Diversification and complexity as principles of internal organization are embedded in the behavioral program of any system, including society, politics and international relations. The historical process, in the form of a tendency towards polycentrism, realises and fulfils the natural craving of humanity for “unity in diversity”, as is commonly believed in Indian philosophical thought. It can also be said that the path to “diversity”, i.e. the polycentric structure of the ecumene, reflected in its own way the change of milestones in the historical development of mankind. “History has not ended but returned”. So, figuratively and succinctly, the Indian futurologist Parag Khanna defined the main line of the current world development [Khanna, 2019, p. 12].  India’s Foreign Minister S. Jaishankar assessed the state of the modern world no less expressively and concretely: “Europe has to grow out of the mindset that Europe’s problems are the world’s problems, but the world’s problems are not Europe’s problems” [How to survive a superpower split, 2023].

At one time, Fareed Rafiq Zakaria [Zakaria, 2008] unambiguously defined “tectonic shifts” in the world economy and politics, dividing the last five centuries of world history into three unequal stages:

1. The ascent of the West, which began in the 15^th century (directly related to the great geographical discoveries) and underwent a “dramatic” acceleration at the end of the 18^th century, under the influence of the first industrial revolution, which predetermined the long-term economic and political domination of the nations of the “North Atlantic space” over the rest of the world.
2. The self-assertion of the United States as the main world power (since the end of the 19^th century), which acquired an uncontested character in two decades after the dismemberment of the USSR (Zakaria published his book in 2008).
3. The “rise of the rest”, which inevitably gave impetus to a new regrouping of geopolitical forces in the international system and is taking place before our eyes, in “real time” mode.

However, the eminent author made a few mistakes in dating the last phenomenon: the current “tectonic shift” began two decades earlier, in the second half of the 1980s. This process involved countries in its whirlpool (then they were called “new influentials”), among which Brazil, Argentina, Venezuela, Egypt, Nigeria, South Africa, India, etc. clearly stood out. (It should be noted that China, which had just entered the path of accelerated economic growth, did not figure in the forecast scenarios of international political scientists at that time.) The main feature of this newly emerging community was their own, particular interests, which were different from the aspirations of the USSR and the United States and their respective allies. However, the dramatic events of the late 1980s and early 1990s “obscured” the objective trends and processes in the world system, and the formation of the grouping of new influential members of the world community is already taking place in a new context, against the background of the emergence of a polycentric or (in the terms used by Zakaria) “post–American world”

Initially, in the mid-2010s, the “post-American world” had already acquired some specific contours of “seven-centric” system, which then included the following countries and regions: Brazil, the United States, Western Europe, Russia, India, China and Japan. After the events of February 24, 2022, the “fallout” from this “cohort” of Western Europe and Japan was quite quickly revealed because they “reactively” migrated to the status of a economic and geopolitical “periphery” of the United States. It is easy to notice that even then, in addition to the recognized leaders of the world economy, relatively new forces were included in the “seven-centric” world, which even then were collectively referred to as BRIC.

Already in the mid-1950s, it was possible to distinguish the  three peculiar “poles” of world development. The Non-Aligned Movement was added to the Soviet Union and the United States, led by the leaders of India, Egypt and Yugoslavia. In fact, the movement towards a polycentric form of  the world space had actually begun. However, the progressive movement of the world historical process, enriched in the mid-1980s by the emergence of “new influentials”, was interrupted by the collapse of the Soviet Union in December 1991. Nevertheless, the backward ‘traction’ of global processes, manifested in the short-term reign of the “unipole” / Pax Americana, only delayed the “return of history”, i.e. the transformation of the main part of humanity into a genuine force and subject of world politics.

Today, in retrospect, we have the right to believe that such a development of the international system was a kind of historical accident. In our opinion various circumstances support such an interpretation of world development. Firstly, the collapse of the bipolar world was not dictated by the logic of historical development. A significant (and perhaps decisive) role in the collapse of the USSR was played by a subjective factor, i.e. the desire of the late Soviet ethnocratic elites to divide politically and economically the space of the largest country in the world. It is clear that an external factor, the actions of the “collective West”, also played a certain role in the development of destructive processes in the USSR. Secondly, the United States a priori could not exercise “global governance” through mechanisms of political and economic control abroad, since after the collapse of the USSR, the United States accounted for only 25% of world GDP (the maximum value of American GDP was in 1944 when it reached about 35% of the world’s aggregate). Thus, a kind of duality of world politics arose: the United States, which did not have the necessary political and economic resources for “global governance”, tried to implement the idea of Pax Americana, while the rest of the world was not psychologically prepared for a new, multipolar world order. Thirdly, this contradiction continued to grow and was first felt around 2005 after the failure of the expeditionary mission to Iraq. Obviously, since then, the need for a new, more just international order has been clearly felt as an existential necessity, primarily in the “Global Orient and the Global South”. This necessity has given impetus to new, non-West-centric institutional forms of international communication.

Even then, at the beginning of this century, the question was often asked: how viable is the ‘platform’ formed by Brazil, Russia, India and China (and soon the Republic of South Africa) as a geo-economic and – in the foreseeable future – a geopolitical union? In other words, will the new platform, using the academic style of the late Samir Amin, be able to become a new “world project”? These were not idle questions, and it was almost impossible to answer them in monosyllables. On the one hand, the systemic global crisis of 2007-2009, according to authoritative Western and Japanese experts, has far from exhausted its “destructive” potential for the world economy. Thus, speaking at the World Economic Forum in Davos in January 2009, Chinese Prime Minister Wen Jiabao sharply criticized the United States and other Western countries. He blamed “inappropriate macroeconomic policies of some economies and their unsustainable models of development characterized by low savings and high consumption” and “an excessive expansion of financial instruments in blind pursuit of profit, lack of self-discipline among financial institutions and rating agencies”. Wen added that the direct impact of the crisis on China was “limited because of our banking system”. This time it was China that warned Western leaders, not the other way around [Hiro, 2010, p. 183]. Therefore, in the current situation, as a result of a comprehensive financial and economic crisis, which Western institutions were powerless to manage, it seemed natural for super-large nations to coordinate their actions in order – keeping in mind the tentative  integration of their economies and markets – to avoid the consequences of severe geo-economic shocks, and, prospectively, to turn the BRICS into a space relatively autonomous from the “triad of globalization” (USA – Western Europe – Japan) and capable of ‘adapting’ to  the coming “shocks”. Naturally, the mutual geographical remoteness and the specificity of the national interests of each of the countries ultimately adjusted the pace and trajectory of integration processes.

On the other hand, there were (and they have not disappeared to this day) factors of non-economic origin (the historical memory of peoples; prejudices, sometimes consciously cultivated by elites in their narrow-group interests; the invisible presence of the factor of “third” countries in bilateral relations, etc.), hindering the seemingly natural processes of economic cooperation and integration.

In our opinion, if it is possible to single out the ‘leaders’ of cooperation and integration in the BRICS at the first stage of development of this association, then they were certainly China and Brazil. And there were good economic and political reasons for that. Firstly, both giants are quite deeply involved in the global economy and therefore tried to diversify their foreign economic relations in every possible way, to avoid unilateral dependence on the markets of industrialised countries and their changing circumstances (highlighted by the global financial and economic crisis of 2007-2009). Secondly, Brazil (approximately since 2003) and China (since the XVII Congress of the CPC, October 2007) began to pursue an active socio-economic policy, which, as the Russian sinologist A.I. Salitsky did, could be defined as a movement from reform to development [Salitskii, 2018]. The essence of this policy is to vigorously stimulate domestic demand, to consistently equalise the levels of economic development of various regions of the country, to progressively reduce social and property disparities in society, etc. The goals of such a policy are clear and transparent. They include an increase in the standard of living of the masses and – on this basis – the expansion of support in society for the economic and political system. Identical goals make the development strategies of both countries clear to each other, increase their interest in joint ventures, including cross-investments. China has acted very vigorously in this direction [Hiro, 2010, p. 182-184]. The new international role of the “rising economic powers” – Brazil, Russia, India and China – prompted the then Managing Director of the IMF, D. Strauss-Kahn (2007-2011) to call for the organisation to redistribute votes in the Fund in favor of these states.

Even at the initial stage of the platform’s existence, it was erroneous to call Russia and India “outsiders” to economic integration within the BRICS (then in the BRIC format), but the official line from Moscow and New Delhi, despite their active participation in quadrilateral meetings at the official level, raised some questions for China and Brazil. First, what was the relationship between geopolitics (support for the idea of BRIC at the highest state level) and economics (stimulating integration processes in a multilateral format) in the foreign policy strategy of India and Russia? Second, what economic and political forces in the two countries were ready to actually participate in the formation cooperative ties within the framework of the then BRIC format? Third, did Russia and India have a long-term strategy for BRIC consolidation?

At that time, it was difficult to get an exhaustive answer to these questions. Now, after almost 15 years, we can try to explain the reasons for the “lag” of Russia and India in the struggle for the BRIC in the following way. In India, the elites found themselves in a kind of conceptual vacuum after the collapse of the USSR and the “departure from the East” of the so-called “new” Russia. Indeed, their hopes for a long-term “America-Centric” world in which India would have an important (but an essentially auxiliary) role to contain China in the Asia-Pacific region turned out to be a geopolitical illusion. In addition, the elites and the people of India had difficulty overcoming the “complex of historical memory” in relation to China, stemming both from memories of the border conflict of 1962 and from the fear of the accelerated economic growth in China, which could turn into geopolitical expansion, holding the prospect of “encirclement” of India in South Asia. The warnings of the Indian military at that time that China could allegedly launch a preemptive nuclear strike on India in 2017 did not look accidental at all. However, history itself turned out to be the best healer of peculiar “historical diseases”: after February 24, 2022 India felt like a real-world power “without exceptions.” This process has gained a positive inertia of irreversible forward motion.

For Russia, in our opinion, the BRIC/BRICS “project” was initially primarily an intellectual problem that needed to be solved methodologically and integrated into our country’s foreign policy strategy as a “building material”. At the beginning of this century, a rather strange and contradictory picture was emerging. After all, back in the second half of the 1990s, a general idea was put forward about Russia’s independence in the world space. However, as historical practice shows, an idea is transformed into a concept and into principles of activity only when it is filled up with the necessary “details”. In short, post-Soviet Russia, which initially made a
“Western choice”, had to comprehend not only the limited benefits of a unilateral orientation towards Western Europe, North America and Japan, but also to realise and feel the ongoing “change of milestones” in world politics, hence moving its axis towards the “East and the Global South” and finding a practical algorithm for embedding Russia in the era of “the return of history.”

