Yves here. We said from the very outset of the much-ballyhooed “de-dollarization”: and “new currency/new reserve currency” vogue that it would take a very long time to dethrone the greenback. That is not to say that the so-called Global South, and the BRICS members in particular have not made important progress, that is peculiarly underplayed by these enthusiasts.
Specifically, the big object to the US misuse of its reserve currency status and therefore its control over the dollar payment system was its use of sanctions, and particularly the way sweeping sanctions against Russia hurt all sorts of innocent bystanders, like countries that wanted to buy Russian fertilizer.
The messy bi-lateral trade schemed being put in place allow these countries to escape the sanctions noose as far as trade concerned, and that (as opposed to investments and dollar capital raising) is how the US had intended to inflict pain on the likes of Russia, Iran, and Cuba.
Many major countries are already well along in this process. Russia’s central bank governor Elvira Nabiullina has pointed out that building the related payments/information infrastructure to facilitate this type of trading is a priority.
Andrew Korybko provides a new sighting confirming that even the supposed leaders of the de-dollarization effort are not planning to move it forward very quickly. As much as I like this piece, it’s frustrating to see Korybko again call out what he labels the “alt media community” (in the past he at least qualified his stereotyping with depicting the stance as held by many, as opposed to being monolithic). He described privately in some detail how he challenged a prevailing non-mainstream view; As he explained by e-mail:
I sincerely do regard it as an unofficial lobbying group that functions as the “mainstream” counterpart of non-Mainstream Media (MSM).
I discovered this in early 2017 when there was a failed community-wide attempt by the Syrian-focused influencers to “cancel” me…
Since then, I realized that they’re practically copies of one another when it comes to pushing the most popular non-mainstream narrative on whatever issue it may be.
2017 is some time back. And the most visible writers and YouTubers who have acted as if the BRICS are soon to launch a new currency are high profile enough to be independent operators. Nevertheless, his perception may be correct among the next-tier voices.
By Andrew Korybko, a Moscow-based American political analyst who specializes in the global systemic transition to multipolarity in the New Cold War. He has a PhD from MGIMO, which is under the umbrella of the Russian Foreign Ministry. Originally published at his website
Simply put, BRICS wants to “play it safe” because all of its members apart from Russia are in relationships of complex economic-financial interdependence with the West, which isn’t expected to overreact to their piecemeal reforms since their own policymakers now believe that they’re inevitable.
“Alt-Media Was In Shock After The BRICS Bank Confirmed That It Complies With Western Sanctions” last month, and now the Alt-Media Community (AMC) just got hit with two more truth bombs after other leading officials confirmed that it doesn’t want to de-dollarize and isn’t anti-Western. South African Finance Minister Enoch Godongwana told Reuters earlier this month in an interview that the group’s focus is on expanding the use of national currencies rather than de-dollarization.
That outlet also quoted New Development Bank (NDB, popularly referred to as the BRICS Bank) Chief Financial Officer Leslie Maasdorp in the same article, who told them that “The bank’s operating currency is dollars for a very specific reason, U.S. dollars are where the largest pools of liquidity are…You cannot step outside of the dollar universe and operate in a parallel universe.” The official confirmation that BRICS doesn’t want to de-dollarize directly led to the next clarification about it not being anti-Western.
South African Ambassador to BRICS Anil Sooklal corrected false perceptions about the organization’s global role in an interview with Bloomberg several days back where he told them that “There’s an unfortunate narrative being developed that BRICS is anti-West, that BRICS was created as competition to the G7 or the Global North, and that is incorrect. What we do seek is to advance the agenda of the Global South and to build a more inclusive, representative, just, fair global architecture.”
In connection with this purpose, he also confirmed what Godongwana and Maasdorp said earlier in the month about how BRICS has no desire to de-dollarize. In Sooklal’s words, “Trading in local currencies is firmly on the agenda (but) There is no agenda item of de-dollarization on the BRICS agenda. BRICS is not calling for de-dollarization. The dollar will continue to be a major global currency — that’s a reality.” These revelations about BRICS might understandably overwhelm the average member of the AMC.
