Can BRICS members really provide an alternative global financial system to the U.S.-West system?

For many years, BRICS’s aim to create an alternative to Western dominance in the global financial system, had failed.

But, the Kazan Summit, 2024 had renewed the resolution. However, U.S. President Donald Trump’s warning to impose 100% tariff on nations that try to work on”de-dollarization”suggests that the BRICS aim is not easy to achieve and that the world is in for a tumultuous geopolitics.

Trump has stated on social media platform, Truth Social, that ‘the idea that the BRICS countries are trying to move away from the Dollar, while we stand by and watch, is over. We are going to require a commitment from these seemingly hostile countries that they will neither create a new BRICS Currency, nor back any other Currency to replace the mighty U.S. Dollar or, they will face 100% Tariffs, and should expect to say goodbye to selling into the wonderful U.S. Economy.”

The Kazan Summit, 2024 had attracted a huge participation of well over 36 nations that accounted for 45 per cent population of the world, and 35 per cent world economy. The world political community had nearly alienated Russian President Vladimir Putin after he went ahead with a full-fledged war against Ukraine for more than 1,000 days, but he had managed to gather nations around the idea to discuss a “non-US-non-West”alternative world order with multilateralism.

Original BRICS nations include Brazil, Russia, India, China and South Africa. But the group has expanded. Important nations include Brazil, Egypt, Iran, and United Arab Emirates among others. This long list shows that a section of the nations wants a multilateral world order which offers an alternative to U.S.-West centric global economic world order, particularly in the global payment system.

Tariff is again the weapon for U.S. and West to maintain their global financial hegemony and U.S. President Trump has made it clear.

It would be interesting to note how the BRICS nations, who took bold resolutions at the Kazan Summit, stay steadfast to their resolutions.

Russia has been going through a very difficult phase of its economy due to the sanctions that have been imposed upon it by the U.S. and the European Unions. Recent addition to the list of sanctions by the European nations, has made its trade operations all the more difficult. It is going through a very tough time to supply energy to China and India—two of its trade partners who have been buying petroleum.

China’s economy is strong. India is doing well. Brazil and South Africa are stable. Mexico, upon which Trump has already resolved to impose a tariff of 25%, too, had joined the Kazan Summit and wants a multilateralism.

With Russia today confronted with sanctions and a war, the burden of pushing forward the Kazan resolution for multilateralism falls more on China, India, Mexico and a few other wealthy nations.

China, however, has been locked with a trade war by the U.S. as well as its Western allies. India does not want to risk itself by openly trying to defy U.S. global hegemony.

Thus, Kazan Summit resolution for exploring a “non-U.S.-non-West” financial system appears a tough dream to pursue on the face of a Trump resolution to “Make America Great Again”—which include slogans like America First, Drill Baby Drill, Liquid Gold Under Our Feet—and more importantly—tariff and sanctions.

Arab nations like Iran, Turkey, Saudi Arabia and others too, want to stay with BRICS bloc, and see a multilateral world. Iran is already undergoing the burden of U.S. sanctions. The last term of Trump had been bad for Iran, and this term too, Iran is not likely to see any positive change.

On January 17, before his presidential inauguration on January 20, Trump held a conversation with Chinese President Xi Jinping over telephone. It is believed to be the first direct talk of Trump with Jinping after the latter completed his first term in 2021, and shows how much Trump’s mind is occupied with China.

Indian Prime Minister Narendra Modi had been trying to talk to Trump, but that conversation came much later after Trump’s presidential inauguration.

The telephonic conversation between Trump and Jinping centred around, according to what Trump later said, “balancing trade, fentanyl, TikTok, and many other subjects”.

If Russia placed by the side, Trump as a matter of policy, may not like to go too head-on with China. Trump on February 1 has resolved to impose 10% tariff on all Chinese imports. Mexico and Canada bear a tariff of 25%.

Thus, Trump may like to keep China in good humour and at the same time chastise it. China’s role in pushing globally for an alternative financial order is important if the alternative financial system has to fructify on the face of a war-torn and sanctioned Russia.

At present, international payment system is dominated by Dollar and the SWIFT (Society for Worldwide Interbank Financial Telecommunications).

China has an alternative to the SWIFT payment system though limited in use. Countries like Turkey and Brazil are restructuring their dollar reserves into gold. There is a desire for a greater financial independence from the West.

Dollar and sanctions—now tariff too, are weapons for the U.S. to maintain supremacy and status quo. Any effort to change the status quo would be naturally resisted as Trump has clarified.

Russia too, however, has clarified that the BRICS members are working on creating joint investment platforms, and not talking of setting up of a new currency as an alternative to Dollar. However, creating a payment system (Pay) and a unit of account (Unit) are very much a resolution of the BRICS members.

A unit of account would include partly to gold and partly to a basket of BRICS members’ national currencies, according to plans.

However, the goings of the BRICS in its effort would be tough as geopolitics indicate.