At the beginning of this century, irreversible changes commenced to materialise in the system of international relations. After the quickly revealed fiasco of the American-British “expedition” to Iraq, the course of world history underwent a significant acceleration. Intellectuals in the West openly talked about the “end of the Empire” and the decline of Pax Americana. The inability of the “collective West” to cope with the financial and economic crisis of 2007-2009, which acquired an all-encompassing and global character, seems to have undermined the psychological foundations of Western dominance over the rest of the world. By itself, a simple question arose: what will happen after the “end of the Empire”? In 2010, the authoritative international expert and analyst Dilip Hiro noted that the New International Order after Empire did not revolve around the United States: “Nor is it dialectical – the United States versus China, the West against Asia, or democracies versus autocracies.” The developments described by him have cumulatively led to “an international order with multiple poles, cooperating and competing with one another, with no single pole being allowed to act as the hegemonic power. Quite simply, the age-old balance of power is back at work” [Hiro, 2010, p. 5-6]. The events and processes of the early 2000s gave rise to crisis phenomena in the activities of international institutions (UN, IMF, etc.) and faced the world with the need to create new transcontinental formats and platforms capable of adequately responding to the irreversibly increasing economic and political diversity of humanity.

Thus, the initially amorphous BRIC/BRICS platform began to acquire the qualities of an international organisation potentially capable of consolidating that part of the world that was outside the “golden billion” and no longer objectively fitted into the “global liberal order” headed by the United States of America. A material basis for the development of BRICS and similar organisations was provided by several phenomena, mainly:

• the natural exhaustion of the US ability to exercise “global governance”, individually or jointly with ‘allies’;
• the long and vigorous economic growth of China;
• the self-assertion of India as a “civilisation state”;
• Russia liberating itself from the psychological crisis / historical “fatigue” after the collapse of the USSR;
• the emergence of a whole group of states – unequivocal opponents of the “world liberal order” (Iran, Venezuela, North Korea, etc.);
• the civilisational and political consolidation in the Arab world;
• the desire of Latin American nations to speak to the world freely, “in their own voice”;
• the “awakening” of the oppressed Africa.

In our opinion, the growing instability of the international financial system, governed exclusively by the United States and other countries of the “collective West”, also played a significant role in accelerating the development of the BRICS project. The political and economic causes of the chronic instability of world finance were described by the prominent Indian economist Amiya Kumar Bagchi: “The U.S. neoconservatives … have announced that the United States should enforce its will on the rest of the world and international laws are there only for other states. This doctrine is a sign of U.S. weakness in the economic field: the United States can no longer pay for the energy resources it needs for the kind of military-centered, environmentally destructive path of profit accumulation it is pursuing, and hence militarism has become a means of grabbing resources without paying a proper price, increasing the profits of crony companies and generating employment in defense industries” [Bagchi, 2005, p. 335].

The BRICS figure itself is implicitly present in the relations of the two most populated countries of the world – India and China. Thus, the noted Indian historian of international relations Z. Daulet Singh maintains that the resolution of the conflict in Doklam in the summer of 2017 occurred under the influence of three circumstances of purely “non-military” origin. Firstly, “invisible” mechanisms of conflict resolution were involved in such formats as BRICS and SCO, which some Indian “analysts” are nevertheless instantly demeaning. Secondly, the joint interest of India and China in a solidary dialogue with the West on the reform of international financial institutions has affected their behaviour. Thirdly, bilateral trade and investment are beginning to play an increasingly important role in the Elephant-Dragon relationship [Daulet Singh, 2020, p. 103].

So, the values defended by India, Russia, China, Brazil, the Republic of South Africa and other countries are about arriving at an equal international dialogue as well as about the rejection of the idea of “supercivilisation”, allegedly endowed with the right to impose its behavioral models on other “civilisational states”. The “civilisational states” seek to legitimise the polycentric forms of national political organisations, the indivisibility and “inclusiveness” of the world security architecture, as well as the universal value of sovereignty. In the political and economic sense, the BRICS activities are focused on the search for a common ideological platform for the international financial institutions that promote the goals and interests of the countries of the “Global Orient and Global South”. In the view of the BRICS countries, the world of the future is a space of equal interaction between “civilisational states”. The formula for such interaction should be the principle of “unity in diversity”, well known to Indian philosophical thought. We can say that the BRICS objectively brings a new “Axial Age” (in the sense given by K. Jaspers), developing theoretical and practical foundations for inter-civilisational dialogue and interaction in a rapidly changing world.

Considering BRICS as a viable alternative to the “rules-based order”, many states of the “Global Orient and Global South” express a desire to join this association. Currently, according to Russian press reports, the list of potential BRICS members includes the following countries: Algeria, Argentina, Afghanistan, Bahrain, Bangladesh, Belarus, Egypt, Indonesia, Iran, Kazakhstan, Mexico, Nicaragua, Nigeria, Pakistan, Saudi Arabia, Senegal, Sudan, Syria, Thailand, Tunisia, Turkiye, the United Arab Emirates, Uruguay, Venezuela, Zimbabwe, etc. [Dimkin, 2023]. More recently, Bolivia, Cuba and Morocco have been cited as potential BRICS members. Thus, the possible number of future BRICS member countries (1) inevitably puts on the agenda the elaboration of criteria for joining the BRICS as a separate problem.

Under these circumstances, it will inevitably have to take into account the experience (sometimes negative) of other economic associations. Thus, the rapid expansion of the European Union to countries at a lower level of socio-economic maturity than the “pioneers” of integration constantly raises the problems of disparity and development imbalances in the EU. On the contrary, the experience of ASEAN ‘platform’, based on the principles of gradualism and consensus, deserves serious study and critical application. Another problem (to a certain extent arising from the first one) is the active use of national currencies in mutual settlements of the BRICS countries. National currencies, as we know, are stimulators of exports, production and one of the driving forces of economic growth, which is so necessary for the BRICS countries. Of particular importance is the problem of cross-investment in the BRICS countries. The discussion on the creation of a single BRICS currency can and should continue. Nevertheless, the introduction of a single currency seems to be a matter for the more or less distant future though the BRICS resolution of 2023 commits the member-states to studying the possibilities for alternative payment mechanisms and submit a report on this in time for the 2024 summit. President Putin was particularly insistent on this aspect of BRICS development and offered the use of existing Russian mechanisms applied within the Eurasian Union though he stopped short of suggesting a common monetary unit, calling instead for the growing utilisation of national currencies.

In our opinion, the preservation of the viability of the BRICS format, – and all five current participants are interested in this now – allowed for only three realistic scenarios. The first scenario presupposed the actio of the BRICS in different configurations and in diverse modulations, without formally expanding the format, i.e. using the formula “BRICS+.” Even more than a half of the world’s states may take part in some discussions, including some countries traditionally referred to as the “collective West” (for example, Hungary or South Korea). In fact, we can see a new format in terms of content, but partly inheriting the principles of the Non-Aligned Movement.

The second scenario (that was rejected) implied the preservation of the BRICS five as the core of interaction between different regions of the world. However, only Russia and Brazil have obvious integration projects along the borders (the EAEU and Mercosur, respectively) with a potential expansion of their areas (in the first case through the addition of Tajikistan, Uzbekistan, Azerbaijan, possibly Mongolia and Iran and in the second case – across Latin America and the Caribbean). It is doubtful that China or India will be able to adequately represent the ASEAN countries or Pakistan, (though India has formed BIMSTEC to better integrate its neighbours into a regional association and is making progress in connecting the Indian Ocean Region Association (IORA).  South Africa would have to take on the impossible task of representing the entire African continent. It would have been unclear in this case how to interact with such an important region as the Arab world.

The third scenario that was chosen at Johannesburg implies a very cautious increase in the composition of the BRICS by adding a few countries in the initial stage. It also implies changing the acronym for the Grouping to reflect the changed composition, The selection of countries had to be based both on the political preferences of the current participants and on objective quantitative indicators. The resulting “top-7” or “top-10” countries of the Global South do not necessarily have to become an alternative to Western-centric institutions trying to implement global governance, but it will definitely consolidate by its very existence the transition of the world order towards polycentrism. The most “adjustable” countries seemed to be Indonesia, which would anchor BRICS in the ASEAN mega-region, and Nigeria, representing Tropical Africa. However, both were kept out for now. Indonesia is more or less comparable to Russia and Brazil in terms of population and GDP, while Nigeria is not just competing with South Africa for the right to represent Africa, but steadily turns quantitative growth into qualitative changes (for example, local oligarchs have been able to form national TNCs, second only to South African ones on the continent). Nevertheless, in ASEAN, under the leadership of Indonesia, Thailand, which applied to the BRICS too, is quite comparable with South Africa.

On the eve of the BRICS 2023 summit Saudi Arabia, Egypt and Argentina seemed to be the three most likely nations to join, and they made the cut, along with the United Arab Emirates, Ethiopia and Iran, surely as the result of a compromise between the five current members.

Of course, all speculative calculations about the economic, political or cultural-ideological weight of countries are usually broken by the facts of the real course of history. Nevertheless, it is useful to provide some factual and statistical data for 2022 (see the table).

Some leading countries outside the “collective West” (2022)

Country	Population, million persons	GNI by PPP, USD billion	Merchandise exports, USD billion	Outward FDI stock, USD billion	Military expenditures, USD billion
Brazil	215.3	3,716.7	334.1	327.5	20.2
Russia	145.6	5,222.9	531.9	315.3	86.4
India	1,417.2	11,636.8	453.5	222.6	81.0
China	1,412.2	30,001.7	3,593.6	2,931.7	292.0
South Africa	59.9	932.8	122.9	200.0	3.0
Indonesia	275.5	3,925.9	292.0	103.9	9.0
Nigeria	218.5	1,234.8	62.7	13.6	3.1
Iran	88.6	1,605.1	73.0	4.2	6.8
Turkiye	85.3	3,151.1	254.2	56.9	10.6
Ethiopia	123.4	345.3	3.9	0.0	1.0
Egypt	111.0	1,619.6	49.3	9.2	4.6
Saudi Arabia	36.4	2,172.0	410.5	167.5	75.0
Algeria	44.9	580.8	61.1	2.8	9.1
UAE	9.4	824.2	598.5	239.9	n.a. (more than 20)
Argentina	46.2	1,203.5	88.4	44.8	2.6
Mexico	127.5	2,684.8	578.2	196.0	8.5
Venezuela	28.3	n.a.	5.1	25.5	Less than 0.1
Pakistan	235.8	1,496.7	30.9	2.8	10.3
Bangladesh	171.2	1,316.1	54.7	0.4	4.8
Thailand	71.7	1,439.2	287.1	179.8	5.7
Kazakhstan	19.6	531.4	84.7	22.1	1.1

Data from the World Bank (https://data.worldbank.org/indicator) with some figures for Russia by Rosstat (https://rosstat.gov.ru/), while FDI statistics put from [UNCTAD, 2023, p. 200-203] and military expenditures estimates put from SIPRI (https://milex.sipri.org/sipri).

