BRICS Summit: De-Dollarization Gains Momentum

The 16th BRICS Summit was held in Russia last week and has significant implications for the geopolitical landscape. It was the first major international summit held in Russia since the start of the Ukraine War. As you know, the Western Bloc is imposing a serious economic embargo on Russia, and the International Criminal Court has declared Vladimir Putin a potential war criminal and issued an arrest warrant for him.

While swords were drawn between the Western Bloc and Russia, 36 heads of state came to Kazan, Russia, for the BRICS Summit. Among the participants were Chinese President Xi Jinping, Indian Prime Minister Narendra Modi, Iranian President Masoud Pezeshkian and Turkish President Recep Tayyip Erdogan.

Putin's primary goal with this Summit was to show that Russia was not isolated from the world. The argument that the economic embargo imposed on Russia now necessitates an agreement on an alternative currency to the dollar was strongly reinforced throughout the meeting. Another surprise at the summit was the declaration of BRICS’ Partner Status. Turkey has become a partner country for now, along with 12 other nations, and this will create quite a debate in the future regarding Turkey’s status as a NATO member.

The gap between the West and alternative blocks like BRICS is gradually widening. It is becoming increasingly clear that the future will not be shaped around a single global market. It is quite possible that we have come to see the beginning of the end of the dollarized world economy as you know it. 

The geopolitical risk carried by traditional investment instruments such as the stock markets, which is especially pegged to the dollar, is increasing day by day. This is not to even mention the untenable fiscal situation the U.S. government is in, and it doesn’t take a genius to realize betting everything on the U.S. dollar is a huge risk. As the world order changes, it is time for you to rethink your position.

Now, let us reflect on the geopolitical implications of the meeting through the declaration of the 16th BRICS Summit.

STRONG EMPHASIS ON MULTILATERALISM

The BRICS countries' signature message at the summit was to "strengthen multilateralism for a just global development and security." It is clear that existing global governance structures, such as the United Nations or the World Trade Organization, make hypocritical decisions in international conflicts that favour the Western Bloc. The BRICS countries rightly argue that these institutions, which they claim are under the hegemony of the West, must change to create a balance of power. 

In geopolitical terms, these demands are the BRICS countries' challenge to the West's influence. Countries like Russia and China do not defend these claims for a multipolar world out of love for democracy and liberty. However, we may soon understand that other countries will not be able to endure the devastating consequences of the US imposing its own foreign policy on other parties in every international crisis.

The BRICS demand for a multipolar world is not limited to economic interests. The biased stance on security issues will eventually turn into hot conflicts. The most probable scenario is that many international disputes managed through proxy wars will easily turn into wars between major powers.

Related content: BRICS Nations And De-Monopolization Of Economic Resources

BRICS AND GLOBAL SOUTH COOPERATION

The BRICS' decision to expand cooperation with the Global South strengthens the discourse of multilateralism. It is an attempt to form a broader alliance against the economic and political hegemony of the Western bloc. Creating the BRICS Partner Countries Category at the 2024 Summit is part of this strategy. BRICS supports them in gaining economic and political independence from Western-centered institutions.

Cooperation with the Global South involves taking a collective stance against unilateral sanctions and trade restrictions imposed by the West and developing alternatives to the dollarized global trading system. This cooperation is expected to allow developing countries to pursue their own development and growth policies without being exposed to neo-colonial policies by the West. 

BRICS demands greater flexibility and trade privileges, particularly within the framework of the principle of Special and Differential Treatment (S&DT), to enable developing countries to continue their economic growth

UN SECURITY COUNCIL REFORM

The current structure of the international system maintains a Western-centric balance of power. The dominance of the West in the Security Council has been criticized by BRICS and other developing countries. BRICS argues that developing countries in Africa, Asia, and Latin America should be more represented in the Security Council. So, it all comes down to breaking the Western bloc veto-based power and creating a more equitable global governance system. The current structure of the Council is seen as a tool that supports the policies of the West, and therefore, BRICS is calling for reform that will defend the interests of developing countries in particular.

WTO REFORM

BRICS has a second target of international organization: the World Trade Organization (WTO). The WTO claims to support free trade but does the opposite. It favours big corporations and powerful countries and sidelines smaller players. Instead of fostering true economic freedom, the WTO builds layers of bureaucracy that limit individual choice. 

BRICS emphasizes that WTO favours developed countries in trade agreements. So, it advocates strengthening a multilateral trading system that will protect the trade advantages of all players. BRICS demands more trade flexibility and privileges, especially within the Special and Differential Treatment (S&DT) principle framework, so developing countries can continue their economic development. 

