TIOL - COB( WEB) - 944
OCTOBER 31, 2024

By Shailendra Kumar, Founder Editor

HETEROGENEITY is known for some obvious inherent advantages but not without its own share of caveats. If an international group of countries is born with genetic heterogeneity, realising common goals looks more unlikely and unattainable. BRICS is one such forum which was floated with a set of economic errands. Believing that a forum of sovereign political entities would not let politics smear their economic attires, can at best be said to be gullible and credulous! Though predominant objectives may be economic cooperation for a bloc of countries but the primordial fact cannot be ruled out - geopolitics and geo-economics are fully intertwined and are the two sides of the same coin! Voila! The centrality of geopolitics was seen poorly hedged at the last week's 16th BRICS Summit and the first for the BRICS+ at Kazan in South Russia. The 'PLUS' of new members - Iran, Egypt, Ethiopia and UAE, has further deepened the heterogeneity of political, economic, social and environmental interests of the members. The presence of many other countries like Turkey, Saudi Arabia, Malaysia and Thailand, promises to make it more intricate forum in the future! Though Western experts may view the Kazan Summit long on geopolitics and short on substance but its growing heft emblemises the soaring unease of the Global South against a slew of unaddressed malaise in the prevailing jejune and time-warped framework of multilateralism!

The Western media may be right in its analysis that the much-vilified Russian President who has globally been isolated after Russia's invasion of Ukraine, partly used the forum to telegram a message to the West that despite severe sanctions against it, dozens of nations continue to rally behind Mr Putin. For the Kremlin, BRICS+ happened to be the first biggest diplomatic conclave of powerful leaders from the Global South after its invasion of Ukraine. Mr Putin had to pass over the last BRICS Summit in South Africa as he did not want to confront the large shadow of arrest warrant issued by the International Criminal Court. So, this year summit was a gild-edged opportunity for Mr Putin to reiterate his hyperboles against the US-dominated global order. He spoke against brazen use of economic sanctions against Global South countries in violation of international laws. And let's not kid ourselves by believing that he did all these without the tacit consent of the 'Giant Panda' which has worked hard on its chumminess with Iran - another notable victim of Western economic sanctions and also other prejudices resulting in a clash with Israel.

What happens when sanctions are imposed against a country? The species of sanctions has, over the decades, multiplied into several variants - financial, economic, trade and technology-related. Financial sanctions lead to ejection of an economy from SWIFT - a dollar-dominated Europe-based international payments settlement system. This is what happened to Russia after Ukrainian invasion as its assets worth USD 282 billion were frozen, and Iran after Trump exited the erstwhile nuclear agreement. Such ouster kneecaps the ability of a country to conduct international business. To overcome such an arbitrary bump coming from the West-controlled financial arsenal, China, Russia and Iran are too keen to sculpt an alternative financial architecture - at least for the Global South. That is how BRICS Bridge was niftily floated by Russia as one option before the BRICS members. However, it was predictably not well-received at the outset. Many members cautioned against a step in haste. They rather preferred doing intra-BRICS trade in local currencies as first step. In fact, to pale the shine of American dollar, many Global South countries have begun to supplant dollar reserves by gold. However, there is no uniformity in the trend. Secondly, there is a hiatus between the wish of a political leader and the ground actions by the Central Bankers. For instance, the Brazilian President last year said that he would reduce his dollar reserves but his Central Banker reduced gold and went for the American dollar as reserves. So, the message is that the rivalry-bugged or geopolitically ambitious nations have many miles to go before the American dollar may start paling and dulling. Even history tells us that a similar attempt was made by launching euro-backed mBridge known as Swiss-based Bank for International Settlement (BIS) but it has also failed to dethrone US dollar.

