Amid focused debates and high optimism to establish an economic clout, BRICS (Brazil, Russia, India, China and South Africa) together with new members and its partners (outreach format) are steadily looking forward to a new era of de-dollarizing the global economic system by introducing a new currency and also to set up a new payment system, most likely, during the forthcoming October 2024 summit in Kazan, the Republic of Tatarstan.
In pursuit of defining the collective determination to achieve these economic policy goals, BRICS has over the months been deliberating broadly the effectiveness and the importance its newly-designed mechanisms and a well-balanced approach for reconstructing the western dominated dollar-system in the world.
With a couple of months away for taking a landmark collective decision on this, BRICS recognizing the strong working ties among members, has demonstrated its readiness by engaging in consistent dialogue and cooperating with like-minded alliance of partners and international corporate actors. In strict adherence of its guidelines, and the resolutions adopted at the XV BRICS summit in South Africa, an appreciable progress and accomplishments have been made on several initiatives under Russia’s BRICS leadership.
Despite the fact that there were months of back-and-forth movement with the dialogue on these economic initiatives, the strategic perspectives for their further development with and to incorporate, in particular, most of the developing countries in the Global South. There are following plans with a major information campaign discrediting Europe and the United States. The relevance of this is that, most of these influential countries with growing discontent against western hegemony have expressed interest in the ideals and aspirations of the ‘informal association’ BRICS which was created in 2006.
According to information monitored in the reputable global media, more than 30 countries have expressed their readiness to join BRICS. Under Russia’s chairmanship, integrating more new members into BRICS has been suspended, even though recognizing the increasing interest, Russian Foreign Minister Sergey Lavrov explained “the modalities of ascension have to be collectively discussed” at subsequent summits in future.
Laying down a joint payment mechanism will be a key discussion topic at the forthcoming summit, which is going to be the final event of Russia’s BRICS presidency, said Viktoria Panova, who heads an expert council tasked with overseeing Russia’s presidency. “Active efforts are underway to create a financial payment mechanism that would make cooperation between BRICS countries easier, maintaining their sovereign trade and economic exchanges. This issue tops the agenda because every member of the group sees it as important,” the expert said, and reported by the local Russian media.
News came in late July that BRICS members had developed a system similar to the Society for Worldwide Interbank Financial Telecommunication (SWIFT), from which Russia had been disconnected after the invasion in Ukraine. The mechanism will operate on the basis of the BRICS Bridge supranational payment platform. Payments will be conducted in the national currencies of BRICS countries, while the New Development Bank will act as a platform for integration, conversion and clearing. That said, it’s also important to discuss ways for new BRICS members to interact with the New Development Bank, according to Panova’s explanation.
As BRICS association continues to challenge the US dollar dominance in the global markets, creating the payment system has become the highest priority, the financial project seriously heading for a debut at the upcoming 2024 summit. Several arguments and propositions have given strength to whta is referred to as the BRICS Bridge to navigate around the western-dependent SWIFT system. More specifically, its creation will allow developing countries especially in the Global South to limit or restrict their dependence on the US dollar, but instead there will be the possibility to promote their own national currency usage for trade settlements.
The New Development Bank (NDB) was established in 2015 by the members as an alternative to multilateral financial institutions, now welcomed four countries into its membership, Bangladesh, the United Arab Emirates, Uruguay and Egypt. Its founding members, the BRICS members consisting Brazil, Russia, India, China and South Africa. While multilateral financial institutions, especially the International Monetary Fund and the World Bank have been active and in the headlines, the NDB with its skeleton organizational structure and limited investment profile – all these are little known and/or made public, raising policy implications surrounding the operations since its establishment.
There have been an evolving scholarly debates and research on the BRICS Bank, from its initial establishment to the current period as the NDB enters its second decade. Boston University Global Development Policy Center’s scholar, Gregory T. Chin, in July published an article titled “The ‘New’ New Development Bank: A Decade Plus in the Making” in which so many questions were raised. Among a series of obvious questions is what makes the NDB governance and agenda unique, what has been its achievements over the past decade, and now at the fore-front with de-dollarization and increasingly on multipolarity.
