Analysis

Syria: Reincarnation or Revision?

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Ayanangsha Maitra

◉ EMPTYING THE SMOKE from his mouth after a drag of his Marlboro cigarette, Mohammed Jalali, the $140-a-month salaried Prime Minister under Bashar al-Assad, asserted the Kurdish-oriented news outlet Rudaw that it was not the tumultuous 13-year war that ended the 54-year-old Al-Assad regime, but rather poverty and corruption. Ministers were receiving only $70 a month under Bashar Al-Assad’s autocracy, while government workers were paid a mere $20, creating an unbearable struggle for everyday life. A lightning rebel offensive in the dawn of December 8 changed the course of Syria’s fate, filling millions with euphoria and optimism. On the dawn of December 8, 2024,  Syrians were surprised to learn that their president of 24 years had sought refuge in Russia, which granted asylum to Assad and his family members. Two days after Assad’s departure, at current leader Al-Sharaa’s order, the Malboro loyalist and academia professional Mohammed Jalali  transferred the authority to Mohammed Bashir, establishing an interim government set to last until March 2025.

 

Ministry and the Men of Matches

Syria is now ruled by a hung power of multiple hardliners, drawing experiences from military warfare. De facto leader of the present time, Ahmed al-Sharaa, better known by his nom de guerre Abu Mohammed al-Jolani, leader of Hayat Tahrir al-Sham (HTS) and the dominant force in the rebel alliance, spearheaded the lightning offensive that toppled Bashar al-Assad’s regime . An engineering graduate and gas industry veteran, Mohammed al-Bashir, is the man of his choice to install as interim Prime Minister. Sharaa’s general, Murhaf Abu Qasra,  is appointed to head the Defense Ministry. Once a hardcore Islamist leader, Ahmed al-Sharaa has rizzed several  Western and Arab state-leaders or diplomats. In less than a month, the HTS-led government has established formal diplomatic relations with nearly 30 countries.

Test & Trials ahead Sharaa

Spiraling inflation, a plummeting currency, and, moreover, crippling fuel shortages present the new government with its most pressing challenges, in addition to the need to restore stability and facilitate the return of millions of refugees.

Typically, a regime change leads to a currency devaluation, but Syria’s situation is an exception. Following Assad’s downfall, the country saw an influx of dollars—not only from areas that had previously been under rebel control, but also from the surge of foreign entities and organizations entering Syria.

Economy, Life & Consumption

Syria’s economic crisis, already dire before the onset of civil war in 2011, has worsened tragically. The World Bank’s 2022 data estimated the country’s economy at just $23.63 billion. The economic squeeze has been exacerbated by a stream of interconnected crises, including regional instability, international sanctions, domestic mismanagement, and of course the last devastating earthquake.  The humanitarian crisis in Syria is staggering, with over 16 million Syrians—roughly 70% of the population—now in urgent need of assistance. Nearly 90% of the population lives under poverty.

In the year 2024, World Food Programme (WFP) has provided aid to over 1 million individuals in Syria. In 2023, prior to funding cuts that led to the suspension of its General Food Assistance program, WFP was supporting 5.5 million people. Looking ahead, the organization is seeking US$250 million to help 2.8 million people in 2025. 

Syria’s Reincarnation

In the wake of World War I, the Ottoman Empire gave way to a new order, and France, was entrusted with a mandate over the northern expanse of the former Ottoman province of Syria. For nearly three decades, French rule sought to reshape the land, its people, and its governance, until, in 1946, Syria achieved her long-sought independence. In 1958, amidst a wave of pan-Arab fervor, the country entered into an ambitious alliance with Egypt, forming the short-lived United Arab Republic (UAR). But the two divorced from the union ultimately in 1961.

 

Syria’s social fabric is a mosaic, with Arabs comprising around 50% of the population, followed by significant minorities including Alawites at approximately 15%, Kurds at 10%, Levantine, and others. Under Sharaa, Syria got  her pace faster and several humanitarian agencies and western authorities are expected to come.

Ethnographic Map of Syria

 

 

                                                     ◉ In an interview with COGGS, Giorgio Cafiero, CEO of Gulf State Analytics and Adjunct Professor of Georgetown University opined that policymakers in Washington are excited that Syria is now drifting apart from Iran but how they will rule it remains a concern for them. UN Special Envoy for Syria Geir O Pedersen – while briefing to the Security Council on 8 January 2025, mentioned political transition as unclear. “We are ready to work with the caretaker authorities on how the nascent and important ideas and steps so far articulated and initiated could be developed towards a credible and inclusive political transition,” he stated further.

 

 

Before the civil war escalated in 2011, Syria was exporting 380,000 barrels per day (bpd) of oil, a key source of hard-currency revenue. However, this revenue stream vanished after the war broke out. Syria’s economic decline accelerated in 2019 when Lebanon, historically a vital economic partner, entered its own financial collapse. The once-robust economic ties between the two nations—spanning trade, banking, and remittances—disintegrated, depriving Syria of a crucial lifeline. In response, the current Syrian government introduced multiple exchange rates in a desperate attempt to regulate foreign currency flows and protect the remaining hard currency reserves.

Since the onset of the civil war in 2011, Syria’s dependence on oil imports has grown sharply, primarily relying on Iran to meet its dwindling domestic consumption needs. The country’s demand for oil has plummeted from 305,000 barrels per day (b/d) in 2010 to a mere 163,000 b/d in 2024, reflecting the profound toll the conflict has taken on Syria’s economy. Once a relatively self-sufficient producer, Syria’s oil output has drastically fallen from nearly 400,000 b/d before the war to just around 20,000 b/d today. Iraq could not supply because of Washington’s red-eye.

[Baniyas, Syria’s largest oil refinery located in the northwest part of the war-torn nation.]
Syria’s oil infrastructure has also been severely impacted by the ongoing conflict. The country operates two refineries, one in Banias with a capacity of 120,000 b/d and another in Homs, capable of processing 107,100 b/d. However, due to extensive damage and a sharp decline in demand since the war’s eruption, both refineries are functioning far below their potential. As a result, Syria has become increasingly reliant on external sources, particularly Iran, to sustain its oil supply. Iran alone owed around $30 billion for its continued support. Reportage indicates that the new Syrian government has no intention of settling the debts incurred during the Assad era. Instead, it has asserted that Iran owes Syria $300 billion for the damage caused by its forces in the country.

Syria’s financial system remains precariously fragile. Current foreign currency reserves are very little, with only about $200 million held in the central bank, along with 26 tonnes of gold, which, at current market rates, is worth roughly $2.2 billion, according to Reuters. However, the country faces a massive shortage of liquidity due to severe sanctions and the freezing of Syrian assets abroad. Western governments, seeking to pressure the Assad regime, have frozen hundreds of millions of dollars in assets in countries ranging from Switzerland to the UK. According to Swiss authorities, around 99 million Swiss francs ($112 million) in Syrian assets are currently frozen in Switzerland, while the Syria Report newsletter estimated the UK holds some $205.76 million in frozen Syrian funds, as reported by Reuters.

Beyond the issue of frozen assets, the broader trade picture remains grim. The Syrian economy has been hit by a catastrophic collapse in both exports and imports. Exports, once a major source of revenue, have plunged from $18.4 billion in 2010 to just $1.8 billion in 2021. This is largely due to the destruction of oil fields, electricity, finance mechanism, supply chain, loss of tourist income, and the disruptions caused by ongoing conflict. At the same time, Syria’s imports—especially vital food and fuel—have remained a key economic burden. Despite falling imports overall, from $22.7 billion in 2010 to $6.5 billion in 2021, the country still struggles with shortages in basic goods, as the state remains heavily reliant on imported fuel and food, with limited foreign exchange to cover these costs. Inflation rates are astronomical, with the Syrian pound plummeting against the dollar, and unemployment has skyrocketed.  Al Sharaa’s swift transition and reformist approach are promising signs, yet these two aspects remain under scrutiny, and are not entirely free from suspicion. Economic recovery is  nearly impossible without significant international investment and support. 

While the international community’s sanctions were intended to pressure the Assad regime, those sanctions have had a catastrophic effect on the general population. Syria’s economy, in its current state, has become one of the most isolated and impoverished in the world. As international support remains scarce and reconstruction efforts stalled, the country’s future depends on the nature, style and module of the leadership.

