Former US Congressman Ron Paul says a new member of the global economic alliance known as BRICS poses a serious threat to the US dollar’s hegemony.
In a new blog post, Paul says BRICS was created to challenge the economic and political dominance of the United States.
The former US representative specifically mentions Saudi Arabia, one of BRICS’s latest inductees, as a country that could fuel a decline in the dollar’s supremacy.
“The ‘petrodollar’ is the backbone of the dollar’s reserve currency status. Early this year, Saudi Arabia signed a deal with Brazil to accept Brazil’s currency instead of dollars for oil purchases.
If Saudi Arabia signs similar deals with other BRICS nations, it will hasten the end of the dollar’s reign as the reserve currency.”
Petrodollars refer to the revenues generated from crude oil exports paid in US dollars. In the 1970s, Saudi Arabia agreed to accept dollars for oil payments in exchange for US military protection.
Saudi Arabia is the second-largest oil producer in the world with an output of over 10.8 million barrels per day.
Late last month, reports surfaced that BRICS has expanded its circle with the admission of six new countries including Saudi Arabia, Iran, Ethiopia, Egypt, Argentina and the United Arab Emirates with more countries looking to join the economic alliance.
Paul says that one of the reasons more nations are looking to replace or create alternatives to the dollar is due to the potential long-term impacts of the United States’ rapidly growing debt burden.
Paul goes on to say that the weaponization of the dollar is affecting how other countries see the American currency.
In March 2022, the West imposed foreign sanctions that froze about $300 billion worth of Russian reserves. The sanctions also cut off Russian banks from SWIFT, a cross-border payment system dominated by the dollar and the euro.
Says Paul,
“The rejection of the dollar is also being driven in large part by resentment over the ‘weaponization’ of the dollar’s reserve currency status… It was inevitable that the arrogance of our foreign policy elite would eventually cause a backlash.”
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