Geopolitics Review - 28th October 2024

The BRICS Summit and The Future Of The World Order

Dylan Muggleton

Oct 28, 2024

Contents

Introduction
Key Takeaways
The Future of The Multipolar World
Concluding Remarks

Bitesize Edition

What emerged as an economic bloc in 2001 is rising in geopolitical importance. The latest BRICS summit saw 24 world leaders and 32 delegations meet in Kazan, Russia. Some accuse the group of making little active progress in its establishment of an alternative global system, but I’d argue differently. Sometimes, an idea can light a spark, leading to efforts and inspiration. We’re at a precipice where the spark could die out, or fuel could maintain this spark.
Outside of visible policy, the group represents dissatisfaction by many countries with the current international system. This summit saw no new major policy decisions proposed or pursued, but the existence of the group is indicative of the emergence of multipolarity. The group seems inspired to find fuel to continue this spark.
I’ll explore the biggest takeaways from this recent summit in which we’ve seen China and India solidify a border deal, Azerbaijan and Armenia seated next to each other, Venezuela’s Maduro giving a speech against the current world order, and the announcement of new BRICS partner countries, among other news.
I’ll then explore the longer-term geopolitical, financial, and technological trends unfolding as we see a multipolar world arising, and the new ways in which modern-day conflicts are being fought today on new battlegrounds. Could the future of conflict revolve around space or the cyber realm? Find out more below.

Introduction

The latest BRICS summit was hosted in Kazan, Russia this past week. The summit seemed to bring no drastic policy shifts from the BRICS group, but below the surface, it’s an indication of discontent amongst many countries in the world at the current status of the international world order. What key takeaways can we garner from the summit, and how do these changes affect the long-term direction of the world we live in today?

Key Takeaways

Guterres Visits BRICS Summit - The UN Secretary-General Guterres paid a visit to the BRICS summit in a diplomatic role. However, it could be seen as the UN’s recognition of the rising role BRICS is playing in geopolitics. Does this indicate the UN seeks to bridge inequalities between developing and underdeveloped nations versus the developed world? After all, it is usually the developed world that possesses the loudest, most influential voices in the room, but they aren’t the only voices. This idea of voice in geopolitics has also been seen in several nations seeking to join the five permanent United Nations Security Council members, namely India, the African Union, Japan, Germany, Brazil, and Argentina. Permanent members have the power to veto any proposal individually. The critique during the summit of Western institutions is an indication of the rising role BRICS wants to play in the pursuit of a more fair world by reforming institutions that better consider the needs of the developing and underdeveloped world. This would, of course, affect the United Nations. The Guterres visit will not be perceived well by Ukraine and leader Zelenskyy, who will see it as a legitimisation of what is supposed to be an isolated global power in Russia after its war in Ukraine commenced in February 2022. The number of countries visiting this year’s summit seems to negate Russia’s isolation, but Putin didn’t attend the summit in South Africa last year and hasn’t made many trips abroad in recent years. Russia itself may not be isolated from the geopolitical game, but Putin himself is limited in his movements, in part due to the International Criminal Court’s arrest warrant against him.
China-India Diplomacy - The border deal first reported by India was later confirmed by China. The BRICS Summit was the first in-person display of diplomacy between Xi and Modi since the news broke. I’ll discuss this more on Thursday, so subscribe if you don’t want to miss that.
Photo by swapnil vithaldas on Unsplash
Visiting Country Members - 24 world leaders and 32 foreign delegations attended the summit. The most notable absences were Lula, with Mauro Vieira representing Brazil in his place after the President suffered a minor brain haemorrhage. New members Egypt, Ethiopia, Iran, and the United Arab Emirates also attended. Turkey’s attendance continues to enforce them as a rising power in geopolitics, balancing NATO membership with potential BRICS aspirations. Serbian President Aleksandar Vucic was personally by Putin but didn’t attend himself, sending a representative instead. The final absentee of note was President of Cuba Miguel Diaz-Canel, with Cuba currently experiencing blackouts and “serious energy problems”. Cuba requested to join the BRICS group as a partner country on October 8th. This is notable after the military exercises that unfolded in the Caribbean in June involving Russia and Cuba. This saw the United States deploy assets to shadow the Russians.
Maduro Criticises The UN And His Domestic Issues Follow Him To Russia - Back home, Venezuela has been experiencing protests against the election of Maduro for a third consecutive term in a highly debated result, with polling before the election heavily doubting Maduro’s chances of re-election. And so, Maduro will have hoped for a change of scenery to distance himself from the issues back home. However, Brazil-Venezuela relations have been declining after Lula stated he wouldn’t accept the results of the Venezuela election without a breakdown of the results. Further tensions have existed since Venezuela set its sights on Guyana’s offshore oil supplies and the Essequibo region, with Brazil moving military assets in December of 2023 to secure the Northern border and act as a deterrent to Venezuela, who were themselves had been amassing military assets near Guyana’s border. Brazil hence vetoed Venezuela’s membership aspiration to BRICS. Putin openly disagreed with Brazil in this move, stating Venezuela is “fighting for survival”. Putin did state he sought to improve relations between the two South American states. An improvement in relations between the two could involve the decline in regional tensions between Venezuela and Guyana. As for Maduro’s speech, he spoke of the divergences between UN policy in different conflicts. He spoke of the Middle East, and where the United Nations justice system has been in the face of thousands dying in Gaza and Lebanon. He later stated how the UN needed refounding in what he later referred to as “a dying system”.

