In its summit in Johannesburg, South Africa this August, BRICS invited six new members: Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates.
The bloc now represents 37% of global GDP (measured at purchasing power parity, or PPP), as well as 40% of global oil production and roughly 1/3rd of global gas production.
The inclusion of top oil producers like Saudi Arabia and the UAE, which have long priced their crude in dollars, is a direct challenge to the US petrodollar system.
All of the invited nations have indicated that they will officially join the extended BRICS+ bloc on 1 January 2024.
Four of Earth’s top 10 gas producers are now de facto BRICS+ members, making up 32% of global production.
Seven of the world’s 10 largest oil producers are now de facto BRICS+ members. According to 2022 data from the US Energy Information Administration, these include the:
- second-largest producer (Saudi Arabia)
- third-largest producer (Russia)
- fifth-largest producer (China)
- seventh-largest producer (UAE)
- eighth-largest producer (Brazil)
- ninth-largest producer (Iran)
In this video I discuss the importance of the expansion of BRICS
The BRICS+ bloc now represents:
-37% of global GDP (PPP)
-40% of global oil production
-1/3rd of global gas productionIt can challenge the petrodollar system that undergirds US economic hegemony
Full video below pic.twitter.com/SDQm1ymacV
— Ben Norton (@BenjaminNorton) August 25, 2023
De-dollarization at the BRICS summit
A key topic at the Johannesburg BRICS summit from 22 to 24 August was de-dollarization – the international movement of countries seeking alternatives to the hegemonic US currency.
The Russian government has confirmed that some BRICS members are slowly making plans for a new global currency for international trade, to settle balance of payments, and to hold in central bank foreign-exchange reserves.
Brazil’s President Lula da Silva, an original co-founder of the BRICS, used the meeting in South Africa as a platform to call for creating a new international reserve currency, to challenge the dollar.
BRICS has a working group dedicated to developing concrete proposals for this new reserve currency.
Lula emphasized that it would be “a unit of account for trade, which will not replace our national currencies”.
These comments made it clear that BRICS model is not the euro; it is rather something like the bancor, the international unit of account proposed by economist John Maynard Keynes at the 1944 Bretton Woods Conference (which ended up adopting the dollar as the global reserve currency, under US pressure).
Discussions of a new international unit of account are still in the early stages, however, and the currency is only on the horizon in the medium-to-long term.
In the short term, BRICS members voted to increase their use of national currencies in bilateral trade.
The BRICS New Development Bank (NDB), now under the leadership of Brazil’s former President Dilma Rousseff, has promised to gradually de-dollarize the bank’s lending, instead providing financing for projects in the national currencies of members.
BRICS: An economic powerhouse
In an August article published before the BRICS bloc announced its expansion, economic geographer Mick Dunford explained:
In 2022, the combined economic output of the five BRICS members, measured in purchasing power parity, exceeded for the first time that of the US-led G7.
At market exchange rates in 2021, the BRICS accounted for 26.1 percent of global GDP and 53.1 percent of world population, compared with 43.5 percent and 9.8 percent for the G7. However, GDP is misleading.
If one examines the production of manufactures, energy and raw materials and food, the BRICS countries account for 36.6 percent, 28.3 percent and 53.1 percent of world output, respectively (compared with 35.5 percent, 28.1 percent and 14.1 percent in the case of the G7).
This contribution to the production of real goods vital for human survival significantly exceeds the BRICS’ share of GDP (without correcting for purchasing power differences which significantly raise its shares) while those of the G7 are much smaller than its GDP share.
The bloc has become a massive economic powerhouse – and is only growing in influence.
China’s President Xi condemns US ‘hegemonic and bullying acts’
President Xi Jinping stressed in his speech at the BRICS summit that China does not want a “new cold war”.
Xi called for “win-win cooperation”, guided by the goal of “common prosperity” for all.
At the same time, the Chinese leader warned of the “hegemonic and bullying acts” of “some country” – obviously a reference to the United States.
