserve currency, the Dollar also served as the basis for foreign exchange; thereby allowing the US to borrow at a low cost. The Bank for International Settlements survey identified the USDollar as the primary currency used in 88% of the world’s financial exchanges.
As the US learned it could continue to print paper dollars to finance its domestic spending backed by US Treasuries, its paper dollars soon surpassed its available gold until President Nixon decoupled the gold/dollar standard into a floating exchange rate. While the Dollar remained the world’s currency due to accumulated volume and still a stable rate of exchange, the Dollar, nevertheless, began its long, slow, arduous decline.
As world currency, the Dollar allowed the US to become the world’s hegemony, spreading its military might throughout the world, putting its stake in the ground wherever there were valuable resources with massive expenditures on nuclear and conventional weapons to suit every occasion, every geography. Those fiscal demands on its Pentagon, its covert intel programs and all associated costs are now taking the US budget in an unsavory, unwelcomed direction that is threatening the fiscal stability of a once great Nation and threatening its claim as a Constitutional Republic – and the BRICS, who saw the potential, are preparing to protect their own assets and resources.
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As if the debt-enhancing supplemental votes were not a sufficient wake up call, the House dared to vote to ‘seize’ the $300 billion in Russian securities that the US had frozen as a sanction soon after the war in Ukraine began. The final vote was 311 – 112 with 101 Republicans voting Aye with the Democrats as 112 Republicans had the good sense to know there would be serious payback from Russia and voted Nay.
It was the BRICS that identified the global trend towards de-dollarization that dramatically increased after Russia was cut off from SWIFT. At the same time in early 2022, the US, UK, EU and others agreed to ban Russian banks from participating in the SWIFT (Society for Worldwide International Financial Telecommunications) system; thereby unable to participate in international markets. Under the guise of a global economic realignment, the collective west sought to confront Russia over what the US called an ‘unprovoked’ war in Ukraine, even though the US was fully aware of Russia’s sovereign concerns with NATO on its doorstep.
Applied as a diplomatic asset and an alternative to military action, the dollar allows the US to use its currency as a political sanctioning tool against thirty seven sanctioned programs and/or countries. The SWIFT ban followed by earlier sanctions were intent on isolating Russia economically and crippling its financial system. It is unclear whether the collective west mistakenly believed that there was no alternative to SWIFT or that the Russians would be so easily deterred from protecting their sovereignty from NATO’s incursion that they would acquiesce.
Most importantly, when the collective west denied Russia access to Swift, had they not foreseen they were creating an opportunity for CIPS to accelerate its growth and development or had they not considered that Russia was being pushed into the arms of another money messaging system not dependent on the US Dollar.
Launched in 2015, China has been eager to bring CIPS (Cross Border Interbank Payment System) to the attention of international traders. Trading in the Yuan, CIPS quickly became a reliable replacement for SWIFT when Russia transferred its services.
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In Rio Nivosti, Alexey Mozhin, Executive Director of the IMF in Russia offered the possibility that BRICS nations could create a “currency built on a basket of currencies of the five member countries” such as ‘the yuan, the rupee, the rand, the ruble and the real.” Mozhin continued that “Such a proposal is being discussed. In the event of the collapse of the dollar and the international monetary system, it will be necessary to turn the said BRICS accounting unit into a real currency” while stating the obvious that the US is in a ‘hopeless” situation “due to public debt. “
Ivan Chebskov, Russian Deputy Finance Minister described that “most BRICS countries supported building new payment mechanisms and developing central bank payments in national currencies and that building new platforms are what the BRICS countries need.”
The BRICS II next meeting will host a BRICS Sports Games (read Olympics) in October in Russia at which its membership meeting will consider new emerging nation-states added to its membership – with sixty having already applied.
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By late 2023, Russian Prime Minister Mikhail Mishustin announced that Russia and China had completely eliminated third party payments with every agreement being traded in Rubles or the Yuan as his Chinese counterpart Li Qiang cited the importance of strengthening mutual ties against a background of “global turbulence.”
In addition, Russian Finance Minister Anton Siluanov indicated that within BRICS “We need to further develop financial cooperation.. including sustainable development of financial relations and settlements on the BRICS platform is important for us, and we believe that it is necessary to work out such issues..,” It is expected that BRICS nations and those expected to join in the near future are already in the process of de-dollarizing their trade as a growing number of Nations turn to national currency settlements in trade rather than fritter their assets.