No BRICS currency announcement planned, but over 40 nations want to join: SA senior diplomat
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(Kitco News) - Anil Sooklal, South Africa's ambassador to BRICS, told reporters on Thursday that more than 40 countries have indicated an interest in joining the bloc of major developing economies, but there is no gold-backed currency announcement planned for next month's summit.
BRICS was formed by Brazil, Russia, India and China in 2009, with South Africa joining in 2010, and the bloc has remained at five countries since then. South Africa, which is hosting the upcoming BRICS summit in Johannesburg in August, proposed a further expansion in 2018, and Sooklal said serious discussions about adding new members began last year.
"This knocking on the door is nothing new," Sooklal said. "Twenty-two countries have formally approached BRICS, an equal number of informal approaches" have been received as well.
Sooklal said that "Argentina, all the major Global South countries," have applied for membership, and that other economically significant countries have expressed an interest in joining, including Bangladesh, the United Arab Emirates, Iran and Saudi Arabia, and even some European countries. "They are quite weighty countries," he said.
He added that South Africa has invited 69 global leaders to attend the BRICS summit, demonstrating the bloc's interest in increasing its global influence.
According to South Africa's Institute for Security Studies, BRICS nations represent 42% of the world's population but have less than 15% of the voting rights in the World Bank and the International Monetary Fund. Sooklal said the reason South Africa was admitted to BRICS the year after its formation was that "you could not have a Global South body that excluded the African continent."
The ambassador and his counterparts "discussed four broad areas that needed to be addressed to decide on the criteria for expansion" earlier this month, and these four areas will be elaborated upon during a meeting of the bloc's foreign ministers later on Thursday, he said.
Earlier on Thursday, Sooklal attempted to put rumors of a gold-backed currency announcement to rest when he told reporters that the BRICS currency is not in the cards at the upcoming summit.
"There's never been talk of a BRICS currency, it's not on the agenda," he said during a media briefing. "What we have said, and we continue to deepen, is trading in local currencies and settlement in local currencies."
The ambassador added, however, that the bloc's member countries will continue to move away from the U.S. dollar, and that Western sanctions against Russia imposed after the Ukraine invasion are accelerating the transition.
"BRICS started a process that has been expedited as a result of the conflict, as a result of unilateral sanctions," Sooklal said. "The days of a dollar-centric world is over, that's a reality. We have a multipolar global trading system today."
Sooklal's denials contradict earlier reports from Russia's state-backed RT news network, which aired multiple segments on July 7 asserting that a BRICS currency announcement would be made at the summit.
In response to the media reports, Thorsten Polleit, chief economist at Degussa, said in an exclusive comment to Kitco News that the potential announcement would be a step in the right direction, but there is still a long way to go.
"At first glance, a new transaction unit, backed by gold, sounds like good money – and it could be, first and foremost, a major challenge to the U.S. dollar's hegemony," he said, but added that the devil is in the details.
"For making the new currency as good as gold, a truly sound currency, it must be convertible into gold on demand. I am not sure whether this is what Brazil, Russia, India, China and South Africa have in mind," Polleit said.
"Using gold as money, the unit of account, would be a true game changer, no doubt about it. It could lead to a sharp devaluation of many fiat currencies vis-à-vis the yellow metal (including the BRICS fiat currencies), and it could catapult up goods prices in terms of fiat currencies. It could be a shock to the global fiat money system," he said. "I am not sure that this is what the BRICS wish to achieve."
Polleit added that another option would be for BRICS nations to create a new bank for financing foreign trade that would require holding gold as capital.
South Africa announced on Wednesday that Russian President Vladimir Putin would not attend in person, averting a potential diplomatic crisis as the country is a member of the International Criminal Court and could be obligated to arrest him over alleged war crimes committed by Russia in Ukraine.
"It shows the maturity and strength of the partnership," Sooklal said. "Putin recognized the dilemma and didn't want to jeopardize the summit."