While the world is on the brink of Armageddon, the BRICS move on step by step.
Be certain that at some stage, the project will be interfered with by the G7. This is unavoidable.
In the meantime here's a very complete assessment of the BRICS' project and where they are going.
Authored by Peter Hanseler via VoiceOfRussia.com,
The
Western media are prioritizing the Ukraine conflict, the green
revolution and the woke revolution. In the shadow of this media
coverage, BRICS is changing the world.
We bring you the latest figures and place them in the current geopolitical environment. – An analysis.
Introduction
One
of the main topics of this blog is BRICS. We have written numerous
articles, followed and analyzed the development of this organization.
Significantly, the first independent post on this blog was dedicated to
BRICS on November 18, 2022 “The unstoppable rise of the East“.
Our last dedicated BRICS-only article from 24 September 2023 “BRICS will change the world – slowly”
gave an overview of the development and summarized the results of the
BRICS summit in South Africa in August 2023. This article was published
by ZeroHedge, the GloomBoomDoom report by Dr. Marc Faber and Weltwoche
(print and online).
From the density of our coverage, it is clear
that we ascribe paramount importance to BRICS for the geopolitical and
geo-economic development of the world. Based on the facts, we have come
to the conclusion that BRICS will change the world more than all other
developments of the last 100 years put together. The developments around
BRICS have already triggered a tectonic shift in the geopolitical
balance of power; the Ukraine conflict and the accelerating crisis in
the Middle East are merely pieces of the mosaic by comparison.
The
Western media are setting their priorities differently and focusing on
topics that we believe are of lesser importance: Mortal enemy Russia,
wokeness and green ideology.
Reporting on BRICS in the West, if it
takes place at all, is limited to portraying BRICS either as an
instrument of China to achieve world power – as the Financial Times put
it,
«How the BRICS nations risk becoming satellites of China»
FINANCIAL TIMES – 26 JULY 2023
or to trivialize the success of BRICS – according to the NZZ,
“We explain in the video why this extension only promises limited success.”
NZZ, 14 DECEMBER 2023
Preliminary remarks on the figures
We proceed as we always do and develop a fact-based foundation for a discussion.
Membership doubled as of January 1
Since
January 1, Saudi Arabia, Iran, the United Arab Emirates, Egypt and
Ethiopia have joined the existing members (Brazil, Russia, India, China
and South Africa) as new members.
Argentina not participating
In
August 2023, Argentina was invited to become the sixth member. However,
the new president of Argentina, Javier Milei, decided not to accept
this invitation and to rely on the USA and Donald Trump to rescue his
economy.
It is impossible to judge at this point whether this
decision will prove to be the right one. For the second largest country
in South America, which was once one of the richest countries in the
world, it is to be hoped that Milei can pull the cart out of the deep
mire. Milei is fighting against the establishment in Argentina, which
has driven the country economically to the wall. These former rulers are
serious opponents who are fighting for sinecures that Milei must wrest
from them if he wants to save Argentina. We hope that Javier Milei can
prevail and wish him every success and good luck. The first signs of
success appear to be emerging: The country was able to report a positive
budget for the first time last month. It seems to be heading in the
right direction.
Saudi Arabia
According to Western media
reports, Saudi Arabia is not yet fully on board. South African Foreign
Minister Naledi Pandor is reported to have told Reuters that “Saudi
Arabia has not yet responded to the invitation to join BRICS. It is
still being considered”.
Saudi Arabia, or rather the ruling Saud
family, has been an ally of the USA since the end of the Second World
War, and this relationship has been further strengthened since the
agreement of the ” Petrodollar” in 1974.
Since
President Biden has been in power, the relationship with the USA has
suffered massively, while at the same time cooperation with China and
Russia has strengthened to an unprecedented level.
The problem
that Saudi Arabia now has is the gigantic investments that the state and
private individuals have made, particularly in the USA and the UK.
Government investments in the USA alone amount to over USD 35 billion and investments in the UK are said to be around USD 75 billion.
