Information Bulletin of the BRICS Trade Union Forum
Monitoring of the economic, social and labor situation in the BRICS countries
Monitoring of the economic, social and labor situation in the BRICS countries
Issue 38.2024
2024.09.16 — 2024.09.22
International relations
Foreign policy in the context of BRICS
Business model innovation: shifting the focus to small economies (Инновации в бизнес-моделях: смещение акцента на малые экономики) / Russia, September, 2024
Keywords: economic_challenges, expert_opinion
2024-09-22
2024-09-22
Russia
Source: brics-plus-analytics.org
Several months ago we postulated a BRICS+ business model for companies that explored the scope for exploiting the BRICS diverse presence in the main regions of the developing world[1]. But while this business model had its clear advantages, it also contained some drawbacks, most notably pertaining to the degree to which BRICS/BRICS+ economies could be/were integrated into regional/global supply chains in the midst of mounting geopolitical risks. Another problem that we noted was the lack of intra-BRICS trade liberalization and the still relatively high trade barriers across BRICS+[2]. The question then is: what kind of business model would enable companies to leverage the high number of trade accords concluded by some of the most open economies on the international arena? What we then propose is a business model that is in some respects the reverse of the BRICS+ paradigm, namely, it is based on a different array of economies, with the quality of economic policies and economic openness being the key criteria for the formation of such a business-oriented platform.
The markets that are endowed with the widest networks of trade alliances in the world economy are largely represented by small open economies that have a strong track-record of high-quality economic policies. Collectively, these countries could be brought under the umbrella of the acronym OASES – Oriental Republic of Uruguay (ORU) in South America; Austria and Switzerland in Europe, United Arab Emirates (Emirates) in the MENA region; and Singapore in East Asia. These are some of the smallest countries in their respective regions that at the same time have substantial economic clout, have relatively high standards of living and have developed a diverse network of trade alliances.
OASES countries and their regional integration arrangements
In terms of economic openness Uruguay’s import tariff (simple average MFN applied) of 10%[3] is among the lowest in Mercosur – broadly on par with Paraguay’s 9.6%, and lower than in Argentina (13.3%), Brazil (11.1%) and Bolivia (11.7%)[4]. Singapore stands out not only in the ASEAN region, but also global with its simple average import tariff level of 0% – this compares with 8% in Indonesia and 9.6% in Vietnam. Austria’s import tariffs are unified at the common EU level of 5.1% and are close to the levels observed in Switzerland (5.6%)[5]. Import tariffs in UAE at 4.7% are on par with Kuwait and Qatar, slightly higher than in Bahrain (4.5%) and notably lower than in Saudi Arabia (6,3%) and Oman 5.6%).
From a business strategy standpoint, it is not even so much the level of import tariffs per se, but rather than network of free trade alliances that the economy has developed that make it an attractive element of the company’s business model. In this respect, Switzerland stands out as a key focal node for OASES – it has trade agreements or is negotiating trade accords with all other parts of such a platform – all in all Switzerland has 35 free trade agreements (FTAs) with 45 countries or blocs[6]. Another key node in terms of trade linkages is Singapore – it has a total of 27 implemented FTA agreements[7], with a leading role in the global economy in the sphere of forging digital economic agreements (DEAs). In the case of UAE, under the Greater Arab Free Trade Area Agreement, the UAE has free trade access to Saudi Arabia, Kuwait, Bahrain, Qatar, Oman, Jordan, Egypt, Iraq, Lebanon, Morocco, Tunisia, Palestine, Syria, Libya, and Yemen[8]. In South America, while Uruguay may be behind Chile in the number of trade accords, it has the benefit of the Mercosur platform of regional integration and has launched FTA talks with China in addition to the existing accords with Mexico and Chile[9].
Apart from the extensive network of trade accords, OASES economies are key members of regional integration arrangements – Switzerland in EFTA, Austria in the EU, Uruguay in Mercosur, UAE in GCC, Singapore in ASEAN – that through free trade provide possibilities for companies to expand shipments and production to the regional partners of OASES economies. The combination of regional and extra-regional accords provides corporates that are localized in OASES economies with greater optionality and lowers the costs of distributing goods and services to other parts of the global economy. Across consumer categories, the OASES business model may target the middle to high-end parts of the income spectrum that have a particular predilection to established brands. The OASES business model may hence be further reinforced and enriched by such business models/strategies as ultimate luxury, open business model, and ingredient branding[10].
Across sectors, given the competitive advantages of OASES in the services sector, these small open economies may be used as platforms for companies in launching new services that could then be scaled up to other parts of the respective regions of the global economy. There may be also competitive advantages of the OASES business strategy in manufacturing. As we have already pointed out above, one of the weaknesses of the BRICS+ business model is the risk to the integration of some of the core BRICS economies into the global value chains. In contrast, the openness of OASES markets renders them more integrated into regional and global value chains, with the risks of geopolitical disruptions being contained by the fact that all OASES countries are (de jure or de facto) neutral.
The importance of the services sector for employing OASES as a business model platform has a further dimension. According to Michael Porter’s Diamond model, one of the key competitive advantages of nations is the level of development of supporting industries. In this respect, OASES markets offer some of the best conditions in their respective regions in terms of financial services and logistics. The financial sector in the OASES economies is particularly competitive in the segment of wealth management, while transportation plays an important role in the operation of key regional and global connectivity routes[11].
Overall, the OASES business model offers a range of benefits to companies that are seeking to establish their global presence, particularly in the services sector. These benefits include a diversified network of trade accords expands the scope for product distribution with lower costs; neutrality as a factor that lowers the risks associated with disruptions in supply chains or regulatory disruptions; high levels of economic development and quality of life allow for competition for high-skilled labour and talent. The OASES business strategy may accordingly increase the optionality of the corporate operations across geographies and sectors, while also raising the adaptability of companies to geopolitical and economic shocks.
[1] https://brics-plus-analytics.org/business-model-innovation-in-em-towards-a-brics-business-model/
[2] https://brics-plus-analytics.org/teslas-business-model-innovation-in-em/
[3] https://www.wto.org/english/res_e/booksp_e/world_tariff_profiles23_e.pdf
[4] One of the lowest levels of import tariffs in the region outside of Mercosur are in Peru (2.3%), (Colombia (5.8%), Chile (6%).
[5] https://www.wto.org/english/res_e/booksp_e/world_tariff_profiles23_e.pdf
[6] https://www.swissinfo.ch/eng/foreign-affairs/who-benefits-from-free-trade-agreements-with-switzerland/83968513#:~:text=Switzerland%20has%2035%20free%20trade,others%20from%20favourable%20tariff%20arrangements.&text=Swissinfo.,-ch’s%20India%20specialist
[7] https://www.trade.gov/country-commercial-guides/singapore-trade-agreements#:~:text=Singapore%20has%20an%20extensive%20network,Union%2C%20United%20Kingdom%20and%20Turkiye.
[8] https://www.trade.gov/country-commercial-guides/united-arab-emirates-trade-agreements
[9] https://www.trade.gov/country-commercial-guides/uruguay-trade-agreements
[10] Oliver Gassman, Karolin Frankenberger, Michaela Choudury. The business model navigator. The strategies behind the most successful companies. Second edition. FT Publishing. Pearson. 2020
[11] https://brics-plus-analytics.org/from-chokepoints-to-bridges-a-different-look-at-the-world-map/
Yaroslav Lissovolik, Founder, BRICS+ Analytics
Source: brics-plus-analytics.org
Several months ago we postulated a BRICS+ business model for companies that explored the scope for exploiting the BRICS diverse presence in the main regions of the developing world[1]. But while this business model had its clear advantages, it also contained some drawbacks, most notably pertaining to the degree to which BRICS/BRICS+ economies could be/were integrated into regional/global supply chains in the midst of mounting geopolitical risks. Another problem that we noted was the lack of intra-BRICS trade liberalization and the still relatively high trade barriers across BRICS+[2]. The question then is: what kind of business model would enable companies to leverage the high number of trade accords concluded by some of the most open economies on the international arena? What we then propose is a business model that is in some respects the reverse of the BRICS+ paradigm, namely, it is based on a different array of economies, with the quality of economic policies and economic openness being the key criteria for the formation of such a business-oriented platform.
The markets that are endowed with the widest networks of trade alliances in the world economy are largely represented by small open economies that have a strong track-record of high-quality economic policies. Collectively, these countries could be brought under the umbrella of the acronym OASES – Oriental Republic of Uruguay (ORU) in South America; Austria and Switzerland in Europe, United Arab Emirates (Emirates) in the MENA region; and Singapore in East Asia. These are some of the smallest countries in their respective regions that at the same time have substantial economic clout, have relatively high standards of living and have developed a diverse network of trade alliances.
