Building Blocs

BRICS saves Globalisation, Yan Xuetong on Great Power competition, US & G7 put domestic agendas first, Yoon Suk-yeol's American Pie disaster, Malaysia conference spurs Asian integration

Jun 21, 2023

UPDATE: Global interest among nations seeking to join the BRICS economic bloc led by Brazil, Russia, India, China and South Africa is demonstrating its growing influence as a new geopolitical force with the potential to challenge the largely Western-led financial system.

Yan Xuetong: I believe the statement that great power competition goes against the trend of the times has two layers of meaning. The first layer is that great power competition objectively exists. If it did not exist, it would not go against the trend. But it does exist, and it goes against the trend. So, the first layer is that great power competition objectively exists.

The relationship between China and the Republic of Korea turned turbulent when ROK President Yoon Suk-yeol criticized China's domestic policies during his visit to the United States in late April. What made matters worse is the White House statement that Washington is committed to enhancing the deployment of US strategic assets in and around the Korean Peninsula, in particular US nuclear-capable platforms.

BRICS to save Globalisation

By Tom O'Connor (edited)

Global interest among nations seeking to join the BRICS economic bloc led by Brazil, Russia, India, China and South Africa is demonstrating its growing influence as a new geopolitical force with the potential to challenge the largely Western-led financial system.

As the group prepares to hold a fateful conference this summer, transformations long in store for the international order are beginning to take effect.

"The main drivers are to do with an overall belief that the United States has become both unreliable and overbearing in its foreign policy," said Chris Devonshire-Ellis, chairman of the Dezan Shira & Associates business firm dedicated to doing business across Asia.

"Unreliability such as issues concerning the recent U.S. debt ceiling—which has only been pushed back to 2025—and the risks of sanctions," Devonshire-Ellis told Newsweek. "Overbearing in that it has used international mechanisms to punish countries it doesn't agree with (cutting countries off SWIFT) and has appeared to use the G7 as an economic 'gang' to support and justify what it does elsewhere."

The debt ceiling crisis forced President Joe Biden to cut his Asia trip short after his appearance at the G7 meeting late last month in Hiroshima alongside the leaders of Canada, the European Union, France, Germany, Italy, Japan and the United Kingdom.

And while the influential group sought to showcase a united front, another meeting held by leading diplomats of the five core BRICS members last weekend in South Africa also generated global interest.

"Other countries are starting to become concerned at this type of behavior: unsustainable debt levels and the imposition of a 'rules based order' and global economics that only appear to service the U.S. and its immediate allies—at the expense of everybody else," Devonshire-Ellis said.

"Simply put," he added, "numerous global leaders from Africa, Latin America, Central Asia and the Middle East, as well as China and Russia, have stopped believing in the United States as a responsible global leader."

BRICS, which began as "BRIC" before South Africa's inclusion as a term for emerging economies coined by then-Goldman Sach's economist Jim O'Neill in 2001, held its debut summit in 2009. But it has generated a sharp uptick in interest over the past year since China hosted a "BRICS+" meeting that drew 19 heads of state last June.

In the leadup to the recent BRICS ministerial in Cape Town, South Africa's Ambassador-at-Large to BRICS Anil Sooklal told Newsweek that more than 20 countries have applied to join or expressed interest in becoming members of BRICS as it plans to debate expansion at the upcoming August leaders' summit set to be held in Durban.

Sooklal emphasized at the time that BRICS did not seek confrontation against any other blocs, including the G7, but rather sought cooperation in creating a more equitable and inclusive international architecture.

Irina Yarygina, head of the Economics and Banking Business Department at the Moscow Institute of Foreign Relations (MGIMO), echoed a number of these points.

"Actually, globalization has reached a new stage of its development associated with the formation of difference alliances," Yarygina told Newsweek, "whose members share the main principles of interaction (mutual respect and equality) within the framework of reaching definite economic and social problems in the interest of their nations."

"One of such a kind of intergovernmental alliance is BRICS," she added, "whose member countries do not seek to dominate, but are interested in constructive relations, ensuring secure well-being."

Yarygina noted that the BRICS agenda encompasses an ambitious range of issues on which multilateral cooperation is sought, including security issues, post-pandemic recovery, technology sharing, sustainable development and people-to-people exchanges.