If we take the population (and here the “demographic dividend” is hidden), gross national income when calculated by purchasing power parities (i.e., the scale of national economies), exports of goods (in fact, the competitiveness of the country’s production), the outward foreign direct investment stocks (the power of national business and ability of companies to internationalise their activities), and military spending (that is, the ability to protect their achievements from the encroachments of other powers), then South Africa is an unambiguous outsider among the BRICS. Nevertheless, there is not a single country among the applicants for joining the BRICS that would overtake South Africa in all respects (we have listed 15 countries in the table, since other applicants – for example, Bahrain, Zimbabwe and Nicaragua, are not significant countries economically).

It was not so clear how the Middle East and North African region (WANA) was to be dealt with. For example, Iran is undoubtedly a “civilisational state”, whilst Turkiye claims the same role, by pursuing a very active foreign policy and, due to its ‘westward’ orientation, has achieved more impressive economic dynamics. There is no recognised single leader in the Arab world – Saudi Arabia is the historical center of Islam and an important regional player, but it is obvious that neither Egypt, nor Algeria or the UAE will accept the Saudi Kingdom to represent their region in any important international format, such as the “enlarged BRICS”. The situation with Latin America is not yet free from difficulties, since it is nearly impossible to decide which country can more adequately represent the Spanish-speaking countries of the region – Argentina, Mexico or even Venezuela? We should not also forget about the applications of countries as demographically large in population as Bangladesh. In the event, the nations that were not invited in Johannesburg were promised the opportunity to become dialogue partners in the coming months or years and some may eventually acquire membership.

As the dynamics of the development of the Russian Federation over the past 30 years show, the economic weight, military-political ambitions and even the wealth of ideological concepts for “export” can change very much under the influence of internal short-term fluctuations in the economic and political conjuncture. It is also reasonable to recall the figures of a century ago, which show that the simplest traditional geopolitical categories should not be discounted. For example, the five largest states in 1922, both in terms of population and area, were (alphabetically) the British Empire, China, the French Empire, Soviet Russia (then the USSR) and the United States of America. It was these five who, two decades later, became the victorious powers in World War II, received exclusive permanent seats of the UN Security Council with veto rights, and within half a century it was again the United States, the USSR, the United Kingdom, France and China that became the owners of nuclear weapons (without granting such a status to India). We ought to emphasise that Germany and Japan, despite their ambitions during the 1930s, which led to the global catastrophe of World War II, were not among the five largest states.

Any ambitious power can live with a variety of statistical indicators without experiencing discomfort from it. Now some well-known Western politicians love to demean Russia, the largest country in the world by area, by pointing out its comparatively modest demographic and economic weight. But some Russians are still alive who, as students, learned that the USSR, despite its then struggling economy and low living standards won World War II, successfully launched the first artifical satellite and the first manned space flights, led the global movement against colonialism and, in principle, became one of the superpowers. We believe that it is appropriate to quote the luminary of national economic geography, Professor N.N. Baranskiy, in the first chapter of his textbook “Physical Geography of the USSR”, which was mandatory for all Soviet schoolchildren since 1935. He wrote: “Only the British Empire is larger than the USSR in area, i.e. England …, but the possessions of England are scattered in all parts of the world, divided by oceans and are politically weakly connected; our Union is one continuous territory and … is politically so tightly soldered as no other state in the world” [Baranksiy, 1935, p. 3].

Summing up, it can be noted that the activation of the BRICS format is caused by long-term trends in global development, but specific configurations will depend on the political decisions of countries and their leaders. Russia currently feels like a power capable of transforming the current world order, that is clearly unfair to the majority of humanity. Moreover, it is the Russian Federation that will assume the BRICS chairmanship in 2024. Nevertheless, this does not mean that other BRICS participants should neglect this format. On the contrary, South Africa, Brazil and India are actually the most interested in it, since outside of this format their leverage in international relations would decrease. In addition, in our opinion, institutional reforms of the world order not involving the military-power component are possible only through the strengthening of the BRICS and the expansion of its activity.

 

Author Brief Bio: Andrey VOLODIN and Alexey Kuznetsov are working with Institute of Scientific Information for Social Sciences of the Russian Academy of Sciences (INION), Russia.

 

References

1. Khanna P. (2019). The Future is Asian. Global Order in the Twenty-First Century. London: Weidenfeld & Nicolson, 433 pp.
2. How to survive a superpower split (2013). The Economist, April 11, available at https://economist.com/international/2023/04/11/how-to-survive-a-superpower-split; accessed 03.07.2023.
3. Zakaria F. (2008). The Post-American World. New York & London: W.W.Norton & Company, 292 pp.
4. Hiro D. (2010). After Empire. The Birth of a Multipolar World. New York: Nation Books, 348 pp.
5. Salitskii A.I. (2018). The Outward Expansion of China as a Result of Its Victorious Modernization. Herald of the Russian Academy of Sciences. Vol. 88, no. 1, pp. 104-110.
6. Bagchi A.K. (2005). Perilous Passage. Mankind and the Global Ascendancy of Capital. New Delhi: Oxford University Press, 423 pp.
7. Daulet Singh Z. (2020) Powershift: India–China Relations in a Multipolar World. Macmillan, 348 pp.
8. Dimkin (2023). 30 countries have applied to join the BRICS (in Russian). Available at: https://www.tinkoff.ru/invest/social/profile/Dimkin/e1749d6a-29d9-425f-a699-a92fc57e733a/; accessed 08.08.2023.
9. Baranskiy N.N. (1935). Physical Geography of the USSR (in Russian). Moscow: Uchpedgiz, 119 pp. Available at: https://elib.rgo.ru/safe-view/123456789/211979/1/MDAyX1IucGRm
10. UNCTAD (2023). World Investment Report 2023: Investing in Sustainable Energy for All. United Nations, 228 pp.

Note 1: (some sources alluded to 50 states, but shortly before the 2023 BRICS summit, the President of South Africa, as its host, announced a little more than 20 official applications)

 

 

For years, the BRICS countries (Brazil, Russia, India, China and South Africa) have been experimenting with the use of their national currencies in trade and agreements within the group and also with other emerging countries. A process of progressive de-dollarisation of their trade and economies is underway, involving now other regions of the world like the Shanghai Cooperation Organization (SCO) countries and the nations of Mercosur.

In this context, many Western analysts continue to assert that the BRICS coordination has no future, it is doomed to fail. These “experts” should remember that BRICS coordination came into being in connection with and as a response to the Great Global Crisis of 2008, caused by the collapse of the U.S. and international banking and financial systems. The effects were devastating with respect to the production of goods and to world trade. The hardest hit was indeed the poor and developing countries. That is, those who did not bear the responsibility for economic and monetary mismanagement and financial speculation, but who paid a heavy price for the consequences.

All financial data confirm that the global financial situation is today worse than that of 2008. For example, world public debt moved from $41 to $92 trillion; global debt is at $305 trillion, $45 trillion higher than its pre-pandemic level; the mostly unregulated and often speculative Non-Bank Financial Institutions (NBFI) overcame the Banking System globally, etc.

Therefore, despite all the legitimate differing national orientations and sometimes diverging or competing interests of the BRICS countries, the necessity to have a safety net and of crafting an alternative to the likely crisis of the dollar and related systems remains stronger than before.

Multilateralism and the challenge of a new international financial order

Multilateralism is today the only means of peacefully addressing and resolving the many global challenges, political, economic, monetary, and even those concerning security. It is a concept recognized in Europe as well. Among others, François Villeroy de Galhau, the governor of the Banque de France argued this during the May 2022 Emerging Market Forum in Paris in a speech on “Multipolarity and the role of the euro in the International Financial System.” He stated that “while Bretton Woods disappeared when the convertibility of the dollar into gold failed, the international monetary system remained based on the U.S. dollar. The idea of a global currency has not thrived in academic debates, much less in policy discussions.”

Even as early as the 1960s, Henry Fowler, the Treasury secretary under President Lyndon Johnson, warned that “providing reserves and trade to the whole world is too much for one country and one currency to bear.”

The idea of change had been taken up in 2010 by Michel Camdessus, longtime managing director of the IMF, who had launched an initiative to highlight the shortcomings of the international financial system, particularly its global governance and over-reliance on a single currency.

This debate is also very intense in the United States, even if ignored by most of the media. For example, a leading American economist, James K. Galbraith, asked the question: “Can the United States survive the rise of a multipolar world?”

Galbraith is an economics professor at the University of Austin in Texas, best known for drafting the first legislative plan to save New York City from bankruptcy in 1975. He is the son of John Kenneth Galbraith, a famous economist and a close associate of various American presidents, starting with F. D. Roosevelt, for whom he implemented the price control policy during the Second World War.

To the question above, formulated in his article published by the Institute for New Economic Thinking, James Galbraith answers positively but adds, «not without a political upheaval, stimulated by inflation and recession and by a declining stock market in the short term and, finally, by demands for a realistic strategy in tune with the current global balance of power». He says that “the dollar-based order has thus far been sustained mainly by instability elsewhere and the lack of a credible alternative.”

He expects China to work to “set up bilateral or multilateral payment mechanisms, with willing partners, that bypass the conventional medium of the dollar.” However, it will be inevitable that the question of an alternative to dollar reserves will be raised. In addition to the role of gold, “an international financial asset will emerge, composed of a weighted set of securities of the participating countries, similar to Eurobonds … In the reality of Eurasia, this means a bond based predominantly on the Chinese currency.”

His prediction is that “the dollar-based financial system, with the euro serving as a junior partner, is likely to survive, for now.” A significant no-dollar, no-euro zone could be created, cut out for those countries that the US and the EU consider adversaries, primarily Russia, and for their commercial partners. China will act as a bridge between the two systems: it will be the fixed point of multipolarity. “If tough decisions are to be made against China, then a real division of the world into isolated blocs, as in the Cold War, would become a possibility.”, he says.

The role of national currencies in trade

China is clearly at the forefront of using its currency, the renminbi, for its international trade and investment. The most resounding agreement was the one signed in 2018 in renminbi and rubles for the supply of Russian gas to China for the equivalent of about $400 billion. It should be kept in mind that it imports $250 billion worth of oil and another $150 billion worth of commodities such as steel, copper, coal, and soybeans from the rest of the world every year. All these commodities are today valued and traded internationally in dollars. Therefore, China also has to pay for them in U.S. currency. The use of the renminbi, therefore, has become a strategic priority for Beijing. Trade in the renminbi is intensively done with the other BRICS countries but more in general with the other emerging economies worldwide.

China and Saudi Arabia, for example, in addition to oil agreements, recently signed a memorandum to coordinate the economic initiatives of the Belt and Road Initiative with the Saudi “Vision 2030” program of industrial and manufacturing development. The agreements include cooperation in space, nuclear, missile, new energy such as hydrogen, and major infrastructure including the construction of “Neom,” a $500 billion super modern city. Among the contracts signed is one with Huawei, the telecommunications giant, which, despite U.S. opposition, already has 5G network agreements with almost all Gulf countries. The prospect, of course, is to bring BRI with all its infrastructure, technology and industrial projects to that region and on to the Mediterranean. China has naturally proposed to use the renminbi in payments for energy supplies and more generally for trade.