Any international trade restrictions are against consumers and in favour of interest groups. However, the trade restrictions imposed on developing countries by supranational organizations such as the European Union under the guise of protecting their own domestic markets increase tensions in global trade and reduce economic cooperation. It should be remembered that such mercantilist policies are always behind the causes of the biggest wars.

The BRICS’ efforts to challenge the dollar’s hegemony are their primary strategy against the Western bloc. Initiatives to create a payment system backed by tangible assets like precious metals are already underway

OPPOSITION TO UNILATERAL SANCTIONS

Another important objection of BRICS is against unilateral economic sanctions. Economic sanctions and using the global financial system as a weapon do not contribute to resolving conflicts. BRICS argues that economic sanctions the West impose contradict international law and disrupt the global trading system. Economic embargoes should be abandoned if free trade and global economic cooperation are expected to contribute to world peace and prosperity. However, it is also obvious that politicians addicted to power will not give up these privileges. Therefore, it is quite reasonable to expect global trade to be fragmented among blocks soon.

BRICS CURRENCY DISCUSSIONS

BRICS' efforts to break the dollar hegemony are the most important strategy against the Western bloc. In this context, efforts to establish a payment system based on tangible assets like precious metals within BRICS are also ongoing. This system aims to facilitate transactions in local currencies and minimize the impact of payments made in dollars.

Increasing trade in local currencies will allow BRICS members to establish more independent and flexible economic relations with each other. This is also seen as an economic defence mechanism against the power of Western sanctions. An alternative global financial system would deeply shake global geopolitics. Frankly, I see no reason why BRICS would not put its own financial system into action and start the de-dollarization process in the face of a major global crisis.

Related content: BRICS Currencies: Charting A New Course In Global Finance

Another key development at the Summit was the creation of BRICS Partner status, allowing countries to participate in meetings and cooperation projects. This move is a clear strategy for global expansion

AGRICULTURE AND FOOD SECURITY

At the Summit, BRICS reiterated their goal of ensuring sustainability in agricultural trade. Removing restrictions on agricultural trade is a major economic issue for BRICS. These restrictions negatively affect agricultural production and trade in developing countries. Removing trade restrictions on agriculture is important for sustainable agricultural production and ensuring food security.

In particular, Russia's proposal to establish a grain trading platform within BRICS is an effort to increase food security and ensure easier and smoother trade among BRICS countries. This platform aims to increase coordination among grain-producing countries and deliver grain products to world markets more quickly and effectively.

PARTNER STATUS

Another notable development at the Summit was the establishment of BRICS partner status. It allows these countries to participate in BRICS meetings and cooperation projects and move closer to BRICS's global development goals. This is part of a global expansion strategy for BRICS and an opportunity for the countries concerned to create an alternative area of ​​economic, trade and diplomatic cooperation outside Western-centered economic blocs. These partner countries are Kazakhstan, Algeria, Belarus, Bolivia, Cuba, Indonesia, Malaysia, Nigeria, Thailand, Turkey, Uganda, Uzbekistan, and Vietnam.

This is an important development. Countries like Turkey can increase economic diversification by integrating energy, trade, and finance into BRICS projects. Countries rich in natural resources, such as Algeria and Bolivia, can play important roles in BRICS' growing energy markets. Similarly, Asian countries such as Indonesia, Vietnam, and Malaysia can contribute to BRICS expanding their influence in the Asia-Pacific region.

Related content: What Does Turkey's Move To Join BRICS Mean For Expats?

Unless global politics and economics are restructured on the foundational pillars of natural rights to life, liberty, private property, and unrestricted free trade between individuals, the near future holds the potential for significant disasters

CONCLUSION: THE CRACK IS DEEPENING

The declaration of the 16th BRICS Summit shows that the transition to a multipolar system in the global order is accelerating. This shift exposes the unsustainable nature of economic models centred around the US and Western nations. Unless global politics and economics are reshaped through free trade, individual freedom, and mutual respect, the near future holds the potential for significant disasters. However, a new pro-freedom world order is currently nothing more than a dream. 

So, what matters most is taking the necessary steps to respond to a disintegrating world order. As global blocs impose economic embargoes and issue nuclear threats, you cannot protect your wealth through government bonds or stock market shares. Those are ultimately just paper assets. Now more than ever, it is essential to focus on tangible investments, such as precious metals, international real estate, raw land, timber, etc. I would be happy to guide you in crafting a Plan-B to protect your wealth and freedom. Remember, today is always the best time to take action.