"It is important for everyone to recognize the multipolarity of the world as a new process of globalization," she said, "and strive for compromises within the framework of creation of a better future for mankind."

At the heart of BRICS, however, is an effort to diversify market access away from the domination of the U.S. dollar, by far the world's largest reserve currency, as well as U.S.-led financial networks subject to tools such as sanctions.

"Investment cooperation, along with other areas, is designed to strengthen balanced and inclusive economic growth and increase the level of the international competitiveness of BRICS economies," Yarygina said. "We consider these principles to be attractive to developing countries, and highly appreciate their intention to join BRICS economic and financial platform."

Leading this effort is BRICS' Shanghai-based New Development Bank (NDB), which has already expanded to include Bangladesh, Egypt and the United Arab Emirates as partners.

Cobus van Staden, a senior researcher at the South African Institute of International Affairs, told Newsweek that "the interest among developing countries to join the NBD is driven by dual dynamics."

"First, there is a lack of development financing options open to the Global South, particularly for concessional financing aimed at infrastructure development," van Staden said. "This reality has significantly contributed to the current debt crisis in the Global South, because lack of concessional options forces countries towards market-rated lending. So, the NDB opens another set of options for these countries, in addition to traditional development finance sources like the World Bank."

"Second, a smaller subset of developing countries has complicated relationships with Western powers, especially in relation to sanctions," he added. "For countries like Iran and Saudi Arabia, the NDB represents a potential source of financing and influence outside of forums dominated by Western norms and different forms of conditionality linked to financing from institutions like the World Bank."

The interest expressed by both Riyadh and Tehran in joining BRICS and its NDB has taken on a new light in the wake of Beijing's successful effort to broker a deal in March for the two longtime rivals to reestablish relations.

While van Staden stated that China and Russia have their "own preoccupations around the use of dollar-targeted sanctions" that "are contributing to the sudden momentum in exploring alternative currency trade," he also said he was "struck by the relatively quick engagement from the rest of the developing world."

"I think this is partly informed by alternative views of the global order coming from the Global North and the Global South," van Staden said.

He pointed to a survey published by the European Council on Foreign Relations in February, one year after Russia's invasion of Ukraine, which found vast differences in the opinions expressed by respondents in the West from those in China, India, Russia and Türkiye.

Respondents across nine European Union countries, the U.S. and the U.K. were more likely to say that the conflict would produce a world divided between two blocs led by China and the U.S., while those in the four non-Western nations were more likely to choose a more even distribution of global power among multiple countries.

The trend has been particularly evident during South Africa's BRICS chair tenure, as many nations across the continent see both China and the U.S. as roughly equally popular, even while Washington warns nations against doing business with Beijing. Van Staden also noted that U.S. trade with Africa throughout all of 2022 was less than China's trade with the continent in just the first quarter of this year.

"This raises new challenges for U.S. foreign policy," van Staden said, "because it will increasingly have to make allowance for these countries' desire to keep dealing with a wider range of global powers, while also keeping traditional partners like the U.S. on board."

"Putting too much us-or-them pressure on these countries risks them leaning more conclusively towards China," he added, "among other reasons because China is many of their main trading and financing partners."

As BRICS sets its sights on expansion, however, there are also significant disputes among core members. Perhaps the most serious of all is the difficult relationship between China and India. The two countries have been long locked in a border dispute that sparked a war six decades ago and turned deadly once again in 2020, with bilateral cooperation deteriorating between adjoining states that are home to the world's two largest populations.

"China and India don't have any modus vivendi to deal with the disputes at hand," Vijay Prashad, executive director of the Tricontinental: Institute for Social Research, told Newsweek. "They're not just border disputes, they're pretty fundamental, even about questions of trade and in international relations."

That being said, Prashad he said that even "India and China have been able to collaborate in BRICS and work through BRICS institutions," such as the NDB, whose first director general, K.V. Kamath, was from India.

China and India are also members of another common bloc, the Shanghai Cooperation Organization (SCO), as is India's other top rival, Pakistan. This group, which also includes Russia, along with four Central Asian states, is also set to expand across geopolitical fault lines, with Iran on its way to full membership and Saudi Arabia being one of many countries to have applied for dialogue partner status.

