Information Bulletin of the BRICS Trade Union Forum
Issue 34.2019
2019.08.19 — 2019.08.25
International relations
Foreign policy in the context of BRICS
Brics hegemony in Africa, its impact (Гегемония БРИКС в Африке, ее влияние) / Zimbabwe, August, 2019
Keywords: expert_opinion, economic_challenges
Author: Allen Choruma

The BRICS (Brazil, Russia, India, China and South Africa) 10th annual summit, which was held in Johannesburg, South Africa, in July 2018 under the theme "BRICS in Africa: Collaboration for inclusive growth and shared prosperity in the Fourth Industrial Revolution", signals BRICS hegemony in Africa.

After decades of US and European Union (EU) domination of global political and economic architecture, the balance of power is shifting and being counterbalanced with the rise of China and other emerging economies such as Russia, India and Brazil, who make up BRICS.

The acronym BRICS was originally coined in 2001 to refer to a group of four countries: Brazil, India, Russia and China.

These four emerging economies started to meet regularly as a group in 2006.

In 2010, South Africa was invited to join BRICS, bringing the total membership to five countries.

The Delhi Declaration, passed at the 4th BRICS summit in March 2012, clearly sums up BRICS objectives as follows: "We envision a future marked by global peace, economic and social progress and enlightened scientific temper.

We stand ready to work with others, developed and developing countries together, on the basis of universally recognised norms of international law and multilateral decision-making, to deal with the challenges and opportunities before the world today."

According to World Trade Organisation (WTO) statistics, BRICS countries account for 30 percent of global land, 43 percent of global population, 21 percent of world GDP and 45 percent of world's agricultural production.

As the grip and influence of the US and EU countries is waning in the globalised village, emerging economic blocs like BRICS have gained momentum and are spreading their tentacles in the so-called developing regions.

Africa, given its diversity, strategic geographical position and abundant natural resources — in high demand globally — is flexing its muscles and can no longer be considered as a docile player on the global economic stage.

Africa is now placing conditions on extraction of its natural resources and leveraging on them to advance its own political interests and economic development aspirations as envisioned in African Union (AU) Agenda 2063, and on robust economic integration initiatives such as the Continental Free Trade Area (CFTA).

Africa is rising and making informed and smart choices on who it wants to do business with, and under what conditions.

African countries view BRICS as a development partner rather than as a threat to their independence and national sovereignty.

BRICS offers African countries with an alternative — an equal partnership in economic co-operation and development and less reliance on the US and EU countries.

Western countries are generally viewed by Africans as having double standards and often tend to use development finance, aid and technical assistance to serve their political and economic interests.

Western development aid approach in Africa is now considered as outdated and based on perpetuating the colonial and imperialistic donor — recipient — subservient legacy.

BRICS offers a new way of doing business, a partnership and a win-win deal with Africa.

According to EU 2012 Parliamentary report, "The role of BRICS in the Developing World", BRICS member states are catalysing changes in the architecture of international development co-operation, not only with regard to trade and financial flows, but also as donors.

Over the last decade, BRICS increased financial and technical assistance and economic co-operation with developing countries through the south-south co-operation.

Although BRICS development aid to Africa is lower in comparison to Organisation for Economic Co-operation and Development (OECD) Development Assistance Committee (DAC) countries — often referred to as the major donor countries — it is nevertheless increasing.

Lack of structured data often makes the tracking and quantification of BRICS development aid difficult to measure.

The EU Parliamentary report cited above shows that FDI inflows from BRICS increased incredibly from less than $10 billion in 2002 to $146 billion eight years later in 2008.

In 2016, FDI inflows from BRICS to recipient countries were estimated at $481 billion.

BRICS New Development Bank (NDB) — launched in 2014 in Brazil at the BRICS 6th summit — seeks to mobilise resources for infrastructure and sustainable development projects in BRICS and other developing countries.

NDB offers development aid alternatives to African countries, which relied mostly on western multilateral lending institutions like IMF and World Bank, which are controlled from western capitals.

Western development aid has often come with strings attached and unfavourable conditions under the guise of promoting democracy, human rights and poverty alleviation.

Over the last decade, BRICS countries, as a bloc and individually, have made significant contributions in strengthening economic co-operation and development ties with African countries.

BRICS strength is in its policies of multilateralism, partnership, non-interference and recognition of national sovereignty of the countries they dialogue and co-operate with.

BRICS has a different approach to development aid and views African countries as "equal development partners".

BRICS aid projects in Africa are negotiated deals and determined by the needs of the recipient countries as opposed to being imposed.

According to AfreximBank (Africa) and Exim Bank (India) 2018 report: "Developing South-South Collaboration: An Analysis of Africa and India's Trade and Investment", trade between Africa and India is on the rise.

Indo-Africa trade between 2001 and 2014 increased tenfold, making the Asian country Africa's fourth-largest national trading partner.

According to the above report, Indo- Africa bilateral trade over the last 17 years rose as follows: 2001($7,2 billion), 2014 ($78 billion) and 2017 ($55 billion).

Africa accounts for 8 percent of India's total trade. Indian deputy president Shri Venkaiah Naidu was in Zimbabwe in November 2018 on a three-nation tour of Botswana, Zimbabwe and Malawi aimed at deepening India's strategic economic co-operation with Africa.

India and Zimbabwe signed six bilateral agreements in areas which include mining, information services, health and ICT.

India also pledged a $310 million line of credit to Zimbabwe for infrastructure rehabilitation projects.

Russia has also entered the fray in Africa.

In March 2018, Russia's Foreign Minister Sergey Lavrov undertook a five-day tour of African countries, namely Angola, Namibia, Mozambique, Zimbabwe and Ethiopia.

This was viewed as marking the return of Russia in Africa as it did not focus much on defence deals, but on mining, agriculture, industrial development, energy and other commercial interests.

China remains Africa's leading trading and development partner. China's relations with Africa are multifaceted and have been boosted by the Forum on China-Africa Co-operation (Focac) and other platforms such as the One Belt-One Road Initiative (OBOR) and institutions such as Export-Import Bank of China (Exim), China Development Bank and China-Africa Development Fund.

China's policy on Africa has caused uneasiness in the Trump administration.

US President Donald Trump has shown disdain and disrespect for African countries as shown by his previous disparaging remarks on Africa. The US New African Strategy policy announced by Trump's security adviser John Bolton on December 13 2018 at the Conservative Heritage Foundation clearly shows that US interest in Africa is in securing its security and economic interests and countering Chinese influence on the continent.

On the sidelines of the G20 Summit held in Argentina in December 2018, BRICS Heads of State issued a joint statement criticising protectionism amid threats by the US to intensify tariffs on China and impose more sanctions on Russia.

BRICS members urged open international trade, stressing that "the spirit and rules of WTO run counter to unilateral and protectionist measures".

BRICS continues to increase its footprint in Africa and is forging strong symbiotic political and economic ties with African countries, thus heralding a new chapter in BRICS-Africa economic partnership and development co-operation.
Russian, Indian top diplomats to hold talks in Moscow on August 27 (Российские и индийские дипломаты проведут переговоры в Москве 27 августа) / Russia, August, 2019
Keywords: mofa, top_level_meeting

The top diplomats will compare notes on tough issues, focusing on cooperation in the Asia-Pacific region, as well as the UN, the Shanghai Cooperation Organization and the Russia-India-China forum

PYATIGORSK /Stavropol Region/, August 22. /TASS/. Russia's top diplomat Sergey Lavrov and Indian Minister of External Affairs Subrahmanyam Jaishankar will hold negotiations in Moscow on August 27, Russian Foreign Ministry Spokeswoman Maria Zakharova said at Thursday's briefing on the sidelines of the North Caucasian youth forum Mashuk.

"The foreign ministers will discuss the ways of further promoting bilateral cooperation and synchronize their watches for the schedule of upcoming contacts," she noted. "The focus will be on the preparations for the participation of the official Indian delegation in the fifth Eastern Economic Forum that will take place in Vladivostok on September 4-6, as well as the implementation of the annual [bilateral] summit."

Zakharova said that "trade and investment, military and scientific-technical cooperation, the use of national currencies in mutual payments, promising projects in the space and energy sphere, especially in the Arctic shelf and in Russia's Far East" will top the agenda at the negotiations.

