Chronicle Editor
Tendai Hildegarde Manzvanzvike, Zimpapers Politics Hub
THE BRICS+ countries summit will commence in the Russian capital, Moscow, this week and the BRICS currency union is likely to be high on its agenda.
The summit comes on the backdrop of an invite extended to Zimbabwe to join the group in a development meant to remodel the global financial landscape currently dominated by the US-led monetary system.
Russia and China are making efforts to bring new members into the group. Other countries that have also been invited include Syria, Bolivia, Cameroon and Cuba.
As the summit kicks off in Moscow, many observers are wondering whether the proposed BRICS currency will bring an end to the dollar’s dominance as the international reserve currency. Is the Global South now ready to shake the international financial system?
Will the proposed BRICS+ currency bring to an end the dollar’s dominance as the international reserve currency? Is the Global South now ready to shake the international financial system?
BRICS News posted on its X (formerly Twitter) platform @BRICSInfo: “One of the BRICS countries India says, ‘the era of American dominance is over’”.
There is also a plethora of headlines in the mainstream media and on some podcasts on the issue. They include: Can BRICS dethrone the US dollar? It’ll be an uphill climb; experts say; A BRICS currency could shake the dollar’s dominance; End of the US dollar: US literally freaks out as BRICS takes a huge step to dethrone the dollar (Africa Reloaded podcast); BRICS just announced the US dollar is about to collapse for good (Redacted/Morris Invest podcast).
The dethroning of the US dollar could be one of the biggest disrupters of the 21st century. @sukodingha writes on X platform: “Looks like someone’s finally waking up to reality! The world has been waiting for a multi-polar future and the era of American exceptionalism is indeed coming to an end. Time for the
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US to adapt to a new world order, where diverse voices and perspectives are valued!”
Yesterday, Lena Petrova a YouTuber said the IMF’s Managing Director, Kristalina Georgieva had already sounded alarm bells on the management of the US economy and impending de-dollarisation: “The International Monetary Fund made another quite interesting revelation… You might remember that about a week ago, the head of the IMF said that the United States is on an unsustainable fiscal path due to its surging national debt…” said Petrova.
Listeners remarked: “De-dollarisation. It’s the reason BRICS was created. No more playground bully”(@nihilmiror6312).
“The fact that the IMF made this announcement means the petrodollar situation is a lot worse than we know”. (@frontRunn3r587)
How did the world get to a position where the United States, through its foreign policy, dominates world affairs with the dollar standard?
In 1973, Harold van Buren Cleveland, wrote a paper titled “How the dollar standard died”, published in “A Reordered world: Emerging international economic problems”:
“The dollar system had two defining characteristic. One was the general use of the dollar by foreign governments and central banks as a reserve asset. The other was the presumption that the parities of major currencies were not simply pegged temporarily but actually fixed – that is, unlikely to change… It was generally assumed, in other words, that the effective exchange rate of the dollar would never change either through a deliberate devaluation initiation by the United States or by virtue of a general up-valuation of other important currencies…”
Thus the greenback has been allowed to maintain its dominance with minimal contestation, even though the US treasury continues to print money, which is not backed by gold and other precious minerals; and, against a $34 trillion national debt.
This mayhem, coupled with the United States’ vindictive and meddlesome foreign policy are making groupings like the BRICS+ countries look for an alternative reserve currency.
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The Global South hopes that as the BRICS+ grouping grows, the world would eventually witness the hegemonic decline of the US dollar, coupled by a paradigm shift in the international monetary system discourse.
As @gopisk writes on his X: “Ukraine war was a turning point. India continued doing business with Russia that changed the situation.”
He is however cautious as he maintains that, the United States will continue to be “a dominant force,” and that the next decade “will determine the situation”.
