(CNSNews.com) – Brazil’s leftist president began a visit to China on Thursday by taking a swipe at the U.S. dollar and asking why the group of leading emerging economies known as BRICS could not use a currency other than the greenback to trade with each other.
President Luiz Inácio Lula da Silva’s made the comments in a speech at a bank in Shanghai established by the BRICS partners – Brazil, Russia, India, China, and South Africa.
“Every night I ask myself why all countries are forced to do their trade backed by the dollar,” da Silva said, to applause. “We can’t we do our trade backed by our currency? Why are we not committed to innovating?”
Why could BRICS’ New Development Bank not agree to use another currency for trade between Brazil and China, and for trade among all the BRICS partners, he asked.
“The creation of this bank shows that the union of emerging countries is capable of creating social and economic changes relevant to the world,” he said. “We don’t want to be better than anyone else; we want the opportunities to expand our own potential.”
Da Silva’s remarks come against a backdrop of a geopolitically freighted campaign by China and Russia to reduce the non-Western world’s dependence on the U.S. dollar, as part of their broader drive against what they see as U.S. domination of the international system.
His visit to China comes two weeks after Brazil and China reached an agreement to use their own currencies – the yuan and the real – rather than the U.S. dollar in bilateral trade.
In an editorial on the agreement, the Chinese Communist Party paper Global Times made clear where it hoped the trend would ultimately lead.
“While the fact that the dollar remains the most frequently used currency in the world will not change in the foreseeable future, the trend that more and more countries will consider and pilot trade in non-dollar currencies is also unchangeable,” it said.
“History tells us that the decline of hegemony often begins with its currency.”
Asked at the time for reaction to Brazil’s role in the CCP’s push for “de-dollarization,” State Department principal deputy spokesperson Vedant Patel’s response focused on the administration’s view of Brazil as a key “partner” of the U.S.
“Countries are going to make their own sovereign decisions as it relates to relationships with any country in the world, including the PRC [People’s Republic of China],” he told a briefing.
“What I will say about Brazil is that it is a important partner of ours, an important partner as it relates to our priorities in the Western Hemisphere but also across the world. There is an important climate nexus between our two countries, an important trade cooperation.”
President Biden offer similar comments when welcoming Da Silva in the Oval Office in February, declaring that the U.S. and Brazil together stand up for democratic values, “not just in our hemisphere but around the world.”
‘Multipolar world order’
BRICS partners China and Russia are also increasingly using their currencies in bilateral trade. While hosting Chinese President Xi Jinping in Moscow last month, President Vladimir Putin noted with satisfaction that two-thirds of payments in business between their countries were now being made in yuan and rubles.
Putin also told Xi that he supports using China’s yuan as a settlement currency for transactions between Russia and countries in the “global south.”
“We support using Chinese yuan in transactions between the Russian Federation and its partners in Asia, Africa and Latin America,” he said.
“I am sure that these types of payment will grow between Russian businesses and their counterparts in third countries – as I said, payments in yuan.”
In an essay aimed at Latin America, published on Thursday, Russian Foreign Minister Sergei Lavrov thanked countries in the hemisphere for not supporting Western-led sanctions against Russia – for its invasion of Ukraine – and made reference to the de-dollarization push.
“It is no coincidence that the efforts to abandon the U.S. dollar in foreign trade and to create an infrastructure of transport, logistics, interbank, financial and economic ties that are not controlled by the West have stepped up significantly around the world,” he wrote.
As part of the drive to form a “multipolar world order,” Lavrov said, it was essential for Russia and Latin American countries “to expedite the transition to transactions in national currencies or other currencies as an alternative to the U.S. dollar and the euro.”
Together the five BRICS economies account for around one-quarter of global GDP – although China’s GDP is more than twice that of the other four countries, combined.
Growing in clout, the club may in the future also grow in number. Among the more than a dozen countries that have expressed interest in joining are Argentina, Iran, Turkey, Indonesia, Egypt, and Saudi Arabia.
The BRICS grouping established the New Development Bank in 2014. Da Silva was speaking at the inauguration Thursday of the bank’s new president, former Brazilian President Dilma Rousseff.
A member of Da Silva’s left-wing Workers’ Party, Rousseff was his chief of staff before succeeding him to serve two terms as president. She was impeached and removed from office in 2016.
See also:
Khamenei to Putin: Let’s Ditch The Dollar and ‘Isolate the Americans’ (Nov. 2, 2017)