The top diplomats will compare notes on tough issues, focusing on cooperation in the Asia-Pacific region, as well as the UN, the Shanghai Cooperation Organization and the Russia-India-China forum. In addition, talks on the preparation for Russia's chairmanship in BRICS (Brazil, Russia, India, China and South Africa) and some regional scenarios, including the preservation of the Joint Comprehensive Plan of Action on the Iran nuclear program and the situation in the Persian Gulf zone and in Afghanistan will be on the agenda as well," the spokeswoman stressed.
Experts urge BRICS to remain voice of global south (Эксперты призывают БРИКС оставаться голосом глобального юга) / China, August, 2019
Keywords: expert_opinion, global_governance

JOHANNESBURG, Aug. 23 (Xinhua) --BRICS should continue to be the voice of the Global South for it to remain relevant, said experts at a public seminar titled "BRICS and Global South in the Plural Modernities Context" in Johannesburg on Friday.

Maxim Khomyakov, the director of the BRICS Studies Center at Ural Federal University, Russia, said BRICS managed to give a platform to African countries to discuss their concerns with BRICS.

"The BRICS sustainability depends on it continuing being the voice of the global South. It will only succeed if it becomes the vanguard of the Global South. It is a good platform to discuss common interest issues like geo-political issues, economic and terrorism. There are good things coming out of BRICS," said Khomyakov.

Khomyakov said each country in BRICS has its own agenda but the bloc is rallying point to address some issues.

He said BRICS has to overcome such challenges with rise in right wing, populism, shunning of multilateralism, adding that BRICS has to continue to articulate the voice of the Global South and give those countries a voice to air their concerns and interests.

Francis Kornegay, senior researcher at South Africa's think tank Institute for Global Dialogue, said there is a proliferation of BRICS interest.

"When BRICS was formed it had a narrow focus on strategic agenda. It has proliferated to every agenda like education, university, labor, civil society and gender. We have seen some interbank mechanism to the local currencies as opposed to the U.S. dollars which is part of the essence of the BRICS formation," he said. Enditem

Emerging dynamics of conflict and cooperation in a post-hegemonic age: A Kautilyan perspective on BRICS (Возникающая динамика конфликта и сотрудничества в постгегемонический век: взгляд Каутиляна на БРИКС) / India, August, 2019
Keywords: expert_opinion

This paper theorises international relations using the perspective of an Indian classic, Kautilya's Arthashastra, and employs such interpretation to conceptualise BRICS (or the association of emerging economies, Brazil, Russia, India, China and South Africa.) As a litmus test for the analytical viability of the Kautilyan perspective developed here, the paper examines what might be called "the BRICS paradox": the mismatch between theoretical expectations about the nature of BRICS and the ambiguous empirical evidence about it. From the Kautilyan perspective, and in particular seen through the framework of multiple and overlapping mandalas, BRICS can be redefined as a novel type of international agent that reflects the emergence of pluralist global politics. Having sought to test Kautilyan concepts in the contemporary context, the paper confirms the analytical value of the ancient theorisations, their potential for contemporary IR scholarship as well as strategic foreign policy analysis in a pluralistic international order in a post-hegemonic era.

I. Introduction: The Changing International Order and the BRICS Paradox

The question of how global power transitions affect the liberal international order has long been a subject of enquiry for scholars of international relations (IR).[1] The realist perspective tends to emphasise the geopolitical and competitive dimension of the rise of the emerging powers and their formation of new international institutions.[2] Those who focus on institutional and normative continuities, for their part, are keen to point out that none of the emerging powers or new initiatives has directly sought to oppose or reform the institutional bedrock of global governance.[3] Still others have focused on ideational and conceptual transformations. Echoing Huntington's observations about the empowerment of cultural identities, scholars like Amitav Acharya and Barry Buzan have argued that there is a growing interest in local perspectives to IR theories and a demand for a global IR built on a dialogue between them and the established Western perspectives.[4]

The grouping of Brazil, Russia, India, China in 2006, and later South Africa in 2010, referred to as BRICS, illustrates these transformations. Yet, the conundrum of global power transitions, and new international institutions like BRICS and their implications for the liberal international order, remains an object of empirical and conceptual debate. This paper offers an additional conceptual perspective to these debates. Its objective is a conceptual analysis of an Indian classic, Kautilya's Arthashastra, to develop a local perspective to BRICS studies, and the study of international relations in general.

There are at least three reasons why a local perspective on BRICS studies is useful. First is the lack of broadly accepted theorisations about BRICS and the persistent debate about its political nature. Second is the uncertainty over the application of Kautilyan conceptualisations on BRICS: It is unknown whether Kautilya can be useful in BRICS studies, what results a Kautilyan perspective yields and how it relates to other interpretations. The ambiguous notion that BRICS scholarship has not been conceptually saturated, which underpins the above reasoning, provides a third and more general argument for the task in this analysis.

To be sure, BRICS has been subjected to various, sometimes contradictory, conceptualisations. Some scholars have interpreted it as a challenger to Western dominance and the promoter of a new international order.[5] Others have claimed it to be more of a paper tiger as its members are quarrelsome, to begin with, and tended to support the existing liberal institutions.[6] Moreover, while BRICS has succeeded in creating two new financial institutions, the New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA), it has not produced a BRICS Consensus, leaving critics of neo-liberal development policies disappointed.[7] Against this background, some scholars have sought to describe these different and conflicting interpretations as "the BRICS paradox",[8]deriving from certain theoretical premises about international relations that pose expectations and lead to interpretations that do not match with the reality.

One major aspect of the BRICS paradox is regarding BRICS' position within the contending-dominant power continuum or the classic realist narrative that links international order with cycles of hegemonic rise and fall.[9] For example, power transition theorists argue that the international order tends to be structured hierarchically with a preponderant power at the top of its hierarchy. During a decline of a former hegemon, power transition is likely to produce a contender, either as a group of states or one single great power.[10] Various scholars have already shown that this does not fit well with BRICS.[11]

The same holds for the balance of power theory when employed in this context of Ikenberry's hegemonic realism. It proposes that augmentation of power by one actor disrupts the balance in a system and thus is followed by rebalancing measures by other actors in the same system.[12] This would suggest that though BRICS started as a coalition against Western dominance, with the increase of Chinese influence in world affairs, it would meet with rebalancing efforts by either Russia or India, or even both. However, there is not enough empirical evidence to support this theoretical deduction. Indeed, the evidence is contradictory. First, under the Narendra Modi government, India has become the US' partner in the Indo-Pacific and has actively sought closer ties with Japan and Australia. This can be seen as a reaction to China's growing presence in South Asia and the Indo-Pacific. In the summer of 2017, during the so-called Doklam crisis, Sino-Indian tensions came close to a military showdown.[13] These examples support the notion of rebalancing efforts and conflicting relations among the BRICS countries.

Second, and in spite of these tensions, there is also plenty of Sino-Indian and intra-Asian cooperation, particularly in terms of economic and financial integration. BRICS is only one of the many instances where hugely heterogeneous emerging powers have more or less equal influence and where inter-state conflicts have been set aside for the sake of common objectives and international cooperation. According to some scholars,[14] these observations challenge the general viability of the hegemonic realism and the contending-dominant power dichotomy. However, as they draw on European experiences, it would seem logical that they are partially context-specific.[15] Indeed, some commentators have argued that international pluralism, coexistence of cooperation and rivalries, is deeply embedded in both past and present Asian politics; Asian powers, China and India included, would seem to endorse this as a positive feature.[16] European experience with rivalries, on the other hand, has been less positive.

BRICS may not have challenged the current international order, but it has given a task to scholars attempting to understand it. On the one hand, BRICS may be seen as a process in making, or that it is merely a paper tiger. Alternatively, it could be that, as part of a new and emerging reality, there are no available analytical tools to assess its true potential. Thus, as Michael Liebig has argued, indigenous traditions provide us with untapped resources to develop analytical tools to study IR.[17] According to the proponents of the so-called global IR, this is not just a research gap in the specialised BRICS scholarship.[18] Instead, broader usage of local perspectives would benefit the development of IR theory in general. This article contributes with a non-Western local perspective to the contemporary BRICS scholarship.

