Genesis, growth, breakdown, and disintegration: such is the life cycle of a civilization proposed by Arnold Toynbee in his sweeping Study of History (1934) as the British Empire was gradually coming to terms with its waning geopolitical predominance. The idea has deeply impressed itself upon Western and non-Western minds alike. “In life and in the history of humanity, through every time period and every sphere,” Russian President Vladimir Putin said during a December 8, 2023 forum, “it has always been like this. Someone develops, then fades away. New leaders appear.” [1] The collapse and replacement of today’s preeminent powers indeed initially seems unstoppable, for no civilization has succeeded in staving off its disintegration forever. Toynbee nonetheless held out hope for Britain, arguing that “our living civilization is not doomed inexorably in advance to ‘join the majority’ of its species.” [2] Is it naive for Americans to kindle the same optimism in 2024 when leaders from every continent repeat the narrative that the United States is following a precipitous path of decline? [3] The answer will depend on both how Washington handles the present test to its global superiority and the success of American adversaries in establishing credible alternatives to U.S.-led institutions. The extent to which these visions for a new world order are embraced by countries across the globe will play a critical role in deciding whether the United States remains at the helm of the international political and economic system. Since the end of the Cold War, the most concrete challenger that has thus far presented itself is BRICS.
The intergovernmental organization takes its name from Brazil, Russia, India, China, and South Africa, which agreed in 2010 to form the bloc. The group saw further expansion at the start of 2024 with the accessions of Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates (Argentina was previously invited but refused to join following Javier Milei’s accession to the presidency in the November 2023 election). [4] The organization states its uniting principle to be a “restructured global political, economic and financial architecture that reflects the contemporary world and is more equitable, balanced and representative.” [5] BRICS members generally agree that the United States’s preponderant role in the world, particularly in the financial sphere, is a relic of a rapidly fading post-Cold War system.
The bloc also depicts the United States and its European allies as colonial states that have suppressed the development of low-income countries. During the China-Africa Leaders’ Dialogue that took place on the sidelines of the 2023 BRICS summit in Johannesburg, South Africa, Chinese Premier Xi Jinping emphasized that Beijing and African countries should “practice true multilateralism and unequivocally oppose vestiges of colonialism and hegemonism in all forms.” [6] Such statements leave the United States in a complicated position when conducting diplomacy because any outreach it makes to low-income countries could be perceived as a desperate attempt to cling onto an unequal, colonial relationship.
This is indirectly what India’s Minister of External Affairs Subrahmanyam Jaishankar hinted at when he summarized the past few decades as a “logical” process whereby there has been a “redistribution of power” to produce a more “democratic” world. [7] Other BRICS members focus more on how a multipolar world, in which several centers of power share control of international institutions, would minimize the United States’s ability to decide the fate of allies and adversaries alike. For instance, Putin often declares that the West seeks to “reshape the world exclusively on [its] terms,” such as when it tried to “paralyse [Russia’s] banking sector” and “create problems for millions of Russian families” by ejecting Moscow from interstate financial systems. [8-9] Leaders like Putin often take a two-pronged approach to addressing the human cost of U.S. sanctions and how their impact spills across borders: blame the United States for today’s most serious problems and make other countries fear that they might be next on Washington’s list.
De-Dollarization
Perhaps most unsettling for the United States, however, are the rampant calls for de-dollarization made by current and aspiring BRICS members. The dollar is the world’s primary reserve currency, which means that it is held by banks across the world in larger quantities than its peer currencies. Consequently, governments and banks use the dollar to conduct most of their trade, execute financial transactions, maintain a consistent supply of imports during crisis periods, and pay their debts. [10] The fact that approximately 60 percent of central bank reserves today are denominated in dollars and that the currency is involved in about 90 percent of all transactions goes a long way in explaining the United States’s leading role on the global stage. [11] But it also fuels the resentment of other countries who feel either excessively dependent on the greenback or frustrated by Washington’s ability to use its financial hegemony to exert political influence in ways that only reflect American priorities.
