In his opening remarks at the China-US Beijing Summit in May 2026, President Xi Jinping proposed that China and the US can – and should – avoid the “Thucydides Trap”. This was a shrewd reference (which was reportedly lost on Donald Trump) to the account by Thucydides of the Peloponnesian War (432-404 BCE) when the once great city of Sparta was challenged by Athens – a more advanced rising power. For Thucydides, this made war inevitable. For Xi, of course, China is the new Athens but war with the US is not an option.
The 18th BRICS Summit took place in Delhi on 12 September 2026. India, host and holder of the current BRICS presidency, selected the 2026 theme Building for Resilience, Innovation, Cooperation and Sustainability. What is now an 11-member Global South coalition (with nine partners), BRICS+ issued the Delhi Declaration on Saturday after prolonged negotiations over the wording stretched into the early hours of Saturday. It has a decidedly Thucydian ring to it.
Given the prominence of rising geopolitical conflicts, the Indian press has unsurprisingly focused attention on India’s successful diplomatic efforts to reconcile key differences: Iran wanted the declaration to condemn the US for its illegal war (which was avoided), while the United Arab Emirates wanted Iran sanctioned for attacking the Gulf states (also avoided); Russia wanted to make sure that no wording could imply criticism of its war with Ukraine (done), and China wanted to strengthen references to the role of BRICS in global economic governance (also done). While there are explicit references to the dysfunctional impact of tariffs on global trade, respect for national sovereignty, peaceful resolution of conflict and the ongoing violence in Gaza, Trump is not referred to by name (nor is genocide, despite the South African position on this issue at the International Court of Justice).
What the Indian and international press reports miss, however, is something far more important than semantic compromises to keep the peace. There are several paragraphs devoted to calls for reform of the global financial system that are decidedly more explicit than previous statements. Reflecting Chinese influence but supported by South Africa and the BRICS Task Force on Growth and Development models initiated by the Indian presidency, paragraph 17 states:
“With the growing share of EMDEs (Emerging Markets and Developing Economies), in global output and growth, reform of global economic governance remains a consistent BRICS priority. We will continue to strengthen coordination among BRICS members to make international financial institutions more representative, transparent and accountable. We reiterate the urgent need to reform the Bretton Woods Institutions (BWI) to make them more agile, effective, credible, inclusive, fit for purpose, unbiased, accountable, and representative, to enhance their legitimacy. BWI governance structures should be reformed to reflect the transformation of the global economy since their establishment.”
Paragraph 17 seems eminently sensible given that Europe, North America and Oceania have between them four times more votes on the International Monetary Fund (IMF) and World Bank boards relative to their population share, while sub-Saharan Africa, South and South East Asia have four times fewer votes relative to their collective population share. Reversing this colonial legacy is an obvious goal for BRICS.
From this bold statement flows a range of specific recommendations including review of the World Bank’s shareholder structure, implementation of the IMF’s quota system as agreed in the 17th General Review of Quotas, restoration of the integrity of the World Trade Organization that tariffs have disrupted, stabilisation of the supply chains that the pandemic and tariffs have disrupted, a “self-reliant BRICS insurance ecosystem” including taking forward India’s proposal for a BRICS Risk Lab, the New Investment Platform pushed by Brazil and India, ending of unilateral imposition of tariffs and sanctions, and China was commended for its zero-tariff approach for all African countries. Specific reference is made to the Strategy for BRICS Economic Partnership adopted in 2025 under the Brazilian presidency, and taken forward by the Indian presidency.
I can’t help wondering whether a Risk Lab might include a BRICS-based swap line-type mechanism that would unlock the large reserves held by central banks to fight off speculative attacks on their currencies – the South African Reserve Bank’s reserves, for example, are at their highest yet at about R1.2-trillion.
BRICS as the primary challenger
Once again, it all makes eminent sense. After all, it is well known that rich countries benefit from higher returns on their foreign assets than what they pay on their foreign debt – hence the net outflow of capital from poor into rich countries’ coffers.
