🇧🇷🇷🇺🇮🇳🇨🇳🇿🇦 Today BRICS is no longer a club of growth leaders, and the ability of the candidate countries to effectively participate in solving the most acute current problems facing the developing world - the energy and food crises - is coming to the fore.

In many respects, these considerations have dictated China's desire to include Argentina and Iran in the union, despite all the well-known problems facing the economies of these countries.

The new global situation requires developing countries to push old grievances to the background, so that they may work on the task of increasing the representative nature of the BRICS, expanding its potential in addressing the food and energy crises.

The inclusion of new full members of the BRICS is a long process, which, even with the consent of all participants, could take several years. The Chinese approach to foreign policy is traditionally characterised by flexibility and action on several tracks at once. It is this “second track” that BRICS+ is intended to become, writes Dmitry Razumovsky, Acting Director of the Institute for Latin American Studies of the Russian Academy of Sciences.

👉 On July 12, we discussed this and other issues within the framework of the expert discussion timed to coincide with the release of the new Valdai paper “BRICS+: The Global South Responds to New Challenges (in the Context of China’s BRICS Presidency)”. Watch the video.

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🌐 The Bretton Woods system arose at the final stage of the Second World War (1944) as a result of negotiations between 44 states, led by the United States and Britain.

The two key Bretton Woods institutions were the International Monetary Fund (mission — currency stability and convertibility) and the World Bank (assistance in the reconstruction of war-torn states, as well as assistance to countries embarking on the path of decolonization).

Today there is no state or group of countries on the planet capable of imposing its will on the entire world community, however, today we are witnessing another wave of interest in reforming Bretton Woods.

Let us single out several main approaches that dominate the modern discussion about reforming Bretton Woods 2.

🎯 Technocratic approach. Its supporters, representing the structures of the UN and other international organizations, believe that the system should be preserved, correcting only the forms of organisation of work and adapting the system management structure to modern realities.

🎯 Liberal approach. During the period when Christine Lagarde held the post of Managing Director of the IMF (2011-2019), an attempt was made to widely introduce issues of the liberal agenda into the activities of the Bretton Woods institutions. During this period, gender equality, sustainable development, the fight against climate change and socio-economic inequality in all its manifestations were recognised as new priorities in the work of the Bretton Woods System.

🎯 Neo-Marxist approach. Supporters of this approach sharply criticise the structures of the Bretton Woods System for their adherence to the ultra-liberal “Washington Consensus” and the practice of “conditionality”, i. e. putting forward political conditions when issuing credit to the countries of the Global South. 

🎯 Construction of a parallel “Anti-Bretton Woods”. This approach, from our point of view, has not yet been formalised, but over time, China, Russia, and with them other BRICS states as an international forum with claims to certain functions of an intergovernmental organisation are increasingly inclined towards establishing it.

A new or radically reformed Bretton Woods, of course, should take into account the opinion of all the states of the planet, regardless of their size. The solution of such a problem through negotiations will last for many years, while the likelihood of success will be minimal, writes Valdai Club expert Stanislav Tkachenko.

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🌏 One of the important aspects of ASEAN’s greater capability to play a global role on the international stage is its neutrality that the bloc is observing amid the rising rivalry between China and the US in the Pacific. 

In pursuing the quest for maintaining a balanced and neutral position on the international arena there may be scope for ASEAN to explore the possibilities of greater cooperation with the cooperative arrangements that bring together the Global South and the advanced economies. ASEAN has made significant advances in this direction via building the Regional Comprehensive Economic Partnership (RCEP) together with China, Japan and South Korea.

At the same time there remains scope to complement the active ASEAN-EU links with greater engagement of ASEAN countries with the platforms developed by the Global South. In particular, ASEAN could become one of the key pillars in the BRICS+ global platform, it could also play a leading role in the creation of platform for Eurasia’s developing economies (Greater Eurasia). 

The year 2022 is a special one for ASEAN as a number of its prominent members have taken over the chairmanship in some of the key global and regional organisations. In particular Indonesia is the chair of the G20 and is actively preparing to conduct the G20 summit, while Thailand is the Chair in APEC.

Given its neutrality and mediation capabilities ASEAN could lead the creation of a global platform for regional integration arrangements – something that it could pursue on the basis of an R20 (regional 20) format within the G20, writes Valdai Club Programme Director Yaroslav Lissovolik.

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🌐 If the global economy is to shift from prioritizing quantitative growth targets towards qualitative goals such as sustainability, green development and other goals, there needs to be a more prominent role for multilateral financial institutions.

What is missing in the current system of global governance is greater coordination among regional arrangements — a system of “syndicated regionalism” (Regionalism Inc.) that would fill the voids in regional economic cooperation.