Russia’s role as a key wheat supplier has been impacted by the departure of Bashar al-Assad, and the US has shown little interest in re-engaging diplomatically with Damascus, especially with its embassy operations suspended since 2012. Meanwhile, Turkey, Qatar and Saudi Arabia have expressed a willingness to provide energy assistance. Ankara will be a partner in reconstruction too. The status of HTS, considered a “foreign terrorist organization” by the EU, Turkey, and the US, continues to be a contentious issue, with Syrian officials like Sharaa urging the West to reconsider its designation. As the scenes in Damascus changes fast, with the region hosting diverse ethnic groups, both the US and the EU have signaled they will wait to see the policies of the new Syrian government before making decisions.

Syria faces urgent needs for investment and comprehensive restructuring across her financial, banking, energy and alternative energy, and transportation sectors. Private sector is the enabling factor of socio-economics.  Beijing’s cautious approach and calculated steps focused on loans for infrastructure without the involvement of the US, EU, or Gulf states, will redifine the diplomacy in the region and the geo-economics in broader sense. Syria has been reborn multiple times throughout its history, but now is the moment to build a promised future for its compatriots—bringing home the 15 million displaced individuals to reclaim their sense of belonging. As the Sharaa-led hung power seeks to rebuild Syria, it stands at a crossroads, where new alliances may form and long-standing bilateral relationships may be renegotiated. Damascus under Sharaa- the man of the moment, exploring the “wisdom of Idlib” and the shifting regional realities, will likely pave a path shaped by these changing factors. The extent of the incumbent’s inclusivity, the nature of its accommodation, and the type of liberal market it will embrace—these are questions that spark both curiosity and concern. Yet, above all, Syria must finally be a place for Syrians.

 

[ Cover illustration : COGGS ] 

 

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How Central Asia is Becoming a Key Player in Global South?

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Balaji Chandramohan

Central Asia, situated at the crossroads of the Middle East and South Asia, was historically a key battleground in the Great Game between Asia and Europe throughout much of the 19th and 20th centuries. In the 21st century, it has gained significant geostrategic importance, particularly within the Global South.

In 2001, China, Russia, and four Central Asian countries formed the Shanghai Cooperation Organization (SCO) as a countermeasure to limit Western influence in the region. India and Pakistan joined the SCO in 2017, further expanding its significance.

The SCO has grown in relevance for both Russia and China as their relations with the West have deteriorated. Experts argue that the potential of the SCO cannot be underestimated, despite the existence of other prominent regional and multinational forums such as BRICS (Brazil, Russia, India, China, South Africa), the G20, and the G7.

 

Colorful pushpins marking locations on a detailed map of Central Asia.

Iran’s inclusion as a full member of the SCO will strengthen the organization’s energy portfolio but is likely to provoke anger in Western capitals. As the SCO becomes more aligned against Western-led forums, India may find it increasingly challenging to strike a diplomatic balance between its various global partners.

Nonetheless, India is confident in maintaining an independent foreign policy without aligning exclusively with any one group. How New Delhi manages its diplomacy—particularly its relations with Russia, China, and Pakistan—will influence the future trajectory of the SCO.

To begin with, Russia, India’s longstanding ally, seems supportive of India’s ambition to link South and Central Asia through Iran, bypassing Pakistan. India will also work with Iran to complete this project, which will foster closer economic ties between Central Asia, Moscow, and New Delhi.

This policy suggests that Moscow is prepared to support India’s ambitions in Central Asia, at least diplomatically (though not militarily). Russia’s soft power in Central Asia is increasingly seen as a valuable countermeasure against China’s expanding diplomatic and military influence in the region.

On the other hand, Central Asia is considered China’s western periphery, and Beijing has strategically developed oil and gas pipelines connecting to the region, including routes to Kazakhstan and the Turkmenistan-Uzbekistan-Kazakhstan-China gas pipeline.

Moscow is aware of China’s growing influence in the Central Asian republics, particularly through the SCO and bilateral agreements in the energy sector.

Furthermore, Afghanistan and Pakistan, both neighboring China and maintaining strong political ties with Beijing, are increasingly attuned to China’s role in mediating conflicts, such as between Saudi Arabia and Iran, as well as in the Ukraine crisis. Both nations have heightened expectations of China, and the trilateral meeting in Islamabad signaled their growing confidence in China’s diplomatic role.

Notably, Moscow and Beijing have increased their dealings with Kabul, short of formally recognizing the Taliban government, which has led to greater comfort in Central Asia toward aligning with the Global South.

Russia, Central Asian states, and China share a common perception of existential threats posed by terrorism and religious extremism, a longstanding concern of the US. This shared threat has fostered cooperation to prevent the US from establishing basing facilities in the region or allowing the Afghan Resistance (Panjshir) to use Central Asia as a sanctuary for further conflict.

Debating Central Asia’s credentials as part of the Global South offers significant academic value in at least two ways. First, it encourages scholars to revisit and rethink the region’s post-Cold War trajectory.

While Central Asia may be an uneasy fit for the Global South, it provides an appropriate framework to discuss the region’s historical and present-day significance. Viewing Central Asia as part of the Global South can shed new light on the nuances, richness, and conceptual limits of the Global South itself.

The region’s unique geographical position and its historical connections to the Silk Trade Routes have been crucial in shaping Central Asia’s geopolitical role, solidifying its place within the Global South.

These ancient routes, which connected the East and West, facilitated the exchange of people, goods, and ideas between Europe and the Far East, profoundly shaping the region’s cultural, economic, and political landscape, even when it was part of the Soviet Union.

The disintegration of the Soviet Union in 1991 led to the independence of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan—five Central Asian countries that have made significant strides in political transformation, modernization, and economic growth.

Russia-Ukraine Conflict and Central Asia

Central Asia has become increasingly significant in global geopolitics, especially due to the escalating Russia-Ukraine conflict. This conflict has attracted the attention of regional and global powers, all seeking to expand their influence in the region, thereby impacting Central Asia’s economic, political, and security dynamics.

The Russia-Ukraine crisis, which began in 2022, has had a profound effect on the economic and political landscape of Central Asian countries. For example, the energy sector has faced significant supply chain disruptions. Additionally, the economic sanctions imposed on Russia by Western countries have had a ripple effect, adversely impacting the economies of Central Asian nations that are heavily dependent on Russia.

The withdrawal of US forces from Afghanistan created a vacuum in terms of Western influence, which Western countries quickly sought to fill, often overlooking the concept of the Global South.

Conversely, the Russia-Ukraine conflict has reignited Western interest in the region. A key moment was the summit in September 2023, where all five Central Asian heads of state met with US President Biden for the first time. This was the first summit-level meeting between the US and Central Asia, symbolizing a renewed engagement.

Regarding India, the past decade has seen significant developments in its relationship with Central Asia. Prime Minister Narendra Modi’s visit to all five Central Asian countries in 2015 marked a milestone, reinforcing India’s commitment to the Global South.

India views a stable and integrated Central Asia as part of its “extended neighborhood,” crucial for both security and economic interests.

In January 2022, India hosted the inaugural India-Central Asia Summit, further solidifying political ties. Indian Foreign Minister Dr. S. Jaishankar framed this relationship around the “4Cs”—commerce, capacity building, connectivity, and contacts—each of which strengthens India’s engagement with the Global South.

Meanwhile, global geopolitical transformations have sparked renewed interest in the Global South. As the US struggles to maintain its superpower status, China’s expanding economic and political influence and Russia’s challenge to the international order through its invasion of Ukraine have elevated discussions on the Global South’s role in global affairs.

These tensions have sparked debates about the credibility of the Western order and the growing influence of emerging powers. The economic, financial, and industrial development patterns of the Global South raise questions about whether its elites will challenge the existing global capitalist order or seek to revise it by shifting their positions and influence within the system.

Though discussions on the world order and the role of the Global South have been ongoing for decades, China’s assertive ambitions and Russia’s actions in Ukraine have given rise to new narratives about the role of the Global South in geopolitics.

In Europe, Russian aggression has fostered unprecedented unity and highlighted the need to diversify strategic needs in areas such as energy, military, industry, and technology.

Moscow has expressed dissatisfaction over the lack of support from the Global South during the sanctions imposed on Russia. Many countries in the Global South have trust issues with the West and question the likelihood of receiving help from Western powers when needed. As a result, they advocate for neutrality and demonstrate “strategic autonomy.” This situation aligns with Russia’s global ambitions.

It is understood that the US is capitalizing on the geopolitical challenges posed by Russia’s aggression, using them to undermine the credibility of the Global South. By advocating for Russia’s weakening, the US aims to recalibrate its political strategy while strengthening relations with Global South allies.

