On the 25th of July, the 10th annual BRICS Summit takes place in Johannesburg. This year’s summit will bring together not only Brazil, Russia, India, China and South Africa, but Turkey, Egypt Argentina and Indonesia are also invited to participate the meeting.
As the scope of the BRICS and the number of diverse nations attending summits continues to expand, here are some of the aims of this year’s summit and for the multipolar organisation as a whole:
1. New currency mechanism for bilateral trade
At least year’s BRICS summit Xiamen, discussions regarding Dollar independence in terms of bilateral trade among BRICS members and partners was a major theme. This including discussions on Russian proposals for a BRICS wide cryptocurrency which will likely be discussed further at this week’s summit.
Crucially, since last year’s summit in Xiamen, the Petroyuan has become a reality as China has begun issuing oil futures contracts in Renminbi on the open market beginning in early 2018. Also since last year’s summit, Donald Trump’s threats of tariffs against both economic “rivals” and traditional partners has gone from a theoretical threat to a manifest reality that does not appear to be on the verge of ending anytime soon.
A bullish Dollar has likewise caused inflation among growing economies ranging from Turkey to India, to The Philippines. Meanwhile the decline in the value of the Chinese Yuan has resulted from negative market speculation based on the tariffs coming out of the White House, even though crucially this actually works to China’s short and medium term favour.
All of these factors, combined with the fact that several of the permanent BRICS members are substantial customers of Iranian oil (which will fall under US sanctions beginning in November), have created a far greater impetus for the leading and developing economies of Asia, Latin America and Africa to look for alternative currencies in their bilateral trade.
Therefore, it is imperative for the BRICS to work with its members and partners in developing a pragmatic means of exchange that circumvents the Dollar while creating an equal playing field among a diverse group of trading partners from the wider global “east and south”. At present, the development of a new currency basket – the pooled value of several currencies is one of the most attractive solutions to de-dollarising trade among BRICS members and partners.
Other options that can be considered are formal agreements to trade in a combination of national currencies at a bilateral level, while further discussions about a would be BRICS cryptocurrency will likely also come into play at some level.
2. BRICS+ is here to stay
As the BRICS member states (Brazil, Russia, India, China, South Africa) look to inject new purpose into their partnership, it is clear that a broader view of the BRICS as champions of win-win cooperation throughout the developing world and between two of the three global superpowers has won out over a more narrow vision of the organisation that seeks to focus the group’s agenda on the existing group of five.
India in particular has been increasingly reticent to embrace the concept of the BRICS+ due to the fact that this could inevitably lead to Pakistan forming an important partnership with the BRICS. That being said, as both India and Pakistan share a table at the Shanghai Cooperation Organisation, sharing a broader table at the BRICS may become inevitable and ideally, good for long term pan-Asian peace and cooperation in the long term.
Irrespective of the geopolitics of south Asia, Chinese President Xi Jinping’s visits to the UAE, Senegal and Rwanda on his way to South Africa makes it clear that the longer term vision for the BRICS is one that will come to encapsulate truly global development and cooperation initiatives. This phenomenon looks to make the BRICS a champion of economic multipolarity. Therefore, today’s BRICS encompasses a far broader an agenda than the initial founding strategy of the group which was mainly focused on increasing cooperation between its original members.
This development is ultimately healthy not only for the BRICS but for the wider multipolar world. As Asia, Africa and Latin America look to embrace modern connectivity initiatives in order to accelerate national development through meaningful partnerships, it becomes increasingly important for a set of multilateral organisations to form with a clear goal and purpose. Such organisations will help to automatically foster more dialogue between the leading Asian economies and those of the developing world, while also giving rise to institutions designed to initiate direct conflict resolution.
While recent years have seen fears of a BRICS plateauing in terms of its goals due primarily to wide ranging disagreements between China and India – the clear solution is not to isolate any one member of BRICS but simply to diversify the organisation so that its past efforts do not go to waste just because of India’s rejection of the One Belt–One Road initiative.
Rather than forging a new international body, it was far more prudent to simply take the BRICS to its next logical stage of development which is typically referred to as the expanded BRICS+ formula. This year’s summit demonstrates the ultimate triumph of a BRICS format that looks outward in order to draw a larger set of diverse nations into the existing organisation. When one considers that the alternative was a kind of perennial paralysis between some of the initial members, it was quite simply a no-brainer to choose this win-win model of de-facto BRICS expansion.
