Yves here. This post by Andrew Korybko is a follow on of sorts to the first piece of his we published at Naked Capitalism. That was on a key bit of evidence, that the so-called BRICS bank was adhering to Western sanctions, which he used to support his contention that the new BRICS currency would be much longer to come to fruition than anti-globalist enthusiasts predicted.
Here he points out something that frankly ought to be obvious given regular and often heated intramural disputes in the EU and in the more centralized US: that the BRICS, which is a fairly new body and has only recently been looking to considerably increase its scope of operation, is not necessarily unified internally on key issues. He describes here how that much-hoped-for new currency scheme is one.
By Andrew Korybko, a Moscow-based American political analyst who specializes in the global systemic transition to multipolarity in the New Cold War. He has a PhD from MGIMO, which is under the umbrella of the Russian Foreign Ministry. Originally published at his website
China envisages BRICS’ members replacing the dollar with yuan and integrating into BRI, while India wants them to prioritize the use of national currencies and doesn’t want BRICS as a whole officially connected to that global project.
A Broken Clock Is Right Twice A Day
Astute observers know that Bloomberg can’t always be trusted, but they might be telling the truth in their latest report about BRICS despite putting an obvious spin on everything. In their piece titled “China’s Push to Expand BRICS Membership Falters”, they cited two unnamed Indian officials who claimed that their country proposed strict criteria for joining BRICS after China allegedly expressed a comparatively more laidback position towards this issue.
Clarifying Common Misperceptions About BRICS
Before explaining why their report is likely true, it’s important to clarify that this leading Mainstream Media outlet obviously has an interest in framing this disagreement as yet another example of rising Sino-Indo tensions, which is why they titled their article the way they did. The wording is intended to imply that BRICS is led by China and that all other members are its junior partners. The particular content of their piece then conveys the notion that intra-group disputes are endangering its future.
The reality is that BRICS could more accurately be conceptualized as a financially focused form of RIC+. The Russia-India-China trilateral serves as its core while Brazil and South Africa function as their top partners outside of Eurasia for accelerating financial multipolarity processes. About their shared goal, this is being pursued through gradual reforms owing to each member’s relationship of complex interdependence with the Western-centric financial system, with Russia being the only exception.
The preceding observation accounts for why their reserve currency project probably won’t be launched anytime soon, if ever at all, as well as South Africa capitulating to Western pressure to have President Putin attend the next BRICS Summit online instead of in-person due to his ICC arrest warrant. It also adds context to President of the BRICS Bank Dilma Rousseff’s recent statement confirming that her institution complies with Western sanctions against Russia and thus isn’t planning any new projects there.
The Sino-Indo Dispute Over Formally Expanding BRICS
The Alt-Media Community (AMC) largely regards the aforesaid facts as setbacks since they’ve been preconditioned by top influencers to think that BRICS is a revolutionary movement dedicated to dethroning the dollar, but this is a false perception that was propagated for self-serving reasons. BRICS is still more than capable of changing the global financial system, though gradually instead of radically. To that end, its members continue de-dollarizing and building alternative non-Western financial platforms.
Nevertheless, differences still exist among them in terms of how best to go about this, hence the likely factual content of Bloomberg’s latest report regarding China’s and India’s opposite stances towards expanding BRICS. The first envisages their group’s members replacing the dollar with yuan and integrating into the Belt & Road Initiative (BRI), while the second wants to prioritize the use of national currencies and doesn’t want BRICS as a whole officially connected to that global project.
Accordingly, China reportedly has a comparatively more laidback position towards expanding BRICS since it mostly only expects new members to accelerate the yuan’s internationalization and their integration into BRI whereas India’s position is stricter due to the complexity of prioritizing national currencies. There’ll of course be those in the AMC who’ll claim that Bloomberg’s latest report supposedly proves that India is the West’s Trojan Horse in BRICS, but they couldn’t be more wrong.
Clarifying Common Misperceptions About India
In early May, it was advised that “RIC’s Differences Should Be Candidly Acknowledged Instead Of Denied Or Spun By Alt-Media”. One month later, the US’ hosting of Prime Minister Modi in spite of his brave defiance of its demands to dump Russia showed that “The US Finally Realized The Futility Of Trying To Force India Into Vassalhood”. This development proved that India has completed its rise as a globally significant Great Power whose strategic autonomy in the New Cold War is respected by all key players.