OASES countries and their regional integration arrangements
In terms of economic openness Uruguay’s import tariff (simple average MFN applied) of 10%[3] is among the lowest in Mercosur – broadly on par with Paraguay’s 9.6%, and lower than in Argentina (13.3%), Brazil (11.1%) and Bolivia (11.7%)[4]. Singapore stands out not only in the ASEAN region, but also global with its simple average import tariff level of 0% – this compares with 8% in Indonesia and 9.6% in Vietnam. Austria’s import tariffs are unified at the common EU level of 5.1% and are close to the levels observed in Switzerland (5.6%)[5]. Import tariffs in UAE at 4.7% are on par with Kuwait and Qatar, slightly higher than in Bahrain (4.5%) and notably lower than in Saudi Arabia (6,3%) and Oman 5.6%).
From a business strategy standpoint, it is not even so much the level of import tariffs per se, but rather than network of free trade alliances that the economy has developed that make it an attractive element of the company’s business model. In this respect, Switzerland stands out as a key focal node for OASES – it has trade agreements or is negotiating trade accords with all other parts of such a platform – all in all Switzerland has 35 free trade agreements (FTAs) with 45 countries or blocs[6]. Another key node in terms of trade linkages is Singapore – it has a total of 27 implemented FTA agreements[7], with a leading role in the global economy in the sphere of forging digital economic agreements (DEAs). In the case of UAE, under the Greater Arab Free Trade Area Agreement, the UAE has free trade access to Saudi Arabia, Kuwait, Bahrain, Qatar, Oman, Jordan, Egypt, Iraq, Lebanon, Morocco, Tunisia, Palestine, Syria, Libya, and Yemen[8]. In South America, while Uruguay may be behind Chile in the number of trade accords, it has the benefit of the Mercosur platform of regional integration and has launched FTA talks with China in addition to the existing accords with Mexico and Chile[9].
Apart from the extensive network of trade accords, OASES economies are key members of regional integration arrangements – Switzerland in EFTA, Austria in the EU, Uruguay in Mercosur, UAE in GCC, Singapore in ASEAN – that through free trade provide possibilities for companies to expand shipments and production to the regional partners of OASES economies. The combination of regional and extra-regional accords provides corporates that are localized in OASES economies with greater optionality and lowers the costs of distributing goods and services to other parts of the global economy. Across consumer categories, the OASES business model may target the middle to high-end parts of the income spectrum that have a particular predilection to established brands. The OASES business model may hence be further reinforced and enriched by such business models/strategies as ultimate luxury, open business model, and ingredient branding[10].
Across sectors, given the competitive advantages of OASES in the services sector, these small open economies may be used as platforms for companies in launching new services that could then be scaled up to other parts of the respective regions of the global economy. There may be also competitive advantages of the OASES business strategy in manufacturing. As we have already pointed out above, one of the weaknesses of the BRICS+ business model is the risk to the integration of some of the core BRICS economies into the global value chains. In contrast, the openness of OASES markets renders them more integrated into regional and global value chains, with the risks of geopolitical disruptions being contained by the fact that all OASES countries are (de jure or de facto) neutral.
The importance of the services sector for employing OASES as a business model platform has a further dimension. According to Michael Porter’s Diamond model, one of the key competitive advantages of nations is the level of development of supporting industries. In this respect, OASES markets offer some of the best conditions in their respective regions in terms of financial services and logistics. The financial sector in the OASES economies is particularly competitive in the segment of wealth management, while transportation plays an important role in the operation of key regional and global connectivity routes[11].
Overall, the OASES business model offers a range of benefits to companies that are seeking to establish their global presence, particularly in the services sector. These benefits include a diversified network of trade accords expands the scope for product distribution with lower costs; neutrality as a factor that lowers the risks associated with disruptions in supply chains or regulatory disruptions; high levels of economic development and quality of life allow for competition for high-skilled labour and talent. The OASES business strategy may accordingly increase the optionality of the corporate operations across geographies and sectors, while also raising the adaptability of companies to geopolitical and economic shocks.
[1] https://brics-plus-analytics.org/business-model-innovation-in-em-towards-a-brics-business-model/
[2] https://brics-plus-analytics.org/teslas-business-model-innovation-in-em/
[3] https://www.wto.org/english/res_e/booksp_e/world_tariff_profiles23_e.pdf
[4] One of the lowest levels of import tariffs in the region outside of Mercosur are in Peru (2.3%), (Colombia (5.8%), Chile (6%).
[5] https://www.wto.org/english/res_e/booksp_e/world_tariff_profiles23_e.pdf
[6] https://www.swissinfo.ch/eng/foreign-affairs/who-benefits-from-free-trade-agreements-with-switzerland/83968513#:~:text=Switzerland%20has%2035%20free%20trade,others%20from%20favourable%20tariff%20arrangements.&text=Swissinfo.,-ch’s%20India%20specialist
[7] https://www.trade.gov/country-commercial-guides/singapore-trade-agreements#:~:text=Singapore%20has%20an%20extensive%20network,Union%2C%20United%20Kingdom%20and%20Turkiye.
[8] https://www.trade.gov/country-commercial-guides/united-arab-emirates-trade-agreements
[9] https://www.trade.gov/country-commercial-guides/uruguay-trade-agreements
[10] Oliver Gassman, Karolin Frankenberger, Michaela Choudury. The business model navigator. The strategies behind the most successful companies. Second edition. FT Publishing. Pearson. 2020
[11] https://brics-plus-analytics.org/from-chokepoints-to-bridges-a-different-look-at-the-world-map/
Yaroslav Lissovolik, Founder, BRICS+ Analytics
Russia welcomes Pakistan's bid to join BRICS — Russian Deputy Prime Minister (Россия приветствует заявку Пакистана на вступление в БРИКС — вице-премьер России) / Russia, September, 2024
Keywords: brics+, Pakistan
2024-09-18
2024-09-18
Russia
Source: tass.com
Russia welcomes Pakistan's bid to join BRICS — Russian Deputy Prime Minister
"Over the past year, we have seen a significant expansion of BRICS, and countries from all over the world are showing great interest in joining," Alexey Overchuk said
ISLAMABAD, September 18. /TASS/. Russia welcomes Pakistan's bid to join BRICS, Russian Deputy Prime Minister Alexey Overchuk said at a press conference following talks with Pakistan's First Deputy Prime Minister and Foreign Minister Ishaq Dar.
"We are glad that Pakistan has applied [for membership]. BRICS and the Shanghai Cooperation Organization are friendly organizations. We will support this," he said.
"Over the past year, we have seen a significant expansion of BRICS, and countries from all over the world are showing great interest in joining. We have very good relations with Pakistan," Overchuk added.
Earlier, in an interview with TASS, Pakistan's Ambassador to Russia Muhammad Khalid Jamali said that the republic had applied to join BRICS.
BRICS was founded in 2006 by Brazil, Russia, India and China, and South Africa joined in 2011. On January 1, 2024, Egypt, Iran, the UAE, Saudi Arabia and Ethiopia became full members of the association. This year, Moscow is presiding over the association. The BRICS summit will be held in Kazan from October 22 to 24.
Source: tass.com
Russia welcomes Pakistan's bid to join BRICS — Russian Deputy Prime Minister
"Over the past year, we have seen a significant expansion of BRICS, and countries from all over the world are showing great interest in joining," Alexey Overchuk said
ISLAMABAD, September 18. /TASS/. Russia welcomes Pakistan's bid to join BRICS, Russian Deputy Prime Minister Alexey Overchuk said at a press conference following talks with Pakistan's First Deputy Prime Minister and Foreign Minister Ishaq Dar.
"We are glad that Pakistan has applied [for membership]. BRICS and the Shanghai Cooperation Organization are friendly organizations. We will support this," he said.
"Over the past year, we have seen a significant expansion of BRICS, and countries from all over the world are showing great interest in joining. We have very good relations with Pakistan," Overchuk added.
Earlier, in an interview with TASS, Pakistan's Ambassador to Russia Muhammad Khalid Jamali said that the republic had applied to join BRICS.
BRICS was founded in 2006 by Brazil, Russia, India and China, and South Africa joined in 2011. On January 1, 2024, Egypt, Iran, the UAE, Saudi Arabia and Ethiopia became full members of the association. This year, Moscow is presiding over the association. The BRICS summit will be held in Kazan from October 22 to 24.