The theme of adding members to the NDB immediately raises the issue of purpose. For this collection, Jim O’Neill returns to the theme of the ‘BRICs’, the term he coined (South Africa was not included in O’Neill’s original formulation, which was focused on Brazil, Russia, India and China). Similar to the question of BRICS expansion, O’Neill emphasizes the importance of figuring out criteria and procedures for NDB membership expansion; the need to reach consensus on the criteria for admission, linking them to a redefinition of collective purposes and specific goals; a clearly defined scope of activity, and value-added, for their future collective action. That however, O’Neill suggests that the 2023 addition of the main petro-states in the Gulf and Middle East to the NDB membership would be useful for supporting the Bank’s drive for more local currency use.
Ultimately, it is also fair to debate whether the NDB members and senior management have been daring enough in building-up the Bank, given the initial vision of the BRICS governments when launching the NDB – in building its global profile and presence, in pursuing alternative ways of doing things that support a Southern developmental agenda: whether on membership expansion, regional offices, outreach and partnership, or on the tangible goals of promoting local currency use, tackling climate change and environmental protection, as well as promoting sustainable infrastructure and renewable energy.
In another webinar meeting held in Geneva, Switzerland, participating experts noted that digitalization of the economy involves so many aspects – at the initial stage of digitalization entails explicit streamlining and creating a regulatory framework for this process. And one of the bottlenecks in dealing with digital markets is market definition – the application of traditional market definition tools is challenged by the tendency of digital markets to be highly innovative and dynamic.
As the number of BRICS member countries is growing, the association remains informal, and moreso it is beginning to work more actively. The more active it transforms, the more practical contradictions and problems. Nevertheless, experts noted that there is a significant convergence among BRICS jurisdictions in recognizing the importance of certain essential standards, such as consumer welfare standards, but there are also some differences that are worth highlighting.
Authorities in different countries, especially Brazil, Russia, China and South Africa, recognize other objectives, such as ensuring economic freedom or a level playing field for small and medium-sized enterprises. And these goals can somehow be translated into more elaborate legal standards for assessing abuse of dominance. This includes the issue of antitrust regulation, both within individual countries and various interstate associations.
Victor Oliveira Fernandes, Commissioner of the Brazilian Administrative Council for Economic Defense (CADE), Alexey Ivanov, Director of the BRICS Competition Law and Policy Center, Deni Mantzari, Associate Professor, University College of London and a few other experts pointed out that developing approaches to competition policy reflect the interests of the development of the BRICS economies. But there other important main issues including new approach to antitrust regulation of the digital economy. But much attention has to be paid on the fact that cooperation exactly within the framework of supranational associations can give real results in the fight against violations of fair competition rules by global monopolists in local markets.
Nevertheless, the development of new definitions and indicators is one of the most important tasks of the meeting. As part of the presentation, Victor Oliveira Fernandes, Commissioner of CADE, stated that within their organization a number of new indicators have already been developed to define the platform market: for example, the ability to unilaterally impose conditions, including as a show of bargaining power, ownership of key datasets, ability to influence choice through online platform architecture, lack of transparency.
For this article a couple of the BRICS members, and several policy experts and scholars acknowledged early August in separate interviews with this article author that the BRICS payment platform development has reached an advanced stage, and if it continued as planned, it would explode as a bombshell globally. The BRICS Bridge could have an expected impact as majority members of the association declared their support for de-dollarization approach or process, (unfathomable tragedy for the western currency’s future) and promoting unilateral trade. It could however increase the overall trade dealings and essentially strengthen emerging relationships between the association’s members in the long term.
Within the stipulated guidelines, Russia took over the BRICS one-year-long presidency on January 1, 2024. Russia’s presidency features more than 250 various events, with a scheduled BRICS summit in Kazan in October 2024. Since its inception in 2006, BRICS has experienced two phases of expansion. In 2011, South Africa joined the original group, which included Brazil, Russia, India, and China. On January 1, 2024, five new members officially entered BRICS, namely Ethiopia, Egypt, Iran, Saudi Arabia and the United Arab Emirates.
