Last week’s Brics summit was supposed to herald the dawn of a new world order. It would announce the end of the American era and the rise of another, this time belonging to developing nations. It would even, according to excitable analysts, be remembered as another Bandung Conference, the 1955 meeting that paved the way for a non-aligned movement during the Cold War.
And on that front, the gathering in Johannesburg succeeded. The organisation announced its first expansion since its founding in 2009: next year, the five original Brics members — Brazil, Russia, India, China and South Africa — will be joined by Saudi Arabia, the United Arab Emirates (UAE), Egypt, Iran, Ethiopia and Argentina (provided the current government wins the upcoming elections, which seems unlikely). Even more significantly, the summit underscored the bloc’s inclination to use its increasing economic clout to challenge the Western-dominated global order. The combination of these two elements — growing economic muscle and political boldness — means that the bloc (to be renamed Brics Plus) has become a full-blooded geopolitical actor that can longer be ignored.
However western soft power is still too strong for Brics or Brics plus or Brics Alpha to have much immediate effect. Only time will tell whether it has long term staying power.
As long as the global population consumes Hollywood and Westen media, wears Westen luxury brands and accessories, aspires to western luxury vehicles, reads western content, sends their children to western schools, colleges and universities, prefers western sons and daughters in law, maintains savings in dollars, euros and pounds in western banks in western countries, this new bloc will have a mountain to climb if it is to fulfill the ambition to undermine American hegemony and replace the US$ as the global reserve currency. There are signs though that steady progress is already being made towards achieving those goals.
On the other hand, the Achilles’ heel of the USA and its NATO and EU allies is the finances of western, debt dependent economies – and especially in the use of the dollar as a reserve currency. This is the area in which BRICS can pose the greatest threat: if the dollar fails America fails. And NATO / EUmember states will be dragged down with it.
For comparison, the downfall of the British Empire was as much about declining financial strength as anything else. Having built up an enormous pool of investments by 1914 in America, Argentina, India, etc etc it had to sell half to finance WW1 and the rest for WW2. By 1945 it was running on IOUs of which one form was the continued willingness of many countries to hold their reserves as Sterling at the Bank of England. The history of 1945 to 1975 was largely a matter of these IOUs coming due and the British trying to cut their colonies, overseas garrisons and other commitments to economise – and simultaneously becoming subservient to their largest creditor, America.
Today America appears to be where Britain was then. The only
difference is that Washington has dissipated its foreign investments and sold its bonds to the highest bidder in order to finance a credit driven boom rather than two world
wars. American indebtedness at all levels is truly astounding.
The Chinese have long been adept at exploiting weaknesses in the West’s financial and foreign policies and usually astute enough to avoid challenging western supremacy where it cannot win. On a military level, they developed relatively cheap long range missiles which have neutralised the US Pacific fleet. Now they are using the BRICS to hit America where it will hurt financially – by pushing the de dollarisation of official reserves and the oil futures market.
The Chinese are playing a more crafty game in this new Cold War than the Russians did in the old one – or Putin has recently. Maybe Go produces subtler strategists than Chess or Poker.