Xi stated:
We need to promote development and prosperity for all. Many emerging markets and developing countries (EMDCs) have come to what they are today after shaking off the yoke of colonialism. With perseverance, hard work and huge sacrifices, we succeeded in gaining independence and have been exploring development paths suited to our national conditions.
Everything we do is to deliver better lives to our people. But some country, obsessed with maintaining its hegemony, has gone out of its way to cripple the EMDCs. Whoever is developing fast becomes its target of containment; whoever is catching up becomes its target of obstruction.
But this is futile, as I have said more than once that blowing out others’ lamp will not bring light to oneself.
China's President Xi at the BRICS summit:
"some country [hint: the USA], obsessed with maintaining its hegemony, has gone out of its way to cripple the EMDCs (emerging markets and developing countries). Whoever is developing fast becomes its target of containment; whoever is… https://t.co/mjXvydA5yz pic.twitter.com/XNHc0aYsPT
— Ben Norton (@BenjaminNorton) August 23, 2023
On the sidelines of the summit, Xi also met with Cuba’s President Díaz-Canel. State media reported that Xi pledged that “China will continue to firmly support Cuba in defending national sovereignty and opposing external interference and blockade”.
In a similar vein, Brazil’s President Lula condemned the unjust, Western-dominated international financial system and insisted that countries need “a fairer, more predictable, and equitable global trade”.
“We cannot accept a green neocolonialism that imposes trade barriers and discriminatory measures under the pretext of protecting the environment”, he added.
South Africa likens BRICS to the Bandung Conference
In his speech at the BRICS summit, South Africa’s President Cyril Ramaphosa compared the bloc to the 1955 Bandung Conference, which was organized to oppose colonialism.
“When reflecting on the purpose and role of BRICS in the world today, we recall the Bandung Conference of 1955, where Asian and African nations demanded a greater voice for developing countries in world affairs”, he said.
“We still share that common vision”, Ramaphosa added. “Through the 15th BRICS Summit and this Dialogue we should strive to advance the Bandung spirit of unity, friendship and cooperation”.
Will Argentina join BRICS?
Among the six countries invited to join BRICS+, a question mark is hanging over the head of one.
Argentina’s current, centrist government, led by President Alberto Fernández, has vowed to join BRICS+. However, whether or not the South American country actually does depends on the results of the elections approaching in October.
Two of the three main presidential candidates have publicly stated that they will not join BRICS+: the right-wing candidate Patricia Bullrich and the far-right extremist candidate Javier Milei.
Milei wants to abolish Argentina’s central bank, abandon monetary sovereignty, and adopt the US dollar as the official national currency (while also implementing mass privatizations of state institutions, building private for-profit prisons, and heavily militarizing the country).
When asked if he would consider joining BRICS+ if he won the election, the far-right extremist Milei declared: “Our geopolitical alignment is with the U.S. and Israel. We are not going to align with communists”.
Eric Arthur Blair
2023-08-30 at 19:02
This concise yet comprehensive summary by Michael Hudson and Pepe Escobar (hosted by Danny Haiphong) provides a good understanding of the dynamics.
https://www.listennotes.com/podcasts/3monkeys/pepe-escobar-michael-hudson-rvY0gMl8kKX/
Brazil wanted Argentina in.
South Africa wanted Egypt and Ethiopia in.
China wanted Iran, Saudi Arabia and the UAE in. Those latter three are major oil exporting nations. Russia was happy with that because those 3 are already cooperative partners in OPEC+.
It is simply a matter of time before Algeria, Venezuela and Kazakhstan join BRICS (Tokayev may try to play Erdogan-type games, but ultimately he knows his future is with BRICS and that all those bogus “good deals” offered by the CIA / fake “N”GOs infesting Astana are pure bullcrap.) Iraqis hate the USA for good reason but lack autonomy at present. With a majority Shi’ite population, even now Iraq is naturally gravitating towards Iran. Will China (Shock! Horror!) eventually negotiate a closer reapproachment between Iraq and Iran? Those Chinese are such nefarious evil peacemongers, unlike the noble good US warmongers!
