2015/04/08

BRICS and the De-Dollarization

Pr. Chossudovsky publishes today an article surprisingly titled BRICS and the Fiction of “De-Dollarization” which must be understood between the lines. 

At first glance, the article makes the case that neither NDB ("BRICS Bank") nor CRA fund are relevant signs of a de-dollarization trend. It concludes at least with :
"The geopolitics behind the BRICS initiative are crucial. While the BRICS initiative from the very outset has accepted the dollar system, this does not exclude the introduction, at a later stage of a multiple currency arrangement, which challenges dollar hegemony."
Because I know Pr. Chossudovsky reads some of my articles and tweets, I would like to remark :
Geopolitics, in its current academic definition, is now too limited to describe efficiently what is happening. Any relevant global analysis must mix geo-economics, geopolitics and history of philosophy.

BRICS as the champion of de-dollarization is a frequent theme since BRICS' first meeting in 2009 or even before.

Analyzing the trend of the de-dollarization  requires to explain :
  • why the BRICS leaders really need and want de-dollarization, whatever US pressures ;
  • why AIIB was proposed in October 2014 by China - not by BRICS - and after NDB/CRA announcements by BRICS leaders ;
  • why Russia joined AIIB the last day and not before, and how this made it much easier for EU countries to join AIIB ;
  • why UK joined AIIB before any other ex-US allies ;
  • that the de-dollarization is first a loss of influence / soft power by US (and a gain by the BRICS), before being a currency choice ;
  • that AIIB/NDB are institutions targeting development and infrastructure, not trade invoicing which is a much larger scale ;
  • that de-dollarization must be a rapid process but as progressive as possible ;
  • which IMS system will progressively replace dollar, beyond bilateral currency swaps or emerging multiple currency arrangement between BRICS countries ;
  • to provide references when claiming AIIB/NDB will provide loans only denominated in dollars ; explaining the importance of the problem to be solved if these institutions would like to modify this currency for future loans ;
  • to provide details for the mean duration of the loans, and the flow of funding ;
  • to provide figures of main currencies volumes in SWIFT payment system or currencies' shares of global foreign-exchange transactions, and mentioning emerging BRICS alternative payment systems ;
and finally to explain why de-dollarization trend is inevitable, real and ongoing.

sources: PBoC, nowandfutures.com, Conscience-Sociale.org