Dollar hegemony in danger

The history shows that the world’s base currency can lose its position, as happened with Britain’s pound in the 20th century. The US economy is much smaller as a share of world output now than it was after WWII, when its dominance began. And now some investors are flagging concerns about the potential for chaotic images emanating from the US election that could undermine confidence in American rule-of-law and the broader political system.

In 2009, after the meltdown in US mortgage securities triggered the biggest financial crisis since the Great Depression, China’s central bank chief of the time issued a high-profile call to move the global financial system away from the dollar. 

Fifteen years later, it continues to reign supreme — having weathered the launch of trade wars under Donald Trump’s administration and a welter of US sanctions on other countries that showcased the risk, for some nations anyway, of keeping assets in dollars. The greenback remains the main currency of choice in global reserves and massively dominates the foreign-exchange market.

Multiple stewards of US economic policy over decades have highlighted the importance of democratic, transparent governance and respect for the law in underpinning the dollar’s role. A violent attempt to disrupt the transfer of power occurred in the wake of the last election, and had little impact on markets. But further instances could have consequences, some warn.

“You can’t be complacent around any of these things” with regard to the dollar, Robin Vince, CEO of BNY Mellon — one of the world’s largest custodians of financial assets — said in an interview last week. “As is the case with many tipping points, you don’t quite know when you’re approaching it until you go over the other side.”

Thierry Wizman, a three-decade Wall Street veteran, said “the American exceptionalism narrative could end if traders lose faith in US institutions.”

“The way that could happen in the next few weeks is if we have an election without a definitive result for several weeks, and where people can’t trust the institutions to adjudicate any of these disputes,” said Wizman, a global currency and rates strategist at Macquarie.

Courtesy: Bloomberg

 

 

Why a rush to join BRICS?

Last year, BRICS decided to expand its membership, inviting Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates to join the bloc.

BRICS is attracting Southeast Asian countries, with Thailand and Malaysia being the latest to express their interest in joining the bloc.

Last month, Thailand submitted a membership request, while Malaysian Prime Minister Anwar Ibrahim said in an interview with Chinese news portal Guancha that his country would soon begin formal procedures.

“Being a member of BRICS would open up trade and investment opportunities, so the question is ‘why not?'” Piti Srisangam, the executive director of the ASEAN Foundation, told DW.

“The bloc has members from all over the world, but none from Southeast Asia yet,” he added.

According to James Chin, a professor of Asian Studies at the University of Tasmania, “both Thailand and Malaysia are seen as middle powers.”

“It’s better for them to join groups like BRICS so that they will have a larger voice in the international arena. But the major benefit will be trade,” he added.

Last year, BRICS — an acronym that was originally used to refer to Brazil, Russia, India, China, and South Africa — decided to expand its membership, inviting Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates to join the bloc.

The name for the expanded group has not yet been officially announced, but it could be called “BRICS Plus”.

Combined, its members account for about 45% of the world population — around 3.5 billion people.

Their economies are worth around US$30 trillion (€28 trillion) — about 28% of the global economy, according to World Bank data.

The bloc “can help Malaysia’s digital economy grow faster by allowing it to integrate with countries that have strong digital markets and also take advantage of best practices from other members,” Rahul Mishra, associate professor at the Center for Indo-Pacific Studies at Jawaharlal Nehru University in New Delhi, told DW.

“Thailand would also be able to draw investments in important industries including services, manufacturing, and agriculture,” he added.

Chin believes the trade ties that Malaysia and Thailand already have with China have influenced their decisions to join BRICS.

China has been Malaysia’s largest trading partner for the past 15 years and Thailand’s biggest for 11 years, according to official data.

Both these Southeast Asian nations becoming BRICS members “will enhance their relationship with China,” Chin told DW.

Last month, Thai Foreign Minister Maris Sangiampongsa insisted that Bangkok did not view joining BRICS as an act of “choosing sides,” or as a way to counterbalance any other bloc.

“Thailand is unique in that we are friends with every country and enemies to none. We can act as a bridge between developing countries and BRICS members,” Maris said.

Apart from BRICS, Thailand has also applied to join the Paris-based Organization for Economic Cooperation and Development (OECD), which has 38 mostly Western members.

“Small and middle powers do not have many options,” Piti said. “What Thailand is doing is a balancing act — one foot with the Western liberal democracy and the other foot with the emerging economies.”

In Malaysia, public sentiment is currently more in favor of China, the world’s second-largest economy after the United States, according to a recent survey by the ISEAS-Yusof Ishak Institute, a Singaporean think tank.

Nearly three-quarters of the survey’s respondents said ASEAN should favor China over the US if the bloc were forced to align with one of the two rival superpowers.

In June, during the three-day visit of Chinese Premier Li Qiang to Malaysia, Anwar criticized “the incessant propaganda that we should cast aspersions and fear the dominance of China economically, militarily, technologically.”

“We do not. We in Malaysia, having a neutral stance, have the resolve to work with all countries and with China,” he added.

Malaysia and Thailand are not the only countries in Southeast Asia interested in joining BRICS.

In May, Pham Thu Hang, Vietnam’s Foreign Ministry spokesperson, told a press briefing in Hanoi that “like many countries around the world, we are closely monitoring the process of BRICS membership expansion.”

Mishra believes Vietnam, Laos and Cambodia “could be the potential applicants” as they already have good ties with China, India, and Russia — all key players in BRICS.

“For Vietnam, which has been registering significant investments, it would be a good opportunity to further boost its trade beyond their traditional markets into the Middle East, Latin America, and Africa,” he added.

Ahead of the BRICS summit in South Africa last year, there had been speculation that Indonesia — the only G20 country in Southeast Asia that hopes to complete the accession process with the OECD within three years — could become a BRICS member.

But ultimately, Indonesian President Joko Widodo told the public that his government had decided not to submit a letter of interest. Indonesian Foreign Minister Retno Marsudi said at a press conference in January that Jakarta was still weighing the pros and cons of the BRICS membership.

 

China and Iran to strengthen BRICS

This year is the first year that Iran has formally joined the BRICS mechanism, which provides a new platform for China-Iran cooperation and enriches the vision and potential of the China-Iran comprehensive strategic partnership.

BRICS Foreign Ministers' meeting was held in Nizhny Novgorod, Russia on June 10 and 11.

 Member of the Political Bureau of the CPC Central Committee and Foreign Minister Wang Yi, attended the meeting and met with Iranian Acting Foreign Minister Bagheri. Wang expressed warm congratulations for Iran’s participation in the BRICS Foreign Ministers' Meeting for the first time as a formal member.

Nowadays, the world has entered a new period of turbulence and transformation. It is undergoing major shifts, division and regrouping, leading to more uncertain, unstable and unpredictable developments. BRICS is an important force in shaping the international landscape.

BRICS' expansion has ushered in a new era for the Global South to gain strength through unity, and the appeal and attractiveness of BRICS has been continuously increasing.

In terms of scale, the BRICS countries account for nearly half of the world's population, and the BRICS has already surpassed the G7 in purchasing power parity.

In terms of economy and trade, the BRICS countries' goods trade accounts for about 20% of the world's total, but the trade volume between them only accounts for about 10% of their respective foreign trade, and there is still great potential for growth.

The BRICS New Development Bank supports nearly 100 projects, promoting the economic and social development of member countries.

