There is a lot of talk about the BRICS and the power they are wielding. The challenge is they are rapidly becoming like the United Nations. When you have a large conglomerate of countries, all with different interests, problems arise. This can be compounded when the cultures are so radically different.

With the BRICS, we are no longer dealing with 5 nations. Officially, that number doubled to 10. At present, the countries are:

Brazil
Russia
India
China
South Africa
Egypt
Ethiopia
Iran
Saudi Arabia
United Arab Emirates

Then there are another 10 that are considered partner status.

In my view, this is going to be no more successful than the EU. That was framed much in the same way as the BRICS are. The outcome will probably be the same.

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The Problem With The BRICS

Unity becomes a challenge. When you have India and China together, there is an issue. Those two countries, historically, have not been allies. Today, the split is being enhanced by the United States, who is striking separate deals with each country, pitting one against the other. Each time a US company moves a plant from China to India, that is another shot across the bow.

With China and the US getting into a heated battle, on many fronts, this will likely continue.

Even within the ranks, there is disunity. As the BRICS nations get together, there are headwinds to the alliance.

Internal tensions have been brewing for a while.

Several signs show that the BRICS bloc is undergoing a phase of strategic misalignment. Recent episodes have clearly revealed internal tensions within the group :

• Last April, the alliance’s foreign ministers failed to agree on a joint statement, mainly due to disagreements over wording support for permanent seats on the UN Security Council for Brazil, India, and South Africa ;
• By contrast, a few weeks later, the same countries signed a joint declaration denouncing American and Israeli strikes on Iran, described by BRICS as “violations of international law”, showing a capacity for punctual coordination, but limited to certain topics ;
• The lack of clear communication on the group’s long-term economic objectives fuels skepticism about its real cohesion.

This misalignment causes it to look weak in front of Western powers, especially the United States. President Trump is a hurricane ripping through global trade. The challenge is the BRICS really do not have the economies to weather an extended battle with the US. Even China saw a major setback to its economy when Trump imposed outlandish tariffs on the country.

Of course, regular readers will know that the only country the BRICS need to focus upon is the US. The EU is cooked, with its leading economy, Germany, in the toilet. There is division across that continent, something that will rear its head once war really takes hold.

The End to the End of the US Dollar

For years we heard how BRICS is going to crush the US dollar. It is actually ironic that, for those old enough, it was the same rhetoric that was spewed about the euro. When the EU was formed, people talked about the total GDP of the member states and how the euro would end up taking over as the global reserve currency.

How did that work out?

The BRICS are facing the same dilemma. We heard everything from a gold back currency to something separate that crushes the USD. It seems the coalition is going in the wrong direction.

While the Rio summit reveals the group’s diplomatic fractures, it also sheds light on another stalled project: that of a new monetary architecture. One of the most anticipated projects, a possible common currency or a cross-border settlement system independent of the dollar, now seems stalled.

The joint absence of Xi Jinping and Vladimir Putin, two of the main architects of this alternative financial vision, significantly reduces the prospects for ambitious announcements. No concrete project has been advanced at this stage of the summit.

Contrary to expectations raised beforehand by some observers, no official statement mentioned a timeline, model, or coalition around a BRICS crypto or a decentralized monetary system.

So much for that. Perhaps this will be a topic for the conference next year.

Meanwhile, the United States is working on legislation that will provide clarity for stablecoins. Since the US dollar denominated stablecoins already lead the pack, passage will ensure the dollar is centerstage in the new financial system.

With the expected entry of United States banks, the growth of stablecoins is almost guaranteed. They will spread globally, consuming a greater share of the total transactions. To start, it will suck the value out of smaller local currencies before moving onto the bigger countries.

In the meantime, the BRICS are fighting among themselves.