Besides an alternative payments settlement system, the Kazan Declaration loudly spoke in unison about their uneven representation in global institutions such as Security Council, IMF, World Bank and WTO. Since Western countries continue to hold sway over them despite their shrinking fortunes, BRICS has called for an overhaul of the existing institutions. Incidentally, the UN Secretary General was also present at the Summit and also acknowledged the lingering grudge against the disproportionate influence of the West. Obduracy of the West to offer fair representation to the rising powers in the Global South is one key driver behind the brisk fracture of the extant global order and the phenomenon of multi-polarity. Given the swelling groundswell of support among the Global South countries for the BRICS, the G7 appears to be white-knuckling its rise as a potential rival having the potential to impact the functioning of the G20. Though the BRICS has not achieved anything extraordinary in the past 15 years but it is also not cringeworthy. It has built a functioning institution like the New Development Bank. And this bank has so far bankrolled projects worth USD 30 billion - a good attraction for poor countries looking for loans at cheaper rates sans strangulating conditions. As per the rotation policy, the leadership of the bank would hop to Moscow next year and it may enable Mr Putin to wield and undergird his heft among the African and Latin American countries. The BRICS members also agreed to develop this bank into a new type of MDB in the 21st century and supported its further expansion of membership.

On taxation front, the Kazan Declaration backed the landmark Rio Declaration on International Tax Cooperation. The Rio Declaration supports the OECD's work to make tax arrangements fairer and work better through automatic exchange of information. It also hailed the UN Resolution on promotion of inclusive international tax cooperation. It hopes that the implementation of the UNFCITC would promote an inclusive, efficient and effective tax system for sustainable development, while addressing challenges to strengthen domestic resource mobilisation. It also extended its support for a more progressive and stable international tax system. In the context of WTO, BRICS has rejected the unilateral trade restrictive measures and welcomed the outcomes of the 13th Ministerial Conference held in UAE. It has called for immediate reform of the trade regulator and supported its two-tier binding WTO dispute settlement system and the selection of new Appellate Body Members without further delay. It also hailed the establishment of the BRICS Informal Consultative Framework on WTO issues. It may be recalled that the WTO dispute settlement forum has become dysfunctional as the US is not keen to appoint any member out of its quota.

To iron out the wrinkles in the bilateral relations among the members of the forum, the host Russia also played an outsize role in injecting a thaw in the diplomatic relations between India and China. Except for a couple of pull-asides in the past few years, Mr Modi and Mr Xi Jinping had avoided bilateral dialogue for almost five years after border clashes in the Himalayas. Having two heavyweights as not-speaking-to-each other-members would have been kryptonite for the composite image of the forum. So, Mr Putin persuaded his Chinese counterpart to mollify his stand against India. Such a request would not have been more opportune as the West-ostracised Chinese economy is losing steam and China needs a large market for investments as well as exports. Secondly, having friendly relations with India would also showcase him as a committed leader for the Global South interests. Thirdly, China is under tremendous military pressure with the tensions soaring against the West. Being a seasoned diplomatic tightrope walker, Mr Xi Jinping made a tactical decision, a day prior to the Summit, to pull away its troops from the Indian borders which could facilitate his bilateral meeting with Mr Modi.

Going by the images of the subsequent de-escalation and disengagement of troops, it appears to be not an optical illusion! However, India need not buy the tub-thumping remark that the latest diplomatic overture of Beijing brings a new pivotal beginning to its relations with China! India needs to keep China on its regular watch list and learn the art of expecting the unexpected like in the past decades. My deeply, fundamentally saddened hunch is that it is a 'temporary' retreat on part of China to make some geopolitical and geo-economic gains. Such a pacifying move on the Indian borders would also enable Beijing to fix its eyeballs on its sole target - Taipei. Before the third Presidential election in 2027, Mr Xi Jinping, who appears to be under the impact of geopolitical 'meow meow', may not restrain his pugnacious army from invading Taiwan. And if it is going to be MAGA-riding Mr Trump in the Oval Office, America would think ten times before sticking its neck into another 'anaconda-like' quagmire! And in a multi-polar world, I do not see other military powers really making much noise against such a looming bedlam, leave aside a China-pedalled forum like BRICS! To me, it appears that the world is heading towards a 'pole-less' world - free-for-all! Plus ça change!