The international mainstream media is also of the view that “the BRICS currency union is not likely to destroy the US dollar. While the idea of a BRICS-issued currency, has been discussed and there are ongoing talks about creating a new currency for cross-border trade among Brazil, Russia, India, China, and South Africa (BRICS nations), experts remain sceptical about its potential to dethrone the US dollar as the world’s primary reserve currency.
“The dominance of the US dollar in global trade and finance is deeply entrenched, with significant challenges facing any alternative currency or system seeking to replace it”.
Why is that so? “The US dollar has been the world’s principal reserve currency since the end of World War II and is used in over 80 percent of international trade.
While calls for de-dollarisation have gained momentum due to geo-political tensions and concerns about US sanctions impacting other countries’ economies, experts highlight several obstacles that could hinder the success of a BRICS-issued currency in displacing the US dollar”. (Summary from various media)
But there are voices of reason within the United States that believe that the dethroning of the dollar as a dominant currency is not too far-fetched, and the introduction of the BRICS currency will therefore pose a serious challenge.
This currency crisis was predicted during the Reagan era with the former President saying, “No great nation that has abandoned the gold standard has ever remained a great nation.”
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Former Congressman Ron Paul, a respected voice on the global economic outlook, said in May 2015: “Without a gold standard, there is nothing to limit government spending.
In short, as long as the government is able to overspend, the national debt will be the norm rather than the exception. Since the gold standard was abandoned, what is backing our currency?
Confidence! Without a hard asset backing up the dollar, it is supported only by the ‘full faith and credit of the federal government’.” (New York Times)
The US currency crisis has also been a major talking point on a number of podcasts, although naysayers, including the mainstream media, are in denial, arguing that the proposed BRICS currency union will in no way affect the dollar’s hegemony.
Clayton Morris has for the past two years made the dollar’s decline a major talking point on his “Redacted/Morris Invest” podcast.
At the weekend, Morris claimed that “the US dollar is about to nosedive in a way that we have never seen before … because the global world order is being restructured right before our eyes, (which is) a nail in the US dollar coffin”.
He added, “In one week (May 14), everything could be changing for the US dollar as the BRICS nations come together for their big event in Russia, and China will be there. And of course, the acceleration to the BRICS currency, based on commodities, based on gold is at a pace that the United States has dramatically, under-appreciated. They didn’t see this coming”.
Morris says the US is to blame for this. “We know the history of this. We accelerated the mess with sanctions against Russia, following the war in Ukraine.
We pushed Russia to war in Ukraine and we are now left holding back. We fomented a coup in Ukraine, their doorstep and then Russia invades, we sanction them. It hurts the United States more than anything.
And they’re like oh!, you sanction us, you don’t want to do business with us anymore. We will have our own currency, backed by gold, backed by other precious metals.
You guys, are going to be left with a bag holding the US dollars. And now, we are seeing this acceleration of people moving away from the US dollar across the board.
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“Last week we saw a number of African countries coming out and saying, we want to get our gold out of the United States.
We want to repatriate our gold: South Africa, Ghana, Cameroon, Nigeria and others are trying to pull their gold out of the United States. They want to move it to their home countries, away from the US dollar hegemony, controlling the entire money supply.”
The caveat is that former President Donald Trump, a leading contender in the 2024 presidential election has warned that they “cannot allow countries to move away from the dollar. That would be like a revolutionary war”, said Trump.
The bullying tactics remain to be seen, as the world continues to witness the demise of the unipolar world and with it, the dethroning of the dollar as the world reserve currency.
If he wins the presidency, Trump should also be prepared to put up a fight of his life in that revolution, because the Global South is saying, “Enough!”
Finally, as the BRICS+ nations seek to expand its membership, Zimbabwe’s invitation to be a member is a positive development that should see the narrative shifting from a US dollar denominated economy, to an economy that is modelled for total transformation.
How does Zimbabwe see its involvement, following the introduction of its gold-backed currency, the Zimbabwe gold (ZiG)? Will the US dollar continue to be the favourable currency among its basket of currencies?
Online Reporter