Analysis

The Falcon and Bear Braving a Storm: UAE and Russia in the Dawn of Multipolarity

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  • Ayanangsha Maitra

Russia, THE TSAR of diamond mining, and the UAE, where the raw brilliance is honed into luxury, share a warm economic relationship and the pair contribute immensely in the grand design of the  geoeconomics. Ukrainian President Volodymyr Zelenskyy’s state visit to Qasr Al Shati in Abu Dhabi, following the Munich Security Conference signifies the Emirate’s growing role as a mediator in global diplomacy.  It also shows the trust Abu Dhabi commands from both Moscow and Kyiv in advancing peacemaking efforts.

Moscow’s policy to diversify trade from the West to Asia has benefited the United Arab Emirates (UAE). Trade between Russia and the United Arab Emirates tripled over the last three years, remarked President Vladimir Putin when he hosted UAE ruler Sheikh Mohammed Bin Zayed Al Nahyan in Moscow in October 2024, followed by a meeting at the Novo-Ogaryovo state residence. The bilateral trade between the two burgeoning economies crossed $11.4 billion in 2023, redefining the relations between the two nations.

The UAE has joined the BRICS as a full member in January 2024. Against the backdrop of seismic geo-politics as well as geo-economics shift, several factors have altered the trajectories of Moscow and Abu Dhabi, shaping their destiny. Since the war in Ukraine began in February 2022, the UAE has experienced greater economic success as Moscow has diversified its trade strategy from the West to Asia. In the UAE, Russia exports transport items and IT in addition to the energy. On the other hand, the UAE exports products such as shisha tobacco, broadcasting equipment and selected aviation parts to Russia. The UAE is not only the largest trading partner of Russia but receives about 90 percent of Moscow’s total investment in the gulf region. The UAE supplies butter, machinery, nuclear reactors, boilers, and vehicles.

 

 [UAE ruler Sheikh Mohamed bin Zayed Al Nahyan and Russia's  President Vladimir Putin. Illustration: COGGS]
[UAE ruler Sheikh Mohamed bin Zayed Al Nahyan and Russia’s  President Vladimir Putin. Illustration: COGGS]
With Russia’s diamond sector largely controlled by state-supported Alrosa, the sanctions imposed by the Western nations have made it harder to access traditional markets. The UAE has stepped in as a key intermediary, leveraging its tax-friendly policies and advanced

infrastructure to facilitate trade. The Ministry of Finance of the UAE, has concluded the negotiations for Double Taxation Avoidance Agreement on income and capital with Russia. The UAE and the Eurasian Economic Union (EAEU) have concluded final round of negotiations to form a comprehensive economic partnership agreement to enhance bilateral trade in goods between the UAE and the five members of the EAEU bloc, comprising Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia. Russian President Vladimir Putin paid a one-day lightning tour to Abu Dhabi in December 2023 during COP28 climate talks. 

The state visit of UAE ruler Mohammed bin Zayed Al Nahyan to Russia in October 2024 warmed up the Moscow-Abu Dhabi relations, which encompass diverse sectors, including energy, trade, space exploration, and humanitarian cooperation. Additionally, Foreign Minister Sergey Lavrov’s participation in the 7th Russia-Gulf Cooperation Council (GCC) Ministerial Meeting for Strategic Dialogue in September 2024, along with his visits to Qatar and the United Arab Emirates and engagement with the League of Arab States (LAS), played a significant role in strengthening ties with the Arab states.  The Russia-Arab bonhomie was rekindled in the meeting of the Russia-Islamic World Strategic Vision Group at Kazan Forum 2024 in May.

 

[BRICS KAZAN FORUM 2024 Celebrating Modest Fashion Day, representing Russian and Gulf Models. Courtesy: RIA Media Bank]

 

 

The UAE: A Magnet for Russian Expats

The UAE has emerged as a dream destination for Russians for plethora of factors. The cities like Dubai and Abu Dhabi offer  a seamless blend of accessibility, convenience, and an elevated lifestyle at a reasonable cost. With direct flights ferrying between multiple cities, streamlined visa policies, and the ease of securing a Dubai residence permit (Dubai ID) and banking facilities, relocation is convenient. However, securing visas for the US and Europe remains a formidable challenge, placing the UAE as an appealing alternative. Dubai, in particular, promises a sophisticated standard of living, featuring upscale residences, prestigious schools, a dynamic culinary scene, and an exclusive social environment for affluent Russian-speaking expatriates. The presence of a well-established Russian-speaking community—estimated at 100,000 as of 2019, comprising 40,000 Russian nationals and 60,000 individuals from former Soviet states—creates a sense of familiarity and belonging. Additionally, the influx of Russian tourists continues to grow, with flights connecting various Russian regions to key UAE destinations such as Sharjah, Ras Al Khaimah, Fujairah, Dubai, and Abu Dhabi.