Prashad has seen this attitude gain greater traction across the Global South, giving rise to what he called a form of "new non-alignment" among countries such as Indonesia, Mexico and Türkiye, "and therefore it's generated interest in BRICS," he said.

In past decades, Prashad said "when the United States or Western European countries talked about globalization, they talked about universal interests, countries in the south felt, 'Well, maybe there's something to that, maybe there are global interests.'"

But he noted that since the financial crisis of 2007, "there's a growth of a mood which suggests, 'Hey, listen, what you sold us as the global interest is actually your parochial interest, and we want to put forward our own national interest.'"

This trend has only been accelerated by growing Chinese economic initiatives that have also fortified Beijing's influence across the globe.

"Many countries are making a calculation, and they'll say, 'Chinese capital, whether it's private or public capital, it's not a utopia, it's not a salvation, but it's certainly not coming with the kind of conditionalities that are imposed by the International Monetary Fund,'" Prashad said.

So far, the U.S. has yet to directly challenge BRICS, though a growing chorus in Washington has expressed alarm over the calls abroad for de-dollarization that could further limit the effectiveness of U.S. sanctions. In the face of this, Prashad said he hoped "that sober minds in Washington will prevail" as the multipolar model advances.

"There may be a shift going on," Prashad said, "and the United States might have to come to terms with that, rather than contest the BRICS project, this new nonalignment project."

Sovereignty and domestic agendas first

By Dani Roderick (edited)

Commentary on the world economy has never been short of exhortations for greater global cooperation. “What happens anywhere affects everybody … [so] it is pretty clear that the world needs more … international coordination and cooperation,” wrote a leading International Monetary Fund official in 2013. “[V]irtually every problem destabilizing the world … is global in nature and can be confronted only with a coalition that is global,” echoed a leading columnist in 2019.

Worries about the inadequacies of global governance and weakening multilateralism have heightened in recent years, because the United States and other leading advanced economies have increasingly put their domestic agendas first. Unilateral approaches have dominated in trade, industrial policies, and the climate transition. The World Trade Organization—the crowning achievement of global governance in the hyper-globalization era we are leaving behind—has been reduced to an ineffective bystander.

For the globalist commentariat, this is clearly bad news. For the global economy, however, the consequences are less clear—and could be salutary. In fact, in a world in which national governments focused on their own sustainable prosperity and social cohesion, the global economy would do just fine. Upon closer scrutiny, the case for global economic governance turns out to be considerably weaker than is commonly presupposed.

Start from the conventional case for global cooperation. We live in a world that is economically interconnected, goes the usual argument. What one country does often affects others. If governments do not coordinate their policies and reach agreement on common rules, these spillovers could leave everyone worse off.

But this reasonable-sounding argument has a big hole: the mere existence of spillovers is not an adequate justification for global coordination. In the overwhelming majority of cases where economic policies generate cross-border spillovers, national governments legitimately retain full autonomy—with little apparent detriment to the world economy.

Consider a government that wants to double its budget for tertiary public education or for the training of scientists and engineers. Should other governments be allowed to object and invoke international rules to constrain or discipline the policy? Even the most diehard globalists would consider this an absurd possibility.

But there is definitely a cross-border spillover, and it could be a large one: if the policy is carried out, the home country will strengthen its comparative advantage in skill-intensive goods, harming its competitors in global markets. Because spillovers are so pervasive, and because many domains of government policy are naturally viewed as “domestic” (as the education example indicates), they are not a good guide to where we should seek global cooperation.

Perhaps global rules should focus on policies that might be harmful to the home economy. Investing in public education would most likely benefit the domestic economy, even if it harms certain trading partners. But raising import tariffs or subsidizing certain industries would under many circumstances harm the domestic economy as well as trading partners.

But this approach would not produce a reliable guide, either. Import tariffs, subsidies, and myriad other policies that might decrease efficiency under perfect market conditions can be desirable under second-best, real-world conditions—say, to address regional unemployment or technological externalities. It is not clear that global bureaucracies would be better positioned – or viewed as more legitimate—than national policy authorities to determine the appropriateness of such policies for the home economy. And, in any case, shouldn’t democracies be allowed to make their own mistakes?

