Information Bulletin of the BRICS Trade Union Forum

Monitoring of the economic, social and labor situation in the BRICS countries
Issue 39.2023
2023.09.25 — 2023.10.01
International relations
Foreign policy in the context of BRICS
A best-case scenario for the Global South (Наилучший сценарий для глобального Юга) / Russia, September, 2023
Keywords: expert_opinion, global_governance

In the past several months it has become fashionable to talk up the theme of China's economic demise and the ascendancy of India as the main growth engine of the Global South. Mass media, academic gurus, fund managers and corporates are starting to argue in favor of re-directing financial flows away from China to India. India's successful G20 chairmanship further added fuel to discussions about the possibility of a grand shift in the Global South universe, with India leading not only in growth, but also in addressing global issues. A rise for India's economy would surely be a welcome result for the fortunes of the Global South, but could this scenario be further improved upon? In a world that is so vainly led by "zero-sum" impulses, is there any scope for "win-win" patterns to become more prevalent? In particular, could there be the possibility of an amelioration in the China-India economic relationship that takes the global wealth creation to a whole different level?

In fact, there may be reasons why an expansion in the economic cooperation between China and India could become the best-case scenario in the dynamics of Global South economic growth. First and foremost, both countries account for nearly a third of the global population and the welfare dynamics in these two countries have the greatest global impact in terms of poverty reduction, environment and other global issues. I would even go so far as to state that in terms of "allocative efficiency" it would be more optimal from the point of view of global welfare dynamics, if more of the economic growth was concentrated in high population areas with sizeable scope for catch-up growth – as is the case with China and India. Furthermore, for all the rhetoric about the differences and tensions between China and India, the two developing giants share a lot in common in terms of the stance on the global arena. Many of these common projects that may potentially boost bilateral economic cooperation between China and India are concentrated in the BRICS platform:

  • A common development bank – the BRICS New Development Bank
  • A common platform for alliances with third parties: BRICS+
  • A common platform for coordinating macroeconomic policy and anti-crisis measures: BRICS CRA
  • Joint BRICS coordination in international economic organizations, such as the IMF
The mutual trade dynamics between China and India exhibited a rising trend in the past several years, with the 2022 trade turnover reaching an all-time high of more than USD 135 bn. But that trade figure could well become far more ambitious if the indications of a gravity model were anything to go by. In particular, China's mutual trade with Russia is on course to exceed USD200 bn in 2023, even though India in terms of the size of GDP is notably greater than Russia. At the same time, the US trade turnover with China is several times higher than with India, despite the common border and geographical proximity between India and China. The potential for expanding China-India trade is further magnified by notable complementarity in the trade patterns: while China exports mostly manufactured goods, India's trade flows to China are concentrated in primary and semi-finished products, with scope to also make gains in services exports.

In the investment sphere, recent statements from India's Rajeev Chandrasekhar, minister of state for electronics and information technology, suggests that the country is open to greater capital flows from China. A key dimension to the India-China investment partnership is the connectivity track – aligning mutual economic trade with greater transportation connectivity would benefit both economies as well as the in-between economies such as Nepal, Bhutan, Burma, Central Asian economies. These are mostly landlocked economies that would greatly benefit from greater connectivity with their neighboring partners. As with trade, there is a significant element of complementarity between the connectivity frameworks of China and India – in the case of the former it is mostly about the East-West transportation corridors in Eurasia, while in the case of India there is more emphasis on the North-South axis. The China-India border at nearly 3,500 kilometers is the second longest land border segment for India, which is further magnified by the scope for connectivity with neighboring economies such as Nepal and Bangladesh. The China-India economic partnership could then set up a fast-track for catch-up growth in the developing world, for the reduction in poverty levels and expanding the potential for connectivity projects.

The India-China partnership could also transform the pattern of global economic alliances. At the global level, along with the regional Indo-Pacific QUAD economic partnership there could be a more global QUAD that brings together the US and the EU from the North and China and India from the South. Apart from the greater scope for a more active advancement of the BRICSBRICS+ partnership there may be more latitude for pan-Asian integration initiatives as well as the consolidation of Global South platforms in key international fora (such as G20). In view of the criticality of the China-India relations for the future of the Global South economic prosperity targeted mechanisms need to be created that would perpetuate and reinforce the China-India economic linkages within the broader framework of cooperation among developing economies. Importantly, as with trade and investment there is substantial degree of complementarity in the economic alliances that may be forged by China and India together on the international arena – India may become a key gateway for the Global South in the outreach to the developed economies, while China may forge ahead with its BRICS+ platforms that expand the possibilities for South-South economic cooperation.

An upgrade in bilateral economic cooperation between China and India could thus result in a notable improvement in the economic performance of the global economy and the Global South:

  • a more inclusive and open paradigm of North-South relations compared to a scenario of China and India acting separately
  • a major boost for BRICS that essentially deals away with the single most important barrier to its development
  • a BRICS++ paradigm supported by both India and China that includes cooperation with advanced economies and their development institutions can provide a basis for a more sustainable globalization effort
  • a re-direction of mutual investment flows to the Global South
But how would all this cooperation framework in China-India economic relations emerge in view of the geopolitical frictions between the two giants of the developing world? One possibility is that the Global South continues to ascend economically and politically on the global arena, with the growing economic potential from mutual cooperation starting to modify the "prisoner's dilemma" payoff matrix in which China and India are currently locked. The pros of economic cooperation will start to outweigh the illusory benefits of wrangling in bilateral relations.

In view of the above considerations, some of the priority initiatives that could be launched by China and India in the near term include:

  • China and India aligning economic development strategies vis-à-vis the Global South, including with respect to SDGs
  • an ambitious target for increasing bilateral trade
  • a co-integration of China's BRI and India's connectivity projects
  • a roadmap of joint trade liberalization
  • a formation of a bilateral portfolio of "priority investment projects" that may be overseen by NDB
  • joint support initiatives for the least developed economies, including with respect to Africa
  • contingency plans for common stabilization/anti-crisis/stimulus/trade liberalization measures targeting the Global South and the global economy
Overall, the emergence of a strong China-India economic partnership could be the single most powerful wealth-enhancing transformation in the global economy. Within the Global South space such a partnership would represent the best-case scenario of generating greater South-South trade and investment flows, with developing economies likely accelerating their catch-up growth vis-à-vis developed economies. The high degree of complementarity between China and India in trade, investment and economic alliances provides ample scope for such a partnership to benefit the Global South. And while many will quickly dismiss the possibility of a China-Indian partnership as utterly unrealistic due to geopolitics, nothing is impossible in the world of alliances – in a matter of years earlier foes turned into pragmatic allies. And when economic considerations become a priority, the case for a higher level of India-China economic cooperation is too strong to dismiss.

