Irina Filatova: Putin’s BRICS triumph challenges Western dominance

At the recent BRICS summit in Kazan, Vladimir Putin reasserted his vision for a multi-polar global order, backed by support from 20 heads of state, including Turkey's President Erdogan and UN Secretary-General Antonio Guterres. Putin aims to challenge the West's financial dominance through the proposed BRICS Bridge, a digital financial platform designed to bypass the dollar. However, internal conflicts among BRICS members and differing national interests could hinder these ambitions..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here..By Irina Filatova .___STEADY_PAYWALL___.Vladimir Putin, Russia's president would be justified in considering this year's BRICS summit as his personal triumph. He must feel completely vindicated for his last year's humiliation, when he was forced to speak to the previous BRICS summit, held in South Africa, only online, but not in person for fear of being arrested by the order of the International Criminal Court. It is all different this year. Everybody has already heard or read that more than 20 heads of state and more high-ranking officials from other countries have come to the city of Kazan, 900 kilometres east of Moscow, to shake Putin's hand. And these were not only leaders of BRICS present and potential member countries, but also Tayyip Erdogan, president of a NATO's member country, and even Antonio Guterres, the UN General secretary. Every respectable media outlet has already reported on how big and important BRICS has now become. Present BRICS members (Russia, China, India, Brazil, South Africa, Iran, Egypt, UAE, and Ethiopia) plus Saudi Arabia, which was supposed to join but has not yet officially done so, represent 45 percent of the global population (compared with the G7's puny ten percent) and nearly 36 percent of world GDP by purchasing power parity, as compared to the G7's just over 30 percent. Moreover, 40 more countries have applied to join, including such important ones as Indonesia and Turkey among them. .This triumphalist reportage cheered by many throughout the world, including South Africa, creates the impression, long propagated by Putin, that "the West" is in the process of irreversible degradation and decline, and "the Rest" – new dynamic progressive forces – are ready to take over the world and build a better global order than the existing one created by the West and now in its dying throes. Putin's main thrust for this summit is to strengthen BRICS even further by creating a new global financial system which would destroy the dollar, and thus America's predominance in global finance. This, many believe, could be the final coup de grâce to the whole post-Second World War liberal order with its hated Bretton–Woods institutions and Western-imposed rules and regulations, thus clearing the way to the new happy multi-polar world..Putin should be credited with many of BRICS' successes. At its modest start the four founder-members were at pains to assure the world that they were not challenging the West, but rather trying to find ways of improving Western–dominated economic and political institutions by making them more equitable and friendlier to the developing world. All four needed the West and its institutions for their own development then. Indeed, without the West the rise of China and even, at that time, Russia, would have been impossible. But the global political dynamic and China's strength allowed Putin to pull BRICS further and further away from the pernicious West, finally challenging it and making the creation of the new world, dominated by the "Rest", the core of the organisation's purpose. Putin also consistently worked on the enlargement of BRICS, from South Africa on, to make it more representative and economically and politically weightier. He also managed to pull together such rivals and quarrelling neighbours, as China and India, and to keep at bay potential internal conflicts..Read more: 🔒 Xi-Modi BRICS breakthrough followed months of pressure by India CEOs.Putin's political role and his urgency stems not only from his vision of the world and Russia's role in it, but also from Russia's practical economic and political needs which have emerged as a result of Western sanctions, imposed as a retribution for its occupation of the Crimea in 2014 and its full–scale invasion of Ukraine in 2022. Officially Russia shrugs the sanctions off. So far it has managed to weather economic head winds quite well. Western firms, leaving Russia, sold their assets cheaply to Russian businesses, Russia's exports have been re-directed East and South, as there are enough countries to buy Russian goods cheaply, despite the danger of falling under Western secondary sanctions. Banned Western goods flow to Russia steadily by alternative or shady routs – even the sales of iPhones increased several times over this year compared to 2023, and there are reports that the government buys them for some officials despite its own bans. For deliveries abroad Russia has developed a whole shady fleet of ships which sail around under the radar, undetected. .But financial sanctions proved to be a problem. Nearly 60 percent of all world currency reserves are held in dollars now, and over 80 percent of international trade deals are made in this currency, i.e. through an American correspondent account. This is what gives America its leverage in the present financial system. It can impose sanctions on any country trading in dollars by simply disconnecting it from its