The focus of the article is on developing an interpretation of the Indian classic, Kautilya's Arthashastra, which is an ancient Sanskrit treatise on statecraft and foreign policy.[1] The litmus test of the analytical viability of the Kautilyan perspective developed here consists of using this perspective to explain the BRICS paradox. This is in response to the interest in and demand for developing local IR perspectives. By developing a Kautilyan perspective and testing its analytical viability, this paper also provides a conceptual framework that can be used to study how and to what extent—if at all—this perspective differs from the established or Western IR theories, and the manner it resonates with them.

The second section of this paper provides the reasoning for why Kautilya is a relevant source in IR. The third section presents some of Kautilya's key concepts in terms of international relations and seeks to interpret them for the purposes of contemporary foreign policy analysis. The fourth section applies the analytical framework on explaining BRICS, and the fifth section summarises the conclusions reached.

II. Kautilya and the Relevance of his Arthashastra

Kautilya, also known as Chanakya, was a Brahman scholar and political adviser who lived during and after the era of Alexander the Great's conquests. Although uncertain, the predominant understanding is that the Arthashastra, an extensive treatise in statecraft and foreign policy, was authored by Kautilya. Kautilya, who, together with Thucydides, can be considered one of the first realists, served as chief minister and councillor of the Indian king, Chandragupta Maurya (321–296 BCE). It is thought that Kautilya's advice helped Chandragupta to establish an empire of his own in the Indian peninsula, an empire which at its peak covered most of contemporary South Asia.[19]

Kautilya's Arthashastra is a piece of ancient Sanskrit literature, with over 200,000 words in the English translation and more extensive than Aristotle's Politics. It counts among the finest specimens of ancient literature.[20] Unlike Politics, Arthashastra was lost until 1904 when it was discovered by Dr R. Shamasastry. Welcoming its recovery, scholars like Max Weber compared Arthashastra with ancient Hellenic literature on statecraft, while Johann Jakob Meyer, a German Indologist, referred to it as the "library of ancient India".[21] In spite of having been lost, some elements of the Arthashastra survived and were passed on by oral tradition through Hindu epics such as the Mahabharata and Ramayana, as well as through social structures, religious beliefs and according to Patrick Olivelle, to some extent, even in legal codes like the laws of Manu.[22]

This author's reading of Kautilya's Arthashastra is used as a tool to conceptualise the present.[23]This objective aligns the present paper with IR theory and foreign policy analysis while setting it apart from works in history of ideas, although these are never fully separate.[24]It should be noted, as Bilgin[25] and Acharya[26] have argued, that it is analytically challenging if not impossible to exclusively define what actually is "Western" about Western IR or what constitutes the inherently non-Western dimensions in non-Western IR. Like technological innovations, ideas too travel across regions, mutated on the way and assimilated into new contexts.[27] In addition, focus on at least partly artificial categorisations can strengthen exclusiveness whereas emphasis on what unites and what is common can be seen to increase positive sentiments across various kinds of boundaries. From this perspective, the concept of 'non-Western' may contain false connotations about the separateness of, for example, Indian and Chinese traditions, even if those form important building blocks of what is meant by 'Western'.

Consequently, indigenous traditions should not be studied to serve national pride or civilisational confrontations. Rather, it should be the realisation that the epistemic sources of IR should reflect the pluralism of the current international order that should motivate such studies. In the past, the US got the chance to develop, employ and interpret IR for its own purposes, to legitimise its supremacy. This resulted in contextual biases. Therefore, to unravel the secrets of the present world, what is needed is to not only acknowledge and understand the particularistic and contextual finesse of ideas, but also to seek to replenish the conceptual sources.[28]

III. Kautilyan International Relations and Foreign Policy

Early works by Sarkar and Modelski, and more recent research by, for example, Boesche, Zaman, Gautam, Mitra and Liebig have already sought to connect Kautilyan concepts with present-day political science terminology.[29] Following Gautam, this author has in a previous study[30] divided Kautilya's foreign policy framework into seven elements: (1) a specific type of king, the conqueror; (2) four measures to overcome opposition (upayas); (3) the seven constituent elements of state; (4) six measures of foreign policy; (5) mandala system of international relations; (6) three ways of conquest; and (7) three ways of war. This paper focuses on three: the mandala[2], the constituent elements of state, and conquest. These three elements in Kautilya's foreign policy framework can be expanded to broader analytical concepts providing perspectives to: (1) the organising principles of international relations; (2) overarching leadership goals of transnational agents; and (3) the foreign policy obligation of an aspirant global leader.[31]

3.1. The logic of international relations

In Kautilya's Arthashastra, 'mandala' refers to circles of kings, and an international system based on strategic relations between them. The central nodes in the mandala system, the four circles of kings, are four types of kings: conqueror, conqueror's enemy, middle power and neutral power. Each of the circles consists of the friends and allies of their nodal power, be it the conqueror, conqueror's enemy, middle king or the neutral power. In addition, king does not merely denote ruler but also, depending on the context, the whole state.[32]

The four nodes of Kautilya's mandala system have particular characteristics. The most powerful state, the so-called neutral king, is defined as one that would have the material capabilities to resist and even subjugate each of the minor kings individually, but is situated beyond their territories. This great power regards the lesser states with indifference because, for Kautilya, enmity depends primarily on territorial proximity. The middle king is the second strongest state, but it also shares territory with minor powers. Conqueror and its enemy are the lesser states that also share a common border.[33] As Arthashastra is written without direct historical references, various scholars agree that the mandalasystem is primarily a conceptualisation of possible strategic relations between them, even though Boesche has shown that it also has a descriptive dimension.[34]

The concepts of enmity and friendship lie at the heart of the mandala's strategic function. Yet, for Kautilya, enemy is a state that "is situated anywhere immediately on the circumference of the conqueror's territory."[35] Benoy Sarkar, writing during World War I, adopted this idea without deeper scrutiny. Gautam, conversely, has noted that while the natural enemy of any state is bound to be its neighbour, not all neighbours are enemies.[36] Still, to get an idea about the organising principle in the mandala's strategic function, the factors that cause enmity in the neighbourhood should be considered.

Some of the obvious reasons are competition for the same resources like arable land, woods or metals, dependence on the same source of water, increases in population, and migration and the potential colonisation resulting from it. These become causes of conflict only between peoples who live close to each other. Even today these matters are relevant to a certain extent, yet global markets and the relative ease of travel reduces dependency on the neighbourhood. Consequently, instead of neighbourhood, enmity results from conflicting strategic interests, which in Kautilya's historic context tended to coincide with territorial proximity. This resonates with Liebig's extrapolation about Kautilya's matsya-nyāya, or the 'law of the fishes', or 'law of the jungle', which define conflicting interests as the natural condition of human life.[37]

As a result, the constitution of the circles of states, and their relations with each other, are a question of conflicting interests between them. This modification makes it possible to expand the applicability of the mandala. While territorial borders in IR apply to states, conflicting interests also apply to other governance institutions as much as matters of international and transnational interdependences.

Defined in this sense, mandala can account not only for inter-state relations but also for global governance and international organisation. This is an important observation, because one of the major implications of globalisation has been the transformation in the political sovereignty of states through various forms of shared authority and pooled sovereignty.[38] This is what Rosenau and Czempiel[39]referred to with the influential notion of 'governance without government'. The concept encapsulates the resulting fragmentation of public authority and the emergence of new actors including non-governmental and private actors – in addition to transgovernmental (between for example state departments), intergovernmental, intra-regional, translocal (between for example two cities) and public-private hybrids.[40]

Thus, it seems both possible and plausible to define mandala as a conceptualisation of transnationalrelations structured by how different agents relate to: (1) each other in terms of size and influence; and (2) matters of governance. A matter of governance can be a conflicting interest or an issue of interdependence between at least two actors. In the modern age, many governance issues are not fundamentally about conflicting interests, but about management of interdependences.