Those top AMC influencers who still insist that India is the West’s Trojan Horse in multipolar fora contradict the conclusions of top Russian officials who reassuredeveryone after Prime Minister Modi’s trip to the US that bilateral ties still remain strong. It’s their right to believe whatever they want, but observers should be aware that there isn’t any substance to their claims, which have been debunked by diplomatic professionals who obviously know better about Indian policy than those folks do.
This insight is integral for readers to keep in mind so as to avoid being misled by agenda-driven AMC influencers who propagate literal conspiracy theories about India’s global role for whatever their reasons may be. Returning to Bloomberg’s article, this supplementary clarification should improve their understanding of BRICS’ dynamics in general and Sino-Indo differences towards the issue of the group’s formal expansion in particular.
The Pros & Cons Of China’s & India’s Approaches
Both Asian Great Powers are sincere in their desire to gradually reform the Western-centric financial system, but they disagree over how best to go about it. China wants to accelerate the yuan’s internationalization and BRICS’ integration into BRI whereas India wants to prioritize the use of national currencies and keep BRICS separate from BRI. These opposite approaches reflect their respective national interests and are therefore natural to espouse unlike what the AMC might claim about India’s.
Each pathway has its merits but also compelling arguments against it too. Regarding China’s, it would speed up financial multipolarity processes but at the risk of making some countries suspect that the People’s Republic secretly wants to replace the US’ unipolar role, even if only in Asia. As for India’s, it would strengthen each country’s financial sovereignty but the timeline for effecting major change would likely be longer than China’s pathway, plus it’s comparably more complex to implement.
Considering that “The SCO States Agreed On The Contours Of The Emerging World Order” during early July’s virtual leaders’ summit in spite of rising Sino-Indo tensions, recent precedent suggests that the BRICS ones will likely reach a compromise on their group’s expansion that meets everyone’s interests. This could most realistically result in implementing the BRICS+ concept popularized by Russian geo-economic guru Yaroslav Lissovolik so that prospective members can formalize their ties with the bloc.
BRICS+ Could Be A Mutually Beneficial Compromise
While it can’t be discounted that China and India might agree on one or two countries joining as official members, which Bloomberg’s report claims that the other three wouldn’t be opposed to in principle, this compromise could prevent rising Sino-Indo tensions from impeding the group’s growth. Delhi’s interests would be served by establishing criteria for official membership, whatever the details thereof might ultimately be, while Beijing’s would be served by still having them participate in BRICS activities.
Those countries that are interested can internationalize the yuan and integrate into BRI through the ambit of their bilateral ties with China and participation in non-BRICS platforms while prioritizing the use of national currencies via their ties with fellow BRICS and BRICS+ members exactly as India envisages. If the parts from Bloomberg’s report about Brazil’s, Russia’s, and South Africa’s positions on this issue are to be believed, then those three are tacitly more aligned with India’s approach than China’s.
China’s Stance On This Issue Is The Real Outlier
Their Brazilian and South Africans sources were unnamed, but their Russian one was Valdai Club research director and head of the Council on Foreign & Defense Policy Fyodor Lukyanov, whose two affiliated institutions advise the Kremlin. He’s one of Russia’s most influential experts and was quoted as saying that “It’s broadly in favor of BRICS expansion, but without any huge enthusiasm. It’s following the others’ lead. We won’t block any decision.”
There are no credible reasons to believe that Bloomberg invented his quote like AMC conspiracy theorists might imagine, nor that this highly respected expert misinformed his audience about Russia’s position on this sensitive issue. Rather, Lukyanov candidly described the Kremlin’s thoughts in order to dispel false perceptions and associated expectations like those that have hitherto been cultivated by top AMC influencers. This confirms that Russia recognizes BRICS’ previously described intra-group dynamics.
