India
Source: www.businesstoday.in

Jim O'Neill is the former chairman of Goldman Sachs Asset Management and former UK treasury minister, notable global economist and chair of UK think tank Chatham House. He coined the acronym BRICS 20-year-ago to represent the emergence and probable rise of economies of Brazil, Russia, India and China. He predicted that by the mid-2030s, the combined GDP of these four countries would be as large as that of the G6 (the G7 minus Canada). In a special interaction with Business Today's Aabha Bakaya, Jim discussed the US exit from Afghanistan and the resulting impact on global governance. He also spoke about Biden's ambitious plans, China's emergence on the world stage, and what this means for shifting global power dynamics? Here are the edited excerpts.



AB: Jim, what is going to be the ongoing role of the US economy, and with it, or indeed separately, the role of the US dollar in the world economy and its financial system? The US has maintained such a massive influence throughout the past 50 years, despite the rise of other economies. Now that we've seen this massive event, Biden's withdrawal from Afghanistan, his ambitious stimulus programme, how do you see things changing?


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Jim: Dangerous to give too much lasting importance to the role of the Afghanistan mess to the US and the dollar. Based on history, (one) could easily have said the same after Vietnam, Iraq, Libya, and so on. And none of them fancied the role of the dollar in particular, and it is peculiar, given the rise of other economies and the relative decline of the US economy. I would caution viewers about that. Certain long term comparisons are to be made with the demise of pound sterling -- the pound played a role in global finance long after the declining of the UK economy -- so, at some point in the future, the dollar will cease to be as important as it is. And at that point, historians will look back and say it was obvious. And it will probably depend on the ongoing performance of the US economy and the performance of not only the Chinese and EU economy especially, but how policymakers want their financial models to develop. My career has spanned the 50-year-history of Bretton Woods and the reason why the dollar continues to have so much influence is that no one else wants to provide that role. And until that changes, the dollar is going to have that not so economically justified role hanging over global finance, relevant to many places including India.

AB: Dollar's potential has been used as a tool for pursuing diplomatic and security objectives. The Trump administration's use of secondary sanctions against countries that did business with Iran was a perfect example of this. If current or future US leaders choose to use the dollar's dominance in a similar fashion -- perhaps against countries doing business with a hostile Afghanistan -- that could have a significant bearing on the currency's future. What are the implications post the withdrawal from Afghanistan? Could it be different this time?

Jim: My suspicion is, the US probably thought, if we continue to use the dollar, and US financial system, in a more aggressive way against what they perceive as hostile states -- and countries that engage with them against our wishes -- that's undoubtedly more powerful and definitely less expensive for the US than these endless ground wars. So I suspect that's part of the process. It will be important to see some evidence of that if countries do end up supporting the Taliban in Afghanistan in a way that America chooses to not desire. And as I said, it's particularly true in China, as well as post-Merkel Germany… relevant to see how Chinese and Europeans want to see the RMB financial system and Europeans want to see Euro. Who knows, maybe in 30 years time, the same question will be relevant to India and the rupee.

AB: In a recent article, you mentioned that it is better not to underestimate the US but that Biden has taken huge risks with the US fiscal position. What's the potential downside of a failed stimulus? And is that the biggest risk… a tighter fiscal policy… especially if inflation returns? What are the implications for the global economy?

Jim: I'm going to give you a contradictory answer. I think it's too early to judge. Throughout my career, it's been tempting to write the US off… 20 years ago, with 9/11, how easy it would have been, and it was a mistake, same after 2008. It's dangerous because the US has proved to be remarkably adaptable and flexible to many things that happen. That said, Biden has taken over against the background of an already weak fiscal position, and taken extraordinary fiscal risks. Two big risks that'll accelerate the US decline. One is what economists would call the no-multiplier effect… where it does not raise investment and where trend growth remains just above 2%... which will be seen as a meaningless fiscal stimulus next few years. And certainly… if it unleashes a sustained pick-up in inflation… it will mean the end of the Fed reserve board's policy going back to 2007 and going back to the early days of my career in the 1980s... the Fed would then have to think differently and that would be a huge constraint for anything to do with consumers in the US and also corporate borrowers who have a lot of leverage. Will have to watch closely next 12-18 months to see what the evidence is.