Iran expects to sign strategic partnership agreement with Russia at BRICS Summit (Иран рассчитывает подписать соглашение о стратегическом партнерстве с Россией на саммите БРИКС) / Russia, September, 2024
Keywords: brics+, Iran, summit
2024-09-18
2024-09-18
Russia
Source: tass.com
Iran expects to sign strategic partnership agreement with Russia at BRICS Summit
"Iran and Russia are advancing on their path towards strategic cooperation," MP Abolfazl Zohrevand underlined
DUBAI, September 18. /TASS/. Iran hopes to sign a comprehensive strategic partnership treaty with Russia during the visit of the republic’s President Masoud Pezeshkian to Kazan to attend the BRICS Summit on October 22-24, member of the Iranian Parliament’s National Security and Foreign Policy Commission Abolfazl Zohrevand said.
"Iran and Russia are advancing on their path towards strategic cooperation. During Mr. Pezeshkian’s upcoming visit to Russia, we will witness the signing of a strategic partnership agreement between the countries," the MP told the Tasnim news agency.
Commenting on the European authorities' claims about alleged deliveries of Iranian ballistic missiles to Russia, Zohrevand noted that Europe "intends to slow down and disrupt the process of strategic cooperation between Iran and Russia by putting pressure on Iranian public opinion." According to the official, if the EU imposes sanctions against the Islamic republic for allegedly supplying missiles, "it will hint to public opinion inside Iran that these sanctions are the result of strategic cooperation between Tehran and Moscow."
On September 7, Iranian Ambassador to Russia Kazem Jalali told TASS that a comprehensive strategic partnership agreement between the two countries could be signed in October at the BRICS Summit in Kazan or later at a private meeting of the presidents; the document has been finalized.
Source: tass.com
Iran expects to sign strategic partnership agreement with Russia at BRICS Summit
"Iran and Russia are advancing on their path towards strategic cooperation," MP Abolfazl Zohrevand underlined
DUBAI, September 18. /TASS/. Iran hopes to sign a comprehensive strategic partnership treaty with Russia during the visit of the republic’s President Masoud Pezeshkian to Kazan to attend the BRICS Summit on October 22-24, member of the Iranian Parliament’s National Security and Foreign Policy Commission Abolfazl Zohrevand said.
"Iran and Russia are advancing on their path towards strategic cooperation. During Mr. Pezeshkian’s upcoming visit to Russia, we will witness the signing of a strategic partnership agreement between the countries," the MP told the Tasnim news agency.
Commenting on the European authorities' claims about alleged deliveries of Iranian ballistic missiles to Russia, Zohrevand noted that Europe "intends to slow down and disrupt the process of strategic cooperation between Iran and Russia by putting pressure on Iranian public opinion." According to the official, if the EU imposes sanctions against the Islamic republic for allegedly supplying missiles, "it will hint to public opinion inside Iran that these sanctions are the result of strategic cooperation between Tehran and Moscow."
On September 7, Iranian Ambassador to Russia Kazem Jalali told TASS that a comprehensive strategic partnership agreement between the two countries could be signed in October at the BRICS Summit in Kazan or later at a private meeting of the presidents; the document has been finalized.
- On September 17, the Iranian president said that he was looking forward to meeting with Russian leader Vladimir Putin in Kazan.
Foreign Minister Sergey Lavrov’s statement and answers to media questions at a joint news conference following talks with Minister of Foreign Affairs, Emigration and Egyptian Expatriates Badr Abdelatty, Moscow, September 16, 2024 (Заявление и ответы на вопросы СМИ министра иностранных дел Сергея Лаврова на совместной пресс-конференции по итогам переговоров с министром иностранных дел, эмиграции и по делам египетских эмигрантов Бадром Абдельатти, Москва, 16 сентября 2024 г.) / Russia, September, 2024
Keywords: sergey_lavrov, speech, foreign_ministers_meeting
2024-09-16
2024-09-16
Russia
Source: mid.ru
Ladies and gentlemen,
My colleague, Minister of Foreign Affairs, Emigration and Egyptian Expatriates Badr Abdelatty, and I have had extensive and productive talks.
We expressed satisfaction with the level of traditionally friendly Russian-Egyptian relations which are advancing in accordance with the Treaty on Comprehensive Partnership and Strategic Cooperation signed by our respective presidents in Sochi in 2018 which entered into force in 2021 following ratification by our respective parliaments.
The positive dynamics of trade and economic cooperation is quite inspiring. In 2023, bilateral trade exceeded the $7 billion mark, which is significantly more than the year before. We are committed to doing everything possible to maintain and reinforce this uptrend.
In this regard, we praise the activities of the Joint Russian-Egyptian Commission on Trade, Economic, Scientific and Technical Cooperation and note its important coordinating role in strengthening our multifaceted ties. This morning, Minister Abdelatty had a meeting with Minister of Industry and Trade Anton Alikhanov, who is also a newly appointed co-chair of the intergovernmental commission.
We reviewed the progress of implementation of major joint investment projects, primarily the El Dabaa Nuclear Power Plant and a Russian industrial zone near the Suez Canal. We had an extensive discussion about Russia’s grain supplies to the Egyptian market, and noted their stability.
We both agreed that Egypt’s accession to BRICS in January had given a strong boost to our partnership. We discussed preparations for the upcoming BRICS summit in Kazan in October, and the BRICS ministerial meeting on the sidelines of the UN General Assembly in New York later this month.
We had an in-depth discussion of current international and regional issues. We share common commitment to continuing close coordination at the UN and other multilateral platforms.
We focused on the crisis situation in the Palestinian-Israeli conflict zone in light of the unprecedented escalation of violence in the Gaza Strip. We stand united with our Egyptian friends in calling for immediate ceasefire and providing urgent humanitarian assistance to the people of the enclave.
We noted the importance of continuing uninterrupted collective efforts seeking to create proper conditions for advancing the political settlement process based on the UN-approved two-state formula, under which Palestine and Israel, as two independent and sovereign states, should coexist peacefully and securely which is crucial for ensuring sustainable peace for the peoples of Palestine and Israel. We highly appreciate Egypt’s efforts to facilitate such agreements, particularly in terms of ceasefire. In turn, we keep working at the UN Security Council, but the stance adopted by the United States is preventing us from making sure Israel complies with the requirements put forward by mediators and Security Council members.
We discussed in detail the situation in and around Libya. Like our Egyptian friends, we are committed to the concept of a comprehensive crisis settlement based on the principles of Libya’s sovereignty, unity, and territorial integrity. We emphasised the urgent need to appoint a new Special Representative of the UN Secretary-General for Libya, as this position has remained vacant for too long.
We welcomed our Egyptian partners’ commitment to expanding political dialogue with Syria. Cairo’s constructive position was instrumental in deciding to restore Damascus’ full membership in the League of Arab States. We hope that the process of restoring Syria’s natural ties with its neighbours in the region will continue. This process will not only help overcome the consequences of the years-long crisis in that country, but will also create additional opportunities to strengthen security and stability in the Middle East as a whole.
There are many other issues which directly affect Egypt’s interests in the regions that lie next to the Arab Republic of Egypt, such as Sudan, Somalia, and the Red Sea. We believe all these issues should be addressed through direct dialogue between the parties involved with the support of neighbouring countries.
We reviewed several practical issues related to the first ministerial conference of the Russia-Africa Partnership Forum, following the decision of last year’s summit which was held in St Petersburg in July 2023. The ministerial session of the Partnership Forum will be held in Sochi on November 9-10.
I expressed my gratitude to our Egyptian friends for their balanced and constructive stance on the situation in and around Ukraine. We exchanged views on how this issue is being discussed at various venues. I outlined our perspective on the emerging issues, including within the international community, and our vision of ways to overcome them based on the legitimate interests of the Russian Federation.
We agreed to continue working together on all items on the bilateral agenda, as well as on international and regional matters.
Question: What do Russia and Egypt plan to do in order to achieve Palestinian settlement?
Sergey Lavrov: We mentioned the steps we are taking in our respective opening remarks. Along with several other countries, Egypt is striving to find recommendations that will be acceptable to both Israel and Hamas.
We welcome all initiatives aimed at ending the bloodshed as soon as possible and ensuring a sustainable and permanent ceasefire. We are working towards this goal at the UN Security Council as well, acting in concert with our Egyptian friends.
The problem is that the United States is unwilling to let pass the resolutions that would seriously imply an end to the bloodshed which is what everyone wants. They have vetoed several resolutions promoted by our Arab colleagues, other Security Council members, and us. Several months ago, in May, the Americans submitted their own draft resolution, a vague and non-specific document. However, they said it was enough, Israel agreed with this approach, and everything would be fine.