Due to the geopolitical situation in the world and the West’s
aggressive sanctions policy, the concerns of Saudi Arabia that these
investments could be confiscated in the event of a BRICS accession are
definitely justified. As Saudi Arabia is important to BRICS and China
has overtaken the US as Saudi Arabia’s largest trading partner, we
expect Saudi Arabia to join BRICS as soon as China might make
commitments to the Saudis in the event of Western expropriation.
BRICS-10 in numbers
Map
Dark green BRICS until August 2023 – light green – the new BRICS members – Source: VoicefromRussia
Numbers
In
our figures, we compare the BRICS-10 with the G7 and the world as a
whole to give you a feel for the ratios. The parameters we use are
population, GDP (adjusted for purchasing power), oil production, gas
production and gold production.
We
show the gross national product adjusted for purchasing power. If you
use the US dollar as a measure of GDP, the economic power of a country
is distorted: if you want to measure financial strength realistically,
it makes a big difference whether, for example, a Big Mac in US dollars
costs twice as much in one place as elsewhere. The so-called Big Mac Index is
reason enough to use purchasing power-adjusted figures when comparing
GDP figures. The reason why Western media use the unadjusted figures is
pure marketing to disguise the devaluation of the US dollar and make it
appear stronger than it is.
Charts
Graphical representation of the figures – Source: VoicefromRussia.
Interim result
All
factors show that the BRICS 10 far outstrip the G7 and it seems
incomprehensible that the West is simply suppressing this fact. A look
beneath the surface reveals facts that reinforce the impression of the
bare figures.
Assessment of these figures
Oil production
The following additional facts should be taken into consideration when evaluating the oil production figures:
Firstly,
although the USA is still the largest oil producer in the world,
accounting for around 18% of global production, it also consumes the
most oil, with a share of over 20%. This means that the USA is currently
not even able to cover its own consumption. This fact alone is a
compelling reason for the US to pressure Saudi Arabia not to join BRICS.
Secondly,
the major oil-producing members of BRICS have a great deal of influence
or even control over OPEC. As BRICS thus also controls OPEC and
therefore controls the price and distribution of a large proportion of
oil, BRICS can be said to have an (indirect) monopoly position.
Thirdly, the production costs for US oil are around 2.5 times higher than the production costs for Saudi oil.
These factors therefore further strengthen the BRICS’ position of power with regard to oil.
Natural gas
With
regard to natural gas, it should be noted that with Iran’s accession to
BRICS, the two largest natural gas producers in the world are joint
members of BRICS: Russia and Iran.
The largest non-BRICS gas
producer is Qatar, which is (still) allied with the USA. BRICS is
therefore also a real center of power when it comes to natural gas.
Gold
With
regard to gold, it should be briefly mentioned that China and Russia
are number 1 and 2 in global gold production respectively. I mention
gold here because there is a good chance that gold will again play an
important role in future monetary systems at some point – more on this
below.
Russia holds the BRICS chairmanship in 2024
Over
220 BRICS conferences will be held in Russia over the course of 2024.
The topics are diverse: science, high technology, healthcare,
environmental protection, culture, sport, youth exchange and civil
society.
President Putin’s statements at the beginning of the year
at the opening event of BRICS 2024 in Moscow were interesting. He
mentioned several times the closer cooperation between the members on
security issues. It seems that BRICS will therefore not only focus on
economic aspects, but also on security-related aspects more and more.
The apparent coordination of the BRICS states in connection with the
Middle East conflict at the UN in New York clearly indicates close
cooperation on non-economic issues.
Various non-official sources
have reported that the SCO (Shanghai Cooperation Organization) is moving
closer to BRICS and may even merge with it. In addition to China,
India, Kazakhstan, Kyrgyzstan, Pakistan, Russia, Tajikistan and
Uzbekistan, Iran has also been a member of the SCO since July 2023.
