A New Global Super Bloc Is Born in BRICS, the U.S. Should Look at This as Opportunity for Cooperation, Not Antagonistically
The recent expansion of BRICS will result in a global powershift in geopolitics and trade from U.S.-Europe hegemony to BRICS as now being a coequal global super bloc. BRICS is now the alternative global bloc to G-7 and the West.
The BRICS bloc of developing nations – comprised of Brazil, Russia, India, China and South Africa – just admitted Saudi Arabia, Iran, Ethiopia, Egypt, Argentina and the United Arab Emirates as members. It will be official in January 2024, and BRICS is said to be open to accepting new members.
BRICS new advantage in the global oil market
Look at the heft in global oil production that has been amplified with the addition of new members to BRICS. With the expansion of Saudi Arabia, Iran, and the UAE joining founding member Russia (other large global oil-producing country), these countries collectively corner about 48% of the entire global oil production.BRICS is essentially the new OPEC with OPEC’s largest members now BRICS members. As we’ve seen historically, OPEC countries have had a major influence in setting global oil prices. But BRICS has just become more influential than OPEC.
Just think back recently how during the outbreak of Russia’s invasion of Ukraine, the U.S. sanctioned Russian oil from being traded in the U.S. which set in motion a major spike in oil and natural gas prices in the U.S., which in turn pushed inflation to go higher. Due to consumer angst over the increased costs of all goods (not just gasoline and natural gas), President Joe Biden traveled to Saudi Arabia to basically plea to crown prince Mohammed bin Salmin for Saudi Arabia to output more oil to help ease the price of oil in the global oil market. Saudi Arabia cooperated as it has other trade and financial interests with the U.S.
With Saudi Arabia now in BRICS, and that Saudi Arabia has new large and powerful trade partners in China and other BRICS members, the new global reality is that Saudi Arabia would no longer necessarily be pressured to output more oil on the U.S.’ request.
Where, then, would the U.S. go to ask for increased oil production? All the major oil producers of the world are now BRICS members and can now rely economically on a massive alternative trading bloc beyond the U.S. and Europe in BRICS, if needed.BRICS is so large that both population wise and in total trade output, BRICS comprise half of both in the world.
Some would say the U.S. is oil independent and could output as many barrels of oil as needed. Again, we’ve seen in the recent oil/inflation bust that this didn’t work. Why? Because the quality of crude oil in the U.S. must be refined. That added step to produce consumer ready gasoline, adds to cost, which is why the U.S. still is importing oil already refined from other large oil producing countries because it ends up costing cheaper.
Dollar could no longer be the new international default currency
Besides U.S. new vulnerability in oil, the U.S. dollar’s strength is also more vulnerable.
Part of the strength of the dollar is rooted in the fact that in all international and commodities trade, all transactions are done in the U.S. dollar. So, while China, for example, is the largest trade partners in the world, it still must use the U.S. dollar in all of their transactions. BRICS has formed a new bank and global networking system to facilitate international trade transactions to be done by local currency, which gives advantage to local economies and BRICS members. In time, this eventually could weaken the U.S. dollar and pricing of commodities could be more expensive for Americans.
Looking into the future of global GDP
Goldman Sachs, investment banks and the largest accounting firms are already forecasting some of BRICS’ largest members will have the biggest economies in the world. By 2050, China will have the largest GDP and overtake the U.S.BRICS member India, currently with the fifth largest global economy, will be third and Russia be in the top 10, even as this war with Ukraine unfolds.
By 2070, Goldman Sachs predicts China and India will be number one and two, followed by the U.S. Brazil and Russia will be in the top 10. (The Philippines by 2050 will be a top 20 economy, by 2070 it’s expected to be around 14th, and a global powerhouse economically. Indonesia will catapult to number 4. Both the Philippines and Indonesia haven’t applied to become BRICS members, but both countries already trade heavily with China. And it’s conceivable that both these countries, especially Indonesia, could eventually be interested in joining BRICS.)
What does this powershift mean for the U.S.?
The answer to this question will largely depend on which political party is control of the U.S. The Republican party views the rise of BRICS antagonistically. A Republican leadership could set off trade wars as they’ll try to strongarm their way for advantage. However, it would be more bark than bite as BRICS is already large and powerful enough independently to go along as they please.
Under a Democratic party leadership, we don’t know clearly how this will play out because there hasn’t been much in public opinion from top democrats on BRICS. Ideally, and hopefully, the Democratic leadership approach will be one of greater cooperation and less hostility toward BRICS.
But in order for this second scenario, the more desirable outcome, Americans cannot buy into the hostility model that Republican demagogues and right-wing media are currently pushing.
Some right-wing media are stooping as low as warmongering. But again, that is more bark than bite because the top member countries of BRICS – China, Russia, India – are all stacked with nuclear arsenal. Cooperation is the only alternative and the best outcome for humanity and the world.