3.2. Overarching leadership goals

Mitra and Liebig have argued that the raison d'état of Kautilya's political leadership is the optimisation of state power to maintain and increase the welfare of its people. This is because only a powerful state can ensure the welfare of its people.[41] Kautilya divides power into three components: intellectual strength (which provides good counsel); a strong army and prosperous treasury, which provide for physical strength; and valour, which builds the psychological bases of energy and morale. According to Ramachandran's interpretation, Kautilya's conception of power embodies four factors—counsel, military might, economy and motivation—and in this form is similar to the conception by the Chinese military strategist and writer Sun Zi.[42] Pursuit of power is one of the factors that render Kautilya a realist because one of the basic premises in realism is that states seek to maximise their power and influence.

Yet, Kautilya's realism is conditional. A king is bound to do his best for the welfare of his subjects: 'In the happiness of his subjects lies his happiness; in their welfare his welfare.'[43] Welfare is the goal, and realist politics the tool. How then does Chanakya define welfare? He defines it as material well-being, acquisition and abundance of wealth:

Hence the king shall ever be active and discharge his duties; the root of wealth is activity, and of evil its reverse. In the absence of activity acquisitions present and to come will perish; by activity he can achieve both his desired ends and abundance of wealth.[44]

[W]hen the king is well off, by his welfare and prosperity, he pleases the people; of what kind the king's character is, of the same kind will be the character of his people; for their progress or downfall, the people depend upon the king; the king is, as it were, the aggregate of the people.[45]

State power is not only an extension of the elements of power (intellectual, moral and material capacities and possessions) on an abstract idea of state. In fact, Kautilya's seven-fold typology of state, or the 'constituent elements', 'state factors' or 'elements of sovereignty', are fully comparable with 20th-century realist conceptualisations of state power.[46] Kautilya operationalises the optimisation of power through the following state factors: (1) king, ruler; (2) government, administrative bodies; (3) people, country and the productive capabilities like agriculture; (4) capital or fortified city; (5) treasury or perhaps the tax base and tax income; (6) army; and (7) allies.[47] State power refers to optimisation of intellectual, moral and material capacities and possession of all these seven factors.

For the purposes of modern analysis, some modifications of these elements are in order. The king and ministers should be considered in the broader sense of an efficient government and the ability of a central authority to exercise decisive influence on its subjects. Roger Boesche describes Kautilya's administrative system as 'despotic', but this interpretation has been challenged by for example Deepshikha Shahi's constructivist reading of the Arthasastra.[48]

The third element for Kautilya would seem to be a compound of people and natural resources, and how they under an efficient and just administration yield both the sustenance for the country as well as the tax base that supports the government in its undertakings and a strong army. Like the king and governmental officials, so would the people be of good character, loyal and capable in their respective business. Today, the productive capabilities of a country would embody its industrial base, connectivity to international markets, position in regional and global value chains, as well as other elements that form the preconditions of economic productivity and competitiveness, like social and physical infrastructure.[49] Some elements of the modern social infrastructure, like the educational and judiciary systems, link to Kautilya's 'character' of the people and imply not only the build of occupational capabilities but also the construction of societal virtues, cohesiveness of the society and individual attachment to community. Finally, for Kautilya, commerce is not a-political even if it serves economic exchange. Commerce is also a key element of 'intelligence service' as we have learned from the examples of Facebook and Huawei.[50]

The treasury and tax base are still applicable concepts. The fortified city, constructed to protect the population against enemy troops, would need some modifications to become a useful category for contemporary analysis. Societal resilience might be a useful replacement for the ancient concept of a fortified city. It encompasses elements of both external and internal security. It also covers the soft elements of societal cohesiveness, approval of government and a critical and well-informed world-view which provide a fortification against inimical influence. Indeed, these elements of resilience find expression in Kautilya's theory of society, which combines social control and administration with the material well-being of people and the general acceptability of the king and social hierarchies. However, he does not list these as part of the elements of sovereignty.[51]

In the Kautilyan formulation, there is also a non-material aspect to strength and happiness, one defined by Vedic tradition and the hierarchical social structure of the Aryan caste system. Living well in this context would imply fulfilling one's duties as a member of a caste as given.[52] Cultural traditions, belief systems and values can be seen as sources of societal resilience, stability and predictability. They also form an element in the sociological acceptability of governance. For example, Peter Stillman defines legitimacy as "the compatibility of the results of governmental output with the value patterns of the relevant system".[53]

Of the last two state factors, army and allies, the latter is highly relevant in the modern context, defined by environmental and economic interdependences. These ties cause a fundamental transformation in the nature and operational logic of the mandala system. For example, the productive forces of any country are dependent on their connections with other countries. Various transnational governance institutions regulate how and between whom these connections are built and supervised. As a result, cooperation permeates most of Kautilya's state factors: the circles of states in a modern mandala become intertwined and tie kingly obligations in one political entity with the happiness of people in another. This leaves enmity or zero-sum games with only a side role.

Thus, the raison d'être of leadership in the modern era mandala can be defined as optimisation of welfare in the often transnationally intertwined state factors. This can be defined as the inter-state mandala. Leadership in this context can be about solving common problems.[54] Moreover, if modern mandala has to take into account the transnationally intertwined state factors, so can it also be applied to conflicting interests and governance in cases, where instead of states, international organisations serve as agents. In this sense, these are transnational mandalas. These organisations (1) do not have kings but leaders; (2) do not have governments but bureaucracies; (3) do not have a nation, but they have people as their subjects and their objectives are often defined with regard to problems experiences by peoples in many countries and geographic areas; (4) do not have capitals but a relation with social cohesiveness and societal resilience; (5) do not have right to collect taxes but virtually all of them have a budget and incomes; (6) some have an army; and (7) many cooperate with other international organisations, institutions, non-state actors and states.

An additional feature in Kautilya's conceptualisation of state, which strengthens the applicability of mandala also on international organisations, is the open character of Kautilya's state: it is not territorially bound, nor nationally or ethnically defined. The idea of nation-states has been predominant among European whereas states in Asia, Africa and South America encompass multiple nations of whom many speak their own tongue. According to Shyam Saran, this openness is distinctive in Asian political history. It would explain why pluralism would appear so much more acceptable a condition in Asia than in Europe, where the integration process was launched to avoid the horrific experiences of the two world wars.[55] Admittedly, the European Union's (EU) legitimacy as an integration process has more recently been contested, partially through misguided diagnosis by the Brexiters[3] and populist movements with alleged support from China and Russia, about the ongoing migration crisis and global economic imbalances.

3.3. Conquest as a foreign policy obligation

Benoy Sarkar described Kautilya's mandala as a 'cult of expansion'. Sarkar connected expansionism with world conquest; Boesche also hints at this. Liebig and Gautam, in contrast, restrict Kautilya's expansionism to the geographic and civilisational sphere of the Indian subcontinent.[56] Nonetheless, conquest forms an essential part of Kautilya's theory, where the would-be-conqueror or vijigisu is a central actor.

Conqueror is a singular type of king because of its normative character, and its role in the international system. The normative dimension of the conqueror refers to certain qualities that legitimise the vijigisu's role as a conqueror. The conqueror should possess excellent personal qualities, and be industrious in attaining and improving his skills and abilities. He should husband his time efficiently according to a carefully planned schedule, and never let selfish desires and urges dictate his actions.[57]

In addition to these features, the vijigisu is distinctive because of conquest. The Arthashastra classifies conquests into three groups: (1) righteous; (2) greedy; and (3) demonical. A just conqueror, our vijigisu, does not necessarily need to seek usurpation or extension of his state's belongings. Territorial takeover, moreover, would likely involve death, loss of money and impoverishment. It would not necessarily be conducive to the happiness and welfare of his people, least of all those newly subjected to his rule. In the Arthashastra, a 'king […], being possessed of good character and best-fitted elements of sovereignty' and seeking conquest, should be neither demonic nor greedy. If he would act in any other way than righteous, he would create the space and need for another state to seek a new conqueror. This is because it is the duty of a king to aspire for the welfare and happiness of his people, which is impossible under a demonic ruler and difficult with a greedy one.[58]

To be able to conquer, the vijigisu should have the necessary material and non-material capabilities both to conquer and to maintain a dominant position after the conquest. To establish himself, he needs to set up his rule in a manner that advances the happiness and welfare of the new subjects, thus binding them to the king for material gains and for non-material reasons. The non-material reasons in Kautilya's Arthashastra have to do with the Brahmanical order and virtues which deepen the moral dimension of Kautilya's realism.[59]

As a result, Kautilya's conquest does not generate rights without obligations. Instead, by extending the kingdom, conquest also extends the obligations that come with leadership. In this sense, the ethical and material are inseparably intertwined. Interestingly, this seems to resonate with certain modern concepts. There is, for instance, a similarity between 'benevolent superpower' and 'liberal international order' on the one side, and the vijigisu and 'conquest' on the other. As noted by Liebig, these conceptual interfaces deserve 'long overdue' scholarly attention. However, they are beyond the scope of this particular paper.[60]

If the mandala in the contemporary context can be regarded as a certain type of strategic constellation of diverse interests around a governance issue, or, more narrowly, a constellation of state relations with regard to a matter of governance, then to conquer means to solve this issue. A righteous conquest would imply a solution that improves or secures the welfare of the vijigisu and the conquered. For example, a mutually beneficial trade agreement, or a port or railway connection, would correspond to righteous conquest, while a trade war would imply a greedy conquest.

