Building the new order
Written by Pablo González and Pedro Nonay, trying to know how the new world will be.
Entry 10
BRICS and G20 Summits
Bharat vs India – Changing times
October 1, 2023
My new context selection.
The recent news items I have selected to think about context shifts are as follows (and I make the comment that this context shift is accelerating):
- Antonio Guterres (UN Secretary General) has said before that body on September 19: “while the world has changed, the institutions have not” (see here). It seems a consequence of what I discuss below about the requests of the BRICS summit. We may be close to the changes that will generate the new world order.
- Poland has stopped supporting Ukraine, and Slovakia may do so very soon (news here, and here). This complicates the position of the European Union.
- Nagorno Karabakh has been dissolved as an attempt at an independent republic. Given the support for the parties to the conflict, this can be seen as a triumph for Turkey against Russia, or perhaps as Turkey’s cashing in on indirect support for Russia in its occupation of Ukraine. In addition, the matter is closely related to facilitating the arrival of Azerbaijani gas to Europe (explanations can be found here).
- The European Parliament has approved the Raw Materials Act (see here). It is a recognition of a problem, and a good intention. But it is difficult to solve if there are no agreements with China, which controls raw materials.
- China has banned the export of gallium and germanium. These are essential materials for the production of chips, and China has almost absolute control of them worldwide. It has done so in retaliation to the US bans, and it is something that is going to complicate the technology industry (news here).
- China has also banned government employees from using iPhones, which has hurt Apple badly. It is another retaliation. News here.
- The French-speaking part of Africa is unraveling. It is not exact, but almost (Sudan was not French-speaking), that part was in the Sahel, where, after wars and coups d’état, the dominance has shifted to the Chinese-Russian alliance. The last example is Niger. This is the consequence of what I have been calling in these entries the “signing” of countries, either for money, ideology, war, … This is almost the only part of Africa that did not belong to the African Union, which has now been admitted as a member of the G20.
- Zelensky has complained that Elon Musk (always him) has not given him access to his satellite network to attack Russia. Musk has said that he cannot be guilty of such attacks. What is relevant is that the War moves on to “private” matters. News here.
- It seems that the missile that caused the massacre in Konstiantinivka (Ukraine) was Ukrainian. A malfunction. At first, Zelensky accused Russia. The thing is that such news was hidden before, in order not to demoralize, and now the West is publishing it (maybe for that, to demoralize). In addition, there have been resignations in the Ukrainian war ministry. News here. Kolomonsky, who is the owner of the TV station that made Zelensky famous as a humorist, has also been arrested, which smells of a pact to counterbalance news, and that he will be released soon.
- India is considering changing the name of the country. They want to call it Bharat (which was already the second official name, but little known outside India). It is a way to officialize the end of the colonial era, and the beginning of new times. News here.
*****
In this entry I digress on the issue I have been dealing with in previous ones, which is that of raw materials. I do so because I consider it more urgent to talk about what happened recently at the summits of the BRICS and G20 countries.
I will return to the subject in subsequent entries. Briefly, however, because there is a recent article published by researchers from IMDEA MATERIALS where they summarize the subject very well, and identify the insufficient raw materials in the world for the energy transition. They do not demonstrate their calculations, but there is no need for them to do so, given their reliability. I have known Javier Llorca for more than 40 years, who is the director of the Institute, and his scientific quality is overwhelming (as well as human), and recognized worldwide. You can see the article here.
The importance of the BRICS and G20 summits.
When I wrote the previous entry, the BRICS summit had already taken place. In fact, I quoted it in the usual opening part of my writings, which I call “new context”. But the summit of the G20 countries had not yet taken place.
Reading the much that has been published about both summits led me to try to delve deeper into the matter. So, I decided to search, read, and study the original statements signed by the participants in both summits. And compare them. … And draw my conclusions, which are the ones I will present in this entry.
For those interested in reading these original statements (in English), the link for the BRICS summit is here, and the link for the G20 summit is here. Be warned that they are long and boring to read because of the excess of diplomatic language and the many circumlocutions to say things without expressly saying them.
I provide here the way to access both statements, in which I have highlighted in blue the parts that have caught my attention, and I have included in red my own personal interpretations (here the BRICS one, and here the G20 one). Perhaps it is a quicker reading of the statements to go directly to what I have highlighted in color, although it is clear that this has the bias of my selection (without changing the original text).
The fact is that I am glad I did it, because I have drawn personal opinions somewhat different from what I have seen in the press. Opinions that I am happy to share below.
Previous comments.
The first thing that is striking is the closeness of the dates (the BRICS meeting was on August 23, and the G20 meeting was on September 10). In addition, we must pay close attention to what is mentioned above by Antonio Guterres´ speech at the UN on September 19, that is, immediately after.
