AND GROWING B R I C S 5 COUNTRIES

India news article discussing the BRICS upcoming annual summit scheduled this year for June 2-3 in Cape Town, South Africa.

Included in the list of 19 are Algeria, Argentina, Bahrain, Egypt, Indonesia, Iran, Mexico, Nigeria, Saudi Arabia, Turkey, and the United Arab Emirates (UAE).

Admitting any number of these countries to its ranks would greatly increase BRICS worldwide reach. The organization began in 2006 as BRIC and added just one nation – South Africa – in 2010 to become BRICS.

As of now, the five nationmembers of BRICS represent 23 percent of the world’s economy and 18 percent of its trade. Adding other nations to its roster will increase its worldwide power. According to Reuters, Saudi Arabia’s Public Investment Fund boasted $400 billion in 2020. The UAE is a technological destination nation with an impeccable credit rating. Its potential of joining BRICS would be a huge boost to the group’s credit rating worldwide, according to the Global Policy Journal.

Isn’t America Economic Besties with Some BRICS Intendeds?

The U.S. military has a strategic base in Turkey and our annual trade with Turkey was worth $21 billion in 2021. Mexico is our southern neighbor with whom we share a border, an illegal immigration problem, and $780 billion in trading of goods annually. In 2021, the US exported more than $17 billion in goods to the UAE, according to the UAE’s embassy website. And, U.S. investment in Egypt topped $21.8 billion in the past 12 months. as quoted in The Exchange: Africa’s Investment Gateway. And, don’t we buy a lot of oil from Saudi Arabia?

Challenge to the International Monetary Fund and the World Bank

In 2022, China announced that the BRICS New Development Bank (NDB) would be headquartered in Shanghai. NDB is a $100 billion investment by the five BRICS nations in an effort to challenge the rule of the IMF and the World Bank.

Any financial transactions done at the NDB when it opens won’t be done in U.S. dollars.

To understand the importance of this shift, a short review of how the U.S. dollar became the dominant currency is in order.

A Little History Review

The U.S. dollar became the world’s economic standard in 1944 at the close of World War II when 730 representatives from 44 of the Allied nations voted in favor of creating a worldwide monetary system at an economic conference dubbed the Bretton Woods Agreement. Held in Bretton Woods, New Hampshire, the international conference was a three-week effort resulting in the U.S. dollar becoming the currency all others would be measured up against worldwide. It also established fixed currency exchange rates with U.S. gold determined to be what backed up the new economic system.

Out of this conference, the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD) were formed, according to U.S. State Department online archives.

China, India, and Russia

(all now members of BRICS) were among the ten most active nations in the summit, according to archives accessible at www.worldbank. org.

Groundwork for the Bretton Woods Agreement – officially worldwide known as the United Nations Monetary and Financial Conference – was laid three years earlier at the Atlantic Conference in Newfoundland, Canada, in August 1941. This is when then U.S. President Franklin D. Roosevelt and then British Prime Minister Winston Churchill met on neutral territory to hammer out a plan for post-war recovery. Particularly noted were 1930s economic conditions that the two leaders and their staff cited as causes for the European portion of the worldwide conflict.

Throughout the following decades, many other economic actions were taken – most notably in 1971 when then U.S. President Richard Nixon issued an executive order pursuant to the Economic Stabilization Act of 1970. The order ended the U.S. gold standard by eliminating direct conversion of the dollar to gold, except on the open market. It was called, “The Nixon Shock,” because he didn’t consult members of his own Cabinet or the IMF. The resulting worldwide angst and the intervening decades during which the U.S. dollar continued to rule the global economic roost created an environment in which other world powers have sought to put their own thumbprint on economic activities.

Today, it isn’t too surprising that other nations representing other cultures want their own economic independence separate from a western mindset and U.S. dollars.

If nothing else, this should serve as a wake-up call that other countries are tiring of the American dollar heralded as the global benchmark, and that a paradigm shift may be on the horizon.