Articles

BRICS UAE, Saudi expansion marks biggest challenge to the US dollar in the 21st century

I shared some more perspectives with Tala Michel Issa of Arabian Business on the changing dynamics of Great Power Competition, increasingly crystalised on the push for de-dollarization of the world economy.

While acknowledging that “A big part of this (Saudi Arabia dis-aligning itself from the US) is to develop the strongest relationship with economies that will play as big of a role as the West in the coming years. This is where BRICS membership becomes so crucial”, I reminded readers that “For all the push towards de-dollarisation – and the appetite for it – this will be a slow and painful process”.

Indeed, “reducing reliance on the US dollar presents several economic challenges. Entire payment and pricing mechanisms would need to be reinvented for new cross-border arrangements. Central banks hold trillions in dollar reserves that would need to be diversified. Fluctuations between currencies could create unintended risks. (…) Managing all this requires a gradual, coordinated effort – hence why full de-dollarisation remains distant”. “There will be push-back by the US, by some Global South nations even, as exemplified by Argentina.”

That being said, I concluded that “anything short of full de-dollarisation can already be seen as a victory”. “The very existence and expansion of BRICS+ is a challenge to the US-led world order. And every year that passes is a testament that an alternative is viable”.

Read the full article here.

Picture credits: arabianbusiness.com

Nicolas Michelon

Nicolas is a corporate geoeconomics and strategic & business intelligence expert with 25 years of experience in the Asia-Pacific region. He advises corporate executives on how to navigate the current geopolitical and geoeconomic environment, mitigate risk and develop prospective scenarios. He is also an Adjunct Professor & Guest Lecturer in geopolitics, geoeconomics and business intelligence at ESCP Business School (France), Galatasaray University (Türkiye), Ecole de Guerre Economique (Paris School of Economic Warfare) and the International University of Monaco.

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