Economic Relations

Economic ties are one of the key determinants of UAE–Russia relations. The two nations have come forward mostly over the decades from the relations of ecommerce. The UAE is playing a role in facilitating parallel imports into Russia, with a significant increase in exports of electronics, spare parts, and microchips from the Emirates to Russia. However, despite this increase in trade, the UAE is under constant pressure from the West to limit its cooperation with Russia. The financial institutions of the Emirate are exercising caution in their dealings with Russian entities because they are closely followed by US regulators. The UAE was included in the “grey list” of the Financial Action Task Force, prompting increased oversight of cash flows, making it more difficult to transfer assets from Russia or bypass sanctions.

From the late 1990s onward, Moscow has progressively solidified its partnership with the Arab nation, resulting in a marked surge in Russian exports to the Emirates. Concurrently, a mushrooming Russian diaspora has emerged in the urban habitats like Dubai and Abu Dhabi. The Russian community, comprising business professionals, skilled laborers, and entrepreneurs is cajoled by the appealing economic nature and abundant investment opportunities these cities offer.

 

The UAE and the USSR (Union of Soviet Socialist Republics) established diplomatic ties shortly after the UAE’s formation in December 1971. A USSR delegation visited the UAE in January 1972, acceding to establish diplomatic missions at the ambassador level. Despite the early agreement, the actual establishment of embassies was delayed until November 1985, when Moscow and Abu Dhabi officially announced bilateral relations. The USSR opened its diplomatic mission in March 1986, with the UAE Embassy opening in Moscow in April 1987. The missions provided a significant boost to bilateral ties, particularly in the economic sphere.

Economic Cooperation and Trade

  • Early Financial Agreements: In April 1988, Moscow received a loan of $50 million from the UAE, marking early economic cooperation. In December 1989, the Russian Foreign Bank visited Abu Dhabi to explore additional borrowing opportunities and the participation of UAE financial institutions in issuing Soviet financial credit instruments.
  • Air and Sea Transport: An Air Transport Agreement was signed in 1987. Notably, Aeroflot had an office in Abu Dhabi since 1979. Later in 1988, several Soviet sea carriers inked deals with the UAE company Sharaf Shipping.
  • Trade and Industrial Cooperation: An Agreement on Trade, Economic, and Industrial Cooperation was signed in Moscow in January 1990, further strengthening economic ties.

Trade Relationship

Deliveries of electronic items and spare parts for them from the Emirates to Russia have grown significantly to become the country’s biggest category of exports to Russia, while deliveries of microchips soared 15 times. In the 2022, the UAE sold Russia 158 civilian drones. The bilateral trade between Russia and UAE crossed $11.4 billion (1 trillion rubles)  in 2023.  In 2022, Russia exported $8.07 billion to the UAE, while the UAE exported $2.47 billion to Russia, indicating a significant trade surplus in favour of Russia. Russia’s main exports to the UAE in 2022 were gold ($5.36 billion), diamonds ($1.64 billion), and refined petroleum ($214 million). The UAE’s main exports to Russia in 2022 included broadcasting equipment ($1.4 billion), computers ($244 million), and microphones and headphones ($71.8 million).

Despite the difficulties faced by Russia in the 1990s after the dissolution of the USSR, the warm relations between the two nations were maintained and gradually developed, with rapid growth occurring in the first decade of the 21st century. Since the start of the war in Ukraine in February 2022, Dubai has become an increasingly important hub for trade with Russia. This has been aided by Western sanctions on Russian energy products which have led to an exodus of oil and commodity traders from London and Geneva to Dubai.

The UAE-Russia relationship has evolved from its early diplomatic foundations to a significant partnership characterised by robust trade and economic cooperation. The increasing volume of trade, coupled with continuous high-level diplomatic engagement, highlights the importance of this relationship for both nations. The establishment of Dubai as a key trading hub post-2022 further demonstrates the adaptability and growing significance of this bilateral relationship in the current scenario.

[ Rosoboronexport, state-owned defence firm of Russia maintained a business-as-usual composure. Courtesy: Sputnik]
The conflict in Ukraine was a shock to the market. The UAE, as part of OPEC+, has been struggling to bring more investment into oil and gas production. This is a shared challenge within the OPEC+ framework, which includes Russia, and suggests that the countries have a joint mechanism for oil production. The UAE has previously warned of the need for more investment in oil and gas, which was ignored when the world’s attention was focused on renewable energy and environmental issues.

