Why don't all BRICS players support Russia's candidacy for a dedollarized world?

Russian President Vladimir Putin, right, and Chinese President Xi Jinping hold drinks during a festive BRICS summit reception in Kazan, Russia, October 23. AP-Yonhap

Amid the unity demonstrated this week in the Russian city of Kazan, BRICS leaders remained divided over the value of dedollarization — a geopolitical difference that could become more stark as the bloc expands, analysts say .

By the end of the summit on Thursday, the bloc's original members – Brazil, Russia, India, China and South Africa – had welcomed Iran, Egypt, Ethiopia and the United Arab Emirates as full members.

In addition, 13 other countries were invited to join as “partner countries”, thereby expanding the BRICS footprint.

The players appear to be finding common ground in areas such as environmental cooperation, financial reform and global conflict resolution, with mentions from Chinese President Xi Jinping and his Russian counterpart Vladimir Putin.

Xi and Putin were seen having a side discussion on Thursday, which ended with a handshake, sparking interest in the content of their discussion.

Sarang Shidore, director of the Global South program at the Quincy Institute for Responsible Statecraft, said BRICS countries appeared to be united on issues such as green protectionism and “paralysis” in the World Trade Organization.

Shidore said these were “clear criticisms of the United States” and reflected a fragmentation of the world not only geopolitically, but also based on climate and energy transition .

“These fragmentation trends are being seen and increasingly criticized in a forum like BRICS,” Shidore said.

But this unity did not result in the Russian proposal to detach the global financial system from the US dollar.

Other countries may not like the dominance of the U.S. dollar in international trade, Shidore said, but “when they look at the cost-benefit analysis of moving full speed ahead and creating a alternative, there are all kinds of obstacles, internal, geopolitical, technical. , and of course the fear of strong American reprisals. »

From left, Chinese President Xi Jinping, Russian President Vladimir Putin, South African President Cyril Ramaphosa and Turkish President Recep Tayyip Erdogan attend a family photo ceremony ahead of the Outreach/BRICS Plus session at the summit of BRICS in Kazan, Russia, on October 24. AP-Yonhap

Moscow is promoting an alternative payment system for international trade, called the BRICS bridge, to overcome some of the financial barriers created by Western sanctions triggered by Russia's invasion of Ukraine.

These obstacles include the shutdown of Swift – the main international payment messaging platform used for settlements.

In Kazan on Thursday, Putin said “it is essential to build alternative multilateral financial mechanisms and supply chains that are reliable and free from diktats.”

BRICS leaders have gone some way along this path, saying in their joint statement that the countries welcome improvements in cross-border payments, including the use of local currencies in transactions.

They also agreed to study the feasibility of creating an independent cross-border settlement and deposit infrastructure.

Agathe Demarais, policy research fellow at the European Council on Foreign Relations, said there was growing interest in using digital currencies as a tool to circumvent Western financial sanctions and potentially reduce reliance on Swift and the American dollar.

“Because they have no connection to Western financial mechanisms, these digital currencies appear immune to Western economic policy tools like sanctions,” she said.

But it was “difficult to imagine” widespread adoption of BRICS financial tools because the dollar’s ​​dominance was “well-entrenched,” with the currency accounting for more than 80% of global transactions.

“The BRICS group is made up of an eclectic mix of countries, which have very different economies and a wide variety of geopolitical objectives. This situation will likely weigh on the group's boastful promises to deepen financial and monetary integration.” , added Demarais.

Shidore agreed, saying that BRICS members were not lining up behind Russia on this idea.

“I think the big system that Russia wants, which is a unified interface where everyone starts to sort of detach themselves from the dollar and use this platform, is very idealistic at this point. The policy is not generally not aligned with this within BRICS,” he said. said.

“I'm not sure even the Chinese would accept it wholeheartedly, given that they have a dialogue with the United States that is actually progressing, however glacial it may be.”

Shidore said states were divided on whether to urgently design an alternative system or “continue experimenting for a while with more marginal local currencies.”

“Russia may be the most radical state, but generally speaking, the BRICS group would like existing global institutions to be more open, more representative, more effective, and that is the message,” he declared.

Read the full story at SCMP.