The Kremlin’s measured and pragmatic stance is a reflection of its national interests, the same as can be said about China’s and India’s enthusiastic and cautious ones respectively. Likewise, Brazil and South Africa presumably have similar approaches to this issue as Russia does for the same reason, though their corresponding national interests have more to do with not coming under any more Western pressure. This overall assessment raises the chances that they’ll agree on implementing BRICS+ as a compromise.
Concluding Thoughts
India’s reported request that there be strict criteria for joining BRICS therefore isn’t a bad thing like the AMC might be inclined to think since it arguably aligns with every other members’ views apart from China’s, which thus makes it representative of the majority and not a supposedly US-influenced outlier. There’s nothing bad about China’s stance either since it’s also well-intentioned, but it’s Beijing that’s the outlier on this sensitive issue, not Delhi or anyone else. In any case, a compromise will likely be reached.
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To say Korybko is off track is an understatement.
The idea that India is any kind of great power, with its own strategic autonomy, is laughable. The US didn’t even need to lift a finger to bring Adani, Modi’s financial backer, to heel. India buys Russian oil because it has to, not out of some sense of solidarity.
Modi making the SCO summit remote deprived Putin of an important opportunity to meet other world leaders on its sidelines. Russia and China have moved forward with the “Axis of Seven” as well, bypassing India. Indian Punchline has it right.
He’s peddling the RIC narrative for his viewers. Frankly, it’s a very Russo-centric view.
My personal belief is that Russia finds it uncomfortable to face the fact they are so codependent on China. They are obsessed with “balancing” China, futilely holding out hope that somehow India or Japan will rise and create chaos in Asia so Russia can escape China’s economic gravity and retain its own regional bloc. There’s a reason Russia wasn’t onboard with the BRI before the SMO. They are very much like the US in this regard.
To say you know what you are taking about is quite a stretch. It’s both entertaining and pathetic when someone comes here and cops an attitude of superior knowledge that they then demonstrate they lack.
Your view of India as a colonial lackey is dead wrong. Jerri-Lynn Scofield, who for the latter years when she was writing for us was also the best paid business columnist in India, posted a series of article discussing how India was charting an independent geopolitical course. A sampling of many, which include US-defying measures:
We also published some, like India Is Mulling Rupee-Ruble Payments System for Trade with Russia as well as regularly noting the ways the US kept pressuring India to condemn and/or distance itself from Russia and failed.
You also straw man Korybko with your “great power” remark. The point of the post was merely that India could throw a spanner in BRICS expansion.
As for the July 4 SCO meeting in India, which was not the premier meeting of the year, the reason for holding it virtually was about India not being happy with some key attendees:
https://www.hindustantimes.com/india-news/india-to-host-sco-summit-virtually-on-july-4-chaired-by-pm-modi-theme-towards-a-secure-sco-with-10-pillars-of-cooperation-101685458616444.html
So Putin may have suffered collateral damage but the change was not aimed at him.
As for your Russia-China claim, that lazy trope is up there with “Russia is running out of missiles.” There was a period early in the war when Russia and Russians were freaked about the sanctions impact, which turned out to be vastly lower than expected due to Russia having already gone a far way to becoming an autarky plus a lot of very fast and generally effective emergency responses. During that period, having China not ally with the US (very unlikely anyhow given that the US had started getting hostile towards China in 2017 and the Biden Administration escalated with its astonishingly rude behavior in its early 2021 Alaska summit) was very important to Russia in signaling to other countries they would not be alone if they refused to knuckle under to Collective West pressure to turn Russia into a pariah.
Russia has far more advanced military technology than China, particularly air defense, signal jamming, and missiles. Contrary to Western pretenses, Russia does not depend on China for chips for its military. Russia is the leading natural resource nation and is capable of preventing exploitation, while China in many key areas cannot meet the resource needs of its citizens and its industries.
Putin is clever enough to allow Xi to strut a bit because China has long felt badly treated by the colonial powers and take umbrage at the tiniest slights. And that may also be because it is Russia that is playing the lead role in creating the new multi-polar order, with Putin’s many pointed speeches and statements in meeting and his and Lavrov’s very active personal diplomacy.
There is no evidence Putin has allowed or will allow China to dominate Russia. They have a useful symbiotic relationship.