Paragraph 90 is the most important of all, couched in technocratic language that is easy to miss: “We acknowledge the efforts of the BRICS Payment Task Force (BPTF) towards exploring pragmatic solutions for efficient cross-border payment mechanisms… In this regard, we acknowledge the work done to study the cross-border interoperability of payment and messaging channels, and the discussions on promoting trade settlements and investments using BRICS local currencies… We encourage the BPTF to continue discussions… to facilitate practical solutions for cross-border payments among BRICS countries, which are fast, low-cost, more accessible, efficient, transparent and safe.” Significantly, these cross-border mechanisms would include a settlement and depositary infrastructure that was discussed at a BRICS technical workshop.
Read together, these paragraphs position BRICS as the primary challenger of the global US dollar system that was set up at the Bretton Woods Conference after World War 2. Everyone owed the US money after the war, which means it could call the shots. Instead of a new global reserve currency as advocated by John Maynard Keynes, the US insisted on pegging all currencies to the dollar, and pegging the dollar to gold. The resultant US dollar hegemony that the BWI facilitated was reinforced when the US decoupled the dollar from gold in 1971, and after Henry Kissinger agreed in 1973 during a visit to Egypt that oil would henceforth be traded in US dollars. If everyone needs oil, and if oil is traded in dollars, then everyone needs dollars. It was as simple as that.
Challenging the dollar has major medium- to long-term geopolitical implications that are hard to predict. As argued previously in this column, the US’s illegal military attacks on Iran may well mark the start of de-dollarisation of the global economy for two reasons: more and more oil is traded in non-US dollars (China buys 80% of Iran’s oil in yuan), and more and more energy is produced without oil as investments in renewables grow twice as fast as fossil fuels and nuclear combined. China is the world’s first electrostate and the largest producer of renewables-related kit, increasingly traded internationally in yuan. We now face an energy-driven Thucydides Trap: the rise of the electrostates (China and India) rivals the inevitable decline of the petrostates (North America and the Gulf states). The latter are unlikely to go down without a fight – the recolonisation of Venezuela by the US after its president was kidnapped is a case in point. Iran is another, but failed. No wonder Xi has pondered the Thucydides Trap.
The finance paragraphs in the Delhi Declaration are not just BRICS positioning to advance the interests of its members and partners. It is also building on a wide range of recent calls to reform the global financial system. Only the most impactful are referred to here: paragraph 7 of the Outcome Document of the UN’s Fourth Finance for Development Summit (Seville, June 2025) stated: “We commit to continued reform of the international financial architecture, enhancing its resilience, coherence and effectiveness in responding to present and future challenges and crises.” Action 4 and actions 47 to 52 of the Pact for the Future adopted by the UN’s Summit of the Future in late 2024 made explicit references to the need to reform the global financial system.
The G20 Taskforce on a Global Mobilization against Climate Change, initiated by the Brazilian G20 presidency, produced a report (compiled by leading economists Vera Songwe and Mariana Mazzucato) for G20 ministers of finance and central bankers in 2024 that called for reforms so that financing of the energy transition can be accelerated. The Nairobi Declaration issued by African heads of state in 2023 at the first African Climate Summit also called for far-reaching reforms of the global financial system, including solutions to Africa’s debt crisis. The Bridgetown Initiative launched by the prime minister of Barbados has been taken very seriously because it proposed specific implementable reforms. The High-Level Expert Group on Climate Finance produced a report titled A Climate Finance Framework: Decisive Action to Deliver on the Paris Agreement in 2023 that reinforced the call for reforms. The UN’s Inter-Agency Task Force on Financing for Development articulated in their Financing for Sustainable Development Report 2023 the most robust criticism of the workings of the global financial system.