AB: From BRICS, it's really been India and China. If China becomes as large as the US, the question arises… What does China want or what will it perhaps evolve to want, on the global scene? Will it want to truly influence the global financial system and crucially, contribute more responsibly towards it? How do you see Chinese policy evolving? Is it headed in that direction and if not – why not? What's holding them back?

Jim: Peculiar part of my answer to you -- historically for me, predicting the next five years and beyond for China, I always found relatively straightforward answers despite the uncertainty of these things. Because, I found clarity about Chinese policy, unlike other international commentators, and I never feared the direction China was going on would be different from the ongoing 5 yearly estimates would indicate. Now I see two dilemmas. The apparent crackdown Xi is continuing to make is linked to this desire for more equality… (it) raises risks about further disincentivising parts of domestic economic growth. It discourages risk-taking by private individuals about being penalised savagely by the government and also the consumers.

So it raises risks to Chinese growth at a time when the labour force has definitely peaked. So the dynamics for growth in China is not as good as in the past. Secondly, not clear to me whether the Chinese have a truly developed chance on how they want to engage with the rest of the world.

You can see it with the one-belt-one-road initiative, which in many ways has been huge a disappointment. It is noticeable the complete lack of dialogue and involvement of India. If China can't truly engage in a constructive way with important neighbours in the region, it shows how difficult it is to be a bigger accepted global player the same way the US has been for the last 50 years. China will have to figure all these things out. It's difficult for China to find a stable relationship with the rest of the world. Got to change how they engage.

AB: Biden towards China – how detrimental can it be for the world economy, for the US, to turn its attention from the Middle East to China in an antagonising manner rather than taking a constructive approach? Instead of focusing on domestic concerns and using economic and even military threats? Economic collaboration has led to peace for over 40 years… but the complaints against China are growing -- from technology theft, policy on Hong Kong, Wuhan and coronavirus. Is this looking like a potboiler? We saw a pause in the trade talks during the worst of the pandemic, what do we expect to see next?

JIM: (We) Will see further problems between the two countries. It won't be that stable either. The US will have to change. Aspects of the US stance are rather naive. (It) seems to be based on the idea that they want China to become a democracy and shows the lack of understanding about various aspects of China's history and crucially the implicit support the Chinese government has from its population.

Even though it's different, the US should be a bit more bruised about the experience of trying to impose the US-style democracy on many smaller places and it hasn't worked in those. So that's a mistake in approach. There are obviously many important values the US leads and represents like human rights and laws on trade and China has to find a way of behaving more consistently with what many of us are used to. Or introduce a gentler way of why they do what they do because for many of us it's hard to understand. Because of China's importance, the US can't afford to persist on a permanently antagonistic stance. It will hurt us and the rest of the world. China has been the most marginally important economic force in the world for the past 20 years and if (you) disrupt it to the point of chaos, it will be bad for everybody.

AB: Finally, let's talk about India. What's working in our favour is the huge influx of foreign capital at the moment, but what are India's growth prospects over the next 20 years?

Jim: India is poised, with favourable demographics, in the next 15 years to be 3rd largest economy in the world, overtaking Japan. Whether that happens or not depends on what Indian policies are. Without this, it will continue to be influenced as it has been by global events and will experience much more erratic cycles of growth vulnerable to global forces. Still conceivable that India could grow close to double digits in the next 15-20 years.

country
Source: www.ipsnews.net

RIO DE JANEIRO, Sep 22 2021 - Amid scepticism and a lack of public interest, domestic crises and the backdrop of Covid-19, last week the BRICS countries delivered on their commitment to hold an annual summit without showing the signs of disunity that has beset the group in recent years.

So what still holds the bloc of so-called emerging nations together?