We asked them to provide evidence. We asked our Israeli colleagues to confirm that they agreed with what was written in the American document, but Israel refused to do so. We were forced to abstain during vote on this resolution. Our Arab friends, including Palestine, asked us not to veto it, and to give a chance to this document that was so much touted by the Americans. We abstained, and the resolution was adopted. It was adopted on “empty paper,” and has remained empty paper to this day.
Not a single promise made by the United States has been acted upon. This does not mean we should stop doing what we are doing. If the mediation, which Egypt is energetically engaged in alongside a number of other Arab countries, bears fruit, we will be happy with that outcome.
The UN Security Council cannot leave this issue unattended, since it is the key international issue, no matter how others may try to portray it.
Second, we agreed that once the ceasefire is in place, humanitarian aid must be rushed in immediately. The humanitarian situation in the Gaza Strip is catastrophic, and the situation on the West Bank is not much better.
The most important thing is not to allow this conflict to remain “frozen” once again. We must press everyone who opposes it into complying with the UN Security Council and General Assembly resolutions on creating a Palestinian state. This is no easy task, given the situation on the ground with a large number of illegal Israeli settlements in the West Bank.
We cannot go back on the decisions that have been made and supported by the overwhelming majority of the countries around the world. Those who are used to be the only ones to call the shots will eventually - sooner or later (preferably sooner) - have to heed the voice of humanity.
Question: What do you think about the latest US sanctions on Russian news outlets, including the RT television channel? What can you say about US Secretary of State Antony Blinken’s call to treat RT as an intelligence agency? This is a serious accusation.
Sergey Lavrov: Presidential Press Secretary Dmitry Peskov and Foreign Ministry Spokeswoman Maria Zakharova, as well as many other officials and politicians, have commented on this matter. I’m not going to go over it again.
I can only add that George Orwell had rich imagination and great historical foresight. However, even he was unable to envision what a totalitarian state would actually look like. He outlined some of its attributes, but was unable to delve into the depth of the totalitarianism we are witnessing today under the “rules-based order.” I have nothing else to add to that. The leaders in Washington suppress dissent and have upstaged even Orwell and his vision. This is unadulterated totalitarianism. McCarthyism was just a child’s play by comparison.
I hope independent observers who are closely watching international developments and the way the United States and its satellites are doing everything possible, impossible, and unimaginable to stop the objective process of forming a multipolar, just, and democratic world order are clear about that. They need democracy only to tell the countries how to go about their lives. But as soon as you propose discussing the democratisation of international relations, they clam up. It’s all about the rules-based order. But all of that is doomed. Anyone can clearly see that. They are historically doomed. The course of history is accelerating.
Question: What does Türkiye (a NATO country) willing to join BRICS mean? How may its prospective membership impact things?
Sergey Lavrov: I’d be hard pressed to explain why the Turks submitted an application to join our organisation, but a few comments may be appropriate here.
First, there is an objective, historical, and unstoppable process of forming a multipolar world order. Second, it’s clear that with its rapidly growing global weight and reputation, BRICS is becoming one of the key engines and creators of the multipolar world order. BRICS has received more than 30 requests to establish relations or to join as a member. These are all well-known countries that play significant roles in their respective regions. Perhaps, leaders who are thinking about the future of their countries within the emerging multipolar world order are unwilling to be left behind.
It is likewise important that BRICS is developing special mechanisms to enhance the role of its member states and their partners in addressing global governance issues, including reforming the Bretton Woods institutions, the International Monetary Fund, and the World Bank. The acquisition of the necessary number of votes by BRICS countries and their like-minded partners in these institutions, which reflects their effective economic weight, is being artificially held back by the United States and its allies.
The situation in the World Trade Organisation is similar. Special efforts are being made to hold back the reform, which would allow the actual economic performance and trade capabilities of each country to be properly evaluated.
Without a doubt, against this backdrop, many are drawn by the fact that alternative payment platforms are being developed within BRICS which allow countries to trade, invest, and conduct other economic transactions without being dependent on those who have decided to weaponise the US dollar and the euro. No one wants to end up in that position. Everyone realises that anyone can be subjected to American or other Western sanctions.
We are witnessing the collapse of entities that were once created as part of Western globalisation, where everyone was pressed into believing that eternal values include fair competition, the inviolability of property, and free market mechanisms, and that the US dollar was the world patrimony.
Now, everyone knows this is by far not so and that these very levers and globalisation mechanisms, which were promoted primarily by Western countries, are being used in an unlawful policy of suppressing competitors by any means in an attempt to perpetuate their hegemony which is slipping away as the world is watching.
I think if we objectively assess the positions of the countries applying to BRICS, we can say that all of this is important for the countries determining their future.
Source: mid.ru
Ladies and gentlemen,
My colleague, Minister of Foreign Affairs, Emigration and Egyptian Expatriates Badr Abdelatty, and I have had extensive and productive talks.
We expressed satisfaction with the level of traditionally friendly Russian-Egyptian relations which are advancing in accordance with the Treaty on Comprehensive Partnership and Strategic Cooperation signed by our respective presidents in Sochi in 2018 which entered into force in 2021 following ratification by our respective parliaments.
The positive dynamics of trade and economic cooperation is quite inspiring. In 2023, bilateral trade exceeded the $7 billion mark, which is significantly more than the year before. We are committed to doing everything possible to maintain and reinforce this uptrend.
In this regard, we praise the activities of the Joint Russian-Egyptian Commission on Trade, Economic, Scientific and Technical Cooperation and note its important coordinating role in strengthening our multifaceted ties. This morning, Minister Abdelatty had a meeting with Minister of Industry and Trade Anton Alikhanov, who is also a newly appointed co-chair of the intergovernmental commission.
We reviewed the progress of implementation of major joint investment projects, primarily the El Dabaa Nuclear Power Plant and a Russian industrial zone near the Suez Canal. We had an extensive discussion about Russia’s grain supplies to the Egyptian market, and noted their stability.
We both agreed that Egypt’s accession to BRICS in January had given a strong boost to our partnership. We discussed preparations for the upcoming BRICS summit in Kazan in October, and the BRICS ministerial meeting on the sidelines of the UN General Assembly in New York later this month.
We had an in-depth discussion of current international and regional issues. We share common commitment to continuing close coordination at the UN and other multilateral platforms.
We focused on the crisis situation in the Palestinian-Israeli conflict zone in light of the unprecedented escalation of violence in the Gaza Strip. We stand united with our Egyptian friends in calling for immediate ceasefire and providing urgent humanitarian assistance to the people of the enclave.
We noted the importance of continuing uninterrupted collective efforts seeking to create proper conditions for advancing the political settlement process based on the UN-approved two-state formula, under which Palestine and Israel, as two independent and sovereign states, should coexist peacefully and securely which is crucial for ensuring sustainable peace for the peoples of Palestine and Israel. We highly appreciate Egypt’s efforts to facilitate such agreements, particularly in terms of ceasefire. In turn, we keep working at the UN Security Council, but the stance adopted by the United States is preventing us from making sure Israel complies with the requirements put forward by mediators and Security Council members.
We discussed in detail the situation in and around Libya. Like our Egyptian friends, we are committed to the concept of a comprehensive crisis settlement based on the principles of Libya’s sovereignty, unity, and territorial integrity. We emphasised the urgent need to appoint a new Special Representative of the UN Secretary-General for Libya, as this position has remained vacant for too long.
We welcomed our Egyptian partners’ commitment to expanding political dialogue with Syria. Cairo’s constructive position was instrumental in deciding to restore Damascus’ full membership in the League of Arab States. We hope that the process of restoring Syria’s natural ties with its neighbours in the region will continue. This process will not only help overcome the consequences of the years-long crisis in that country, but will also create additional opportunities to strengthen security and stability in the Middle East as a whole.
There are many other issues which directly affect Egypt’s interests in the regions that lie next to the Arab Republic of Egypt, such as Sudan, Somalia, and the Red Sea. We believe all these issues should be addressed through direct dialogue between the parties involved with the support of neighbouring countries.
We reviewed several practical issues related to the first ministerial conference of the Russia-Africa Partnership Forum, following the decision of last year’s summit which was held in St Petersburg in July 2023. The ministerial session of the Partnership Forum will be held in Sochi on November 9-10.
I expressed my gratitude to our Egyptian friends for their balanced and constructive stance on the situation in and around Ukraine. We exchanged views on how this issue is being discussed at various venues. I outlined our perspective on the emerging issues, including within the international community, and our vision of ways to overcome them based on the legitimate interests of the Russian Federation.
We agreed to continue working together on all items on the bilateral agenda, as well as on international and regional matters.
Question: What do Russia and Egypt plan to do in order to achieve Palestinian settlement?