The argument for global governance is much stronger for the rather narrow category of policies that are strictly “beggar-thy-neighbor”—the harm they generate abroad is a necessary precondition of the benefits produced at home. Exploiting a country’s monopoly power on world markets, maintaining low capital taxes to shift paper profits from abroad, or undervaluing the domestic currency to “steal” employment from abroad are classic cases.

But such examples are few and far between. The vast majority of economic policies that produce adverse cross-border spillovers are not of the beggar-thy-neighbor type, and they would be deployed even in the absence of harm to other countries.

What about “climate protectionism,” which is at the center of contemporary worries around unilateralism? While U.S. green subsidies’ local-content requirements and the EU’s tariffs on carbon-intensive imports have raised the ire of third countries, such concerns are misplaced. Climate change is an existential problem for the world, and addressing it is a true global public good. From a global-governance standpoint, it would be far worse if leading countries chose to free ride on others’ decarbonization policies and did not do much themselves to address climate change.

For a variety of largely domestic reasons, the U.S. and the EU have taken major strides toward advancing the climate transition. That is cause for celebration, not condemnation, even if they have done so unilaterally and using very different instruments. Their governments’ desire to keep some of the benefits at home by privileging the competitive position of domestic firms is understandable—and a small price well worth paying for the world economy as a whole.

Too many limits on national policy autonomy can also produce a backlash against the global economy. One consequence of the erosion of national sovereignty under hyper-globalization was an increase in economic anxiety and the sense of a loss of control among many citizens. These are circumstances that exacerbate xenophobia and out-group hostility. As import competition fueled job losses in many communities, voters turned to ethno-nationalist, authoritarian populists.

So, when governments pursue more inclusive economic, social, and environmental agendas, they provide a further benefit to the world economy. Well-governed economies where prosperity is widely shared are more likely to welcome expanded international trade, investment, and immigration. As economics teaches, it is the home economy that reaps the bulk of the benefits from openness to the world economy, provided the benefits are distributed equitably. When countries help themselves, they help the global economy.

ROK must avoid US trap to improve ties with China

By Xie Guijuan

Further, during US President Joe Biden's visit to the ROK in May, the two sides agreed to upgrade their bilateral ties to a "global comprehensive strategic alliance "not only to counter the growing threat posed by the Democratic People's Republic of Korea, but perhaps also to contain China.

Friendly ties and cooperation have marked China-ROK relations over the past 30 years, with the most important lesson for the two countries being respecting each other's core interests and concerns, and maintaining regular communication to promote economic cooperation.

True, China-ROK relations have not been wholly smooth when seen in the context of the deadlock between the DPRK and the ROK. But the US, as a backstage influencer in the Asia-Pacific region, has been trying to muddy the historical issues China and the ROK have with Japan. The US is also responsible for the deteriorating Sino-US ties.

It seems the ROK has now adopted a tactic to maximize benefits by maintaining a delicate balance between strong economic ties with China and security dependence on the US. Since taking office one year ago, Yoon has been trying to "upgrade the US-ROK alliance", which the two sides ultimately agreed to during Biden's visit to the ROK. This has not only impacted China-ROK relations but also increased tensions on the Korean Peninsula and in Northeast Asia.

Disputes between China and the ROK that were confined to the political domain have now extended to economic and cultural fields, raising worries about China-ROK ties spiraling downward. But in the national interests of the two sides and for long-term regional security, Beijing and Seoul should take measures to halt the deterioration in bilateral relations.

First, China and the ROK should keep making efforts to promote mutual respect and trust, maintain peace in the region, and pursue win-win cooperation, the important factors they highlighted when establishing diplomatic ties in 1992. The two neighbors have common interests in facilitating regional development and contributing to regional peace and security.

Second, the ROK has the right to deepen relations with other countries but not at the expense of harming the interests of any third party or disturbing regional peace and stability. Yoon tried so hard to please Washington during his visit to the US that he said the Taiwan question "is not simply an issue of China but a global issue", which is a direct interference in China's internal affairs and a breach of the one-China principle, the political foundation of China-ROK ties.