In 2023, Russia exported 902,000 tonnes of agricultural products to the UAE, marking a 2.8-fold increase from the previous year. According to Agroexport, Russia has steadily expanded its wheat shipments to the UAE, with exports surpassing 900,000 tonnes in the 2019/20 agricultural year—accounting for 50% of the UAE’s total wheat imports. Andrei Terekhin, Russia’s trade representative in the UAE, highlighted the Emirate’s market as a promising destination for a diverse range of agricultural products.

 

Several prestigious Russian universities have established a presence in the UAE. Russian companies have showed enormous interest in the UAE across sectors and about 4000 Russian companies are functional in the UAE. Russian enterprises like Rosneft, Metalloinvest, Volga-Dnieper, Kurganmashzavod, Amtel, Stroitransgaz, Metallurgical Pipe Company, Interkomholding, Alrosa, KAMAZ, Lukoil, VTB Capital,  and several  others not just created their footmarks but also earned name as a respected corporation. UAE’s logistics major DP World, signed a strategic cooperation deal with Rosatom State Corporation, to establish an international logistics joint venture (JV) to develop container shipping through the Arctic and operate in the Russian and international markets. The Russia-UAE Working Group for Regional and Investment Cooperation conducts their meeting time to time. The enterprises from the two nations formed Russia-Emirates Business Council in September 2005.

Conclusion:

The Emirate’s prestige, prosperity and tax-friendly policies make it an attractive gateway for businesses looking to engage with Russia, particularly as trade routes and partnerships shift in the current geopolitical landscape. The UAE’s business-friendly approach allows Russian companies, making it a significant bridge for trade and commerce.

The UAE’s warming ties with Russia and intuitive move to be a member of BRICS  a clear move towards supporting multipolarity – while simultaneously maintaining a business diversification strategy. The Emirates’ role in facilitating parallel imports into Russia highlights its function in circumventing Western sanctions and enabling continued trade relations. This is further supported by the increase in exports of electronics, spare parts, and microchips from the UAE to Russia. The UAE provides an excellent opportunity for several other countries to access the Russian market. By establishing itself as a major trading hub, the UAE facilitates the flow of goods and services between various other nations in addition to Russia. The presence of a growing Russian community in the UAE creates a conducive environment for business, further promoting trade and investment. In essence, the UAE’s actions show a dual commitment to both strategic diversification and enabling multipolarity.

[ Ayanangsha Maitra, PhD is a writer and producer at COGGS. He can be contacted via @Ayanangsha  on X or via email : ayan@thegeoeconomics.com . ]

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BRICS: Not Dead, But Thriving

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Mohammed Saqib

IN HIS RECENT comments, President Donald Trump of the United States of America declared that the BRICS bloc—currently comprising Brazil, China, Egypt, Ethiopia, India, Indonesia, Iran, Russia, South Africa, and the United Arab Emirates—was created with a “bad purpose” and that it is, in effect, already “dead.” Even more dramatically, he – before assuming his second term threatened a 100% tariff on any sort of  trading activity involving the BRICS nations if they attempted to  de-dollarize commerce.

 

[ Courtesy: TASS News Agency]

President Trump’s remarks on BRICS may appeal to nationalist sentiments. Despite his claims that BRICS is irrelevant or “dead,” the bloc is a formidable global economic force.  The interest of countries to join the bloc makes it more practical and a powerful entity to claim the multipolarity. Representing over 3.24 billion people—more than 40% of the world’s population—BRICS nations wield demographic influence on an unprecedented scale. Economically, the bloc contributes approximately $26.03 trillion to global GDP, accounting for 26% of the world’s total GDP. Their impact on international trade is equally significant, with BRICS countries are responsible for 20% of global exports and 18% of global imports. Beyond these metrics, the New Development Bank (NDB), established by the bloc in 2014, has approved over $33 billion in infrastructure and sustainable development projects. Far from being defunct, the economic weight of BRICS continues to shape the trajectory of regional as well as global development.

Misunderstanding BRICS’ Purpose and Potential

The perception that BRICS was established for a “bad purpose” fails to recognise the bloc’s core objective: providing a collaborative platform for emerging economies to enhance their voice at the global level. It seeks to address and rectify longstanding economic disparities. Initiatives like the New Development Bank (NDB) signify its dedication to promoting sustainable development and addressing infrastructure needs—goals that starkly contrast with any notion of a “bad purpose.” Moreover, rather than being dismissed, BRICS continues to flourish, attracting interest from numerous nations eager to join a framework that fosters multipolarity. The claim that “most people don’t want it” is unfounded and overlooks the increasing demand for a more diversified global financial landscape. Over 30 countries, including Turkey, a NATO member, have applied to join BRICS or its economic bloc.