Speaking at Shanghai’s New Development Bank in April 2023, Brazilian President Luiz Inácio Lula da Silva drew great exuberance from the audience by asking, “Why can’t we do trade based on our own currencies?” [12] Russia, which previously utilized the U.S. dollar at high rates, began shifting from the U.S. dollar to the euro after its 2014 annexation of Crimea. [13] Later, in response to the Western sanctions that followed the 2022 invasion of Ukraine, Moscow started forcing European countries to pay for Russian energy in rubles or gold. [14] China has been moving in the same direction. Within the framework of the Belt and Road Initiative (BRI), Chinese banks have been signing a flurry of deals driven by renminbi-denominated loans with key middle powers, including Malaysia, Egypt, and Saudi Arabia. [15] Beijing has simultaneously begun dumping its stockpile of U.S. government debt and promoting ‘panda bonds,’ a renminbi-denominated form of debt in China’s onshore market issued by offshore companies, to promote the use of its currency worldwide. [16-17] Unsurprisingly, 95 percent of trade between Moscow and Beijing is now completely detached from the U.S. dollar, according to Russian First Deputy Prime Minister Andrei Belousov. [18] This threatens to weaken Washington’s global influence because these two great powers can now build out international monetary institutions completely free of dollar transactions that act as robust replacements to their Western equivalents. Moscow and Beijing established the System for Transfer of Financial Messages (SPFS) and the Cross-Border Interbank Payment System (CIPS) with this goal in mind. [19]
The argument that de-dollarization will herald liberation from Washington’s whims is particularly attractive to low-income countries, some of which are in line to join BRICS. For example, immediately after her appointment in November 2023, Bolivian Foreign Minister Celinda Sosa advocated for the activation of “new mechanisms of financial integration between countries of the Global South which would reduce dependence on the dollar.” [20] Despite the pressure mounting from within and without, BRICS’s core members diverge when it comes to the implementation of a common currency as an alternative to the dollar. Although Lula forcefully backed the idea during the 2023 Johannesburg summit, the item did not make it on the event’s agenda. India has hesitated to endorse such a project, and Xi has chosen not to comment on it specifically. [21]
Internal Disagreements
The disagreement over de-dollarization embodies the divisions that have crept into BRICS. Indeed, the organization has not yet succeeded in devising a unified and coherent way to restructure the current U.S.-led world order. Border disputes between China and its neighbors; China’s growing bellicosity in the South China Sea and the Indo-Pacific at large; and India’s warming relations with the United States, demonstrated by its active role in the Quadrilateral Security Dialogue, all serve to minimize the prospect of strategic cooperation between New Delhi and Beijing. [22] South Africa’s membership in the International Criminal Court, which compelled it to issue an arrest warrant for Putin in March 2023 based on war crimes committed in Ukraine, led to an awkward situation when Putin was unable to attend the August 2023 Johannesburg conference in-person. [23] The simultaneous entry of embittered competitors Iran and Saudi Arabia into BRICS at the beginning of this year also does not bode well for the synchronization that will be needed for ambitious projects, such as the formation of a common currency.
It is possible that the varying agendas of each member country, which will only continue to diverge as BRICS expands, means that the organization is nothing more than a paper tiger, unable to overcome internal discord. Not only do members differ in their economic structures and ambitions, but they also disagree on the way to achieve their overall geopolitical objectives. Also noteworthy are the divisions within each country regarding the proper approach to dethroning the United States. For instance, Chinese business executives, scientists, company founders, and academics are actively debating the extent to which the United States is declining and whether China’s geopolitical might has peaked in recent years. [24] Meanwhile, Russian officials are becoming increasingly uncomfortable with their disproportionate dependence on China, which has resulted from the systematic outsourcing of their industry to that country. [25] This trend is likely to continue as the two states grow ever closer through their memberships in BRICS.
