10/22/2024–|Last updated: 10/22/202406:29 PM (Mecca time)
The activities of the BRICS summit begin today in the city of Kazan, the capital of the Republic of Tatarstan in Russia, amid aspirations to enhance economic cooperation among the countries of the group in a way that protects them from the challenges they face, amid openness to increasing the number of countries of the bloc after it increased to 10 during the current year from only 5. The five new ones are Saudi Arabia, Egypt, the UAE, Iran and Ethiopia.
The summit focuses on food security and energy issues, with special attention to the Middle East, and the main title of the meeting will be: BRICS and the Global South to jointly build a better world.
36 countries are participating in the meetings, including 22 at the highest level and leaders of 6 international organizations, discussing issues of interaction between the countries of the global majority, in resolving urgent crises, including improving the structure of international relations, and ensuring sustainable development of food and energy security, in addition to the worsening situation in the East. Middle.
Get rid of the dollar
The activities scheduled to continue until October 24 of this year include the idea of getting rid of the dollar in intra-transactions between the bloc’s countries at the top of the agenda of events, especially with the increase in US sanctions on Russia since the start of the war in Ukraine, one of the pillars of which was the US control over global payment and money transfer systems. Especially since it is the source of the dollar currency used in global trade and most of the countries’ monetary reserves as well.
This comes at a time when requests for new countries to join BRICS are increasing, and it is one of the points that will be studied during the summit.
It is noteworthy that although central banks have worked to diversify their holdings, including gold, about 58% of foreign exchange reserves are in dollars, and the effects of the dollar network place American banks at the center of global payment systems.
All banks deal in dollars through a correspondent bank in America, which enables the greenback-issuing country to monitor flows for signs of terrorist financing and evade sanctions.
After the outbreak of war in Ukraine, the West froze $282 billion in Russian assets held abroad, separated Russian banks from the SWIFT system and prevented them from processing payments through American banks. Washington also threatened to impose “secondary sanctions” on banks in other countries that support the war effort. Even European policymakers who support sanctions were dismayed by the speed with which Visa and MasterCard (two American companies that the eurozone relies on for retail payments) closed their doors in Russia.
The Russian Sputnik news agency quoted economics professor Wafa Ali as saying that the BRICS summit comes at a time that the world is going through, which is suffering from a state of eroding confidence in light of wars and economic crises.
Not easy
The agency quoted international economist Dr. Karim Al-Omda as saying that switching to a new payment mechanism between countries is not an easy measure, but it will be gradual and will require time, as countries move in this direction.
The mayor pointed out that “China and Russia have already begun the process of reducing dependence on the US dollar, given the importance of the dollar in international transactions, which gives the United States additional strength.”
The mayor described “the dollar as not just a means of trade exchange, but rather a means of American hegemony,” saying that mutual investments between the BRICS countries will enhance the group’s presence, noting the experience of payments away from the dollar between Brazil and Argentina, in addition to the experience of dealing in local currencies between the UAE, India, Russia, and China, especially in Energy sector.
It is noteworthy that the number of people subject to US sanctions increased by more than 900% (to about 9,400 people) in the two decades until 2021, according to what the British newspaper The Economist reported.
The British newspaper The Economist reported that the “BRICS Bridge” payment system according to the Russian name is scheduled to be built within a year, which will allow countries to conduct cross-border settlement using digital platforms managed by their central banks, according to the Economist.
The newspaper expected that discussions during the summit would focus on the race to reshape money transfer routes, as China has long bet that payment technology would reduce America’s power because it is at the center of global finance (by controlling money transfer systems), and the BRICS plan may provide cheaper transactions. And faster, and these benefits may be enough to entice emerging economies.
According to the Economist, the new BRICS plan, which focuses on digital currencies run by central banks, appears to be at least partly inspired by an experimental payments platform called “M Bridge” that was developed by the Bank for International Settlements along with the central banks of China, Hong Kong, Thailand, the Emirates and Saudi Arabia. , in addition to 31 other observer members.
In another economic context, Russian President Vladimir Putin, during his meeting with the head of the New Development Bank of the BRICS, Dilma Rousseff, described the Development Bank of the BRICS group as a promising financial institution, noting that the bank has financed projects worth $33 billion since 2018.