Threat of a 100% Tariff

Perhaps the most alarming element of Trump’s comments is the threat of imposing a 100% tariff on any BRICS nation’s trading activities if it dared entertain policies aimed at de-dollarizing global commerce. It may sound like rhetoric, but such a move would have far-reaching consequences if implemented. The BRICS nations hold significant value in the age of multipolarity. China, a leading member of the bloc, is a manufacturing titan and the US’s largest trading partner, accounting for approximately $600 billion in bilateral trade in 2024, with critical imports like electronics as well as machinery underpinning American supply chains. Similarly, India is one of the fastest-growing  economies. Consider the examples of other members. India’s burgeoning trade relationship with the US is driven by key sectors such as technology, pharmaceuticals, and services. Brazil, the US’s second-largest trading partner in Latin America, supplies essential commodities like soybeans and crude oil. While trade with Russia has decreased due to sanctions, its energy export capacity remains significant. South Africa offers vital minerals and metals necessary for US manufacturing and technology. A blanket tariff would complicate economic ties and affect bilateral relations.  As a result, American businesses and consumers may have to pay higher costs. Such tariff measures may invite potential retaliatory actions that could ripple across global supply chains and further exacerbate global economic instability.

 President of Russia Vladimir Putin during an expanded meeting of BRICS leaders during the 16th BRICS summit in Kazan. [Photo: Sergey Bobylev ]
De-Dollarization: A Growing Trend

The emphasis on “playing games with the dollar” reflects a fundamental misunderstanding of why certain BRICS members are advocating for de-dollarized trade. These measures are not primarily aimed at undermining the US dollar; rather, they focus on reducing external vulnerabilities to sanctions and market volatility. Diversifying currency use is a pragmatic strategy in an unpredictable global economy, not an antagonistic action deserving of punitive tariffs. The global financial architecture is witnessing a slow shift as BRICS nations pursue the use of other means for international transactions along with the dollar. This movement manifests in three key developments: the increasing adoption of local currency settlements, exemplified by India and Russia’s rupee-ruble oil trade arrangements; the advancement of central bank digital currencies, with China’s digital yuan reaching 260 million users in its pilot phase; and discussions at the 2023 BRICS Summit regarding the creation of a shared currency for inter-BRICS trade. These efforts represent an economic diversification strategy aimed at reducing dollar dependency. At the same time it creates greater financial autonomy among BRICS nations rather than a direct challenge to the dollar’s international role. The trend reflects a broader evolution in global finance, where emerging economies seek to build resilient payment systems that can withstand geopolitical pressures while maintaining stable trade relationships.

Need for a Constructive Engagement

Ultimately, in true Trumpism style, the hyperbolic rhetoric surrounding the state of BRICS appears designed more for political theatrics than for a genuine analysis of global economic strategies. Instead of dismissively threatening an entire coalition of nations, a more productive approach would involve engaging in dialogue and developing mutually beneficial economic frameworks.

The BRICS bloc is an evolving testament to the shifting dynamics of global power. While the United States remains a dominant economic player, its influence is increasingly challenged by a world where trade, technology, and geopolitical alliances are as fluid as they are interconnected. Threats of tariffs and isolation may create temporary pressure, but they are unlikely to dismantle a bloc that is built on shared interests and growing interdependence. Rather than instilling fear through tariffs and empty threats, a future-oriented strategy would recognise the benefits of inclusive dialogue — one that respects multiple voices in the international arena.

The reality is that BRICS is not dead. In fact it’s an evolving bloc that reflects the aspirations of the Global South to have a greater voice in global affairs.

[ Mohammed Saqib is an economist and Convenor of COGGS. ] 

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DeepSeek: A Legacy of Confucian China

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Atul Aneja

THE STUNNING SUCCESS of the Chinese AI chatbot DeepSeek has left the US-led tech universe shell-shocked, fearful, and demoralised. That is not surprising. The arrogant rulers of the cyber-universe headquartered in such places as the Silicon Valley have long believed in the myth that they have the divine right to lead the  global tech industry. To find young upstarts from lowly Hangzhou shattering the myth that they have been born to command cyber-space in perpetuity, is, indeed, hard to swallow.

But had the tech-titans in the West been humbler and avoided living in a self-created bubble, they would perhaps have by-passed their terrifying deer-in-the-headlights situation. So how did China achieve its Sputnik moment that has delivered such a shattering psychological blow to the  high-browed collective west?

There are at least three underlying drivers that explain why the tireless neo-Confucian techies from China, made such a big splash on the hi-tech canvass by training an advanced AI chatbot at a miserly cost $5.58 million. This has  hugely embarrassed the ruling tech priestly class that has pumped far larger sums to produce, from a user’s perspective, only similar products.