Sergey Lavrov: We mentioned the steps we are taking in our respective opening remarks. Along with several other countries, Egypt is striving to find recommendations that will be acceptable to both Israel and Hamas.
We welcome all initiatives aimed at ending the bloodshed as soon as possible and ensuring a sustainable and permanent ceasefire. We are working towards this goal at the UN Security Council as well, acting in concert with our Egyptian friends.
The problem is that the United States is unwilling to let pass the resolutions that would seriously imply an end to the bloodshed which is what everyone wants. They have vetoed several resolutions promoted by our Arab colleagues, other Security Council members, and us. Several months ago, in May, the Americans submitted their own draft resolution, a vague and non-specific document. However, they said it was enough, Israel agreed with this approach, and everything would be fine.
We asked them to provide evidence. We asked our Israeli colleagues to confirm that they agreed with what was written in the American document, but Israel refused to do so. We were forced to abstain during vote on this resolution. Our Arab friends, including Palestine, asked us not to veto it, and to give a chance to this document that was so much touted by the Americans. We abstained, and the resolution was adopted. It was adopted on “empty paper,” and has remained empty paper to this day.
Not a single promise made by the United States has been acted upon. This does not mean we should stop doing what we are doing. If the mediation, which Egypt is energetically engaged in alongside a number of other Arab countries, bears fruit, we will be happy with that outcome.
The UN Security Council cannot leave this issue unattended, since it is the key international issue, no matter how others may try to portray it.
Second, we agreed that once the ceasefire is in place, humanitarian aid must be rushed in immediately. The humanitarian situation in the Gaza Strip is catastrophic, and the situation on the West Bank is not much better.
The most important thing is not to allow this conflict to remain “frozen” once again. We must press everyone who opposes it into complying with the UN Security Council and General Assembly resolutions on creating a Palestinian state. This is no easy task, given the situation on the ground with a large number of illegal Israeli settlements in the West Bank.
We cannot go back on the decisions that have been made and supported by the overwhelming majority of the countries around the world. Those who are used to be the only ones to call the shots will eventually - sooner or later (preferably sooner) - have to heed the voice of humanity.
Question: What do you think about the latest US sanctions on Russian news outlets, including the RT television channel? What can you say about US Secretary of State Antony Blinken’s call to treat RT as an intelligence agency? This is a serious accusation.
Sergey Lavrov: Presidential Press Secretary Dmitry Peskov and Foreign Ministry Spokeswoman Maria Zakharova, as well as many other officials and politicians, have commented on this matter. I’m not going to go over it again.
I can only add that George Orwell had rich imagination and great historical foresight. However, even he was unable to envision what a totalitarian state would actually look like. He outlined some of its attributes, but was unable to delve into the depth of the totalitarianism we are witnessing today under the “rules-based order.” I have nothing else to add to that. The leaders in Washington suppress dissent and have upstaged even Orwell and his vision. This is unadulterated totalitarianism. McCarthyism was just a child’s play by comparison.
I hope independent observers who are closely watching international developments and the way the United States and its satellites are doing everything possible, impossible, and unimaginable to stop the objective process of forming a multipolar, just, and democratic world order are clear about that. They need democracy only to tell the countries how to go about their lives. But as soon as you propose discussing the democratisation of international relations, they clam up. It’s all about the rules-based order. But all of that is doomed. Anyone can clearly see that. They are historically doomed. The course of history is accelerating.
Question: What does Türkiye (a NATO country) willing to join BRICS mean? How may its prospective membership impact things?
Sergey Lavrov: I’d be hard pressed to explain why the Turks submitted an application to join our organisation, but a few comments may be appropriate here.
First, there is an objective, historical, and unstoppable process of forming a multipolar world order. Second, it’s clear that with its rapidly growing global weight and reputation, BRICS is becoming one of the key engines and creators of the multipolar world order. BRICS has received more than 30 requests to establish relations or to join as a member. These are all well-known countries that play significant roles in their respective regions. Perhaps, leaders who are thinking about the future of their countries within the emerging multipolar world order are unwilling to be left behind.
It is likewise important that BRICS is developing special mechanisms to enhance the role of its member states and their partners in addressing global governance issues, including reforming the Bretton Woods institutions, the International Monetary Fund, and the World Bank. The acquisition of the necessary number of votes by BRICS countries and their like-minded partners in these institutions, which reflects their effective economic weight, is being artificially held back by the United States and its allies.
The situation in the World Trade Organisation is similar. Special efforts are being made to hold back the reform, which would allow the actual economic performance and trade capabilities of each country to be properly evaluated.
Without a doubt, against this backdrop, many are drawn by the fact that alternative payment platforms are being developed within BRICS which allow countries to trade, invest, and conduct other economic transactions without being dependent on those who have decided to weaponise the US dollar and the euro. No one wants to end up in that position. Everyone realises that anyone can be subjected to American or other Western sanctions.
We are witnessing the collapse of entities that were once created as part of Western globalisation, where everyone was pressed into believing that eternal values include fair competition, the inviolability of property, and free market mechanisms, and that the US dollar was the world patrimony.
Now, everyone knows this is by far not so and that these very levers and globalisation mechanisms, which were promoted primarily by Western countries, are being used in an unlawful policy of suppressing competitors by any means in an attempt to perpetuate their hegemony which is slipping away as the world is watching.
I think if we objectively assess the positions of the countries applying to BRICS, we can say that all of this is important for the countries determining their future.
Foreign Minister Sergey Lavrov’s video address to participants in the 9th BRICS Legal Forum, Moscow, September 19, 2024 (Видеообращение Министра иностранных дел России Сергея Лаврова к участникам IX Юридического форума БРИКС, Москва, 19 сентября 2024 г.) / Russia, September, 2024
Keywords: sergey_lavrov, speech
2024-09-19
2024-09-19
Russia
Source: mid.ru
Colleagues, friends,
I would like to cordially greet the organisers and participants in the BRICS Legal Forum, being held in this format for the ninth time.
Over the years, the Forum has asserted itself as an influential international platform that provides professional jurists with an excellent opportunity to exchange experience and applied knowledge in the field of regulating various spheres of public life and interstate collaboration. This makes it possible to better understand the specific features of BRICS member states’ legal systems in the interests of strengthening comprehensive legal cooperation between them.
I am noting with satisfaction that the Forum’s central theme, Law: Safeguarding a Fair World, meets the current agenda. It is common knowledge that countries of the US-led collective West strive to destabilise the existing system of international law and to replace it with their own pro-Western rules-based world order.
For its part, Russia is firmly committed to the principles of the UN Charter in their entirety and interconnection. We believe that unconditional compliance with the norms of international law is a highly important component of forging a more equitable multipolar world order heeding the cultural and civilisational diversity of nations worldwide and their sovereign right to decide their destiny. I am delighted to note that our position enjoys the broadest support among like-minded BRICS countries and other states of the Global Majority.
Your meeting has a rather packed agenda. You will discuss a wide range of topical issues, including the international justice system, the legal dimension of international trade, as well as legal aspects of sport and energy cooperation.
I am confident that the Forum will take place in a constructive and creative setting, and that it will contribute to more effective legal collaboration and to charting common approaches towards the regulation of various aspects of cooperation within BRICS.
I wish you productive discussions.
Source: mid.ru
Colleagues, friends,
I would like to cordially greet the organisers and participants in the BRICS Legal Forum, being held in this format for the ninth time.
Over the years, the Forum has asserted itself as an influential international platform that provides professional jurists with an excellent opportunity to exchange experience and applied knowledge in the field of regulating various spheres of public life and interstate collaboration. This makes it possible to better understand the specific features of BRICS member states’ legal systems in the interests of strengthening comprehensive legal cooperation between them.
I am noting with satisfaction that the Forum’s central theme, Law: Safeguarding a Fair World, meets the current agenda. It is common knowledge that countries of the US-led collective West strive to destabilise the existing system of international law and to replace it with their own pro-Western rules-based world order.
For its part, Russia is firmly committed to the principles of the UN Charter in their entirety and interconnection. We believe that unconditional compliance with the norms of international law is a highly important component of forging a more equitable multipolar world order heeding the cultural and civilisational diversity of nations worldwide and their sovereign right to decide their destiny. I am delighted to note that our position enjoys the broadest support among like-minded BRICS countries and other states of the Global Majority.
Your meeting has a rather packed agenda. You will discuss a wide range of topical issues, including the international justice system, the legal dimension of international trade, as well as legal aspects of sport and energy cooperation.
I am confident that the Forum will take place in a constructive and creative setting, and that it will contribute to more effective legal collaboration and to charting common approaches towards the regulation of various aspects of cooperation within BRICS.
I wish you productive discussions.
