Author: Ozan Nergiz
Introduction
For decades, the US dollar has ruled global finance, supporting trade, energy pricing, and
international reserves. However, a financial transformation is unfolding. The BRICS bloc—
Brazil, Russia, India, China, and South Africa—has long sought to challenge the Western-led
financial system. Yet, recent developments indicate that this is no longer just an aspiration but a
real and accelerating movement.
With Saudi Arabia and the UAE joining BRICS, the bloc’s economic and energy influence has
expanded significantly. More importantly, its push toward de-dollarization—reducing
dependence on the US dollar in trade and finance—has gained unprecedented momentum. Is this
the beginning of a new global financial order?
De-Dollarization: Why BRICS Wants to Break Free from the Dollar
The US dollar’s dominance comes from its status as the world’s reserve currency. Most
international trade, particularly oil sales, is priced in dollars, and approximately 60% of global
foreign exchange reserves are held in USD. However, this dominance carries risks and
constraints for BRICS nations:
Why BRICS Seeks De-Dollarization:
• Sanctions as a weapon: The US used the dollar’s power to exclude Russia from the
SWIFT payment system after it invaded Ukraine, highlighting the risks of dollar
dependency.
• Concerns over US debt: The US national debt recently surpassed $34 trillion, raising
doubts about the dollar’s long-term stability.
• High transaction costs: Emerging economies face exchange rate fluctuations and
transaction fees, making trade in USD expensive.
Key Moves Toward De-Dollarization
BRICS members have already taken significant steps to reduce their reliance on the dollar:
• China and Russia now conduct over 80% of their trade in yuan and rubles.
• India and the UAE recently agreed to settle crude oil transactions in rupees, bypassing the
dollar entirely.
• Brazil and Argentina have increased regional trade in their local currencies.
• The BRICS Contingent Reserve Arrangement (CRA) is challenging the IMF, aiming to
cut reliance on Western financial institutions for emergency funding.
However, the most significant challenge to de-dollarization comes from Saudi Arabia and the
UAE.Saudi Arabia & UAE: BRICS’ Most Strategic Additions
Saudi Arabia and the UAE’s entry into BRICS isn’t just an expansion—it’s a game-changer.
These Gulf nations control a massive share of global oil production and have the power to
reshape global energy markets.
Saudi Arabia: The Biggest Threat to the Petrodollar?
Since the 1970s, the petrodollar system has ensured that oil sales remain priced in US dollars,
reinforcing the greenback’s dominance. However, Saudi Arabia, the world’s largest oil exporter,
is signaling a historic shift:
• Oil for Yuan? In early 2023, Riyadh hinted at pricing some oil exports to China in yuan,
directly challenging the petrodollar system.
• BRICS Oil Power: Saudi Arabia’s top oil buyers are China, Russia, and India, three of the
largest BRICS economies. Its membership strengthens BRICS’ control over global energy
pricing.
• Diversification Strategy: Under Vision 2030, Saudi Arabia is expanding its trade ties with
Asia and BRICS members, reducing its dependence on the US-led financial order.
UAE: The Financial Hub of a New Multipolar World
The UAE has positioned itself as a financial powerhouse, bridging Western and Eastern
economies. Within BRICS, its role will likely include:
• A global hub for non-dollar transactions: Dubai is emerging as a clearing center for yuan
and ruble trade, facilitating BRICS’ financial expansion.
• Leadership in digital finance: The UAE is a pioneer in central bank digital currencies
(CBDCs) and could help develop a digital BRICS currency.
• Strengthening Gulf Influence in BRICS: With Saudi Arabia and the UAE as members,
BRICS now wields greater energy market control, challenging the West’s financial grip.
By joining BRICS, Saudi Arabia and the UAE have elevated the bloc from a coalition of
emerging markets to a significant global trade and finance force.
Western Reactions: Concern or Dismissal?
The West’s response to BRICS’ expansion and de-dollarization push has been mixed. While some
downplay its significance, others warn of economic disruptions.
The US & EU: Cautious but Watching Closely
• US Treasury officials recognize BRICS’ de-dollarization efforts but insist that the dollar’s
liquidity and trustworthiness remain unmatched.
• The European Union remains divided, with some members exploring alternative
currencies for trade while others stay committed to the US-led financial system.• Wall Street analysts warn that if Saudi Arabia and the UAE shift away from the dollar, it
could trigger volatility in US bond yields and currency markets.
IMF & World Bank: Underestimating the BRICS Shift?
The IMF and World Bank, long seen as pillars of the Western financial system, have dismissed
BRICS’ ability to establish a real alternative. However, as BRICS expands lending and trade in
local currencies, it slowly erodes Western financial dominance.
Can BRICS Create a New Financial Order?
Despite BRICS’ progress, significant challenges remain:
1. Lack of a Unified Currency – A BRICS-wide currency remains unlikely since each nation
follows its monetary policy.
2. Gaps in Financial Infrastructure – The dollar dominates SWIFT, Forex markets, and
international lending, which BRICS has yet to match.
3. Internal Power Struggles – BRICS nations have competing economic priorities, making
coordination tricky.
Even so, the world is shifting toward a multipolar financial system, with BRICS leading the
charge.
The Road Ahead: What Comes Next?
• Saudi Arabia officially prices oil in yuan, → A significant blow to the petrodollar system.
• The UAE solidifies itself as a BRICS financial hub, → Increasing alternative trade
settlements.
• BRICS expands its lending in local currencies → The New Development Bank further
reduces dollar reliance.
• Western response → The US and EU may introduce countermeasures to keep Gulf
nations aligned with the dollar system.
One thing is sure: the financial shift led by BRICS is no longer theoretical—it’s happening in
real-time.
Conclusion
For years, BRICS has aimed to challenge the Western-led financial system, but its influence has
reached new heights with Saudi Arabia and the UAE on board. De-dollarization is accelerating,
oil trade is shifting, and an alternative financial order is forming.
The US dollar remains dominant, but its unquestioned supremacy is now being tested. Whether
BRICS triggers a financial revolution or forces the West to adapt, one thing is clear: the rules of
global finance are being rewritten.