First, clear-eyed leaders of the People’s Republic of China (PRC) have diligently painted the big picture, detailing the time-lines for China’s rise, in which developers of AI have a pivotal, clearly defined role. The rise of AI, the key to cutting-edge Industry 4.0 that was already in focus—received a big boost in 2017 during 19th congress of the Communist Party of China (CPC). At the end of the congress, which is routinely held every five years, Chinese President Xi Jinping, delivered a seminal  speech. In  his marathon address, which lasted more than three hours,  Xi  laid out China’s grand strategy. From the ornate Great Hall of the People, the Chinese leader declared the country’s two centenary goals.

He unambiguously announced that his country’s first goal would be to eradicate absolute poverty by 2021—the year that marked the centenary of the formation in Shanghai of the CPC. That goal has already been achieved with the doubling in one decade of the Chinese GDP from its 2010 base. The second goal was even more consequential. Xi made it plain that in 2049—the year marking 100 years of the formation of the PRC—China would become a world leader, acing all spheres of  human endeavour. With that the people of the country would realise their “Chinese dream.”

In  order to achieve these jaw-dropping goals, the Chinese had already packed the required feedstock, including AI. During their 14th five-year plan that would end this year, Chinese planners had identified the critical role of  digital economy, focusing on core industries such as  big data, blockchain and AI to propel China’s digital advance.

Regarding AI, the plan focused on developing advanced algorithms, visible in the DeepSeek model,  and their application in industrial manufacturing, fintech and healthcare. It also lasered on integrating AI with quantum computing. This was done with the intent of beefing computational power that was required to solve complex problems quickly. Chinese planners saw a major AI role for establishing smart cities, digital villages, improving public services and living standards of the people.  

Second, the Chinese began their long march to establish a hi-tech culture and eco-system  that was original, innovative, and geared to guarantee success.  Here it is important to grasp the Chinese drill for developing digital technologies, including AI.

In an in insightful article that appeared in the South China Morning Post,  economist Kok How Lee points to three key drivers of China’s ever- growing success.

He points out that  China has leveraged its vast domestic market to achieve economies of scale, leading to inexpensive production of goods,  without compromising quality. Riding on a 1.4 billion population, China has a vast consumer base allowing businesses to scale up production—a situation that other markets will find hard to replicate.

Citing the smartphone industry, Lee spotlights Chinese brands such as Huawei Technologies, Xiaomi, Oppo and Vivo. These companies focused on meeting the needs of the massive domestic market before expanding globally. “This ability to scale up domestically first provides a critical edge over international counterparts who operate in smaller markets,” Lee observes.

The article further nails China’s “user-centric” approach as a key driver for on-your-feet innovation. It points out that Chinese companies are very sensitive to user feedback, and channel it rapidly into improved products. Copious data on consumer behaviour and preferences drawn from China’s vast market, gives Chinese companies the fire power to innovate and improve products.  

Finally fierce domestic competition in advanced areas, including AI has been driving breakneck innovation across China, taking the world by storm.  For instance, unlike Europe,  cut-throat competition for market share among electric car brands-BYD, Nio, Li Auto and Xpeng –is driving down costs and improving product quality.  

“This relentless drive to outdo competitors has fostered a culture of innovation that permeates China’s tech ecosystem,” says Lee.

Third, the post-Covid situation, marked by sharper geopolitical hostility from the West, coupled with the domestic economic slowdown, significantly driven by sluggishness in traditional economy drivers including real estate and infrastructure, has forced China to seek new motors for economic success, including AI. Recently, China’s leaders exhorted industry heads to focus on the country’s tech sector in the search for new drivers of economic growth. President Xi, in a meeting, himself called for “high-level technological self-reliance and improvement” and “sound development momentum” in 2025—the years when the 14th five-year plan runs its course.

Xi authorised the business chamber All-China Federation of Industry and Commerce, to steer the private sector towards greater entrepreneurship and boosting their confidence. In order to power digital innovation, China has chosen Hangzhou, the ground-zero from where DeepSeek took wings, as a key destination of AI advancement. 

Why Hangzhou?

There are several reasons for nailing Hangzhou as an AI hub. First and foremost, Hangzhou has abundant talent pool. The city can leverage several research institutions, including Zhejiang University, which has taken a head-start in AI research since 1978. The city has over 7,000 people working in the AI industry—a talent pool that naturally draws AI investors. Hangzhou has become a digital favourite also because of its tradition of local government support, exemplified by the establishment of the 5G Innovation Park there. Today, it hosts the China Artificial Intelligence Town– a dedicated area within Hangzhou Future Sci-Tech City, focusing  on big data, cloud computing, IoT, and chip design. In fact, Hangzhou has designated four districts – Yuhang, Xiaoshan, Binjiang, and Xihu – as pilot areas for AI development, leveraging their resources and expertise.