3. Pan-African partnerships
The fact that new South African President Cyril Ramaphosa will be hosting his first BRICS summit already means that pan-African issues will be a central focus of this year’s summit just as least year’s summit in China clearly had a pan-Asian focus. As July of 2018 marks the 100th anniversary of Nelson Mandela’s birth, this symbolic moment also represents a meaningful psychological catalyst for African nations and their partners to reinvigorate the spirit of progressive modernisation in Africa as a tribute to the aspirations of the man many Africans know as Madiba.
Even before arriving at the 10th BRICS Summit in Johannesburg, President Xi Jinping’s visits to both Senegal and Rwanda are helping to solidify the wider pan-African partnership with China that runs from South Africa to Egypt and from Djibouti to Ghana.
China is currently working on multiple mega-projects throughout the continent, while China also looks to help African nations with security issues in an age of hybrid warfare. In so far as this is the case, is not insignificant that the People’s Liberation Navy’s first overseas base is in fact in Djibouti.
In offering African nations direct assistance in infrastructural development as an alternative to the loan-shark mentality of neo-liberal powers, China looks set to help future generations of Africans to generate their own wealth independent of foreign finance. Furthermore, China’s own loan initiatives to African states are generally viewed as far more fiscally prudent than many foreign alternatives.
As this years BRICS summit will be in South Africa, Chinese President Xi Jinping will be able to address many of these issues directly before his South African hosts while clearly his words will be listened to intensely throughout the continent.
Furthermore, against the background of the Chinese President’s multiple visits to African nations prior to the summit, combined with Russia’s major re-establishment of ties to the continent, the potential for China, Russia and other partners to help South Africa’s facilitation of a wider pan-African free trading arrangement remains substantial, as was recently discussed by geopolitical expert Andrew Korybko.
In this sense, deals established both during and on the sidelines of the summit to create more economic inter-connectivity within Africa will likely be a major component of the summit’s desired outcomes.
4. A commitment to global free trade
While some commentators in the US are attempting to portray the early stage (and far from complete) Russo-US rapprochement of the Trump era as a sign that the US and Russia will “team up against China”, nothing could be further from the truth. The US and Russia are currently being drawn ever so slightly closer together not because of a mutual distaste for Chinese initiatives but because of a mutual partnership with Israel.
To understand Russia’s firm commitment to China’s push for more open global markets, one can listen to the words of the Russian President himself. Even prior to the Trump White House stating that there were plans to formally invite Russian President Vladimir Putin to the US in the autumn of this year, President Putin issued the following statement about the goals of Russia’s foreign policy:
“Today, the principle of competition and openness in global trade is being more frequently replaced by protectionism, economic expediency – by ideological conjuncture and political pressure, while economic ties and freedom of entrepreneurship are becoming an object of politicisation. Against this background, Russia’s foreign policy must become more economically oriented and more prudent”.
In the same speech Putin praised the potential of the Eurasian Economic Union (EAEU) as an organisation that can help to benefit all member nations equally. While Putin did not use the phrase “win-win”, the essence of win-win was clearly implied. Likewise, the fact that the EAEU will enter into a full free trading relationship with China beginning in 2019 underscores the fact that rather than act as an insular Eurasian economic fortress, the EAEU looks to be a massive and dynamic logistical land-bridge linking east Asia to the Mediterranean and eastern Europe as part of the wider One Belt–One Road inter-connectivity initiative.
In an age where the economic language of China is that of openness, free trade and helping to create new and innovative trading partnerships on the basis of a collective win-win mentality, it was clear that in terms of his rhetoric on trade, the Russian President was speaking Chinese.
Therefore, those in the US so-called Blue Team of anti-Chinese right-wingers and mainstream Indian media will be inexorably disappointed to learn that the personally good relations between Donald Trump and Vladimir Putin will not result in a two against one superpower alliance aimed at undermining China.
In reality, China is Russia’s most important partner in terms of trade and increasingly in terms of geopolitical security. The incredibly successful Shanghai Cooperation Organisation summit held in Qingdao and next week’s BRICS summit in Johannesburg are further examples of Russia and China growing ever closer in terms of a partnership based on historically good relations where 20th century schisms remain an overall anomaly.
Therefore, the agreement to create the world’s largest free trading space between the Russian lead Eurasian Economic Union and China which goes into effect next year, the potential of a pan-African free trading zone and even India’s anger at its American partner for failing to exempt New Delhi from the Trump tariffs, will all coalesce to make the BRICS a group designed to facilitate free trade among its partners.
All of the aforementioned goals will take time and effort to realise and it should not be expected that any final agreements in these broad areas will be an immediate result of the forthcoming BRICS summit. However, by setting a broad agenda in the name of pragmatic and necessary win-win solutions to the problems of the day, this year’s BRICS summit in Johannesburg holds the potential for being the most vital such meeting in the relatively young history of the BRICS.