BRICS Is Becoming The Big Kid On The Block: Implications For Australia – Analysis
US sanctions as a weapon of war are having an unexpected affect. Russia, China, and Iran are developing alternative routes of trade and finance, and cooperation with other nations. Perhaps the biggest product of sanctions has been to encourage the rapid development of BRICS plus, now a very strategically important block.
BRICS was formed in 2001 as an economic association between Brazil, Russia, India, China, and later South Africa to promote cultural, trade and political cooperation between the members. BRICS has created a development bank, a Contingent Reserve Arrangement, a BRICS payment system, and a BRICS basket reserve currency. The estimated population of the grouping is 3.2 billion people, or 42 percent of world population. BRICS combined GDP represents around 26 percent of total world GDP.
BRICS is becoming closely interconnected with the members of the 9 member Shanghai Cooperation Organization (SCO), where influence across the Pan-Eurasian region is strong, Iran just being added as a new member. The SCO grouping has grown from the original Russo-Chinese security alliance, where central Asian Republics now have a multilateral platform for dialogue. This is a platform where India and Pakistan, as well as Iran and Saudi Arabia are holding bilateral talks.
Geo-political and geo-economic cooperation has been enhanced with the Belt and Road Initiative (BRI), where trade can expand into Africa and South America.
Iran and Argentina have applied for BRICS membership, while a host of nations including Egypt, Indonesia, Kazakhstan, Kenya, Mexico, Nigeria, UAE, Saudi Arabia, Senegal, Thailand, and Turkey are in close dialogue with BRICS.
Observers within the region state that interest in joining BRICS increased greatly after the US withdrawal from Afghanistan in August 2021. Iran, Saudi Arabia and Turkey are rumoured to be advanced on their respective negotiations to join BRICS within the next couple of years.
This would radically shift alignment within Eurasia where there would be a strong nexus between Riyadh, Tehran, Ankara, Moscow, Beijing, and Delhi. The objective here is to develop a commodity trade regime that would bypass the US Dollar. This would severely weaken primacy of the US Dollar as an international currency.
There are already moves by Russian, Chinese, Indian, and Turkey to use Rubles, Yuan, Rupees, Turkish Lire, and Rials as trading currencies backed by commodities and gold. Banks are bypassing the SWIFT system for their own. The system is also accommodating payments with commodities.
Since the Nord Streams incident, Turkey is interested in taking the lead as Russia’s gateway to the EU for gas exports. Turkey can then become the gateway to the EU from both Russia and Azerbaijan. This will connect Egypt, Greece, and make Turkey a major hub in Europe for energy. Russian pipelines to Turkey via TurkStream and Blue Stream pipelines already have a capacity of 39 billion cubic metres per annum. Balkan Stream will deliver gas to Europe. There are plans to rapidly expand these capacities.
These relationships are also benefitting this grouping militarily. Iran is now supplying Russian forces with a modified Shahed-136 kamikaze drones, proving much more effective than Russian drones on the battlefield.
Consequences for Australia
The rapidly changing regional order needs a new and up to date analysis. Vietnamese President Nguyen Phu Thong’s visit to Beijing at the invitation of Xi Jinping this month, signals an improvement in bilateral relations. China’s diplomatic, trade and investment relationships with the rest of ASEAN are now very strong. China is not seen as the adversary in the region, in the way Australia sees China. The recent announcement of stationing potentially nuclear armed B-52 bombers at Tindal Airbase in the Northern Territory, can be seen as provocative in the region. The Australian Government consideration to send advisors to Europe to train Ukrainian troops, complementing an already wide array of consultants, advisers, and mercenaries, together with weapons is not an act that will contributing to the lowering of tensions.
With India’s embracing of BRICS, it’s commitment in time of any conflict to the QUAD must be looked at very closely. The QUAD is portrayed as an important strategic agreement to Australia.
We have witnessed China de-couple trade with Australia. Why buy beef from Australia when it can be bought from Brazil? Expect more de-coupling as China utilizes the Belt and Road even more. With the sharp change in China’s business ideology, public enterprises are growing in influence and importance. Australian corporations must see these shifts and try to couple up with this change in the nature of China trade.
According to BRICS diplomats within ASEAN, Australian trade diplomats are already fighting a de facto trade war, where the booty is market-share. For example, trade diplomats have long informally agreed which markets should be deemed traditional for products from respective exporting countries. Breaking these informal agreements is considered an act of war, be it for beef, lamb, fruits, or services. Australia will not be retaliated by one country, but all the BRICS members, if it breaches these understandings. This is a trade war Australia cannot win and is damaging Australia’s reputation, where ordinary citizens are not even aware of.
The US pivot Mark I, II, & III to the Indo-Pacific in contrast, lacks the lustre of the Chinese advance into the region. They have been based upon the premise of competing rather than cooperating in mutual coexistence. One of the US misunderstandings is that China is not alone, it’s bringing a new trade regime with it to the region. Australia may have US military hardware on its territory, but through the cultural, political, and economic paradigms within the region runs the risk of isolating itself. These are areas the US alliance cannot assist Australia.
Over the years I have been skeptic about the BRICS (Brazil, Russia, India, China, and South Africa) initiative especially when the interests of India, China the two immediate neighbours clash on almost all issues! Similar is the case with the SCO.There is no logic behind the coming together of these countries falling on different continents, ideologically different and their economies being in different stages of development. Both organisations are coming closer to become BRICS Plus and SCO Plus with countries wanting to join these two groupings. The Ukraine war and the US sanctions appears to be changing the scenario into getting these two organisations a big boost.The BRICS cover 40 percent of the world’s population and more than 25 percent of the world’s land. The groups continues to meet and to talk on common agenda. The US attitude of trying to rule the world is another major reason of both the BRICS and SCO likely to be further enlarged and prosper.China Xi’s BRI initiative is also a reason towards countries showing interest to join the BRICS and the SCO.
Rightly analysed by the author that enhancing of US sanctions due to the Russian invasion of Ukraine have led to the biggest clash of interests in decades between Moscow and the West leading to changing Global order and BRICS and SCO coming closer.
Australia has those old mentalities we are in 21st century, the world is moving on
Perhaps they are all fed up with the IMF ponzy scheme. US dollars aren’t worth the paper they are printed on, that’s if they ever get printed. Australian government is a corrupt corporation and whoever funds Ukraine is insane.
The remarkable fact about both the BRICS and SCO has been their capacity to unite nations that have been adversaries for centuries.
Here, China has played a significant role as a peacemaker, and its efforts seem to have aroused genuine delight in the various client nations involved. For example, the Saudis and Iraq whose new relationship has acted as a catalyst for healing across the Arab world.
I’m very optimistic that the pledged adherence of these nations to the UN Charter will usher in an unparalleled era of peace and prosperity.
Sensible analysis. It is up to Australia to decide on what they want. Great opportunity for Australia to be a major feeder of food, minerals, banking, education and other areas and lovely place for tourism to pour in.
But Australia still try fill in as a local sepoy for US and queen country UK and still carry in the skin, we are still a white (with that edge attitude), may need some realistic adjustment.
Countries like India and Indonesia would like to more closer relation if Australia become more sensible to that. I recently saw a visit by Jaishankar and an event talk. Human resource minister delivering lecture mainly to Indian audience. Just the body language itself sees that. Hey we are ….
Also am a US policeman here. In India we use word local dada. This will not help since we can see through the intent and content of other.
Best wishes. Lovely country