Global Courant 2023-04-13 10:30:52
The first event of Brazilian President Luiz Inácio Lula da Silva’s long-awaited visit to China is the official swearing-in ceremony of Dilma Rousseff as president of the New Development Bank (popularly known as the BRICS Bank) on Thursday, April 13.
The appointment of Brazil’s former president to the post shows the priority Lula will give to the BRICS countries (Brazil, China, India, Russia and South Africa) in his government.
Also Read: Will Lula find his El Dorado in China?
BRICS has lost some of its dynamism in recent years. One of the reasons was the withdrawal of Brazil, which had always been one of the group’s engines, in a choice by its right-wing and far-right governments (2016-2022) to join the United States.
A new impetus for BRICS?
After the last BRICS summit in 2022 hosted by Beijing and held online, the idea of expanding the group was strengthened, and more countries are expected to join this year. Three countries have already officially applied to join the group (Argentina, Algeria and Iran). several others consider doing so publicly, including Indonesia, Saudi Arabia, Turkey, Egypt, Nigeria and Mexico.
The BRICS countries are occupying more and more important place in the global economy. In terms of GDP at purchasing power parity (PPP), China is the largest economy, India is third, Russia is sixth, and Brazil is eighth. BRICS now represents 31.5% of global GDP PPP, while the share of the Group of Seven has fallen to 30%.
The BRICS are expected to contribute more than 50% of global GDP by 2030, and the proposed expansion will almost certainly drive that forward.
Bilateral trade between the BRICS countries has also grown strongly: trade between Brazil and China has broken records every year, reaching $150 billion by 2022; between Brazil and Indiathere was a 63% increase from 2020 to 2021, to more than $11 billion; Russia tripled exports to India from April to December 2022 compared to the same period last year, rising to $32.8 billion; while trading between China and Russia jumped from $147 billion in 2021 to $190 billion in 2022, an increase of about 30%.
The conflict in Ukraine has brought them closer together politically. China and Russia have never been so aligned, with a ‘partnership without borders’ as evidenced by President Xi Jinping recent visit to Moscow.
South Africa And India have not only refused to give in to NATO pressure to condemn Russia for the conflict or impose sanctions, but they have moved even closer to Moscow. India, which has been closer to the United States in recent years, seems increasingly committed to the South’s cooperation strategy.
Alternatives to the dollar
The two main instruments created by BRICS are the New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA).
The first aims to finance multiple development projects, with an emphasis on sustainability, and is seen as a possible alternative to the World Bank.
The second could become an alternative fund to the International Monetary Fund (IMF), but the lack of strong leadership since its inauguration in 2015 and the lack of a solid strategy from the five member states have prevented the CRA from getting off the ground.
Currently, one of the most important strategic battles for the Global South is to create alternatives to the hegemony of the US dollar. As a Republican US Senator Marco Rubio known at the end of March, the United States will increasingly lose the ability to sanction countries if they reduce their use of dollars.
Almost once a week there is a new agreement between countries to bypass the dollar, as recently announced by Brazil and China. The latter already has similar deals 25 countries and regions.
There is currently a working group within BRICS whose task it is to make proposals own reserve currency for the five countries that could be based on gold and other commodities.
The project is called R5 due to the coincidence that all currencies of BRICS countries start with R: renminbi, rubles, reais, rupees and rands. This would allow these countries to slowly increase their growing mutual trade without using the dollar and also reduce the share of their international dollar reserves.
Another untapped potential so far is the use of the Conditional reserve arrangement (a total of $100 billion) to rescue insolvent countries.
When a country’s international reserves run out of dollars (and it can no longer trade abroad or pay its foreign debts), it is forced to ask for a bailout from the IMF, which takes advantage of the desperation and the lack of options for the country to implement austerity. packages of cuts in state budgets and public services, privatizations and other neoliberal measures.
For decades, this has been one of the weapons of the United States and the European Union to ensure the implementation of neoliberalism in the countries of the Global South.
At the moment, the five BRICS members have no problems with international reserves, but they do with countries Argentinasri lanka, pakistan, Ghana and Bangladesh find themselves in a bad situation. If they could access the CRA, with better loan repayment terms, it would be a political breakthrough for BRICS, who would begin to demonstrate their ability to build alternatives to the financial hegemony of Washington and Brussels .
The NDB should also start de-dollarizing itself, with more operations involving the currencies of its five members. For example from the $32.8 billion in projects approved so far by the NDB was about $20 billion in dollars and about the equivalent of $3 billion in euros. Only $5 billion was in renminbi and very little in other currencies.
It will be a huge challenge to reorganize and expand the NDB and the CRA. The leaders of the five countries will have to align on a common strategy that will ensure that both instruments fulfill their original missions, which will not be easy.
Dilma Rousseff, an experienced and globally respected leader, brings hope for new beginnings. Rousseff fought Brazil’s civil-military dictatorship in the 1960s and 1970s spent three years in prison before. She became one of President Lula’s chief ministers in the 2000s, and she was elected Brazil’s first female president and subsequently won re-election (2010 and 2014).
She was in office until she was overthrown by one coup based on fraudulent grounds by Congress (2016), which has since admitted the fraud. She has just returned to political life to lead one of the most promising institutions in the South.
After all, as president, Dilma Rousseff never shied away from major challenges.
This article was produced by Globe trotterwhich it provided to Global Courant.
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