In this context, the growing attention to the Asia-Pacific and Indo-Pacific regions, enhanced engagement with ASEAN countries, India’s push to position itself as the leader of the Global South, and the rise of the Indo-Pacific security agenda all emphasize the participation of the Global South. Similarly, countries in Latin America are gaining increased attention as key players in the Global South, with all major global powers—China, Russia, the EU, India, and the USA—intensifying their focus on this region.

In this environment, Central Asian countries are eager to strengthen their geopolitical position and align more closely with the growing influence of the Global South.

[ Balaji Chandramohan is a Chennai, India based geopolitical analyst and former visiting fellow with Future Directions International, Australia. The views expressed in this article do not reflect those of COGGS.]

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China’s Dollar Gambit: Subtle Shift in Global Financial Power

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Mohammed Saqib

In a significant move, China’s issuance of $2 billion in USD-denominated sovereign bonds in Riyadh, Saudi Arabia, has generated considerable attention for its implications. While modest in size, the bond issuance has indicated China’s potential to challenge U.S. financial dominance. This strategic manoeuvre has captured the attention of financial analysts and policymakers alike, highlighting China’s growing influence in the international monetary system, and posing potential challenges to the longstanding dominance of the U.S. Treasury market.

The bond issue attracted extraordinary demand and oversubscribed nearly 20 times to over $40 billion. This level of interest far surpasses typical U.S. Treasury auctions, which usually oversubscribe between 2x to 3x. Such robust investor confidence indicates strong market appeal for China’s dollar-denominated debt, positioning China as a formidable contender in the global bond market.

One of the most striking aspects of this bond is its interest ratClose-up of US and China flags with US dollar bills, representing international trade and finance.e. China’s bonds were priced just 1-3 basis points (0.01-0.03 %) above U.S. Treasury rates, enabling China to borrow in U.S. dollars at nearly the same cost as the U.S. government. This narrow spread is unprecedented for a non-U.S. sovereign issuer. Typically, even countries with top-tier credit ratings pay a premium of 10 to 20 basis points over U.S. Treasuries when issuing USD bonds. This achievement highlights China’s improved creditworthiness and growing appeal to global investors.

The choice of Saudi Arabia as the venue for this bond issuance is especially noteworthy. Traditionally, sovereign bonds are issued in major financial hubs such as New York, London, or Hong Kong. By opting for Riyadh, China strategically positions itself within the core of the petrodollar system—a financial framework historically dominated by the United States. This move allows China to manage dollar liquidity directly within a crucial market, offering Saudi Arabia an alternative avenue for investing its substantial USD reserves outside U.S. Such diversification not only benefits Saudi Arabia but also deepens China’s integration into the global financial infrastructure.

The implications of China’s successful bond issuance extend beyond immediate financial metrics. If China continues to scale this initiative, it could become a significant competitor to the U.S. Treasury in the global dollar bond market. This competition has the potential to create a parallel system where China influences the flow of dollars worldwide, thereby diverting funds away from U.S. Treasury bonds. For the United States, which relies heavily on selling Treasuries to finance its substantial deficits, this could pose serious financing challenges and erode the “exorbitant privilege” that has long been a cornerstone of U.S. economic power.

China’s strategy could also be linked to its expansive Belt & Road Initiative (BRI). With over 140 countries participating in the BRI, many of these nations hold significant USD-denominated debts to Western lenders. China’s ability to issue USD bonds provides a mechanism to assist these countries in refinancing their existing debts. In exchange, China can secure repayments in yuan, strategic resources, or through other bilateral agreements. This approach not only helps China manage its USD surplus but also reduces dependency on the U.S. dollar within the BRI network, thereby extending China’s economic influence on a global scale.

The United States faces a challenge from China’s financial actions. Using traditional methods, like sanctions, could lower confidence in the safety of dollar assets. This might lead investors to move away from the U.S. dollar. Raising interest rates to make U.S. Treasuries more appealing could also raise the government’s borrowing costs, making the deficit situation worse. Taking stronger actions, like limiting China’s access to dollar transactions, might split the global financial system and reduce the dollar’s role as the main reserve currency.

China’s bond issuance represents a strategic opportunity for the international community, particularly for the incoming U.S. administration. By successfully issuing competitive USD-denominated bonds with low costs, China is effectively showcasing its financial capabilities and enhancing its strategic options. The United States may find it beneficial to reexamine its relationship with China, recognizing the importance of adapting to evolving global financial dynamics. This could also signal the dawn of a new and constructive phase in international monetary relations.

[Mohammed Saqib is the Convenor of Center of Geoeconomics for the Global South]

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BRICS and IBSA: Contrasting Approaches to the World Order?

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Balaji Chandramohan

BRICS is an intergovernmental organization comprising nine countries: Brazil, Russia, India, China, South Africa, Iran, Egypt, Ethiopia, and the United Arab Emirates, while IBSA is a unique forum bringing together India, Brazil, and South Africa. These two organizations present different and sometimes conflicting approaches to the international system. A major obstacle to permanent cooperation within BRICS is the lack of similarity among its member countries.

A globe and book stack in a library, symbolizing education and global knowledge.

Brazil is a regional power in South America, Russia is a great power in Eurasia, India is a great power in the Asia-Pacific, China is a rising superpower, and South Africa is a regional power in Africa, at best. What these countries have in common is their dissatisfaction with the current international order, which is dominated by Western powers, particularly the United States. Even in India, which views China as its primary threat, there is significant domestic opposition to the values promoted by the West and the United States, even in the second decade of the 21st century.

However, it remains uncertain whether these countries can form a cohesive alternative to the international system. Each of them continues to rely on the United States to balance against threats within their respective regions—a strategy that has historically worked in Washington’s favor since the late 19th century. Brazil seeks American support in its regional struggle for hegemony against Argentina. Russia finds it difficult to accept China’s growing influence in Central Asia and the Middle East, as does India in South and Southeast Asia. Similarly, South Africa’s position in Africa is threatened by China’s growing presence on the continent, with the latter’s disregard for human rights also being a point of contention for both Brazil and South Africa.

There is also a risk that BRICS could evolve into a platform primarily promoting China’s foreign policy, just as Moscow uses a variety of interregional cooperative bodies to further its own goals. If this occurs, the legitimacy of the organization could be jeopardized, and the remaining members may need to reconsider their involvement.

Brazil, on the other hand, has the potential to become a global player. The problem, however, is that Brasília has not yet clearly defined its grand strategic vision. Bolsonaro’s foreign policy choices, for example, remain uncertain. Rather than propelling Brazil toward a new global status, they may instead harm its international reputation.

IBSA, by contrast, is a forum bringing together India, Brazil, and South Africa—three large democracies and major economies from different continents, all facing similar challenges. These countries are developing, pluralistic, multi-ethnic, multi-lingual, and multi-religious nations. The forum was formalized on June 6, 2003, when the foreign ministers of the three countries met in Brasília and issued the Brasília Declaration. India is currently the IBSA Chair.

Earlier, India held the IBSA Chair in 2021 under the theme “Democracy for Demography and Development.” Meanwhile, Brazil assumed the rotating presidency of the India-Brazil-South Africa Dialogue Forum (IBSA) on March 2, 2023, marking 20 years since the forum’s establishment. Brazil’s presidency is expected to strengthen IBSA’s three strategic pillars: political coordination, trilateral cooperation, and collaboration with other developing countries through the IBSA Fund.

IBSA was founded as a coordinating mechanism among three emerging countries with democratic credentials, social diversity, and global capacity. The grouping is committed to addressing social inequalities within its borders and expanding its influence on global issues. Its principles are rooted in participatory democracy, respect for human rights, and adherence to the rule of law in the international system. A shared vision between the three countries emphasizes that democracy and development are mutually reinforcing and key to sustainable peace and stability.

Unlike BRICS, IBSA has no headquarters or permanent executive secretariat, maintaining a flexible and open structure. It focuses on concrete projects of cooperation with less developed countries, aiming to strengthen ties and contribute to the construction of a new international system.

Brazil’s current grand strategic vision is influenced by the rise of Asia and Africa, alongside a rethinking of the 20th-century geopolitical boundaries that separated different sub-regions. Brazil is particularly focused on expanding its influence in Africa and, if possible, in Asia.