The process of coordination could be institutionalized via greater cooperation among the respective development banks and other institutions.

Re-building global governance architecture with regional blocs may serve to strengthen the “supporting structures” of the edifice of the global economy — with hardly any attention paid to coordination among regional arrangements, most of the coordination and regulation was focused on the nation state level or the level of global institutions.

A globalization process that is based on integration and cooperation among regional blocs may harbour the advantage of being more sustainable and inclusive compared to the paradigm of the preceding decades.

A globalization process that is based on integration and cooperation among regional blocs may harbour the advantage of being more sustainable and inclusive compared to the paradigm of the preceding decades, writes Valdai Club Programme Director Yaroslav Lissovolik.

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👷🌐 Looking ahead, there may be reasons to expect a reversion of the share of labour in national income in the coming years.

This trend that may have significant implications for the evolution of the global economy. The economic effects are likely to be also complemented by political shifts favouring left-wing parties, with some of the regions (Latin America being a case in point) already starting to exhibit these trends. 

✅ One of the bellwether indicators of a potential resurgence in labour is the rise in the levels of unionization.

✅ In the political sphere pro-labour forces are starting to gain the upper hand.

✅ There are also drivers emerging that may underpin a rising trend in wages and social security transfers.

The increasing role and share of labour is long overdue in the global economy. The main benefit from this long-term trend will be a greater emphasis placed in development on human capital, most notably in education and healthcare. It may also lead to a substantial revision in economic policy in terms of priorities and instruments used.

The transformation of capitalism towards a more labour-oriented mode is underway, writes Yaroslav Lissovolik, Programme Director of the Valdai Discussion Club.

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🇧🇷🇷🇺🇮🇳🇨🇳🇿🇦 Despite its heterogeneity and its frequent dismissal by Western analysts, the BRICS has emerged as an alternative political bloc, contesting unipolarity and Western dominance in the international liberal order in order to promote an alternative global economic and diplomatic strategy.

In this context, the expansion of the BRICS has accelerated due to three factors:

1️⃣ First, the intense East-West confrontation.

2️⃣ Second, the deepening of “BRICS Plus cooperation”.

3️⃣ Third, demands for the inclusion of “node” countries “with clear national strengths and obvious location advantages”, according to Nian Peng of the Research Centre for Asian Studies in Haikou, China.

The BRICS are seen as an alternative to the G7 countries, grouping together five of the most dynamic emerging economies, which are positioning themselves as a decisive factor in the global governance architecture and as a voice of the ‘Global South’ that advocates an economic and political alternative to the West, Andrés Serbin writes.

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🌏 Now, when the contours of the sanctions restrictions of the collective West in relation to Russia have taken their almost-complete shape, the need for a revision of the system of Russian foreign economic relations is becoming obvious.

In the context of the forced break and undocking of many previously seemingly unshakable economic ties with the EU countries, Russian state and business structures have much more actively than before begun to pay attention to the geographically more distant, but so far politically relatively neutral nations of Southeast Asia, united as the ASEAN trade bloc.

However, are there any real grounds that amid the new geo-economic and geopolitical conditions, Russia and the ASEAN countries will be able to build up economic cooperation, and perhaps even elevate it to a qualitatively new level? Ekaterina Koldunova tries to answer this question.

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🌐 The main institutions of the Bretton Woods system, which have existed since the Second World War, are rapidly losing their economic weight.

At this time, key actors in the developing world are coming to the fore, calling into question the out-dated rules of the game, including the hegemony of the West.

Instead of destroying the legacy of the last century, they offer an alternative economic system where each player is able to influence important decisions at the international level.

The BRICS countries have proposed their own concept for building the future of financial stability - the New Development Bank, write Maksim Chirkov and Alisa Kazelko.

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🌏🌎 The BRICS+ summit and the foreign ministers’ BRICS+ meeting in 2022 brought together developing economies that represented regional blocs such as the African Union, CELAC, SCO, GCC and ASEAN.

This in effect was the widest outreach exercise covering the vast majority of the Global South and representing a platform that could prove instrumental in advancing greater economic openness across the developing world.

The key factor that renders the creation of a South-South FTA feasible and in fact expedient is the high degree of undertrading along the “South-South” axis compared to the potential based on distance and respective country GDP levels (indications of the gravity model). Another factor is the “integration gap” — namely the significantly lower scale and quality of integration in the developing world compared to the advanced economies.

The South-South FTA could serve to bridge this gap and foster “catch-up integration” or “integration convergence” vis-à-vis the developed world, writes Yaroslav Lissovolik, Programme Director of the Valdai Discussion Club.

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🌏 The SCO is witnessing increasing interest from the developing nations.