Partner Countries Given Preliminary Status - Turkey, Kazakhstan, Uzbekistan, Algeria, Belarus, Bolivia, Cuba, Indonesia, Malaysia, Nigeria, Thailand, Uganda, and Vietnam were all given preliminary status, a prerequisite for eventual permanent membership in the group. Progress on Saudi Arabia joining the group hasn’t received an update for some time after they haven’t yet formalised their membership, but the group has been invited and participates in some BRICS activities as they did with this summit. A security guarantee deal with the United States has been whispered as a part of potential normalization with Israel, but with the Middle East rather fragile, this doesn’t yet look possible, Still, Saudi Arabia is another nation balancing multiple sides in the emerging rifts in geopolitics as multiple poles emerge.
No BRICS Currency, Apart From Mock Banknote. Won’t Be Publicly Discussed - The topic of the BRICS currency was discussed in the leaders meeting, but won’t be mentioned publically. The use of trade in alternative currencies is being promoted by BRICS over the issue of a new currency today, but this transition will take decades to unfold, not years. The group possess over 40% of the world‘s population, a third of the world’s GDP, and close to 30% of the world’s oil production. A plan to introduce a BRICS currency, a move heavily influenced by Russia’s Sergei Lavrov who has proposed the idea for over a decade, will not yet be pursued publically, but this didn’t stop Putin from revealing physical mock bank notes, designed with a nod to each of the first five members. One such issue that was made public was BRICS Pay, a rival to the SWIFT system for international payments. Other plans include a BRICS credit rating system, an insurance underwriting structure, and BRICS Bridge, a digital payment platform. BRICS has big aspirations and is working towards establishing institutions necessary in an operational global system.

brown and gray concrete building during daytime — Photo by Michael Parulava on Unsplash