After all, many of them were misled by top influencers into imagining that this group is plotting to deal a deathblow to the dollar out of hatred for the West, but nothing could be further from the truth after what leading officials revealed in the last three weeks. President of the BRICS Bank Dilma Rousseff confirmed that it complies with the West’s anti-Russian sanctions; Godongwana, Maasdorp, and Sooklal confirmed that it doesn’t want to de-dollarize; and the latter also confirmed that it isn’t anti-Western.
BRICS can still “advance the agenda of the Global South and to build a more inclusive, representative, just, fair global architecture” exactly as Sooklal clarified is its intent in spite of the ‘politically inconvenient’ facts that were just shared, but it’ll be at a gradual pace, not an accelerated one. Therein lies the crux of the misperceptions about it, which Russia sought to correct earlier in the month after finally realizing that its soft power interests are threatened by supporters’ unrealistic expectations.
A critical mass of the AMC came to be convinced that BRICS was something that it’s not through a combination of well-intentioned but naive influencers pushing their wishful thinking about it and others maliciously doing the same to generate clout, promote their ideology, and/or grift. In parallel, some of this camp’s Mainstream Media (MSM) rivals scaremongered about BRICS for the ulterior purpose of galvanizing Westerners against it, but which also extended false credence to the AMC’s populist claims.
Taken together, it’s easy in hindsight to understand why so many people fell for the false narrative that BRICS is plotting to deal a deathblow to the dollar out of hatred for the West, which is why the organization’s officials decided to set the record straight in recent weeks ahead of its next summit. They didn’t want their supporters’ unrealistic expectations leading to deep disappointment that in turn makes them susceptible to hostile suggestions, nor did they want to spook the West into overreacting either.
The first potential outcome that could have come to pass had the previously mentioned clarifications not been made risked filling its supporters with such despair that they might either become apathetic towards BRICS or possibly even turn against it after feeling that they were duped. Regarding the second, some among the West might have ramped up their pressure campaigns against BRICS and its partners, including through blackmail, political meddling, and sanctions threats, all to stop the bloc in its tracks.
After debunking the disinformation that’s been spewed about their organization by the AMC and MSM alike, each in advance of polar opposite agendas but still suspiciously relying on practically identical narratives, BRICS officials are now more confident that these worst-case scenarios can be averted. This reality check sobers their supporters up and prepares them to expect a prolonged transition to multipolarity while also reducing the chances that the West will overreact to their group’s goals.
To elaborate on the last observation, the events of the last eighteen months since the start of Russia’s special operation convinced the West that the global systemic transition to multipolarity is irreversible, which is why they’re now willing to entertain reforms to their hegemonic models. German Chancellor Olaf Scholz, former Director for Europe and Russia at the US National Security Council Fiona Hill, and Goldman Sachs’ President of Global Affairs Jared Cohen all suggested this on the same day in mid-May.
They believe that the West must engage with the Global South on a more equal level, which necessitates scaling back some of its most blatantly exploitative practices in order to not lose more hearts and minds to the Sino–Russo Entente. To that end, they’re positively inclined towards accepting gradual changes to the global financial system such as those that BRICS’ officials confirmed that they have in mind, but will resolutely respond to any revolutionary developments that risk drastically accelerating this transition.
Simply put, BRICS wants to “play it safe” because all of its members apart from Russia are in relationships of complex economic-financial interdependence with the West, which isn’t expected to overreact to their piecemeal reforms since their own policymakers now believe that they’re inevitable. Among those four members, two schools of thought predominate as represented by China and India, whose respective differences of vision were explained at length here.
In brief, China wants to speed up the yuan’s internationalization and integrate BRICS into the Belt & Road Initiative (BRI), while India wants to prioritize national currencies and keep BRICS officially separate from BRI. Both agree that changes to the global financial system must be gradual, however, in order to avoid provoking a mutually detrimental overreaction from the West with whom all of them apart from Russia are in relationships of complex interdependence.