Besides, the presence of Ali Baba, the e-commerce giant, has vastly added to Hangzhou’s glamour and allure, majorly reinforcing the city’s AI ecosystem.   Alibaba’s initiatives include  ET Brain, which has several applications in various fields such as  healthcare and fintech.

Unsurprisingly, attracted by its strong AI  infrastructure and digital culture,  Hangzhou, besides DeepSeek, is home to companies like Rongyi.Big, Intellifusion, CloudWalk Technology, and Terminus Technologies. These firms are undertaking cutting edge research to benefit AI applications for e-commerce, video analytics, smart city solutions, and IoT integration. Other digital icons in Hangzhou include robotic dog maker Unitree and Game Science, which has become famous after developing Black Myth: Wukong, an AAA video game.

It is important to understand the Chinese success can be significantly attributed to its strong rootedness to its traditional Confucian work ethic. This includes respect and advocacy for hard work and diligence based on the belief that persistent effort and continuous improvement yield desirable results. Respect for authority and  hierarchy is another strong attribute of the Confucian culture. Distilled at the workplace, it means showing respect to seniors and supervisors.

The Confucian ethic also places a premium on group harmony and cooperation. Teamwork and collaboration to achieve collective goals is of higher value than individual triumphs. Besides life-long learning and self-improvement is encouraged, which means relentless pursuit of knowledge, skill development and professional growth in the workplace.

 

[Atul Aneja is an advisor to COGGS. The article is republished from katehon.com. The views expressed in this article are solely his own.]

 

 

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Davos 2025: 10 Points on Europe’s Quest for Economic Revival

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The high-octane discussions at the World Economic Forum on January 20-24, 2025 in the Davos, Switzerland have tabled significant challenges facing the European economy, alongside potential pathways for recovery and growth. Here are ten key points that encapsulate the current threats to European economy and proposed solutions.

  1. Stagnant Growth Rates: Europe’s economy is projected to grow at about half the pace of the US from 2019 to 2024. Only 25% of economists surveyed believe Europe will experience “moderate or stronger” growth this year, compared to over half for China and three-quarters for the Middle East and North Africa[1].
  2. Strategic Miscalculations: Jamil Anderlini, editor at Politico, emphasized that Europe made three significant bets that have backfired: dependence on Russia for energy, reliance on China for open markets, and looking to America for security. This has left Europe vulnerable as it navigates a complex geopolitical landscape[1].

 

  1. Energy Crisis: The continent is grappling with a persistent energy crisis as it seeks alternatives to Russian energy supplies while simultaneously facing long-term dependence on imports from China. This dual challenge complicates Europe’s energy security and economic stability[1][3].

 

  1. Fragmented Financial System: Contrary to popular belief, Europe’s financial system is not as integrated as it should be. Larry Fink, Chairman and CEO of BlackRock, described Europe as “a beautiful myth,” emphasizing the need for a more cohesive financial framework to create economic resilience[1][2].
  2. Capital Markets Union: A proposed solution is the establishment of an EU capital markets union. This drive aims to better allocate funds to young, innovative companies, thereby retaining domestic entrepreneurs and attracting foreign talent[2][4].

 

  1. Leadership Acknowledgment: Christine Lagarde, President of the European Central Bank, noted that decision-makers are aware of the necessary steps forward. The creation of a capital markets union is crucial for enhancing investment opportunities across Europe[1][2].

 

  1. Cultural Confidence Gap: IMF Managing Director Kristalina Georgieva pointed out that Europe suffers from a “culture of modesty,” in contrast to the US’s “culture of confidence.” There is a pressing need to build greater confidence in European markets and industries to stimulate growth[1][2].

 

  1. Leveraging Cultural Heritage: Europe can capitalize on its historical strengths, including its values and cultural heritage, as exemplified by figures like Beethoven and Kant. This cultural capital can serve as a foundation for promoting liberal democracies and attracting global talent[1][3].

 

  1. Emerging Economic Opportunities: As the US potentially shifts its focus away from selected growth sectors, particularly clean energy production, Europe stands ready to seize these opportunities. Lagarde indicated that if the US does not pursue this growth, Europe would welcome it with open arms[1][4].

 

  1. Strategic Recommendations from Davos: Leaders assembled at Davos proposed several strategies for Europe to regain its competitive edge, including enhancing green energy initiatives, improving investment environments, and creating strategic interdependence among nations[1][4].