BRICS Pay, A Swift Replacement, Soft Launched. Banking Connections - BRICS Pay is painted as a competitor to SWIFT which Russia was suspended from after the invasion of Ukraine. The system revolves around connecting key banks from the original five BRICS members (Brazil, Russia, India, China, and South Africa) to facilitate trade better. Although painted as a rival to SWIFT, in this early stage, it won’t be anywhere near rivalling the SWIFT system and will be utilised more by the BRICS nations only. I’ll discuss international trade in more detail later on in this piece.
Azerbaijan-Armenia Diplomacy - Armenian Prime Minister Nikol Pashinyan and Azerbaijani President Ilham Aliyev sat side by side at the summit sharing a few words. The conflict over Nagorno-Karabakh saw Azerbaijan take control from Armenia in September 2023 in a large offensive. The Azeri offensive wasn’t blocked by Russian peacekeepers in the region and has hence seen Armenia's relations with Russia suffer. Armenia has since received weapons aid from the French and India and has pulled funding for the CSTO. However, as I discussed after the Azerbaijani offensive into the region, the Azeris are in the driver’s seat here, and with the COP 29 conference unfolding next month in Baku, tensions won’t re-escalate any time soon. A dispute over four villages on the border between Armenia and Azerbaijan also saw Azerbaijan gain control of more territory earlier this year. The details of the exchange from the summit haven’t come to light, but the Azeris remain in control here. There are further issues to be hashed out here between Armenia and Azerbaijan, but this won’t be a story over the coming months. For more details on the background of this conflict, head to my Geopolitics Database and search the Countries section for Armenia or Azerbaijan. All posts can be found there.

The Future Of The Multipolar World?

Throughout history, any changing world order has unfolded over decades, not years, as marked by measurable indicators, as proposed by Ray Dalio in his book The Changing World Order.

This summit was marked by BRICS speaking negatively of Western-created global institutions, but this is part of a longer-term pursuit to address inequalities in the current rules-based world order.

The Kazan Declaration was issued at the end of the summit. The key proposals were as follows:

Strengthening Multilateralism
Efforts To Prevent An Arms Race In Space
Strengthening The Non-Proliferation Regime and Establishing A Nuclear-Free Zone In The Middle East
Mediation In Ukraine
Resumption of Iran Nuclear Deal
BRICS Members Agree On Easing Trade Between Countries
Reform of Bretton Woods Institutions By Expanding Contribution of Developing Countries
Share Best Practices In Intellectual Property Rights Protection
Concerns of Negative Influence of Unilateral Sanctions on the Global Economy
Recognition of Legitimate and Valid Security Concerns of All Nations
Support an Open Multilateral Trade System
Immediate Ceasefire In Gaza Strip And Release of Hostages Without Preconditions
Support of Palestine’s Accession To The UN Within 1967 Borders

When BRICS was first proposed as an idea by then Goldman analyst Jim Grant in 2001, it was to mark the four biggest emerging economies in the world before the “S “ of South Africa joined the movement. It was hence originally considered an economic group pursuing collective development and cooperation on trade and finance. The declaration above demonstrates the group’s pivot as a rival to the US-led world order.

a stack of green and red containers sitting on top of each other — Photo by Bernd 📷 Dittrich on Unsplash

Since 2001, the financial aspects have remained a part of the group’s ambitions but the financial aspects are now proposed as a function of the BRICS political bloc that seeks global system change. The New Development Bank established in 2015 is an alternative to Western Institutions like the World Bank and the IMF and is a financial and economic policy with a mask of geopolitical and strategic discontent. The financial institutions and policies discussed in the key takeaways further enforce the aim of BRICS to establish a functioning global system.

But attitudes amongst the group differ. Russia especially pursued new systems, after the sanctions and removal from the SWIFT payment system after the onset of the Ukraine War saw Russia double down on its pursuit of a potential new global system. However, some nations, namely India and Brazil, remain heavily involved in the Western world, trade, and its systems. Would these differences in severity in the pursuit of a multipolar world ever bring tension to the BRICS group members, or are they all aligned to the same extent in the pursuit of a new system better suited to a multipolar world? As some nations want greater equality in the global system, some nations such as Russia need it.

