Write a note on the expansion of BRICS and its attempts towards de-dollarization of the international economy, highlighting its global and regional implications.

Introduction

Visiting Shanghai in April 2023, Brazilian President Luiz Inácio Lula da Silva asked: "Every night I ask myself why all countries have to base their trade on the dollar." His question captures the mood of BRICS, the group of emerging economies that has expanded rapidly since 2023 and is searching for ways to reduce dependence on the US dollar. The freezing of Russia's foreign reserves in 2022, repeated US sanctions and the burden of dollar debt have convinced many in the Global South that the dollar's dominance is a political weapon. The expansion of BRICS and its efforts at de-dollarisation have significant implications for the world economy, for great-power rivalry and for regions such as South Asia and the Middle East.

Overview

The term "BRIC" was coined by Goldman Sachs economist Jim O'Neill in 2001. Brazil, Russia, India and China held their first summit at Yekaterinburg in June 2009, and South Africa joined in 2010–11. In 2014 the group agreed to create the New Development Bank (NDB) and a US$100 billion Contingent Reserve Arrangement. At the Johannesburg Summit of August 2023, BRICS invited six countries; Egypt, Ethiopia, Iran and the UAE joined in January 2024, Argentina declined, and Saudi Arabia did not formally confirm. Indonesia joined in January 2025, and the Kazan Summit (October 2024) created a category of "partner countries". Pakistan applied for membership in November 2023. The expanded BRICS covers nearly half of the world's population and, measured by purchasing power, a larger share of world GDP than the G7.

BRICS attempts towards de-dollarisation

1. Trade in local currencies.

BRICS members increasingly settle trade in their own currencies; Russian officials state that almost all Russia-China trade is now settled in roubles and yuan, and India has allowed trade invoicing in rupees since July 2022. (Reference: Reserve Bank of India circular on international trade settlement in rupees, 11 July 2022; Kremlin statements, 2024.)

2. Lending by the New Development Bank.

The NDB, headquartered in Shanghai, aims to provide a growing share of its loans in members' local currencies, reducing borrowers' exposure to the dollar. (Reference: New Development Bank, General Strategy 2022–2026.)

3. Alternative payment systems.

China's Cross-Border Interbank Payment System (CIPS) and Russia's SPFS offer alternatives to SWIFT, especially after Russian banks were cut off from SWIFT in 2022. (Reference: People's Bank of China, CIPS annual data; Bank of Russia, SPFS.)

4. The BRICS Cross-Border Payments Initiative.

The Kazan Declaration (October 2024) encouraged the use of local currencies and asked members to study a BRICS cross-border payment system and a reinsurance company, but did not create a common currency. (Reference: Kazan Declaration, XVI BRICS Summit, 23 October 2024.)

5. Central bank gold buying.

Central banks, led by China, Russia, India and Turkey, bought more than 1,000 tonnes of gold a year in 2022, 2023 and 2024, partly to diversify away from the dollar. (Reference: World Gold Council, Gold Demand Trends, 2022–2024.)

6. Bilateral currency swap lines.

China has signed swap agreements with dozens of central banks, including those of Saudi Arabia, Argentina and Pakistan, allowing trade and reserve support in yuan. (Reference: People's Bank of China, bilateral currency swap agreements list.)

7. Energy trade outside the dollar.

Russia sells oil to India and China in rupees, yuan and dirhams, and China has begun buying some LNG and oil in yuan, challenging the "petrodollar". (Reference: Reuters reports on Russia-India oil payments, 2023; Shanghai Petroleum and Natural Gas Exchange, yuan-settled LNG deals, 2023.)

8. The debate on a common unit of account.

Brazil and Russia have floated the idea of a BRICS common currency or unit for trade, but India and others have opposed it, and BRICS declarations have not adopted it. (Reference: statements of India's External Affairs Minister S. Jaishankar, 2024; Johannesburg II Declaration, August 2023.)

Global and regional implications

1. Movement towards a multipolar order.

BRICS expansion signals the rise of non-Western centres of power and the desire of emerging economies for a more representative international system. (Reference: Johannesburg II Declaration, 24 August 2023; IMF, World Economic Outlook data on shares of world GDP.)

2. Erosion of Western financial leverage.

If more trade and reserves move outside the dollar, US and EU sanctions become less effective, which weakens a major tool of Western foreign policy. (Reference: Atlantic Council, Dollar Dominance Monitor, 2024–2025.)

3. A louder Global South voice.

BRICS amplifies demands for reform of the IMF, World Bank and UN Security Council, where developing countries are under-represented. (Reference: Rio de Janeiro Declaration, XVII BRICS Summit, July 2025.)

4. US backlash.

President Trump threatened 100 per cent tariffs on BRICS countries if they created a rival currency, and in July 2025 threatened an extra 10 per cent tariff on countries aligning with BRICS policies, showing the risk of economic confrontation. (Reference: Donald Trump's statements on Truth Social, November 2024 and 6 July 2025; reported by Reuters.)

5. South Asia: India's balancing act.

India is both a BRICS founder and a Quad member. It supports local-currency trade but opposes a BRICS currency and an anti-Western turn, which limits the group's ambitions and protects its ties with the US. (Reference: Ministry of External Affairs of India statements, 2023–2025; Quad Leaders' Joint Statements.)

6. Pakistan's membership bid.

Pakistan applied to join BRICS and the NDB in November 2023 to diversify its partners and access finance, but India's opposition and the consensus rule have blocked its entry so far. (Reference: Ministry of Foreign Affairs of Pakistan, statement of 24 November 2023.)

7. The Middle East's new alignments.

The entry of Iran, the UAE and Egypt, and Saudi Arabia's invitation, bring major energy producers into a China-led forum, strengthening China's role in the region and the prospects of oil trade outside the dollar. (Reference: Johannesburg II Declaration; International Energy Agency, Oil 2024 report.)

8. Africa and Latin America.

Ethiopia, Egypt and partner countries such as Nigeria and Uganda gain access to new finance and markets, while Latin American members use BRICS to diversify from the US. (Reference: Kazan Declaration, 2024, on partner countries; New Development Bank membership.)

Limits of de-dollarisation

De-dollarisation remains more an aspiration than a reality. The dollar still accounts for about 58 per cent of global foreign exchange reserves and is on one side of about 88 per cent of all foreign exchange transactions. BRICS members have different interests: India and China are rivals, the UAE and Saudi Arabia are close US partners, and no member offers a deep, open capital market like the US. The yuan is not freely convertible, so many countries do not want to replace dependence on the dollar with dependence on China.

Conclusion

In 1971 US Treasury Secretary John Connally told European finance ministers: "The dollar is our currency, but it's your problem." BRICS expansion is the Global South's attempt to make the dollar less of a problem. The group has grown in size and ambition and has started real steps towards local-currency trade and alternative payment systems, which carry implications for sanctions, alliances and regional politics. Yet internal divisions and the dollar's deep advantages mean that de-dollarisation will be gradual. For Pakistan, the wise course is to keep seeking BRICS membership and local-currency trade while maintaining its economic ties with the West.