Another example is Egypt, which applied to join the BRICS in 2022, and is reportedly considering issuing renminbi-denominated bonds for the Chinese market. Beijing has already signed currency swap agreements with more than 30 countries, including Japan and Russia, allowing the renminbi to be used for certain trades. Many cooperation projects between Brazil and China are already financed and settled in the Chinese currency and in the Brazilian real. In 2019, Russia and China signed an agreement to use ruble and renminbi financial instruments to cover 50 percent of all their bilateral trade in the coming years. The implementation of the Belt and Road Initiative (BRI) and the financing role of the Asian Infrastructure Investment Bank help to internationalise the renminbi.

Many infrastructure projects with the Asian countries involved are already contracted in the Chinese currency. More surprising is the renminbi deal between China’s National Offshore Oil Company and France’s Total Energies on 65,000 tons of liquefied natural gas imported from the United Arab Emirates. The deal is being handled through the Shanghai Petroleum and Natural Gas Exchange; an exchange created to facilitate renminbi payments.

India likewise has been preparing its currency, the rupee, to play an important role in international markets for quite some time. According to Indian policy experts, “sanctions have created a new world of countries seeking to trade using their own currencies instead of the U.S. dollar.” They also claim that sanctions have harmed third countries, such as India, which are only guilty of having trade relations with those who, for a variety of reasons, have been subjected to sanctions. For example, Venezuela and Iran are rich in oil and have been India’s major crude suppliers in the past. Trade was effectively stopped because of U.S. sanctions. Myanmar has also been subjected to several sanctions, tightened after the latest military takeover. Indian trade has also paid the price. India argues that the Western sanctions policy will remain in place for a long time and that other countries may be targeted in the future. This fear is prompting policy makers to set up alternative payment systems. The goal is to create parallel systems that can enable trade, rather than immediately “replace” the dollar.

The Indian reflection starts with energy. It states that the global energy scenario has changed over the past two decades. After the growing role of the Chinese renminbi, which has emerged as an alternative to the dollar, New Delhi wonders whether the rupee can be a third player with a petro-rupee. As is well known, India is the world’s third-largest consumer and second-largest importer of energy. Indians complain that the world oil and gas trade is conducted almost entirely in dollars on Western exchanges and with prices that do not represent real demand. India argues that the 2008 crisis challenged the dollar’s role as the single global currency and that its instability would double U.S. debt, prompting Washington to retreat from globalisation processes. It is noted that unilateral and geopolitically motivated sanctions have aroused strong resentment toward U.S arbitrariness. Hence the move to internationalise the rupee through the creation of a hub for a new international oil and gas market, possibly linked to the Mumbai exchanges. In this way, the Indian government could bring its influence to bear on energy price formation.

The proposal of a new currency

From the standpoint of the already long experience of the use of national currencies and looking at the future perspectives for stronger institutional cooperation, discussions and proposals about a new BRICS currency are legitimate. I do not believe that such a common currency is a factual possibility in the near future, but the studies upon this are today urgently needed.

Russia has been at the forefront of this idea. In mid-March 2022 a meeting dedicated to the “New phase of monetary, financial and economic cooperation between the Eurasian Economic Union (EEU) and the People’s Republic of China” was held in Armenia, under the auspices of the Eurasian Economic Commission and of Renmin University of Beijing, to define the contours of a new international monetary and financial system, at least as regards the Eastern part of the world.

The EEU is the economic and commercial union in which Russia, Belarus, Kazakhstan, Kyrgyzstan and Armenia participate, with a GDP of approximately 1,700 billion dollars. It means to establish a close collaboration with the Belt and Road Initiative, the new Silk Road charted by China. Already in 2020, China had increased its trade turnover with the EEU by about 20%, while national currencies of the concerned states accounted for only 15% of total trade.

What was on the table at the conference was precisely the creation of a “new currency” based on a basket of currencies, among them the ruble and the yuan, also anchored to the value of some strategic raw materials, including gold.

To think that it is just a desperate reaction to the recent imposition of super sanctions on Russia would be a misleading assessment. Instead, it is a project that has been in the field for many, many years, both in Russia and in China.

The project was made public as early as October 2020 by Russian economist Sergey Glazyev, a member of the Council and minister in charge of Integration and Macroeconomics of the Eurasian Economic Commission. He had proposed creating new national payment instruments to set aside the use of “third country currencies”, obviously meaning above all the dollar and the euro, in commercial and monetary transactions between members of the Eurasian Union and China.

Glazyev stated that the idea was the response “to the common challenges and risks associated with the global economic slowdown and the restrictive measures against EEU states and China”. The Russian economist argued that the financial and payment infrastructure was already in place and it was necessary to develop a system of incentives to encourage its use in trade and economic relations.

The minister of the Eurasian Economic Commission proposed: 1) to develop mechanisms to stabilise the exchange rates of the national currencies of the member countries, reducing bank commissions and interest on loans; 2) to create mechanisms to determine the prices of goods in national currencies within the framework of the agreements between the EU and the Belt and Road Initiative, subsequently also involving other countries, possibly those of the Shanghai Cooperation Organization (SCO) and those of the ASEAN.

Furthermore, in an interview on April 14, 2022, with The Cradle, the online journal of geopolitical analysis, Sergey Glazyev recalled that, together with economists from the Astana Economic Forum, a decade earlier he had proposed moving towards a new global economic system based on a new trade currency pegged to an index of the currencies of the participating countries.

It was then proposed to expand the underlying currency basket by adding some exchange-traded commodities. A monetary unit based on such a large basket was mathematically modeled, demonstrating a high degree of resilience and stability.

In the first phase of the monetary transition, these countries would use their own national currencies and related clearing mechanisms, supported by bilateral currency swaps. Price formation would still be guided by prices determined on various exchanges and denominated in dollars.

This stage, according to Glazyev, was almost complete. After Russia’s reserves in dollars, euros, pounds and yen were “frozen,” the Russian economist said it would be unlikely that any sovereign country would continue to build up reserves in these currencies, instead it would seek to replace them with other national currencies and gold.

The second phase should include new pricing mechanisms that would no longer refer to the dollar. Pricing in national currencies would incur overhead costs, but it would still be more attractive than current pricing in “pegged” currencies, such as dollars, pounds, euros, and yen. The only remaining global currency candidate, the Yuan, would not take their place due to its inconvertibility and limited external access to China’s capital markets.

The third and final phase of the transition to the new economic order would involve the creation of a new digital payment currency.

As can be seen, according to Glazyev this new currency would be open to BRICS and other interested countries. In my opinion, this is an interesting idea but not a practical one. A preparatory middle step is needed, first in the form of a unit of account.

The example of the ECU

The European currency unit, ECU, indicates the unit of account established in March 1979 within the European Monetary System (EMS), whose structure was defined as a basket made up of specific amounts of each community currency, weighted according to the importance of national economies, in terms of gross domestic product and intra-community trade.

The ECU was not a circulating currency and did not replace the value of the currencies of European Economic Community (EEC) member countries. A unit of account is one of the functions of money. It is a measure, a standard numerical monetary unit of measurement of the market value of goods, services, and other transactions.  Therefore, it is a necessary prerequisite in commercial agreements that involve debt.

Using a mechanism known as the “snake” the European Exchange Rate Mechanism (ERM) tried to minimise fluctuations between member state currencies. It attempted to create a single currency band, pegging the EEC currencies to one another, with the aim to achieve stable, fixed ratios over time, and prepare the ground for the European Single Currency to replace national currencies.

The ECU replaced the European Unit of Account (EUA) which was introduced in 1950 for the European Payment Union. Originally the EUA was defined with the same value of a US dollar. After the collapse of the Bretton Woods system, with the 1971 decoupling of the dollar from gold, the EUA was redefined as a basket of European currencies. In 1974 the EUA basket was designed to have the same value as the IMF Special Drawing Rights basket.

Since the 1980s, the ECU experienced a notable development in its private monetary and financial uses (issue of bonds, bank deposits and credits, travelers’ cheques, etc.) and particularly in the commercial sector as an invoicing and payment currency. With the adoption of the euro on 1 January 1999 by the European Economic and Monetary Union, the ECU ceased to exist. The conversion between ECU and euro was established on the basis of a ratio of 1 to 1.

The ERM and the ECU processes were undermined in 1992 by Margaret Thatcher’s announcement of her outright opposition to the European Economic and Monetary Union. The general economic instability in Europe pave the way for an impressive speculative attack against some currencies, like the British sterling and the Italian lira.

The speculative attack against the sterling became known as the “Black Wednesday” of September 16 1992. The same day the UK government was compelled to withdraw the sterling from the ERM. According to reports the UK spent over £ 6 billion trying to defend the value of the currency. In those days the big financial speculators moved in to kill the ERM. Press reported that George Soros, known as “the man who broke the Bank of England”, made a speculative profit of over £ 1 billion in few days. Later the UK Treasury estimated the cost of Black Wednesday at £3.14 billion.  For other people the overall cost to the British economy was much, much higher.

In the same days of September, the Italian lira also became the target of massive international speculation. The entire process was more widely analysed in Italy and was known as the “Britannia Story”. In fact, shortly before the crisis began, at the beginning of July, an informal meeting took place on Queen Elizabeth’s yacht Britannia off the harbor of Civitavecchia, near Rome, involving British and international financial interests and representatives of the companies in which the Italian state had a stake. The discussion was about the privatisation of these companies.

Italy had to face huge costs from the Bank of Italy’s attempts to defend the value of the lira from speculators. More devastating was the effect of the devaluation of the currency following waves of speculative attacks: the privatisation of the state-partly owned companies was carried out over time with a “discount” of about 30%!

The undermining of the ECU and of the ERM was the result of speculation and strong political opposition from dominating Anglo-American power centres. The timetable towards the single currency planned by the European States was upset. European leaders wanted a slower process to be able to combine the monetary union with other fiscal and political unitary decisions. To prevent the collapse of the process to build up the European Union, the monetary transition and the creation of the euro were accelerated. Now, Europe’s structural weaknesses are apparent, due the fact that the single currency and the European Central Bank are not supported by other, common political, economic, social and defence institutions, such as a single ministry of public finance.

The ECU experience could be a very important case study in the process of creating a BRICS unit of account. The technical aspects can be studied and improved. Eventually, some of the European economists who worked with the ECU process can still be consulted.

According to me, the most important lesson to learn is the way ECU was attacked and undermined. I am sure the BRICS leaders are well aware of this danger. It is important, therefore, to prepare a number of strong defensive measures against speculative and other attacks. The BRICS Contingent Reserve Arrangement (CRA) has been conceived as a defense mechanism to face situations and threats as experienced in the 2008 global financial crisis. The latter originated in the US financial and banking sectors awash in debts and immersed in speculations, its devastating effects reverberated dramatically in the emerging economies. Along with the creation of a unit of account, the BRICS should modify and improve the CRA in order to be able to support it in case of need.