Everyone has the right to their own opinion about this reality that was just described, but the facts that were shared throughout this analysis in support of associated observations can’t be denied. Any top influencers among the AMC who still push the debunked narrative about BRICS plotting to deal a deathblow to the dollar out of hatred for the West are dishonest. Those among their audience who now know better should politely fact-check them under their posts to prevent others from being misled.
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What happens if there is a serious border conflict or cold war between China and India? Is BRICS just on a totally separate track? Or is China-India hostility exaggerated in Western media?
China and India are genuinely hostile to each other. Although, tensions between them are being ginned up by Western media, since the West wants to use India as a wedge against China.
India participates in BRICS out of respect for Russia and because they want a seat at the table.
Just how hostile could they be if their border skirmishes in disputed territories are mostly fisticuffs sans guns aka live training exercises?
Because neither side wants an actual war, but can’t begin negotiations about those territories for political reasons.
I don’t think it’s possible to avoid tensions between two powerful countries in the same region ultimately.
But that doesn’t mean both can’t cooperate on things that care about.
so china and india will go to war cause “I don’t think it’s possible to avoid tensions between two powerful countries in the same region ultimately”. the problems of assertions like that above lies in western educational system, that’s so devalued that he mainly produce people too much ideologized to have a grasp on reality
That is precisely the opposite of what Random wrote.
And the statement about border tensions is correct. Even the US and Canada have ongoing border disputes. The only countries I can think of without border disagreements are European countries where the issues were definitively settled at the end of WWII.
There is something analogous farther to the east: Vietnam. Also hostile to China politically and militarily, with longstanding territorial disputes, but also historically friendly with Russia, for good reasons. Both also have close economic relationship (at least in terms of volumes of trade) and are actively courted by US as potential partner against China, Russia, etc, but with ambiguous results. And yes, Vietnam is also a BRICS aspirant.
There’s also India-Pakistan hostility, which together with India.China hostility forces the other members of both SCO and BRICS kinda workd around India to get real benefits from the collaboration.
Indian dilemma is the need to sit on the table with other Indo-Pacific big boys, while still having influential sinophobic and islamophobic blocks turning foreign policy issues into domestic policy issues – so every step India takes is a compromise dependent more on the current status of each different internal and external block than on any long term planning.
In the end, though, India does not want to fight a war, wants a place on the top of the multipolar world and indeed seeks sovereignty from all-mighty dollar (as long as it’s not replaced by all-mighty yuan) so in the long term it is more aligned with China than, say, USA or UK.
So I guess the answer is that India would be sacrificing its international aspirations if it sat out BRICS, and the same could be said for BRICS if it left out India, so geopolitical conflicts with China are on indeed on a separate track. Also, they want to strengthen India-Russia trade relations.
How wonderful to ask a simple, not terribly well-informed question and get sincere, patient answers that don’t assume bad faith. NC comments is the last place on the internet I know of where that is still possible, and certainly the last place on the internet where I still bother commenting on current events. Thank you, everyone.
This guy also implies here that AMC is all Russian supporters. Typical.
I think BRICS will move fast once they can, but there’s no machinery to operate outside the dollar. Need at least national commodity exchanges that enable local pricing. To actually believe BRICS is not trying to be an alternative to G7 is to disregard that South Africa also said BRICS and SCO should merge and they have similar purposes. Also in what world can BRICS develop peacefully without countering the West. I have a bridge in Pakistan to sell this naive dude.
Lordie, some people can’t win.
Korybko has been attacked here for taking a Russian line (which is simplistic but we’ll put that aside for now). So he’s not pure enough for you?
All who are sympathetic to Russia’s situation (or at least not hostile, which is the more common view in the commentariat) must all operate in lockstep? You are PERSONALLY demanding that he hew to a loyalty test and not criticize wrong-headed views among fellow non Russia-haters?
Although you are only one person, you are confirming Korybko’s complaint.
And you are also straw manning the post. It’s about de-dollarization and launching a new currency, not the many other ways BRICS and other groups can advance the multipolarity agenda. Straw manning is a violation of our written site Policies.