The Threat to the United States
BRICS’s current lack of consensus and the historic tensions between several of its members should not, however, lull Washington into a false sense of security. The reality is that the financial and political mechanisms being established by key BRICS members are already circumventing Western institutions and gradually undermining the United States’s ability to influence global politics.
Perhaps the gravest issue plaguing the United States is how the Western international institutions that it leads have left low-income countries disillusioned, which has opened the door for adversaries to make inroads outside the framework of these multilateral organizations. During the Great Recession and the COVID-19 pandemic, the International Monetary Fund (IMF) succeeded in injecting enormous amounts of liquidity into global markets, but it failed to do so equally for low-income countries due to the higher propensity of investors to sell assets denominated in weaker currencies in times of economic crisis. [26] As a result, certain countries have entered bilateral swap lines with China to stabilize their liquidity. These swaps entail the exchange of the two countries’ currencies to supply liquidity to a central bank on the brink of financial instability. Through this process, Beijing aids economically teetering countries while internationalizing the renminbi. [27] One such example was when, in December 2023, Argentina covered more than half of two repayments still outstanding from a 2018 IMF loan using the equivalent of $2.8 billion USD in Chinese renminbi. [28] China entered into a similar agreement with Saudi Arabia one month prior to promote trade. [29]
The core of the problem is that the IMF unevenly distributes its Special Drawing Rights (SDRs) and conditions its loan packages on often unachievable policy reforms, thereby eventually accentuating inequality. [30] Since the Great Recession, the United States has frequently engaged in its own currency swaps, though primarily only with its close allies or in ways that have insufficiently addressed the deep financial stress present in certain developing countries. [31] China has capitalized on the frustration caused by this policy through its opposition to the IMF and its call to frame BRICS as a rallying point for the supposedly neglected ‘Global South,’ with which it attempts to identify by referring to its own history with Western colonialism. In July 2023, top Chinese diplomat Wang Yi described BRICS as “the most important platform for cooperation among emerging markets and developing countries.” [32] At around the same time, Putin declared at the 2023 Russia-Africa Economic and Humanitarian Forum in St. Petersburg that “Western countries still cannot overcome their colonial past and continue to think and act according to this template.” [33] BRICS regularly presents itself as a critical supporter of Africa’s development, and it is clear that many on the continent are receptive to this anticolonial rhetoric. [34] To understand the depth of this feeling, one need only witness the omnipresence of Russian flags in the crowds that swarmed the streets of Niamey after a military coup toppled Niger’s government in July 2023. [35]
Steps Forward
As Washington studies BRICS’s rise, it should not overly fixate on the nominal gains that the organization achieves. Its excessively rapid expansion will exacerbate the logistical complications of pioneering collaborative financial and political projects intended to replace the U.S.-led world order. These projects will likely be primarily symbolic because of the differing priorities of the organization’s members, which will become increasingly irreconcilable as more and more voices need to be accounted for and accommodated. BRICS has also still not concretely developed global institutions that offer substantive alternatives to the IMF or the World Bank, for instance, despite plenty of rhetoric lambasting these institutions.
Neither should Washington allow these inherent shortcomings within BRICS to lull it into a false sense of security, however. Rather, Washington should acknowledge and address the trends to which BRICS members are contributing. It should combat colossal issues like de-dollarization, frustration over Western sanctions, and a growing willingness to create a common BRICS currency by beginning its response at the bilateral level. The United States should place particular emphasis on India and Brazil in this regard, as the former is a linchpin in the competition with China and the latter holds a key position in Latin America. The United States must also provide countries accusing it of global economic harm with clear justifications for existing sanctions and explanations of how its economic policy works to minimize spillover effects. [36] Washington should also avoid so readily using the dollar as an economic weapon and should instead consider all diplomatic options first when it wants to steer countries toward a more favorable political path.