3.4. Towards a framework of analysis

The basic unit in the mandala is the state, conceived of as a compound of seven elements, none of which, in the contemporary world, is fully independent or sovereign, but which is tied to other states, friends and enemies alike, with at least some environmental, economic and international connections. The objective of each state is the optimisation of the immaterial and material dimensions of each of the seven transnationally interdependent state factors, which would obligate leaders or at least the vijigisu to aspire for win-win solutions instead of zero-sum outcomes. This holds in cases where the circle of states is intertwined through interdependent constituent elements. These notions might help to rethink the dynamics of conflict and cooperation in a manner that underpins the historical experiences of Asian civilisations and is well suited for the emerging pluralistic international order.

Moreover, while the basic unit in Kautilyan mandala is the state, the modern mandala also applies to international organisations and governance agencies in the global context of complex and inter-relational webs of political authority. Along with states, these webs of authority can be situated as parts of a state-centric mandala, as elements of 'interdependent sovereignty' affecting people and productive forces, treasury and allies. But they can also be interpreted as actors in transnational mandalas, where instead of states the focus is on transnational agents or international organisations.

Finally, the ideal leader (vijigisu) would be one that employs all measures in hand to ensure successful win-win solutions for common concerns, while ensuring neutrality or zero-sum gains in cases where the mandala is divided into clearly separate circles, and where the state factors of each central node of each circle are disconnected. The following is a tentative analytical framework:

  1. A key foreign policy objective is righteous conquest. In the context of multiple and overlapping circles consisting of transnationally intertwined state factors, righteous conquest denotes successful leadership in optimisation of welfare in the interconnected political entities through win-win solutions for common problems. The modern vijigisu has mastery over the complex web of mandalas, knows how to keep them separate (e.g., does not mix political conflicts with economic cooperation), and has the ability to exercise effective leadership.
  2. In defining the operational environment for foreign policy manoeuvres, primary focus is on what constitutes a given mandala:
  • What are the conflicting interests/common problems?
  • What kinds of agents are involved?
  • What does the vijigisu do to lead or overcome, by what means and how successfully?
  • What are the shortcomings of his leadership?
  • From the normative perspective, what should the vijigisu do and who or what is most suitable to be a vijigisu?

Emerging dynamics of conflict and cooperation in a post-hegemonic age: A Kautilyan perspective on BRICS - Part II (Возникающая динамика конфликта и сотрудничества в постгегемонический век: взгляд Каутиляна на БРИКС - Часть II)

IV. BRICS and the multiple and overlapping mandalas

Various scholars have attempted to define the association of Brazil, Russia, India, China and South Africa or BRICS as an international agent and to conceptualise its relationship with the changing international order. The BRICS countries portray some elements befitting various theoretical conceptualisations. It seems to be a little of many things, but not fully anything. This is the interpretation behind the BRICS paradox.

The BRICS paradox can be defined as a theoretically grounded chain of arguments that leads to deductions about BRICS that are not coherent with empirical reality, or at least seem controversial or ambiguous. One aspect of the paradox emerges from the idea that because the BRICS countries are so heterogeneous, i.e. they lack the political, geographic, ideational and constructivist elements that, particularly from the perspective of European integration theories, are necessary for efficient cooperation, BRICS is defined as fundamentally a paper tiger with little expectations regarding its global role. Another perspective, this one grounded in power transition theory, expects the BRICS countries to align to challenge either the hierarchical order of states in the increasingly obsolete US-led world order, or the norms and institutions of the current system in order to reform them to better fit their own interests. There is contradictory evidence for both these claims.

In Kautilyan terms, the organising principle in both these claims relates to some aspects of global interdependence, governance issues or conflicting interests. The Kautilyan perspective would thus suggest conceptualising these puzzles through relatively narrow, issue-specific mandalas. In other words, this perspective would solve the paradox by changing the premises leading to it. Even as no theory is perfect, most theories can convey some important information. Comparative studies show that BRICS is neither a federation nor a supranational governance entity, but an interstate alliance subject to conflicts or dissonance between its members. The Kautilyan perspective can add to this type of analysis with insights about what elements bind the BRICS countries together, and how they relate to the elements that separate them or create potential for conflicts within BRICS. For this, the Kautilyan perspective provides the tools of multiple and overlapping mandalas.

The BRICS mandalas divide into various transnational and interstate mandalas, which are partly separate and partly overlapping. BRICS as an international agent is a compound of how dynamics interrelations between these various mandalas. Figure 1. illustrates some of the complexities of these dynamics. Each colour denotes a specific constellation of strategic and conflicting interests, and each shared border (even between different colours) denotes a potentially conflicting relation. Enemy in one mandala can be friend in another.

4.1. Transnational mandalas

According to BRICS summit documents, BRICS was formed as a reaction to the "major and swift changes" in world affairs and the resulting need "for corresponding transformations in global governance". [61] The summit declarations underline values including mutual respect, cooperation, coordinated action and collective decision-making in "a multipolar, equitable and democratic world order."[62] As a result, the organising principles for the BRICS transnational mandala are the relation of each international agent towards these values, pluralism and the "corresponding reforms" in global governance.

The United Nations (UN), International Monetary Fund (IMF) and the World Trade Organization (WTO) are three of the most important governance institutions of the so-called liberal international order. They are also the objects of BRICS' critique, causes of conflicting relations, and the targets of conquest. Yet, the source of critique is not in the principles of these institutions. Instead, enmity arises from the discrepancy between values and practices. In spite of the power shift, the US and the developed countries continue to maintain a strong position in these institutions, and the system that should generate non-discriminatory gains for all still produces disproportionate benefits to the already powerful companies, countries and groups of people.[63] This, it would appear, is what the BRICS countries want to change.

Indeed, the shortcomings of what in critical political economy literature is called the neo-liberal political economy, clearly felt in the Global South, has been one source of major expectations for alternative development models and thus also for actual financial and trade initiatives for that purpose. For example, Duggan[64] and Mielniczuk[65] have separately shown that the BRICS discourse about development and political economy deviates from the established neo-liberal jargon. Neither of them, however, is able to demonstrate that the BRICS actually have an alternative agenda. Other scholars have shown explicitly that they do not.[66]

While state influence over markets among BRICS countries is relatively extensive, they have been major beneficiaries of economic globalisation and stout supporters of capitalism and remain so.[67]For example, BRICS country lending to other developing countries is as extractive as investments from the advanced economies.[68] The newly founded NDB has already been criticised for lack of transparency and disrespect for good governance. A recent case is the contentious infrastructure loan to Durban port in South Africa, strongly objected to by the local population.[69] Another factor is the close institutional relations between the Contingent Reserve Arrangement (CRA) and the IMF. BRICS created the CRA as a liquidity buffer against potential balance of payments problems, but when there is need for more than 30 percent of borrowing quota, it must first seek structural adjustment loans from the IMF before it can receive more support from the CRA.[70]

Nonetheless, even if there may not exist a mandala that is on a systemic level or that concerns capitalism, there appears to be a narrower developmental mandala. The BRICS rhetoric also emphasises the well-established problems of global governance—that poverty and lack of social and physical infrastructure, water and electricity are highly tangible problems even among the BRICS themselves. Mielniczuk has argued that construction of a new discourse can have long-term effects on how we see the world, how we create shared purposes and how we imagine the future.[71] It begins with ideational delinking from established and predominant discourses. Thus, some scholars have shown that to some extent, the BRICS countries have already caused a rupture in ideas about development. This is also evident from the NDB's General Strategy,[72] which seems to invite discussions and debates on development:

The bank will constructively engage the international community as an independent voice on development trends and practices. As a new institution, NDB has much to learn from the wealth of experience of multilateral and bilateral development institutions, as well as civil society and academic organizations.

