The Rise Of BRICS And The Fall Of The G20

When the the G20 aka Group of 20 was created in 1999, the United States was the big dog at the table and saw this new entity as another forum/tool giving Washington more de facto control over the international financial system — created in the aftermath of World War II in order to coordinate international economic policy with the the U.S. dollar as the reserve currency — via the International Monetary Fund and the World Bank, and the World Trade Organization. It is no coincidence that the G20 meeting in India comes on the heels of the successful BRICS summit two weeks ago in South Africa. What a contrast! BRICS is growing and has a long list of countries from the Global South clamoring for membership while the G20 is losing its luster and clout.

The current members of the G20 consist of:

Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the U.K. and the U.S..

It also includes two other regional organizations — the European Union and the African Union (just added) — who are allowed to attend and contribute to the discussion.

By this time tomorrow we will have the final communique from the G20 confab, but early reports indicate there is no agreement to condemn Russia’s military operation in Ukraine despite pressure from the United States and Europe. This is a key indicator that the U.S. effort to isolate and punish Russia is backfiring.

Two years ago Russia and China were chafing at being held hostage to the U.S. dollar in order to conduct international trade and did not have any viable alternative. That reality is now changing, and changing rapidly. At least 6 of the G20 members are working intensely to set up trade regimens that operate independent of the dollar. The United States and Europe’s egregious use of sanctions against Russia and China has fractured the foundation of the G20 and created a growing movement among the largest countries (in terms of population) who no longer are willing to submit to the U.S. using the dollar to punish them.

I do not think that the majority of the West’s financial gurus are comprehending the significance of the BRICS countries earnest effort to create an alternative to the dollar. They are calculating that the BRICS countries will fail and will be compelled to be under the thumb of the U.S.-led international financial order. I think they are making a grave mistake.

The status of the U.S. dollar as the reserve currency is based primarily on belief. As long as foreign countries believe they have no choice but to submit to using the dollar for international trade the system remains intact. But that belief is being seriously challenged. I do not think the system will crumble over night, but the moves by China, India, Saudi Arabia, Brazil, South Africa, Iran and Argentina to make payments for oil and other commodities without using the dollar is accelerating.

There is only one situation where sanctions can be used effectively to coerce changes in the policy or behavior of another country — the country imposing the sanctions must have monopoly control over the currency or commodity that the other country or countries need. While U.S. dollars and treasury bills continue to be scooped up by some foreign investors, China and Saudi Arabia have been divesting themselves of dollar-based assets. We are living through a watershed moment in history where the international financial order created under U.S. leadership at the end of World War II is being challenged with viable, powerful alternatives.

It is not just the West’s animosity towards Russia that is fueling discontent. China, Iran and Saudi Arabia are three large economies that have been regularly targeted by U.S. sanctions. And there are a host of other nations, especially in Africa, that see themselves as victims of U.S. economic imperialism. I believe the world has reached critical mass where a combination of countries rich in natural resources and commodities are now quite willing to follow the lead of Russia and China in circumventing Washington’s bullying.

Just check out this video of the Huawei phone/computer store in China, a direct competitor of Apple. After years of being sanctioned by the United States, Huawei decide — enough. It is now making its own chips and using the same nationalist rhetoric that the U.S. has spouted in the past to justify its actions. I suspect this is not a good sign for Apple and its future earnings.

Huawei vs Apple

You should not look at the war in Ukraine as an isolated phenomena with no bearing on the global economic order. The war in Ukraine is a symptom of the breakdown in the Western dominated “rules based” international order and this disruption is reverberating around the world. The recent coups in Africa, for example, are another sign that the vassals of the Western feudal lords are no longer willing to be de facto colonial subjects. They want some measure of independence and are turning to Russia and China to find a way out.

The post The Rise Of BRICS And The Fall Of The G20 appeared first on The Gateway Pundit.

   

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