Professor Eloranta highlights trust issues among BRICS nations at summit in Kazan, Russia

Professor Jari Eloranta from the University of Helsinki has identified a significant challenge for the BRICS nations’ proposed financial system: a lack of trust among member states. In an interview with Yle’s morning broadcast, Eloranta noted that many of these countries are quite undemocratic, complicating the establishment of such a system due to their propensity for secrecy.

Originally, BRICS refers to an alliance of emerging economies consisting of Brazil, Russia, India, China, and South Africa. This year, Egypt, Ethiopia, Iran, and the United Arab Emirates joined the group. The BRICS summit is taking place today in Kazan, Russia—marking the largest international meeting in the country since February 2022.

Following the onset of the Ukraine war, Russia was cut off from the international payment system, SWIFT, due to imposed sanctions. Russia has expressed its intention to create a new interbank system among BRICS nations, enabling transactions to be conducted without reliance on U.S. currency or banks.

The agenda of the summit includes discussions on de-dollarization, which refers to reducing dependency on dollar-based trade. Teivo Teivainen, a professor of world politics at the University of Helsinki, suggests that China and Russia are eager to position BRICS as a geopolitical alternative to the U.S. and the G7, while other participants may view it primarily as a platform for investment, trade opportunities, and technology exchange.

Although Teivainen emphasizes that no credible alternative currency currently exists to displace the dollar, he believes that any new system could diminish the dollar’s standing in the global economy, along with the U.S.’s influence. China, which accounts for over 70% of the combined economies of BRICS nations, remains the driving force for the group. However, Eloranta points out that China’s currency is heavily manipulated and lacks credibility as a trustworthy global currency, despite its significant influence in world markets and aggressive investments in the global south, which enhance its political leverage.