To address the linked and equally problematic trend of sinking confidence in Western international institutions like the IMF among low-income countries, the United States can propose changes aimed at making loan packages less constraining and more targeted. The IMF can improve its distribution policy by requiring that the political reform tied to aid both accomplishes a concrete goal that has already been proposed by the recipient country and promotes the state’s national interest. When the IMF created the Resilience and Sustainability Trust in 2022, which funneled $40 billion in funds from G20 countries to nations with SDRs to the IMF, it made these transfers conditional on climate change- and pandemic-related reforms that were occasionally unrealizable for developing nations. [37] The IMF should have designated this money for health and sustainability projects writ large that were already planned by nations in need of financial support. That way, the IMF would have found a happy medium between the BRI’s excessively flexible terms and the fund’s current stifling conditions. In short, the IMF should act as a channel for U.S. banks to provide balanced assistance to low-income countries, using the dollar as an instrument of support rather than as a weapon.
Finally, to counter the accusations of Western colonialism and imperialism that accompany BRICS’s expansion, the United States should ensure that it puts itself on the same level as other countries in its public messaging. The International Broadcasting Bureau and the State Department’s Office of Public Diplomacy and Public Affairs should back these efforts by highlighting the United States’s renewed effort to engage with partners across the globe.
While Washington should not be afraid to occasionally highlight how adversarial projects like China’s BRI are true examples of contemporary colonialism, it would be more constructive for the United States to treat its desired partners as equals, as it is currently doing with India. To achieve this, the White House will have to continue reinforcing mutually beneficial ties with BRICS members on an individual basis, placing particular emphasis on India, an important actor in the geopolitical confrontation against China, and Brazil, which enjoys a commanding position in Latin America. Washington will need to combine these offers of support for individual states’ policies with proposals to reform multilateral institutions to successfully respond to BRICS’s expansion. With such a strategy, Washington can prove wrong its adversaries who have labeled this the century of American decline.
Axel de Vernou ’25 served as the President of the AHS chapter at Yale University, where he is majoring in History and Global Affairs with a Certificate of Advanced Language Study in Russian.
__
Notes:
[1] Vladimir Putin, “Russia Calling! Investment Forum,” President of Russia, December 7, 2023, http://en.kremlin.ru/events/president/transcripts/72926.
[2] Arnold Toynbee, A Study of History (Oxford: Oxford University Press, 1947), 297.
[3] Seth Frantzman, “Facing Protests, Iran’s Khamenei Says US World Order is Declining – Analysis,” The Jerusalem Post, November 6, 2022, https://www.jpost.com/middle-east/iran-news/article-721587.
[4] Patrik Gillespie and Manuela Tobias, “Argentina Won’t Join BRICS Bloc Under Milei, Adviser Says,” Bloomberg, November 30, 2023, https://www.bloomberg.com/news/articles/2023-11-30/argentina-won-t-join-the-brics-bloc-under-milei-adviser-says?srnd=politics-vp.
[5] “Three Pillars of Cooperation,” BRICS, https://brics2023.gov.za/three-pillars-of-cooperation/.
[6] Xi Jinping, “Full text: Remarks by Chinese President Xi Jinping at China-Africa Leaders’ Dialogue,” The State Council Information Office: The People’s Republic of China, August 26, 2023, http://english.scio.gov.cn/topnews/2023-08/26/content_107938167.htm.
[7] Subrahmanyam Jaishankar, “‘US is Getting Used to a Multipolar World’: EAM Jaishankar,” The Economic Times, September 28, 2023, https://www.youtube.com/watch?v=6VM-FWP-plM.
[8] Luke Harding, “Vladimir Putin Accuses West of Seeking to ‘Dismember’ Russia,” The Guardian, February 26, 2023, https://www.theguardian.com/world/2023/feb/26/vladimir-putin-acccuses-west-of-seeking-to-dismember-russia.
[9] Putin, “Russia Calling! Investment Forum,” President of Russia.