One of the near-term issues concerns the possible expansion in the organization’s membership in the coming years as well as the possible creation of SCO development institutions.

🧩 In terms of the expansion in the ranks of SCO one of the most significant additions in the near term will be Iran that is expected to become a full-fledged member of the organization during the 2023 India’s chairmanship.

🧩 Another potential member in the process of accession is Belarus.

🧩 There may also be an elevation in the membership/partnership status of countries such as Turkey, Sri Lanka, Cambodia, Nepal, Azerbaijan and Armenia (currently dialogue partners of the SCO) – some of these countries may acquire observer status in the organization.

🧩 Furthermore, the status of SCO dialogue partners may be accorded to countries such as Saudi Arabia, Qatar and Egypt in 2022, while the launching of procedures related to granting such status to Bahrein and Maldives may also take place this year.

Valdai Club Programme Director Yaroslav Lissovolik writes on the SCO’s transition of the SCO towards a more economy-focused organization.

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🇧🇷🇷🇺🇮🇳🇨🇳🇿🇦 One of the ways to picture the uniqueness of BRICS geography is the sheer distance that separates its members.

If the distance were to be measured on the basis of the separation between the respective capitals, then the greatest distance among the two BRICS economies would be between Brazil and China — nearly 17000 km. The distance between Russia and Brazil is nearly 11700 km. These distances are several times higher than the longest separations of capitals within the EU (Warsaw-Lisbon separation is 2760 km) and still notably greater than the most extreme spatial separations in the developed world (London-Canberra is 10545 km and the New York — Canberra route is just over 10000 km).

But perhaps the most important common feature among the BRICS economies is that they serve as crucial regional hubs for their continental neighbors, particularly developing landlocked economies. Indeed, each BRICS economy neighbors several landlocked developing economies — in many cases these are some of the largest landlocked economies in the world.

The enormous intra-continental distances for BRICS can become an asset and an opportunity-set for advancing South-South cooperation through connectivity projects, writes Yaroslav Lissovolik, Programme Director of the Valdai Discussion Club.

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🚏🗺 The unipolar order has already collapsed as evident by the weaponization of economic dependencies and declining trust in the freedom of navigation.

Liberal international economic systems with reliable transportation corridors tend to form under economic hegemons with control over the seas.

There is self-interest in providing public goods in the form of trust in open transportation corridors, as the “benign hegemon” can organise the international economic system under its administration. However, declining hegemons have incentives to limit or condition the freedom of navigation to prevent the rise of rivals, which causes a return to mercantilist traditions. 

As the unipolar order has come to an end, Eurasian integration is facilitating a multipolar world in which trust can be restored in new transportation corridors. 

Eurasian transportation networks are not only creating more cost and time efficient transportation corridors, they are also reviving reliable connectivity in a multipolar format.

Gradually, the Eurasian land powers are displacing the competitive advantage of the oceanic powers, writes Valdai Club expert Glenn Diesen @glenndiesen.

#Valdai_WorldEconomy #Eurasia #multipolarity

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🌐 The assertion that global problems cannot be solved by any one state alone, even the most powerful state, seems to have become axiomatic.

We have repeatedly heard this statement from the lips of representatives of those same Western countries. It is precisely these goals that the numerous multilateral institutions and mechanisms, should have served, both old ones and new ones. In theory, at least.

But what do we see in practice? If you look at the facts, at least the Western co-founders saw in these institutions just tools for exercising control and maintaining their own dominance on the world stage in all areas - from military-political and technological to economic and ideological superiority. For all appearances, the G20 was given an identical role by the "older" countries of the G7.

This year, the G20 chair is Indonesia. Probably, first of all, only thanks to the will and firmness of Jakarta, the G20 still manages to avoid being written off. 

Indonesia, as chairman, has demonstrated exceptional maturity, vision, and scale as a true global power by resisting unprecedented pressure from the West to impose a rule-based order that benefits only them. 

Regardless of the outcome of the G20 summit itself, it will be possible to mark the Indonesian presidency as a success. After all, the current crisis has allowed Indonesia to prove itself as a global power. It is precisely the crisis and the hegemonic aspirations of the West that allow the rest of the G20 members to look for and eventually find those bold and non-standard solutions that will lead to a new, more just and equal world, writes Viktoria Panova, Vice-Rector of the National Research University Higher School of Economics, Sherpa of Russia in the Women's Twenty.

https://valdaiclub.com/a/highlights/g20-does-multilateralism-have-a-chance/

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🇷🇺🌍 Russia has chosen the Politics First course, in which economic preferences are a natural consequence of successful political cooperation.