In terms of international influence, the BRICS mechanism includes major emerging economies and major countries in all continents. After the expansion, the BRICS mechanism has more influence in international affairs and global governance to safeguard the common interests of developing countries.

The data released by the Iran Customs Administration (IRICA) indicated that the value of Iran’s non-oil trade with BRICS group of countries was close to US$40 billion in the 2022-2023 fiscal year, showing a 14% increase as compared to same period a year earlier.

Iran's BRICS story is inseparable from the background of China-Iran brotherhood, and will surely add bright BRICS colors to the picture of China-Iran friendship. Iran is one of the first countries to apply to join the BRICS mechanism.

In 2017, President Xi Jinping proposed the "BRICS Plus" cooperation concept and invited Iran to join. In 2022, China assumed the presidency of the BRICS and launched the expansion process. In 2023, with the support of China and other countries, Iran was accepted as a formal member of the BRICS.

Looking to the future, China and Iran have great potential for cooperation under the BRICS mechanism. Both sides should give priority to development, pool their efforts for progress, deepen pragmatic cooperation, enhance cultural exchanges, and promote the upgrading of China-Iran friendly relations in all fields.

Both sides should safeguard universal security, work together to meet challenges, stick to independence, objectivity and fairness, promote international consensus for peace, and provide new impetus for the political settlement of hot issues.

Both sides should uphold fairness and justice, improve global governance, continue to hold high the banner of multilateralism, work closely together in the BRICS mechanism, take the lead in upholding the UN-centered international system, and promote the realization of an equal and orderly multipolar world.

Thanks to the long-standing traditional friendship and high political mutual trust between the two sides, China-Iran relations have maintained healthy and stable development. China is willing to strengthen strategic coordination with Iran, adding BRICS color to the beautiful picture of China-Iran friendship.

 

RIC search for a new global security order

The key question is, how will Russia–Iran–China (RIC), as BRICS leaders, SCO members, and simultaneously top three “existential threats” to the Hegemon, be able to start implementing a new global security architecture without staring down the genocidals. 

The Hegemon has no idea what awaits the Exceptionalist mindset, China has started to decisively stir the civilizational cauldron without bothering about an inevitable array of sanctions coming by early 2025 and/or a possible collapse of the international financial system. 

Last week, US Secretary of State Anthony Blinken and his list of delusional US demands was welcomed in Beijing by Foreign Minister Wang Yi and President Xi Jinping as little more than an annoying gnat.

Wang, on the record, stressed that Tehran was justified in defending itself against Israel’s shredding of the Vienna Convention when it attacked the Iranian consulate in Damascus. 

At the UN Security Council, China now openly questions not only the state terror attack on the Nord Streams but also the US–Israel combo’s blocking of Palestinian statehood. Moreover, Beijing, just like Moscow recently, hosts Palestine’s political factions together in a conference aiming to unify their positions.   

Only two days before Moscow celebrates Victory Day, the end of the Great Patriotic War, Xi will land in Belgrade to remind the whole world about the 25th anniversary of the bombing of the Chinese embassy by the US, UK, and NATO. 

Russia, meanwhile, provided a platform for the UNRWA – the UN relief agency for Palestinian refugees, which Israel has sought to defund – to explain to high representatives of BRICS-10 the cataclysmic humanitarian situation in Gaza, as described by UNRWA Commissioner-General Philippe Lazzarini. 

In short, serious political business is already being conducted outside of the corrupted UN system, as the United Nations disintegrates into a corporate shell with the US dictating all terms as the largest shareholder. 

Russian Security Council chairman Nikolai Patrushev met in St. Petersburg with his Chinese counterpart Chen Wenqing on the sidelines of the 12th International Security Summit, congregating over 100 nations, including the security heads of BRICS-10 members Iran, India, Brazil, and South Africa, as well as Iraq. 

The key crossroads these past few days was the Shanghai Cooperation Organization (SCO) defense summit in Astana,

For the first time, the new Chinese Defense Minister, Dong Jun, met with his Russian counterpart, Sergei Shoigu, to emphasize their comprehensive strategic partnership. 

Dong, significantly, stressed the “dynamic” nature of China–Russia military interaction, while Shoigu doubled down, saying it “sets a model for interstate relations” based on mutual respect and shared strategic interests. 

Addressing the full SCO assembly, Shoigu emphatically refuted the massive western propaganda drive about a Russian “threat” to NATO. 

Everybody was at the SCO defense ministers’ meeting – including, at the same table, India, Iran, Pakistan, and Belarus as an observer. Minsk is eager to join the SCO. 

The interlocking Russia–Iran–China strategic partnerships were totally in sync. Apart from Dong meeting Shoigu, he also met Iranian Defense Minister Brigadier General Mohammad Reza Ashtiani, who lavishly praised Beijing’s condemnation of the Israeli terror air strike in Damascus. 

What is happening now between Beijing and Tehran is a replay of what started last year between Moscow and Tehran, when a member of the Iranian delegation on a visit to Russia remarked that both parties had agreed on a mutual, high-level “anything you need” relationship.  

In Astana, Dong’s support for Iran was unmistakable. Not only did he invite Ashtiani to a security conference in Beijing, mirroring the Iranian position, he also called for an immediate ceasefire in Gaza and the delivery of humanitarian aid.   

Shoigu, meeting with Ashtiani, provided extra context when he recalled that “the joint fight against international terrorism in Syria is a vivid example of our long-standing friendly relations.” The Russian defense minister then delivered his clincher: 

The current military-political situation and threats to our states oblige us … to common approaches to building a just world order based on equality for all participants in the international community.

Establishing a new global security order is right at the heart of BRICS-10 planning – on par with the de-dollarization debate. All of this is anathema to the collective west, which is incapable of understanding the multifaceted, intertwined Russia, Iran, and China partnerships.   

And the interaction goes on in person. Russian President Vladimir Putin will be visiting Beijing later this month. On Gaza, the Russia–Iran–China position is in complete sync: Israel is committing genocide. For the EU – and NATOstan as a whole – this is not genocide: the bloc supports Israel no matter what.

After Iran, on April 13, changed the game in West Asia for good, without even using their finest hypersonic missiles, the key question for the Global Majority is stark: in the end, who will restrain the genocidals, and how? Diplomatic sources hint this will be discussed face-to-face by Putin and Xi. 

This time, the barbarians are facing a 5,000-year continuing written civilization, armed with Sun Tzu’s Art of War, Mao thought, Xi’s dual circulation strategy, Belt and Road, BRICS, renminbi digitalization, Russia and China unlimited, the world’s most powerful manufacturing industry, tech supremacy, economic powerhouse, and the backing of the Global South.

US threats of a “clear choice” between ending several key strands of the Russia–China strategic partnership or facing a sanctions tsunami don’t cut it in Beijing. The same applies to Washington’s wishful attempts at preventing BRICS members from ditching the US dollar. 

Yaroslav Lisovolik, founder of BRICS+ Analytics, dismisses the Hegemon’s threats against BRICS as the road map toward an alternative payment system is still in its infancy. As for Russia–China trade, the non-dollar high-speed train has already left the station. 

Russian Foreign Minister Sergey Lavrov has made it quite clear that Moscow and Beijing have nearly reached the point of abandoning the US dollar in bilateral trade. And the outright theft of Russian assets by the collective west is the ultimate red line for BRICS – and all other nations watching with horror – as a whole, this is definitely a “non-agreement capable” Empire, as Lavrov has been emphasizing since late 2021.

