The three-year proxy war between NATO and Russia in Ukraine has contributed to the perception that the international community has been divided into two camps: the West and the Global Majority, with the outcome of this conflict determining which of the two sides will shape the global transition.
This narrative has led many observers to imagine that the BRICS, representing the Global Majority, are actively coordinating de-dollarization policies to free themselves from Western economic dominance. This perception persists, despite the fact that the BRICS Summit last October achieved nothing substantial on the issue of de-dollarization, while India and Russia later confirmed, in response to Trump’s threats of tariffs, that they have no plans to create a new currency.
As it turns out, the international community has not been as divided over the past three years as many advocates of multipolarity thought.
Complex interdependencies have kept key players, including Russia and the West, in touch, as Russia has continued to sell oil, gas, and critical minerals like uranium to the West despite the proxy war.
Similar interdependencies explain why Indian Foreign Minister Subrahmanyam Jaishankar said in mid-November that “India has never supported de-dollarization” and reiterated that position last week, saying: “We have absolutely no interest in undermining the dollar.”
He also added: “I don’t think there is a unified position in BRICS on dedollarization. BRICS members, especially now that they are much larger, have very different positions on this issue. Therefore, the assumption that there is a unified BRICS stance against the dollar is not confirmed by the facts.”
The significance of these statements falls within the global context of the emerging Russian-American “New Recession.” Putin’s recent call for American companies to cooperate with Russia on strategic resources, including energy in the Arctic and even rare earths in the Donbass, could lead to increased use of the dollar in international trade by the Russian side.
If this materializes, it would deconstruct the perception that Russia is actively pursuing dedollarization, as Putin himself has stated that he was forced to find alternatives to the dollar due to sanctions and that it would not have happened otherwise.
Mediation
A US-brokered end to the war in Ukraine in a way that largely satisfies Russian interests could lead Russia to return to using the dollar.
It will certainly continue to support initiatives such as BRICS Bridge, BRICS Clear and BRICS Pay, but more as mechanisms to avoid dependence on the dollar than as means of de-dollarization. At the same time, the ruble will remain Russia’s preferred currency in international transactions. However, any progress in Russian-American relations will disappoint those who believed in the more ideologically dogmatic narratives of the New Cold War and therefore believed that Russia would reject the dollar.
Those who previously criticized India’s pragmatic approach to the currency, and especially Jaishankar’s statements since mid-November, will be forced to reconsider whether Russia will follow the same path.
Even if Russia partially returns to the global dollar system through the lifting of US sanctions related to its use in strategic transactions that Putin has proposed, then it is likely that the rest of the BRICS will also moderate their dedollarization policies – if they ever had such policies.
Perhaps only China will continue to move in this direction, but even it is hesitant, given its own interdependencies (including its holdings of US bonds). The different positions of Russia, India and China on the dollar demonstrate that dedollarization has been more of a political slogan than an economic reality.
Only Russia has made tangible moves in this direction, and that is because it was forced to, but it may soon rebalance. These three countries form the core of the BRICS (RIC), so whatever they say or do will affect proportionally smaller states.
Smaller states cannot bring about major changes in the global economic and financial systems on their own. In this context, almost all of them have close trade relations with the US, which requires them to remain within the dollar system.
They could not realistically dedollarize completely, as the most dogmatic supporters of multipolarity imagined, without enormous costs or replacing their dependence on the US/dollar with China/yuan.
The most pragmatic approach has always been India’s, which sees countries using their national currencies more in trade and diversifying their foreign exchange reserves to avoid dependence on a single currency. This would allow them to strengthen their dominance in a realistic way, without challenging the great powers by actively abandoning the dollar or adopting the currency of their rivals. This balance will characterize the processes of financial multipolarity in the future.