In pursuit of this vision, Brazil has engaged in strategic partnerships with major Asian powers. One such initiative is a long-discussed railway project that would link Brazil’s Atlantic coast to ports on the Pacific via the Andes—the world’s longest continental mountain range. This project could become part of China’s Belt and Road Initiative (BRI), with Brazil offering a shortcut for commodities and goods to bypass the Panama Canal.

Brazil’s reach into Africa and Asia is also supported by its historical ties with Portuguese-speaking countries like Angola, Cape Verde, Equatorial Guinea, Guinea-Bissau, Mozambique, and Timor-Leste. Brazil’s involvement in Africa is further supported by its South American School of Defense (ESUDE) and military cooperation with African nations, such as Cape Verde and Namibia.

In terms of maritime power, Brazil’s vast coastline (7,491 km) and its continental depth offer strategic advantages similar to those of the United States. Brazil’s growing economic clout and geopolitical position are expected to drive its strategic expansion into Africa and the wider Indo-Pacific. This ambition is underscored by naval modernization and a focus on regional structures like Mercosur and the Pacific Alliance.

These developments are expected to influence both BRICS and IBSA. While South Africa also seeks to assert its role in the Global South, India and Brazil, both members of BRICS and IBSA, stand to benefit significantly from these forums. In the changing international system, Brazil is likely to challenge the United States’ Monroe Doctrine in Latin America and the Global South. India, in turn, will likely align more closely with Brazil to improve its strategic outreach in the Global South and the Western Hemisphere.

Ultimately, both BRICS and IBSA will benefit India and Brazil, even with their differing approaches to the international system. Their cooperation in these forums could prove to be a game-changer, despite the dichotomous approaches of both organizations.

[ Balaji Chandramohan is a Chennai, India based geopolitical analyst and former visiting fellow with Future Directions International, Australia]

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Global South: Expanding Relevance in International System and India’s Strategic Interest

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Flat lay of travel items including a map, compass, and polaroid for adventure planning.Balaji Chandramohan

The Global South is, in fact, a coalition of what is referred to as the ‘Global East’ (China and Russia) and the Global South. The two components of BRICS—China and Russia—have their own distinct interests, and the Global South grouping reflects the wider scope of BRICS. The Global South sees value in this coalition due to the many failures of the US-led world order that emerged after World War II.

For instance, collective efforts on climate change by the G77 at the COP summits serve as an example, as does the broad participation of the Global South in international legal actions related to Gaza. It is understood that a world centered on national interests will always leave some space, albeit limited, for collective action.

Despite these challenges, most states of the Global South are not interested in a radical overhaul of the existing global order. Nor do they see Washington as an adversary. In fact, they would prefer to maintain strong relations with the United States, albeit in a world where American primacy no longer holds. However, their increasing alienation from the US-led order is largely due to systemic constraints that limit their rise, compounded by the transgressions and oscillating foreign policy of Washington. The US’s preference for forming military alliances has been a key factor in strengthening the need for the Global South.

One example of such constraints is the international sanctions regime, which has expanded to the point where more than a quarter of the world’s countries—and nearly a third of the global economy—are currently targeted by such sanctions.

While Washington maintains that its sanctions are not aimed at the Global South, those states perceive them differently. The secondary sanctions regime is enabled by global US dollar hegemony, making de-dollarization a major common interest across much of the Global South. However, de-dollarization is easier said than done. While BRICS has made it a key focus of its rhetoric, achieving progress would require the central banks of its member states to relinquish some degree of sovereignty—a tall order. Moreover, with China being by far the largest trading power within BRICS, India is concerned about Beijing’s dominance in any BRICS-driven alternative currency arrangement.

Efforts towards de-dollarization beyond BRICS are also underway, with mixed results. In response to sweeping Western sanctions following its invasion of Ukraine, Russia has tilted sharply toward China. This has led to the yuan replacing the dollar as the dominant currency in bilateral trade between the two countries. Indian exports to Russia have also boomed, thanks to growing trade denominated in rupees.

Southeast Asia and ASEAN are similarly pushing to empower local currencies in regional transactions. In 2023, five ASEAN countries, including Indonesia and Singapore, signed an agreement to establish a regional cross-border payment system, allowing consumers to make payments using QR codes, bypassing the foreign exchange market. Indonesia has also signed agreements with China, India, Japan, and South Korea to trade in local currencies.

Unfortunately, these efforts are still insufficient. In Washington, Moscow, and Beijing, there is a tendency to view the “rest” of the world primarily as a battleground for great power competition, or simply as victims. The Global South, however, is more aspirational than anything else. It is not seeking a savior or hoping to emerge as one itself, but rather wishes for the powers blocking its rise to step aside.

The great powers have been resistant to reforming the international system to better accommodate the growing autonomy and power of the Global South. Beijing, in particular, is seen as the biggest obstacle to the much-needed reform of the UN Security Council. Voting shares in the IMF and World Bank remain heavily skewed in favor of wealthy Western nations. Washington has mostly paid lip service to international climate finance, and there appears to be no intention in Washington, Moscow, or Beijing to de-escalate the steady march toward militarized great power competition.

The great powers are often unable to grasp the new realities of the vast middle, largely because the Global South remains an enigma they are conditioned not to understand. The Global South encompasses 120 countries that vary greatly in terms of economic interests, development trajectories, resource endowments, and political landscapes. The term itself is intellectually elusive, and the renewed interest in the ‘Global South’ should not be seen as divorced from its underlying political and strategic motivations.

While there is oversimplification inherent in the North-South binary, there are practical areas of convergence, such as climate action, trade policy, and technology, where the Global South remains relevant and generally in agreement. There are also arguments for a more nuanced understanding of the Global South, advocating for selective engagement based on economic considerations rather than ideological alignment.

 

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The History of the Global South

The term “Global South” was coined in 1969 by Carl Ogelsby, an American writer and activist associated with the New Left. During that time, Western analysts divided the world into three “worlds,” as first conceptualized by French demographer Alfred Sauvy in 1952. These included the “First World,” comprising the United States and its Western allies; the “Second World,” composed of the Soviet Union and its Eastern bloc satellites; and the “Third World,” consisting of developing nations, many of which were newly independent from colonial rule.

The concept of the Global South as a synonym for the Third World began to gain traction in the 1970s, with the call for a New International Economic Order, but it rose to prominence with the 1980 Brandt Report. This landmark document, produced by an international commission led by former West German Chancellor Willy Brandt, distinguished between wealthier nations concentrated in the Northern Hemisphere and poorer ones in the South.

The Global North, especially the West, benefited greatly from the Industrial Revolution. The majority of countries in the Global South were located south of the Brandt line, an imaginary boundary that runs from the Rio Grande through the Mediterranean Sea, Central Asia, and the Pacific Ocean. However, from a purely geographic perspective, the Brandt line left much to be desired, as many nations designated as “southern” (e.g., India) are located in the Northern Hemisphere, while countries like Australia and New Zealand, categorized as “northern,” lie south of the equator.

Following the end of the Cold War, the term “Third World” gradually fell out of favor because the Second World no longer existed and the term itself had negative connotations. In contrast, the term “Global South” emerged as a more neutral and appealing label. Over time, the Global South became synonymous with the Group of 77 (G77), a coalition of developing countries that united in 1964 to advocate for their collective economic interests. Today, the G77 comprises 134 countries, which regularly refer to themselves as the Global South. The UN has launched multiple initiatives in response to their needs, including the UN Office for South-South Cooperation.

Renewed Use of the Global South Label

The question today is whether the label “Global South,” despite its historical relevance, still makes sense. Its most obvious limitation lies in its conceptual incoherence. The label groups together a remarkably diverse set of countries—130-odd nations representing perhaps two-thirds of the world’s population and spanning Africa, Asia, Latin America, the Caribbean, Oceania, and the Middle East. These nations range from emerging powers such as Brazil, India, and Nigeria to smaller states like Benin, Fiji, and Oman.

While some members of the Global South share overlapping strategic interests, the practical relevance of this broad meta-category is unclear given the vast economic, political, and cultural diversity it encompasses. The term risks reinforcing outdated dichotomies and stereotypes at the expense of appreciating the world’s full variety.

 

taj mahal, architecture, tourism

India’s Strategic Positioning within the Global South
India’s desire to assert itself as a leading voice of the Global South comes at a time when other powers, particularly China and Russia, are competing for influence in the developing world. India’s position is complex—it is both a developing economy and a strategic partner of the developed world. Additionally, India’s identity conundrum, rooted in its anti-hegemonic history, plays a role in its global ambitions.