Investment and Finance
Investment and finance in BRICS
BRIC by BRIC, de-dollarization only a matter of time (Шаг за шагом, дедолларизация — лишь вопрос времени) / Hong Kong, September, 2024
Keywords: economic_challenges, political_issues
2024-09-17
2024-09-17
Hong Kong
Source: asiatimes.com
Speculation mounting BRICS to announce a gold-backed trading currency to break the greenback’s hold on global finance, writes ‘Asia Times’.
At a campaign rally in Wisconsin, US presidential candidate Donald Trump stepped up his America First campaign earlier this month by vowing to impose 100% tariffs on goods from any nation that shifts away from the dollar.
Trump did not tell his supporters that the measure to protect the dollar would be painful for American households, with many consumer goods likely to double in price. Around 70% of products sold at Walmart and Target are sourced from China, the nation at the forefront of de-dollarization.
Trump made his announcement on the eve of the highly anticipated annual BRICS summit, scheduled for October 22-24 in Kazan, Russia. Crucially, the meeting may announce a roadmap for developing an alternative to the current dollar-centric global financial system.
Details are still scarce but some observers expect the meeting will announce a multicurrency payment platform. Some BRICS watchers even predict the announcement of a roadmap for a gold-backed BRICS trading currency.
The creation of an alternative to the current dollar system would be historic for several reasons. It would mark the first credible attempt to move past the 1944 Bretton Woods Agreement that established the postwar global financial system.
Under Bretton Woods, the dollar was tied to the fixed price of gold while all other currencies were pegged to the dollar. Nations with dollar-denominated trade surpluses could exchange their dollars for gold with the US central bank at the so-called gold window.
The dollar system created financial stability but gave the US near total control over the global financial system. US banks became the clearinghouses for global trade. A Japanese company buying goods from India had to buy dollars to pay its supplier in India. The centralized system enabled the US to ban any person, business or country from the global financial system.
Bretton Woods started to unravel in 1971 when US President Richard Nixon decoupled the dollar from gold. Faced with rising trade deficits, the US chose to close the gold window rather than balance its trade, effectively defaulting on its Bretton Woods obligations.
The decision had major consequences. Freed from the constraints imposed by the gold standard, the US government lost its financial discipline and went on a decades-long spending spree. From 1971 to 2024, the US national debt grew from $400 billion to $35 trillion.
Servicing the national debt has become the biggest line item on the US national budget, even larger than annual defense spending, prompting a growing number of high-profile economists and business leaders to sound the alarm. Tesla CEO Elon Musk recently warned: “At current rates of government spending, America is in the fast lane to bankruptcy.”
More specifically, the US may soon run out of creditors willing to buy its debt. China has sold hundreds of billions in US Treasuries in recent years, and foreign investors have become net sellers of US debt. (The commonly used term “printing money” actually means issuing debt.)
Even without the US incurring its massive debt, gradual de-dollarization is inevitable. The American share of the global economy is declining rapidly.
In 2016, BRICS countries overtook the G7 in combined GDP. The group now accounts for 35% of the world’s output, compared to the G7’s 30%. China alone contributes 30% of global industrial output, nearly double that of the US.
Designing a financial or monetary architecture for countries as diverse as BRICS members is complex but there are several templates. The deputy foreign minister of the Russian Federation, Sergei Ryabkov, called recently for a monetary unit similar to the European Currency Unit (ECU), the precursor to the Euro.
The ECU was conceived in 1979 in response to Nixon’s decision to close the gold window. No longer pegged to gold, the European currency started to fluctuate wildly. The ECU thus created a shared unit of account that stabilized currency markets.
Another template being mentioned is the “bancor,” a currency unit proposed by economist John Maynard Keynes during the Bretton Woods Conference.
Keynes envisioned the bancor as a supranational unit of account, tied to a basket of essential commodities like oil and wheat. This would ensure that the bancor’s value was based on real economic resources rather than fluctuating national currencies.
Keynes also proposed penalties for countries with persistent trade surpluses or deficits, in a bid to encourage balanced global trade. The US rejected the bancor as cumbersome and a hindrance to free trade. But today’s chronic imbalances—particularly the US’s massive trade deficit with China—validate Keynes’s foresight.
The path BRICS takes from here will depend on several factors. How aggressively will the US defend the dollar? How will the US address its growing debt and trade imbalances? What is next for its increasingly dysfunctional political system?
While Trump’s pledge to sanction de-dollarizing nations could be campaign rhetoric, an escalation of America’s sanctions war could trigger a financial reset in response.
BRICS could decide to launch a currency unit partially backed by gold and natural resources like oil, minerals and metals. The group has considerable leverage considering it controls a large and growing part of the world’s natural resources, enough to dictate global prices.
One indication that BRICS is preparing for such a financial reset is its unprecedented hoarding of gold. In the past two years, BRICS members have bought gold at record levels. The monetary metal has historically been used to recalibrate currencies following a financial or monetary crisis.
To be sure, a transformation of the now 80-year-old global financial system is inevitable. Bretton Woods was a neo-colonial makeover of the British Empire that modernized the financial system and moved the seat of power from London to New York.
BRICS, on the other hand, will likely seek to develop a new financial architecture from the ground up, one that reflects the economic and demographic realities of the 21st, not the 20th Century.
Source: asiatimes.com
Speculation mounting BRICS to announce a gold-backed trading currency to break the greenback’s hold on global finance, writes ‘Asia Times’.
At a campaign rally in Wisconsin, US presidential candidate Donald Trump stepped up his America First campaign earlier this month by vowing to impose 100% tariffs on goods from any nation that shifts away from the dollar.
Trump did not tell his supporters that the measure to protect the dollar would be painful for American households, with many consumer goods likely to double in price. Around 70% of products sold at Walmart and Target are sourced from China, the nation at the forefront of de-dollarization.
Trump made his announcement on the eve of the highly anticipated annual BRICS summit, scheduled for October 22-24 in Kazan, Russia. Crucially, the meeting may announce a roadmap for developing an alternative to the current dollar-centric global financial system.
Details are still scarce but some observers expect the meeting will announce a multicurrency payment platform. Some BRICS watchers even predict the announcement of a roadmap for a gold-backed BRICS trading currency.
The creation of an alternative to the current dollar system would be historic for several reasons. It would mark the first credible attempt to move past the 1944 Bretton Woods Agreement that established the postwar global financial system.
Under Bretton Woods, the dollar was tied to the fixed price of gold while all other currencies were pegged to the dollar. Nations with dollar-denominated trade surpluses could exchange their dollars for gold with the US central bank at the so-called gold window.
The dollar system created financial stability but gave the US near total control over the global financial system. US banks became the clearinghouses for global trade. A Japanese company buying goods from India had to buy dollars to pay its supplier in India. The centralized system enabled the US to ban any person, business or country from the global financial system.
Bretton Woods started to unravel in 1971 when US President Richard Nixon decoupled the dollar from gold. Faced with rising trade deficits, the US chose to close the gold window rather than balance its trade, effectively defaulting on its Bretton Woods obligations.
The decision had major consequences. Freed from the constraints imposed by the gold standard, the US government lost its financial discipline and went on a decades-long spending spree. From 1971 to 2024, the US national debt grew from $400 billion to $35 trillion.
Servicing the national debt has become the biggest line item on the US national budget, even larger than annual defense spending, prompting a growing number of high-profile economists and business leaders to sound the alarm. Tesla CEO Elon Musk recently warned: “At current rates of government spending, America is in the fast lane to bankruptcy.”
More specifically, the US may soon run out of creditors willing to buy its debt. China has sold hundreds of billions in US Treasuries in recent years, and foreign investors have become net sellers of US debt. (The commonly used term “printing money” actually means issuing debt.)
Even without the US incurring its massive debt, gradual de-dollarization is inevitable. The American share of the global economy is declining rapidly.
In 2016, BRICS countries overtook the G7 in combined GDP. The group now accounts for 35% of the world’s output, compared to the G7’s 30%. China alone contributes 30% of global industrial output, nearly double that of the US.
Designing a financial or monetary architecture for countries as diverse as BRICS members is complex but there are several templates. The deputy foreign minister of the Russian Federation, Sergei Ryabkov, called recently for a monetary unit similar to the European Currency Unit (ECU), the precursor to the Euro.
The ECU was conceived in 1979 in response to Nixon’s decision to close the gold window. No longer pegged to gold, the European currency started to fluctuate wildly. The ECU thus created a shared unit of account that stabilized currency markets.
Another template being mentioned is the “bancor,” a currency unit proposed by economist John Maynard Keynes during the Bretton Woods Conference.
