‘We are not giving up, we are not fighting the dollar, but if they do not allow us to work with it...’
How BRICS members discussed a new financial system where the “blood” of the economies of the Global South will flow
“The longer we live by someone else's rules and on someone else's platforms, the longer the transition to a fairer economic system will take,” said President Vladimir Putin at an extended meeting of the BRICS Summit in Kazan. Following its results, the countries of the association approved the Kazan Declaration, which enshrines the principles of a multipolar and fairer world, where the dollar is unacceptable as a weapon against the economies of developing countries. However, most of the leaders of the BRICS member countries are concerned about the expansion of armed conflicts in the Middle East and insist on making greater efforts to strengthen security. Read more in a report of Realnoe Vremya.
Multipolar world: Russia will support Iran
Day two of the BRICS Summit in Kazan was perhaps the central event of the forum. After yesterday's series of bilateral meetings of Vladimir Putin in the Kazan Kremlin, world politicians from all 13 BRICS countries gathered together at Kazan Expo exhibition centre.
Under the chairmanship of Russia, an extended meeting of the BRICS summit itself was held here, which is likely to launch a chain of political transformations. Following its results, the members of the association approved the Kazan Declaration where they secured their commitment to reorganisation in the direction of a multipolar world, the emergence of new centres of power in the Eurasian space, and voted for the inadmissibility of economic pressure on developing countries.
“Multipolarity can expand the opportunities for developing countries with emerging markets to unlock their constructive potential and ensure inclusive and fair economic globalisation and cooperation that is beneficial for all,” the declaration says.
The fact that Russia will not deviate from the course towards multipolarity became clear immediately after the signing of the declaration. Literally half an hour later, Iran's full membership in BRICS was announced. This long-lived Muslim country under international sanctions formally joined BRICS back in January 2024. But Vladimir Putin, as Russia's chairman, considered it important to hold the “inauguration” ceremony with Iranian President Masoud Pezeshkian in Kazan.
It was immediately announced the upcoming signing of an agreement on a comprehensive strategic partnership between Russia and Iran. It provides for the construction of a railway along the North-South route, which will export to India, as well as the completion of the power unit of the Bushehr NPP, Vladimir Putin said. Judging by the video, Iranian President Pezeshkian could barely contain his emotions.
In general, more than 30 countries of the Global South have expressed a desire to join BRICS. Vladimir Putin believes that it is necessary to maintain a balance and not allow the effectiveness of BRICS to decrease.
“In Johannesburg, we agreed to develop the modalities of our association's partners and to form a list of countries to obtain such status,” he said.
Currently, 13 countries are applying for the status of BRICS partners, said the Russian president’s aide Yury Ushakov.
The dollar as a weapon against the economy of developing countries
The economic independence of the BRICS countries is constrained by the fact that the countries cannot make trade settlements in either national currencies or dollars. As is known, the US administration has banned the use of the dollar in international settlements in trade with Russia, which has created risks for the economies of the BRICS countries. Although these countries are home to 30-40% of the world's population, and their share in the world GDP is 36.7%. At the same time, the BRICS countries showed a growth rate of 3.8%, which is higher than that of European countries — 3.2-3.3%, Vladimir Putin noted. In terms of purchasing power parity, these countries confidently exceed the share of the G7, but the latter uses the dollar as a means of pressure on the economies of developing countries.
“We do not refuse, we do not fight the dollar, but if we are not allowed to work with it — what should we do? Then we are forced to look for other alternatives, which is what is happening,” the Russian President said.
The head of state emphasised that using the dollar as a tool of struggle undermines confidence in this currency. As an alternative, he proposed creating an electronic platform.
President of Egypt Abdel Fattah al-Sisi was one of the few who agreed with the severity of this problem. He said that the solution could be to use the resources of the New Development Bank for interbank cooperation of the BRICS countries:
In June, a meeting of the New Development Bank on PPP, transport, clean energy was held. Egypt confirms its readiness for integration to strengthen food security, the transition to national currencies based on interbank cooperation of the BRICS.
Brazilian President Lula da Silva spoke in unison with him, via a video link. According to him, an autonomous financial system will help reduce the costs of conducting trade transactions. At the moment, the NBR is considering 100 projects for $100 billion.
“We need alternative financial relations, but not a replacement for our money,” he noted.
When the floor was taken by the President of the NBR Dilma Rousseff, former President of Brazil, the hall froze in anticipation of the financial summary. She said that the bank experienced a liquidity deficit in the first months of blocking operations, but the credit institution got out of difficulties. True, she admitted that the bank remains dependent on the international monetary system, but the share of settlements in national currencies is close to 30%.
In her opinion, their use will reduce the cost of borrowing for developing countries, since the dollar is exerting negative pressure.
Later, head of VEB.RF Igor Shuvalov said that Russia is ready to provide assistance in organizing trade financing for developing countries through the NDB.