Courtesy: Information Clearing House

BRICS an evidence of failure of Modi Doctrine

According to, Alan Paul Varghese, an independent foreign affairs and geopolitical analyst based in New Delhi, it became clear that India continues its alignment with the West and Israel.

At the BRICS Plus extraordinary meeting hosted by South Africa on the conflicts in West Asia, it became clear that India continues its alignment with the West and Israel. While most of the members reiterated how Israel’s settler colonialism is the root cause of the conflict, Indian external affairs minister S. Jaishankar stood firm on blaming Hamas. He also stated that there can be no compromise to terrorism.

The Modi doctrine of diplomacy for the past nine years has stagnated India’s internal reputation and aspirations. Narendra Modi had skipped the online meeting due to the election campaigns in poll-bound states.

Though the officials stated that Modi was preoccupied with the campaign schedules, it is obvious that the outcome of the extraordinary meeting was anticipated.

In a close examination of recent diplomatic events by India, one can categorically see how the Modi doctrine is failing to capture its promised achievements.

While the economy is trailing and seldom benefitted through trade agreements, the only resort of Narendra Modi and Jaishankar was their self-projection as the leader of the Global South.

It is noteworthy that the extraordinary meeting succeeded the Voice of Global South Summit which had references to ongoing genocide in Palestine.

BRICS Plus comprising of mostly countries from the global south has proved that India is isolated for its stand on the Israel-Palestine issue. This isolation has a serious impact on the future geo-political prospects of India.

In evaluating the BRICS extraordinary meeting Iran urged the members to cease economic and military interactions with Israel. Vladimir Putin who attended the meeting criticized the US monopolization of mediation efforts. He urged the international community to unite in an effort to achieve a speedy de-escalation and a ceasefire in Gaza, as well as a political solution to the Israeli-Palestinian conflict, and added that the BRICS nations and regional actors could play a leading role in this process.

This can be a possible indication of Argentina’s disassociation from BRICS as Milie, a far-right economist is a proactive supporter of dollarizing the economy. 

Xi Jinping in his address said “The root cause of the Palestinian-Israeli situation is the fact that the right of the Palestinian people to statehood, their right to existence, and their right of return have long been ignored. It has been often reiterated that the only viable way to break the cycle of Palestinian-Israeli conflict lies in the two-state solution, in the restoration of the legitimate national rights of Palestine, and in the establishment of an independent State of Palestine. There can be no sustainable peace and security in the Middle East without a just solution to the question of Palestine. China calls for early convening of an international peace conference that is more authoritative to build international consensus for peace and work toward an early solution to the question of Palestine that is comprehensive, just, and sustainable.”

Saudi Arabia called for the cessation of arms and ammunition supplies to Israel.

Argentina’s newly elected President Javier Milie condemned Hamas and demanded that Israel must adhere to international humanitarian law.

India had three diplomatic events before this extraordinary meeting. The ICC World Cup, Voice of Global South Summit, and ministerial dialogue between India and Australia.

During the World Cup Modi tried for cricket diplomacy by inviting his counterparts of the UK and Australia. Though Rishi Sunak expressed his readiness, due to some reasons he didn’t make his presence.

A sideline discussion with Anthony Albanese prior to the 2+2 ministerial dialogue was expected to boost talks in favour of India. But Albanese prioritized the Asia Pacific Economic Cooperation Summit over his QUAD partner.

The core weakness of Modi doctrine – neglecting the neighbours was visible in the failed innings of cricket diplomacy. In the interview given to The Hindu, Australian finance minister Penny Wong in reply to a question on whether India’s urge to take action against the Khalistan group was fulfilled, she said “ ….In relation to that I’d say is we respect your sovereignty. And we also are very clear about the line between peaceful protests, freedom of expression, and violence and vandalism.”

She has already clarified that the cooperation with India is for the balancing of power to counter China. The failed cricket diplomacy, Australia’s stand on the India-Canada standoff, and the statements by Wong proved how India has turned into a vassal of the Western countries under the Modi doctrine.

The current stand of the union government has isolated India in the Global South. Meanwhile, China is on the verge of emerging as the new dominant player in West Asian geopolitics. In the background of the Saudi-Iran peace deal that was brokered by China, Arab countries held direct talks with Beijing.

The officials holding meetings with China were from Saudi Arabia, Jordan, Egypt, Indonesia, Palestinian authorities, and the Organization of Islamic Cooperation, among others. Succeeding this South Africa, one of the strongest allies of China in the African continent hosted the virtual meeting of BRICS. Joining the dots, China is set to emerge in the role of mediator. Arab countries met Chinese diplomats to give a strong message to the USA too.

With the BRICS extraordinary meeting, China was able to successfully entrap the United States between the Zionist pressure for continuous aggression and the Middle East pressure for a ceasefire. One will not be mistaken to assume that China is working to diminish the outreach of US in West Asia.

Though, a joint declaration was not issued from the statements of various leaders except Jaishankar all others demanded a ceasefire and held Israel’s settler colonialism as the reason for the conflict. They endorsed the initiatives of Arab countries for establishing peace. South African parliament has voted for the closure of the Israel Embassy in Pretoria.

Undoubtedly India has trailed from its glorious legacy of being the voice of global south. China emphasized on the strategy that India forgot during the Modi era. In the past, India’s diplomacy focused on creating a New Economic World Order based on the liberation of Asian, African, and Latin American countries from neo-colonialism. The Non-Aligned Movement led by India comprised countries that gained independence from colonial regimes.

These were not powerful countries but had the potential of multiple dimensions. It was never the service or submission to power that helped India and NAM to develop their influences. China has built deep economic cooperation with African and Asian post-colonial countries than with the Western countries.

Bharath Karnad assessed Modi’s foreign policy as “bowing to the powerful and bullying the weak.” Such policies only result in the rupture of the country’s power.

In an article written by Rahul Nath Choudhary in East Asia Forum, he noted that the majority of free trade agreements signed by India failed to cater better results. In the period between 2017 and 2022, India’s exports to its FTA partners increased by 31%, while its imports increased by 82%. India’s FTA utilization remains very low at around 25%, while utilization for developed countries typically is 70% to 80%. 

The alternative for this – bilateral agreements and multilateral forums can be achieved if India could revamp another NAM based on multipolarity and de-dollarization. If the escalation continues in West Asia the future of India’s Middle East Corridor will be forever at a crossroad. Even a peace treaty based on the intervention of China and BRIC countries will bring the same fate.

 

Tattered Western Order

The great power competition between the United States and China is in full swing. Both the countries are embroiled in major issues of international affairs, and none of the international issues remains immune to their influence. 

Trade war, ideational war, and forging alliances are new forms of strategies crafted by Washington and Beijing. Arguably, the world no longer solely is dominated by the West materially and ideationally. The material and ideational decline by and large is contributing to enfeebling the Western hegemony.

The democratic crises in the West and the rise of China in terms of economy, becoming the world’s largest export market, and rapid rise in technology caused a great deal of consternation for the West. The deeply embedded crisis in the Western-led liberal order, ostensibly, leaves a vacuum for China.

The old Western-led liberal order looks more troubled today than at any time since the 1930s. 

Over a decade, Western free societies endured polarization, corruption, populism, inequality, and illiberal threats to the rule of law. The former US president Donald Trump's rhetoric of “America First” was not only symptomatic of attacks on liberal internationalism but also challenged US exceptionalism.

