Throwing 'BRICS' At America's Head?

The summit of Brazil Russia, India, China and South Africa (BRICS), which is meeting in China has included a number of initiatives that could potentially change the international strategic environment. Is Washington paying attention?

Here’s where they are headed:

(1) Closer Russian and Chinese collaboration. Russian President Medvedev and his Chinese counterpart Hu Jintao “agreed to intensify work on the eastern and western gas supply routes before the end of the year,” according to the Moscow Times. China is desperate for expanded access to energy and Russia is an all-too-willing supplier. China is the world’s biggest energy consumer. Russia is China’s main trading partner as of last year. While the United States increasingly relies on its energy from unstable regions in the world, China is looking to partner with Russia to find a much more secure supply. True, the Chinese are active in South America and Africa, but the more energy they can get from Russia the better. Medvedev is going on an extended visit of China following the BRICS meeting.

(2) Displace the U.S. dollar with the Chinese yuan. There was discussion about the five countries adopting the yuan as a trade currency and the five countries signed a memorandum on cooperation that will open the door to granting one another loans in their national currencies. This is an important step in displacing the U.S. dollar. China immediately announced that it was going to extend 10 billion yuan in loans to Brazil, Russia, India, and South Africa. These loans were largely for….oil and natural gas projects.

(3) Overhaul the international financial system. The five powers issued a joint statement which has outlined plans for radically changing the international financial system. They want serious reforms of the International Monetary Fund (IMF) and they want to end dependence on critical reserve currencies like the U.S. dollar.

What is clear is that all three of these initiatives accomplish one thing: they diminish American power. There was optimism that this was just the beginning of a strong collaboration between them. “This is not a format where countries decide things,” Fyodor Lukyanov of Global Affairs told the Moscow Times. “It is much more about showing the emergence of new structures as opposed to old organizations.”