It’s worth noting here how conflict in the modern age is changing as we experience the challenge of BRICS to the current system. Finance, infrastructure, trade, proxy groups, resources, space, and technology are becoming weapons in the newly established battlefields of war. Sanctions have escalated the financial war and underscored the potential vulnerabilities of heavy reliance on the dollar if you find yourself on the opposite side to the Americans. Blowing up key infrastructure such as pipelines, and cutting undersea fibre optic cables facilitate infrastructure war. Trade wars can be enacted by any group with a handheld drone and a block of C4 as we’re seeing in the Red Sea with the Houthis, or a man with a proclivity for tariffs. Proxy Wars continue to unfold around the world, with Syria the most notable for the sheer involvement of global geopolitical superpowers. Nearshoring and friendshoring indicate the worry about securing the key resources of the future in a rapidly innovating world. Satellites surround the Earth, with debris fields of destroyed satellites, anti-satellite weapons, and the new space race back to the Moon and Mars ensuring space is once again becoming an important geopolitical field. The technology and innovation race threatens to see us lose control of our own exponential growth as spaces such as AI and Quantum will see the world change as we know it, with automation affecting labour markets, and quantum threatening to upshift the entire global encryption system. Paints a scary picture, right? And this is a surface-level analysis. Many other sectors are related to each of these potential methods of modern warfare. But as I stated above, would every member of BRICS pursue each of these strands of potential war so far up the escalatory spiral that we one day see the potential for a hot war between superpowers arise? Would we ever see a war between a BRICS-led system and a Western US-led system? I’d argue not due to the unimaginable costs to the world as we know it, but these individual strands of war will continue to remain key narratives in geopolitical competition moving forward.

In exploring longer-term trends, I find it prudent to dive deeper into finance and trade as examples. BRICS possesses a trade surplus. The United States, as is reported frequently, discussed a trade deficit. Does this lead to a US reliance on BRICS?

In contrast, no other currency is in the position to upheave the dollar as the global reserve currency. Hence, would a financial or trade decoupling hurt BRICS more than the United States in this hypothetical scenario? Would the weaponisation of the dollar, as Russia experienced with the confiscation of its dollar-held foreign exchange reserves, be utilised by the United States on a larger scale? With so many aspects to this scenario, it’s impossible to predict. But, the idea of this scenario existing at all is leading many nations to nearshore, reindustrialization, and reduced reliance on the dollar. The potential consequences here are leading to active changes in trade and financial policy, regardless of geopolitical alignment. The concepts of economic interdependence and globalisation acting as backstops in potential financial and trade conflicts are slowly declining. It’s these shifting trade and financial narratives that are also supporting the rather muted rise of gold prices to all-time highs.

Three gold bars stacked on top of each other — Photo by Scottsdale Mint on Unsplash

On the BRICS side of this coin, China and India both possess restrictive capital accounts. This allows for better control of cross-border capital flows to shield their economies from external volatility, but it limits efforts to internationalist currencies for trade. Hence, an alternative strategy is being pursued.

Over the last few years, we have seen many central banks pursue large gold purchases. In exploring the history of currencies, we can see that currency systems have shifted throughout history. The Gold Standard was the economic system from the 1870s to 1932, and from 1944 to 1971, when the United States terminated dollar convertibility to Gold in what is known as the Nixon Shock. It was during this period that many global currencies had a fixed exchange rate to the dollar.

Today, the Western system is mostly a floating currency system based on supply and demand, as is reflected via the forex currency markets. In the past, hard assets such as gold have provided backing and exchange for currencies. Inflation isn’t a threat in these currency systems, since money printing is restricted by the amount of hard assets possessed with which to exchange. When central banks started to emerge as lenders of last resort, however, the currency systems backed by Gold convertibility gave them fewer monetary policy tools. Hence arose the system we live in today, with central banks possessing multiple policy tools in the event of crises.

When it comes to BRICS, and especially China, they could embrace the dollar system but be potential victims to its weaponisation, or they could open their capital accounts and incentivise cross-border flows more into their own currencies, but they would then lose options when external global financial volatility arises. Or they could trade raw materials and products in their own currencies via currency swap lines. Then you might say, but what would Nation A do with large reserves of Nation B’s currency? What they could do, is head to the Shanghai Gold Exchange, and exchange the currency for Gold. This enables trade between nations in their own currencies and then provides an option to exchange it for a more useful asset in Gold. As we can see today, Gold is rising in price and is held in large reserves by many BRICS and BRICS-aligned nations. This doesn't signify BRICS is pursuing a gold-based trade and financial system, but it hints at a potential long-term shift against the dollar and its reserve currency status, which as discussed earlier, is often the final aspect of an empire to fall.