In addition, the Yoon administration arranged for active interactions with Japan despite their deep-rooted historical problems, which many ROK nationals criticized as giving in to Japan's ploy to avoid facing its militarist past and surrendering to the wishes of the US. This US-centric diplomacy of the ROK has disturbed the traditional balance among China, the US, Japan and Russia in the region, shrinking the space for diplomatic maneuverings.

Third, sacrificing its win-win economic relations with China for the faux security guaranteed by the US is not in the interest of the ROK. Economic cooperation outweighs competition between China and the ROK, and that's why the US is desperately trying to prevent the ROK and Japan from strengthening their cooperation with China. If the ROK wants to enhance its international status, it should seek to resolve contentious issues with the help of other parties, instead of taking sides.

As an export-oriented economy with a saturating market, the ROK has to look for new growth points. More important, the ROK needs external mediation to help reduce the nuclear risks on the Korean Peninsula. And China can play a key role in this context.

And fourth, it is in the common interest of Beijing and Seoul to develop stable bilateral relations. China attaches great importance to its relations with the ROK and remains committed to maintaining friendly bilateral ties. To achieve that, China adheres to the philosophy of harmony in diversity and resolving disputes through dialogue.

Also, Seoul should realize that Beijing is a stakeholder in the Korean Peninsula denuclearization issue. But despite having a stable relationship with the DPRK, China has no intention of meddling in inter-Korean issues beyond the basic security requirements. China does not want inter-Korean relations to harm China's security interests either.

The Yoon administration should give its US-centric diplomacy a serious rethink, because it is essential for China and the ROK to respect each other's interests, avoid misunderstandings and miscalculations, and improve cooperation. However, in spite of China-ROK ties fluctuating in the short term, cooperation remains an irreversible trend in the long run.

Long Mekong Publisher joins Malaysia conference to unlock Asia's potential

Malaysian officials and dignitaries from across Asia met in Kuala Lumpur on the 17-18 June to express their belief that sincere and meaningful cooperation is key to unlocking the vast potential of Asia and to enable the realisation of a multipolar world order. Applying the Asian values of shared prosperity and cooperation will also see the continent finally shed its longstanding dependence on the West and allow it to chart its own direction and destiny, former Malaysian Foreign Minister Anifah Aman said in his remarks at the Kuala Lumpur Conference 2023 on Saturday.

"We must recognize that our strength lies in unity and collaboration. Asia, with its rich history, vibrant cultures, and thriving economies, has the potential to be a beacon of progress for the world. By harnessing our collective power, we can overcome the challenges that lie ahead and build a future defined by economic prosperity and shared success," he said.

"Another crucial step towards realizing this vision is the promotion of bilateral trade and investment in domestic currencies within the Asian market and beyond. By reducing reliance on Western currencies and embracing our own, we can foster greater economic stability, encourage cross-border transactions, and unlock the full potential of intra-Asian trade. This will not only strengthen our regional economies but also enhance our global standing and influence," he added.

Anifah, who is also the special advisor to the Sabah chief minister for international relations and foreign investment, urged advanced countries in Asia to facilitate capacity-building and technology transfer to empower developing countries to help the region rise as a whole.

Jointly organized by the Center for Economic and Sustainable Development and the Global Dialogue Forum "Building an Asian Common Market of Shared Prosperity", the conference brings together various officials and academics to discuss cooperation across Asia in the face of new geopolitical realities.

Separately, former Transport Minister Ong Tee Keat urged caution and wisdom in facing a West that, in the wake of its waning primacy, is seeking to divide the world, to the detriment of progress and cooperation across Asia and the Global South.

"Time and again, the mayhem was perpetrated in Asia to serve the selfish geopolitical interest of powers from outside the region. And without fail, the Global South countries were consistently made the targets of aggression under the prevailing order, albeit the rhetoric of 'rules-based order' continues to ring aloud," he said.

However, the rise of multipolarism and the growing aspirations of Asia that are increasingly empowered through cooperative development initiatives will see the West having to accept that it is no longer able to pull strings on the global stage.

"The reigning hegemon must learn to accept the hard facts that the West-centric global order can no longer meet the rising expectations and aspirations worldwide ... All in all, what the Global South has been yearning for all these years is nothing more than an egalitarian and inclusive international order where their concerns can be addressed even-handedly," he said.

Read full article here.

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