Another step in the same direction could be the creation of a strong gold reserve inside the New Development Bank as an alternative defence instrument in case some national currencies of BRICS members come under international speculative attack.

Conclusion

On the occasion of the 14th annual BRICS (Brazil, Russia, India, China, South Africa) Summit, dedicated to a “New era of global development”, organised in Beijing at the end of June 2022, Russian President Vladimir Putin announced that the member-countries are preparing to create an international reserve currency.

Speaking online at the BRICS Business Forum, he said: “Russia’s financial messaging system is open to connect with banks, thus projecting the need for a BRICS member country reserve currency. The Russian MIR payment system is expanding its presence. We are exploring the possibility of creating an international reserve currency based on the BRICS basket of currencies.’

After the sanctions imposed by the West against Russia following the war in Ukraine, it is an almost inevitable move, expected by those who analyse political processes with a scientific and realistic approach, without ideological bias or prejudice.

Among the various sanction, in addition to the freeze of more than 300 billion dollars of monetary reserves of the Central Bank, Russian banks have been excluded from the SWIFT system of international payments. However, there are other global bilateral or multilateral settlement systems for cross-border financial services, such as the Chinese CIPS system. CIPS processed about 80 trillion yuan ($11.91 trillion) in 2021, an increase of more than 75% year-on-year. According to SWIFT data, the yuan maintained its position as the fifth most active currency for global payments, with a share of 2.14% of the total.

In the context of the present growing global conflicts, it is legitimate from the side of BRICS countries to prepare and alternative separate monetary system, but I believe that inevitably the emergence of two counterpoised systems, a Western one and an Easter-Southern one, would increase the danger of a direct confrontation.

On these matters, I share the evaluation of Villeroy de Galhau, already mentioned above. He acknowledged that a fragmented financial system poses a serious danger. We must avoid moving from a dollar-dominated system to a conflictual non-system between the dollar world and, for example, the Chinese renminbi world. This would generate instability, with the risk of competitive currency devaluations. It could lead to the development of separate payment systems with limited interoperability and weaken the global financial safety net. In particular, he noted that to avoid the mistakes of the past, we would need to generate a collective momentum toward a stable, market-oriented multipolar financial system.

Indeed, on the basis of a stronger international position and the growing influence in the so-called global South, the BRICS should work to propose and organise a reform of the entire international monetary system based on a basket of currencies, involving also the dollar and the euro.

Unfortunately, in the context of the war in Ukraine, the European Union is behaving as as junior partner of NATO. Nonetheless, it should be remembered that the economic reality and the genuine interests of Europe demand a more autonomous and independent strategic and geopolitical orientation. In my opinion, it is of utmost importance that the BRICS group, which has proven to be realistic and responsible hitherto, work for alternative global monetary and financial reform in collaboration with those in Europe, and also in the USA, who are committed to a peaceful future based on global justice and cooperation.

Author Brief Bio:  Paolo RAIMONDI is an Economist; Columnist for the newspaper “ItaliaOggi”; and Expert member, Eurispes BRICS Lab.

References:

https://www.reuters.com/markets/global-public-debt-hits-record-92-trillion-un-report-2023-07-12/

https://www.iif.com/Products/Global-Debt-Monitor

https://www.fsb.org/2022/12/global-monitoring-report-on-non-bank-financial-intermediation-2022/

François Villeroy de Galhau,  https://www.bis.org/review/r220517b.pdf

Henry Fowler, see IMF Summary Proceedings Annual Meeting 1965 9781475565157-9781475565157.pdf

https://www.reuters.com/article/uk-imf-idUKTRE5AG1EV20091117

James K. Galbraith,  https://www.ineteconomics.org/perspectives/blog/the-dollar-system-in-a-multi-polar-world

On the Yerevan meeting, see https://www.ispionline.it/it/pubblicazione/prove-generali-di-monete-rivali-34394 e https://kapital.kz/finance/103768/yeaes-i-knr-razrabotayut-proyekt-mezhdunarodnoy-finsistemy.html “EAEU and China will develop a draft international financial system”

Sergey Glazyev 2020. See various interventions in http://www.eurasiancommission.org/en

Glazyev’s interview with The Cradle https://thecradle.co/Article/interviews/9135

ECU,https://ec.europa.eu/eurostat/statisticsexplained/index.php?title=Glossary:European_currency_unit

https://www.investopedia.com/terms/b/black-wednesday.asp

https://www.investireoggi.it/economia/draghi-e-il-caso-britannia-facciamo-chiarezza-sul-piu-grande-pregiudizio-contro-il-premier-incaricato/

President Vladimir Putin: “Greetings to BRICS Business Forum participants June 22, 2022”

http://en.kremlin.ru/events/president/news/68689

www.brics-info.org  Brics information Sharing & Exchanging Platform for all the information and speeches,

www.brics.utoronto.ca for all the final declarations and other official papers.

Vedi www.ndb.int for the New Development Bank

BRICS Foreign Ministers meeting, final declaration and speeches http://brics2022.mfa.gov.cn/eng/hywj/ODMM

The summit in South Africa (August 22-24) has unveiled the new BRICS development roadmap. Where is it going? How do the players themselves envision the future? Within what time frame? Following which paths? With which companions? With what strategy? In order to have a clearer view of this checkerboard, let’s examine at ease, the path already traveled and the possible responses following that landmark gathering.

The emergence of the BRICS was inevitable, although the birth of its name is anecdotal. The grouping represents a fundamental move forward towards a more impartial and multipolar world through emancipation from the hegemonic system. Its growing strength and attraction are increasingly felt. This is why the eyes of the whole world were trained on the summit, which took place in South Africa on August 22-24. We believe that we should focus our attention more on the long-term action plan that is being traced, than on the summit itself, which is only a moment in the execution of the former.

Two objectives are of paramount importance in their action plan, namely the introduction of a currency shared between the BRICS countries and their expansion in terms of new members. A review of progress made in this regard was done at the Summit.

The BRICS members have agreed to admit Saudi Arabia, Iran, Ethiopia, Egypt, Argentina and the United Arab Emirates in the group. Furthermore, the door is wide open, dozens more countries could join the bloc[1]. This enlargement is a great step forward in the development of BRICS and also in the transformation of the world.

Birth and development

By grouping together under the acronym BRICS, the four countries which had the highest growth rate, namely Brazil, Russia, India and China and later South Africa, the Goldman Sachs bankers did perhaps not realize that they were giving an identity to a tectonic shift at world level in the economic and financial fields and even beyond.

This movement reflects a basic need in the development of the Eastern and Southern world countries: the search for and creation of a fairer and more balanced global system for the greatest number of countries. In 15 years of existence, this informal alliance has already managed to stand up and acquire more substance and legitimacy. It will revolutionise and restructure the world. During the last summit, the BRICS has substantiated and started on its new roadmap, in front of an assembly of more than 50 participating countries from all over the world.

Why does BRICS strive to create an alternative system to the one that was established at the end of WWII? It is true that this time-tested latter one provided a stable framework to the world at large for decades and that the World Bank and the IMF joined forces for global recovery after the massive destructions.^[2] However, this system, under American control, is far from fair and balanced, regarding the countries of the global East and South. The aid is given subject to conditions that the changes imposed will be accomplished, without taking into account the reality of the country, and the sums awarded incur high social costs under the logic of the Structural Adjustment Program. It has created more problems than solutions, for example in the case of Asian countries after the financial crisis of 1997-98.

An alternative architecture is more than necessary because G7 cannot represent, and does not reflect the world in relation to political, economic, demographic and aspirational criteria.

The BRICS group represents more than 40% of the world’s population and about 26% of the global economy and provides an alternative forum for countries that are outside the platforms dominated by traditional Western powers. Its influence and economic weight encourage more nations to join.

Encouraging results but some gaps remain to be filled

In terms of strategy, the BRICS follows a dual axis: while seeking to reform as much as possible the existing system, in particular the World Bank and IMF, it carries out actions with a view to creating and operating a new financial system as well as strengthening the autonomy of national currencies and preparing to create a common currency.

Regarding the working method, a step-by-step philosophy is practiced within the group, especially for strategic projects.

In this real world, the BRICS does not sit back idly dreaming, nor does it get lost in empty talk. It strives to help the countries of the Global East and South in particular, concrete instances, where it is urgent and possible to intervene. Thus, the BRICS created: the BRICS bank, the New Development Bank (NDB), encouraged the use of local currencies and set up the Contingent Reserve Arrangement (CRA).

The NDB is a useful tool to help needy countries through the financing of projects at acceptable rates, such as the transition to electrical buses (Brazil), hydropower plants (Russia) and water supply (India), etc.

Encouraging the use of national currencies for transactions has the effect of reducing dependence on US dollars.

The BRICS Contingent Reserve Arrangement (CRA) created in 2015 is a framework to provide support through liquidity and precautionary instruments in response to actual or potential short-term balance of payments pressures. With the CRA, the BRICS comes to the aid of countries that face short-term payment difficulties.

With the goodwill and efforts of its members, the BRICS has gradually become an effective and operational cooperation platform. In addition to these tangible benefits, the BRICS has given more voice to members and to the Global South, structuring a whole new geostrategic narrative and giving hope for the rise of a new world order.

At the same time, the BRICS should address some shortcomings if it wants to move faster and more solidly.

The BRICS does not exist as a formal organization yet, it is an annual summit between the supreme leaders of five nations. The presidency of the forum is rotated annually among the members. It is a cooperation platform. Circumstances play an important role. The members are in a fairly relaxed relationship. Despite their shared interest, they have divergent national interests determined by their respective geographies, histories, cultures and strategies. The articulation between these interests requires a lot of work and formalism.

The new objectives

Several programmes are to be launched or purused with more strength and speed.

Extension process

Given the growing number of candidates who wish to adhere formally or informally (more than 40 according to South Africa^[3]), it has become urgent to come to an agreement about the details of conditions and the process of accepting membership, both for official candidates and for observers, who should wait before joining BRICS. India is leaning towards a stricter vetting process, while China seems to be pushing for greater openness. The idea of ​​the “BRICS +” put forward by Yaroslav Lissovolik deserves a new reading.^[4]

Expanding the group too quickly should be avoided before all have a clear idea of ​​what they want. The experience of the European Union is an interesting case study in this regard.

There was convergence on the first batch of new members. Other applicants are to become partner-countries by the time of the next summit to be hosted by Russia. This addition also makes BRICS a forum for some of the world’s largest fossil fuel producers and exporters.

Creation of the BRICS currency

There is an ongoing discussion about the need for a common gold-based BRICS currency.

