Kazan Russia just hosts BRICS Summit: A Critical Moment for Global Politics and the Economy
A new era is emerging in the world, marking the gradual decline of the U.S.'s exclusive dominance and its currency, the Dollar.
We are currently experiencing monumental times. One significant issue is the tragic genocide in Gaza, which will be remembered as one of the darkest chapters in human history during the 21st century. This atrocity is alarmingly backed by numerous countries that proclaim to be democratic and to advocate for human rights, including the United States and Germany. Additionally, we are witnessing the emergence of a new era, marked by the gradual decline of U.S. dominance and the hegemony of the American dollar. The mass printing of dollars to cover wars and fire the genocide that is taking place in Gaza. How the dollar and the dollar system is being used as a weapon. This worked against smaller countries, but when they did that to Russia a fatal mistake was made. This dominance, which took shape after World War II, has become rigid in a drastically transformed global landscape in the 21st century.
In this two-part article, I will investigate how this transformative moment is unfolding, with a focus on the contentious role of the BRICS Summit that took place in Kazan from October 22-24, 2024. The first segment will delve into the new payment systems and their anticipated mechanisms.
The Decline of U.S. Hegemony
The BRICS monetary and payment frameworks represent a significant stride towards diminishing U.S. dominance over the dollar-based system. Not that it was introduced at this summit. The development of this new system has been years in the making. China, Russia, Iran, and India have been running tests to get a working model. They have finally come up with a working model. This has already been used between Russia and Iran. The formal introduction of the system took place at a meeting of the Finance Ministers several months ago. At Kazan they reiterated the system and said it is ready for use. The twenty-three countries will now slowly start using it. Slow and steady is the catch cry.
Following World War II, the United States built a global system reflective of its interests, creating institutions that eventually catered to both contemporary needs and its own agendas.
The various crises spawned by its financial systems, along with numerous wars and invasions of sovereign states, and the unilateral sanctions that caused immense suffering and loss of life in nations like Cuba, Iran, Syria, and Afghanistan, have served as a crucial wake-up call for the global community, particularly for the Global South. Furthermore, the manipulation of the world trade system through the U.S. dollar, which was enforced as the exclusive currency for oil transactions, exemplifies the extent of this imposition.
Under the guidance of China and Russia, the BRICS has embodied the aspirations of the Global South for freedom and affluence, instilling a sense of urgency for the establishment of a new world order. This is starting to look like a reality for them rather than a pipe dream. They have a working system in their hands.
What did the Kazan Summit Achieve?
The Kazan Summit is set on the establishment of an integrated payment system for the BRICS, which other nations outside the group may also have the opportunity to use, as noted by French economist Jacques Sapir. They announced that they are now in the stage of developing all the institutions that will stabilise the system. Organisations that rival the IMF to new commodity trading centres that rival and remove the totally corrupt Comex and LMBA. The west will no longer be able to steal the resources of the poorer countries.
The core challenge was in the creation of this internal payment system that has garnered much attention within BRICS discussions. It has been clarified that this will not function as a currency, but as a payment mechanism announced by Vladimir Putin during the economic summit. Russian Finance Minister Mr. Siluanov has provided further elaboration on this topic in various statements.
The objective of BRICS was to develop a payment framework that does not incorporate the dollar or the Euro. Essentially, they aim to facilitate transactions independently of these currencies. However, without causing them to collapse. This may be impossible for the USD as so many trillions are held outside the US. Officially 13 trillion, but in reality, likely twice that. At some point when it becomes obvious and probably well before that, there is going to be a mad dash for the door to get rid of dollars.
The Mechanics of the New Payment System
In the context of international trade, a unit of account specifies the sum to be paid, a transaction unit denotes the currency used for the exchange, and a settlement currency establishes the payment medium for the seller and the obligation for the buyer.
Currently, there seems to be a consensus that the settlement currencies will be the domestic currencies of the participating nations. Nonetheless, since these currencies can change in value relative to each other, it is crucial to establish a unit of account as well as a settlement unit, highlighting an area of concern. This will likely eventually be solved being the same, a brick unit. The Australian dollar will be 90% of a Brick Unit and the New Zealand dollar will be 85% of a Brick Unit. The country still gets to call their currency by whatever name they wish. The real value will be a Brick Unit, a cryptocurrency. There will need to be strong restrictions on how much money a government can print out of thin air.
Approximately a year ago, a proposal emerged to implement a system akin to the Special Drawing Rights (SDRs) managed by the International Monetary Fund. However, Russia and China have expressed that the existing SDR framework includes the dollar and the euro—currencies they prefer to sidestep. This has led to a shift toward developing an electronic unit of account.
This situation exemplifies how cryptocurrency technology can influence political systems. A type of cryptocurrency will be utilized, but it will be linked to a tangible asset, likely gold. According to Sapir, though, the cryptocurrency's value in gold may vary; thus, it does not represent a gold standard system. It does limit the amount of money that can be printed out of thin air.
Countries will engage in an exchange of this cryptocurrency for their national currencies: selling nations will receive a specified amount of cryptocurrency, while buying nations will have to provide a designated sum in return. Consequently, national currencies will be necessary for purchasing cryptocurrency or converting it back to conventional currency.
Implementing this framework will necessitate various technical solutions. Reports indicate that Russia is inclined to have transactions or conversions from cryptocurrency to national currencies occur on a semi-annual basis or at year-end. Transactions in this arrangement would remain in cryptocurrency for a six-month or year-long duration until settlements are finalized. This allows for a scenario where one nation purchases BRICS goods from another while trading with a third party. The objective of this structure is to minimize frequent transactions, facilitating a single final transaction upon settlement. This whole argument seem flawed. If these transactions are happening electronially then there should be no reason for all this to happen instantly.
My Conclusions
China, India and Russia are the biggest, third and fourth-biggest economies in the world. The numbers for the USA GDP are clearly nonsense. They are in a depression with no hope of exit, as is Europe. While India and China are both growing fast. In all the Bric’s countries, you are seeing good growth.To stand in the way of their progress to becoming the world's two superpowers will get that country run over.