[10] Anshu Siripurapu and Noah Berman, “The Dollar: The World’s Reserve Currency,” Council on Foreign Relations, July 19, 2023, https://www.cfr.org/backgrounder/dollar-worlds-reserve-currency.
[11] “The U.S. Dollar as the World’s Dominant Reserve Currency,” Congressional Research Service, September 15, 2022, https://crsreports.congress.gov/product/pdf/IF/IF11707.
[12] Filip de Mott, “Brazil’s President Wants to End Dollar Dominance and Backs Calls for BRICS Nations to Use Their Own Currency,” Business Insider: India, April 13, 2023, https://www.businessinsider.in/stock-market/news/brazils-president-wants-to-end-dollar-dominance-and-backs-calls-for-brics-nations-to-use-their-own-currency/articleshow/99473221.cms.
[13] Xu Wenhong, “Dedollarization as a Direction of Russia’s Financial Policy in Current Conditions,” Studies on Russian Economic Development 35(June 2024): 9-18.
[14] Chico Harlan and Stefano Pitrelli, “Europe accepts Putin’s demands on gas payments to avoid more shut-offs,” The Washington Post, May 24, 2022, https://www.washingtonpost.com/world/2022/05/24/eu-russian-gas-putin-rubles/.
[15] Aruni Soni, “China Signs Yuan-denominated Loans for Belt and Road Initiative, Accelerating De-dollarization,” Business Insider, October 20, 2023, https://markets.businessinsider.com/news/currencies/dedollarization-china-yuan-loans-belt-and-road-initiative-usd-renminbi-2023-10.
[16] Yusho Cho, “What is Behind the 40% Drop in China’s U.S. Treasury Holdings?,” Nikkei Asia, November 4, 2023, https://asia.nikkei.com/Spotlight/Datawatch/What-is-behind-the-40-drop-in-China-s-U.S.-Treasury-holdings.
[17] Morgan Lau and Judy Chen, “Chart Room: China’s Booming Panda Bond Market Not so Black and White,” Fidelity International, December 15, 2023, https://www.fidelityinternational.com/editorial/article/chart-room-chinas-booming-panda-bond-market-not-so-black-and-white-98b027-en5/.
[18] Mauro Ramos, “Dedollarization: 95% of Trade Between China and Russia is no Longer Done in US Currency,” People’s Dispatch, December 19, 2023, https://peoplesdispatch.org/2023/12/19/dedollarization-95-of-trade-between-china-and-russia-is-no-longer-done-in-us-currency/.
[19] Huileng Tan, “China and Russia are Working on Homegrown Alternatives to the SWIFT Payment System. Here’s What They Would Mean for the US Dollar,” Business Insider, April 28, 2022, https://www.businessinsider.com/china-russia-alternative-swift-payment-cips-spfs-yuan-ruble-dollar-2022-4.
[20] “Bolivia’s New Top Diplomat Pledges Efforts Toward BRICS Membership,” TASS, November 28, 2023, https://tass.com/world/1712751.
[21] Rachel Savage, “What is a BRICS Currency and is The U.S. Dollar in Trouble?,” Reuters, August 23, 2023, https://www.reuters.com/markets/currencies/what-is-brics-currency-could-one-be-adopted-2023-08-23/.
[22] Daniel Markey and Andrew Scobell, “Three Things to Know About China-India Tensions,” United States Institute of Peace,” October 19, 2023, https://www.usip.org/publications/2023/10/three-things-know-about-china-india-tensions.
[23] Carien du Plessis, “South Africa Asks ICC to Exempt it from Putin Arrest to Avoid War with Russia,” Reuters, July 18, 2023, https://www.reuters.com/article/idUSKBN2YY1E6/.
[24] Daniel Fu and Arran Hope, “There Is No Consensus on American Decline in Beijing,” The Diplomat, October 9, 2023, https://thediplomat.com/2023/10/there-is-no-consensus-on-american-decline-in-beijing/.