This new common currency would drastically reduce the dependence of current and future BRICS member-countries on USD, and provide autonomy, financial stability and protection against possible sanctions and turbulence linked to the cycles of the American economy. When agreed upon, it is bound to dynamite the existing hegemony and prepare the onset of the new global order.

For a subject of such importance and complexity, the process of convergence must be pursued among the BRICS countries, particularly between China and India, to further enable and develop the use of national currencies. In particular, regarding the internationalization of the Rupee, India chooses caution in the adoption of the initiative, since it fears that such a move might introduce unexpected complexities and uncertainties well-established business relations with its partners.^[5]  Intense discussions were expected to take place during the Summit (see below). Vladimir Putin spoke extensively about the ‘irreversible’ process of dedollarisation during his address to the Summit and emphasised the growing reliance on domestic currencies for trade between BRICS members and the diminishing role of the US currency,

Other issues on the agenda included discussions about geopolitics, trade and infrastructure development. Putin described Russia’s efforts to develop both the Northern maritime route (along the Siberian coast) and the North-South Corridor between the Indian Ocean and the Baltic Sea.

Convergence and divergence between members

The BRICS members totally share a common interest in wanting to establish an alternative global order, different from the current one under US leadership. At the same time, they may have divergent analyses and positions on a number of issues, for example in the case of India and China.

These two very large countries are neighbours and share a very long common border. Although conflicts have taken place in the past, Beijig and Delhi have a common interest in securing autonomy and development for the Global South. This does not preclude them from having divergent positions on certain subjects, such as the extension of the BRICS and the creation of the BRICS currency.

India has taken note, as all the other BRICS members, that the countries of the West (the US, Europe, Japan, etc.) are in relative decline. At the same time, India also keeps in mind that these countries are still very powerful players, with huge resources in terms of capital, technology and market. It is vital for India to continue cooperating with them while increasing its economic interaction with China. It is not about aligning with anyone else; India decides according to its own interests. India has a right to align with itself.^[6]  This is completely understandable.

The creation of the BRICS currency is one topic of intense discussion between the two partners. China seems ready to give it a go, while India sees this prospect differently, as was clarified by S. Jaishankar, the Indian Minister of Foreign Affairs.^[7] Creating a currency is a long process which heavily impacts the economies of the countries concerned and which will shake up the world economy. Some precautions and preparation are just good common sense.

Once sufficient convergence is achieved between the leading BRICS members in the coming years, the idea of ​​a kind of BRICS currency zone like the Euro Zone could be examined.

Are these the seeds of a separation? Absolutely not. These discussions are healthy within a structure of this scope and magnitude. As long as the areas of ​​divergence do not exceed the points of convergence, this remains an internal matter, manageable within BRICS.

The danger of a hybrid war against the BRICS?

Not everyone wants to see the creation and development of a global alternative order embodied by the BRICS initiative. The latter is the target of hybrid warfare attempts aimed at slowing it down or even stopping it.^[8]  Of course, it is useless to get flustered about predictable opposition from certain quarters but, at the same time, awareness and countermeasures may be required.

The Summit and prospects

The evolution towards a new world order is not a sprint but a full-fledged marathon.^[9]  The upcoming Summit was an opportunity for intense work between members at the highest level and helped refine the roadmap leading to a new stage in the development of the BRICS.

As many had predicted, there were no sensational and disruptive announcements, to live up to the expectations of the media about the introduction of the BRICS currency. Convergence is a slow and complex process. On the other hand, a step forward relative to expansion of membership was taken.

One thing is certain: the BRICS, as an irresistible trend, will continue to develop, sweeping away all obstacles, despite its slowness and the turbulences that lie ahead, along the way. A new world is possible, although the road is long and winding.

On the other hand, the possibility of a dialogue between the BRICS and the G7 is not to be ruled out, either, in the medium and long term. One day perhaps, they might find a way to work together in an unprecedented multipolar structure, starting with the acceptance of one or two members of the G7 as observers at the BRICS summits, and later, allowing them to join in closer cooperation within the broader framework of the G20.

Author Brief Bio: Alex Wang is former executive manager of a World TOP500 company. He has assumed, during his long career, key responsibilities in domains of HR, sales, wholesales, procurement & supply chain and open innovation. As the founder of JAC (“Joint Alliance for CSR”) established in 2010, Alex has contributed greatly to the CSR development in global telecom industry. As the honorary chairman of TESFEC (Association for Ecologic transition & Solidarity), Alex actively participates in SDG development. Holder of two PhD (philosophy & engineering), Alex is an active geopolitical writer.

References:

[1] https://www.reuters.com/world/brics-poised-invite-new-members-join-bloc-sources-2023-08-24/#:~:text=JOHANNESBURG%2C%20Aug%2024%20(Reuters),order%20it%20sees%20as%20outdated.

^[2] Michel Camdessus, La scène de ce drame est le monde, treize ans à la tête du FMI, Les Arènes, 2014.

^[3] Plus de 40 pays veulent rejoindre le groupe des BRICS, selon l’Afrique du Sud, TRT AFRIKA, 21 juillet 2023.

^[4] Yaroslav D. Lissovolik, BRICS-Plus: the New Force in Global Governance, RIAC, Moscow, Russia.

^[5] Balinder Singh and Dr. Jagmeet Bawa, Reshaping Global Dynamics: BRICS Summit 2023 And Emergence Of New Geopolitical Era – Analysis, August 15, 2023.

^[6] S. Jaishankar, The India Way: Strategies for an uncertain world, HarperCollins, 2020.

^[7] Balinder Singh and Dr. Jagmeet Bawa, Reshaping Global Dynamics: BRICS Summit 2023 And Emergence Of New Geopolitical Era – Analysis, August 15, 2023.

^[8] Pepe Escobar, The Hegemon Will Go Full Hybrid War Against BRICS+, June 10, 2023.

^[9] Ray Dalio: Principles for dealing with the changing world order, Simon & Schuster, 2021.

“Permit me to issue and control the money of a nation, and I care not who makes its laws” – Mayer Amschel Rothschild, 1790 

What began as a 2001 prediction by Jim O’Neill from Goldman Sachs^[1] and became a geoeconomic reality in 2009 when the four states listed by him held their first summit in Ekaterinburg, Russia has now reached a crucial stage of evolution. Will it remain a club of five very diverse and even sometimes diverging powers huddling together every now and then to devise cooperative ventures in development finance, science, and technology or will it expand to accommodate new members and project itself as a non-western G-10, 20 or 40, reminiscent of the Non-Aligned Movement of the seventies or of the Group of 77 of the same period?

Will it be able to hold on to the principle of unanimity in its decision-making or will it split into two or more camps under the pressure of strategic rivalries and economic disagreements? Could it even turn into an alternative or rival of sorts to the UN Security Council, still dominated by the winners of the Second World War who refuse to really make room for the new great powers?

There are differences in the strategy to be followed with regard to the two most important decisions now under consideration. While China and Russia seemed to favour the rapid admission of new members, India and Brazil made it known that they wish to grant eligible candidates partner or observer status for the time being^[2].

Likewise, while Moscow and Beijing have stated their intent to launch a new common reserve and trade currency for the Group in the short term, India has reservations about that project and prefers to grow bilateral or multilateral transactions between the respective national currencies, as is now happening between India, China, Russia, and the United Arab Emirates, mainly in the energy market (e.g. India is paid for its exports to the UAE in Dirhams which are used to settle India’s oil purchases from Russia and Russia, in turn, is paid in yuan for energy deliveries to China). Whether two systems can be used side by side (currency swaps and a common BRICS basket unit) remains to be seen.

Major tests of the Organisation have been the Ukraine crisis that began in 2014 when the Western powers imposed several rigorous sanctions on Russia following the Maidan Putsch and Moscow’s annexation of Crimea and, from the February 2022 Russian ‘Special Operation’. The four other partners, while supporting a cessation of hostilities and a peaceful resolution, have kept a broadly neutral policy with regard to that enduring international confrontation although Beijing has tacitly supported Russia.

Another challenge to the viability of the BRICS system was posed by the bloody clash between the Chinese and Indian armies on the Galwan area of Ladakh around their Himalayan border in the summer of 2020. Yet, in spite of these systemic shocks and perhaps because of the very instability and unpredictability of the international situation, the partnership has survived by focusing on issues where cooperation between the members is mutually beneficial and steering clear of conflictual issues. It should be recalled that the almost seismic political transition of 2019 in Brazil between the Left-Wing government led by Lula de Silva and his hard-right opponent Jair Bolsonaro, known for his pro-US sympathies and his aversion to China and Communism did not negatively affect the BRICS. Even Bolsonaro recognised the benefits of BRICS membership. It should not be forgotten that a number of valuable academic, scientific and educational joint projects for cooperation have been launched and mostly successfully implemented between the BRICS members. The group indeed is not solely an economic and geopolitical assembly, it is also a cultural cooperation platform that helps citizens of its participant states to bypass hitherto hegemonic or at least preponderant universities, foundations, endowments and thinktanks.

Yet, the biggest challenge since its inception was faced at the latest summit of August 2023. The BRICS had to decide whether to add new members from a fast-growing roster of applicants that exceeds forty countries, of which nineteen have formally requested admission, including several important states such as Saudi Arabia, the United Arab Emirates, Indonesia, Egypt, Nigeria, Ethiopia and Argentina. Even France’s President Macron made an unexpected attempt for his nation to join the Organisation when he sought an invitation to the Johannesburg Summit. Although China appeared open to it, whereas India probably had no objection, Russia nipped the proposal in the bud by pointing out that France is a sponsoring party to the unilateral Western sanctions against Russia and other nations and is therefore ineligible according to the BRICS Charter.

Why is this rapidly rising worldwide interest in an organisation, which was initially dismissed by the Western powers as a rather toothless league of developing or declining states scattered around the globe and having little in common apart from holding grudges against the current neoliberal order? The response is clearly to be found in the systemic crisis of the said neoliberal financial and monetary order and in the need for a solution that the BRICS may offer. While the US^[3] and EU^[4] economies decline as a result of untenable neoliberal policies of financialisation and industrial downsizing, their Fiat currencies (the US Dollar and the Euro) are no longer trusted as safe havens for the reserve holdings of governments and corporations, particularly those of all the other nations and alternatives backed by tangible values such as gold, strategic minerals and fossil fuels are in urgent demand.

The quest for an alternative to the US greenback has been ongoing since the beginning of the 21^st century at least but it was massively accelerated by the Ukraine crisis in 2014 when the Government of the United States resorted once again to its familiar policy of economic, judicial and financial sanctions against an allegedly rogue state. However, that time the target is not another North Korea, Iraq, Syria or Iran but Russia, a nuclear superpower, controlling the largest landmass and owning the greatest reserves of natural assets on the planet. The weaponisation of the world’s main reserve and trading currency by the US Government and its subordinates against an increasing number of nations, in violation of international law and of the UN charter, was seen as a clear and present threat to all other countries, even those that had good but essentially tributary relations with the self-appointed leader of the free world.