services. This is exactly what happened first to Iran, then to Russia. .Western countries froze nearly $300bn of Russian assets abroad, and the USA disconnected Russia's banks from SWIFT which made it impossible for Russia to trade in dollars. Russia offered its trade partners that they deal in local currencies. At first this system worked to the participants' satisfaction, but soon problems emerged here too. Trade is never equal. One partner always sells more to a particular country than that country sells back, and if the deal is in local currency the second country will at some stage run out of the first country's currency. Which is exactly what happened to Russia, which recently started to experience a deficit of yuan. In some cases it had to revert to barter, a humiliating experience for a great power. Sergei Lavrov, Russian foreign minister, spoke about the purposes of de-dollarisation of trade openly. "Anyone may face US or other Western sanctions", he said. So, a BRICS payment system would introduce "economic operations without being dependent on those who decided to weaponise the dollar and euro.".Russia calls this system "BRICS Bridge", the final declaration, "BRICS Clear". It is not an alternative currency, but rather a financial system of digital platforms run by the participating countries' central banks, which would allow cross–border operations without any involvement of the present American institutions. If implemented, this system would be cheaper and faster to run than any of the non–digital ones, and for this reason alone it may be very attractive. But, of course, what would make it irresistible to many countries, is that it would make them invincible to any sanctions. Any number of shady deals by states or other actors, such as terrorist groups, could be made through it, all invisible to the Americans. .So far, the West has not paid much attention to BRICS. After all, it has been just an amorphous grouping of states without much power or financial infuence. In 2014 BRICS created the New Development Bank centred in Shanghai, but as soon as Russia came under sanctions the NDB stopped dealing with Russia too, just as all other major banks did. There was an idea to create a common BRICS currency, based on a basket of several non–dollar currencies, but it was rejected as unpracticable. .But the BRICS Bridge plan is based on digital money used through national central banks. This is not a complete novelty. Such digital currencies started to be used by Central banks of several countries, e.g. China, the United Arab Emirates, and even, by way of experiment, by the Bank for International Settlements (BIS), called "a bastion of the Western-led order" by the Economist. This system cut the time of transactions from days or even weeks to seconds. By a strange coincidence the BIS digital currency system was called mBridge. It was so successful in maximising efficiency that even Saudi Arabia's Central Bank decided to join, and there are three dozen observer countries. According to the Economist, the technology behind mBridge was created by the People's Bank of China, the Chinese central bank. This may not have been the intention of the mBridge project, which is mainly used by Western powers, but it will certainly diminish the dominance of the dollar, benefit China and, if continued and developed, will create a completely new financial system. The work on this system continues, albeit at a slower pace, and in principle, once the consequences of its introduction have been studied, it would be open to whoever would want to join. .In this context it does not really matter whether all these innovations are going to finally dethrone the dollar, or just create additional opportunities around it. The fact is that the predominance of the dollar is challenged, and that the BRICS Bridge is only one, although potentially the biggest and thus the most dangerous, of the challengers. Whether its members are going to be pleased with the result of their efforts, is not at all clear. Only two countries, Iran and Russia, really need the new currency. The rest happily continue using the SWIFT system and are interested in the BRICS Clear only as a contingent reserve and trading facility. The new system, which is deemed to be transactionally transparent, will, nevertheless, attract rogue elements, as there will be fewer checks and balances. World security may suffer. .The new system may also prove volatile and chaotic because BRICS does not have formalised, rules–based institutions which maintain and support the present system. Its members prefer informal "connectivity" relations. Apart from Russia and China their economies are also not strongly bound together by trade. Stronger economies could weather financial shocks of every kind and may even thrive in them, but weaker ones might not. Despite all their anti-Western rhetoric, some, which, like Egypt, are badly in debt, prefer to apply for funding to the much maligned but old and trusted IMF, rather than to the new BRICS institutions. .The new financial system is not the only important point on the BRICS' agenda. The global South is displeased with the Western credit rating agencies, which, they say, are unfair to them. The Africa Union is already setting up its own credit ratings agency, so BRICS, a broader–based organisation may want to create a rating mechanism of its own too. The main problem of African countries, however, is food security. In the last two years Russia's blockade of Ukrainian grain exports dramatically exacerbated