For anybody who says that BRICS isn’t worthy of news coverage, are they to also say that the financial trends arising above aren’t worthy of news? Or any of the other potential areas of geopolitical competition I detailed earlier that could escalate into conflict? I’d heavily argue the opposite regardless of whether these trends unfold over decades or not. Clear changes in the geopolitical landscape are arising today before our very eyes, and they will have implications in the years to come that we can be aware of today.

Concluding Remarks

For those who say BRICS doesn’t matter, in its current form, it indicates shifting global attitudes of underrepresentation and inequality in the current world order. Some state the group is littered with internal contradictions, with the largest being China and India’s clashes. The border deal goes a long way towards addressing this, with the fine print still to be hashed out. But even prior to this border deal, the two nations still found common ground in the idea of BRICS, sending a delegation to summits every year. The group is painted as one of equal nations, but Russia and China often dominate the proceedings and lead projects pursued by the group. They are often the loudest voices at the table. Another contradiction is The Kazan Declaration stating that BRICS members will recognise legitimate security concerns of all nations, yet Russia is at war in Ukraine, and the Ukrainians aren’t being allowed to determine their own future and self-interest. The member nations of BRICS have the hope of change in the world order in common, but this won’t come without struggle, navigating clear differences between members and navigating difficult contradictions such as those mentioned above. As more members join the group, the pursuit of change in the world order will be reinforced by the raw number of member states, but agreement will become harder to reach.

In the cycle of empires, the death of currencies is one of the final pegs to fall, hence why the dollar receives much attention, but upheaving a currency used in over 60% of global transactions doesn’t occur overnight.

Strategies such as currency swap lines, key commodities being traded in other currencies, and the Shanghai Gold Exchange are arising as key strategies in efforts to reduce dollar reliance. It’s a trend to be monitored indicating shifts in the attitudes of some players in the geopolitical game for greater autonomy, but the status of the world order in the short term is not to undergo dramatic change. This doesn’t mean any coverage of BRICS should be cast aside. Quite the opposite should occur, as it is an indication of the change some nations hope to bring to the world. Any unrest in a global system should be listened to, otherwise, it has the potential to escalate into conflict over time. Navigating this tension without complete chaos requires states willing to adapt. Change is inevitable, and it doesn’t take a mathematician to see the economic power BRICS has, and the potential of this to rise further due to the economic potential of its members. The group also launched the BRICS grain exchange, which will eventually expand into a wider product and raw materials exchange. They are building an entire global system to rival the current world order, and yet some cast BRICS news aside as not worthy of coverage.

What some interpret as noise with BRICS, I believe is important. As of today, many proposed policies, such as a BRICS currency, haven’t yet taken off. If there comes a time when these key policies emerge, we know the idea of BRICS and its global discontent will become a physical representation of change. Will the group then be worth of news coverage? Imagine if we made efforts to prepare, negate, or adapt to any potential escalatory elements of these changes (if they were to occur) today.

The BRICS group reinforces discontent among some of the world’s biggest powers, and with that comes the hope of a change in the current global system. Some would say change is inevitable, as all world orders before this one have undergone, but that these changes never occur without tension and conflict. A ruling superpower will seek to defend itself from a rising one, to maintain its power.

Is this a new world where changes can be navigated without conflict, or are we set down the same path of conflict seen countless times before in history? Time will certainly tell, but BRICS will need to pursue and enact more physically visible policy changes at a faster speed to continue its pursuit of its geopolitical goals. The biggest takeaway for me on the topic of the existence of BRICS from an economic idea to a geopolitical influence seeking to build a brand new global system. BRICS is attracting nations with its existence alone, and this indicates shifting geopolitical tides.

What other events or occurrences are clear signals of our changing world, or do you believe no such change is coming? Let me know below!

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