Keynes envisioned the bancor as a supranational unit of account, tied to a basket of essential commodities like oil and wheat. This would ensure that the bancor’s value was based on real economic resources rather than fluctuating national currencies.
Keynes also proposed penalties for countries with persistent trade surpluses or deficits, in a bid to encourage balanced global trade. The US rejected the bancor as cumbersome and a hindrance to free trade. But today’s chronic imbalances—particularly the US’s massive trade deficit with China—validate Keynes’s foresight.
The path BRICS takes from here will depend on several factors. How aggressively will the US defend the dollar? How will the US address its growing debt and trade imbalances? What is next for its increasingly dysfunctional political system?
While Trump’s pledge to sanction de-dollarizing nations could be campaign rhetoric, an escalation of America’s sanctions war could trigger a financial reset in response.
BRICS could decide to launch a currency unit partially backed by gold and natural resources like oil, minerals and metals. The group has considerable leverage considering it controls a large and growing part of the world’s natural resources, enough to dictate global prices.
One indication that BRICS is preparing for such a financial reset is its unprecedented hoarding of gold. In the past two years, BRICS members have bought gold at record levels. The monetary metal has historically been used to recalibrate currencies following a financial or monetary crisis.
To be sure, a transformation of the now 80-year-old global financial system is inevitable. Bretton Woods was a neo-colonial makeover of the British Empire that modernized the financial system and moved the seat of power from London to New York.
BRICS, on the other hand, will likely seek to develop a new financial architecture from the ground up, one that reflects the economic and demographic realities of the 21st, not the 20th Century.
Regional safe havens in the global economy (Региональные «тихие гавани» в мировой экономике) / Russia, September, 2024
Keywords: economic_challenges, expert_opinion
2024-09-19
2024-09-19
Russia
Source: brics-plus-analytics.org
The reigning paradigm of looking at the main regions of the world economy is through the prism of the largest regional economies and the economic growth impulse that emanates from these heavyweights to their regional neighbours via trade, investment and migration/remittances channels. A different way of looking at the regional patterns in the world economy is to discern the smaller economies that in their respective regions serve as stabilizers, anchors or role models. In some cases, such economies are already performing important roles in their respective regions/regional integration blocs – in the case of Singapore in ASEAN or the UAE in GCC the qualitative impact of these economies may rival the quantitative contributions to regional growth impulses delivered by the largest economies of the respective regional groupings. A pattern whereby every major region has its “safe haven”/regional stabilizer would harbor significant benefits for the world economy and could be facilitated by the creation of a global platform for regional safe havens pursuing superior economic modernization/macroeconomic stability policies.
The current global pattern of the distribution of “safe havens” – economies that exhibit superior economic policy practices that are rewarded by financial markets with high long-term returns and lowers asset price volatility – appears to be (quite expectedly) largely concentrated in a limited number of developed economies, with far less such stability anchors observed in the developing world. Such a concentrated pattern of safe havens may be self-reinforcing, with initial advantages attained by advanced economies being perpetuated by capital outflows from emerging markets (cumulative causation factor). Most of the safe haven economies in the developed economies are global in scope and go well beyond their regional realms – what is lacking then in the current set-up is the layer of “regional safe havens” (RSHs) that would serve as stability anchors in their respective regions and that would provide for a more even distribution of low-risk/low volatility assets across the global economy.
There may be several reasons why a more decentralized pattern of regional safe havens that are present in all of the main regions of the world economy would benefit global economic development:
A greater role for regional safe havens could pertain to areas such as the launching of global initiatives related to sustainable development/dealing with climate change as well as in leading some of the key economic policy tracks in their respective regional integration blocs. Indeed, rather than the largest economies serving invariably as the main representatives of their respective regional associations/groupings, the smaller economies that serve as economic policy role models may take the lead in their regions in coordinating the harmonization and the inter-operability of standards[2] across the main regions of the global economy.
The normative implications of the above discussion pertain to the need for greater policy coordination among the RSHs with the possibility of the creation of a global platform that would connect such small open economies. The launching of such horizontal cross-continental platforms could foster the emergence of new regional safe havens when coupled with efforts undertaken at the level of the respective regional integration arrangements. The longer term goal of such a diversified network of RSHs may be directed towards building (in an ideal world) a network of “fully equipped regions”, whereby all of the main regions of the global economy are endowed with a critical/minimal array of arrangements, policy tools and anchors: regional development institutions, regional policy rules, regional financing arrangements, regional safe havens, regional trading arrangements. Such a “minimal array”/MVP of regional instruments and arrangements could boost the quality of economic policy in the main regions of the global economy, while also setting the stage for improved cross-regional/cross-continental harmonization of standards and economic policy coordination.
[1] https://www.econstor.eu/bitstream/10419/40304/1/55876939X.pdf
[2] This may be particularly important in areas such as digital economy standards or the inter-operability of regional/national carbon pricing markets.
Yaroslav Lissovolik, Founder, BRICS+ Analytics
Source: brics-plus-analytics.org
The reigning paradigm of looking at the main regions of the world economy is through the prism of the largest regional economies and the economic growth impulse that emanates from these heavyweights to their regional neighbours via trade, investment and migration/remittances channels. A different way of looking at the regional patterns in the world economy is to discern the smaller economies that in their respective regions serve as stabilizers, anchors or role models. In some cases, such economies are already performing important roles in their respective regions/regional integration blocs – in the case of Singapore in ASEAN or the UAE in GCC the qualitative impact of these economies may rival the quantitative contributions to regional growth impulses delivered by the largest economies of the respective regional groupings. A pattern whereby every major region has its “safe haven”/regional stabilizer would harbor significant benefits for the world economy and could be facilitated by the creation of a global platform for regional safe havens pursuing superior economic modernization/macroeconomic stability policies.
The current global pattern of the distribution of “safe havens” – economies that exhibit superior economic policy practices that are rewarded by financial markets with high long-term returns and lowers asset price volatility – appears to be (quite expectedly) largely concentrated in a limited number of developed economies, with far less such stability anchors observed in the developing world. Such a concentrated pattern of safe havens may be self-reinforcing, with initial advantages attained by advanced economies being perpetuated by capital outflows from emerging markets (cumulative causation factor). Most of the safe haven economies in the developed economies are global in scope and go well beyond their regional realms – what is lacking then in the current set-up is the layer of “regional safe havens” (RSHs) that would serve as stability anchors in their respective regions and that would provide for a more even distribution of low-risk/low volatility assets across the global economy.
There may be several reasons why a more decentralized pattern of regional safe havens that are present in all of the main regions of the world economy would benefit global economic development:
- RSHs allow for scaling up superior economic policy practices from the safe haven economies to their regional partners via such channels as economic policy coordination within the regional integration arrangements and exchange of best practices
- Retention of capital within the wider region in case of capital outflows from any given economy: with capital staying closer to home within the region there is more scope for capital repatriation compared to outflows into “far abroad” economies in line with the indications of the gravity model[1]
- More safe havens in the global economy: it may be hard for some of the regional safe havens to compete with their peers that have a global reach/status – there is much more scope for such safe havens to differentiate themselves in relative terms on a regional basis.
- A decentralized pattern of regional safe havens opens the possibility for the creation of a global platform for such regional nodes that targets the exchange of economic policy best practices and the possibility of a coordinated development agenda
A greater role for regional safe havens could pertain to areas such as the launching of global initiatives related to sustainable development/dealing with climate change as well as in leading some of the key economic policy tracks in their respective regional integration blocs. Indeed, rather than the largest economies serving invariably as the main representatives of their respective regional associations/groupings, the smaller economies that serve as economic policy role models may take the lead in their regions in coordinating the harmonization and the inter-operability of standards[2] across the main regions of the global economy.
The normative implications of the above discussion pertain to the need for greater policy coordination among the RSHs with the possibility of the creation of a global platform that would connect such small open economies. The launching of such horizontal cross-continental platforms could foster the emergence of new regional safe havens when coupled with efforts undertaken at the level of the respective regional integration arrangements. The longer term goal of such a diversified network of RSHs may be directed towards building (in an ideal world) a network of “fully equipped regions”, whereby all of the main regions of the global economy are endowed with a critical/minimal array of arrangements, policy tools and anchors: regional development institutions, regional policy rules, regional financing arrangements, regional safe havens, regional trading arrangements. Such a “minimal array”/MVP of regional instruments and arrangements could boost the quality of economic policy in the main regions of the global economy, while also setting the stage for improved cross-regional/cross-continental harmonization of standards and economic policy coordination.
[1] https://www.econstor.eu/bitstream/10419/40304/1/55876939X.pdf
[2] This may be particularly important in areas such as digital economy standards or the inter-operability of regional/national carbon pricing markets.
