BRICS+ and the new world order

Challenging the old world order

The world order, which has been in place since World War II, is being questioned. International institutions, like the UN Security Council and the World Trade Organisation, are being questioned. They work, but they don’t work properly. Global governance is not functioning well and, more importantly, it doesn’t meet the world’s realities. Emerging countries need to have more of a say on the international arena. The era of Western domination, which lasted for hundreds of years, is not over but it is drawing to a close.

This opens up opportunities for countries to reposition themselves and casts the spotlight on global alliances. The BRICS+ countries, in my view, have strong dynamics in terms of growth, resources and demographics. These will continue.

What is happening right now will only convince people to rally towards China and the rest of the BRICS. At the next BRICS+ summit in Rio in July there will be further enlargement of the coalition. It will continue to develop cooperation platforms, including on grains and on energy; and it will continue to fund the new development bank (though the amounts are not so important for now). De-dollarisation is another long-term project.

Europe and BRICS+ opportunities

The central theme of the BRICS+ coalition will likely be how to avoid pressure from the US and how to continue to set up a space free from Western sanctions.

China is trying to appear as the country of stability, rallying around itself all the countries that are affected by the current unpredictability of the US. It fears what has happened to Russia, with the seizing and freezing of assets. And China is organising the world accordingly. Take the Belt and Road initiative. The aim is not only to export overcapacity but to have a political network of friends, ones they treat very well. It’s multilateralism by China on a bilateral basis. They are also prioritising transaction tools that will allow other countries to continue to trade with China in case of sanctions.

I don’t believe the yuan will replace the dollar because China’s capital markets would have to open. But it will play a growing role. The share of transactions which are not done in US dollars is only 3.5% now, but it has grown from 1% within a few years.

The G7’s long-term future is less certain. Russia will likely not come back to it. Then there is the G20. It’s a special chemistry, including most BRICS countries, plus some others, and the G7. How will they manage the major issues – tariffs, free trade, the principles of the charter of the UN?

Europe, too, needs to find its place in the new world order. The EU is resuming trade links with China. It may also find a way to work more closely with countries like India. Many things are open in a restructuring world.

Will the US give up their global agenda? I don’t think so. What is Trump striving for? A weaker dollar and a restructuring of international trade that will allow the US to re-industrialise and dominate markets. They are not satisfied with how international trade works now. I am not sure they want to be isolationist; but they want their own long-term needs to be satisfied, and they are willing to take strong and controversial steps for that. The idea of making America great again means American dominance.

But it will take time for America to industrialise again. Until then, I think this is an opportunity for Europe to re-organise trade in its favour.

Should Europe fear the US more than the BRICS? We don’t have to fear anyone, we have to deal with reality: we don’t have allies, we have our interests. We must be practical. If I had my own government, I would say let’s go further, I would work with the BRICS. Europe can find its place and go where the growth is, where its interests are.