India’s rise in the global order has significant implications for the non-Western world. A balanced and inclusive strategy will be essential in asserting India’s position. India can capitalize on its unique position by fostering triangular cooperation between Western powers and developing states. However, India must engage with the non-Western world on its own terms, rather than simply mirroring the strategies of other major powers.

Historically, India has had a unique role within the Global South. During the Cold War, under leaders like Jawaharlal Nehru and Indira Gandhi, India spearheaded the Non-Aligned Movement and positioned itself as a leader of developing nations. In recent years, however, India has focused more on strengthening relations with Western powers, such as Japan and the United States, viewing these relations as increasingly important.

The geopolitics of the Global South is also complicated. There is a growing divide between the West—critical of Russia, strengthening sanctions, and enhancing military support for Ukraine—and the Global South, which sees the prolongation of the war as causing economic hardship. India, for its part, has refrained from joining Western sanctions and continues to maintain strategic ties with Russia, purchasing oil and fertilizers despite the West’s disapproval.

In conclusion, the Global South plays an increasingly significant role in the international system. As India seeks a larger leadership role, claiming the mantle of Global South leadership will serve its strategic interests and help shape a more inclusive international order.

[ Balaji Chandramohan is a Chennai, India based geopolitical analyst and former visiting fellow with Future Directions International, Australia]

Global South: Expanding Relevance in International System and India’s Strategic Interest Read Post »

Timeline: How Has BRICS Evolved Over the Years?

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Economist Jim O’Neill sparked a revolution in global economic thought by coining the term “BRIC” in 2001. He foresaw a future where Brazil, Russia, India, and China would rise to prominence and further reshape the global economy. Rich in resources and human capital, these four nations formed BRI to challenge traditional economic powerhouses.  The bloc was established to unite the world’s key developing countries, creating an alternative to the political and economic dominance of wealthier nations in North America and Western Europe.

The journey began with the first BRIC ministerial meeting in 2006, held on the margins of a UN General Assembly session, establishing the groundwork for future cooperation. The leaders of the BRIC countries—Brazil, Russia, India, and China—held their inaugural meeting in St. Petersburg, Russia, during the G8 Outreach Summit in July 2006.  In May 2008, the BRICS foreign ministers convened, signaling the coalition’s growing importance in international diplomacy. This gathering marked the formal beginning of BRIC as a cohesive unit and this emphasized the need for collaboration to address shared economic challenges and seize opportunities.

Momentum increased on 16 June 2009 with the inaugural BRICS summit in Yekaterinburg, Russia. Leaders convened to discuss their economic ambitions and declared their intent to institutionalize their alliance. Prior to this, the first BRICS Academic Forum was held in May 2009 to promote intellectual exchange and collaboration among scholars from member states.

In December 2010, South Africa joined the group, transforming BRIC into BRICS. This expansion symbolized a commitment to inclusivity and recognized the diverse voices within emerging markets, amplifying the perspectives of a wider range of developing nations.

In April 2010, the second BRICS summit was hosted in Brasilia, Brazil, leading to the establishment of the BRICS Inter-Bank Cooperation Mechanism and the first BRICS Business Forum to enhance economic ties among member nations. The inclusion of South Africa that same year further diversified the coalition’s representation.

The third summit took place in Sanya, China, on 14 April 2011, followed by the fourth summit in March 2012, both reinforcing the bloc’s commitment to collaboration. The fifth BRICS summit in Durban, South Africa, in March 2013 was notable for establishing the BRICS Think Tanks Council and the BRICS Business Council, as well as initiating the inaugural BRICS-Africa outreach dialogue to strengthen ties with African nations.

In July 2014, the sixth BRICS summit in Brasilia led to the establishment of the New Development Bank, aimed at financing infrastructure projects and promoting sustainable development. The seventh summit in Ufa, Russia, in July 2015 focused on innovation with the launch of the BRICS Science, Technology, and Innovation (STI) Framework Programme.

 

Subsequent summits continued to build on this agenda, with the eighth in Benaulim, India, in October 2016, and the ninth in Xiamen, China, in September 2017. The tenth summit in Johannesburg, South Africa, in July 2018, and the eleventh summit in Brasilia in November 2019 further advanced the group’s objectives.

In July 2020, the BRICS Women’s Business Alliance was launched, highlighting the importance of gender equality and women’s participation in economic activities. The twelfth summit, held virtually in November 2020, adapted to the challenges posed by the COVID-19 pandemic, followed by the thirteenth summit, also virtual, in September 2021.

In March 2022, the virtual BRICS Vaccine Research and Development Center was launched, showcasing the bloc’s commitment to global health issues. The fourteenth BRICS summit convened in June 2022, setting the stage for further collaboration.

The fifteenth BRICS summit took place in August 2023 in Johannesburg, South Africa, where significant developments occurred, including the addition of Egypt, Ethiopia, Iran, the UAE, and Saudi Arabia as new members. This reflected the growing influence and interest in BRICS as a platform for international cooperation. The upcoming sixteenth BRICS summit is scheduled for 22-24 October 2024 in Kazan, Russia, marking another important chapter in the coalition’s ongoing evolution and its role in the changing world order. The summit is set to come up with a declaration and some announcements on payment, currency and banking systems. This initiative could pave the way for enhanced economic collaboration and greater financial autonomy among member nations.

 

Read More: Kazan Convergence: BRICS+ and Quest for a Fairer World Order – COGGS

 

Timeline: How Has BRICS Evolved Over the Years? Read Post »

Kazan Convergence: BRICS+ and Quest for a Fairer World Order

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Ayanangsha Maitra,  COGGS

flag, china, brazilThe 16th BRICS summit in Kazan, Russia, on October 22-23 is expected to be a landmark summit, teeming with expectations for innovative announcements and remarkable changes in geopolitics and geo-economics. There will be talks beyond currency mechanism. As the group expands into BRICS+, the significance of the bloc continues to rise. The bloc has welcomed five new members: Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates. This expansion not only enriches the group’s diversity but also creates a powerhouse with a combined population of approximately 3.5 billion—about 45% of the world’s total. The collective economies of these member states now exceed $28.5 trillion, accounting for roughly 28% of the global economy. Remarkably, with the inclusion of Iran, Saudi Arabia, and the UAE, BRICS nations now command an impressive 44% of global crude oil production, making BRICS a formidable force in both geopolitical and economic arenas.

Why is BRICS getting popular?

Several Global South nations feel marginalized by the current world order, which they believe disproportionately favors a handful of wealthy Western countries. Accusations of hypocrisy against the U.S. regarding its selective application of international law—especially in conflicts like those in Ukraine and Gaza—underscore the need for a more equitable global framework. Consequently, BRICS, which promises a fairer international system and proper representation of developing nations’ interests and aspirations, is emerging as a viable alternative to Western-led mechanisms.

However, Jim O’Neill, who coined the term BRIC and is a noted commentator on the bloc, argues that “BRICS has done nothing to effect meaningful organizational or structural change within international institutions.”

Despite Western efforts to isolate Russia following its military actions in Ukraine, Moscow continues to find solidarity among middle powers and Global South nations. This perception is immensely significant for BRICS+, which seeks to challenge the privileges enjoyed by Western nations, primarily through the creation of alternative and parallel institutions. The 16th BRICS summit could mark a pivotal moment for BRICS+, aiming to provide a platform for emerging and middle powers to advance their often overlapping interests while subtly reshaping the global multilateral system.

BRICS+ nations are increasingly driven to gain greater independence from the Western-dominated international monetary system. Presently, approximately 90% of global foreign exchange transactions are conducted in US dollars,  and most of them processed through banks in the U.S. and Europe.

Will BRICS+ Appeal to Corporations?

BRICS+ is expected to deliver what the original BRICS could not. Some major corporations, not only from Russia and China but also from Southeast Asia and Africa, are likely to support BRICS+ for a variety of compelling reasons.

First, BRICS+ offers a platform for emerging markets to align on key global issues, creating opportunities for corporations to tap into burgeoning markets across continents. To establish an effective and smooth supply chain and trade network, BRICS nations—Brazil, Russia, India, China, and South Africa—must leverage their unique strengths, which will attract more multinational corporations for economic integration. This would involve setting up a comprehensive framework for trade facilitation, including streamlined customs procedures, reduced tariffs, and standardized regulations. There must also be a serious and continuous focus on enhancing infrastructure connectivity, such as transportation and logistics networks, which are crucial for reducing transit times and costs.