This
is extremely important due to the heightened geopolitical tensions and
the two major conflicts in Ukraine and the Middle East. If these two
organizations were to merge, there would be a new counterweight to NATO.
NATO is already increasingly being characterized by experts as a mere
chattering club, particularly due to its performance in the Ukraine
conflict, which was not a success. As a result, NATO has almost lost its
threatening potential. If the BRICS-SCO merger becomes a reality, NATO
would finally degenerate into an empty shell.
Formal applications for admission – BRICS+
Candidates
Algeria,
Bahrain, Bangladesh, Bolivia, Kazakhstan, Cuba, Kuwait, Nigeria,
Pakistan, Palestine, Senegal, Thailand, Venezuela, Vietnam and Belarus
have formally applied for membership.
Green: BRICS 10 (light green Saudi Arabia) – Yellow: formal membership applications
Figures
Charts
Assessment
It
should be noted in this list that the formal applicants will probably
not all be admitted in 2024. This illustration shows the maximum and the
broad formal interest in this organization. The applications for
admission from some countries harbor great potential for conflict with
the USA.
In my opinion, the greatest potential for conflict from
an American perspective is the possible accession of Mexico, Cuba and
Venezuela. Mexico’s membership would be seen by the USA in the same way
as the Soviet stationing of nuclear missiles in Cuba in 1962 – “enemy on
the doorstep of the USA”. This is probably also the reason why it was
reported on March 3 that
Mexico had not submitted a formal application for membership. Fear is
breathing down the necks of the Mexicans and the USA is exerting
pressure in the background.
In Venezuela, the country with the
world’s largest oil reserves, the US has been trying for years to
overthrow President Maduro and install a puppet.
Last August, it was not enough to gain admission and
the USA will do everything in its power to prevent this oil giant from
joining. However, the USA has a losing hand with the Venezuelan
population, as it is imposing sanctions on the beleaguered country to
bring about a collapse and accepting that the Venezuelan people are
suffering from hunger.
The
list of formal applications for admission could therefore change
considerably between now and October, when the decisions on who will be
invited to Kazan are made. What is certain, however, is that the G7 –
especially the United States – is devoting huge energies to slowing down
the development of BRICS. In my opinion, however, this organization is
already too powerful to be weakened by the West.
BRICS turns its back on the US dollar
The petrodollar – US dollar as a reserve currency
The
greatest danger of this ever stronger community is to the USA. We have
discussed many times that the Petrodollar is the real foundation of
American supremacy and not the American armed forces.
It is of
existential importance for the USA that international trade, especially
commodity trade, is conducted in US dollars. We explain why.
The
US dollar as a global trading currency means that practically all
countries have to hold US dollars in reserve in order to be able to
settle their trade invoices. This makes the US dollar a reserve
currency.
However, central banks do not hold the US dollar in
cash, but in US government securities in order to earn interest. This
makes the world’s central banks the biggest buyers of US government
securities, regardless of whether they think they are a good investment.
As a result, the US can refinance its debt on terms that are not based
on the strength of the US economy, but on these systemic purchases.
French President Giscard d’Estaing rightly described the petrodollar in
the 1970s as an “exorbitant privilege”, as it leads to the automatic
refinancing of the USA.
Abuse of this exorbitant privilege
However,
the USA has been abusing this privilege for decades. Whenever a country
implements something that the US does not like, it is cut off from the
US dollar. The US can implement this without any problems, as all US
dollar transactions go through the US. The consequences for the country
concerned are catastrophic, as it is effectively banned from the
commodities trade.
Theft of Russian central bank reserves
However,
by blocking the foreign currency reserves of the Russian central bank
in March 2023, the US has overstepped the mark, because now the entire
Global South is afraid to hold US dollars, as they may suffer the same
fate. Although every legal expert declares that the freeze was already
carried out without an international legal basis, the West is about to
go one step further and prepare the confiscation. This is the
unequivocal statement made by Janet Yellen on February 27:
“I
also believe it is necessary and urgent for our coalition to find a way
to unlock the value of these immobilized assets to support Ukraine’s
continued resistance and long-term reconstruction.”