Another triggering factor was the endemic, out-of-control money-printing by the US Treasury/Federal Reserve that has grossly abused its ‘exorbitant privilege’ as an emitter of the global currency to flood its economy and all others with ever more virtual dollars, actually IOUs whose principal is not intended to be ever repaid. The engineered COVID-19 epidemic crisis provided a new ‘force majeure’ escape for the US to keep its ailing economy afloat by distributing free money to its banks, companies and citizens. However, The inevitably resulting inflation did not immediately occur because of the remaining ut dwindling ability of the US to make the rest of the world absorb the rapidly expanding mass of Dollars which still account, together with the Euro, for 80% of all trade settlements and currency holdings.

Russia – and to some extent China, which has been designated as a systemic rival and strategic competitor by Washington – took the opportunity of the widespread alarm to promote a proposal for de-dollarisation based on the creation of a new, ‘democratically managed’ multinational ‘basket’ reserve and trading currency, backed by gold and possibly by other hard assets, such as fossil fuels and strategic minerals, that could provide security and stability for business and protect the savings of all member states from the inevitable devaluation of the fiat currency and from the actually negative (with regard to inflation) interest rates offered by US Treasury bonds.

Some early steps in that direction were taken by the D-20 Long Term Investors Club, which held a conference in Modena, Italy in 2008 with the participation of economists and bankers, Savings and Loans and pension fund managers from several countries. The founders and participants floated proposals for a return to principles of sound investments into tangible, productive assets and companies, amounting to de facto partial ‘de-financialisation’ of the economy. In November 2012, another conference on the same theme was convened in Milan under the auspices of the ‘Eurasian Razvitie (Development in Russian) Development Corridor Project’, planned on behalf of the Russian Railways Corporation, and further discussions were held during successive annual sessions of the Astana World Economic Forum in Kazakhstan^[5].

Some of the ideas taken up at the Milan conferences were about in-depth reforms of the global trade regime and currency systems on the lines proposed by the late Nobel Economics Prize Laureate, Professor Maurice Allais (2009). The priority was to limit and reduce the influence of major private banks and MNCs that were seen to have taken over economic leadership from governments to impose a ‘technocratic feudal system’ to the benefit of a small, self-coopting minority of plutocratic stakeholders. Real free trade was to be defined as fair trade and great attention was paid to the IMF study authored by Jaromir Benes and Michael Kumhof “The Chicago Plan Revisited”^[6] to slash private debt by 100 percent, while boosting growth and stabilizing prices.

There was also a proposal to evaluate the original Simons and Fisher’s 1936 Chicago Plan that advocated for national states to resume control of the creation of money and buy back private debt by issuing fiat currency as equity, not debt, while segregating the monetary and credit functions, in keeping with the Swiss ‘full money’ banking reform proposal. In the suggested new system, banks would be required to hold 100% reserves for loans (as proposed by Milton Friedman in 1967) and state-created credits would be invested in priority fundamental research and technological and industrial applications. It was noted that an earlier FMI-sponsored study of such a proposed reform had been predictively analysed according to the DSGE stochastic model and found feasible. It was indeed concluded that it would result in a major gain in welfare for societies implementing it.

Policies dovetailing with the proposal include the issuance of low or zero-interest public credit (special bonds, project- or industry-specific when suitable) to state-sponsored research bodies or in some cases to public-private partnerships on the basis of market evaluation and analysis of socio-environmental priorities and product/process commercial potential. Financial facilities can be provided, on the basis of such credit instruments, to attract innovating entrepreneurs.

The economic and financial roadmap advocated by the D20/LTIC and the Razvitie planning team flagged the threat posed by private equity funds, defined as cartelised corporate predators ‘churning borrowed fiat money in the short term’ for their own profit while destabilising industry and the economy in the process.

The Modena initiative was one of the sources of inspiration for the Astana World Economic Forum of 2011, which promoted President Nazarbayev’s anti-crisis plan prepared by economist S N Nugerbekov. The proposal for a radical reform of the international financial system led in the following year to the creation of the G-Global, an informal advisory platform to the  G-20 Summit in Guadalajara, Mexico. G-Global also drew inspiration from the 2009 Moscow West-East Economic Forum for its Think20 Report based on the submissions of the D-20 study group and supported by some eminent economists, including Nobel Economics Prize Laureate Robert Mundell.

This preparatory work paved the way for the BRICS hard asset-based common currency project and for the creation of new cooperative financial institutions, the New Development Bank (NDB), also known as the BRICS Bank, and the Asian Investment Bank (AIB) as well as a new Gold Exchange^[7] in Shanghai, that opened in 2017.

A major qualm of the emerging economies about the current financial system is shared by many in the leading capitalist countries as well. The aforementioned Nugerbekov report notes that 10 to 20% only of capital is invested in the production of material goods. {The other} 90% consist of virtual and derivative financial products used for short-term speculative transactions.’

The BRICS currency system is envisioned as a tool to correct that imbalance. An ingenious interpretation of its likely mechanisms is provided by columnist Dimitry Orlov^[8] who describes it as a notional accounting unit created to rate the value of commercial transactions between currencies. An alternative method is to emit chits (short-term loans at zero interest) that can periodically be either cancelled out if the trade is balanced or renewed on identical terms. If trade imbalances cannot be corrected, gold may be provided by the debtor country in proportion to its trade volume with the other BRICS partners, only to compensate for the deficit in trade (and not to be lent or sold by the recipient) and priced in the earlier described notional accounting units.

The bad news for the American Dollar in this regime is that the participating states would have an imperative reason to sell their US Treasury holdings against gold in order to accumulate sufficient reserves of the latter. Other analysts suggest that other resources, such as gas, oil, and precious metals could also be used like bullion, if priced in the common currency chit units.

All those discussions are building up towards the decoupling that is now taking place, gradually but at high speed and not only in BRICS member states and in those that are applying to join them.

One of the most farsighted analysts of the global financial scene, Ankit Shah, has pointed out how, by replacing the old LIBOR interest-rate index, based on the estimations of London member institutions (‘Each bank estimates what it would be charged were it to borrow from other banks’), with the SOFR^[9], the United States is imposing its Treasury’s data as the sole standard, depriving non-American partners of a say in interest-rate setting decisions. The response from abroad according to him will be the ‘indigenisation’ of lending rate regimes in different countries and economic blocs^[10]. Thus, de-dollarisation is a predictable reaction to the increasingly autocratic management of the international economy by the US Federal Reserve and Treasury Department. Russia is in urgent need of it as it is not allowed to function normally under the current sanctions regime which is likely to be permanent, as is the case for many other such punitive measures slapped on other states several years ago. China foresees the time when it will come under similar pressures and wishes to prepare by developing a parallel, alternative system while other countries, in Asia, Africa, the Americas and even in Europe are aware of the coming currency crisis and financial-political earthquake which will make them all the victims of fateful economic decisions taken in the US and EU ruling circles. The quest for a way out is therefore an inevitable process, and only the manner and the timeframe in which it will be carried out remain topics of discussion. It will not be solely a result of the endeavour by certain ambitious rival powers to upstage and overthrow the United States from its hegemonic pedestal. Rather it is a consequence of the economic decline of the hegemon itself, no longer able to sustain the system it built when it took the place of the waning British Empire.

The spendthrift management of the American economy in the last decades and Washington’s ever more frequent use of sanctions and military aggression to keep challengers under control have eroded the trust it enjoyed in most parts of the world in the middle of the 20^th century when the fear of communist revolution kept many governments and societies under the US financial and military umbrella.

Monetary and financial regimes, like civilisations and empires, go through phases of growth, acme, and decline ending in their disappearance. The bell now tolls for the fiat Dollar system. The American government knows it and is predictably trying by diverse means to prevent the BRICS from going ahead with its projects for an alternative international trading currency. Accordingly, much disinformation circulated about this year’s Johannesburg BRICS summit, aimed at convincing the world that the conclave was doomed to fail. The heads of the member governments were surreptitiously advised not to go, or to attend only virtually. South Africa was heavily pressured to comply with the arrest warrant opportunely issued by the International Criminal Court against the Russian President and, as a result, Russia was represented physically by the Foreign Minister. Rumors of dissension and mutual backstabbing within the group floated even in media that used to ignore previous such summits.

It is clear that the collective West is worried about the ongoing actions and plans of this association that it does not dominate but, as the saying goes, the horses appear to have already bolted out of the stable.

Priorities for Pilot Projects:

-Suitable for and needed in the target area (Eurasian region).

-Wide use and preferably low cost with applications in many areas.

-Bringing about major savings in energy and other natural resources and externalities, with special regard to housing, heavy industry and transportation (e.g. new materials for rail, road, air and space vehicles).

-Advances and fosters education and research.

-Promotes interdisciplinary research integration.

-Sustainability at the interaction of Environment, Economy and Society.

-Should be conducive to widespread improvement of living conditions, ecologically nurturing or at least non-toxic.

 

Author Brief Bio: Côme Carpentier de Gourdon is currently a Distinguished Fellow with India Foundation and is also the Convener of the Editorial Board of the WORLD AFFAIRS JOURNAL. He is an associate of the International Institute for Social and Economic Studies (IISES), Vienna, Austria. Côme Carpentier is an author of various books and several articles, essays and papers.

 

References:  

^[1] https://en.wikipedia.org/wiki/Jim_O%27Neill,_Baron_O%27Neill_of_Gatley

^[2] https://www.thiesinfo.com/L-Inde-et-le-Bresil-s-opposent-a-un-elargissement-rapide-du-groupe-des-BRICS_a1042.html

^[3] https://www.fitchratings.com/research/sovereigns/fitch-downgrades-united-states-long-term-ratings-to-aa-from-aaa-outlook-stable-01-08-2023

^[4] https://www.cnbc.com/2023/06/08/euro-zone-enters-recession-after-germany-ireland-growth-revision.html

^[5] https://www.vijayvaani.com/ArticleDisplay.aspx?aid=2334

^[6] https://www.d20-ltic.org/

^[7] https://en.sge.com.cn/

^[8] https://reseauinternational.net/les-brics-en-or/

^[9] https://www.newyorkfed.org/markets/reference-rates/sofr

^[10] https://www.youtube.com/watch?v=V1M9SvX-6HQ&t=4s

 

Dedollarisation = Decolonisation = Deradicalisation = Demissionarisation

The World is moving out of the Single Country Reserve Currency format after centuries. Be it a new reserve currency representing a basket of all participant national currencies or trade in national currencies, the Dedollarization process is confirmed. This marks the end of the ills which the single country reserve currency format brought in this world with a lopsided unipolar international trade passing for globalization.

The process of radicalisation of the Indian subcontinent and the Middle East began with the birth of the petrodollar. There were hardly any Arabic black burkhas in the Indian subcontinent before that. There was no single community domination of the property market on both sides of highways across Indian cities before the fiat dollar of 1971 and the petrodollar of 1973.