Image by BedexpStock via Pixabay

                In Scope and Depth: Ways to Strengthen BRICS' Institutional Framework (В масштабе и глубине: пути укрепления институциональной базы БРИКС) / Russia, September October, 2023
                Keywords: global_governance, expert_opinion

                The article explores ways to ensure the internal consolidation of the BRICS group, which is at a crucial stage of its development due to the sharply changed geopolitical situation. It emphasizes that the issue of BRICS' enlargement, which has taken central stage lately due to the desire of more than two dozen states to join it, should not sideline the task of deepening economic interaction within the group, structuring it further, and turning it into a full-fledged economic cooperation organization. The authors conclude that one of the main reasons for the difficulties encountered by the BRICS member states while conducting joint activities and for the "dispersion" of BRICS' efforts is the lack of a comprehensive strategy, that is, clearly defined ultimate goals and parameters of the partnership. The article examines the advantages of adopting a concept of the BRICS common economic space as an integral plan that sets the direction for the group's long-term development. The article outlines practical steps and areas for building a necessary system of institutional mechanisms and instruments that are critical for asserting BRICS' role of a distinct macroeconomic entity in the world economy.
                BRICS, institutional development, common economic space, long-term strategy.

                Download For citation, please use:
                Babaev, K.V. and Lavrov, S.V., 2023. In Scope and Depth. Russia in Global Affairs, 21(4), pp. 5–8. DOI: 10.31278/1810-6374-2023-21-4-124-137

                At the recent BRICS summit its five member states announced the admission of six new countries aspiring to join the group (their membership will come into effect on January 1, 2024). Such a fundamental move (the BRICS "core" composition remained unchanged since 2011) will not only require forging common ground among the BRICS 11 members and formulating shared objectives but will also influence cooperation modalities within the group and affect the agenda.

                If the scope of the decision came for some as a surprise, it is worth recalling that since 2022 BRICS' prospects have mainly been linked to its enlargement. The desire to join the group has been voiced by a number of states, including Saudi Arabia, Egypt, Turkey, Algeria, the UAE, and Venezuela. Argentina and Iran were the first to formally apply for its membership. Also, the question of bringing in new states and regional associations into the BRICS+ format has been actively discussed (Arapova and Lisovolik, 2022).

                The aspiration of various states to join one of the most promising multilateral associations is a sign of its growing importance and the attractiveness of the declared principles and model of relations. The explosive rise of interest in this association in 2022 marked a deep transformation of the world order due to the lack of trust in the West as a guarantor of stability and economic development (Global Times, 2022).

                But spatial expansion is just one of the factors that boost influence and global power. New admissions cannot replace internal structuring, if one, of course, views BRICS as something more than just a prestigious "dialogue platform" or a "club diplomacy" instrument.

                Over the past fifteen years, the association has developed a broad network of ties, including foreign policy coordination, broad economic partnership, compatibility of national legislation, standards and practices, own financial and investment institutions (NDB, Contingent Reserves Arrangement), not to mention joint projects in the field of advanced technologies and fundamental research, and broad contacts in sports, youth policy, culture, and education. An agreement has been reached on the joint use of remote sensing satellites. Naming areas of joint activities alone shows the evolution of the group into a comprehensive partnership (currently the BRICS cooperation network includes more than 60 formats) (BRICS Russia Expert Council, 2020).

                Russia is not interested in maintaining BRICS' dynamics merely by "bringing in fresh blood," as Chinese President Xi Jinping has put it, and pushing into sidelines the goal of its internal consolidation and transformation into a full-fledged organization.

                The group's potential as a factor in the global balance of power has not been fully tapped yet. In terms of global governance institutions, for example, "so far, the impact of the BRICS is limited" (Duggan et al., 2022, p. 478). The BRICS countries have so far achieved very modest results even in having the IMF and World Bank voting quotas revised in their favor (which was one of the few concrete tasks put on the agenda since the creation of the association). This task was set in the declaration of the first BRIC summit in 2009 and was reiterated in the Beijing Declaration adopted at the 14th Summit (2022).

                The overall quota of votes held by the BRICS countries in the IMF is 14.7%, even though they accounted for about a third of global GDP in 2021, a fifth of world trade, and about a quarter of direct investment, with foreign exchange reserves making up about 35% of the world total (Kremlin, 2022). Some experts note "the cumulative dissatisfaction with the actual results of the association's work over the past ten years as many initiatives, including the strengthening of developing countries' voice and reforming global governance institutions, have remained slogans" (Razumovsky, 2022). "There are those who are skeptical that BRICS has achieved much since its inception, that it is only a framework for coordination and not an economic bloc or an international organization in the true sense of the word," writes Egyptian observer Mohamed Kamal (Kamal, 2023).

                Indeed, in terms of organizational and legal status, BRICS is not an international organization or an institutionalized interstate association: it has no Charter, no rules of conduct for its members, no mutual obligations, and no administrative body (secretariat) technically coordinating its activities.

                BRICS is an informal association of leading non-Western states that share the values and philosophy of multipolarity and ideological diversity.

                It can be called a framework platform for cooperation, a club of Global Majority leaders.

                A flexible form has both advantages and disadvantages. In 2022, BRICS members encountered the problem of developing acceptable admission procedures, principles and criteria after receiving applications from a number of states. As Georgy Toloraya, Executive Director of the Russian National Committee on BRICS Research, points out, "there is no management mechanism or even a Secretariat that would simply keep record of what the negotiations were about and how they ended… Sometimes the records of negotiations between different parties were compared to reveal significant differences as each side understood something in its own way. So it is elementary: in order to know what countries have agreed to, some kind of coordinating center is needed… " (Toloraya, 2022).

                Foreign researchers note BRICS' vague organizational and legal basis, seeing it as "an unbalanced group… of issue-based countries" with "no grand vision among them" (Duggan et al., 2022, p. 477). "Developed countries are far better provided with dynamic and well-structured integration alliances than the countries of the Global South," says RIAC member Yaroslav Lisovolik (2022a).

                BRICS Common Economic Space Concept

                One of the main reasons why BRICS efforts are so dispersed is the lack of a comprehensive economic interaction concept and development strategy, that is, clearly defined ultimate goals and parameters of the partnership. A possible way to structure the group's practical activities and unite it by an integral and forward-looking plan could be, for example, the adoption of a BRICS "common economic space" (CES) concept.

                It is worth mentioning that we do not make a comparative analysis of the institutional environment in each participating country because the subject of the study is BRICS as a multilateral body. But the very presence of different institutional environments in the BRICS countries is important for substantiating our proposal.

                The concept of CES (also known as a single economic space) is a relatively new phenomenon in international economic relations (Yaryshev, 2009; Bryun et al., 2004). There is no generally accepted definition of it yet. For example, Georgy Velyaminov points out that "such concepts can be considered rather vague, not yet having a clear legal definition" (Velyaminov, 2004, para. 127). However, the notion of a single economic space (SES) as an integration format has become part of the regulatory practice and is used in a number of important international legal documents. Suffice it to recall the Eurasian Economic Union, which advocates a single economic space (see Part Three "Single Economic Space," and Article 2) (Treaty, 2014).