In the context of the developmental mandala, there would be need for a righteous conqueror. BRICS has so far failed to shoulder this responsibility even if it has created space in both developmental discourses and institutional structures.[73] If the BRICS objective is indeed to advance reforms that are conducive to a more equitable and multipolar world order, their promotion of ideational and discursive pluralism, be it about political economy or cultures, should be in line with that objective. BRICS has promoted pluralism in global institutions as well as at the regional level. During BRICS summits, it has become a practice that the host country also organises a simultaneous conference for some regional organisation. For example, during the Ufa Summit in 2017, the Shanghai Cooperation Organization (SCO) was convened together with BRICS. In this sense, BRICS seems to be working as an enabler and promoter of multiple layers of cooperation.

On the global level, BRICS has faced opposition from the former hegemonic powers. For example, reforms of the IMF quota system had already been agreed upon at the Group of 20 meeting in 2008, a year before the first BRIC summit, but were stopped by the US Congress until 2016.[74] That failure met with harsh criticism from the BRICS. The BRICS summit declaration from 2015 states that "[w]e remain deeply disappointed with the prolonged failure by the United States to ratify the IMF 2010 reform package, which continues to undermine the credibility, legitimacy and effectiveness of the IMF."[75]

Similarly, BRICS concerns with the UN has focused on unilateralism. In various summits, they have condemned "unilateral military interventions, economic sanctions and arbitrary use of unilateral coercive measures in violation of international law."[76] Conflicts in Libya and Syria and the dispute about Iran's nuclear weapons are major triggers for these concerns. In these conflicts, BRICS has emphasised sovereignty and non-interference, while responsibility to protect human rights have been more important for the discourse of the US and its allies. The US has been and continues to be the 'enemy' also in the WTO and in matters of economic interdependencies. Prior to the Donald Trump presidency, BRICS voiced concerns about developed country regional trade agreements, which contain high regulatory standards that could induce additional costs and serve as barriers to market access for developing countries. The BRICS countries have also voiced their concern over the US refusal to appoint a WTO judge, which could "paralyse the dispute settlement system and undermine the rights and obligations of all Members."[77]

4.2. Interstate Mandala

Transnational mandalas thus would seem to encompass developmental concerns as well as concerns about global governance. In these cases, BRICS can be seen as an actor in its own right, and indeed, one can argue that there is a need for global leadership or a vijigisu that would propose solutions to solve common problems. At the same time, it can be asked, why has BRICS' role so far been modest? This depends on the nature of BRICS as not only part of transnational mandalas but also itself part of the interstate mandalas of its member states.

States are important even in transnational contexts and thus for example the developmental mandala comprises of global and regional institutions, corporations as well as states, who have also other strategic interests. While in the transnational context and with regard to development and pluralist global governance, India and China cooperate through various arenas like BRICS, NDP, Regional Comprehensive Economic Partnership (RCEP), Asian Infrastructure Investment Bank (AIIB), Shanghai Cooperation Organization (SCO), these initiatives can also be seen as foreign policy measures and employment of the four upayas by an aspirant conqueror, China. From India-centric mandala, they can be seen as tools of its enemy to legitimise its growing influence, make friends out of potential rivals, and through economic transactions tie India's constituent elements closer to itself.

This does not imply that developmental mandala or transnational mandalas would not exist or that the BRICS countries (or China and India, in particular) would not have common interests. It does, however, imply that BRICS agendas are forged within inter-state mandalas, where India has to be cautious about China and thus, where the dynamics between these two countries affect the manner in which they cooperate on the transitional level. Two conclusions can be made from these observations.

First, with regard to the developmental mandala, it would be desirable that BRICS could emerge as a vijigisu, a righteous conqueror that would lead international cooperation to solve problems of basic social and physical infrastructure, environmental degradation and climate warming. Each of BRICS members can seek to take that role and from a normative perspective, they should see it as their obligation.

Second, each BRICS member also has an obligation to protect the welfare of their peoples and other transnationally entwined elements of their sovereignty, as well as to optimise their influence over these elements. In other words, they have to be inquisitive about the policies of other BRICS members. Considering that China has launched three huge economic initiatives—the RCEP, AIIB and the Belt and Road Initiative (BRI)—BRICS members also need to be cautious to not bandwagon with these initiatives, unless they are convinced that China is a righteous conqueror and they are willing to subject themselves to it.

Consequently, from the Kautilyan perspective it appears that the questions about whether or not BRICS has what it takes to become a global leader in development and global governance, or whether it should or should not aspire for such a role, might be the wrong ones to ask – at least for now. The main reason is that the precondition for BRICS to be able to create a common political agenda for economic development and global governance is the rise of a vijigisu among them. In the contemporary context, this would appear far-fetched. At the same time, BRICS countries do have common concerns as when BRICS as an alliance functions as an agent of global dialogue and promoter of pluralism, it would seem to best serve these interests.

This paper proposes to approach BRICS through the assessment of the dynamics of conflict and cooperation in transnational and interstate mandalas. Using these analytical lenses would not seem to pose an analytical dilemma per se, yet it bears witness to the emerging dynamics of pluralistic international relations. To study these dynamics from descriptive, strategic and normative approaches, a Kautilyan perspective would be useful. Further research in developing these ideas as well as applying them on contemporary politics is needed.

V. Conclusion

This paper has sought to develop conceptual tools to study international relations through an interpretative analysis of Kautilya's Arthashastra. It then applied this perspective on conceptualising BRICS using the so-called BRICS paradox as a litmus test for the Kautilyan perspective. This brief analysis of BRICS has demonstrated the applicability of the perspective. It sought to present the overlapping transnational and interstate mandalas as an analytical tool to examine the dynamics of conflict and cooperation that define BRICS as an international agent and which explain the so-called BRICS paradox.

The Kautilyan perspective has successfully passed its litmus test; it has relevance for IR studies for four reasons. First, classical texts provide an important source from which to reconceptualise the present, to rethink, refine and even challenge well-established theorisations. Second, Kautilya forms a crucial element in the conceptual history of IR. Third, Kautilya can be employed to study and understand India's contemporary foreign politics. Fourth, Kautilya's Arthashastra can be used to complement and develop contemporary IR and strategic analysis.

The main conceptual contribution of this paper relates to the concepts of mandala and conquest, or the nature of international relations and the main foreign policy objectives. Two types of circles were presented, transnational and interstate mandalas. In transnational mandalas, the central agent may be an international organisation or some other agent of global governance. In interstate mandalas, the central node of analysis is a state, albeit the circles around it involve non-state actors and/or international organisations.

Finally, with regard to future research, the perspective provided here may be used to study differences, commonalities and complementarities between this and the established IR perspectives. As Kautilya was a realist political theorist, it would be particularly promising to enquire into the relationship between the Kautilyan perspective developed here and some of the key notions in other realist theories. For example, what is the relation between 'transnationally intertwined state factors' and 'national interest' or 'institutional constraints', and how do the ideas of 'conquest' and the 'circle of states' relate to 'multilateral diplomacy' or 'hegemonic transition'?
Investment and Finance
Investment and finance in BRICS
BRICS bank looks to tap into Indian Rupee offshore market (Банк БРИКС надеется получить доступ к оффшорному рынку индийской рупии) / India, August, 2019
Keywords: ndb, economic_challenges

The Shanghai-based NDB - floated by Brazil, Russia, India, China and South Africa (BRICS) - is headed by renowned Indian banker K V Kamath.

