An objective of BRICS (the Brasil-Russia-India-China-South Africa bloc) is to develop an alternative to dollar-based western financial systems. Algeria recently joined a growing list of applicants to BRICS bloc that includes Saudi Arabia and Iran. Russia, Saudi Arabia, Iran, and Algeria are all major exporters of oil and natural gas. The days of the petrodollar appear to be numbered as plans for a BRICS-allied financial system move forward.
The US dollar has been the reserve currency since the 1940’s, and an agreement with Saudi Arabia has made the dollar the currency for international oil purchases. With the Saudis and other oil exporters joining BRICS, it likely the dominance of the dollar will soon end, and oil purchases will be in a BRICS-supported currency. Chinese President Xi Jinping reportedly plans to visit Saudi Arabia later this year to finalize agreements with Saudi Arabia.
The end of the dollar as the world reserve currency would have huge implications for the US. The ability of the US Treasury to sell trillions in government bonds at low interest rates would be significantly reduced. The ability of the US and its allies to use western financial systems and dollar-based currency reserves as weapons will be greatly diminished.
How should the US respond to the growing financial challenges from BRICS?
Should the US launch a campaign of regime change and sanctions against Saudi Arabia and other BRICS applicants to prevent BRICS from displacing the US dollar as the world’s reserve currency?
Or are matters of trade and associations with other nations part of national sovereignty, and the US should learn to adapt to changing conditions?