                Russian experts define the CES as follows: "The totality of the territories of integrating countries, the process, formalized by an interstate agreement, of regulating the social division of labor through the abolition of customs restrictions and the creation of a single market of participating countries and a single competitive environment" (Urunov, 2015).

                The characteristic features of the CES include the following:

                1. Different forms and content of functioning institutional environments in the member countries of a regional association;
                2. Differences in the legislation regulating the business activity of economic entities in the participating countries;
                3. Absence of single currency;
                4. Different levels and growth rates of economic performance of countries, on the one hand, and different levels and quality of life, on the other hand;
                5. Visa and visa-free regimes for the travel of citizens between countries.
                "The crucial characteristic is the difference in the form and content of functioning institutional environments in the countries being integrated into a regional association" (Ibid).

                The current state of economic relations between the BRICS countries matches these characteristics. However, the complementarity of the economies, the interest in the development of new forms of economic interaction, the documented task of strengthening the "physical connectivity" of the national economies (Strategy, 2020, p. 4) create prerequisites for the next step. Russian experts see various ways to build a CES: both "hard" and "soft" versions, or a set of measures to develop general or compatible norms and rules of economic regulation without creating supranational bodies (Dolgov, 2010, p. 4). As a model of economic convergence, the CES concept "offers significant advantages to participating countries due to its flexibility and the ability to assume different content and use different tools" (Ibid, p. 9).

                In our opinion, this is an important difference between a CES and a SES as various modes of this integration format. The theory of international economic relations distinguishes four stages of economic integration (from the simplest to the highest): a free trade area, a customs union, a common market, and an economic union. In terms of meaning, the SES format, which encompasses various spheres of economic interaction, is an analogue of an economic union.

                But there is an important semantic nuance: "common" instead of "single." When building a "common" space, it is assumed that the parties not only act as objects of coordinated integration activity, but also retain their agency, individual characteristics, and features. So, a CES emphasizes the boundaries of the joint competence delegated by the participants, that is, the extent to which a CES can be filled with elements agreed upon by sovereign states. This applies, in particular, to the terms and stages of abolishing customs restrictions and creating a single market.

                The Concept of the Common European Economic Space (CEES) between Russia and the EU (Concept, 2003), drafted in the early 2000s, can serve as an example. It seems more suitable than the Eurasian integration experience that led to the establishment of the EAEU, because the former implied a space of interaction between countries with very different institutions and economic activity regulation systems, which is more in line with the current state of BRICS.

                Some provisions of this document, such as those referring to "synergies and economies of scale associated with a higher degree of competition in bigger markets" or setting the goal of "creating opportunities for business operators through common, harmonized or compatible rules as well as through inter-connected infrastructure networks," are quite relevant for BRICS today. The CEES concept, for example, makes no mention of any future free trade area or supranational regulatory institutions. This space includes FTA elements and some features of a single market, but it also implies a number of fundamental principles of an economic union.

                As far as BRICS is concerned, a CES would have yet another advantage as a hybrid integration model—it can integrate different activities formally related to different stages of economic integration into one process, if there is a consensus among the state parties. So, this is, in fact, about choosing the mildest forms of integration.

                Shaping a common economic space will undoubtedly be a gradual and phased process.

                It can also be selective and at each stage cover only those areas/sectors of the economy that have been approved by the state parties, without missing the main goal—business entities should be able to make full use of the competitive advantages offered by the size of the aggregate BRICS market.

                So, BRICS will build a CES at a pace and with the use of tools fitting the specific requirements of the participating countries, and employing certain FTA elements without introducing this regime compulsorily. Based on common interests, the BRICS countries can remove customs barriers and non-tariff restrictions for certain sectors or types of goods. These goals can also be achieved by building new transcontinental supply chains, particularly for the production of high-tech and science-intensive products with high added value; network projects with a multiplicative effect; the creation of multilateral digital and technological platforms, the introduction of best practices, for example, in the field of energy and water conservation, etc. The proposal to form a BRICS CES echoes Yaroslav Lisovolik's suggestion to "cooperate in coordination, moving towards aligning their standards and creating a more open economic space for trade and investment by BRICS states and their regional partners" (Lisovolik, 2022a).

                Developing a Strategic Manifesto

                Another important issue for transforming BRICS into a full-fledged international economic entity is the formulation of a strategic document—a manifesto—guiding its activities. The content of this document could be devised by the member states' experts under the direction of the authorized BRICS academic bodies. This work can be started during Russia's BRICS presidency in 2024.

                BRICS' goals include building a new fair and equitable world economic order, increasing the influence of emerging markets and developing countries in global governance institutions. But this, rather, refers to the creation of a favorable "external environment."

                The association lacks a strategic conceptual document that would outline the desirable path for the development of BRICS as a collective entity.

                In 2020, during the Russian presidency, an updated version of the medium-term planning document—the Strategy for BRICS Economic Partnership 2025—was adopted (the initial document covered the period of 2015-2020). Regarding economic interaction among the BRICS countries, the document named such important tasks as "strengthening physical interconnectivity" and "institutional cooperation." It emphasized that "one of the cornerstones of cooperation is an aspiration to achieving connectivity as a prerequisite for enhancing the grouping's competitiveness" (Strategy, 2020, p. 4).

                It is disappointing that most of the provisions of this Strategy were of a most general declarative nature and did not specify agreed steps and measures or expected results. The authors did not go further than listing possible areas of activity and principles to be guided by. It is important that a new document of this kind for the period of 2025-2030, which would be logical to adopt during the next Russian presidency in 2024, be more specific and clearly state the results to be achieved.

                The signs of movement towards a common economic space can be seen in the totality of long-term framework programs, platforms, and action plans to harmonize the economic policies of the member countries, as well as in the innovation cluster. BRICS' fundamental documents should state that "building/creating a common economic space is considered one of the most important long-term goals." In this case the mosaic of programmatic activities would logically follow from the BRICS comprehensive development concept and contain a strategic vision of the organization's future as an economic bloc. "For the BRICS states to become the foundation of a new world order, the bloc has to offer other countries… new paradigms of development on a global scale… a global development track as an alternative to the one promoted by the West (Lisovolik, 2022a). Mentioning the CES concept in the document, albeit in its most general form, would encourage the participating countries to move from declarative-intentional to real integration.

                The flexible form and content of a CES offer different options for countries. With the political will and readiness of the countries concerned, a CES can also be viewed as an initial, preparatory stage for gradual economic integration. Finally, the BRICS countries can agree to use the notion of CES as a political formula to indicate the general direction for further economic work, postponing its detailed interpretation until the participants become ready for real inter-country economic cooperation.

                Institutional Mechanisms

                Strengthening the institutional framework can play an important role in unlocking the potential of economic interaction, and in promoting economic connectivity and complementarity. Work to improve the BRICS mechanisms will also encourage and streamline the member states' long-term efforts.