With India and China, two tech giants, on board, BRICS needs to deliver technology-driven solutions, such as digital platforms for trade and supply chain management. Collaboration in sectors like agriculture, renewable energy, and manufacturing among BRICS members is essential, especially given the vast FMCG market in the Global South that presents opportunities for MNCs from BRICS+ nations.

As BRICS+ continues to evolve—establishing political and financial institutions along with a payment mechanism for transactions—it could significantly influence several markets and marketers. The implications for energy trade, international finance, global supply chains, monetary policy, and technological research are substantial. Corporations from BRICS+ nations can position themselves at the forefront of these developments, enhancing their competitive edge in a well-networked market.

The expansion of BRICS or formation of BRICS+ represents a strategic initiative to unite a diverse array of developing countries. At the same time, it has the capability to address the concerns of Global South nations. If BRICS+ maintains its commitment and delivers tangible outcomes, it could dictate several rules of the game. To achieve this, BRICS+ must address economic growth, climate change, resource equity, and the pressing issues affecting its population.

Kazan Convergence: BRICS+ and Quest for a Fairer World Order Read Post »

Why Kazakhstan Said No to BRICS?

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[ Illustration via META]
Ayanangsha Maitra, COGGS

It’s shocking for BRICS and surprising for many others in the fraternity that Kazakhstan, Central Asia’s cornerstone economy, has refrained from joining BRICS just before the BRICS summit to be held on October 22-24 in Kazan, Russia. By not joining BRICS, Kazakhstan retains the flexibility to engage more with Western markets. Its geographical and strategic location at the crossroads of Asia and Europe provides a unique advantage in facilitating trade and collaboration between these two prime and prosperous economies. Initiatives such as China’s Belt and Road Initiative and the Trans-Caspian International Transport Route (TITR) enhanced the connectivity, allowing goods to flow seamlessly from Southeast Asia and China through Kazakhstan to the European economies.

Kazakh President Kassym-Jomart Tokayev’s spokesperson, Berik Uali, according to the media reports stated that Kazakhstan will not seek BRICS membership now or in the near future. Uali further emphasized Tokayev’s support for the UN as an essential international organization.

The main reason behind  such move of Astana is because of its commitment to the United Nations as the foremost international body overseeing global affairs. Kazakhstan’s foreign policy, focused on multilateralism and peace, is evident in its role in the Astana Process for the Syrian civil war and recent negotiations between Azerbaijan and Armenia. This positions Kazakhstan as a neutral mediator in conflicts, but a close alignment with BRICS could weaken its ability to mediate effectively.

Kazakhstan is an active participant in several regional organizations that include China and Russia, such as the Shanghai Cooperation Organization (SCO) and the Conference on Interaction and Confidence-Building Measures in Asia (CICA). Additionally, as a founding member of the Eurasian Economic Union (EAEU), which encompasses Russia and other nations, Kazakhstan has ample opportunities for collaboration on regional security and economic projects.

Can Kazakhstan be a EU member?

Astana has expressed interest in discussing the possibility of eventual EU membership, despite not sharing a geographical connection with Europe. While the EU may not take this proposal seriously, it is clear that the bloc is committed to build a closer relationship with Kazakhstan. The EU will ensure that discussions about membership do not hinder future diplomatic relations, particularly as Kazakhstan’s influence grows in the Central Asian region.

Astana’s Ties with China and Russia

Kazakhstan’s decision not to pursue BRICS membership will not affect its warm ties with either China or Russia. The country maintains robust economic and trade relationships with both giants. Kazakhstan’s relationship with China is rooted in its Communist past and has evolved rapidly since the collapse of the Soviet Union. President Tokayev not only studied in China but also began his career at the Soviet embassy in Beijing, establishing personal and historical connections.

In 2023, trade between Kazakhstan and China reached a record $41 billion, reflecting a 32% increase from the previous year. This growth is fueled by numerous investment initiatives, with 45 joint ventures worth over $14.5 billion established in vital sectors such as energy and infrastructure.

Conversely, Russia remains a crucial trade partner for Kazakhstan, particularly for land-based trade due to their extensive shared border. In the Post-COVID era, Kazakhstan’s trade with Russia has surged. The years 2022 and 2023 marked record levels of economic cooperation, with trade figures hitting $26 billion and $27 billion, respectively. A $6 billion deal was also inked for Russia to construct three coal plants in Kazakhstan, and several Russian firms operate within the country.

Since Russia’s invasion of Ukraine on February 24, 2022, Kazakhstan’s foreign relations have shifted significantly. While Kazakhstan does not officially endorse international sanctions against Russia, citing their potential negative impact on its own businesses, the country has complied with these sanctions.

However Kazakh President Tokayev is expected to attend BRICS summit as a guest.  Such move of scaling back from joining BRICS – just ahead of the BRICS summit appeared to be setback for Moscow, which aspires to promote BRICS as a coalition representing “the global majority” as part of its strategy to counter Western dominance and resist sanctions imposed due to the war in Ukraine. After Kazakhstan announced its withdrawal from BRICS, Russia’s agricultural safety watchdog temporarily halted imports of tomatoes, flax seeds, peppers, fresh melons, wheat, and lentils from the country.

Why Kazakhstan Said No to BRICS? Read Post »

How Would New International Reserve Currency Look Like?

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  • Paulo Nogueira Batista Jr.
    – Paulo Nogueira Batista.

    The challenges that the BRICS countries face are now much bigger than they were when the group was formed back in 2008. The international context has become much more hostile and dangerous. Three of the member countries – China, Iran and especially Russia – have very difficult relations with the West, to put it mildly. Although this may be controversial, I believe it can be said that these difficulties have been initiated primarily by the United States and other developed countries that increasingly impose trade barriers, restrictions  and sanctions of different kinds, including in the monetary field.

    From a geopolitical standpoint, the BRICS are a diverse group. Brazil and India, for example, have on the whole good relations with the US, Europe and Japan. India in particular has its own national reasons to maintain some proximity to the US. But Brazil and India realize, of course,  the dangers of a situation in which the previously hegemonic countries, the US and its allies or satellites, resist fiercely their relative decline in economic, demographic and political terms – to the point of having a destabilizing impact on all countries.

    China is the main source of concern, for obvious reasons. It has become the largest economy in the world, measured in PPP terms, and the truth is that the US views China’s rise with suspicion and jealousy.  The situation is reminiscent of the one that existed in the decades before World War I. Germany was on the rise and this led to great preoccupations in Britain, the previously hegemonic power. La perfide Albion, to use Napoleon’s famous expression, articulated a wide-ranging coalition against the upcoming rival that ultimately led to Germany’s  defeat in 1918. China is, I believe, aware of these precedents. And if I know the Chinese well, they have probably studied the German experience quite carefully. In this respect, they seem to follow Bismarck who once said: “I never learn from my own experience, only from that of other people.”

    What role can the BRICS, now with 9 countries, play in a world fraught with unprecedented risks? Should the BRICS continue to expand the number of its members? If so, how? What have we learned from our experience with major economic initiatives such as the New Development Bank (NDB), headquartered in Shanghai, and the BRICS Contingent Reserve Arrangement (CRA), the group’s monetary fund? How should we proceed with discussions concerning matters such as alternative payment systems, the use of our national currencies in external transactions, and the especially the possible creation by us of a new international reserve currency? Can the BRICS act together to provide a viable alternative to the US dollar and the existing international monetary and financial arrangements?

    These are the issues I intend to briefly address.

    BRICS expansion: pros and cons

    Although national perspectives differ and the BRICS are a heterogenous group, we have shown that we can act together. We have created the NDB and the CRA, two financing mechanisms that have significant potential to evolve and contribute to a change in the international financial architecture. These two initiatives have a long way to go and have achieved less than could be expect, but they are there and can be developed fruitfully. The CRA is a small and still unused virtual reserve pooling arrangement, but the NDB has actual physical and practical existence.

    The BRICS formation is now expanding. Four new members have come in as of January 2024 – Egypt, Ethiopia, Iran and United Arab Emirates. Argentina rejected the invitation to join. Saudi Arabia, also invited, is sitting on the fence; it has neither accepted nor rejected the invitation and participates irregularly in the BRICS gatherings. The four new members would need to be incorporated into the NDB and the CRA. Two of the four have already joined the NDB (Egypt and United Arab Emirates); none have yet joined the CRA.

    So now we are 9 countries. And it is reported that a large number of other countries would like to join BRICS. How should we view this? The issue is not simple. Expansion has positive and negative sides to it.