Kamath, who is the President of the Bank, "knows the Indian market extremely well, we looked very closely at Masala bonds market", he said. (Reuters)
The New Development Bank (NDB) of the BRICS countries, which got its first 'AAA' rating this week, plans to tap into the Indian Rupee offshore market as part of its efforts to raise capital, according to a top bank official. The Shanghai-based NDB – floated by Brazil, Russia, India, China and South Africa (BRICS) – is headed by renowned Indian banker K V Kamath. Japan Credit Rating Agency Ltd (JCR) on Tuesday assigned 'AAA' foreign currency long-term issuer rating with a stable outlook to NDB, the first such rating acquired by the Bank since it started functioning four years ago.

"It is the safest of investment ratings. If you are a AAA issuer, essentially it means that there's almost zero probability of you ever defaulting. That's what the rating agencies effectively telling investors out there," NBD Vice President and Chief Financial Officer Leslie Maasdorp told PTI in an interview. Maasdorp said it is significant that the NDB got higher rating than the BRICS countries. "India, for example, is BBB- on investment grade, South Africa has one rating at investment grade, China is A+, Brazil is sub-investment grade and Russia is BBB+. So, basically, what we have now, is that the NDB is rated significantly higher than weighted average of our members," he said.

"And it is a significant achievement because there is no other bank that we are aware of in the world that is only owned by emerging markets that has a rating as high as ours. All of the others that have such a high rating, they have either the United States or in Japan or the European Union as members. We have no AAA-rated countries as members," he said. Maasdorp said the bank is looking into the Indian Rupee offshore market to raise resources after Masala bonds market slowed down.

Kamath, who is the President of the Bank, "knows the Indian market extremely well, we looked very closely at Masala bonds market", he said. "We definitely intend to tap into the Indian Rupee offshore market. We looked at this already in 2017. But then, in 2018, there's been a significant drop in the market liquidity and demand for Masala bond," he said. "For a number of reasons the Masala bond market kind of slowed down. We remain very keen to access offshore Rupee (market) as part of our capital raising, but we don't have timing yet. We are studying market conditions closely, because, obviously, investors are very sensitive to interest rate environment," he said.

"I anticipate that in 2020 we are likely to raise Indian Rupees, but it will be based on the demand for local currency. Many of our loans in India to date have been in USD, whereas in other countries there's been more demand for local currency," he said. "So, we are likely to also look for hard currencies for 2020, but it's all based on what happens to the interest rate environment," he said.

Maasdorp said a total of 37 projects have been approved for all the five BRICS counties. "India is number two in terms of approvals now — I'd say about 29 per cent of our entire approved loans (totalling USD 10.2 billion), almost a third of that is in India," he said.

China stands first with 38 per cent of approvals. According to the bank, the approved projects for India included Assam Bridge (USD 300 million), Mumbai Metro Rail (USD 260 million), Madhya Pradesh roads project (USD 350 million), Madhya Pradesh Bridges project (USD 175 million), Bihar rural roads project (USD 350 million), Rajasthan Water project (USD 345 million) and Madhya Pradesh water supply project (USD 470 million).

Asked whether there is any competition between the NDB and the China sponsored Asian Infrastructure Investment Bank (AIIB) which is also based in China, Maasdorp said multilateral banks don't compete with each other. "In general, we do not compete with each other, we are co-financing in many instances," he said.

"We work very closely with AIIB because they are a sister institution, we are both headquartered in China. And the third reason why we don't really compete is that we provide a lot of local currency financing and we are unique in that regard," he said. About the slowdown of the BRICS economies including China and India, he said, "it's obviously concerning that the global economy is going through this global slowdown, but in all our member countries there's a strong urbanization that is driving growth, for example in India."

"India requires bridges, roads, airports — all these things to fuel the economic growth of the country…we believe that a multilateral development bank should do what we call countercyclical investment, meaning when the cycle is down, when economies are slowing down, you need to invest in infrastructure to help kick start the economies," he added.
Huawei Plans to Triple R&D Staff in Russia by 2025 (Huawei планирует к 2025 году увеличить численность персонала в сфере исследований и разработок в России) / United Kingdom, August, 2019
Keywords: social_issues, economic_challenges, trade_relations
United Kingdom

Huawei plans to triple its research and development (R&D) staff in Russia within the next six years, according to a new report from Russian state media outlet Sputnik. The Chinese tech giant, which is currently the largest telecom company in the world, will reportedly hire about 500 new staff by the end of the year and 1,000 more personnel after that.

Huawei currently has about 550 people at two R&D centres in the Russian cities of St. Petersburg and Moscow, according to Sputnik. But that number is expected to almost double by the end of 2019 and perhaps triple by 2025, provided the Russia media report is true.

The announcement is yet another sign that Chinese companies like Huawei are turning to BRICS business partners as their growth continues to be stymied in western markets over concerns that Beijing wants to spy on its geopolitical adversaries. Huawei did not immediately respond to Gizmodo's request for confirmation of its plans but we will update this article if we hear back.

The Trump regime has placed severe restrictions on Huawei's business in the US, and America's Justice Department still has a lawsuit pending that accuses Huawei of fraud and the theft of trade secrets. The US Congress considers Huawei's potential control of communications infrastructure in the US, including 5G networks, to be a national security threat, though President Donald Trump has sometimes said he'd be willing to allow Huawei more leeway if China provided trade concessions.

Huawei recently announced the name of its newly developed operation system, HarmonyOS, though it won't switch to the software unless it gets formally banned from working with Google. The Trump regime had banned US companies from doing business with Huawei, then backtracked by offering a 90 day reprieve. It's not clear where that will leave Huawei long term, but the tech giant is clearly preparing for a scenario where it might have to cut ties with Silicon Valley for good.

China, Russia strengthen financial ties (Китай и Россия укрепляют финансовые связи) / China, August, 2019
Keywords: economic_challenges

More cooperation measures expected to facilitate access to bond markets

China and Russia have agreed to strengthen cooperation in the financial sector, particularly in the bond market, with an aim of jointly supporting global economic growth following a high-level bilateral financial dialogue that ended this week.

"Russia will actively consider the issuance of yuan-denominated bonds on the Moscow Exchange," said a statement on the website of the Chinese Ministry of Finance late on Thursday.

China would also encourage domestic investors to invest in bonds issued by Russia, in line with the existing framework of laws and regulations, it said.

Further cooperation measures are expected by the two sides to facilitate the access of investors from both countries to each other's bond market, said the statement issued after the 8th China-Russia Financial Dialogue held in Moscow on Thursday.

It was the first joint statement since the China-Russia bilateral financial dialogue started in 2006, according to the Ministry of Finance. Chinese Finance Minister Liu Kun and Anton Siluanov, first deputy prime minister and finance minister of the Russian Federation, co-chaired the dialogue.

Liu suggested the two countries strengthen macroeconomic policy communication and coordination, supporting each other on significant global financial issues and exploring new areas for cooperation, including fiscal and tax policies.

" (China and Russia) can take effective macroeconomic policies, accelerate structural reforms and enhance macroeconomic policy communication and coordination, jointly support multilateralism and the free trade system, aiming to promote stable and healthy development of the global economy," Liu was quoted as saying in the statement.

The two sides reaffirmed their commitment to deepen bilateral economic and financial relations. The delegates also agreed to strengthen communication and cooperation on economic and financial issues of mutual interest.

Financial officials from the two countries reached consensus during the dialogue to support the membership expansion of the Shanghai-based New Development Bank, a multilateral institution established by Brazil, Russia, India, China and South Africa, known collectively as the BRICS countries.

They expect major progress on this matter to be achieved before the 11th BRICS Summit to be held in November.

As two founding members of the NDB, China and Russia support the bank's expansion to facilitate infrastructure development and address insufficient infrastructure investments in key sectors of the member countries, the statement said.

Financial cooperation between China and Russia will focus on cross-border capital investment and financing, which will also promote the yuan's cross-border usage in Russia beyond the areas of trade and service, Zhou Hai and Li Yanling, two officials from the Harbin branch of the People's Bank of China, wrote in an article in the magazine China Finance.

The publication is managed by the PBOC, the country's central bank.

Over the past few years, the PBOC has strengthened interbank, settlements and payments cooperation with the Russian Federation. Banks from the two countries started currency spot transactions in December, 2010. Under the scheme, the yuan can be directly exchanged to rouble, bypassing the US dollar in international trades.

