Tahir Mahmoud
As these narratives collapse, it is equally important that those opposed to western imperialism do not construct their own narratives on wishful thinking. Instead, they should take reality as their primary reference point.
This aspect pertains most particularly to the field of economics and finance. Unfortunately, many people do not have a clear understanding of its details and often fall for grandiose but misleading news headlines.
Analyzing the longevity of the US dollar, Crescent International has on numerous occasions pointed out that “the process of dollar’s diminishing role as the global currency will take time.”
Increased activity by BRICS countries due to Russia’s strategic standoff with NATO in Ukraine continuously revives the question of whether the bloc will produce a viable alternative currency to the US dollar.
In multiple assessments, Crescent International has clearly pointed out that people opposing imperialism should have a realistic understanding of BRICS and not exaggerate its capabilities. Nevertheless, BRICS will undoubtedly contribute to the de-dollarization process.
In February 2024, CNBC cited Andrew Amolis, a wealth analyst at New World Wealth, about BRICS’ role in generating wealth. He stated that “BRICS will be the highest wealth growth of any bloc or region globally.”
One of the key reasons for such wealth growth is the intra-BRICS trade. As BRICS members significantly increase trade with each other using their own currencies, the demand for local currencies will continue to grow. This will negatively impact the demand for US dollar.
The US dollar will remain a currency used in international trade, but it will become possible to conduct global trade of strategic importance without using the dollar. One indication was given when Saudi Arabia let the 50-year petrodollar agreement with the US expire on June 9.
To understand the significance of this move, a brief explanation is required. The term “petrodollar” was coined when Saudi Arabia agreed in 1974 to use the US dollar for crude oil transactions on the world market. This arrangement was struck within two years of the US abandoning the gold standard.
In July 1972, the US announced that it will no longer peg the dollar to gold which was then selling at $35 per ounce (today, it has surpassed the $2,000 mark!).
The US-Saudi petrodollar agreement did more. In return for US promise to provide military support and protection to the kingdom, the Saudi regime priced its oil exports exclusively in US dollars. It agreed to do more: it would invest its surplus oil revenues in US Treasury bonds. Uncle Sam has been laughing all the way to the bank ever since.
The US could print—and it did—as many paper dollars as it wanted without worrying about inflation. The rest of the world had to bear the cost. With Saudis opening up to the possibility of trading their oil in other currencies as well, the dollar’s hegemony is no longer assured.
Further, other powers—China, Russia and India—have emerged to fulfill the Saudis’ needs. There are other suitors in the market in addition to Uncle Sam.
With the Saudis no longer confined to using the US greenback only, at some point this will create an excess of US dollars. The amount of dollars available will exceed the demand for it.
The above facts partly explain why the western corporate media did not widely cover the Saudi distancing from the US dollar and its embrace of other currency systems. This would further add to the perception of the US being an empire in decline. In economics, perception shapes reality, as it is directly linked to consumer confidence.
Trade among BRICS members is unstoppable and so is the use of their local currencies. This will receive a further boost during the BRICS conference in Kazan on October 16-18 which the Russian President Vladimir Putin will chair. An important topic for discussion is the creation of a single BRICS currency.
This, however, does not mean that BRICS will be able to replicate the history of the euro and invent a single currency soon. That requires colossal administrative financial work which would take at least a decade or more to materialize.
Multi-currency trait of the BRICS is a positive development for the Muslim world. It is quite clear that within BRICS no Muslim country will play a pivotal economic role in the near future.
A very powerful BRICS with a centralized currency and financial institutions would be outside the influence of Muslim countries. Yet a strong BRICS with a tendency to use multiple currencies will grant Muslim countries more room for economic maneuverability and a greater economic say.
Overall, the positive aspect of the emerging multipolar world order is that there will be no single dominant global hegemon. This is a positive development and should be welcomed.
The emerging wealthy class in the BRICS bloc will be seen as a political backbone by western regimes. What this means that if the economic activities of the wealthy from BRICS countries strengthen the bloc economically, their assets and capital will not be safe from unilateral economic piracy of western regimes.
Examples of such piracy are plenty. One only has to look at well-known incidents relating to Venezuela, Iran and Russia.
This does not mean that Chinese, Indian or Russian millionaires will have no economic dealings with western economies. Their transactions will be reduced and directed towards other markets wherever possible.
This will further contribute to an already declining western economic influence as economic power is linked to confidence, morale and legal stability.
The emergence of the new economic order relies on patience, cooperation and political will. For now, BRICS is showing that it possesses all three. We will have to wait and see how this pans out in practical terms.
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