As for how easy it is to launch a new currency, I suggest you read our considerable body of work on that piece of the proposed Grexit equation and get back to me. If anyone here is naive, it’s you.
Yes. I’ve been on Korybko’s email list for some time and find his observations unique and very useful. The volume and breadth of his output are sometimes overwhelming, perhaps even a bit suspicious, but always a stimulating antidote to both MSM dreck and whatever you call the other side. His analysis and opinions stand on their own, but I would like to know more about him. Naive would be among the last categories I would place him in.
Your takedown (dare I say body slam?) was more diplomatic than deserved- made my morning cuppa taste all the better!
Props to Korybko (and you) for calling for an end to adolescent tribalism between MSM and AMC factions. The truth will out, Jah willing! Any tips on how to buy rubles?
Sorry Yves, but the argument that because it is hard to create a new currency they won’t do it doesn’t hold water. Especially pointing to the work done on Grexit although highlights the challenges, Greece is one country. A small country. A weak country. And a captured one at that (even Greeks know it). The analogy doesn’t translate to BRICS. Context is also very different (leaving a Union and creating a new currency vs keeping local currencies and launching a side one)
And just because they said they don’t want to dollarize doesn’t mean they don’t want to launch a new currency. They’ll still use the dollar, just not as much. Fact is without getting out from under the dollar denominated system multipolarity is just a paint job on a creaky house. Window dressing at best. Which means they need a new currency (or the wide acceptance of an existing one) along with an all new technological and financial infrastructure – and they are capable of it.
No one rational should be arguing that it will be tomorrow or there won’t be challenges (both intrinsic and from the hegemony) … but this is not Greece 😉
The technology issues are exactly the same and that was what we focused on. And as we pointed out, creating a new currency requires an enormous amount of coordination and spending on coding and testing across many many many parties all over the world.
Dismissing the problem as merely one of Greece capability confirms you never read our work carefully.
As Korybko pointed out in another post, even the head of the BRICS bank said that the BRICS bank is complying with all sanctions and is not planning new projects in Russia. So again, you and others have ambitions for BRICS that it does not have….the same way Greece never seriously considered launching a new currency.
i think too that the comparison to euro is a strawman argument. either for the enormous differences between brics and eu, but also cause euro didn’t came up from nothing, before there was the ecu, it was introduced in 1978 (radhika desai described perfectly that historical moment), and it worked much better than the euro, as is easily seen by european life standards after euro introduction (no, i’m not talking about poland or estonia, i am talking about other countries, like italy). still today many european economies are in the eu without adopting the euro, and they will probably never adopt it. what’s the point of describing the euro as a necessary step toward economic integration, while this is not true neither considering europe?
I stopped reading Korybko specifically because of this house sized chip on his shoulder. All of his writing seems directed towards proving these people wrong or correcting their misconceptions. It would be tolerable, except that I think it clouds his judgement and leads to flawed analysis. He used to be better.
He publishes about 4 posts a day. He writes about BRICS and de-dollarization about once a week. This is the only topic on which he goes on about wrongheaded cheerleaders. So it’s only a very small part of his output. So you are seeing a very biased sample.
I’ve been posting his work on that topic because he has been following more closely than I have been able to.
I’ve told him to stop using framing, that it’s not helping him. He’s young and not taking well to editorial suggestions. But I have also told him this is the last post I am republishing where he goes on about his dispute.
For all the promoters of BRICS they failed to see that it is and was another appendage to capitalism.
And capitalism is the problem.
No multi-national organization can bring down the power of capitalism.
Only working people can do this.
I expect a similar road to revelations and realizations around expectations about multipolarity.
There are historical periods when it worked pretty well, as in the balance of power politics of Europe 1815 to 1914, which no major wars (compared to prior periods and the 20th century). But I agree, expectations running awfully high.
I’m not aware of anyone from BRICS ever (officially or unofficially) declaring that the goal was to bring down the west or even the dollar. It is an organization based on de-dollarizing but not in the realm of destroy the dollar. I’d describe it as an organization with the goal of being able to ignore the US rather than defeat it.