The next thing that is striking is the order of dates: first the BRICS, then the G20.
The venues are also striking: Johannesburg for BRICS, and New Delhi for G20. This has been prepared for a long time, but it is still significant that both venues are located in BRICS countries.
Taking into account the situation in which the world finds itself, of high instability due to the foreseeable negotiation of a new world order (as we have been commenting in these entries for quite some time now), these dates, priorities and places seem to be part of a staging. And the declarations that have been made almost confirm this.
We are building a world of two blocks of countries, which can be simplified as the block of the former developed countries, and the block of the former not so developed countries. Blocks that today are being called the West, and the Global South, although these are names that do not seem very appropriate, since it is difficult for me to call Japan and Australia Western countries, or to say that Russia is part of the South, …
What is each block?
The BRICS bloc (an acronym for Brazil, Russia, India, China and South Africa) brings together countries that claim to be the voice of the formerly less developed but now very powerful countries. It was formed in 2008 as a grouping of countries to defend a joint position of these countries before international organizations.
These are countries that do not have much to do with each other, but are united by the feeling that their voice is not well represented in international organizations. It can be said that they feel marginalized by the countries that still rule the world, and they claim their growing strength.
On the other hand, the G20 bloc was created in 1999 and strengthened in 2008. Its objective is not to be the antithesis of the BRICS bloc. In theory, they are intended to represent the countries whose economies are the most relevant at the global level. Its members include countries from the West, and also from the so-called Global South. What happens is that, in practice, and so far, it can be considered more controlled by Western countries.
The relationship of the G20 with international organizations (UN, IMF, WHO, ILO, WTO, …) is very strong. In fact, they belong to its forum. It is not exactly like that, but you can almost say that they give them instructions or lines of work.
From what has been said, the BRICS bloc can be interpreted as a union of forces to claim a greater share of power before the G20, and greater influence before international organizations. These are issues that, in view of what has been said below, they seem to be achieving.
Meeting attendees
Putin’s non-attendance at both summits has come as no surprise. The possibility of his arrest is clear. It may also affect the fear that “his chair will be taken away from him” if he leaves the country.
However, Xi Jinping’s non-attendance at the G20 has been significant, when he did attend the BRICS meeting. There may be many explanations, but one of them is to send his message of greater support to the countries of the Global South.
New members of the blocks.
Following the two summits, BRICS has invited Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates to join its bloc. The decision will be made on January 1, 2024.
In addition, the G20 has accepted the African Union as a new member (they say so in their item 76), which is something that BRICS has appreciated (it is stated in their item 35). In this matter, it is worth noting China’s strong funding of the African Union, as well as reading something of what this union represents (you can do it here).
After that, the BRICS bloc combines greater representation of inhabitants and world GDP, and they have more strength within the G20. This with the unequal demographic representation in international organizations, because I recall that in the UN each country has one vote, i.e., Monaco has the same weight as China.
The following tweet reflects very well the power that agglutinates the BRICS bloc.
Statements that I find noteworthy.
With the logical bias of my opinions, I share here the statements that have most caught my attention, sorted by subject. Of course, they speak of many other issues, but these are the ones I have selected.
About the Ukrainian War.
My conclusion from the reading is that the BRICS have said that they do not blame Russia, … and that they support it. And, the G20 has agreed not to make unanimous criticism of Russia, leaving, only, mentions of wishes for peace. I base this conclusion on the following mentions in both statements.
- The BRICS statement (point 4) makes an indirect critical mention. They say that they “find the use of unilateral coercive measures worrying”. It is clear that they are referring to economic sanctions on Russia. A little further down in the same paragraph they say that they prefer measures taken multilaterally, which is a clear way of saying that their voice must be heard, and that they do not support decisions being taken exclusively by the USA. They repeat the same argument in point 14.
In point 12 they say, in a generic way, that they are “concerned about conflicts in many parts of the world”, and that they should be resolved through dialogue.
In point 19 they do expressly cite what they call “the conflict in and around Ukraine”. They reiterate the need for dialogue, and applaud the mediation proposal of the African leaders’ mission.
And, in the last point (the 94th), they make what I see as a subtle play on words. They say that “Brazil, India, China, and South Africa express their full support for Russia in its organization of the 2024 BRICS summit.”
- On the other hand, the G20 statement says, in its point 8, that they reiterate each country’s positions at the UN (they were different for each country), and that countries should refrain from the use of force to acquire territory. In other words, they do not have enough agreement to say much more. In this regard, point 14 is very striking, which is very brief in its wording and says: “the present era should not be one of war“.
About international organizations.
