BRICS expanding into economic powerhouse: Petrodollar under threat
Aug 25, 2023
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Ben Norton analyzes the importance of the recent BRICS meeting where new members were invited, challenging the US petrodollar system. The bloc now represents 37% of global GDP, over 40% of global oil production, and 1/3rd of global gas production. Topics include the threat to the petrodollar, BRICS' massive economic weight, de-dollarization, Saudi-Iran peace, BRICS vs. G7, new BRICS currency, and Africa-Latin America cooperation.
BRICS expands to challenge the US petrodollar system by including major oil-producing nations and promoting the use of local currencies in trade and investment.
The expansion of BRICS signifies a shift towards resource nationalism, economic independence, and empowerment of countries in the global South.
The BRICS summit showcases the emergence of a multipolar world order, challenging Western hegemony and advocating for a fair and just global economic and political governance system.
Deep dives
Expanding BRICS and the Importance of De-dollarization
The BRICS economic block, consisting of Brazil, Russia, India, China, and South Africa, held its 15th summit in Johannesburg, South Africa. The summit announced the expansion of BRICS by adding Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates. The focus of the summit was on de-dollarizing trade between BRICS countries and encouraging the use of local currencies. This move aims to reduce reliance on the US dollar and promote trade and investment among member countries. Additionally, the summit emphasized the role of the BRICS Bank, the New Development Bank, in gradually de-dollarizing and increasing the use of local currencies in financing development projects. The importance of the expansion of BRICS lies in challenging the petrodollar system, as it now represents more than 40% of global oil production and over one-third of global gas production. Moreover, the BRICS economies together represent a larger share of the global economy than the G7 countries. The summit speeches by BRICS leaders highlighted the need for a multipolar world order, fair trade, and the promotion of development and cooperation among emerging countries. Amidst discussions on economic integration, value addition to raw materials, and the creation of new safe transport routes, the expansion of BRICS marks a step towards creating a new global economic and geopolitical order.
The Importance of Resource Nationalism and Economic Independence
Leaders at the BRICS summit stressed the importance of resource nationalism and economic independence for member countries. They emphasized the need to move away from being mere exporters of raw materials and instead focus on adding value to goods and services in order to promote sustainable development. The expansion of BRICS will facilitate economic integration and diversification of supply chains, while also promoting the transition to national currencies in trade and investment. This resource nationalism extends beyond BRICS countries, with other nations in the global South also seeking to develop their industries and process their natural resources domestically. This approach challenges the neocolonial practices of the Western powers and promotes fair trade and equitable economic growth. Additionally, leaders highlighted the significance of integrating African countries into the BRICS partnership, given the continent's vast reserves of critical minerals and its growing economic potential. Overall, the expansion of BRICS and the prioritization of resource nationalism signify a shift towards economic sovereignty and the empowerment of countries in the global South.
The Emergence of a Multipolar World Order
The BRICS summit showcased the emergence of a multipolar world order, challenging the traditional Western hegemony. BRICS economies now account for a significant share of global GDP and population, surpassing that of the G7 countries. The leaders emphasized the need for a fair and just world order based on international law and mutual respect. They criticized attempts by certain countries to maintain their global hegemony and impose their exceptional status. The focus of the summit was to enhance solidarity and cooperation among developing countries, promoting win-win cooperation and common prosperity. The expansion of BRICS and its commitment to a multipolar world order provides a platform for countries in the global South to have a greater voice on the international stage and shape the trajectory of global development. Moreover, BRICS leaders highlighted the importance of reforming global economic, financial, and political governance to create a more conducive environment for fair trade and to address the challenges faced by developing countries.
Challenging US Dollar Dominance and Western Sanctions
The BRICS summit demonstrated a clear challenge to the dominance of the US dollar and Western sanctions. The expansion of BRICS, particularly with the inclusion of Iran, Saudi Arabia, and the UAE, signifies a shift towards de-dollarization and a rejection of unilateral Western sanctions. Leaders stressed the importance of using local currencies in trade and investment to reduce reliance on the US dollar and create a more stable and equitable global financial system. They condemned the weaponization of the US dollar and the imposition of illegal unilateral sanctions, advocating for a multipolar world that respects the principles of international law. The summit highlighted the need to strengthen institutions like the BRICS Bank, the New Development Bank, to provide alternatives to the Western-dominated financial system. The inclusion of nations subject to Western sanctions demonstrates BRICS' commitment to opposing external interference and promoting sovereignty. Overall, BRICS aims to create a new global economic and political order that challenges the US dollar's privileged position and fosters greater economic autonomy for its member countries.
Unity Among Emerging Economies
The BRICS summit underscored the unity and cooperation among emerging economies. Leaders emphasized the shared purpose and strategic course of BRICS, aligning with the aspirations of the global majority. The expansion of BRICS into BRICS Plus reflects the growing significance of emerging economies in shaping the global economic and geopolitical landscape. The aim is to create a fair and just world order that promotes mutual respect, equality, and common prosperity. BRICS countries recognize the importance of integrating economically, diversifying supply chains, and embracing innovation and technology. This unity and focus on economic diversification and integration provide opportunities for developing countries to challenge the traditional centers of global economic power and promote the interests of the global South. By working together, BRICS countries seek to overcome challenges, reform global governance systems, and create a more equitable and multipolar world.
In its South Africa summit, BRICS invited six new members: Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE. The bloc now represents 37% of global GDP (PPP), over 40% of global oil production, and 1/3rd of global gas production, challenging the US petrodollar system. Ben Norton analyzes the importance of the meeting.
VIDEO: https://youtube.com/watch?v=1SIfrWkQXeE
BRICS debates mission at summit: Challenge West's G7 or be neutral?: https://youtube.com/watch?v=wQN7Uh_XMbA
How a US debt trap in Argentina is fueling inflation, dollarization, far right: https://youtube.com/watch?v=1BRx90DhYWM
US pressures Saudi Arabia to sell oil in dollars, not Chinese yuan: https://geopoliticaleconomy.com/2023/08/10/us-saudi-arabia-sell-oil-dollars-chinese-yuan
Topics:
0:00 Introduction
3:21 Petrodollar under threat
7:51 BRICS+ makes up 40% of global oil production
9:00 BRICS+ makes up 1/3rd of global gas production
10:48 BRICS' massive economic weight
12:09 Will Argentina join?
18:29 De-dollarization
20:46 Saudi-Iran peace
23:35 BRICS vs. G7
30:17 Xi's speech
35:18 Putin's speech
41:06 Lula's speech
42:17 Lula calls for new BRICS currency
44:36 Lula warns of "green neocolonialism"
45:26 Africa-Latin America cooperation
47:42 Ramaphosa's speech
52:50 Venezuela
54:34 Cuba
55:37 Conclusion
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