An exclusionary approach of Trump created a deep rift in international politics. The US exit from the Trans-Pacific Partnership Agreement (TPP), withdrawal from the Paris Climate Agreement and threat of the World Health Organization (WHO) astonished many experts. 

Joseph Nye accurately assessed Trump’s self-destructive approach and argues “I am not worried by the rise of China I am more worried by the rise of Trump” His populism, reactionary nationalism, an assault on the rule of law and openness of US society badly tarnished the American image.

Anne-Marie Slaughter states “Four years of erratic, personality-driven leadership in the United States under President Donald Trump have left the liberal order in tatters”. 

To improve the tarnished image of the US, the incumbent president Joe Biden promised to “rebuild the nation, revitalizing our democracy, and winning the future for America”.

In competition with China, the US must rebuild the social purpose of liberal democracy at home and improve the damaged image of liberal democracy abroad. The work appears to be a daunting task for the Biden administration to improve its triple crises, crisis of democracy, crisis of leadership, and crisis of multilateralism. 

The US is extremely likely to weaponize ideology in its strategic rivalry vis-à-vis China. The battle of democracy vs. autocracy will gain further momentum. Biden advises his countrymen “I predict to you your children or grandchildren are going to be doing their doctoral thesis on the issue of who succeeded, autocracy or democracy, because that is what is at stake”.

The relative rise of China in terms of economy and changing distribution of global wealth in parity between the West and East would go in favour of the East in the coming decades. The diffusion of power and transfer of global wealth will make the hegemonic decline of the West irreversible. 

The Chinese vision, a community of shared future for mankind first emerged in 2011 as a rhetorical slogan in Chinese diplomacy gained content and substance. The phrase in October 2017 after the 19th National Congress was incorporated into the Constitution of the Chinese Communist Party (CCP) and subsequently into the Chinese Constitution in March 2018.  

A community of shared future for mankind is aimed at building an inclusive, open, clean and beautiful world contributing to lasting peace, common prosperity and universal security, providing instructive answers to addressing the fragmentation and turbulence in international politics. China has actively advocated the phrase in public diplomacy. The Chinese vision was accepted in different UN resolutions as far as the peace and security of the world are concerned.

To be fair, the Chinese vision would confront innumerable challenges in a politically divided world community. Nadège Rolland terms the Chinese vision “looks more like a list of what Beijing advocates for its own needs, security, and position than an innovative contribution for the future of the world”.

Meanwhile, China initiated the Global Civilizational Initiative GCI. The initiative is believed to have been promoting diversity, plurality and dignity among nations challenging the idea's imposition and discouraging the exploitation of communities and resources that will prove instrumental for diversity, mutual understanding, and the world's economic growth.

China under GCI is trying to undermine Western democracy which is coupled with populism, polarization, racism and xenophobia. The contemporary world is going through tremendous changes, power is shifting from the West to the East. 

The Western dominance in terms of material and ideational seems to be declining. The Saudi-Iran détente brokered by China was a momentous occasion in Middle Eastern politics that caused a huge setback to the US interest. The inclusion of Saudi Arabia, UAE, Iran Egypt, Ethiopia and Argentina in BRICS would cement China’s ideational, and material strength vis-à-vis the US. 

The prevailing battle of democracy vs. autocracy will further accelerate. The United States promotes Quadrilateral Security Dialogue Quad comprised the democratic countries like the US, India, Japan and Australia in a bid to contain China.

The Ukraine crisis has brought China and Russia closer together. The US domestically and internationally faces dual challenges in the projection of democracy. Domestic crises such as populism, racism, and xenophobia pose severe threats to democracy. In the international arena, China and Russia are causing significant obstacles in the advancement of US democracy.     

 

Chinese President to skip G-20 meeting

Who shows up where can be very revealing 

According to Bloomberg, for the first time since he took power, Chinese President Xi Jinping will skip a Group of 20 summit. Instead, China is sending Premier Li Qiang to the event hosted by India’s Prime Minister Narendra Modi. That’s a clear signal of the relative value he places on the G-20 — set up with US backing in the late 1990s — versus the newly expanding BRICS grouping. 

Xi just made one of his rare 2023 overseas visits last month, to attend the BRICS summit in South Africa, where he successfully pressed for its expansion to include commodity powerhouses including Saudi Arabia, Argentina and the United Arab Emirates.

The new BRICS-11 will account for a major share of key global inputs, according to calculations by Center for Strategic and International Studies researchers Gracelin Baskaran and Ben Cahill: a) 42% of the world’s oil supply, b072% percent of rare earth minerals- with three of the five nations with the largest reserves, c) 75% of the world’s manganese, d) 50% of global graphite and e) 28% of nickel

“It is quite possible that a more coordinated approach” toward export restrictions to the rest of the world could now develop among the BRICS-11, the CSIS analysts wrote.

In the energy field, the group features both major oil and gas producers as well as two of the largest importers, in China and India.

Therefore, there is an incentive for members to set up mechanisms to trade commodities outside the reach of the G-7 financial sector, Baskaran and Cahill wrote.

Ex-Treasury Secretary Lawrence Summers — who was in government when the G-20 began — says the enlarged BRICS is a symptom of the US abdicating global leadership in the cause of economic nationalism. Whereas Washington once championed free-trade deals, now its focus is on import restrictions and a buy American bias, he says.

Whenever anybody says they care about producers, not low prices for consumers, they are adopting a negative sum, ‘all-against-all’ vision of international economic policy that invites challenges to the post-WWII vision the US once championed, says Summers, a paid contributor to Bloomberg Television.

The BRICS-11 has its own challenges. Bloomberg’s geo-economics team, led by Jennifer Welch, cautions that the dollar is unlikely to be dethroned by any push by the group to use alternatives.

India-China border tensions, part of the backdrop to Xi’s skipping the G-20, are a bar to BRICS-11 coordination. President Joe Biden, who will be showing up in New Delhi this week, has every incentive to keep Modi aloof from China. Treasury Secretary Janet Yellen’s attendance marks her fourth visit to India in 10 months, highlighting the US focus on that relationship.

Biden and Xi will both be no-shows at the Asean summit of Southeast Asian nations and key trading partners in Jakarta, Indonesia, this week, a missed chance for both.

Japan’s Prime Minister Fumio Kishida will be — a great opportunity for this key US ally to show support for the region in the wake of a provocative Chinese map that sowed acrimony there.

And to share a stage with regional counterparts as China tries to isolate Japan over its discharge of treated wastewater from wrecked Fukushima reactors into the Pacific.

 

What does BRICS entry mean for Iran?

On August 24, 2023 BRICS adopted Iran together with five other countries as new members defying Western rhetoric and discourse. The historic enlargement of BRICS will create new opportunities and will enhance global efforts against hegemony and unilateralism.

The year 2023 marks the 17th anniversary of BRICS inception. Albeit different in geopolitical locations, political systems and cultural backgrounds, members of BRICS do share development-oriented agendas. Members are either newly emerging economies featuring high economic growth or developing countries aspiring for development.

This is sharply different from the approach of the United States and the West to shape the world with a democratic model defined by their own. In addition, they all enshrine the principle of independence in their foreign policy.

BRICS member states have been very clear that the mechanism will be inclusive adhering to the principle of multilateralism and cultural diversity. The practices of BRICS had particularly demonstrated respect for all member states. That should be one of the reasons why BRICS had proved to be attractive, particularly for countries that had long been oppressed and humiliated by Western hegemonic powers.