Which of course is the same as defeat to US leadership. As for criticism of the AMC, there’s a point here though the brush is far too broad. I would say that many in the AMC circle either expect or hope that other nations of the RoW will act like the US. The evidence of behavior from China, Russia, etc suggests that they intend the opposite. So there’s a disconnect related to motives, means and methods.
Um the Council for Foreign Relations does not think so. This post was March 11, 2022, before it looked like the sanctions were backfiring: Besides China, Putin Has Another Potential De-dollarization Partner in Asia
Putin has been talking up a new reserve currency:
As have other Russian officials:
And BRICS officials and news outlets
There is plenty more where that came from.
talk about strawmen!
Patrick Bond has an article in today’s Counterpunch also citing why the BRICS will go slow on many fronts, with some very good points regarding limits to their action on many fronts.
One marginal move that they can make, especially IF there is an intensifying BRICS+ focus on gold, is for their governments to get BACK their gold stock FROM the US Fed and Bank of England. They don’t “really” have gold until it’s in their possession.
But where can they keep it safe, from a Libya-type grab?
I wonder if their meeting next week will deal with this problem.
In their own nation is the only real place that is safest, except for the nations that are facing political instability. Even then, they may be better to make storage at home. Especially after what the UK did to Venezuela.
It is this lack of Trust in the US government to treat the BRICS fairly and equitably that seems to be driving the Bus to multi-polarity. The transition away from world finance controlled singularly by the US may take a while, but, since the US has shown its general decline is ongoing and likely accelerating, a new monetary order is inevitable.
The BRICS are moving slowly just like Putin in Ukraine: fear of the US doing something real stupid.
I think a piece of the situation that’s missing here is how a number of actions on the part of the US and other Western powers, for example the seizure of Russia’s foreign currency reserves, has at the least placed many countries outside the West on alert about the dangers of keeping their finances in banks or currencies that could make them vulnerable to similar Western actions.
So even if BRICS nations individually or collectively don’t want to de-dollarize or act as a rival force to the West, the West through its own acidity is at least forcing them to consider exit plans from the financial system in which the West has such dominance.
(also I still take issue with Korybko’s claim that China wants to internationalize its currency, but I’m only mentioning it again because Korybko is mentioning it again)
Edit: oops, as I was re-reading, I realized Yves does get at this in her intro to the article, so I guess I’m just adding my two cents here.
Sorry Yves, I opened a new tab to look something up in the middle of reading your intro and didn’t realize I missed a few paragraphs when I came back.
Yeah, where can they keep it safe, from a Libya-type grab/theft?
Despite humans’ self-delusions of grandeur, our world is dictated largely by brute violence. A linear sense of historical “progress” appears silly at this point. The non-western cyclical concepts of history appear more compelling.
The empire mass murdered millions of innocent people over the years and stole untold billions. Iraq, Libya, Syria, Latin America etc. And, as Dr. Hudson alludes, other countries that store their gold in London/NYC (or in USD assets) as well don’t have true possession. They won’t be able to bomb the US into the Stone Age to get it back.
Even the poorest nation (destroyed nation) on earth, Afghanistan, has had billions stolen from it, and illegal siege warfare (so-called sanctions) imposed on it. Cuba is being starved to death by unilateral blockades.
To be crude, there is no Rule of Law, it is the Law of the Jungle. Human progress?
I’m happy, mother smiles in relief… the children are rational after all. It’s an amazing report about a velvet confrontation. I’d even expect a rational acceptance of the fact that there isn’t enough gold on the planet to symbolically back the necessary purchases we are all soon going to make globally in order to achieve sustainability, and (drumroll) we are all therefore going to trust each other and get on with it. Because it’s dawning slowly that the getting-on-with-it is the most precious thing we have. Sea change.
Sorry but it seems to me that he is the one doing wishful thinking.