JANET YELLEN AT THE PRESS CONFERENCE BEFORE THE G20 ON FEBRUARY 27, 2024
The
EU under Ms. von der Leyen and even exponents in Switzerland are
preparing to put this planned raid into practice and thus not only
continue to block these funds, but to steal them.
De-dollarization is already here
Until 2022, Russia conducted 80% of its trade in USD and EUR, 50% in US dollars. Today it is only 13%.
In the same period, Russia’s trade activity in roubles and yuan rose from 3% to 34% for both currencies.
These
figures are clearly the result of the sanctions against Russia.
However, it is a declared goal of all BRICS countries to no longer trade
with each other in US dollars, but in the respective local currencies.
If
you look at the current size of BRICS – 36% of global GDP – this will
herald a tectonic development away from the US dollar; if you add the
formal applicants, this figure rises to 42% of global GDP.
According to Bloomberg, the use of the US dollar as a reserve currency is collapsing.
Source: Bloomberg
Consequences for the US
De-dollarization
poses an existential threat to the USA, as it will result in the loss
of buyers of US government bonds and thus the USA’s ability to refinance
its highly deficit-ridden national budget. As US government bonds are a
product like any other, whose price is determined by supply and demand,
a collapse in demand also leads to a collapse in the price of US
government bonds. As the interest rate on bonds moves inversely to the
price, the interest rate on bonds and therefore inflation will rise.
Debt
in the USA is currently accelerating at an unprecedented rate. Debt
currently amounts to over USD 34 trillion. It will soon take just one
month to accumulate the next trillion in debt – apocalyptic. When
President Reagan was in power, the total US debt amounted to less than
one trillion. It therefore took just under 200 years to build up the
first trillion in debt; soon this amount of debt will be a reality
within a month.
One of the reasons for this is that the USA will
already have to pay one trillion US dollars (1,000,000,000,000) in
interest payments on its own debt this year alone. This is more than the
USA spends on its entire military expenditure, which is gigantic in
itself, as the USA spends more money on its military than the next 13
countries combined.
Source: Wikipedia
If
the willingness of the countries of the Global South, and in particular
the BRICS members, to buy decreases, the USA will sooner or later find
itself in an existentially dangerous situation.
BRICS’ own currency
Trading currency
There
is a lot of talk about a new currency that would serve as a payment and
financing instrument for the BRICS. There were voices – including James Rickards –
who were convinced last August that a BRICS single currency would be
created as early as 2023. We were skeptical about this timing and took
the view that it would take longer, and we were right. However, this
does not mean that James Rickards was wrong, he was just a little early.
We
have seen above that the BRICS countries are in fact hardly using the
US dollar among themselves any more, instead using their local
currencies.
Use of local currencies
The consequence of
this is that the BRICS members accumulate currencies of their trading
partners over the course of a trading year if they sell more goods than
they buy. Example: Russia and India use Roubles and Rupees in their
trade. Since Russia sells more to India (especially raw materials) than
India sells to Russia, the Russians are sitting on large amounts of
Rupees at the end of the year. This problem arises regularly throughout
the BRICS region among the various members in bilateral trade when
deficits or surpluses build up.
Settlement with gold
I
believe that the bilateral use of national currencies will continue for
the time being, but that the first step will be to look for a mechanism
to balance these surpluses or deficits at the end of a trading year.
Gold
is an obvious choice here, not gold calculated in US dollars, Rupees or
Roubles, but gold in units of weight. The trade differences at the end
of a year or month would be settled in gold (kg or tons). Whether in
this case the gold is actually physically delivered or merely recorded
in a ledger depends on the trust between the parties. I also assume that
in such a case, gold warehouses would be opened in various locations in
the BRICS region, where the member countries would store their gold and
their holdings would be confirmed by a BRICS auditing company.