Yaroslav Lissovolik, Founder, BRICS+ Analytics
Political Events
Political events in the public life of BRICS
Foreign Minister Sergey Lavrov’s interview with Sky News Arabia, Moscow, September 20, 2024 (Интервью министра иностранных дел Сергея Лаврова телеканалу Sky News Arabia, Москва, 20 сентября 2024 г.) / Russia, September, 2024
Keywords: sergey_lavrov, quotation
2024-09-20
2024-09-20
Russia
Source: mid.ru
Question (retranslated from Arabic): The BRICS association is expanding rapidly, consolidating its positions and cooperating with a number of countries. Many states would like to join it. At the same time, this association is facing certain challenges. How do you counter these challenges? What is your idea of successful cooperation for the entire world?
Sergey Lavrov: The prescription is very simple – it is necessary to respect international law in full measure. First of all, I am quoting the UN Charter once again, this implies the principle of the sovereign equality of states and non-interference in each other’s domestic affairs. It is necessary to promote collaboration based on a balance of interests that we need to find. Just like the Shanghai Cooperation Organisation, the League of Arab States and the Gulf Cooperation Council, BRICS functions on the basis of consensus. BRICS is an association based on a respectful attitude towards each other and on mutual consideration for each other’s interests.
There is no such a principle in the European Union or NATO. The United States is the hegemon there, it tolerates no objections with regard to its policies. The European Union and Brussels have established a bureaucracy that tells sovereign countries what to do. The people did not vote for this bureaucracy. They voted for their presidents and prime ministers instead; and a bureaucratic system was later established by mutual agreement. Just look how disrespectfully officials in Brussels behave nowadays.
A similar situation is impossible in the BRICS countries. The association advocates the real, rather than artificial (when someone is forced to agree), consensus principle primarily aiming to find agreements that reflect the mutual accord of all participants. This is not easy. The more partners, the harder it is to search for accord. It takes more time to finalise any consensus-based agreement than a vote-based solution. However, such agreements are much more resilient and viable than anything imposed from the outside. This is the entire and very simple secret.
BRICS is developing cooperation in the economy and finance. There is a new development bank, which is gaining strength. There is cooperation in politics, the humanitarian sphere, sports, education and culture. As BRICS chair this year, we have already organised 150 events, with several dozen more planned. All such events are of keen interest and are attended by relevant delegations, ministries, parliaments and public organisations. We observe the events in BRICS countries and see their citizens’ genuine interest in them.
This provides a solid foundation for developing a strategic partnership within the association. Currently, BRICS comprises 10 countries; their number has doubled compared to last year. More than 30 countries have already submitted applications for interaction or membership in the association. At the summit to be held in Kazan in October, one of the main items on the agenda will be the consideration of applications from states that wish to interact and partner with BRICS.
Question (retranslated from Arabic): We wanted to discuss a common problem: overcoming the dollar’s hegemony and the US sanctions imposed on Russia and Iran. This situation was predicted earlier. In particular, it was stated that the dollar would be used as a weapon against Russia and Iran. Now, notwithstanding all this, does Russia really want Donald Trump to return to the White House?
Sergey Lavrov: Donald Trump denounced the policy of the current administration, which, as he explicitly stated, destroys the role of the dollar and undermines the economic strength of the United States, which relies heavily on the dollar. The US national debt is $36 trillion. The interest alone on the US national debt is $1 trillion per year. That's without the principal on that debt. Donald Trump has directly stated that the sanctions imposed by the Biden administration, using the dollar's capacity as a global reserve currency, are detrimental to the US economy.
I agree with him. Moreover, I agree not because I want to, but because an overwhelming majority of countries are already cautious about any transactions in the global economy where they would be dependent on the dollar. This dependence persists. It is huge, including in the People's Republic of China, in India, and most of the world's economies. This dependence has already been recognised as a phenomenon that poses a risk to the development of countries. The dollar is gradually being replaced by settlements in national currencies.
At last year’s BRICS summit, President of Brazil Luiz Inacio Lula da Silva suggested that BRICS should consider creating an alternative payment platform that could be used by association’s members and other interested countries. This task has been set for the Kazan summit, which will be chaired by President of Russia Vladimir Putin. We expect to receive a report on how to establish alternative payment platforms from the BRICS countries’ finance ministers and central banks. Over 90 percent of our trade with China is carried out in national currencies avoiding the dollar. In our trade with India, this figure has reached 60 percent. We are beginning to shift towards such forms of interaction with most countries. It is clear that the United States keeps printing dollars and uses these devalued banknotes to maintain its policy of economic pressure on other countries. However, this age is approaching its decline.
Source: mid.ru
Question (retranslated from Arabic): The BRICS association is expanding rapidly, consolidating its positions and cooperating with a number of countries. Many states would like to join it. At the same time, this association is facing certain challenges. How do you counter these challenges? What is your idea of successful cooperation for the entire world?
Sergey Lavrov: The prescription is very simple – it is necessary to respect international law in full measure. First of all, I am quoting the UN Charter once again, this implies the principle of the sovereign equality of states and non-interference in each other’s domestic affairs. It is necessary to promote collaboration based on a balance of interests that we need to find. Just like the Shanghai Cooperation Organisation, the League of Arab States and the Gulf Cooperation Council, BRICS functions on the basis of consensus. BRICS is an association based on a respectful attitude towards each other and on mutual consideration for each other’s interests.
There is no such a principle in the European Union or NATO. The United States is the hegemon there, it tolerates no objections with regard to its policies. The European Union and Brussels have established a bureaucracy that tells sovereign countries what to do. The people did not vote for this bureaucracy. They voted for their presidents and prime ministers instead; and a bureaucratic system was later established by mutual agreement. Just look how disrespectfully officials in Brussels behave nowadays.
A similar situation is impossible in the BRICS countries. The association advocates the real, rather than artificial (when someone is forced to agree), consensus principle primarily aiming to find agreements that reflect the mutual accord of all participants. This is not easy. The more partners, the harder it is to search for accord. It takes more time to finalise any consensus-based agreement than a vote-based solution. However, such agreements are much more resilient and viable than anything imposed from the outside. This is the entire and very simple secret.
BRICS is developing cooperation in the economy and finance. There is a new development bank, which is gaining strength. There is cooperation in politics, the humanitarian sphere, sports, education and culture. As BRICS chair this year, we have already organised 150 events, with several dozen more planned. All such events are of keen interest and are attended by relevant delegations, ministries, parliaments and public organisations. We observe the events in BRICS countries and see their citizens’ genuine interest in them.
This provides a solid foundation for developing a strategic partnership within the association. Currently, BRICS comprises 10 countries; their number has doubled compared to last year. More than 30 countries have already submitted applications for interaction or membership in the association. At the summit to be held in Kazan in October, one of the main items on the agenda will be the consideration of applications from states that wish to interact and partner with BRICS.
Question (retranslated from Arabic): We wanted to discuss a common problem: overcoming the dollar’s hegemony and the US sanctions imposed on Russia and Iran. This situation was predicted earlier. In particular, it was stated that the dollar would be used as a weapon against Russia and Iran. Now, notwithstanding all this, does Russia really want Donald Trump to return to the White House?
Sergey Lavrov: Donald Trump denounced the policy of the current administration, which, as he explicitly stated, destroys the role of the dollar and undermines the economic strength of the United States, which relies heavily on the dollar. The US national debt is $36 trillion. The interest alone on the US national debt is $1 trillion per year. That's without the principal on that debt. Donald Trump has directly stated that the sanctions imposed by the Biden administration, using the dollar's capacity as a global reserve currency, are detrimental to the US economy.
I agree with him. Moreover, I agree not because I want to, but because an overwhelming majority of countries are already cautious about any transactions in the global economy where they would be dependent on the dollar. This dependence persists. It is huge, including in the People's Republic of China, in India, and most of the world's economies. This dependence has already been recognised as a phenomenon that poses a risk to the development of countries. The dollar is gradually being replaced by settlements in national currencies.
At last year’s BRICS summit, President of Brazil Luiz Inacio Lula da Silva suggested that BRICS should consider creating an alternative payment platform that could be used by association’s members and other interested countries. This task has been set for the Kazan summit, which will be chaired by President of Russia Vladimir Putin. We expect to receive a report on how to establish alternative payment platforms from the BRICS countries’ finance ministers and central banks. Over 90 percent of our trade with China is carried out in national currencies avoiding the dollar. In our trade with India, this figure has reached 60 percent. We are beginning to shift towards such forms of interaction with most countries. It is clear that the United States keeps printing dollars and uses these devalued banknotes to maintain its policy of economic pressure on other countries. However, this age is approaching its decline.
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