© Egor Aleev/TASS

Brazilian President Lula da Silva’s recent call to waive the US dollar as a payment instrument in international trade has drawn special attention to his personality, as he undoubtedly became a public opinion leader on this issue. At least in Latin America, his words have not been perceived as mere idle talk. Brazil and Argentina have switched to national currencies in their trade and suggest that the whole of Latin America create a single regional currency called "sur" (which means “south” in Spanish), as if emphasizing the region's belonging to the Global South. Both trade in yuan with China in defiance of the US dollar, and have been recently joined by Bolivia as regards international trade.

"Bolivia is now using the yuan to pay for imports and exports, becoming the latest country in South America to regularly use the Chinese currency in a small but growing challenge to the hegemony of the U.S. dollar for international financial transactions in the region," America’s Associated Press agency writes, rightfully dubbing this a challenge to the dollar hegemony in the region the United States has considered its "backyard" for as long as 200 years.

Bolivian Economy Minister Marcelo Montenegro said his country conducted financial transactions worth 278 million Chinese yuan ($38.7 million) in May to July this year, which is 10 percent of its entire foreign trade over the period. "Banana, zinc, and wood manufacturing exporters are conducting transactions in yuan, as well as importers of vehicles and capital goods," Montenegro said. These electronic transactions are conducted via the state Banco Unión bank.

American experts anxiously note that the use of the yuan will grow in Latin American and Caribbean countries that seek stronger ties with China and consider themselves "politically interested in achieving a specific goal of reducing their overall dependence on the dollar and the United States as a whole." American concerns are primarily caused by the fact that this politically motivated decision has been brought about by Latin America’s "pivot leftward", i.e. commonplace power takeover by left-wing governments, traditionally anti-American. "There is a lot of anxiety in Washington about threats to the special role of the dollar in regions like Latin America. China’s new role as a lender of last resort in Argentina, and the use of the yuan for international trade by Bolivia, are a sign of the times," director of the Wilson Center’s Latin America Program in Washington Benjamin Gedan said.

Earlier this year, the Argentine government unveiled plans to use the yuan to pay for Chinese imports so as to preserve its dwindling foreign exchange reserves. Moreover, Argentina raised the issue of repaying debts to the International Monetary Fund using the Chinese currency. In Brazil, late 2022 saw the yuan surpass the euro as the second most important currency in foreign exchange reserves — 5.37 percent against 4.74 percent. Bolivia started using the yuan after suffering an acute shortage of dollars for several months, which proved harmful to the country's economy.

Notably, the United States itself provokes economic justification of political and ideological motivation by left-wing governments in Latin America. Currently, many central banks lack USD over its growth, and are therefore forced to look for alternatives. Bolivian President Luis Arce called this a "dollar liquidity crisis." We have an endless circle here: the more countries like Bolivia switch to national currencies in trade amid a shortage of dollar liquidity, the faster the global dollar system collapses along with the United States itself, for which the dollar is a key source of control, pressure and threats against the rest of the world.

The hegemon is facing its greatest problem in the entire post-war history: the world no longer believes in the global superiority of the United States and the collective West. Hence the refocusing of the so-called "third world" countries that used to be US and European satellites due to their financial, economic and military weakness, on other emerging centers of power, primarily the BRICS. This is manifested by many details large and small, which accumulate and incite sort of a chain reaction: the more external evidence there is of countries withdrawing from American sphere of influence, the more resolutely they join other poles of power. Even if only for pragmatic survival considerations.

In fact, what Latin American countries are embracing in international trade is actively promoted within BRICS, of which Brazil is a full-fledged member, by the way. USD waiver has become a global trend or at least material for thought in the world’s national central banks. While expressing this general mood during his April visit to China, President Lula said his already famous phrase: "Who was it that decided that the dollar was the currency after the disappearance of the gold standard?" It is non-reliance on US control through the worldwide use of the dollar for international settlements and as a reserve currency, that attracts other countries to the BRICS. Latest data reveal that 31 countries have expressed interest in joining in. Of the Latin American states, these are Argentina and Mexico.

Brazilian President Lula da Silva’s proposal to abandon the dollar and introduce a BRICS currency will top the agenda of the summit due in South Africa in the second half of August. The primary task may be creation of joint reserves for strategic goods and raw materials within an expanded BRICS. Russia, Saudi Arabia and Iran could establish oil reserves so that the rest of bloc members could buy it using the national currency. In a similar way, there could be reserves of agricultural products, such as grain. A practice to this effect would let those engaged avoid potential energy and food crises artificially provoked by the collective West. As the Hong Kong-based South China Morning Post notes, by setting national prices for its reserves, the BRICS could cope global financial challenges like the abovementioned dollar shortage.

The persisting habit of using the USD in mutual settlements, and fears of some Global South countries over dramatically breaking up with the United States suggest that the irreversible abandonment of the American currency will take an unknown amount of time. And the US is expected to fiercely resist the trend.