At BRICS summit, Russia to push to end dollar dominance

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Russia is seeking to convince BRICS countries to build an alternative platform for international payments that would be immune to Western sanctions when it hosts the group’s leaders at a summit next week.

President Vladimir Putin is keen to build up BRICS – which has expanded to include Egypt, Ethiopia, Iran and the United Arab Emirates as well as Brazil, Russia, India, China and South Africa – as a powerful counterweight to the West in global politics and trade.

The October 22-24 summit in the city of Kazan is being presented by Moscow as evidence that Western efforts to isolate Russia have failed. It wants other countries to work with it to overhaul the global financial system and end the dominance of the US dollar.

Central to that is the proposal for a new payments system based on a network of commercial banks linked to each other through the BRICS central banks, according to a document prepared by Russia’s finance ministry and central bank, distributed to journalists ahead of the summit.

The system would use blockchain technology to store and transfer digital tokens backed by national currencies. This, in turn, would then allow those currencies to be easily and securely exchanged, bypassing the need for dollar transactions. The BRICS Challenge and the US Response: A New Era of Gold (credit: SHUTTERSTOCK)

The BRICS Challenge and the US Response: A New Era of Gold (credit: SHUTTERSTOCK)

Russia sees it as a way to resolve increasing problems in settling trade payments, even with friendly countries such as China, where local banks fear they could be hit by secondary sanctions by the United States.

Yaroslav Lissovolik, founder of the BRICS+ Analytics think tank, said the creation of such a system was technically feasible but would take time.

“After the significant expansion of BRICS membership last year, the attainment of consensus is arguably harder,” he said.

Grain exchange

The Russian document accuses existing institutions such as the International Monetary Fund of serving the interests of Western countries and says they need “improvements to better serve the evolving global economy.” Russian Finance Minister Anton Siluanov called on BRICS members last week to create an alternative to the IMF.

Among other initiatives to facilitate trade and investment, Russia is also proposing to create a “BRICS Clear” platform to settle trade in securities.

The document calls for better communication between credit rating agencies in member countries and for a common ratings methodology, but stops short of proposing a joint BRICS rating agency, an idea that the group had discussed earlier.

Russia, the world’s top wheat exporter, is also urging the creation of a BRICS grain trading exchange, backed by a pricing agency, to create an alternative to Western bourses where international prices for agricultural commodities are set.

But in a sign that Moscow will need to work hard to push its proposals through, most BRICS members sent only lower-level officials – not finance ministers or central bankers – to a preparatory meeting last week.

For the summit itself, Russia says it expects to welcome leaders from all nine BRICS members and about 15 other countries keen to work as partners with the group, as well as the foreign minister of Saudi Arabia, which has been invited to join.

“BRICS is a structure that cannot be ignored,” Kremlin aide Yuri Ushakov told reporters last week.

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