Bottom line: the vast majority of high EROEI oil producing / exporting countries will be BRICS members soon or are BRICS favourable, and the unearned, undeserved privilege of the US petrodollar will soon be lost.
I cannot say this often enough: no matter how much the spin doctors may claim the USA is the largest oil producer in the world, that factoid is in practical terms, utter bullcrap. There are almost no conventional oilfields left in the USA that can produce economically recoverable oil. The USA is DEPLETED of economically recoverable oil. The large volumes of “oil” (actually shale LTO low energy density paint thinner) that the USA has been producing over the past decade+ was NEVER economically recoverable. It was extracted using IMPORTED high EROEI petroleum, obtained for free via the petrodollar privilege and funded by the scams of ZIRP, quantitative easing (now gone), government subsidies and share buybacks that created a stockmarket bubble which attracted yet more sucker “investors”. Even if produced at a 3:1 volume ratio (LTO recovered to petroleum invested) it was done so at an overall energy LOSS, implacably dictated by the second law of thermodynamics. This is a basic fact of physics which however needs some graphics to properly explain.
FACT: The US shale oil industry in aggregate NEVER turned a profit, reflecting the fact that it was and is a net energy sink, not a net energy producer.
FACT: Shale “plays” rise quickly to peak production, then deplete far faster than conventional oilfields (perhaps 5 years vs 35 years) and the Permian Basin is soon to crash. Bakken and Eagleford are already toast.
FACT: Diesel, the workhorse of agri-industry, and Jet A1 kero, are the most important distillates of real petroleum. They CANNOT be made from fake US non-petroleum LTO, unless LTO is blended with heavier components from Canada’s tar sands which itself is a low EROEI and hence very expensive source of oil. Hence US/Canadian unconventional “oil” sources can NEVER be competitive with the remaining conventional (relatively) high EROEI sources of the BRICS favourable nations.*
FACT: Loss of the exorbitant privilege of the US petrodollar means that the US will no longer be able to obtain free imported oil to produce expensive “domestic” LTO. Attempts at using LTO to produce further LTO will result in a even WORSE net energy loss. The USA has ZERO net energy availability from domestic sources to power any industry or agriculture.
FACT: Even if the USA had the political volition to re-industrialise (which it does not), the loss of US petrodollar privilege ensures that it will be physically impossible for the USA to re-industrialise. The USA is SCREWED. (Self inflicted screwing ie self abuse).
The above comments are not ideological opinions, they are FACTS.
The limits to growth scientists spoke of these concepts DECADES ago but were not listened to. Peak Oil experts (Hubbert, Campbell etc and more contemporaneously Art Berman) tried to publicise this DECADES ago but were not listened to. The award winning journalist Nafeez Ahmed wrote about this some years ago and was not listened to.
*they too are past peak production with declining EROEI, but that is for another discussion
JonnyJames
2023-09-07 at 17:18
Thanks for posting the Danny Haiphong segment, Mr. Blair.
You make great points re shale oil etc. The US heavily subsidizes BigOil anyway, so any economic logic need not apply here. Since the US has formalized, legal political bribery, these institutionally-corrupt practices will never end until the dollar collapses.
The US can simply create new money to subsidize the TBTF FinancialParasite class, BigOil, BigPharma, BigTech, the MIC (or whatever we call it nowadays) etc. The whole system of financial imperialism and institutional corruption pivots on this vicious cycle.
As Hudson and Desai point out, the dollar’s days of dominance are numbered, but there are numerous hurdles to be overcome before a “Bancor”-like unit of (central bank) currency can be agreed upon and implemented. This will take time, effort and much cooperation between BRICS+ and other countries.
Desai and Hudson have pointed out that empires rot from within: the US may rot from within before de-dollarization is finished. The emotionally-whipped up, misinformed, and armed public in the US may well start shooting each other (millions own firearms and have stockpiled guns and ammo). Also, the increasing political and institutional corruption will only add to the rot and stench.
Time to move to Mexico? They built the wall to keep the US people from escaping. 😉