The Global South is a neologism aimed at describing a vast number of countries who live in relative poverty. The word south comes from the usual poverty of the countries south of the equator.
The question is: what is the connection between the BRICS and the Global South?
The answer starts with globalisation, a world wide network involving communications, transport, commercial relations and, of course, geopolitics. This phenomenon is largely due to the recent progress in areas as communications and microelectronics. Globalisation is thus a real thing in itself, and as such can be used politically in the same way as a warship fleet.
What we know as globalisation today actually means the use the US make of its facilities for their own advantage. We are globalised in the American way, and the best example here is the role of the US dollar in the world.
The dollar has today the role gold one day had as a real measure of wealth. Practically all currencies we know are or were convertible into gold, and the dollar was no exception. This means that anyone holding 100 dollars was entitled to go to any bank and demand the physical gold corresponding. But this system had a weak spot. When France retaliated against some disagreable measure taken by the US government, the French government demanded all the dollars in the French reserves to be converted into physical gold and shipped to France. And the US did not have all that gold. The then president of the US, Richard Nixon, decreed the end of the convertibility of the dollar into gold from that point on. The then buoyant American economy has so taken the place of gold. The dollar was the new gold.
That measure was complemented by a treaty between the US and Saudi Arabia according to which crude Saudi oil would be paid internationally only in dollars. In this way the world was inundated by dollars that ended up being used to buy American Treasury Bonds. The US had found the Golden Egg Goose. The American Central Bank (the Fed) was completely free to print as much money as desired without fear of inflation.
That was the basis of the finance required to maintain a very large US military establishment, culminating with circa 800 US military bases distributed around the world.
This paradise started to crumble when the Reagan administration lifted practically all rules controlling financial movement. With an astounding speed, new financial derivatives started yielding more profit than corporations based on industrial production. Corporations started to transfer their production to other countries, de facto de-industrialising the US.
At this juncture, a very important point must be made clear:
Wealth is material
American wealth became bits and bytes in banks' computers, and this tendency spread to the whole world. This kind of wealth can only exist as a covenant encompassing all countries. And not all countries bought that fish.
Starting in the 1990s, a group of second and third rank economies grew at rates much higher than the countries that made the hard core of the collective West. And their growth was due mainly to industrial production. They were Brazil, Russia, China, India and South Africa. The BRICS.
It goes without saying that the BRICS did not like the neoliberalism they saw as the cause of great trouble in the leading economies. This means that the BRICS had their own agenda, and that agenda included to stay out of the dollar economy. The globalisation was not palatable to them, and they started to organize themselves to achieve their own goals. China in particular grew at astounding rates, taking with her the center of gravity of the world economy.
For the Global South, the aim of debunking the dollar seemed more and more attractive, as international organisations like the IMF and others operated in the dollar area in ways seen as frankly imperialistic. The Global South started to be attracted more and more to the BRICS.
The most important consequence of the expansion of the BRICS is the so called de-dollarization. That means that commerce can be made without having dollars in reserve.
Today approximately half the world economy is in the BRICS, and the same holds for population. The number 1 victim of this process is the SWIFT, an inter-bank payment system using exclusively dollars. Another, alternative, system is evolving by the BRICS and, of course, in the Global South, where dollar reserves are scarce.
Besides, the US has been weaponizing the dollar against anyone who disagreed with their version of globalisation. Keeping dollars as a reserve started to seem ever more perilous.
A new currency of the BRICS is in the final touches of implantation. It will be largely based in gold and other currencies and the most important commodities. This is very attractive to the Global South, as it opens new windows of growth opportunities outside neoliberalism.
Escaping neoliberalism is an important rung in the ladder leading to national liberation, an issue still very much alive in the Global South.
Today the BRICS group counts approx 20 members, and growing. Some alarmist youtubers say that the dollar will disappear. This is not so. What is happening is a reduction of the sphere of influence of the dollar. This reduction is historically justified by the decline of the west in general and the US in particular when one measures the output of the world economy.
Economic reality dictates the distribution of geopolitical power. The wars in Ukraine and in Palestine are volcanoes along a line of fire where geopolitical plate tectonics collide. It is probable that other volcanoes along that line will appear in the next few years.
Comments