Economy News – Follow-up
The activities of the BRICS summit begin today in Kazan, the capital of the Republic of Tatarstan in Russia, amid aspirations to strengthen economic cooperation among the countries of the group to protect them from the challenges it faces amid an openness to increasing the number of bloc countries after increasing to 10 during the current year after only 5. The five new ones are Saudi Arabia, Egypt, the UAE, Iran and Ethiopia.
The summit will focus on food and energy security 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.
The meetings are participating in 36 countries, including 22 at the highest level and the leaders of 6 international organizations, discussing issues of interaction between the countries of the global majority, in solving urgent crises, including improving the structure of international relations, ensuring the sustainable development of food security and energy, in addition to the worsening situation in the Middle East.
Get rid of the dollar
The events, which are scheduled to last until October 24, are at the top of the idea of getting rid of the dollar in inter-doctions between the bloc countries at the top of the agenda of events, especially with the increasing US sanctions on Russia since the start of the war in Ukraine, one of which was the control of the United States over payment and transfer systems globally, especially as it is the source of the dollar currency used in global trade and most of the cash reserves of countries as well.This comes at a time when applications for new countries to join BRICS membership are increasing, which is one of the points to be considered 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 put US banks at the center of global payments systems.
All banks deal in dollars through a correspondent bank in America, enabling the issuing country of the green currency to monitor flows for signs of terrorist financing and evade sanctions.
After the outbreak of the war in Ukraine, the West froze $282 billion of Russian assets held abroad, disconnecting Russian banks from the SWIFT system and preventing them from processing payments through US banks. Washington also threatened to impose “secondary sanctions” on banks in other countries supporting the Russian war effort, and even European policymakers who support sanctions were horified by the speed at which Visa and MasterCard closed their doors in Russia (two American companies that the eurozone relies on for retail payments).
The Russian agency Sputnik quoted the economics professor, Wafaa Ali, as saying that the BRICS summit comes at a time when the world is suffering from a state of erosion of confidence in light of wars and economic crises.
Not easy
The agency quoted international economist Dr. Karim Al-Mayor as saying that the transition to a new mechanism for payment 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 easing dependence on the US dollar, given the importance of the dollar in international transactions, which gives the United States additional power.”
The mayor described “the dollar as not just a means of trade, but a means of American dominance,” saying that mutual investments between the BRICS countries will enhance the group’s presence, noting the experience of payments far from the dollar between Brazil and Argentina in addition to the experience of dealing with local currencies between the UAE, India, Russia and China, especially in the energy sector.
The number of people subject to US sanctions increased by more than 900% (to about 9,400 people) in the two decades to 2021, according to the British newspaper Economist.
The British newspaper The Economist reported that the BRICS bridge payment system according to the Russian designation is scheduled to be built within a year, allowing countries to make a cross-border settlement using digital platforms operated by their central banks, according to The Economist.
The newspaper expected that discussions during the summit would focus on the race to reshape the fundsition paths. China has long bet that payments technology would reduce America’s strength to being at the center of global finance (by controlling money transfer systems), and the BRICS plan may provide cheaper and faster transactions, and these benefits may be enough to tempt emerging economies.
According to the Economist, the new BRICS plan, which focuses on cryptocurrencies managed by central banks, appears to be inspired at least in part by an experimental payments platform called “M Bridge” developed by the Bank for International Settlements along with central banks in China, Hong Kong, Thailand, the UAE and Saudi Arabia, as well as 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 BRICS development group bank as the promising financial institution, noting that the bank has financed projects worth $33 billion since 2018.
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