                Some practical steps needed for strengthening BRICS' status as an independent macroeconomic entity should be specified. First of all, this is the creation of a system of functional support for economic cooperation—an integral network of instruments, mechanisms, and institutions for inter-country and interstate interaction helping to minimize the negative external impact on trade, economic and investment relations within the group. Such a system, in particular, would allow the member states to securely carry out financial transactions and payments regardless of the global dollar; insure export-import operations, including maritime transcontinental transportation; draw up and use uniform independent criteria for rating economic entities (instead of approaching the world's top three Western rating agencies); create their own commercial dispute settlement institutions; and adapt and harmonize the rules of conducting investment and entrepreneurial activities throughout the entire BRICS area. "This does not necessarily mean confrontation," says Fyodor Lukyanov, head of the Council on Foreign and Defense Policy. "It is much more important to be able to bypass Western institutions and reduce risks from interaction with them by building parallel ways for financial, economic, and trade interaction and avoiding mediation through Western instruments" (Lukyanov, 2022).

                This is not about multiplying framework formats for coordinating intentions, but about creating authorized multilateral institutions that could, within their competence, independently meet the needs of enterprises of the participating countries in certain areas of economic activity (for example, BRICS Arbitration Court). Serious progress has been made in creating independent financial and investment institutions. According to Russian President Vladimir Putin, following the establishment of the NDB and the Contingent Reserve Arrangement, work is underway now to study the possibility of creating an international reserve currency based on a basket of the national currencies of the BRICS countries (Kremlin, 2022).

                It is necessary to develop collective mechanisms for overcoming the negative consequences of the West's unilateral sanctions.

                Today, they are used against Russia and China. Certain compensatory measures may be needed in order to offset, at least partly, the risks and losses from secondary sanctions that may affect BRICS companies. Another important aspect is the development of the insurance services market, primarily for export-import operations. Given the problems Russia experienced after the largest Western companies had refused to insure air and sea transportation to its ports, priority should be given to insuring transcontinental sea transportation operations by own companies of the BRICS countries located at great distances from each other.

                Comprehensive development of economic ties between the BRICS countries is impossible without a legal matrix of cooperation, the harmonization of national legislation concerning primarily business activity, or a BRICS code of economic laws. In order to have a complete set of autonomous instruments, the BRICS countries should promptly create a system of commercial and investment arbitration, widely recognized and covering the entire economic space of the group. This will allow economic entities from partner countries to avoid taking disputes to Western jurisdictions. Russian specialists have made a number of substantive proposals to this effect (for example, in 2021, St. Petersburg State University prepared a draft document on the specialized BRICS arbitration institution for the consideration of investment disputes) (SPbU News, 2021).

                As BRICS creates its own economic community, its member countries get an opportunity to raise their economic cooperation to a new level by establishing transnational consortia or interstate holding companies. By avoiding competitive rivalry, such entities could combine advanced scientific and technical developments and technologies, material and financial resources of the participating countries, and take advantage of the size of the aggregate BRICS market. Establishing a BRICS commodity exchange operating in national currencies, as Russian experts have proposed, also seems quite promising (Kondratov, 2021).

                * * *

                The decisions made at the 15th BRICS Summit in Johannesburg are likely to lead to the group's revolutionary transformation. It is yet to be seen how effective and viable the new composition will be.

                However, it is already evident that doubling the number of participants will complicate consensus decision-making.

                This factor makes it ever more important to start upgrading the association's institutional basis in order to avoid the weakening of its inner cohesion in the enlarged format.

                As BRICS Chair in 2024, Russia should take practical steps to expand economic interaction instruments and strengthen the common institutional framework. Amid unprecedented Western sanctions and a hybrid war against Russia, the advantages of a BRICS common economic space, the development of cooperation and ties with the member countries are of paramount importance to us. Russia may give BRICS companies broader access to its market on the basis of reciprocity. Preferential investment or trade regime can be granted selectively for certain categories of goods, services, or technologies, for example, high-tech science-intensive products with high added value.

                Another possibility is the creation in Russian territory of bi- and multilateral special Hi-Tech zones jointly with the BRICS partners. Such zones have proved quite efficient in China and can boost the development of artificial intelligence, robotics, and big data technologies. Russia is interested in building new reliable supply chains. It would be worth discussing, within the BRICS framework, the joint development of the North-South transport corridors that are of interest to at least three BRICS countries—Russia, China, and India, as well as the development of the Arctic Sea Route and the Arctic as a whole, which may interest Brazil and South Africa. The creation of alliances of BRICS air or railway companies and the joint use of the satellite network to improve information and communication connectivity will significantly deepen economic cooperation in specific areas.

                It is important for Russia to ensure that BRICS makes tangible progress in these areas in the short and medium terms. This will facilitate its economic and technological sovereignty and also contribute to the formation of a multipolar world order.

                              Not Against, but Beyond the West. Ukraine Crisis Draws a Line under Colonial Times (Не против, а за пределами Запада. Украинский кризис подводит черту под колониальными временами) / Russia, October, 2023
                              Keywords: expert_opinion, political_issues

                              For citation, please use:
                              Lukyanov, F.A., 2023. Not Against, but Beyond the West. Russia in Global Affairs, 21(4), pp. 5-8. DOI: 10.31278/1810-6374-2023-21-4-5-8

                              By the fall of 2023, the military campaign in Ukraine had become an integral part of the international political and economic landscape. Currently, no end of hostilities is expected: neither a decisive victory of either side, nor a peace agreement based on a compromise seems likely in the foreseeable future. The conflict remains the main factor affecting the global balance of power.

                              It was clear from the very beginning that relations between Russia and the West were sliding into the most acute version of the Cold War. But the fierceness and persistence of the clash exceeded all expectations. In February 2022, few could imagine the current degree of NATO's involvement in Ukraine or such a complete demolition of all ties between Russia and Western countries. All estimates made at the initial stage proved wrong. Moscow incorrectly assessed Ukraine's military, political, and social disposition, as well as the readiness of the United States and its allies to go so far in supporting it. The West erroneously believed that the Russian economic system would not withstand an external blockade, while the world economy would keep functioning without Russia relatively painlessly. The parties were also wrong in assessing each other's ability to force the other side to change the course and make concessions.

                              Errors made during the initial phase were the result of stereotypes formed earlier. Nuances aside, the opponents exaggerated each other's vulnerability. They still do, to some extent. The game has evolved into the drawn-out Mittelspiel when everyone tries to mobilize his advantages and achieve decisive superiority in order to get out of the stalemate trap. The confrontation between Russia and the West is intensifying but not changing in quality. Some in Russia call for changing the quality, too, by shifting the focus to the nuclear factor, but this is not a prevalent or official opinion yet.

