As geopolitical tensions rise, former US President Donald Trump sounds the alarm over the greenback’s global position. He pointed to BRICS’s aggressive moves towards de-dollarization as a chief concern. Meanwhile, oil trade dynamics seem to support his views, suggesting a seismic shift in global economic balance.
BRICS’s power lay: oil as a currency weapon
The BRICS alliance, representing some of the world’s major economies, has actively pursued de-dollarization, with oil trade taking centre stage. Recent actions by these countries indicate a concerted effort to reduce reliance on the US dollar.
India settled crude oil transactions with the UAE in Rupees, while France opted for the Chinese Yuan in its gas trade with China. Besides, Russia has followed suit, leveraging the Yuan for its oil imports.
In his open Fox Business interview, Trump stressed the importance of these initiatives. He said, “Our country is going to hell, and we’re not going to be the big boy.” Additionally, he worried about the US dollar’s declining worldwide influence. Such shifts, he believes, could have consequences graver than any war, particularly if the US dollar loses its reserve currency status.
More Countries Joining BRICS?
Significantly, Saudi Arabia’s potential inclusion in BRICS has caught international attention. Morocco also recently sent proposal for BRICS membership. Given that the country holds a dominant position in OPEC and has predominantly traded in US dollars for the past 50 years, its shift would be monumental. Consequently, if the country leans towards BRICS, a considerable chunk of oil sales may bypass the US dollar altogether.
Hence, the upcoming BRICS summit in Johannesburg holds substantial weight. If BRICS expansion plans, especially concerning Saudi Arabia, materialize, it might profoundly alter the economic power dynamics. With the possibility that 90% of oil sales might no longer settle in US dollars, the ramifications for the United States could be significant.
The BRICS alliance’s continued pursuit of economic independence and dominance might influence other nations to pivot away from the US dollar. If Trump’s warnings hold water, the world will watch how these geopolitical manoeuvres play out.
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