Following are the notable evils of the Single Country Reserve Currency format in the last 50 years –

1. Destruction of the correct Valuations of the physical assets, commodities and core sectors of manufacturing, farming, food processing, logistics, defense and precious metals.
2. Destruction of Self-employment and Entrepreneurship model in all societies. Destruction of family as an institution by sponsoring waves of individualism, hyper consumerism, feminism and wokism across countries.
3. Funding of protest and terror finance across the world straight from the printers of the central banks in the West.
4. Funding of Sabotage and Religious conversion activities straight from the printers of the central banks in the West.
5. Luring of talent from other sectors to the Information technology sector, which was born out of the Fiat dollar of 1971, by attracting them to outsourcing projects and very high pay scales while making them do ‘digital coolie’ tasks.
6. Luring of talent to the West by offering them Fiat dollar- based high incomes.
7. Playing the Diplomacy of ‘Two-Bucket theory’ by telling every economically healthy nation that your neighbor is a rogue nation deserving to be sanctioned, which means you have to continue with the US dollar for trade by default. Arms and dollars go to one nation while sanctions are handed over to its supposedly rogue neighbor. That explains Russia on the border of China, China on border of India, India on the border of Pakistan, Saudi Arabia – Iran, Iran-Israel and EU-Russia and other such ‘two buckets’?
8. Almost none of the erstwhile English colonies have been able come out of the slave-churning degree-factories converting entire society into jobbers as part of the colonial agenda.
9. All countries which cannot print their own currencies to purchase energy became financial colonies of the US in every sense of the word. All central banks look at the Federal Reserve while framing monetary and fiscal policies to ensure physical goods are sent to the West against lower and lower payments in return for a currency backed by nothing (Fiat money).
10. While the West enjoyed distributing social benefits, income security, food stamps and whatnot by endless currency printing, the rest of the world has had to slog overtime to earn US dollars in order to buy any foreign commodities. The West simply printed the currency endlessly to consume far above its needs while floating paper assets in huge proportions in the market to take down the valuations of what the others export to them.

Instead of the physical asset valuing the derivative, the derivative paper assets are now setting the value of the real physical asset. With a large portion of the population turning to speculative trade and passively investing into others businesses, with the edge the dominating country’s reserve currency, the goods producing nations have ended up with a pittance as payments for their work. The West enjoyed weekends off, multiple vacations through the year, distributed money cheaply to businesses, leading to enormous tech-innovation, weaponised those IPRs and kept buying up the immigrant brains.

The dollar-loans international bodies continue to impose direct and indirect policy decisions to the subject nations to ensure they remain in the doomed loop of poverty and continuous dependence.

1. The American lifestyle has been sponsored by the rest of the World since 1971 as Dollar-inflation was passed on to the rest of the World by transactions referenced in US currency.
2. Sponsoring Start-ups and particularly e-commerce, directly funded by the central banks of the West at the lowest rates of interest to underlime entrepreneurship, offline trade by small and medium enterprises in all countries by selling products online much below the cost of the products. Not surprisingly, most of these online giant distributors have never been profitable.

The intent and pace of Dedollarization is speeding up with the topmost energy producing and energy consuming countries becoming BRICS members. The BRICS will expand with effect from January, 2024 with the addition of othe UAE, Saudi Arabia, Ethiopia, Argentina, Egypt and Iran across the continents. In all probability, the ‘two opposite bucket’ countries worldwide which have clashed and thereby kept the reserve currency status alive till now, are now joining hands. The ‘cats’ may still keep fighting each other, but they have agreed to first eliminate the monkey (US dollar) as their in-between.

The formation and trajectory of BRICS+ & the Global South needs to be on  the following two common themes –

1. Agreement to disagree –

This is to say no country will poke its nose into others’ internal affairs, no country will be bossing others, no country will have sanctioning privilege, no country will have to face any kind of political compulsions, no country will give any kind of lectures on human rights, no country can seize assets or curb multilateral participation of others and any country can freely exit the format, if they choose to.

2. Agreement to Decolonise from the imposed Western templates of governance –

This is to say many of the BRICS nations will now revisit their understanding of history, scientific discoveries, performance indicators, indexes and ranking criteria from finance to trade to health to education to languages and all walks of life. The ‘natives’ will resurrect from the colonial conformism imposed through centuries of western domination.

The core theme & strength of BRICS of non-commonality is currently being portrayed by many experts as the reason for the futility of such a grouping. Only time will tell, if such truly democratic grouping can produce outcomes or not, compared to the contemporary unidirectional, standardised associations promoted and inspired by Western models. My view is that BRICS was formed exactly in order to escape from Western standardisation.  Many of the ‘developing’ economies suffer from internal chaos and reduced valuations of their productivity because of dollarisation, invoicing and referencing their international trade in dollars.

What did Bharat offer to BRICS in the South Africa Summit 2023?

Prime Minister Narendra Modi made the most of Bharat’s stature by timing the Moon landing of Chandrayaan–3 to coincide with the BRICS Summit. The success of insertion on 5^th August, 2023 was complimented by this.

After Subhashchandra Bose, Prime Minister Narendra Modi is perhaps the first Indian leader exercising full sovereignty in governance and decision making, internal as well as external. Many earlier Prime Ministers faced external compulsions when making decisions for various reasons including coalition politics. At the Africa Summit of BRICS – 2023, he offered the following objectives for the BRICS grouping.

1. Unified payments interface
2. BRICS Space Exploration Consortium
3. To make BRICS future-ready, Bharatiya platforms like – DIKSHA, ATAL labs, BHASHINI, COWIN & India Stack
4. Skill-mapping of BRICS nations’ capacities
5. Repository of BRICS traditional medicine knowledge
6. Cooperation in protecting of Big Cats in the BRICS nations

Following are the Dedollarization updates from the Johannesburg Declaration of the XV BRICS Summit – 2023

1. We task our Finance Ministers and/or Central Bank Governors, as appropriate, to consider the issue of local currencies, payment instruments and platforms and report back to us by the next Summit.
2. We stress the importance of encouraging the use of local currencies in international trade and financial transactions between BRICS as well as their trading partners. We also encourage strengthening correspondent banking networks between the BRICS countries and enabling settlements in the local currencies.
3. We call for the need to make progress towards the achievement of a fair and market-oriented agricultural trading system.
4. We agree to strengthen exchanges and cooperation in trade in services as established in the BRICS Framework for Cooperation on Trade in Services.
5. We agree to enhance dialogue and cooperation on intellectual property rights through, the BRICS IPR cooperation mechanism (IPRCM).
6. We look forward to the report by the BRICS Payment Task Force (BPTF) on the mapping of the various elements of the G20 Roadmap on Cross-border Payments in BRICS countries.
7. We have also tasked our Foreign Ministers to further develop the BRICS partner country model and a list of prospective partner countries and report by the next Summit.
8. The African Continental Free Trade Agreement (AfCFTA) and BRICS cooperation present opportunities for the continent to transition away from its historic role as a commodity exporter towards higher productivity value addition.

The above pointers make it very clear that the new applications and memberships are going to substantially increase next year. The oversubscription of South African bonds issued by the New Development Bank on 15^th August, 2023, the forthcoming issue of Indian Rupee bond in October and the designation of a technical committee to discuss the feasibility of a common currency, all point at replacing the US treasury in its global regulatory role as well as raising loans in local currencies. In the coming months, we could see a massive dumping of US treasury by several nations including China and Japan.

No countries need to join BRICS for doing trade in national currencies like Yuan, Rupee or Ruble; so why are countries applying for membership if a common format is not in the plan?

Large nations like China, Russia and India do not need assistance for dedollarising their bilateral trade, but smaller nations need an established framework to shift their trade out of US dollars as in kind of blanket security. They have seen the fate of leaders like Saddam Hussain and Gaddafi after they went solo in their Dedollarisation endeavours.

The Rupee has some of a reserve currency features, but does not carry enough trade to become a trading currency. THe Yuan has many trading currency features, but does not have the trust and transparency factor to become a Reserve currency). The Ruble has none of two, neither trading nor Reserve currency features, but has massive natural resources to be pegged to for valuations. It is very clear that none of the three – Russia, India and China can bring about a unipolar Reserve currency. All the three nations must compromise to arrive at a multipolar BRICS format of trade.

While the invoicing and payments can be easily transitioned outside the US Dollar or Euro currency, the referencing for putting a price tag for the valuation of products or services is the difficult part. One of the easiest ways to do so could be making Gold the reference point for valuations to move trade. For example, a particular weight of Gold value can be fixed for say, one barrel of crude oil. Gradually the price resetting can be done for each of the commodities and production traded among nations. This will require revamping the commodities and stock exchanges and banking systems as well. The GIFT city of Gujarat which hosts the New Development Bank regional office for BRICS can be offered as a mini–World Bank, a nodal agency handling the transactions. Each country can maintain its national currencies for internal trade and shift its foreign trade to BRICS digital tokens issued by the New Development Bank. The issue of BRICS digital tokens can be based on a net gap adjustment of international trade for each member country, with periodic settlements on Gold value terms. There will be a need for a new trans-national, secured Payments system to operationalise and carry out these transactions.

Bharat’s immediate Sphere of Influence –

Under the BRICS Partner-Country model, Bharat should cover memberships of the Greater Indian subcontinent to include Bhutan, Nepal, Sri Lanka, Maldives, Myanmar and Bangladesh. The regional trade of Bharat can grow under the BRICS format in the regional neighbourhood. This is necessary to keep out the imposition of political conditions and external interferences mandated indirectly by the debt-issuing international bodies such as the IMF and the World Bank.

What else can Bharat offer to BRICS?

• Skills-based Curriculum sharing
• BRICS Media
• BRICS Defence Capex Sharing as Net Security Provider across the greater Indian Subcontinent
• Mandir Ecosystem for establishing a Sanatan Economics Model (Sustainable Economics) with seamless connectivity, possibly from Ayodhya as a central node across the greater Indian Subcontinent

When information outlets are non-nationalist and the historical curriculum is not based on Shaashtra (spiritual knowledge) principles, a country needs shashtra (military weapons (for internal security.

Shaashtra is for Internal security & Shashtra is for External security. Bharat has the potential to offer both.

 

Author Brief Bio: Dr. Ankit Shah is a Fellow Chartered Accountant & a Qualified Company Secretary, Independent Fin-Tech Consultant for MNCs including on Semi-conductors, Advisory Board Member with GNLU Legal Incubation Council and a keen observer of foreign policy & security for the Indian subcontinent. He introduces the Super power concept as a Two Buckets Theory in his book – GEOPOLITICS – DECODING INTENTS, LIES, NARRATIVES AND FUTURE. He has served IIM-Ahmedabad as an Academic Associate in the Finance & Accounting Area and as a Research Associate with the IIMA Case Center.