                              Major changes have occurred in the part of the world that is not involved in the conflict but affected by it. The World Majority concept, firmly established in Russia as a reference to the non-Western part of the globe, is somewhat confusing, because it suggests a consolidated community while the essential feature of this majority is its heterogeneity as opposed to the universal value-based cohesion imposed by the West. However, this term covers an array of countries that do not want to be drawn into the grapple and continue the tradition of Western politics. The Ukraine crisis is a product of Western political culture, and Russia, which has assumed an extreme anti-Western position, also acts (or is forced to act) in the Western military-political paradigm.

                              The World Majority becomes increasingly convinced that the influence of those who have long dictated the rules in the international arena is declining.

                              The long-awaited multipolar world has turned out to be more complex than was expected. It is not about several centers of power that somehow communicate with each other but about the emergence of a network of diverse relationships between different players of asymmetrical stature. These ties, horizontal and vertical, are not quite ordered, and the differing stature adds nonlinearity.

                              The World Majority can draw several conclusions from the Ukraine crisis. Firstly, there is a power that challenges the West openly and without reservations, and the West cannot do anything about it no matter how hard it tries. This allows the non-Western world to act more and more independently. Secondly, the Global North states are trying to sort out relations with each other, giving no thought to how this will affect the Global South. Thirdly, the policy of distancing in general while being involved on specific issues can bring good dividends; one just needs to use it skillfully. Fourthly, countries can and should develop fruitful relations with each other without major powers; the latter insist on their indispensability but, failing to solve the problems of countries and regions, drive them deeper into an impasse instead.

                              The latest BRICS summit, held in South Africa in the summer of 2023, reaffirmed these trends. Faced with a critical dilemma between "expanding the group or deepening cooperation," its members chose the former. Having invited the first six countries, the group cannot put off the next step—highly respected powers are no less eligible. BRICS has apparently opted for quantitative growth, which does not automatically imply a qualitative one. This has its own logic.

                              BRICS (BRIC at first) was a product of the marketing strategy advanced by American investment bankers (to advertise rapidly growing markets), but a few years later it suddenly acquired its own political dimension. All by itself, this marked a change in the global balance of power—the emergence of a group of major influential non-Western countries determined to pursue their own policy on the international stage. All four, and eventually five, states are united by one criterion, not articulated but quite readable—they have full sovereignty, that is, the desire and ability (due to their combined potential) to pursue independent foreign and domestic policy. In fact, there are few such states in the world as some lack the required military-economic resources and others join binding alliances, thus voluntarily limiting their sovereignty. In this sense, BRICS' current composition appears to be quite organic not formally, but in terms of its essential characteristics.

                              The newcomers are diverse in all respects, but they do not necessarily fit into the above scheme. This suggests that the decision-makers opted for diversification rather than consolidation. The group will keep growing, but there are no plans to create an institutional mechanism, at least for the time being. Actually, the more participants, the more difficult it is to launch such a body. In point of fact, even five countries have serious differences, let alone eleven or more.

                              The advocates of BRICS as a more cohesive group are disappointed. But is cohesion achievable in principle? Commitment to a common worldview and geopolitical interests is required precisely in and around the Atlantic community. Others insist on their right to decide everything on their own. This trend seems to be prevailing internationally, while the Western approach will continue to steer countries belonging to the relevant cultural sphere only.

                              The World Majority becomes increasingly convinced that the influence of those who have long dictated the rules in the international arena is declining.

                              We can hardly talk about its anti-Western orientation: except for Russia and now, perhaps, Iran, none of the current and likely future participants openly wants to oppose the West. However, this reflects the essence of the coming era when most states will have to constantly choose partners to solve their problems, and they may differ for different problems.

                              By starting its expansion, BRICS abandons the principle of exclusivity, which was considered important for prestige. And since this has already happened, the group is seeking maximum coverage. For example, China, espousing common destiny for humankind and having potential clearly surpassing all others, does not really need BRICS to be institutionalized. India, which carefully protects its multi-alignment policy, that is, cooperation with everyone without restrictions, also prefers to see BRICS as a heterogeneous group. New Delhi is least interested in the growth of antagonistic sentiments vis-à-vis the West within the group.

                              Russia stands apart as it is the only country among the current members that is locked in a severe confrontation with the West. And since BRICS cannot be transformed into an anti-Western alliance, Moscow can welcome the group's gradual but maximum possible expansion to turn it into the most representative community whose members interact with each other bypassing Western pressure or defying it. This would be enough for the forthcoming period.

                              These are the factors that are shaping a new international framework. It has not come into being yet. But when the current conflict ends, whatever the outcome for its direct participants, it is the countries of the World Majority whose positions will strengthen the most—not only China, which is often mentioned as the winner of the confrontation between Russia and the West, but a group of countries that previously played a subordinate role but are now gaining freedom of action. I dare suggest that world politics may become more rational, because pragmatic interests will be declared frankly and in a business-like manner, no longer disguised by all sorts of messianism, which the Global North has been practicing so deftly for centuries. And from this point of view, one can say that the Ukraine crisis really draws a line under colonial times in a broad sense.

                                            Why BRICS matters for Pakistan (Почему БРИКС важен для Пакистана) / Russia, October, 2023
                                            Keywords: brics+, expert_opinion

                                            BRICS represents Brazil, Russia, India, China and South Africa, encompassing 41% of the global population and 24% of the global GDP. The 15th BRICS Summit being held from August 22 to 24 in Johannesburg, South Africa. About 40 countries participated in this year's BRICS summit where some key decisions were made adding six new members namely Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the UAE. The new membership will be effective from January 1, 2024.

                                            In a historic first, Pakistan's participation in the BRICS's seminar, ahead of the summit, was encouraged by Beijing, which wants to integrate Pakistan into the alliance. However, Pakistan surprised the international community for not being the part of BRICS's summit in Johannesburg. By joining BRICS, Pakistan could potentially benefit in multiple ways.

                                            First, BRICS is the emerging power Centre of the world. Joining BRICS could open up economic opportunities for Pakistan. The country could engage in trade with other member states, benefiting from their growing economies. Pakistan's exports could find new markets within the framework of BRICS. Muhammad Karim Ahmed analysed, "These BRICS countries are emerging economies and they have improved their country, their economic conditions, manufacturing, and found markets for themselves through joining the bloc". Certainly, the economic prosperity will minimize unemployment, poverty and illiteracy in Pakistan.

                                            Moreover, developing nations are dissatisfied with the stringent conditions imposed by western-dominated financial institutions like International Monetary Fund (IMF). BRICS has also created two new financial institutions, the New Development Bank (NDB), also known as the BRICS Bank and the Contingent Reserve Arrangement (CRA). CRA, which has a capital of more than USD 100 billion, can help member states withstand any short-term balance of payment crises. Pakistan if allowed in BRICS, can easily access the USD 100 billion CRA as well as the comparatively lenient loan conditions of NDB, without improving the functioning of the Pakistani state.