The development of BRICS reflected a very strong global trend of anti-hegemony and anti-unilateralism. Most BRICS members, like China, Russia and Brazil, had been vociferous about their dissatisfaction against US financial hegemony and the weaponization of dollar as a payment channel. None of the BRICS members had shared with the US and the West their discourse on the Russia-Ukraine conflicts, and none of them had sided with the US on its efforts to provoke the fire.

The Johannesburg Summit had sufficiently demonstrated the attraction of BRICS. Six countries had been admitted into the mechanisms, more than 20 countries had formally applied to enter the mechanism, more than 40 countries had expressed their wish to be part of the mechanism, and more than 60 countries across the world had participated in various activities of the Summit, which was about 30 percent of the member states of the UN.

The enlargement will predictably make BRICS more important in international affairs as the share of member states in world economy will increase significantly and the political representation of the mechanism will grow. Therefore, BRICS will not only serve to maintain the right direction of global governance in a variety of areas including trade and financial cooperation, which had become dysfunctional as a result of confrontational mentalities of some Western countries. BRICS will also boost business opportunities for both old and new industries of all their members, and will create opportunities for its member states to reshape and even reverse the unreasonable narratives of some western powers on various issues including Russia-Ukraine conflicts and other issues.

Iran’s membership will especially enhance Iran’s international status in the international community. Over the last decades, Iran has made friends across the world in defiance of the efforts of certain hegemonic powers to isolate Iran. Entering BRICS will mean new opportunities for Iran to improve its standing.

Presence of Iranian President Ebrahim Raisi at the Johannesburg summit with delegates from more than sixty countries across the world had signified another breakthrough in its diplomacy against Western efforts to isolate the Islamic Republic.

With the dual memberships in SCO and BRICS, Iran as a nation of great civilizations and economic potentials will see more opportunities to increase its international status. The leaders of BRICS countries have a valuable opportunity to leverage the space that has been created and enhance their mutual and multilateral interactions. If Iran holds SCO and BRICS summits, it will mean that dozens of heads of state and governments will travel to Tehran, which will naturally make Tehran a center of global politics and focus of international media, which will extremely nullify the efforts of the West to isolate Iran.

Multilateral diplomacy will mean natural economic opportunities. By presence at the summits, members have the opportunity to promote their business relations. Iran will also benefit from the joint efforts of de-dollarization judging by the consensus reached on this issue in Johannesburg. It should be considered that economic benefits would not come as soon as political achievements. However, it assumes that the policies adopted by Iran will contribute to the future strengthening of the country's economy.

Iran’s accession into BRICS is also a milestone in China-Iran relations. Iran’s application for BRICS membership, as well as SCO membership, not only demonstrated Iran’s identification with the principles and spirits of the BRICS, which could be generally categorized as inclusiveness, diversity and respect, but also trust for China as a major leading actor of BRICS.

China’s support for Iran’s accession very well indicated that China had been very serious in helping Iran to get further integrated with international community. Mutual trust between the two will be further enhanced after Iran’s dual memberships.

Iran’s accession will secondly enhance China-Iran cooperation on the reconstruction of international order. It had long been China’s policy to oppose sanctions against Iran and to help improve Iran’s status in the international community as the two shared a long history of peaceful exchange of civilizations and shared the same experience struggling for justice and fairness of international order.

With Iran’s membership in both SCO and BRICS, China and Iran with other countries in the two institutions, can work better together on issues relating to the great changes and reconstruction of international order.

On top of all, it will serve to materialize cooperation projects between the two countries. China and Iran both had been working hard to materialize the Comprehensive Strategic Partnership announced in 2016, the Comprehensive Cooperation Agreement in 2022 and various agreements in 2023 when President Raisi visited China.

Iran’s accession into SCO and BRICS will make these cooperations more feasible. In addition to bilateral mechanisms, leaders of the two sides will predictably meet with each other twice annually respectively within SCO and BRICS frameworks, and they can talk directly about the concrete issues, which will greatly facilitate cooperation between the two.

All in all, the enlargement of BRICS will create new momentums for global governance and the evolution of international order for the benefits of emerging economies and developing countries and the whole world as well.

Iran’s accession into BRICS, in addition to SCO, will greatly enhance Iran’s international status and will benefit Iran economically. The world will see how Iran can translate these new political momentums into economic benefits.

 

BRICS no rival to G7 and G20, says Lula

Brazilian President Luiz Inacio Lula da Silva said on Tuesday that the BRICS bloc of nations aims to organize the developing Global South and is not meant to rival the United States and the Group of Seven (G7) wealthy economies.

His comments point to a divergence of vision as leaders of the bloc - Brazil, Russia, India, China and South Africa - arrived in Johannesburg for a summit that will weigh expanding the group as some members push to forge it into a counterweight to the West.

Heightened global tensions provoked by the Ukraine war and Beijing's growing rivalry with the United States have pushed China and Russia - whose President Vladimir Putin will attend the meeting virtually - to seek to strengthen the BRICS bloc.

Their vision of an expanded BRICS capable of rivaling US and European global dominance has, however, been met with skepticism by some members. And the outcome of the debate over enlargement could determine the future of a bloc long criticized for a lack of cohesion.

"We do not want to be a counterpoint to the G7, G20 or the United States," Brazil's Lula said on Tuesday during a social media broadcast from Johannesburg. "We just want to organize ourselves."

Summit host South Africa welcomed China's Xi Jinping, the leading proponent of enlarging BRICS, for a state visit on Tuesday morning ahead of meetings with the grouping's other leaders planned for later in the day.

"I am confident that the upcoming summit will be an important milestone in the development of the BRICS mechanism," Xi said shortly after his arrival in South Africa.

South African President Cyril Ramaphosa said during a bilateral meeting with Xi that their two countries had similar views regarding expansion.

"We share your view, President Xi, that BRICS is a vitally important forum which plays an important role in the reform of global governance and in the promotion of multilateralism and cooperation throughout the world," he said.

Indian Prime Minister Narendra Modi is also attending the August 22 to 24 summit.

Putin, who is wanted under an international arrest warrant for alleged war crimes in Ukraine, will not travel to South Africa.

Beyond the enlargement question, boosting the use of member states' local currencies is also on the summit agenda. South African organizers, however, say there will be no discussions of a BRICS currency, an idea floated by Brazil earlier this year as an alternative to dollar-dependence.

BRICS remains a disparate group, ranging from China, the world's second biggest economy now grappling with a slowdown, to South Africa, an economic minnow facing a power crisis that's led to daily blackouts.

Russia is being hammered by sanctions over its war in Ukraine is keen to show the West it still has friends.

India, however, has increasingly reached out to the West, as has Brazil under its new leader.

Two members - India and China - have periodically clashed along their disputed border, adding to the challenge of decision-making in a group that relies on consensus.

Expansion has long been a goal of China, which hopes that broader membership will lend clout to a grouping already home to some 40% of the world's population and a quarter of global GDP.

The leaders will hold a mini-retreat and dinner on Tuesday evening where they are likely to discuss a framework and criteria for admitting new countries.

India, which is wary of Chinese dominance and has warned against rushing expansion, has positive intent and an open mind, Foreign Secretary Vinay Kwatra said on Monday.

Brazil, meanwhile, is concerned that expanding BRICS will dilute its influence, though Lula reiterated on Tuesday his desire to see neighbour Argentina join the bloc.