it. Egypt and Ethiopia, two new African members of BRICS, are among the main sufferers on the receiving end of global politics. .And, of course, one of the most important issues on the agenda was further enlargement of the organisation. Russia tries to present BRICS as a symbol of the strength and unity of the Global South. However, far from all members, let alone the invitees to the summit view the situation in the same way as their Russian host. Some, like Iran, joined to further their dream of destroying the Western–dominated system. Others wanted to squeeze that system and to adjust it to their own interests. Yet others, like India, just wish to supplement options and opportunities in their survival and development kit and do not want to damage relations with the West at all. The enlargement, pushed by Russia, China and India, is not welcomed by Brazil. Already some of bitter enemies are members of BRICS. The conflict between China and India over the Kashmir border, which has been festering for the last four years, seems to be close to resolution, but a new bitter conflict, between Egypt and Ethiopia, over the Nile dam built by Ethiopia, is getting worse by the day. Relations between Iran and Saudi Arabia are extremely difficult too..None of these issues have been resolved by BRICS – it simply does not have any mechanisms for conflict resolution. It can serve as convenient platform for bilateral meetings – but no more than that. Every single question on the agenda was heatedly debated but the outcome in every case was a resolution so bland as if its purpose was to say nothing. On Ukraine, for example: "We emphasize that all states should act consistently with the Purposes and Principles of the UN Charter in their entirety and interrelation. We note with appreciation relevant proposals of mediation and good offices, aimed at a peaceful resolution of the conflict through dialogue and diplomacy." Who could object to that? There is no indication, however, as to who it is who is not acting consistently with the principles of the UN Charter. There are points reaffirming BRICS' commitment to the IMF, recognising the importance of the G20 and even stressing the need to protect "big cats" like tigers. Enlargement will make it even more difficult to achieve a meaningful consensus on the crux of any matter, not just an empty statement of principles. .Will the new enlargement of BRICS make is stronger? Or will it simply dilute its meaning and purpose? Despite all the media projections of its insurmountable strength and momentum, BRICS is still a very young organisation, and its future is not clear. It may stagnate in the role of a talk shop, or it can develop further into an anti-Western alliance. Much will depend on which new countries will join. But its further trajectory will also depend on developments in the global political arena. For now it looks like each member sees in BRICS what it wants to see. .South Africa attributes a particular ideological importance to BRICS. At the time of it accession Blade Nzimande, then the SACP's general secretary, even expressed a hope that BRICS would help the ANC to achieve the goals of its "national democratic revolution". Some still connect a lingering hope that BRICS membership will help South Africa to retreat from the failures of "liberal political economy" and foreground "a more state-led political economy". But for now, the restructuring of the world order is the main priority. .In 2011, when South Africa joined BRICS, Mandisi Mpahlwa, then its ambassador to Russia, wrote: "from the outset", South Africa saw BRIC as an "association of like-minded countries… committed to reforming global decision–making structures… We saw a broader strategic agenda where our thinking tended to converge with BRIC countries". Reforming decision–making structures was the main topic of last year's summit in Johannesburg. Speaking in Kazan, Ramaphosa continued the same line. He castigated the UN Security Council for its inefficiency and its inability to act on the decisions of the International Court of Justice on Israel's actions in Gaza. He insisted that the enlargement of the Security Council, and particularly the extention of the right of veto to all new members, including the two African ones, would somehow miraculously unblock its decision–making ability. .There is, however, no consensus on relations with BRICS even within Ramaphosa's own government. In his BRICS speech Ramaphosa called Russia "a valued ally, and a valued friend". John Steenhuisen, leader of the Democratic Alliance and the ANC's partner in the GNU, issued a strong statement in which he called Russia "an authoritarian regime", "violating international law by waging an imperialist war of aggression against a sovereign state", which cannot be South Africa's friend. The Presidency replied that the DA is entitled to its opinions but cannot impose them on the government. There is no consensus in sight on this and on several other important issues. This could be a miniature preview of how the enlargement of the Security Council with many more states gaining veto powers will reflect on its ability to resolve difficult international problems of the multi-polar world..Read also:.🔒 The Economist: Unveiling at BRICS Summit – Putin's plan to defeat the dollar🔒 Bigger BRICS – what now 9-nation bloc means for worldBRICS in Russia: Putin's power play & SA's hopes…

Irina Filatova: Putin’s BRICS triumph challenges Western dominance

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