                                            Second, BRICS membership could boost Pakistan's geopolitical leverage by providing a platform to collaborate with other emerging powers on global issues. Pakistan has always been blackmailed by its traditional allies. Becoming a BRICS member could offer Pakistan an opportunity to diversify its diplomatic relationships. As a BRICS member, Pakistan could potentially demand for reforms in global governance structure. This could lead to a more equitable international order.

                                            Third, some political analysts suspected that Pakistan's inclusion in BRICS may generate disturbances with India, leading to a defunct group. However, it appears that India's opposition to Pakistan joining the bloc is dying down. Recently, Indian Prime Minister Modi has supported BRICS expansion. South African president also welcomed Modi's remarks, who remarked, "delighted to hear India supporting expansion of the BRICS". Senator Mushahid Hussain Syed told Arab News that "First of all, Pakistan should apply for membership in BRICS, where the lead role is with China and where India is the weakest link due to its proclivity to be part of the West's new Cold War against Beijing." So, BRICS membership will certainly increase Pakistan's diplomatic leverage with regard to India in the region.

                                            Fourth, BRICS membership could also alleviate Pakistan stature in other regions of the world. For example, in East Asia there's Regional Comprehensive Economic Partnership (RCEP), again China is in the lead there, but Pakistan isn't 'Looking East'! Why? Somewhat inexplicable, not seizing opportunities when these arise.

                                            Fifth, BRICS membership will also introduce correctness in Pakistan's foreign policy objectives. International community brands Pakistan as a terror sponsor state. Through joining BRICS, Pakistan could divert its security-oriented approach in foreign policy in line with BRICS manifesto. Even India used BRICS forum in Xiamen to condemn Pakistan-based militant groups like Lashkari Tayyaba. So, Pakistan could also use BRICS forum to project its soft image in the world.

                                            In the past, Pakistan has suffered immensely by aligning itself with one group against other. There appear clear indications that Russia and China have shown clear intent to use BRICS to counter G-7, the grouping of powerful wealthy western nations. By orienting its foreign policy away from block politics, Pakistan could potentially get more economic benefits.

                                                          Russia-Ukraine Crisis: Can Multipolar BRICS-11 Ensure Global Peace and Stability? (Российско-украинский кризис: может ли многополярный БРИКС-11 обеспечить глобальный мир и стабильность?) / Russia, September, 2023
                                                          Keywords: brics+, expert_opinion

                                                          At the United Nations General Assembly high-level meetings held in New York, a number of global leaders including those from Africa vehemently called for global peace and sustainable development. Russia and South Africa, both members of BRICS association attended the September meetings, and as it was during previous summits and conferences have renewed their commitment for ensuring peace within the principles of the Charter of the United Nations.

                                                          "As we gather here, much of humanity is confronted by war and conflict. Solidarity and trust between states is being eroded. At the moment when every human effort should be directed towards the realisation of Agenda 2030, our attention and our energies have once again been diverted by the scourge of war," South African President Cyril Ramaphosa said during his speech delivered there in New York.

                                                          Ramaphosa added that South Africa has consistently advocated for dialogue, negotiation and diplomacy to prevent and end conflict and achieve lasting peace. From the experience of his country's own journey from apartheid to democracy, South Africa highly values the importance of engaging all parties to conflicts to achieve peaceful, just and enduring resolutions.

                                                          It is these principles that inform South Africa's participation in the African Peace Initiative, which seeks a peaceful resolution of the conflict between Russia and Ukraine. In this conflict, as in all conflicts, and that the UN Charter's principle of respect for the territorial integrity of every country should be upheld.

                                                          South Africa supports the urgent call by the UN Secretary-General in the New Agenda for Peace for Member States to provide more sustainable and predictable financing to peacebuilding efforts. It is South Africa's desire to see an end to the suffering of those most directly affected by the conflict in Ukraine.

                                                          Ahead of the Johannesburg summit that was August 20, Ramaphosa in a speech to the nation indicated that South Africa participated in the African initiative to seek peace in the Ukraine-Russia conflict.

                                                          Through this African Peace Initiative, he said emphatically: "We firmly believe that dialogue, mediation and diplomacy is the only viable path to end the current conflict and achieve a durable peace. We support the principle of respect for the territorial integrity and sovereignty of all states and peoples."

                                                          South Africa's foreign policy has been based on what forebears inscribed in the Freedom Charter in 1955 that "South Africa shall be a fully independent state which respects the rights and the sovereignty of all nations; South Africa shall strive to maintain world peace and the settlement of all international disputes by negotiation – not war."

                                                          Brazilian Luiz Inacio Lula da Silva's return to the presidency in January 2023 has paved the way for a revival of an ambitious and assertive foreign policy set out by the leader during his first term in office between 2003 and 2010. He has been voicing for global peace as well as practical development with geopolitical partners, especially in the Global South.

                                                          China insisted on dialogue for conflict resolution. It has also presented its Ukrainean peace plan which Russia keeps on hold. Despite criticisms that it has lured Africa into debts, China is tremendously contributing to Africa's infrastructure development. China appreciably brings "new opportunities" for diverse cooperation, and has unveiled five new development plans for Africa at the last BRICS summit in Johannesburg.

                                                          Even at the end of the 15th BRICS summit, the document adopted encapsulates significant viewpoints on matters of global significance including peace and development. In this document, the BRICS leaders expressed their highest and sentimental concern "to enhance its strategic partnership for the benefit of its people through the promotion of peace."

                                                          It further states… "We reiterate the need for all countries to cooperate in promoting and protecting human rights and fundamental freedoms under the principles of equality and mutual respect. We agree to continue to treat all human rights."

                                                          "We agree to strengthen cooperation on issues of common interests both within BRICS and in multilateral fora including the United Nations General Assembly and Human Rights Council. We call for the respect of democracy and human rights," the BRICS declaration (slightly shortened for space) says.

                                                          Records show that Kenya is not a member of BRICS. But in a similar direction together with a few African leaders at UNGA, Kenyan President William Ruto also made reference to the proactive commitment to peace, which is not limited to the continent; African Union was inspired to dispatch the African Peace Delegation, consisting of six African heads of states to Moscow and Kiev with a ten-point peace plan, beginning with efforts to initiate a mediation process to resolve the conflict between Russia and Ukraine.

                                                          Although the delegation encountered significant challenges in their mission, Kenya and for the matter the entire Africa remain very proud that the peace delegation showed up. The African Peace Initiative group headed by South African President Cyril Ramaphosa, made serious efforts for recognition as peace brokers.

                                                          The delegation included the current Chairperson of the African Union and Comoros president, Azali Assoumani; President of Senegal, Macky Sall; President of Zambia, Hakainde Hichilema and Prime Minister of Egypt, Mostafa Madbouly. In addition, the delegation included representatives of Uganda and Congo.

                                                          The group put forward a 10-point proposal was presented in Kyiv and St. Petersburg. The key aim of the African peace mission primarily to propose "confidence-building measures" in order to facilitate peace between the two countries. It was to seek a peaceful settlement of the conflict which began late February 2022.