In 2025, the UN Department of Economic and Social Affairs published a paper titled UN Chief Outlines Strategy to Reshape Global Finance for Sustainable Development. Read together with the UN secretary-general’s SDG Stimulus to Deliver Agenda 2030, published in 2023, it is clear that the secretary-general strongly believes that the SDGs cannot be achieved if the global financial system is left unreformed. In 2023, the African Climate Foundation published Priorities for an Equitable Reform of the Global Financial System: Unlocking Climate Investment and Sustainable Development in Africa which articulated the African perspective on what reforms are needed.
Reform on the agenda
The year 2025 might well go down as the turning point. With the Fourth Finance for Development Summit as the apex, there is a sense that for the first time the global financial system is now squarely on the global agenda. The Delhi Declaration has just reinforced this agenda. But these are not just policy statements. Shifts are under way, in particular those driven by China and South Africa.
As the petrodollar gets weakened by the military actions of the very government that prints US dollars, the Chinese are taking the gap, strongly supported by the Iranians who no longer need US dollars to buy what they need from China. Using the Chinese-built non-US dollar Cross-Border Interbank Payment System (CIPS), transactions worth 920 billion yuan were processed in March 2026 (shortly after the conflict began), jumping dramatically to 1.2 trillion yuan in April 2026, and rising higher since.
On a different but equally subversive platform, 95% of the rapidly expanding quantity of digital payments flowing through the payment platform called Project mBridge set up by Asian (including Chinese) and UAE central bankers is transacted in digital yuan currency. As of 2026, more Chinese cross-border transactions were conducted in yuan than in dollars. Yuan-denominated so-called Panda Bonds are proliferating, and are being bought up by non-Chinese governments who need yuan-based trading instruments, corporations that trade heavily with China, Western banks (like JP Morgan) and even Western hedge funds who see opportunity in the yuan as the dollar declines relative to the yuan.
Payment systems are the rules-based coordinators of credit transactions (i.e. the “IOUs” that grease the wheels of the global financial system), not the conveyors of actual chunks of cash (currencies). They play a central role in expanding the asset and liability sides of the double-entry books of global banks that make it possible to create money out of nothing. And what these banks created up until now in the off-shore dollar system are US dollars. When a payment system emerges that creates credit in non-US dollars, the ball game starts to change fundamentally.
In 2007, the Industrial and Commercial Bank of China (ICBC) bought 25% of the largest retail bank in Africa – South Africa’s Standard Bank (approved, obviously, by the Reserve Bank). The ICBC said at the time that the strategic purpose of this acquisition was to benefit from the fact that the Standard Bank had the largest retail network in Africa. Restated, with such a network, the ICBC can seamlessly process transfers of capital out of African countries into – and through - Johannesburg accounts. With the help of its Chinese partner, Standard Bank has built the largest payment platform in Africa, processing 2.3 billion transactions worth R164-trillion in 2025. It was also the first African bank to be authorised to participate in China’s CIPS, thus enabling Africa-China payments in renminbi (RMB). But in June 2026 the ICBC and Standard Bank went one step further – they established the Renminbi Clearing Bank of Africa, creating a China-linked RMB clearing infrastructure covering 19 African countries (with, strangely, only three reports on this tectonic shift in South African media). Couple this to Chinese efforts to refinance Africa’s dollar loans in yuan at lower interest rates, and China’s global currency agenda becomes very clear indeed.
But there is a long way to go: the yuan accounts for less than 3% of payments via SWIFT against 51% for the US dollar. CIPS has 1,791 participating institutions (and growing fast), while SWIFT has 11,000. As European countries relocate their gold reserves from the US back into Europe, and as BRICS countries react to the weaponisation of the US dollar via sanctions and tariffs by looking for safer options, the question is no longer whether the world will lose faith in the US dollar, but rather when and how much it will cost each country. India has already felt the pinch: it was recently forced to cut its importation of Russian oil in order to secure a lowering of tariffs imposed by the US – the fact that Indian billionaire Gautam Adani agreed at the same time to invest in an oil refinery in the US (which included getting corruption charges against him mysteriously dropped) helped sweeten the deal. (One can reasonably assume this includes a kickback into the Trump family somewhere along the line.)
