Will the Sino-Russian partnership introduce gold backing for a trade settlement currency, replacing the dollar? And what would be the consequences for the dollar?
The annual BRICS summit in Kazan is rapidly approaching. Among the issues likely to be on the agenda are a proposal to create a new class of associate membership to manage the rapid expansion of BRICS with some forty nations now seeking to join. Furthermore, there is the thorny question of how to do away with the dollar for cross-border trade settlement, over which there has been disagreement among existing members.
Introduction
The BRICS summit in Kazan comes at a very tricky time. Russia may be winning its special operation in Eastern Ukraine, and so NATO led by the US either goes for broke with an all-out war against Russia or seek a face-saving de-escalation. The likelihood is de-escalation and to seek another conflict.
At only a year old the Middle East conflict is just starting, and not only is the US backing Israel but Russia is backing Iran. It is turning rapidly into another proxy war, potentially far more serious than Ukraine. This is because Israel has triggered a fight which without US support will lead not only to its likely defeat but the end of its existence as a nation.
We can be sure that the Americans will be increasingly wanting to call the shots, as much if not more than the Israelis particularly with respect to Iran. They don’t do anything abroad without taking control. Equally, the restraint initially shown by Iran can be partly explained by Russia’s influence. And while Iran appears to be more independent from its backer than Israel, it is still a US objective to defeat Russia. This is the turbulent background to the BRICS summit in Kazan later this month.
Most nations expressing an interest in joining BRICS are wary of upsetting the powerful Americans, only coming out openly because there is safety in numbers, and perhaps a perception that America is losing its grip on world affairs. Some of these nations are Muslim or have large Muslim populations and are appalled at the killing of civilians in Gaza and America’s unwavering support for Israel. Some of them owe dollars and some would have feared American-backed regime changes in their own countries. Nonetheless, it’s reported that some 40 nations have expressed interest in joining with many more observing on the sidelines.
This brings with it the practical problems of integration. At the Johannesburg summit last year, a partner-country or associate membership model was discussed as the basis for future expansion. Out of a list now comprising some 40 nations, last June Russia asked current members for their ten preferences. But since then, thinking about the numbers to be accommodated might have evolved.
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