My conclusion can be summarized as follows: the BRICS countries are saying something along the lines of: “we are not so weak anymore, and we claim our right to have a greater voice in international institutions”. And the G20 is doing something similar to surrendering to these arguments, accepting the need for changes in these bodies, but without specifying too much about the times and forms of these changes.
I base my conclusions on the following points from the statements.
The BRICS declaration devotes many direct and indirect mentions to this issue. I highlight the following.
- In point 2 (right from the start) they call for “a reformed multilateral system for a more representative international order”. In point 5 they reiterate this, calling for greater representation of developing countries in international organizations.
- In point 7 they say they support UN reform to increase the representation of developing countries.
- In point 8, they also call for the reform of the World Trade Organization with the same objective. And they criticize the unilateral sanctions of that organization for the war (point 9).
- In point 10, they call for reform of the IMF quota system. They also call for reform of all the Bretton Woods institutions to reflect the strength of developing countries.
- In point 30, they accept the G20 as a forum to discuss the international economy, and commit to promote an increased voice for the Global South in the G20.
On the other hand, on the issues of international organizations, the G20 declaration says:
- In its point 5.l., that commits to strengthen the voice of developing countries in global decision making. This seems to be an acceptance of what was requested by the BRICS, although without specifying it.
- In point 19.i. they reiterate the need to reform the World Trade Organization through an “inclusive process led by its members”.
This looks like another surrender to the BRICS’ demands.
- In point 47 they “recognize that the global order has changed a lot since WWII, … that there are new economic powers, … and that multilateralism must be revitalized, … and global governance must be made more representative”.
This is to agree with the BRICS’ request, albeit without specifying it. From point 47 to point 53, they talk about multilateral issues, reiterating that more voice and support must be given to developing countries.
- In point 53, they reiterate their commitment to reform IMF governance by studying the reform of the quota system.
This, again, is what the BRICS are asking for.
More relations between BRICS, … and their currencies.
It is also striking that the BRICS declaration mentions several times the issue of relations between the countries of the Global South, and the currency they will use in the future for this purpose.
It can be summarized in a declaration of strength, and in the intention to organize, as a priority, among themselves, with the consequences that this threat could mean for the current global order.
The threat this poses to the dollar is explained quite well here, and here.
On this issue, BRICS declaration says:
- In point 32, that the BRICS produce one third of the world’s food.
- In point 33, that they will encourage cooperation between BRICS for supply chains and payment systems.
- In point 35, that Africa is marginalized in international trade, and that it has much to gain from its relationship with the BRICS.
- In point 36 they talk about promoting intra-BRICS cooperation.
- In point 44 they speak of using local currencies in trade among the BRICS countries. And in point 53 they insist on promoting what they call South-South cooperation. Furthermore, in point 70 they insist on cooperation among BRICS countries given their characteristic of being major energy producers and consumers.
This is a major threat to the dominance of the dollar.
On environmental objectives (SGD).
In the G20 declaration, they recognize that the objectives they had for environmental issues are going badly. That they have to lower them, and listen to the opinions of the BRICS countries.
In point 23 they expressly acknowledge that the SDGs are doing poorly, having achieved only 12% so far.
Also, in point 33, they recognize that the objectives of the Paris Agreement will not be achieved, and they lower the targets set therein.
About cryptocurrencies.
I find it significant that, in declarations of this type, they even mention cryptocurrencies.
I think it is a recognition of their strength, despite what they would like. They elaborate on the issue in this article.
They say little, in the official declarations, but it is enough. Specifically, the G20 one, in its point 58, talks about monitoring the rapid evolution of the cryptocurrency ecosystem.
*****
Readings that have interested me.
In the process of writing this entry I have come across many issues of other subjects. I would like to share the following:
- The guys at VisualCapitalist have made a new graph (very good, as usual). In this case they deal with the total electrical energy produced in the world in 2022, and its sources of origin. The summary is that only 14.4% is of renewable origin. It can be seen here.
- USA is again facing the debt ceiling problem, and what they call the government shutdown. There is a very good summary of what that means and the historical evolution here, and here. The fact is that on September 31 they have agreed to an extension for 45 days (not much), although it is significant that one of the issues for which they have blocked new investments in that period is aid to Ukraine (it seems that everywhere that aid is decreasing).
- The possible accession of Saudi Arabia to the BRICS group (to be confirmed on January 1 in its case) may mean the de-dollarization of oil. That would be the case if China and India start paying it in other currencies. That’s a really bad thing for the dollar. News here, and here. Although here they try to show that this problem will not happen.
In any case, about the dollar, the following chart made by VisualCapitalist is very descriptive.
That’s as far as I go for today. In the next entry I will continue with the subject of raw materials (I think).
As always, I welcome comments on my email: pgonzalez@ie3.org