Currently, an alternative financial system for BRICS is emerging rapidly, and Russian President Vladimir Putin declared the Western-dominated financial order “abolized” at the BRICS annual summit on July 6th.
Alternative systems for BRICS, de-cooperative, tariffs, currency shifts
Putin’s sanctions response through the BRICS framework
Putin’s sanctions response actually systematically has built an alternative financial system for BRICS through the BRICS partnership since February 2022. The US and the European Union are imposing comprehensive sanctions on the Russian financial, energy and defense sectors, creating inflation and nearly 10% economic pressure.
Member States such as India and China offer important alternatives to the Western market and implement BRICS decooperative strategies. Last year, Indian companies violated sanctions by sending hundreds of millions of dollars worth of sophisticated computer chips to Russia through Malaysia, despite this violated the rules.
Trump’s tariffs and BRICS escalation
Trump’s tariff threat appears to represent a serious escalation of the threat to BRICS in the current economic conflict. Trump was clear about the following facts:
“Souths that are in line with BRICS’s anti-American policies will be charged an additional 10% tariff.”
Furthermore, he is extremely unhappy with Putin amid Russia’s ruthless attack on Ukraine. Trump’s tariff warnings range from potential sanctions on countries that allow Russia to use its territory to avoid sanctions, including China, India, Turkey and the United Arab Emirates.
BRICS New Currency Development
As BRICS’ alternative financial system develops further, the BRICS New Currency initiative is gaining momentum. Member States have implemented a derailed BRICS policy using local currency for most transactions between members.
Since 2024, discussions on the development of BRICS’ new currency directly against the dollar have been strengthened, along with the “BRICS Bank” plan. The July summit confirmed participants’ commitment to creating a cross-border payment system.
Putin himself has clearly mentioned his plan for creating an independent payment and financial system within BRICS.
Currently, the BRICS Group covers 35% of the world economy, including dozens of partner countries offering new markets in Russia through Putin’s sanctions response policy. The BRICS Alternative Financial System is pursuing a consolidated alternative to Western-controlled financial institutions, and could change the face of the financial scenario driven by Trump’s tariffs on BRICS in the current tensions at the time of writing.