    On this point, as in other BRICS-related matters, it is important to distinguish political and media hype from the actual on the ground realities of BRICS cooperation. A lot of noise has been made about the rapid growth of the group and the challenge it represents to the G7 and the West more generally. It is indeed true that the entry of new members can increase the clout of the group, especially if they are medium or large size countries.

    The downside is that the BRICS may become too large and even more heterogeneous than it already is, undermining its capacity to generate practical results. Do we not run the risk of seeing the BRICS become a talk shop? Something like the G77 – a platform for grand speeches and fine words with little true impact on world affairs?

    Having participated in the negotiations that led to the NDB and the CRA, as well as in the early years of the NDB as one of its founding members, I can tell you that it was extremely difficult to achieve anything with only five countries around the table, especially because of the tradition of taking decisions by consensus, carried over from the BRICS political formation to the actual working of the NDB – and mind you this was something we had not desired and not  foreseen in the bank’s Article of Agreements. Consensus, especially if understood rigidly as unanimity, paralyses decision-making.

    Well, now consider the existence of nine members – and possibly more. Practical results may elude us. We should thus proceed with caution. Any further expansion better be very gradual and orderly. One possibility would be to incorporate new countries as strategic partners, and not right away as full members of the BRICS.

    Monetary initiatives

    This brings me to the main topic I wish to address – the possibility of building alternative arrangements to the US dollar and the Western payment systems, an objective that has been on our minds for some time. Can we work out such arrangements with a larger group of participating countries? With nine members or even more, if further expansion of the BRICS occurs? Let us hope so. But it will undoubtedly be a challenge. And a challenge it would be in any case, even with a smaller number of countries.

    The reasons for designing alternative arrangements are clear and there is no need to repeat at length what I and many others have written in recent years. Two points only. First, the dollar, the euro, and the Western payment system have been dramatically misused as political and economic weapons. Second, the fiscal and financial fragilities of the US economy raise legitimate doubts about the feasibility of continuing to rely on the dollar as the hegemonic international reserve currency.

    So, we must act. Easier said than done, of course. As the Indian proverb goes: “When all is said and done, more is said than done”. Although the Chinese are an exception to this dictum, I add in parenthesis,  since they normally do more than say.

    The challenge for the BRICS is, first of all, political – the US deeply resents any attempt to unseat the dollar and to undermine what De Gaulle called the United States’ “exorbitant privilege” – understood, in short, as the capacity to pay its  bills and debts by simply issuing currency. The US is ready to blacklist any person or country that truly works to create alternatives to the dollar in a practical and effective manner – not talking here about speeches and grand proclamations. And Americans do not hesitate to call into action the allies and clients they have within  most countries in order to undermine any initiatives of such sort. China, Russia and Iran are probably immune to these maneuvers. The same cannot be said of other countries of the BRICS. This is essential to the full understanding of the political economy of BRICS monetary and financial initiatives.

    But the challenge is also technical. Constructing an alternative monetary and payment system requires hard and specialized work, as well as prolonged and difficult negotiations. Are we capable of carrying this out? I believe we are. Have we, however, made sufficient progress since the matter hit the headlines? Some progress was made since this group of government officials, scholars and politicians last met, in Johannesburg, in August 2023. But less than could be expected.

    Under the Russian presidency of the BRICS, in 2024, there have been partly successful attempts to move the discussion forward. For instance, a group of independent experts has been created, of which I am a member, and in which other economists take part, notably the American economist Jeffrey Sachs, to discuss the reform of the international monetary system and the possibility of a BRICS currency. These experts will meet in early October, here in Moscow, to continue the exchange of views and hopefully to come to concrete suggestions. The Executive Directors of the BRICS have also been discussing the matter, under the leadership of the Russian Executive Director in the IMF, Aleksei Mozhin, who also convenes the group of experts. So far, however, not much progress has been made on the issue of monetary reform and the possible creation of a new currency as an alternative to the dollar. Brazil will be the next president of the BRICS in 2025. Let’s hope Brazilians can pick up where the Russians left off.

banknotes, currency, finance

 

Transactions in national currencies and alternative payment systems

More progress seems to have been made during the Russian presidency on related matters, such as transactions in national currencies intra-BRICS and also between BRICS and other countries, as well as in the construction of possible alternatives to the SWIFT payment system, most notably the so-called BRICS Pay or BRICS BRIDGE. I am not sure BRICS Pay is a ready to go initiative, but such work is undoubtedly a most welcome initiative that goes some way into ridding us of the excessive dependence on the Western currencies and payment systems.

Nevertheless, it should be recognized that settlements in national currencies by-passing the US dollar and  alternatives to SWIFT have their limitations in terms of the main objective which is to de-dollarize and foster a multicurrency system for an increasingly multipolar world.

The crux of the matter is that the existence of an alternative reserve currency is ultimately indispensable to make de-dollarization work. The reason lies in the fact that only accidentally will there be an equilibrium in the balance of transactions in national currencies among countries. An alternative international reserve currency is needed to allow countries to register surpluses and deficits over time. In the absence of this, countries would either revert to some sort of barter – or fall back on the US dollar and other traditional currencies, something that would defeat the whole purpose of the exercise.

An example. Russia has a substantial surplus with India. Trade and other transactions are carried out mostly in their national currencies, if I am not mistaken. Therefore, Russia is accumulating large stocks of rupees. Now, it may not want to hold this currency permanently in its reserves, perhaps because the rupee  is not fully convertible and the Russian central bank may harbor doubts about its stability. What are Russia’s options? It can try to dispose these excessive surpluses in rupees by seeking investment opportunities in India or by making an additional effort to buy Indian goods and services. It can also use these rupees in third countries that have an interest in obtaining Indian currency due to close economic proximity to India. These alternatives, however, are clearly second best and hark back to the antiquated barter system in which economic agents traded goods bilaterally and sought third parties to dispose of unwanted goods. It was precisely to avoid this inefficient barter system that money was created in the first place to serve as a means of payment, a common standard of value, and an instrument for holding reserves. For the very same reason, the BRICS need a new reserve currency as an alternative to the US dollar and other traditional reserve currencies.

A new reserve currency – the NRC

How could this new currency look like? There are several possible routes. Allow me to sketch out, in conclusion, the route that looks more promising.

Let’s call the new currency the NRC, the acronym for new reserve currency. A previous great name was the R5 proposed by Russian economists when the BRICS were five countries and all of their currencies began with the letter R. This name was ruined, however, by two circumstances. Some of the four new members have currencies that do not begin with the letter R. Not a big deal, of course. So, could we then call it simply the BRICS or BRICS + currency? Not possible, unfortunately. Some of the BRICS+ countries are reluctant or even opposed to the idea, India most notably. This is a major barrier, but we can work around it, as I will attempt to explain.

The NRC could have the following characteristics. It would not be a single currency, replacing the existing national currencies of the participating countries. It would therefore not be a euro-like currency issued by a common central bank. The NRC would be a parallel currency designed for international transactions. The national currencies and central banks would continue to exist in their current format, as normal currencies and normal monetary authorities.

The NRC would not have a physical existence in the form of paper money, coins, and demand deposits in commercial banks. It would be a digital currency, analogous to the CBDCs (central bank digital currencies) that have been or are being created in a number of countries.

Note in passing that digital format largely replaces the traditional role of banks as intermediaries and creators of means of payment. The CDBCs and the NRC would downplay the role of banks, provided their use is not tied to the possession of an account in a commercial bank.

An issuing bank – let’s call it the NRMA, the New Reserve Monetary Authority – could be established jointly by the participating members. The NRMA would be in charge of creating NRCs and also bonds – call them the NRBs, new reserve bonds –  into which NRCs would be freely convertible. The NRBs would be fully guaranteed by the National Treasuries of the members. This scheme is similar in some respects to the celebrated hyperstabilization of Germany in 1923-1924, achieved by the creation of the Rentenmark as devised by the great but largely forgotten German economist Karl Helfferich.

A first step, that has been advocated for some time by Russian economists, could be the creation of a unit of account for the NRC, an SDR-like basket in which the weight of the national currencies of the participating countries would correspond roughly to their share in the GDP of the group. China’s renminbi would have the highest weight in the basket, say 40%; Brazil, Russia, and India, 10% each, for example; and the remaining 30% could be shared among South Africa, Egypt, Ethiopia, Iran, and the United Arab Emirates.

