The BRICS alliance, long seen as a counterweight to Western financial dominance, is now witnessing internal divisions over the role of the US dollar. While China, Russia, and Brazil push for alternatives to the dollar, India has made it clear that it has no interest in joining this movement.
The Search for a Dollar Alternative
Since the 2008 global financial crisis, China has actively promoted the yuan as an alternative to the US dollar. It has signed currency swap agreements with several nations and pushed the idea within the BRICS framework.
Russia, facing heavy Western sanctions due to the Ukraine conflict, is also advocating for a new financial system independent of the dollar. Brazil’s President, Luiz Inácio Lula da Silva, has long supported reducing reliance on the US currency.
India’s Clear Stance
Unlike its BRICS counterparts, India has chosen a neutral stance on the issue. External Affairs Minister S. Jaishankar recently stated at the Chatham House think tank in London that the US dollar remains a pillar of global economic stability. He emphasized that India has no interest in efforts aimed at undermining the dollar.
India’s position reflects its strategic priorities, focusing on economic growth and global trade partnerships. The country maintains strong ties with Western economies, and any move against the dollar could disrupt these crucial relationships.
Trump’s Tariff War and India-US Relations
With Donald Trump’s return to the White House, global trade tensions have escalated. He has imposed steep tariffs on China and warned BRICS nations that any attempt to weaken the dollar will invite strong retaliation.
India is navigating this situation carefully, prioritizing its diplomatic and trade relations with the US. Jaishankar highlighted the growing trade between India and the US and reaffirmed that India has no interest in entering a retaliatory tariff war.
BRICS Split Over Dollar Issue
Divisions within BRICS on de-dollarization have become more evident. Discussions at last year’s BRICS summit in Kazan, Russia, failed to yield any concrete decision.
The debate has intensified since Trump took office in January, but consensus remains elusive. While China, Russia, and Brazil advocate for an alternative currency, India and South Africa prefer to maintain their distance from such efforts.
What’s Next?
The ongoing divide within BRICS indicates that the US dollar’s dominance is unlikely to fade anytime soon. For India, the US remains a key strategic and trade partner, making it cautious about any move that could harm this relationship.
As BRICS continues to grapple with internal differences, the global financial system is expected to remain centered around the dollar for the foreseeable future.