                                                          At the United Nations, Foreign Affairs Minister Sergey Lavrov afresh offered the signal that "Russia can't give up goals of special military operation in Ukraine." From several official documents, Russia underlined the reason as – "to de-militarize and de-nazify" Ukraine.

                                                          Quoting President Vladimir Putin, Lavrov said the West was "truly an empire of lies" which even during the battle against Nazism in World War Two, had plotted an offensive against their Soviet allies.

                                                          Soviet and then Russian leaders "were given concrete political assurances regarding the non-expansion of the NATO military alliance to the east", which turned out to be pure deception.

                                                          Washington and Brussels have ceaselessly sought to expand their interests and alliances to subordinate the Global South and East, rejecting Russia's desire for mutual security guarantees, he stated, and closed his case with an appeal for compromise, saying "humanity is at a crossroads…It is in our shared interest to prevent a downward spiral into large scale war."

                                                          He invoked the Secretary-General's call for world leaders to meet and negotiate in the spirit of compromise at this year's UN General Assembly, "when designing our common future for our common good" and concluded that it was an excellent response to those who divide the world up into democracies and autocracies and dictate their neocolonial rules to others.

                                                          UN Secretary-General Antonio Guterres at the Security Council session spoke assertively in reference to children who have gone missing, been abducted, are being concealed and starved. Lavrov called them allegations, issues without substantiation.

                                                          Lavrov, later at the media conference, attributed the conflict in his country's backyard to the West's years-long efforts to transform Ukraine into anti-Russia, while stressing Russia's policy in a multipolar architecture and, in principle, that strictly seeks adherence for global peace and respect for territorial integrity and sovereignty.

                                                          Putin Decrees 'Special Military Operation' in Ukraine

                                                          On 24 February 2022, Russian President declared the 'Special Military Operation' in Ukraine. In his nation-wide address, Putin emphasized that over the past 30 years have been patiently trying to come to an agreement with the leading NATO countries regarding the principles of equal and indivisible security in Europe.

                                                          In the middle of the long speech that February 24, Putin indicated that one could say, with good reason and confidence, that the whole so-called Western bloc formed by the United States in its own image and likeness, in its entirety, the very same "empire of lies."

                                                          "Despite all that, in December 2021, we made yet another attempt to reach agreement with the United States and its allies on the principles of European security and NATO's non-expansion. The United States has not changed its position. It does not believe it necessary to agree with Russia on a matter that is critical for us. The United States is pursuing its own objectives, while neglecting our interests," Putin stressed.

                                                          He further pointed; "As for military affairs, even after the dissolution of the USSR and losing a considerable part of its capabilities, today's Russia remains one of the most powerful nuclear states. Moreover, it has a certain advantage in several cutting-edge weapons. In this context, there should be no doubt for anyone that any potential aggressor will face defeat and ominous consequences should it directly attack on Russia."

                                                          For the United States and its allies, it is a policy of containing Russia, with obvious geopolitical dividends. For Russia, it is a matter of life and death, a matter of historical future as a nation. This is not an exaggeration; this is a fact. It is not only a very real threat to Russia's interests but to the very existence of the state and to its sovereignty. It is the red line. They have crossed it.

                                                          In this context, in accordance with Article 51 (Chapter VII) of the UN Charter, with permission of Russia's Federation Council, and in execution of the treaties of friendship and mutual assistance with the Donetsk People's Republic and the Lugansk People's Republic, ratified by the Federal Assembly on February 22, I made a decision to carry out a special military operation, Putin declared 'Special Military Operation' on Ukriane.

                                                          The purpose of this operation is to protect people who, for eight years now, have been facing humiliation and genocide perpetrated by the Kiev regime. To this end, Russia would seek to demilitarise and denazify Ukraine, as well as bring to trial those who perpetrated numerous bloody crimes against civilians, including against citizens of the Russian Federation. The officers of Russia's Armed Forces would perform their duty with professionalism and courage. It is not Russia's plan to occupy the Ukrainian territory.

                                                          Cost of Russia's 'Special Military Operation' in Ukraine

                                                          Forbes media has reported that Russia already spent over US$167 billion on war against Ukraine. "In a year and a half since the start of its full-scale invasion, Russia spent about US$167.3 billion on the war against Ukraine, of which US$34 billion worth of equipment were destroyed by Ukraine's Armed Forces alone," it reported.

                                                          Source: Forbes calculations based on data from the General Staff of the Armed Forces of Ukraine. Details: According to Forbes, Russia spends about US$300 million a day on its war against Ukraine.

                                                          Direct military spending and the cost of Russia's lost equipment over 18 months of the war (from 24 February 2022 to 24 August 2023) is about US$167.3 billion. This estimate does not include constant defence spending not related to military operations, as well as economic losses of the aggressor country.

                                                          The largest items of expenditure: ensuring military operations (US$51.3 billion), salaries of the servicemen (US$35.1 billion), compensation to the families of the dead (US$25.6 billion) and wounded (US$21 billion) and the cost of destroyed equipment (US$34 billion).

                                                          After the rapid fall of the ruble, the "cost" of the Russian soldier for the budget of the Russian Federation decreased significantly. If for 2022 the total payments per one serviceman were about US$200 per day, now it is about US$120 per day.

                                                          The level of Russian losses in recent months has remained at a significantly higher level than last year, according to the General Staff of the Armed Forces of Ukraine. Accordingly, Russia is forced to spend more on compensation to the families. The cost of compensation to the family of the deceased in the Russian Federation was about US$110,000, now it is only about US$65,000. The amount of compensation to the wounded, respectively, decreased from US$45,000 to US$27,000.

                                                          The main item of expenditure of the Russian Federation on the war in Ukraine is ammunition and military support of the army. The total cost of this is US$51.34 billion. At the same time, the Russians spent over US$9 billion on providing for Russian artillery in a year and a half of the great war. The total cost of missiles fired on the territory of Ukraine has already reached a hefty sum of more than US$21.1 billion.

                                                          In September 2022, the State Duma (lower house of Russia's parliament) and the Federation Council (upper house) approved legislation on ratifying treaties, as well as federal constitutional laws on the accession of the four regions to Russia.

                                                          On February 24, Russian President Putin said in a televised address that in response to a request by the heads of the Donbass republics he had decided to carry out a special military operation to protect people "who have been suffering from abuse and genocide by the Kiev regime for eight years" and Putin explained – "demilitarization and denazification" in Ukraine, approved by the State Duma and Federation Council of the Russian Federation.

                                                                        BRICS Cooperation Mechanism Gives Hand to Global South (Механизм сотрудничества БРИКС протягивает руку глобальному Югу) / Russia, October, 2023
                                                                        Keywords: cooperation, global_governance, expert_opinion

                                                                        The 15th BRICS summit has kicked off in Johannesburg, South Africa, on August 22, and the following year will bring the summit to Kazan, the capital of Russia's Tatarstan region.