In a virtual event, the heads of state of host country India, Brazil, Russia, China and South Africa renewed the group's pledge of cooperation for the thirteenth time, in an event that passed without incident, unlike the barbs of last year. It also failed to attract much public interest.

Internet searches for BRICS-related news during the summit fell to one of their lowest points levels in the group's history, according to Google Trends. Online searches usually peak in popularity during the event but have rarely sparked as much interest as the 2014 summit, when the bloc launched the New Development Bank (NDB).

Scepticism towards the progress of the bloc pervades. It launched in 2009 with industrialised nations in the grip of the financial crisis with great – perhaps too great – expectations over its potential to redefine global governance. Today, not even one of the BRICS' most enthusiastic supporters, the economist Jim O'Neill, who coined the group's acronym two decades ago, seems impressed with the latest developments.

"The bloc's ongoing failure to develop substantive policies through its annual summitry has become increasingly glaring," O'Neill wrote after the event.

BRICS' first decade of success

O'Neill's frustration derives from what he recalls the "roaring success" of the four founding BRICS nations first decade. South Africa joined the group in 2010.

In 2009, Russia hosted the first summit, seeking a more active voice on global economic affairs in response to the devastating financial crisis.

In its early years, "countries pushed for reforms of the International Monetary Fund and the World Bank and offered an alternative to the international financial order by creating the NDB," said Karin Costa Vazquez, of the Center for BRICS Studies at Fudan University.

At that time, and excluding Russia, countries formed the BASIC group, offering an alternative voice in international climate negotiations after the "failure of developed countries to define a climate agenda" and the collapse [of COP15] in Copenhagen", said Izabella Teixeira, who was Brazil's environment minister from 2010 to 2016.

"The BRICS were an environment of important political dialogue," Teixeira told Diálogo Chino. "It was a super interesting moment of confidence building. There was an informality in the conversation among the ministers." The group's diplomatic role, Teixeira added, "was absolutely important" in the negotiations that would later culminate in the 2015 Paris Agreement.

From then on, however, experts chart the emptying of the BRICS as a group, as economic and political crises burdened member countries. It witnessed recession in Russia, South Africa and Brazil, tensions between China and India and the belligerent anti-China rhetoric of Jair Bolsonaro, who became president in 2018 and began to deconstruct environmental policies and isolate himself diplomatically.

"The country has gone against the world," Teixeira said.

BRICS retains relevance

Although the heyday may be behind it, BRICS is still relevant today, according to Costa Vazquez. "The BRICS is the only space that the largest emerging economies in the world have to coordinate positions and propose initiatives of common interest to the five members. This is no small thing when we are talking about more than 30% of world GDP," she said.

Vazquez argues that in order to keep functioning, the multilateralism of the bloc has given way to more bilateral agreements. As such, it is more flexible, limiting cooperation when interests diverge and resuming and expanding it when they converge.

Since BRICS doesn't function as an economic bloc, it does not have a formal statute of rules that dictate its behaviour. The cost of membership is low, and the diplomatic benefits are still significant, according to Oliver Stuenkel, from the Getulio Vargas Foundation.

Stronger diplomatic relations can also reflect booming bilateral trade. For example, trade between Brazil and China should hit a new record in 2021. Last year, bilateral trade topped US$100 billion for the first time and as of last month, it had already surpassed US$93 billion.

Unsurprisingly, Bolsonaro adopted a milder tone on China at the recent BRICS summit. Meanwhile, China's President Xi Jinping said that, regardless of the difficulties, the BRICS will maintain solid and constant cooperation.

NDB offers hope

Despite few new articulations on historic areas of cooperation such as climate, the main product of the BRICS, the NDB, is gaining momentum. Paulo Nogueira Batista Júnior, and economist who was vice-president of the bank between 2015 and 2017, criticised the slowness of the NDB to produce results and fulfil its aspirations of becoming a global development bank.

