BRICS rises On as India Buys UAE Oil using Rupees
…reducing dependence on dollar further
Amb. Anthony Mukwita-27.08.23
Even as the important BRICS meeting kicked off on 22nd August in the glitzy downturn burb of Santon, South Africa, the world order was changing—India was concluding a multi-billion deal to purchases oil from the United Arab Emirates (UAE) using its own currency, the rupee.
What does this mean in simple terms to those with limited knowledge or little interest in the scheme of geopolitical economic scenario as the BRICS rises?
It means by settling bilateral deals in local currencies, India and UAE help “reduce transactions costs and boosts cross border trade.”
They also strengthen their local currencies in the process as the dollar use reduces.
The first Local Currency Settlement (LCS) occurred recently between ADNOC of UAE and the Indian Oil Corp., according to latest media reports.
“The transaction involved the sale of about 1 million barrels of crude oil to India using rupees and dirhams between UAE and India,” a recent report reads.
Consequently, and as more BRICS+Six countries trade using own currencies, their currencies are exponentially expected to strengthen, conversely, the power of the US dollar is going to weaken.
In the past countries aligned to the BRICS have expressed concern about the continued use of the dollar, they say the US and its allies weaponize to ´bully’ whoever doesn’t agree with them via sanctions that include closure of accounts dominated in the green buck.
Between 22nd August-24th August, BRICS the acronym of Brazil, Russia, India, China, and South Africa admitted six other countries, Argentina, Egypt, Ethiopia, UAE, Iran and Saudi Arabia to the fast-rising club.
The group is responsible for 40 pc of the global population as well as 30pc of the global economy, a staggering number even for the US and its allies.
The jury is still out on whether Zambia is among the 40 countries that applied to be a member of the economic and political group, albeit President Hakainde Hichilema was among the more than 60 Presidents that attended the conference hosted by President Cyril Ramaphosa attended by China´s President Xi Jinping and remotely by Russia´s President Valdmir Putin.
Whether Zambia, believed to be more western than BRICS+Six leaning will join the growing geopolitical club shaking the comfort zone enjoyed by the west for more than 70 years since the end of World War II is a story for another day.
For an in-depth peak into BRICS though, my new book “China in Africa the Zambia story” available in Bookworld and Grey Matter may help.
Whatever happens, nevertheless, the BRICS+Six train is moving and positively doing so fast, it is practically impossible to ignore it analysts say.
The other thing having optional trade partners is ever much better than putting one’s eggs in one basket as the adage goes.
Also of special note is the fact that ´de-dollarisation´ started way back in 1999 when Europeans introduced the Euro, a currency often much stronger than the dollar on any given day.
Amb. AM 27.08.23