At the WEF 2025, Davos has underscored a critical juncture for Europe’s economy. While challenges abound—from sluggish growth rates and energy crises to fragmented financial systems—the potential solutions highlighted by leaders provide a roadmap for recovery and renewed competitiveness in an increasingly complex scenario. By harnessing her cultural strengths and building greater confidence in the well-defined markets, Europe can navigate these turbulent times toward a more sustainable economic future.

 

Citations:

[1] https://www.cnbc.com/2024/12/18/europe-economy-good-times-coming-analysts-say.html

[2] https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-insights/securing-europes-competitiveness-addressing-its-technology-gap

[3] https://english.news.cn/20250107/e4d502763eb04ee6a2823dc0bdd16389/c.html

[4] https://www.mckinsey.com/mgi/our-research/accelerating-europe-competitiveness-for-a-new-era

[5] https://economy-finance.ec.europa.eu/publications/2025-euro-area-report_en

[6] https://www.weforum.org/stories/2015/01/10-global-challenges-10-expert-views-from-davos/

[7] https://www.europarl.europa.eu/RegData/etudes/IDAN/2025/767186/EPRS_IDA(2025)767186_EN.pdf

[8] https://www.weforum.org/stories/2025/01/5-key-takeaways-davos-2025/

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Trump’s Tariff and A Tensed World | COGGS|

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REPUBLICAN PRESIDENT DONALD Trump’s return to the White House has united the nations of G7 to the G77 blocs in anxiety over tax and tariff issues. Trump, a Republican with a protectionist pedigree of his party, is known for popularizing the unpopular opinions and mainstreaming defiant stances. Tariff is the most favourite word in his vocabulary, with Trump himself identified himself as a “Tariff man.” His admiration for President McKinley, the 25th President of the USA, is well-known. McKinley is famous for his signature tariff initiative, the Tariff Act of 1890. The Ohio congressman-turned-president also signed the Dingley Tariff, named after Nelson Dingley, a congressman from Maine. One of President Trump’s most remarkable economic strategies was the adoption of protectionist policies aimed at reducing the U.S. trade deficit and reshoring manufacturing jobs.

Trump’s Tariff

As a presidential candidate, Trump advocated for broad tariffs: a 20% tax on imports from all countries including that of global south, a 25% tariff on goods from Mexico and Canada, and a steep 60% levy on products from China. Observers have debated the severity of these developments. He also announced his intention to leverage tariffs as a negotiating tool, targeting nations like Denmark to pressure them into making concessions—such as ceding control of Greenland to the United States. Home is his fort, and to ensure that comfort zone, he may abandon promises made by his predecessors. Right after assuming office, the President threatened to impose a 25% tariff on Mexico and Canada, his two immediate neighbors and major trading partners.

Europe and Trump

The EU has a cherishable trade surplus with the U.S., with the U.S. having a trade deficit of about $161.6 billion in 2023, according to Eurostat data. The U.S. is the largest trade and investment partner of the EU, as well as its main source of foreign direct investment (FDI). Germany and Italy are major exporters to the U.S., and these countries would be deeply affected by any restructured trade arrangement. Brussels would likely unite in response if this happens. Despite being a significant (about 46%) LNG exporter, the U.S. is likely to woo EU nations to import more oil in line with Trump’s “drill, baby, drill” slogan. The arms-import watchdog SIPRI has predicted that, under Trump, EU and NATO nations will stockpile U.S. supplies for their armaments. This trend has already been visible after Ukraine was besieged. Trump will eventually encourage American defence manufacturers to explore Global South markets in coming years. 

A miniature black car on a detailed map of Scandinavia, symbolizing travel adventures.

There is a perception in the air that several EU nations won’t comply with the Undertaxed Profit Rules (UTPR). According to the market experts, President Trump will likely add 10% tariffs on imports other than those from China. While the tariffs fluctuated, at one point, they reached as high as 60% on some Chinese goods. These tariffs were intended to punish China for unfair trade practices, intellectual property theft, and currency manipulation, while incentivizing U.S. manufacturers to bring production back home. However, this approach led to tensions with China, which retaliated with tariffs of its own on U.S. goods, including agricultural products like soybeans, corn, wheat, pork, beef, and other commodities. 

Job Creation in the U.S. and Work Visa 

In his maiden term, President Trump’s economic policies focused on bringing manufacturing jobs back to the United States. The US China trade war further led to the loss of 245,000 U.S. jobs, according to the U.S.-China Business Council. 

