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I have been following the fallout from US President Donald Trump’s puzzling comments and subsequent executive order freezing funding to South Africa over the Expropriation Act.
The news has been intense and by now we obviously appreciate that Trump’s remarks and foreign policy were misinformed and deplorable.
Where much of the commentary falls short, however, is in its simplistic assumption that this incident revolves solely around the issue of land and human rights.
To the contrary, Trump’s criticism of South Africa’s land policies has little to do with the actual issue of land or the welfare of any group of people in the country.
Rather, his comments are a textbook example of politricks in action — employing dramatic political flair and rhetoric to veil true intentions and obscure motives. To be unequivocal, let me state the following:
- Trump’s endgame is clear: to wield international bargaining power and coax South Africa into distancing itself from Russia and China;
- His strategy is characterised by a familiar trio: threats of sanctions, defunding and tariff hikes; and
- His paramount concern is the spectre of US hegemonic decline through increased de-dollarisation propelled by emerging markets and the burgeoning Brics+ consensus.
Since the Bretton Woods institutions were established, the US dollar has reigned supreme as the world’s primary reserve currency, dominating international trade and transactions.
The dollar’s dominance is no mere status symbol; it yields tangible benefits for the US economy. By lowering borrowing costs and debt servicing for the US government and consumers, a strong dollar effectively grants America a privileged line of credit.
This, in turn, enables the US to borrow more than it otherwise could, while also making imports cheaper for consumers, thanks to a favourable exchange rate.
But whispers of the US dollar’s decline have begun to circulate. The US Congressional Budget Office 2023 Assessment predicts a gradual erosion of the dollar’s international clout over the coming decade. This trend is already evident in the dollar’s shrinking share of foreign exchange reserves, a key indicator of its dominance.
Emerging markets are driving this shift. As JP Morgan noted in October 2024, the commodities sector is increasingly pricing energy transactions in non-dollar currencies, while innovative payment systems are bypassing US banks in cross-border transactions.
De-dollarisation affects the US economy in several ways, including reduced demand for US debt such as treasury bonds that lead to increasing borrowing costs, decreased US trade competitiveness, increased volatility in financial markets and potential for higher inflation by driving up import prices.
For the time being, the dollar’s throne appears secure, with neither the Euro nor the Chinese renminbi poised to usurp its dominance. But a seismic shift could occur if a coalition of nations were to collectively pivot away from the dollar, such as may be the case through Brics+, diminishing demand and triggering a rapid acceleration of the de-dollarisation process.
South Africa’s expanding role in Brics+ carries profound implications, as the bloc evolves from a relatively dormant multinational organisation into a force in shaping a multipolar global political-economic landscape. The bloc’s recent expansion to include countries such as Ethiopia, Iran and Saudi Arabia has been accompanied by advanced engagements on issues perceived as threatening by Washington.
Notably, Brics+ has proposed the establishment of a new global payment system, BricsPay, and is exploring the creation of a Brics currency to facilitate trade among member states and potentially reduce their reliance on the US dollar. With Brics+ accounting for 35% of global GDP and 45% of the world’s population, the bloc’s growing ambitions have far reaching consequences.
Circumventing the US dollar is becoming an increasingly attractive option for emerging markets, as it promises to challenge American economic dominance and promote a more multipolar world order. Brics+ has championed this cause, with South Africa playing a pivotal role in promoting its development.
Trump’s recent attacks on the South African government ought to be appreciated in this geopolitical context — they are the cries and rumblings of an empire threatened by decline.
Siseko Maposa is a director of Surgetower Associates management consultancy. He writes regularly on international political economy.