Harbin Bank, a Chinese commercial bank, and Sberbank, the largest lender in Russia, jointly established the China-Russia Financial Council in 2015, providing financial support for China-Russia projects and serving crossborder financial activities.
Brics bank gets highest rating from Japan Credit Agency (Банк БРИКС получил наивысший рейтинг Японского кредитного агентства) / South Africa, August, 2019
Keywords: ndb, rating
South Africa

The New Development Bank (NDB), also known as the Brics Development Bank, has received the highest possible credit rating from the Japan Credit Rating agency (JCR), with a stable outlook.

JCR gave the NDB the rating on Tuesday, citing high-quality risk management and liquid assets sufficient to cover a year of liquidity requirements.

"Although NDB's lending is expanding rapidly against the backdrop of strong funding needs in the member countries, JCR holds that it can maintain its financial health through conservative financial management and appropriate risk control," wrote JCR analysts Atsushi Masuda and Hiroshi Tonegawa.

JCR said, however, that as many of the infrastructure projects handled by NDB are of a large size, it is important for the bank to establish co-operation on co-finance with other financial institutions.

Brazil, Russia, India, China and SA established the bank in 2015 to fund infrastructure and sustainable development projects in the emerging economies.

The NDB has three projects in SA related to environmental protection and renewable energy, with loans to SA totaling $1.4bn as of April 2019.

The bank also has AA+ ratings from S&P Global Ratings and Fitch Ratings — their second highest ratings.

"The AAA international rating is a significant milestone for the bank that is fully owned and led by developing countries," said NDB CEO Leslie Maasdorp in a statement. "Given its international credit ratings, NDB is well positioned to raise capital at competitive rates through the bond markets and ensure competitive loan pricing to our clients."
World of work
Social policy, trade unions, actions
BRICS Digital Report: Digital divide is one of the BRICS problems competition authorities could tackle (Цифровой отчет БРИКС: цифровой разрыв - одна из проблем, с которой могут столкнуться органы по вопросам конкуренции БРИКС) / Russia, August, 2019
Keywords: digital, research

We start revealing some interesting facts from the report on the digital economy of the BRICS Competition Law and Policy Center to be presented on September 19 within the framework of the BRICS International Competition Conference in Moscow.

One of the problems that remains acute for BRICS countries is the digital divide between a country's regions, specifically between rural and urban areas. Consequently, decreasing the divide remains a policy target for each BRICS country.

Internet and mobile penetration rates are only one side of the coin when it comes to accessibility. The other side is affordability – and here the BRICS countries are demonstrating a positive dynamic, offering affordability on a level similar and even exceeding some of the developed countries.
One way to capture these aspects is the Inclusive Internet Index that measures for categories: the availability, affordability, readiness (literacy, trust and safety, policy) and relevance (local content, relevant content).

In some of the BRICS countries competition authorities have contributed to making internet access and mobile telephony more affordable. In Russia the Federal Antimonopoly Service has led a series of cases against mobile operators dealing with excessive prices for intra-network and national roaming which have later been supported by industry regulation banning both types of excess roaming charges. In China competition authorities have also conducted several investigations against its three network operators (China Mobile, China Telecom, China Unicom) which ended up suspended due to the companies making commitments to improve their conduct in line with the requirements of anti-monopoly law.
Why SA can be proud of its robust media freedom (Почему ЮАР может гордиться своей надежной медийной свободой) / South Africa, August, 2019
Keywords: social_issues, expert_opinion, media
South Africa

We may have plenty of challenges as a country, but what few of us fully appreciate is the pivotal role our media plays, and just how free and robust the South African media is when compared to other countries.

At present we may have high levels of tension between major media houses and what they represent, but South Africa scores higher in terms of media freedom than any of our BRICS partners or even the US and UK - long considered beacons of media freedom.

Each year, Reporters Without Borders publishes a media freedom index, which ranks 180 countries in terms of the level of freedom experienced by their journalists. The ranking is based on criteria such as the safety of journalists, their independence, and the level of self-censorship.

Out of 180 countries in the 2019 report, South Africa ranks 31, with the Scandinavian countries at the top of the list in terms of media freedom. Towards the bottom of the list are countries like Turkey at 157, Egypt at 163, and Saudi Arabia at 172.

But perhaps most surprisingly, is the fact that South Africa scores better than the US which is ranked at 48 and the UK which is ranked at 33. We also have a far more impressive score than the other BRICS countries, with Brazil sitting at 105, India at 140, and Russia at 149.

Our ranking actually dropped from 28 to 31, which some interpret as a result of hate speech by senior opposition figures directed at journalists, and other threats to the physical safety of journalists which has been on the increase.

Threats against journalists made by Black Land First, for example, are believed to be a reaction to in-depth reporting on allegations of corruption and state capture. Female journalists in South Africa have borne the brunt of much of the harassment, particularly on social media and due to online trolling, which has become a battleground of conflicting narratives which has often turned abusive.

But despite these challenges, investigative reporting in the fourth estate is robust and fearless, and in many ways has set the public agenda. Without such penetrating investigations we would have never understood the full extent and breadth of state capture. We take for granted the ability to publish and say what we want about our leaders, as that is considered a given in a liberal democracy. But in other contexts that are also technically democracies, many journalists are disappeared and tortured for their reporting, and increasingly online bloggers are meeting the same fate.

Just consider the shocking comment made recently by Egpyt's Minister of Immigration and Expatriates Nabila Makram who was addressing the Egyptian diaspora in Toronto and said, "Anyone who speaks out against our country from abroad - what happens to him? He'll be sliced up."

The minister then runs a finger across her throat. The minister doubled down on the sentiments, saying: "Egyptians do not tolerate anyone who targets their country, nor any negative speech about Egypt." This comment is coming from the country which is currently the Chair of the African Union and supposed to safeguard fundamental principles of good governance, such a freedom of expression and the media.

Any Minister expressing such a sentiment in the South African context would likely never recover politically. While we should celebrate our hard won democratic freedoms, we also need to work hard to safeguard the critical independence of the fourth estate which continues to keep the public and private sectors accountable. Being independent is not only the freedom of journalists to express ideas and opinions, but to be free from undue influence by political parties or factions.

* Shannon Ebrahim is the Group Foreign Editor
2.5 thousand people from 30 countries will attend SCO and BRICS Small Business Forum in Ufa (2,5 тысячи человек из 30 стран мира примут участие в Форуме малого бизнеса ШОС и БРИКС в Уфе) / Russia, August, 2019
Keywords: summit, social_issues

UFA, 22 August 2019. /Bashinform News Agency/ translated by Tatiana Aksyutina/.

On August 21, Moscow hosted a meeting of the Program Committee of the jubilee, fifth Small and Medium Business Forum of the regions of the SCO and BRICS member states, which will be held in Ufa on September 26-27.

"This is the first anniversary of the forum, and we expect delegations from 30 countries to participate in it," said Andrei Nazarov, co-chair of Business Russia and the organizing committee of the forum. "They will include leading businessmen, representatives of government, and development institutions. In total, about 2500 people will take part in the forum, of which 500 are foreign guests. Radiy Faritovich Khabirov wished us all great success and said that he was absolutely sure of a very high-level organization!"

Representatives of the federal authorities of the Russian Federation, the media, business from different countries and the Republic of Bashkortostan, which hospitably prepares the forum in Ufa, representatives of the embassies of Uzbekistan, Kazakhstan, Brazil, and South Africa took part in the meeting of the Program Committee.

Pakistani National Assembly deputy Tariq Hussein Sayed conveyed a welcoming speech to the organizing committee and participants of the meeting.

"I am convinced that the forum in Ufa will be the best platform for the exchange of practices and the development of new ways to stimulate this area. The delegation of Pakistan is looking forward to the anniversary forum and seeks to welcome everyone warmly, "said the representative of Pakistan.

The program will include 18 business events. The future of the driver sectors of the economy, the development of small, medium, family business, logistics, infrastructure projects will be discussed within the framework of panel sessions. The very concept of the forum is formed around the idea of the global importance of small and medium-sized businesses.

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