In his earlier tenure, Trump sought to restrict and minimize immigration, particularly through more stringent visa policies. His administration focused on curbing the H-1B visa program, which allowed highly skilled workers from countries like India and China to take jobs in tech and other specialized fields in the U.S. Trump’s administration made efforts to make these visas harder to obtain, arguing that they displaced American workers. While this created pressure in high-tech industries, it also spurred efforts to increase domestic training programs and promote automation. Rust Belt states like Michigan, Ohio, and Pennsylvania are expected to bring more changes for revenues. 

The Panama Canal 

Trump’s approach to global infrastructure projects was another source of contention. The Panama Canal, a strategic waterway for global trade, became an area of focus under the Trump administration. Trump’s rhetoric often suggested that U.S. interests should have a greater say in Panama’s operations, even hinting at a reevaluation of U.S. involvement in the canal’s security and operations. On the social media platform X (formerly Twitter), José Raúl Mulino, President of Panama assured that Panama Canal would maintain sovereignty. 

US Dollar Hegemony

 Trump’s protectionism was also reflected in his stance on alternative currency plans by BRICS nations. A long-term consequence of Trump’s foreign policies has been the growing trend of countries attempting to bypass the U.S. dollar in international trade transactions. Nations like Russia, China, and Iran have increasingly sought to use alternative currencies for trade, reducing their dependency on the dollar.

China, for instance, has pushed for the use of the yuan in global trade agreements, particularly with countries in Asia and Africa. The rise of digital currencies and regional trade agreements that use non-dollar currencies further highlights this shift. While the U.S. dollar remains the dominant global reserve currency, Trump’s protectionist policies and sanctions may have accelerated this diversification of global trade. Currency-trade is trending but Trump administration is bound to take strict measures if the de-dollarisation threats  US dollar hegemony. 

Trump’s Impact on the Supply Chain and Mobility Costs

The Trump administration’s protectionist approach had a significant effect on global supply chains during his first term. Tariffs, particularly those on Chinese goods, disrupted long-standing trade relationships and forced companies to reconsider their manufacturing locations. The cost of mobility, particularly in terms of shipping and logistics, increased as companies faced higher tariffs and delays due to trade tensions. In industries like automotive and electronics, U.S. companies found themselves paying higher prices for raw materials and components. Additionally, the increased cost of labour due to visa restrictions in certain sectors, such as tech, also pushed companies to reevaluate their workforce strategies. Trump administration will review these two concerns widely. 

Foreign Direct Investment Under Trump

Trump’s foreign policy, particularly his stance on tariffs and international trade agreements, noticeably affected foreign direct investment (FDI) in the U.S. On one hand, some investors were attracted to the U.S. due to the promise of a more favourable corporate tax environment. On the other hand, the trade war and unpredictability in policy made the U.S. a less attractive destination for certain foreign investments, particularly from countries caught in the crossfire of tariffs. 

Technology Transfer and Technological Access: A Battle for Innovation

One of the key aspects of Trump’s trade war with China was the issue of intellectual property rights and technology transfer. Trump pushed for stricter regulations that would limit the transfer of sensitive technologies to China, citing concerns over national security and the protection of U.S. technological supremacy.

The U.S. administration under Trump took a harder line on Chinese tech giants like Huawei, accusing them of stealing intellectual property and posing security threats. At the same time, Trump’s policies raised concerns about the future of global technological collaboration and the ease with which companies could operate in international markets. His stance on TikTok also attracted attention, with Trump directing a postponement of the ban by 75 days.

In his second term, Trump may revise the Biden administration’s decision to remove Cuba from the list of state sponsors of terrorism.  His policies often involve rechristening, removal, and re-installation. His administration is also likely to impose sharp sanctions on Venezuela. Under his administration, the Gulf of Mexico is set to be renamed the Gulf of America, and Alaska’s Mount Denali is expected to revert to being called Mount McKinley—honouring the 25th American president whose tariff policies inspired him. The value of Bitcoin is expected to rise significantly. Trump has kept significant focus on the southern border to reshape the US foreign policy. His policicies surrounding Mexican drug cartels and illegal immigration led to increased border enforcement and the construction of a physical border wall. Despite the controversy surrounding his immigration policies, Trump’s administration is destined to take a defiant stance to curb drug trafficking and organized crime.  While protectionist measures like high tariffs on China will reshape global trade, such measures also led to new alliances and competition in global markets. At home, Trump’s job creation strategies are regionally targeted, particularly in industrial states, but the initiatives will also encounter challenges due to restrictions on immigration and labour mobility.

 

Trump’s Tariff and A Tensed World | COGGS| Read Post »

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]

BRICS and IBSA: Contrasting Approaches to the World Order? Read Post »

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.

 

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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]

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