Does anyone know how BRICS would function? Will it be like NATO where each member theoretically has veto power over certain classes of decisions? Or would each member’s weight in decisions correspond to its population or GDP? It would seem that everyone signing into this scheme ought to have very clear and commonly shared answers to such questions.
BRICS functions (since 2009) by having annual high level summits were decisions are made and agreements signed. Naturally each summit is preceded by meetings of delegations to settle the issues to be decided or agreed upon – or drop them from the agenda.
Mostly the members try to use the existing international organizations – UN, IMF, World bank, etc – to push for the agreed agenda, but sometimes that just doesn’t work and an alternative is constructed, like the New Development Bank when IMF refused to change it’s voting rules. NDB still collaborates with IMF on many issues.
When it comes to items like gaining independence from dollar-based trade, it’s left for bilateral treaties to achieve the more generally stated aims of the BRICS, so basically the members do get to choose and pick to some extent what works best for them. Yet, like in any international collaboration, members have to make compromises here and there.
To my understanding “BRICS” is a way for the members to collaborate on the global issues they feel important for them, without being coerced to act against their own interests. Whether that collaboration is bilateral, multilateral, using existing platforms or creating new ones depends on the situation and the level of commitment of each member.
Mostly the members try to use the existing international organizations – UN, IMF, World bank, etc – to push for the agreed agenda, but sometimes that just doesn’t work and an alternative is constructed.
You make it sound as if the BRICS had no grand plan at all, it just so happened that sometimes things didn’t work out, and they had to make do and improvise something… One may wonder why Wikipedia calls BRICS ‘the foremost geopolitical rival to the G7 bloc of leading advanced economies’.
Maybe BRICS could have a “House” where every country gets Voting Reps according to population and a “Senate” where every country gets the same number of Voting Sens. Who knows?
I’ve been under the impression that China doesn’t want to have the yuan replace the dollar internationally because it would really constrain what they’re able to do with their domestic economy. Sorry I can’t recall any particular places where I’ve come across this but I know I’ve seen multiple people discussing it here and there for at least several months now.
I think the same. I think their financial strategists hold plenty of degrees in top Western institutions, and that they have absorbed all the lessons that the dollar system had to teach them about how to hollow out your economy in 4 decades. We are not living in decolonization times, when Britain left an African country to govern itself with the great total of 17 recent university graduates. (True story.)
But policy makers also operate with short-term, medium-term, and long-term objectives. So I surmise that yuan’s internationalization could be used strategically in the short-term, for instance to limit the sphere of the dollar and disable the West, and, most importantly, to strengthen the Chinese economy in preparation of the looming war for Taiwan. Such an immediate threat to the national state would take precedence over other concerns.
This, from 1992 explaining why the Euro wouldn’t work, anticipating all the problems it’s created, is why anyone who thinks hard about monetary economics sees the threat to sovereignty any joint-currency system represents.
A currency area only makes sense where there’s a balance of policy needs the functioning of the system can be manipulated to support. “Independent Central Banks” end in Crony Capitalism, with the EU and its eventual subordination to the US Fed being cases in point. Once dirigisme (public policy mandates on finance) relaxes, the power of compound interest serves only the Cronies, and money never sleeps.
Monetary systems are systems of potentially absolute, central power (see de-banking of Farage or Canadian truckers). Entering into a “shared currency” arrangement of any kind is a surrender of political power within that arrangement. Aba Lerner said, “Economics has made herself the Queen of Social Sciences by choosing the set of solved political problems as here domain.” This goes for monetary economics as well.
Here is a PDF published by China’s Central bank governor back in 2009 on the subject:
https://www.bis.org/review/r090402c.pdf
Clearly you have fallen under the influence of the insidious AMC.
Hard to imagine all these complexities. the NDB would be the most interesting info – how the BRICS can maintain sovereign control over their own currencies in debt service and etc. And how they will maneuver the pitfalls of debt finance in a for-profit world. Or rather in a world that still exploits the environment in order to service debt. To fix that treadmill we need an entirely new concept for all currencies. Or maybe replacing the concept of debt service in currencies to a debt service in action – that repairs the environment.