Not radical enough
That all said, none of the above initiatives is nearly radical enough to address the triple challenge of rapid decarbonisation, far-reaching redistribution of wealth in a world effectively owned by a well-connected global elite, and the need for real-economy growth. All of them suggest reforms that are not fit for purpose: they will not unlock massive flows of capital to accelerate decarbonisation, nor will they reverse extreme wealth inequalities and declining levels of investment in the real economy.
For an appropriate response to our global financial crisis we need to look beyond UN institutions, BWI, BRICS and high-level expert groups too locked into the status quo. Fortunately, we finally have a report such as this that deserves to be debated and applied (sadly, only one media outlet, Daily Maverick, reported on it). Compiled by the World Inequality Lab led by Thomas Piketty, the Global Just Report (GJR), published this year, is the first well-reasoned quantitative and institutional analysis of the transition needed over 2025 to 2100 that will result in “human wellbeing and equality within planetary habitability”. Instead of grand normative statements, we need more reports like this that courageously place on record what it will take to achieve in actual practice three global goals that get repeated ad nauseam in global policy statements but never get worked out in detail, namely sufficiency, accelerated decarbonisation and reforms of the global financial system.
At the simplest level, sufficiency means “some for all forever” rather than “all for some for now”. Few will disagree that this is a desirable principle. But for the GJR sufficiency has a specific meaning, namely structural transformation of the economy on a global scale by equalising incomes, shortening working hours, lowering the material footprint and dematerialising growth by shifting investment from material sectors into human capabilities, specifically education, health, the energy transition, sustainable food systems and land use.
To address inequality, the GJR proposes that all incomes across rich and poor countries converge over time at €60,000 per annum, thus closing a 16-fold gap. Given that average incomes in sub-Saharan Africa are €290 per month and North American incomes are on average €4,590 per month, the proposed convergence of €5,000 per month (€60,000 per annum) means that average incomes in rich countries would not go down. This would enable the bottom 50% to increase their share of total wealth from the current 2% to 30%. The wealth of the billionaire class would shrink from the current 6% to 0.05% of the total; 90% of the population in rich and poor countries would double their income and work fewer hours.
The GJR argues that convergence at €60,000 is attractive to the developing world and does not disadvantage the developed world. It is also the only way to remain below 2°C warming. Most other models (e.g. the influential International Energy Agency model) converge at about €120,000 per annum, and therefore global warming hits the 4°C mark in these models.
The GJR goes up against both “green growth” and “degrowth” paradigms. Growth is necessary: annual growth rates for the rich and poor countries will need to be 0.5% and 3% to 4% per annum respectively to achieve wellbeing and equality without destroying the planet. “Green growth,” the GJR argues, is not an option because it does not address inequalities. “Degrowth” is also not useful because it ignores the fact that massive investments will be needed, in particular in poorer countries that lack the required infrastructures to ensure wellbeing. The GJR estimates that investment as a percentage of GDP should average out at 10.3% for 2030 to 2060. This is actually quite low – South Africa is currently at just below 15%, and India at 30%.
The radical redistribution of wealth within a growing economy without blowing the fuses of the planet will only be possible if the architecture of the global financial system is transformed. This is where the GJR is most useful because unlike other reports, it recommends the establishment of four new global financial institutions: a Global Justice Fund (GJF), a Global Sovereign Wealth Fund (GSWF), a UN Bank and an International Clearing Union.
A GJF will need to be funded from three sources: a global wealth tax (i.e. a portion of the assets of the billionaire class), a global income tax and revenue from a GSWF. The income generated by the GJF will be allocated to all countries on a per capita basis and invested in education, health, the energy transition and sustainable food systems.