                                                                        As of now, more than 40 countries openly demonstrate their willingness to join the informal grouping, as the current BRICS host South Africa recently stated. In this respect, it's worth asking what the BRICS is and what the BRICS is not.

                                                                        The BRICS that started as a grouping of fast-growing economies not only withstood the test of time, but also fully transformed its identity since the first summit in 2009. Remaining an informal exclusive group, the BRICS pushes forward discussion on more than 30 distinct topics including several ones not presented in the agenda of the G20, namely regional security, tourism, and culture. It does not make the BRICS an alliance of any kind—it lacks formality including any form of sanctioning in a case of non-compliance with the decisions made on annual summits.

                                                                        Neither the BRICS is a club for groundless discussions, as most of the multilateral decisions are implemented quite successfully, according to the results of a multi-year study conducted by a joint collective of Russia-Canada think-tanks, indicating average compliance surpassing 75 percent.

                                                                        Also it would be too much to think of the BRICS in general and the BRICS-inspired multilateral institutions such as the New Development Bank—the group has never claimed to replace any of global organizations. The idea here is not to substitute but to compensate some of the most significant drawbacks of the international order.

                                                                        The BRICS cannot promote obligatory decisions, but it has great potential in formulating the common ground in some spheres of high importance. I assume that the BRICS might be a suitable place to formulate new approaches to the Internet governance system reform, since the discussion on its key aspects (cybersecurity in particular) stagnates.

                                                                        The abovementioned study shows that since the introduction of information technologies-related agenda to the BRICS in 2015, the average compliance score has surpassed 90 percent, indicating willingness of the member states to cooperate. China and Russia are the leading parties in this respect, contributing the most to the agenda development.

                                                                        Taking into account a growing interest towards the BRICS from other countries of the world, it's worth discussing the establishment of a new global partnership on the Internet governance reform with some "BRICS characteristics." The BRICS might give a hand to those who would inevitably become the emerging forces in the Internet governance in decades to come, thanks to continuing economic transition and population growth—African and Latin American countries.

                                                                        The brand-new partnership presents an attractive alternative to previously launched exclusive formats that mostly ignored the interests of the developing world. Voices from the Global South would grant recognition and support to the BRICS multilateral initiatives, among which might be the reform of some of the key Internet governance institutions including the Internet Corporation for Assigned Names and Numbers and the Internet Society, making them more transparent and accountable.

                                                                        Also, the information security agenda might flourish without direct interference from the Western parties which intend to keep their privileged negotiation position during talks on cybersecurity and cyberwarfare.

                                                                        Any tangible result is achievable if only the discussed agenda becomes the main working track within the broad BRICS agenda. South Africa's presidency this year and forthcoming Russia's presidency in 2024 will be a high time to start.
                                                                                      Investment and Finance
                                                                                      Investment and finance in BRICS
                                                                                      Blame the BRICS for the de-dollarization (В дедолларизации вините БРИКС) / Russia, September, 2023
                                                                                      Keywords: economic_challenges, expert_opinion

                                                                                      "De-dollarizing" the world economy could have dangerous consequences for the United States. The BRICS alliance — originally comprising Brazil, Russia, India, China, and South Africa — took a major step toward flexing its communal currency muscle at its recent summit in South Africa, writes 'The New York Post'.

                                                                                      Six new members joined the organization — Saudi Arabia, Iran, Ethiopia, Egypt, Argentina, and the United Arab Emirates — in an effort to reduce the dollar's decades-long dominance and end its use as the preferred payment for the one commodity that still dominates global trade: oil.

                                                                                      The dollar's role as the world's key reserve currency is the foundation for America's global leadership.

                                                                                      Most crucially, at a time of unprecedented global conflict, diminishing the dollar's importance would allow rogue nations such as Iran and Russia to become immune to sanctions in response to geopolitical bad behavior.

                                                                                      Lower demand for the currency might make exports cheaper but it will also reduce the dollar's purchasing power and undermine confidence in its stability.

                                                                                      As the BRICS summit made clear, the block's leverage in the oil market has never been greater.

                                                                                      This has given them unprecedented power to finally replace the dollar on the global energy markets with their own domestic currencies.

                                                                                      Take a close look at the selective approach the alliance used to expand its membership.

                                                                                      While the bloc did not provide details about specific admissions criteria, the selection is clearly energy-centric.

                                                                                      Only six out of more than 40 applicant nations were accepted this year — with sizable economies such as Turkey and Indonesia conspicuously left out.

                                                                                      The anti-Western alliance now has six of the world's top oil producers – Saudi Arabia, Russia, China, Brazil, Iran, and the United Arab Emirates.

                                                                                      It's also home to two of the world's largest oil importers – China and India.

                                                                                      Although 90% of oil trades are currently conducted in dollars, an increasing number are being handled in Chinese yuan and Russian rubles.

                                                                                      India, for instance, has started paying for Russian oil imports in yuan, and China also began using its yuan to pay Russia for most of its energy imports in the first quarter of this year, according to Reuters.

                                                                                      Saudi Arabia may be new to BRICS, but it's already colluding with Russia to reduce petroleum production, which has resulted in oil reaching a 10-month high this month.

                                                                                      What's notable about the BRICS newcomers is that many are authoritarian regimes who are intimately familiar with the power of US sanctions.

                                                                                      Iran, of course, has contended with them for years.

                                                                                      The Saudis — while a crucial US ally — are keen to avoid the "consequences" called for by Biden in October after OPEC+ announced those large production cuts.

                                                                                      Back in 2020, Biden also threatened to make the kingdom a "pariah" over the killing of the Saudi journalist Jamal Khashoggi.

                                                                                      By shutting Washington out of trade and diplomacy, BRICS membership allows rogue nations to upend our ability to "weaponize" the dollar as a tool to punish 'bad guys'.

                                                                                      The US has employed sanctions for decades, in lieu of military intervention against authoritarian regimes such as Iran, North Korea, and now Russia.

                                                                                      The White House, for instance, seized $300 billion in Russian assets following its invasion of Ukraine.

                                                                                      Biden also removed Russia from SWIFT, the international money transfer system, sending shock-waves to non-western nations at risk of White House ire.

                                                                                      But sanctions, no matter how robust, have proven ineffective. China and India — both of which have yet to condemn Russia for its invasion of Ukraine — have kept Moscow's energy revenue flowing, helping to finance Putin's war machine and highlighting the power of BRICS cooperation.

                                                                                      The BRICS already have a significant presence across the global economy.

                                                                                      With a collective population of more than 3 billion and 31.5% of the world's GDP, they're a formidable challenger to the G7 block of the world's top economic superpowers.

                                                                                      The G-7's share of global GDP, for instance, is currently at 30%, and projected to fall to 27.95 percent in 2027, according to Statista research.

                                                                                      The dominance of the dollar has driven many non-Western nations to join forces and develop a counterweight to Western economic hegemony.

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