“the events of the last eighteen months since the start of Russia’s special operation convinced the West that the global systemic transition to multipolarity is irreversible, which is why they’re now willing to entertain reforms to their hegemonic models.”
If that was true then we would have seen negotiations and an end to the SMO. We haven’t. We would have seen a reversal of the sanctions and aggressive rhetoric against Russia and China. We haven’t. They haven’t given up on their hegemony and THEY WILL NOT until they are stopped because they can’t hold on to it anymore.
BRICS says they are not anti-West. Fine. They’re not. It’s the West that are anti-BRICS. Slight but important difference.
BRICS says that they don’t want to dedollarize. For now. What does it mean that they’re increasing trade in local currencies then? Yuan? You don’t launch a new currency when you’re in the middle of a war and the outcome is uncertain. You also don’t launch a new currency to be used between multiple nations until you have the infrastructure and a functional agreement between those nations. Once all these conditions are met it will be launched.
Also the straw man is the dollar will seize to be a reserve currency. It will continue. But it will be A reserve currency. One of many (at least two). The others it (and the west) will not control. Not issuance. Not regulation. Not monetary policy. Not infrastructure. In other words, there will be a viable alternative, and without TINA hegemony collapses.
One last thing: even if a Russia sanctions intention was to mire in the mess of local currencies, they effectively are forcing non-western countries to innovate a solution. Which they will. So just like they thought the sanctions would collapse Russia and it didn’t, and just like they thought giving Ukraine all these weapons, money, and support and Ukraine is still losing, they will fail in this too.
Huh? Your comment is an exercise in projection.
First, in case you missed it, the West has been talking about negotiations, starting with Mark Milley last November. Alexander Mercouris discusses that virtually every day on his show. The problem is they’ve gotten themselves in so deep with Ukraine that they can’t back out without agreeing to all sorts of things that would be hard to deny was a Russian win. Oh, and Ukraine is not on board. Neo-Nazis would kill Zelensky were he to go that route. Perhaps you missed the explosion of outrage when Jens Stoltenberg’s assistant suggested Ukraine cede territory to Russia in return for NATO membership (an idea Russia would never accept either).
Second, cognitive dissonance is pervasive in human affairs. People want contradictory things all the time. Then they have to decide what they are really prepared to do.
Third, saying the non-Western countries can innovate is a handwave. Pretty much everything that exists in finance dates back to the New Bronze Era (not making this up, they had derivatives, futures, syndications, and venture capital). Paul Volcker was right when he said the last innovation in finance was the ATM.
I said they have already accomplished the key aim, which is being able to avoid sanctions, via bi-lateral trade, which they are engaging in. Please explain what problem a new currency is supposed to solve, since the main problem is already being solved without a lot of brain damage.
And that is before getting to the fact that China wants a yuan-based system, not a new currency, but India (and likely others) are not on board. You assume unanimity of views when there is no evidence of that, and no reason to assume that given very different national economic conditions.
Yes Russia is with India in not wanting the yuan to be the new currency. Its not about replacing the USD. That is why the petro-ruble is now on the table between Russia and India to sort out the trade differentials.
BRICS ( and SCO) is about inter nation trading not about a new reserve currency. Of course over time it will have the effect of devaluing the power of the USD as reserve currency, but that should happen naturally not forced.
At the end of the last year three economists from Eurasian Development Bank published a paper “New approaches to international reserves: The lack of credibility in reserve currencies” (Russian Economic Journal) that seems to be a good introduction on alternatives to current international reserve system – spoiler: there are 13 of them, only three of which require international collaboration.
I don’t understand the issue well enough to tell whether this is a good paper or not, but it is adding to my understanding of the issue due to it’s systematic approach into the already published studies. It also emphazises the point that if one is not looking to destroy US dollar but merely trying to diversify away from it, central banks have a large set of tools to choose from independently and on their own terms.
I’m also not sure the relation EDB has to either SCO or BRICS, except that it’s an observer member in the SCO Interbank Consortium which is the platform China is using for Belt and Road initiative and that Russia has proposed to use EDB as SCO development bank instead of creating a new one.