[25] Gleb Stolyarov and Alexander Marrow, “Focus: Made in Russia? Chinese Cars Drive a Revival of Russia’s Auto Factories,” Reuters, July 20, 2023, https://www.reuters.com/business/autos-transportation/made-russia-chinese-cars-drive-revival-russias-auto-factories-2023-07-20/.
[26] Karina Patricia, “Monetary Power and Sovereign Debt Crises: the Renewed Case for a Sovereign Debt Restructuring Mechanism,” Bretton Woods Project, October 4, 2022, https://www.brettonwoodsproject.org/2022/10/monetary-power-and-sovereign-debt-crises-the-renewed-case-for-a-sovereign-debt-restructuring-mechanism/.
[27] Hung Tran, “Internationalization of the Renmibi via Bilateral Swap Lines,” Atlantic Council, March 18, 2022, https://www.atlanticcouncil.org/blogs/econographics/internationalization-of-the-renmibi-via-bilateral-swap-lines/.
[28] “The Rise of Bilateral Currency Swaps – a Threat to the IMF?,” Bretton Woods Project, December 13, 2023, https://www.brettonwoodsproject.org/2023/12/the-rise-of-bilateral-currency-swaps-a-threat-to-the-imf/.
[29] Salina Li, “China and Saudi Arabia Sign Currency Swap Accord to Foster Bilateral Commerce, Giving a Boost to the Yuan’s Globalisation,” South China Morning Post, November 20, 2023, https://www.scmp.com/business/banking-finance/article/3242221/china-and-saudi-arabia-sign-currency-swap-accord-foster-bilateral-commerce-giving-boost-yuans.
[30] Kumasi Adum, “Poverty, Inequality and the IMF: How Austerity Hurts the Poor and Widens Inequality,” Boston University, April 2, 2021, https://www.bu.edu/gdp/2021/04/02/poverty-inequality-and-the-imf-how-austerity-hurts-the-poor-and-widens-inequality/.
[31] Kevin Gallagher, Marina Zucker-Marques, and Barbara Fritz, “Getting Currency Swaps Right: How China is Filling the Void Left by the West,” China Global South Project, April 11, 2023, https://chinaglobalsouth.com/analysis/getting-currency-swaps-right-how-china-is-filling-the-void-left-by-the-west/.
[32] Brian Hart, “The 2023 BRICS Summit: A Mixed Bag for China,” CSIS: China Power Project, September 5, 2023, https://chinapower.csis.org/analysis/the-2023-brics-summit-a-mixed-bag-for-china/.
[33] Vladimir Putin, “Plenary Session of the Russia-Africa Economic and Humanitarian Forum,” President of Russia, July 27, 2023, http://en.kremlin.ru/events/president/news/71814.
[34] Kester Kenn Klomegah, “BRICS Holds Diverse Potential Support For Africa,” Info BRICS, November 10, 2023, https://infobrics.org/post/39813/.
[35] “Supporters of Niger’s Coup March, Waving Russian Flags and Denouncing France,” The Associated Press, July 30, 2023, https://www.npr.org/2023/07/30/1190969703/supporters-of-nigers-coup-march-waving-russian-flags-and-denouncing-france.
[36] Satyajit Das, “How the U.S. Has Weaponized the Dollar,” Bloomberg, September 6, 2018, https://economictimes.indiatimes.com/news/international/business/how-the-us-has-made-a-weapon-of-the-dollar/articleshow/65715068.cms?from=mdr.
[37] Bryn Welham and Mark Miller, “Managing a New Era of IMF Lending Conditions,” Overseas Development Institute, October 4, 2022, https://odi.org/en/insights/managing-a-new-era-of-imf-lending-conditions/.
Image: “Hangzhou – China, 04/09/2016. Presidente Michel Temer durante reunião com os lideres do Brics” by Beto Barata/PR, retrieved from https://commons.wikimedia.org/wiki/File:Brics_Leaders_2016.jpg. This file is licensed under the Creative Commons Attribution 2.0 Generic license.