Well, this relatively simple step could have been taken already. Disappointingly, the Russian presidency of the BRICS in 2024 did not manage to take it until now. Let’s see if Brazil manages to do so during its presidency in 2025.

The reason for the slow progress in this area seems to be the lack of consensus. It is reported that India and South Africa, presumably for political reasons, are against the idea. India – and this is only a conjecture – may be hesitant to displease the US on such a crucial matter. Why? Perhaps because it feels it may need US support in case of a deterioration of the traditionally tense relations with China. Brazil, I note in passing, is also not invulnerable to similar difficulties. In Brazilian society and even within the Lula administration, there are many that look up to the US and have ties with American business and official circles.

I hope that these vulnerabilities and the tensions between China and India will be overcome. But, in the meantime, could we not move forward on the basis of a coalition of able and willing countries? The NRC could be created by a sub-set of the BRICS. The others would join later. This is advisable, in my opinion, but runs up against our entrenched tradition of consensus. If we stick to this tradition, however, we may not get anywhere.

The alternative to something like the NRC would be a gradual replacement of the US dollar by the Chinese renminbi, the currency of the rising superpower. This is already

happening to some extent. Can it continue in a major way? Seems doubtful. One thing to remember is that the rising superpower is also an emerging market and middle income country. It has vulnerabilities and concerns not necessarily shared by the US and other high income nations.

What I mean is that in China’s case, the “exorbitant privilege” could become an “exorbitant burden”. Would China be willing to make the renminbi fully convertible? Would it contemplate giving up the capital account restrictions and foreign exchange controls that protect the Chinese economy from the vagaries of international finance? Would it accept renminbi appreciation as a result of the increased demand for it as an international asset? Would this appreciation not harm the Chinese economy`s international competitiveness and dynamism? The trend towards appreciation could be countered by accumulating additional international reserves. But where would these additional reserves be parked? In dollar, euro or yen denominated assets? Back to square one.

Final remarks

Let us therefore brace ourselves and rise to the task of creating a new reserve currency, a potential game changer in global monetary and financial affairs. In parallel, we should  continue with the expansion of transactions in national currencies and with the promising ongoing work on alternatives to Western payment arrangements.

One should keep in mind that the BRICS will be causing disappointment all over the Global South, if they remain in the realm of slogans, speeches and proclamations and show themselves uncapable of groundbreaking  practical initiatives.

References: 

Bao, Gai. “From De-Risking to De-Dollarisation: The BRICS Currency and the Future of the International Financial Order”, Wenhua Zongheng, Volume 2, Issue no. 1, May 2024, Tricontinental: Institute for Social Research.

Klomegah, Kester Kenn. “Prospects for BRICS New Currency and New Payment System”, Modern Diplomacy – All Views/All Voices, August 15, 2024

Lissovolik, Yaroslav. “Boosting the use of national currencies among BRICS”, Russia in Global Affairs, September 14, 2018.

Lissovik, Yaroslav. “A BRICS Reserve Currency: Exploring the Pathways”, BRICS+ Analytics, December 21, 2022.

Galbraith, James Kenneth. “The Dollar System in a Multipolar Word”, The Institute for New Economic Thinking, May 5, 2022.

Galbraith, John Kenneth. Money: When it Came, Where it Went, Princeton University, 2017, first published 1975.

Nogueira Batista Jr., Paulo. “A BRICS currency?”,  Contemporary World Economy Journal, Vol 3, No 1, 2023, School of World Economy, Faculty of World Economy and International Affairs, HSE University. 

Yifan, Ding. “What is Driving the BRICS’ Debate on De-Dollarization”, Wenhua Zongheng, Volume 2, Issue no. 1, May 2024, Tricontinental: Institute for Social Research.

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[The paper was presented at the BRICS Seminar on Governance & Cultural Exchange Forum 2024, in Moscow, Russia, on September 23, 2024. The Seminar was organized by the Publicity Department of the Central Committee of the Communist Party of China (CPC), the Academy of Contemporary China and World Studies and the China International Communications Group with the support of Russian institutions.

Paulo Nogueira Batista Jr. is a Brazilian economist,   former Vice President of the New Development Bank , and former Executive Director for Brazil and other countries in the International Monetary Fund .]

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The Double Engine: Why Thaw in India-China Relations Crucial for Global South?

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Mohammed Saqib, COGGS

Indian industry and foreign affairs observers have welcomed recent signals indicating a thaw and potential improvement in India-China relations, albeit cautiously. This potential rapprochement has significant implications not only for bilateral ties but also for the broader Global South, which urgently needs, in the words of PM Modi, a “double engine” to spur growth and address present-day issues.  The current economic environment is marked by suffering and distress in developing countries. Most nations are still grappling with the aftereffects of the pandemic, debt crises, and other systemic challenges. It has become increasingly clear that traditional economic prescriptions are insufficient to address the scale and complexity of these issues. Therefore, a renewed focus, cooperation, and effective leadership from emerging economies in the Global South is essential.

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In this regard, the emerging market economies of the Global South have immense role to exercise. Overcoming the challenges faced by the majority of Global South countries will require collective action, collaboration, and strategic guidance to unlock new opportunities for growth and development. These economies need to unify and leverage their unique strengths and experiences to help shape a more equitable and sustainable global economic order.

Given that collaborative efforts and strong leadership are essential for overcoming challenges and creating new opportunities for growth, India and China will be key players in this context. By working together and utilizing their strengths and experiences, these countries can generate momentum for economic growth and create unprecedented opportunities for manufacturing, trade, and technological advancement across the developing world. As the world’s major economic powers and most populous nations, India and China have the ability to find common ground and collaborate. Their combined influence can serve as a “double engine” of growth, with the potential to reshape global economic dynamics and offer new pathways for progress in the Global South and the world.

Double Engine: A Dual Force

The combined economic might of India and China is substantial, representing approximately one-third of the world’s population and accounting for more than 35% of global GDP. India’s GDP is estimated at $3.6 trillion, while China’s stands at $18 trillion. This economic prowess has the potential to be a game-changer for the Global South.pexels-photo-5235169-5235169.jpg

The concept of a ‘double engine’ in this context assumes that both countries have complementary contributions. For instance, India, with its booming IT and pharmaceutical sectors and a large pool of human capital, offers unique advantages. Conversely, China is a manufacturing powerhouse with expertise in infrastructure development and a strong presence in innovation and emerging technologies like artificial intelligence and renewable energy. The Chinese market is also emerging as a significant source of investment outflows through overseas investments and foreign direct investment into developing countries. Pooling these complementarities for development would be a boon for the Global South.

In infrastructure development, China’s Belt and Road Initiative (BRI), aside from its political implications, has made significant strides in building infrastructure across Asia, Africa, and beyond. India’s private sector, with its expertise in construction and engineering, boasts a large pool of engineers and a semi-skilled workforce. Collaboration on such projects could provide cost-effective, sustainable benefits for all stakeholders. A report by the Center for Global Development (2020) estimates that the BRI has the potential to add $2.6 trillion to global GDP by 2040.

Why India-China Collaboration Matters

Another important area for potential collaboration is digital technologies. India’s success in digital public infrastructure, exemplified by its Aadhaar program (a biometric digital identity system) and the Unified Payments Interface (UPI) for mobile payments, offers valuable lessons for developing nations. Combining this expertise with China’s advancements in 5G technology and digital infrastructure can create powerful synergies, bridging the digital divide and fostering inclusive growth.pexels-photo-20445170-20445170.jpg

The COVID-19 pandemic has highlighted the weaknesses of global healthcare systems. India, a leading producer of generic drugs, and China, with its expanding biotechnology sector, can collaborate on joint R&D, patenting, and production to ensure affordable access to vital medicines and vaccines for the Global South.

The benefits of India-China collaboration extend far beyond these specific sectors. A joint approach to tackling climate change, cooperation in science and technology, disaster management, and food security can yield substantial results for the entire developing world.

However, achieving this “double engine” vision presents several challenges. It requires a robust political will to resolve long-standing issues between the two neighbours amicably. For decades, the relationship between India and China has been characterized by a complex mix of cooperation and competition. Historical baggage, border disputes, and strategic rivalry have often overshadowed the potential for collaboration. The world, especially the developing nations, needs India and China to work together. The success of India-China collaboration in driving Global South development could serve as a model for South-South cooperation and contribute to a more balanced and multipolar world order.

[ Mohammed Saqib is the Convenor of Center for Geoeconomics for the Global South. ]

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