Today, however, Batista Junior sees advances. "In the last two years, the bank seems to have moved a little more and achieved some results," he said. "For example, it has approved projects, including support programs to combat Covid-19, continues to hire employees, built its headquarters, developed technically and opened the process of inaugurating new members."

In early September, the NDB announced the addition of Uruguay, the United Arab Emirates and Bangladesh to its membership. In its six years of operation, the bank has approved some 80 projects, with investments totalling US$30 billion. The bank has also made US$10 billion available to BRICS member countries to combat Covid-19.

"The bank is already part of the landscape," said Batista Junior. Can the same still be said of the BRICS bloc?

Russia
Source: tass.com

Within the framework of the SCO, BRICS and CSTO countries take practical steps to enhance global stability, regional security as well as trade and economic relations

MOSCOW, September 21. /TASS/. The role of Shanghai Cooperation Organization (SCO) and a number of other associations with Russian participation is not to team up against anyone, but act for the benefit of all people, Secretary of Russia's Security Council Nikolay Patrushev said in an interview with the Argumenty i Fakty newspaper.

"The role of these organizations has expanded in today's world. It's an objective tendency," the official said, commenting the activities of the SCO, CSTO and BRICS (Brazil, Russia, India, China, South Africa).

As Patrushev emphasized, in particular, BRICS states account for more than 40% of the world's population, a quarter of the world's GDP and 22% of global trade turnover. "for instance, if we look at the purchasing power parity, BRICS has already surpassed the G7 in terms of GDP (33% opposed to 30%)," he added.

Within the framework of the SCO, BRICS and CSTO countries take practical steps to enhance global stability, regional security as well as trade and economic relations. On an ongoing basis, these organizations cooperate to counter terrorism, transnational crime, drug trafficking, illegal migration, piracy and cybercrime, as well as the spread of infections.



"I won't list all the areas in which our countries have been cooperating. It is of great importance that these activities are aimed at the benefit of all people. Teaming up against someone is not our principle, " Patrushev concluded.

He stressed that Moscow favored the expansion of equal multilateral cooperation, the development of universal international institutions, joint efforts to reduce global tension and strengthen international security. "If the West establishes organizations to solve short-term issues, deter countries that it does not like and suppress its own allies, Moscow and its partner countries of the SCO, BRICS, EAEU, CSTO and CIS do not have a shadow agenda. Our countries cooperate to guarantee national security as well as global stability, the supremacy of international law, the UN's coordinating functions, the rejection of interference in the domestic affairs of independent nations, and a commitment to defend their national interests and respect the sovereignty of other countries".

Russia
Source: tass.com

SHANGHAI, September 22. /TASS/. The cooperation between Moscow and Beijing continues to strengthen in a progressive manner, notwithstanding the COVID-19 restrictions, Russian Ambassador to China Andrei Denisov said on Wednesday.

"The pandemic has significantly affected all spheres, even diplomacy. However, despite all the restrictions, Russian-Chinese cooperation continues to strengthen in a progressive manner. The majority of contacts went online, the leaders of both countries continue to communicate by phone and through videoconferencing on a regular basis, jointly participating in various summits such as the SCO, BRICS, while the G20 and APEC ones lie ahead, in addition to a wide range of other formats," the ambassador noted.

He stressed that last year, the volume of bilateral trade shrank but not significantly, and a substantial increase was noted in the eight months of 2021. The e-commerce segment has been growing at a higher rate and the share of net settlements in foreign exchange between the countries has been on the rise.

A number of bilateral events are scheduled online till the end of the year, the Russian envoy added. Among them, he mentioned the meeting of parliamentary speakers and prime ministers, which according to him, will be held on November 30, and the meetings of the intergovernmental commissions at the level of deputy prime ministers and a number of sub-commissions headed by ministers.



The battle against coronavirus became the new area of work, the ambassador noted, and amid pandemic "Russian-Chinese relations proved their effectiveness". In spring 2020, Beijing urgently delivered several hundred million units of personal protective equipment, particularly in short supply at that time. That was of particular importance, especially at the early stage before establishing the necessary volumes of adequate production in Russia.