No Room for Anti-Dollarization

Expansion of BRICS gives semblance of balancing act between China and India
"SWIFT is an organization which was founded in Brussels in 1973 and it predominantly establishes a common process and creates standards for financial transactions."
"SWIFT is an organization which was founded in Brussels in 1973 and it predominantly establishes a common process and creates standards for financial transactions."

One of the biggest takeaways from the recently concluded 15th  BRICs summit in Johannesburg pertained to failure of China and Russia to push Anti American and anti-West tirade of one currency which did not figure in official agenda of the gathering; though the Dragon is having a long-term strategy to make it reality which presently defies the logic.

De-dollarization was a closely monitored issue in the BRIC summit and some members did support the transactions in local currency but O’Neill, a reputed economist and the former Goldman Sachs, who coined the term BRIC in 2001, has outrightly rejected this idea and described it as ridiculous.

O’Neill says that it is almost embarrassing to ponder over an idea of creating a central bank and predicts the rivalry between China and India as a major stumbling block.

He wishes that it will be a good omen if both powers do not agree to have BRIC currency, in case they did then the dominance of the dollar will be much more vulnerable.

Even as this idea was being discussed, data released by SWIFT, Society for Worldwide Interbank Financial Telecommunication, showed that the greenback was used for a record 46% of foreign exchange payments via the communications system in July,2023, which makes dollar worldwide accepted as the dominant currency.

SWIFT is an organization which was founded in Brussels in 1973 and it predominantly establishes a common process and creates standards for financial transactions.

Amidst the pushback being faced by China and Russia owing to sanctions imposed by United States, it was an aggressive posture adopted by both nations to ensure expansion of BRICS though India had taken lead in floating an idea of evolving the consensus over the  admission of new six members in the block to develop new global developmental order of governance which should not be Unipolar.

O’Neill opined that the historical record of BRICS is not heartening and its meetings are all about symbolism and allegory. Neill is unsure whether summits have yielded anything. Diplomacy is predominantly governed by the ingredients of long-term policy and assessment of fallout on national interest which is evident from inclusion of UAE and Egypt in BRICS as both happen to be strategic defense partners.

China failure to create Anti America grouping

China made an unsuccessful attempt in creating an impression that newly added members in BRIC may adopt an Anti-US stance except Iran and presence of India will make it extremely difficult for the Dragon to have its final say in the decisions taken during the summits. Experts say that China was keen to push the proposal of BRICS currency but it was not favored by majority of the members who wanted trading with each other in their respective currency. China could have asserted more had President Vladimir V. Putin of Russia attended the summit but he is wanted in war crimes in Ukraine under a warrant issued by the International Criminal Court which is a Western-dominated international institution. Due to this reason, South Africa did not encourage Putin to flout the norm who kept anti US tirade in his address to the members.

India treads cautiously

Prime Minister Narender Modi emphasized that new six members will further strengthen the BRICS and give a new impetus. Experts say that other four new members viz. Iran, Saudi Arabia, Argentina and UAE have friendly relations with India. The overall impression may sound logical which will be welcomed. Modi said "expansion and modernization of BRICS is a message that all institutions in the world need to mould themselves according to changing times and India has always fully supported the expansion of the BRICS membership. As per India’s vision, the addition of new members will further strengthen BRICS as an organization besides giving a fillip to all our common endeavors." India is of confirmed opinion that the decision to expand the bloc will further strengthen the faith of many countries in the multipolar world order. The new entrants Iran and Saudi Arabia have got close ties with India which will not create imbalance in the grouping. Russia always stands by India whenever issues of mutual interest are discussed at international fora. As per the genesis, grouping took birth in Sept. 2006 comprising Brazil, Russia, India and China which was named as BRIC. After the entry of South Africa in Sept. 2010 it represents 41% of global population i.e., 3.7 billion, 24 % of Global GDP and 16 percent of trade volume which is very significant. More than 40 nations had shown keen interest and 23 formally applied for the membership but only six got the membership which was based on criteria finalised by the existing grouping.

Challenges ahead

Experts feel that expanded BRICS faces several challenges which include reshaping global governance and building a multipolar world which gives prominence to voices of Global South at the center of world agenda. Second, diverse interests of the members should not act as hindrance in focusing on the issues of common interest hence bilateral disputes must be kept at a bay. Third, BRICS should not be an Anti-West or Pro China-Russia block which may turn it into a convergence of an elite group ending into a fiasco. Fourth, the entry of six nations exhibits the relevance and importance to global economic order hence efforts must be made to take it to the next level. Fifth, BRIC can ponder over the idea of having its own currency but it will be possible only if consensus is evolved and it should not be aimed at the West or US which may make the proposal illogical and irrelevant. Sixth, founder members must respect the identity and significance of new members of Middle East and North Africa (MENA) which lends variety to BRICS. Seventh, India gets an opportunity to become the voice of developing countries through BRICS which will elevate its prestige in the international arena. Finally, India has got a serious problem of cross-border terrorism which can be raised at this forum to solicit support and even China will be forced to fall in line.

China-Russia makes deadly combination

The inclusion of Iran and Saudi Arabia is being credited to the forceful plea of China-Russia combine which is aimed at creating an Anti US and West block. China had brokered the deal between Iran and Saudi Arabia which was not a welcome development to the United States. Due to the Ukraine war, Russia is at the receiving end and depends upon China which, at times, sends wrong signals to India and the US. Saudi Arabia is the largest crude oil exporter and it will have China in the same block which happens to be the world's biggest importer of oil. It also means Russia and Saudi Arabia will join each other in a new economic block and both are members of OPEC, a major oil producers’ group. If both nations coordinate their oil output then it may put Saudi Arabia at odds with America.

China’s hegemony

China has been critical of the different groups which have been created by the United States to checkmate its growing influence. Several members of BRICS have trade relations with China hence an issue of balancing the deficit will be of prime importance for them which consolidates Dragon position. India’s presence puts a break on acquiring the hegemony in BRIC and both heads of nations can get a chance to discuss bilateral issues on the sideline of the summit. Chinese President, Xi and Modi discussed India-China border concerns and emphasized the dire need of restoration of peace and normalization which would be in the interest of both countries.PM Modi highlighted the maintenance of peace and tranquility in border areas and giving prime importance to mutual respect which is mandatory for Indo-China relationship.

United Nations Secretary-General, Antonio Guterres made an eloquent remark during expansion session of BRIC and said “today’s global governance structures reflect yesterday’s world and for the multilateral institutions to be universal in nature, they needed to reform.”

Analysts opine that the newly acquired dimension of BRIC nations will have to make a concerted effort to focus on the concept of its originator of acronym, Goldman Sachs, economist Jim O’Neill who favored the promotion of trade and development across countries in the region.

(Writer is political analyst and senior journalist having six-year experience of foreign posting in a neighboring country)

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