The GJR proposes transforming the IMF into a United Nations Bank that will issue a new global reserve currency that will replace the US dollar. This will bring an end to the last vestige of the Bretton Woods agreement, and prevent a negative competitive bid to replace the dollar with the yuan.
The GJR revives a proposal originally developed by Keynes but rejected by the US in the lead-up to the Bretton Woods Conference, namely an International Clearing Union to enable settlements between countries. In essence, all countries would have accounts denominated in the new reserve currency. Countries that ran a current account surplus would be penalised, and the penalties would accrue to the GJF. The aim is to prevent what we have today – that is, massive trade imbalances whereby some countries consistently produce a surplus that must be exported, which means other countries must run deficits. This can cause wars and/or disruptive financial crises.
The GJR calculates that these four reforms will result in three shifts: from richer to poorer people, from private to public, and from the global South to the Global North. Convergence at €60,000 per annum can only be achieved if the wealth of the billionaire class is taxed and redistributed via the GJF. Public and private wealth shares would be reconfigured by 2040: whereas today the capital stock in private hands is 240% of GDP and 94% is with public institutions, the proposed reforms could result in capital stock in private hands rising to 466% of GDP, while the GSWF would end up with 60% of total capital stock generating revenues for the GJF, and 12% would be with public institutions. The net transfer of wealth from poorer to richer countries would be reversed, resulting in transfers from richer to poorer countries equal to 0.8% of GDP per annum.
In addition to concrete ways to reduce inequality, the proposed reforms will create a funding pool that could fund the acceleration of the energy transition, restoration of biodiversity and sustainable food systems.
Without doubt the GJR will be dismissed as unrealistic and utopian by both left and right. But reading it I was reminded that Keynes generated a similar visionary plan towards the end of World War 2. Representing the British Treasury, he risked his life cross-crossing the Atlantic to negotiate the post-war financial settlement (including the repayment terms of wartime British debts) with his US Treasury counterpart, Harry Dexter White. His vision was a global financial governance and trade regime that he believed would prevent another world war.
Although White forced Keynes to dilute his vision during the lead-up to the Bretton Woods Conference in 1944, his original vision reflected his remarkable capacity to imagine a totally different world amid the total devastation of everything around him. He was part of the British delegation at the Treaty of Versailles, but left in disgust, predicting that the desire to punish the Germans would backfire, which of course it did. He and White wanted to avoid a repeat of this mistake, but White also wanted to make sure that Britain was forced to dismantle its empire. (Incidentally, White later defected to Moscow after he was exposed as a long-serving KGB agent.) The point is, both (the original undiluted) Keynesian vision and the GJR boldly reimagined a new global financial architecture in response to a global crisis. And like many who criticised Keynes for being hopelessly unrealistic (including White), the GJR will elicit the same response – and it sure has, in some cases just plain ridicule.
Just like Keynes wanted an alternative that would avoid the mistakes of Versailles that catalysed the Nazi movement, the GJR puts in place a concrete constructive alternative to the false promises of the authoritarian populists, the dystopias concocted by the tech billionaires and the non-solutions offered by the elegant critiques of the academic left.
China really would like to avoid the Thucydides Trap, but it is up against a declining superpower (ruled by madmen) with military bases in 80 countries. China needs BRICS to consolidate its global positioning. But as it takes over the BRICS presidency from India in 2027, will it be able to push BRICS to go further than modifications on the margins of the global financial system? The GJR – or at least a version of its solution – provides the basis for implementing what BRICS professes to be committed to. Can the GJR provide the basis for avoiding the Thucydides Trap or, like the time of Keynes, is another world war inevitable before we can agree on a new world order? If there is a single actor best positioned to drive the kind of ambitious transformative vision that can avoid another world war, it is China – the new Athens. Working with India and the rest of the BRICS bloc, it is not hard to imagine BRICS proposing and hosting Bretton Woods 2.0 at some point in the future. DM
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