This approach is likely to be efficient, since the reverse — first the economy, then everything else — has proven to be unsteady, writes Kirill Babaev, Acting Director of the Institute of China and Modern Asia at the Russian Academy of Sciences.

https://valdaiclub.com/a/highlights/prospects-for-expanding-russia-s-econom/

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🌐 The G20 summit in Indonesia will need to keep its focus on the key imperatives and exigencies of today’s world economy, most notably the rising risks of a global recession. 

Indeed, there do appear to be crucial items on the economic agenda that are awaiting decisions from the largest economies of the globe during the period of unprecedented risks and volatility in the markets. Among the possible venues for discussion are the need to introduce greater inclusivity into the G20 forum itself, with due representation accorded to developing economies.

With the IMF warning about the rising risks of recession perhaps the most important economic issue to discuss at the G20 summit will be the coordination of an anti-crisis response across the global economy.

The developing countries in the coming years could make a lasting and crucial contribution to making the G20 a more effective and inclusive global anti-crisis mechanism, writes Valdai Club Programme Director Yaroslav Lissovolik.

https://valdaiclub.com/a/highlights/the-g20-summit-and-beyond/

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🪙 Initially, the proposal to create a new reserve currency based on a basket of currencies of BRICS countries was formulated by the Valdai Club back in 2018.

The idea was to create an SDR-type currency basket composed of BRICS countries’ national currencies as well as potentially some of the other currencies of BRICS+ circle economies.

The new BRICS reserve currency can act in concert with the stronger role performed by BRICS national currencies to take on a greater share of the total pie of currency transactions in the world economy, writes Valdai Club Programme Director Yaroslav Lissovolik.

https://valdaiclub.com/a/highlights/a-brics-reserve-currency-exploring-the-pathways/

#valdai_programme #Valdai_WorldEconomy #BRICS

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🏦 According to the IMF, the world economy is increasingly vulnerable to the risks of an outright recession, with all the main centres of the global markets experiencing notable difficulties.

🇺🇸 In the case of the US, this is the high inflation and the Fed rate hikes that are adversely affecting economic activity.

🇪🇺 In Europe, apart from concerns over high inflation, there is the lingering threat of energy shortages.

🇨🇳 In China, economic activity has fallen notably compared to the preceding year, which is in part due to the persistence of the adversities associated with the Covid pandemic.

The increasing frequency of recessions in the global economy raises questions about the adequacy of the current framework of global governance in the economic sphere. 

The Covid pandemic, energy shortages, geopolitical vulnerabilities – all of these global issues have not been adequately addressed by the international community in the past several years.

This brings us yet again to the need for changes in global governance – the increasing intensity and frequency of global recessions puts into doubt the adequacy of the existing global framework, writes Valdai Club Programme Director Yaroslav Lissovolik.

https://valdaiclub.com/a/highlights/recession-ahead-what-are-the-remedies/

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🏰🚫 The European Union seems irretrievably engaged in a showdown with Russia.

After having rolled out nine successive waves of sanctions since February 22, 2022, without counting the sanctions already implemented since 2014, it is preparing for a tenth wave.

The sanctions did cause a drop in trade between Russia and the EU. This drop was estimated, in October 2022 compared to October 2021, at −4.5 billion USD. Moreover, it could be seen that the sanctions had above all led to a reorientation of Russian foreign trade, to the benefit of China and India, but also (and this is less well known) Turkey, Belarus and Kazakhstan.

This is an important point, when you remember that the EU was Russia’s main trading partner, both for imports and for exports. The consequences of Russia’s economic pivot to Asia will be far-reaching.

While the sanctions imposed by the European Union have had little impact on Russia, they have had an obvious impact on the EU itself, writes Valdai Club expert Jacques Sapir. What are the real consequences? Does this harsh policy, which can even be described as aggressive, against Russia have a chance of producing effects?

https://valdaiclub.com/a/highlights/will-eu-sanctions-produce-a-winner-and-a-loser/

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🗺 The sanctions against Russia have altered the processes of globalisation and thereby even changed the world order.

The consequence of unprecedented sanctions is that Russia has largely been severed economically from Europe, while the US has restored hegemonic control over its NATO allies.

Although the wider world outside NATO has moved in the opposite direction – US adversaries have united, and neutral/non-aligned states are also reducing reliance on the US to adopt multipolarity.

Isolating Russia to destroy its economy, financial system, and currency failed as the world is no longer Western-centric. Economic sanctions united US adversaries such as Russia, China and Iran, while non-aligned states and partners such as India, Turkey, and Saudi Arabia have diversified their economic connectivity to reduce dependence on the West, writes Valdai Club expert Glenn Diesen @glenndiesen.

https://valdaiclub.com/a/highlights/globalisation-under-a-eurasian-westphalian-world/

#Valdai_WorldEconomy #WorldOrder #multipolarity

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