The article discusses the challenges faced by Global South countries due to immense debts in dollars and Western corporations’ ownership of their resources. The international legal structure favors the West, and the US-run covert network can foment wars and coups against those who defy Western rules. The BRICS summit established a commission to study the possibility of a new currency to replace the dollar in international trade.
However, de-dollarization is a road fraught with many challenges, and most countries are not in a position to defy Western demands. The article also highlights the economic crises faced by countries like Argentina, Pakistan, Lebanon, Tunisia, and Sri Lanka due to neocolonial debt arrangements. The right-wing governments in these countries plunge them deeper into debt, making it difficult for them to emerge.
What happened at the BRICS summit in South Africa?
Several new members were invited to join BRICS in 2024: Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE. Additionally, a commission was established to study the possibility of a new currency to replace the dollar in international trade, at Brazil’s urging. However, the dollar cannot be replaced in a rush, and currency swap agreements will continue to be the way the process moves forward in the short term.
What are the major problems faced by Global South countries?
According to political economists Michael Hudson and Radhika Desai, Global South countries face immense debts in dollars and Western corporations claim ownership over their resources. The international legal structure favors the West, finding in favor of American corporations and vulture funds. The U.S.-run covert network continues to have the ability to foment wars and coups against those who defy Western rules—including financial ones. These problems now confront most countries of the world. To escape the shackles of dollarization, Global South countries have a perilous path to walk.
What is the history of imperial debt regimes in Argentina and Pakistan?
Both Argentina and Pakistan have been controlled by imperial debt regimes for centuries. Argentina’s fate has been controlled by imperial debt since 1824 when the British Empire’s bank first advanced a loan of one million pounds to newly independent Argentina. This was less than 20 years after the British landed forces to try unsuccessfully to colonize Argentina. They ultimately found the financial weapon more effective. In the 20th century, Argentina alternated between elected governments and military dictatorships and switched between developmentalist and neoliberal economic approaches. In the neoliberal periods, Argentina was the site of innovation—new experiments in plundering a country were invented.
Similarly, Pakistan was controlled by imperial debt regimes, first British, then U.S., for centuries. What is now Pakistan was once a group of rich provinces in British India. Each kingdom that Britain’s East India Company brought under its boot was saddled with debt, the principal mechanism (there were others) through which Britain drained $45 trillion from the subcontinent. Britain then partitioned the subcontinent into India and Pakistan before handing it over. Today India is playing an ambiguous role in BRICS, while Pakistan’s post-coup government has resorted to severe violence to try to get the country under control.
Author Bio: This article was produced by Globetrotter. Justin Podur is a Toronto-based writer and a writing fellow at Globetrotter. You can find him on his website at podur.org and on Twitter @justinpodur. He teaches at York University in the Faculty of Environmental and Urban Change.