While a potential BRICS enlargement remains up in the air, the grouping's pledge to become a champion of the developing world and offer an alternative to a world order dominated by wealthy Western nations is already finding resonance.

Over 40 countries have expressed interest in joining BRICS, say South African officials. Of them, nearly two dozen have formally asked to be admitted, with some expected to send delegations to Johannesburg.

 

Saudi Arabia largest trading partner of BRICS

Saudi Foreign Minister Prince Faisal bin Farhan said the Kingdom is the largest trading partner of the BRICS group in the Middle East.

He made the remarks during a ministerial meeting of the BRICS Friends in Cape Town. “Trade relations with the BRICS countries have witnessed continued growth, reflecting the excellent and developed relations among the countries of the group. The total bilateral trade with the countries of the group increased from US$81 billion in 2017 to US$128 billion in 2021 and US$160 in 2022.

Prince Faisal affirmed that Saudi Arabia is keen to develop future cooperation with the BRICS group by benefiting from the Kingdom’s capabilities to meet common interests and achieve prosperity for all.

He explained that the Kingdom shares basic values with the BRICS countries, namely the belief that relations between countries are based on the principles of respect for sovereignty, non-interference, adherence to international law, the existence of multilateral frameworks and collective action as reference points to face common challenges.

“The Kingdom also shares with other countries its belief in the importance of peace, security and stability in order to refocus efforts toward national development and common prosperity,” he said.

The Saudi minister added that the Kingdom continues to be committed to working with international partners to achieve the goals of sustainable development by 2030, and to intensify global efforts to enhance food and energy security amid recurring crises and supply chain issues.

He mentioned that the Kingdom is a leading country in the field of humanitarian and development aid in all fields worldwide as it is among the top 10 donors to low- and middle-income countries.

Will Putin be arrested if he attends BRICS meeting in South Africa?

BRICS foreign ministers on Thursday asserted their bloc's ambition to rival Western powers but their talks in South Africa were overshadowed by questions over whether Russia's president would be arrested if he attended a summit in August.

South Africa's foreign minister Naledi Pandor said her country was mulling options if Vladimir Putin, the subject of a war crimes arrest warrant issued by the International Criminal Court (ICC), came to the planned BRICS summit in Johannesburg.

As a member of the ICC, South Africa would theoretically be required to arrest Putin, and Pandor was bombarded with questions about that as she arrived for a first round of talks with representatives from Brazil, Russia, India and China.

"The answer is the president (Cyril Ramaphosa) will indicate what the final position of South Africa is. As matters stand an invitation has been issued to all (BRICS) heads of state," she said.

At a news conference later, the ministers side-stepped a barrage of questions about the Putin issue.

The ICC accused Putin in March of the war crime of forcibly deporting children from Russian-occupied territory in Ukraine. Moscow denies the allegations. South Africa had invited Putin in January.

Putin has not confirmed his plans, with the Kremlin only saying Russia would take part at the proper level.

The ministers sought to focus attention on their ambition to build up their influence in a multi-polar world.

India's Subrahmanyam Jaishankar spoke of the concentration of economic power which he said leaves too many nations at the mercy of too few, and of the need to reform global decision-making including by the United Nations Security Council.

"Old ways cannot address new situations. We are a symbol of change. We must act," he said.

Once viewed as a loose association of disparate emerging economies, BRICS has in recent years taken more concrete shape, driven initially by Beijing and, since the start of the Ukraine war in February 2022, with added impetus from Moscow.

The bloc launched a New Development Bank in 2015, though that has stopped funding projects in Russia to comply with sanctions imposed by Western countries following the invasion of Ukraine.

Pandor said a senior executive from the bank had briefed the ministers about the potential use of alternative currencies to the current internationally traded currencies.

She said the aim was to ensure that we do not become victim to sanctions that have secondary effects on countries that have no involvement in issues that have led to those unilateral sanctions.

The ministers also discussed plans to potentially admit new members to the club. Pandor said more work was needed to make that possible and she hoped a report on the matter would be ready by the August summit.

China's Vice Minister Ma Zhaoxu said his country was happy about the prospect of more countries joining BRICS as it would increase the influence of the bloc and give it more power to serve the interests of developing countries.

The BRICS bloc "was inclusive ... in sharp contrast to some countries' small circle, and so I believe the enlargement of BRICS will be beneficial to the BRICS countries," he said.

Iran's Foreign Minister, Hossein Amir-Abdollahian, and his Saudi counterpart Prince Faisal bin Farhan Al Saud were both present in Cape Town to participate in the BRICS meeting, which continues on Friday.

Their two countries, along with Venezuela, Argentina, Algeria and the United Arab Emirates are among those that have either formally applied to join BRICS or expressed interest, officials said.

 

Tehran to host Petrochemical Forum

Tehran will host the 14th edition of Iran Petrochemical Forum (IPF) at the IRIB International Conference Hall on May 1-2.

The 14th Iran Petrochemical Forum is a suitable ground for cooperation between active domestic and foreign companies so that the latest developments, plans and new investment opportunities for the development of the country's petrochemical industry are provided to the participants.

Hassan Abbas-Zadeh said during this international event, a large number of specialized meetings will be held, and a strategic meeting is dedicated to the members of the BRICS countries (Brazil, Russia, India, China, and South Africa) with the aim of examining the future cooperation of the Iranian petrochemical industry in the markets of the BRICS member countries, highlighting that for the first time, member countries of the BRICS group will attend the international conference of the Iranian petrochemical industry.

Other important event of this conference is the holding of special meetings with the presence of ambassadors and political and commercial representatives of Iran in order to examine the development of energy diplomacy, empowering the petrochemical industry with the aim of preventing crude sales (selling final products instead), and self-sufficiency in this industry, the NPC director further noted.

The petrochemical industry plays a crucial role in Iran’s non-oil economy, as petrochemical export is the second-largest source of revenue for the country after crude oil. Petrochemical exports already constitute nearly 33 percent of the country’s non-oil exports.

According to NPC Managing Director Morteza Shahmirzaei, the petrochemical industry is a value and job-creating industry, which has no risk.

The official has stated that currently, the petrochemical sector has the highest added value in the oil industry chain.

He has announced that marketing Iran’s petrochemical products throughout the world is on the agenda of the NPC’s activity, and mentioned completing the production value chain as another major program of the company.

“As we have previously announced, we will fully provide all the capacity of the National Petrochemical Company to the private sector and investors so that the plan to complete the value chain of the petrochemical industry will be realized”, he noted.

 

Lula backs replacing US dollar in foreign trade

Brazil’s Luiz Inacio Lula da Silva called on BRICS nations to come up with an alternative to replace the US dollar in foreign trade, supporting China’s crusade against US global dominance just as he prepares to meet with President Xi Jinping in Beijing. 

Lula’s remarks were made on Thursday during a visit to the Shanghai-based New Development Bank, an institution created by BRICS countries, which, along with Brazil and China, include Russia, India and South Africa. Former Brazil President Dilma Rousseff is the bank’s new chief executive. 

 “Why can’t an institution like the BRICS bank have a currency to finance trade relations between Brazil and China, between Brazil and all the other BRICS countries?” he said. “Who decided that the US dollar was the (trade) currency after the end of gold parity?” 

Beijing has ramped up efforts to boost the use of its own currency in foreign trade. Last month, Brazil and China took steps to make it easier to settle their foreign trade operations in yuan or reais, with the stated goal of reducing costs by eliminating a third currency from the transactions. 

