Brics grows as the Global South reacts to sanctions – 08/27/2023 – Nelson de Sá

On the cover of the New York Times, “Iran shakes off outlaw status in the West” (below). It gains “powerful friends” by “joining Brazil, Russia, India, China and South Africa”. A group that “has no clear political coherence other than the desire to reshape the global financial and governance system so that it is more diversified and less submissive to US policy and the power of the dollar.”

In the case of Iran, “the sanctions banned the country from banking transactions and the sale of oil”. He “turned East motivated by Trump’s decision to pull the US out of the nuclear deal reached by the Obama administration — despite Tehran’s full compliance — and impose sanctions.” Then “European companies withdrew from Iran, which has the second largest gas reserves in the world after Russia”.

Now, “Iran can claim that the US has failed to isolate it and confidently enter into negotiations with the Americans”, which have already begun, with an agreement “by which it recovered US$ 6 billion that had been frozen [por Washington] in South Korea”.

Financial Times, The Wall Street Journal, The Washington Post and Foreign Policy were already sounding the alarm for the Global South’s reaction to sanctions. The FT has just published an extensive report noting that the Treasury list “now reaches 2,206 pages and more than 12,000” individuals, companies, countries and others.

He heard from Celso Amorim, Lula’s adviser: “Today there is a lot of discomfort with the financial system based on the dollar. The main factor behind this is the sanctions”. And from Christopher Sabatini of Chatham House: “Extraterritoriality is scaring governments. When you have a quarter of the world’s economy under sanctions and the threat of them being used against any country at any time, that changes the game.”

Agathe Demarais, author of “Backfire: How sanctions reshape the world against US interests”, added that the backlash came after “Iran was banned from the Swift financial network in 2012”.

The WSJ highlighted the ineffectiveness of sanctions against Russia, which led to the “unprecedented redirection of its trade towards Asian partners, mainly China and India”. In Foreign Policy, citing surveys by Princeton and Columbia, “America’s love of sanctions will be its downfall.”

PIX AGAINST THE DOLLAR

The effort to “remove the dominance” of the American currency, underlines the FT, is not only done with trade in local currencies or the Chinese yuan. It is also because of the “explosion of new technologies for international payments” that “cracks are beginning to appear in the once impregnable position of the dollar”. Explains:

“Emerging powers were quick with digital payment systems such as WeChat Pay in China, UPI in India, Pix in Brazil or M-Pesa in Kenya. The West is lagging behind, with the US and Europe still studying the possibility of digital currencies and with payment systems dominated by Visa and Mastercard.”

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