A
final issue would then be to determine the exchange rate of the local
currencies. This seems to be one of the major sticking points so far.
Indications that the trend is towards gold
Evidence always comes from the facts. The world produces around 3,000 tons of gold per year.
According
to the World Gold Council, central banks have been net buyers of gold
since 2010 and the trend in gold purchases has increased steadily in
recent years.
The Chinese bought the most gold (225 tons).
Caution is advised with regard to the official reported gold reserves.
It
is very possible – and in my opinion probable – that the gold reserves
of China and Russia are much larger than officially reported.
It
is clear that central banks are buying more gold than they have since
the 1960s. This is an indication that they are not only arming
themselves against inflation, but also for the settlement of
commodities.
It will be interesting to see what exactly will
happen this year, but I assume that at the next BRICS summit, which will
take place in Kazan in October, announcements will be made that will
surprise the West. In addition to new members, I believe that a trade
clearing system as described above or even more is within the realm of
possibility.
Future of BRICS – many new members
Preliminary remarks
Looking
to the future, BRICS has the potential to unite many countries of the
Global South and completely eclipse the Collective West.
We have
compiled the data of those countries that are interested in joining.
This is for the future, but in times of geopolitical tensions and
military conflicts, history teaches us that a lot can happen in a short
time, especially after decades, without major changes. For this reason,
we are merely providing a framework below and are not making any
predictions regarding the timeline, but rather letting the figures speak
for themselves and refraining from commenting at this stage.
Map
Green: BRICS 10 – Yellow: formal requests for membership – Blue: countries that show interest
Numbers
Charts
Conclusion
After
BRICS became BRICS-10 last August by doubling its membership and thus
far outstripping the previous economic colossus G7, the current year is
set to continue in giant strides. The gap to the G7 will definitely
widen further at the BRICS summit in Kazan. It is still uncertain which
of the formal applicants will actually be invited and thus become new
members on January 1, 2025.
In my opinion, however, one thing is
already a fact: the hegemony of the USA will come to an end as a result
of de-dollarization. The combination of astronomical debts, rampant new
borrowing and the fact that more and more countries in the Global South
are turning away from the US dollar is accelerating the demise of the
hegemon that ascended to the throne in 1945 and is increasingly harming
itself through its aggressive geopolitics.
No world power has ever
left voluntarily and peacefully. The aggressive stance of the USA
towards Russia and China and its adherence to the alliance with Israel
are de facto proof of the aggressive behavior of the sick hegemon.
This
attitude could lead to a war between Russia and NATO in Ukraine, where a
local conflict is still taking place, all the more so as the Americans
have so far been on the way to inciting France, Great Britain and
Germany to wage war against the giant empire.
In the Middle East,
the attitude is downright perverse. In order not to alienate the Jewish
lobbies in the USA, which traditionally have a major influence on
presidential elections, the USA is supporting a genocide that has been
clearly designated as such by the International Court of Justice.
In addition to purely electoral considerations in the USA, the USA also
supports Israel in order not to lose its last power base in the Middle
East. These two ends obviously justify the means – and the means is
genocide. The Israeli attack on Hezbollah in Lebanon has already begun
and so there is ever less in the way of a burning Middle East.
Finally,
they are also trying to provoke a conflict over Taiwan – a conflict
that would be fought between Chinese and would therefore be a civil war.
China’s intention to reach a diplomatic agreement with Taiwan in the
next 20 to 30 years – that was the plan – is in jeopardy due to
Washington’s aggressive stance.
The behavior of the US is
unfortunately typical – the downfall is predetermined, the facts and
figures in this article prove it. Whether the smouldering fires already
blazing in American society will bring about a change and whether they
will be aggressive or more balanced cannot yet be guessed. We will have
to wait for the presidential elections in the USA, but a lot can still
happen between now and November.
For a geopolitician,
the world could hardly be more exciting – but for humanity, a little
less tension and pressure would be a blessing. After all, people under
pressure, especially politicians, have a tendency to make big mistakes.