Brazil’s Finance Minister Fernando Haddad, who’s accompanying Lula in his trip to China, said local currencies are already used in bilateral trade through instruments such as credit receipts. The goal, he added, is to expand mechanisms that allow trade operations to be settled without the intermediation of a third currency. 

“The advantage is to avoid the straitjacket imposed by necessarily having trade operations settled in a currency of a country not involved in the transaction,” he told reporters in Shanghai.

 Courtesy: Bloomberg

Russia and China Creating New Global Reserve Currency

Some analysts have been talking about the possibility of Russia and China challenging the US dollar’s global reserve status. Now, it’s happening. As often happens with consequential news in the United States and the West, no one seems to notice or even care.

It shouldn’t be any surprise to those paying attention that Russia and China are strengthening their economic ties amidst continued Western sanctions on Russia.

Russia and the BRICS countries, including Brazil, Russia, India, China, and South Africa, are officially working on their own “new global reserve currency,” RT reported in late June. Nobody even seemed to notice.

“The issue of creating an international reserve currency based on a basket of currencies of our countries is being worked out,” Vladimir Putin said at the BRICS business forum in June.

Russia has been cut off from the SWIFT system; it is also pairing with China and the BRIC nations to develop “reliable alternative mechanisms for international payments” in order to “cut reliance on the Western financial system.”

In the meantime, Russia is also taking other steps to strengthen the alliance between BRIC nations, including re-routing trade to China and India, according to CNN

President Vladimir Putin said last Wednesday that Russia is rerouting trade to "reliable international partners" such as Brazil, India, China and South Africa as the West attempts to sever economic ties.

"We are actively engaged in reorienting our trade flows and foreign economic contacts towards reliable international partners, primarily the BRICS countries," Putin said in his opening video address to the participants of the virtual BRICS Summit.

In fact, “trade between Russia and the BRICS countries increased by 38% and reached US$45 billion in the first three months of the year 2022”, the report says. Meanwhile, Russian crude sales to China have hit record numbers during spring of this year, edging out Saudi Arabia as China’s primary oil supplier.

Putin said last month, "Contacts between Russian business circles and the business community of the BRICS countries have intensified. For example, negotiations are underway to open Indian chain stores in Russia and to increase the share of Chinese cars, equipment and hardware on our market."

Putin accused the West of ignoring the basic principles of the market economy" such as free trade. "It undermines business interests on a global scale, negatively affecting the wellbeing of people, in effect, of all countries," he said.

President Xi echoed Putin’s sentiments, according to a June write up by Bloomberg:

“Politicizing, instrumentalizing and weaponizing the world economy using a dominant position in the global financial system to want only impose sanctions would only hurt others as well as hurting oneself, leaving people around the world suffering. Those who obsess with a position of strength, expand their military alliance, and seek their own security at the expense of others will only fall into a security conundrum.”

There is a coordinated global challenge taking place to the US dollar - and it would be the biggest news story in decades. Now, remember that both countries have been working on, and preparing for, this situation for years.

De-dollarization has been a priority for Russia and China since 2014, when they began expanding economic cooperation following Moscow's estrangement from the West over its annexation of Crimea. Replacing the dollar in trade settlements became a necessity to sidestep US sanctions against Russia.

It seems to that the BRIC nations understand exactly how precarious of a financial situation the US and US dollar - is in. Despite the dollar’s recent strengthening, these nations have been in the midst of a multi-decade-long plan to de-dollarize.

Even before the Ukraine conflict started, both China and Russia were stockpiling gold and working on denominating transactions outside of the US dollar. It was another “secret” that was out there in the open.

Since the BRIC conference, ties between Russia and China continue to tighten, with Japan even warning this week about the pair’s strengthening of military ties - at the same time China has closely scrutinized a planned trip by House Speaker Nancy Pelosi to Taiwan.

 “As a result of the current aggression, it is possible that Russia’s national power in the medium to long term may decline, and the military balance within the region and military cooperation with China may change.

In the vicinity of Japan, Russia has made moves to strengthen cooperation with China, such as through joint bomber flights and joint warship sails involving the Russian and Chinese militaries, as well as moves to portray such military cooperation as strategic coordination.”

Japan said this alignment between the two countries “must continue to be closely watched in the future.”

While the economic gears turn behind the scenes, China is also becoming increasingly cagey about Taiwan. The country has sent warplanes into Taiwan's self-declared air defense zone identification zone many times in recent months, according to CNN, and recently alluded to the idea of a no-fly zone over Taiwan ahead of a planned visit by Nancy Pelosi.

President Biden commented on Pelosi’s travel plans this week, stating, “The military thinks it’s not a good idea right now. But I don’t know what the status of it is.”

We’re sure Pelosi will wind up going anyway. Remember, this is the same woman who danced her way through Chinatown while Covid was spreading to the US, from China, to prove she wasn’t racist.

Iran: Neighborhood policy neutralizes impact of US sanctions

A year into his administration, Iranian President Ayatollah Seyed Ebrahim Raisi succeeded in diversifying Iran’s foreign policy options through the nascent neighborhood policy he set out last year.

When he assumed office last year in August, Ayatollah Raisi made it clear that he had a new agenda for Iran’s foreign policy. He outlined his foreign policy goals within what came to be known as the Neighborhood Policy, which rests on fostering mainly economic relations with neighboring countries and non-Western powers. 

The new policy orientation soon yielded results, leading to Iran’s membership in the Shanghai Cooperation Organization (SCO) in the first weeks of Raisi’s presidency. Since then, the President traveled to many countries in a bid to advance his foreign policy goals. This included visits to Russia, Turkmenistan, Tajikistan, Oman, and Qatar, to name a few. 

A senior Iranian lawmaker has said that the neighborhood policy of Raisi played in a major role in Iran’s efforts to neutralize US sanctions. The lawmaker, Javad Karimi Quddousi, who is a member of the Iranian parliament’s National Security and Foreign Policy Committee, said the Raisi presidency marked a shift in Iranian foreign policy.

According to the lawmaker, one reason that why the US sanctions had negative impact on Iran’s economy was that the previous government failed to prioritize enhancing economic relations with neighboring countries and focused its time and energy on boosting Iran’s relations with Europe, which has been seeking to sow divisions among Muslim states. 

“Sanctions were also effective in cases where our relations with neighboring countries were strained in the previous government. When I asked Saif (Valiullah Saif, the former governor of the Central Bank) to make bilateral agreements for the exchange of national currencies between other countries, his answer was that this issue was not realized. While diplomacy and many trips between countries are for the realization of this goal,” he told Iran’s state news agency IRNA. 

Qoddousi added, “The 13th government created a unique and unprecedented transformation in foreign relations with neighboring countries in the shortest time. Membership in unions such as Shanghai [SCO], Eurasia, (and possibly) BRICS, etc., signing important agreements with countries in the region and the world in various fields are among the successful goals of the 13th government that have been achieved.”

The Raisi administration is continuing the neighborhood policy. On Monday, President Raisi received Azerbaijani Foreign Minister Jeyhun Bayramov, who also met his Iranian counterpart Hossein Amir Abdollahian. The visit came amid diplomatic efforts to upgrade relations between Tehran and Baku. 

It also came against a backdrop of broader diplomatic efforts by Iran in the region to improve ties with regional heavyweights such as Turkey and Saudi Arabia. Amir Abdollahian recently paid a visit to Turkey where he met Turkish President Recep Tayyip Erdogan and Foreign Minister Mevlut Cavusoglu.

In parallel, Iran and Saudi Arabia seem to be on the verge of restoring ties as a result of mediatory efforts by Iraqi Prime Minister Mustafa al-Kadhimi. The Iraqi premier visited Iran and Saudi Arabia in the past week. According to Arab press reports, Iran and Saudi Arabia could soon announce the restoration of diplomatic ties in a meeting in Baghdad. 

 

 

Iran ramps up neighborhood diplomacy

Iranian President Ayatollah Seyed Ebrahim Raisi gave a new boost to his administration’s policy of cementing ties with neighbors as part of new foreign policy agenda of the country. 

President Raisi had a busy weekend in terms of holding meetings with foreign leaders. He left Tehran on Wednesday for Ashgabat to attend an important regional summit held in Turkmenistan’s capital.

He met with a number of foreign leaders on the sidelines of the 6th summit of the Caspian Sea littoral states, which provided him with a unique opportunity to advance his “neighborhood policy”. It marked a new orientation in Iran’s foreign policy which is aimed at strengthening ties with neighbors. 

President Raisi visited Turkmenistan with a clear goal in mind to further advancing the neighborhood policy. In his meeting with the Chairman of the People's Council of Turkmenistan, Gurbanguly Berdimuhamedow, Raisi said his administration “has a special program in the field of foreign policy to develop neighborly relations, and Iran-Turkmenistan relations are expanding rapidly based on extensive cooperation and mutual trust.”

He reiterated this in his meeting with Turkmen President Serdar Berdimuhamedow, saying that his administration “attaches a special priority to develop relations and cooperation with neighbors”.
President Raisi pointed out that the relations between Tehran and Ashgabat are expanding rapidly based on the development of neighborly relations and on the basis of mutual trust and extensive cooperation.

Raisi also addressed the Caspian Sea summit, where he underlined Iran’s sincerity in its quest for building better relations with its neighbors. He described this as a strategy of Iran.

“The interaction of the Islamic Republic of Iran with its friends and neighbors is original, and this interaction and cooperation not only will lead to economic prosperity and increase the welfare of our nations, but also strengthen regional peace and stability and solve the problems of the Caspian Sea zone merely through its coastal countries. This major strategy of the Islamic Republic of Iran will continue, regardless of international developments,” Raisi said. 

This policy was initiated a year ago when President Raisi assumed office in August 2021. Back then he expressed his administration’s strong desire for fostering cooperation with neighboring countries. The Raisi administration has made great strides. In the early days of his administration, Raisi succeeded in ironing out Iran’s membership in the Shanghai Cooperation Organization (SCO). Interestingly, the SCO membership was achieved during a summit in Dushanbe, Tajikistan. 

Iran is now eyeing a similar membership in the BRICS group of emerging countries which includes Russia, China, Brazil, India, and South Africa. President Raisi was invited by China to address the recent BRICS summit. Russia and China have voiced support for Iran’s membership in the group. 

The Raisi administration is pursuing regional diplomacy simultaneously with its efforts to hammer out a deal with the West over reviving the 2015 nuclear deal. The latest round of talks in this regard was held in Doha, Qatar, on Tuesday and Wednesday. 

China and Russia to lead a new economic bloc

The news that Sinopec, Chinese state-run oil refiner, has canceled plans for US$500 million investment in Russia’s energy sector does not portend a general decoupling of the economies of China and Russia.

On the contrary, it signifies a temporary halt to an economic partnership that is likely to grow in size and complexity as world powers regroup into new, rival blocs in the aftermath of Russia’s invasion of Ukraine and the massive sanctions that aligned nations have levied on the aggressor.

That’s according to Ross Kennedy, a senior fellow at the Securities Studies Group and founder of Fortis Analysis, who spoke to EpochTV’s “China Insider” program on April 02, 2022.

A few weeks prior to Russia’s invasion, Chinese leader Xi Jinping and Russian President Vladimir Putin announced a “no limits” partnership, a relationship that has not shown signs of diminishing even as Moscow becomes a pariah on the world stage over its ongoing assault on Ukraine. But Beijing has not yet rushed in to provide significant economic help to Moscow, cautious about being impacted by Western sanctions in the process, according to Kennedy, a logistics and supply chain expert.

“Beijing, despite declaring pretty forcefully and openly that there are no limits on ties between Moscow and Beijing, still also has to take into consideration what the impact of sanctions may be. And right now there’s a bit of a gray area concerning how capital flow is going to work between the two countries, particularly on the investment side,” Kennedy said.

Calling China a “consumption powerhouse” that continues to need enormous amounts of energy and raw materials, Kennedy said that the availability and ease of goods produced in the Black Sea region and the eastern part of Russia still holds significant appeal for Beijing. Though China’s rulers are wary for the moment about what contravening the sanctions on Russia might mean for China’s economy. Hence Kennedy is skeptical about the long-term significance of Sinopec’s decision.

“I don’t think this is an indicator that China is cooling its support of Russia. I don’t think that it is really reflective of anything other than Sinopec, and other companies, being instructed by Beijing to just be a little bit more cautious right now and make sure that state-owned enterprises don’t have exposure to Western sanctions,” he said.

Despite the Sinopec decision, trade is still ongoing at a high volume between the two powers in such product groups as animal feed, vitamins and trace minerals, amino acids, building and construction materials, and other longstanding components of the Russia-China trade relationship, Kennedy said.

Rather than a decoupling, Kennedy sees the likelihood of Chinese state-owned enterprises ramping up their purchases of energy products and grain from Russia. In Kennedy’s analysis, China, India, and possibly other powers will take advantage of the lower prices of energy products available to be shipped by tanker from Russia as the latter power increasingly finds itself shut off from Western markets. A marked increase in non-dollar- and non-Euro-denominated transactions is highly likely, he added.

“It’s pretty clear that Moscow and Beijing and even some of the other countries of the world, like India and Iran, are working and collaborating pretty closely on having the ability to settle transactions among themselves,” Kennedy said.

The increasing reliance on transactions that do not involve Western currencies or banking systems takes place under the rubric of BRICS, the group of powers composed of Russia, China, India, Brazil, and South Africa. Kennedy sees BRICS as the nexus of this growing consolidation and formation of a bloc rivaling Western democracies.

Besides the devastation of Ukraine and the imposition of massive sanctions, Russia’s invasion of her neighbor has helped start to usher in a new geopolitical landscape. The new bloc will not emerge overnight. Rather, it is in nascent form, Kennedy said.

“We are seeing the emergence of Russia-China-led sphere of economic and geopolitical cooperation that will stand in contrast to what is more of an Anglosphere, or a transatlantic type of alliance among Canada, the US, and our NATO partners,” Kennedy said.

“I think as we look back in three years, five years, ten years, we’re going to see that it’s really two fully formed economic blocs that have some level of cooperation between them where necessary,” he continued.

To the extent that trade and cooperation occur between the rival blocs, it will depend on facilitators that have a presence in both blocs, such as India, Saudi Arabia, and possibly the United Arab Emirates, Kennedy predicted.

He called the new geopolitical configuration unprecedented since the days of the Cold War, when the world broke down largely of the Soviet Union, Western powers led by the United States, and a number of developing countries loyal to one or the other.