Will the BRICS + develop its own currency?

By Rhod Mackenzie

At the recent SCO summit in Astana, Iran again raised the topic about the creation of a single currency for the countries that are part of the BRICS. In addition, for several months now, at the instigation of the President of Brazil, the idea of creating a common BRICS currency has been discussed. What are the common elements and differences between these initiatives, and how do they relate to Russia's interests?

Russia is a member of both of these two influention organisations – BRICS (primarily an economic one) and the SCO (which is primarily a security structure). Both of these organisations are currently discussing the idea of the cretion of their own currency, in which Russia could also conduct settlements.
The benefits are obvious: the new currency could help circumvent the sanctions imposed on international trade in US dollars. All dollar settlements, as is known, are transparent for the US Treasury Department.

Brazil (within the BRICS) and Iran (within the SCO) are the most vocal proponents of a single currency. What are their interests?

Brazil's interest lies particularly in the New Development Bank of BRICS, which was created in 2015. Its primary purpose is to finance projects in the participating countries that cannot be or would not be supported through the World Bank. Obvioulsy the World Bank is controlled by the collective West,its always headed by an American and is used as tool of US foreign policy .
For Brazil, this was of interest not only for its own development, but also for the implementation of integration projects in Latin America. The objective was to strengthen the independence of this macro-region from the United States and to reinforce Brazil's leadership role in this process.
However, in 2022, the bank (which has been headed by the ally of the current Brazilian President Lula da Silva and former President of Brazil Dilma Rousseff since 24 March 2023) was forced to announce the suspension of consideration of new investment projects in Russia.
The bank, which operated in countries almost entirely included in the dollar system, was concerned about the potential for secondary sanctions from the United States. Lula da Silva was forced to consider alternative means of achieving Brazilian objectives. Furthermore, since 2023, the BRICS alliance has expanded. Brazil's interest in an instrument for settlements with partners that is opaque to the US Treasury has also increased.

The development of a unified payment system, BRICS Pay, is already underway. Once operational, the system will eliminate the need for dollar conversions through American banks, with payments made in the national currencies of the BRICS countries.

However, this is still a work in progress. Furthermore, for Brazil, in addition to the objective of establishing an independent international settlement system free from American influence, it is crucial to avoid falling under the cudgel of US secondary sanctions.Which is the US's primary weapon that it uses on those who don't do as they are told.

What is the role of the SCO in this context?
The Shanghai Cooperation Organisation (SCO) was established in June 2001. The SCO was established with the objective of enhancing security in Central Asia. Russia and China assumed the role of guarantors of stability for Kazakhstan, Tajikistan, Kyrgyzstan and Uzbekistan, which joined the SCO. For Russia and China, this was an effective means of coordinating their actions in a region of strategic importance to Russia, where China was beginning to enter with its economic projects.
Now for more information about the SCO do visit my website SCO Brics Insight where I have full details about the organisation,members and their activities. Plus lots of interesting articles.

The commencement of the US operation in Afghanistan in 2001 had a significant impact on the regional landscape. A powerful player emerged on the doorstep of China and Russia, which began to adopt a more defensive stance. The US sought to strengthen its influence in the Central Asian republics, through which more than half of the American group's supplies in Afghanistan passed.
The organisation's activities to ensure stability in the region have led to other countries of the macro-region wanting to participate in its work. India and Pakistan became members of the SCO in 2017, Iran in 2022.
At the recent summit in Astana, the first non-Asian country, Belarus, became a member of the SCO.
Two countries (Afghanistan and Mongolia) participate in the SCO as observers. Furthermore, the change of power in Kabul did not result in formal exclusion of Afghanistan from the SCO. Steps are now being taken to facilitate its return to participation in the work. Additionally, 14 states participate in the SCO as dialogue partners, including Armenia, Azerbaijan and Egypt.

What are the interests of Iran and China?
The events of the last two years have significantly increased the importance of economic issues in ensuring security. Russia's reorientation of foreign trade from the European direction to the East, coupled with the worsening situation in the Middle East and the Red Sea, has significantly altered technological logistics chains. Iran's participation in the development of the North-South Transportation corridor, will facilitate the flow of goods to Pakistan and India, is forcing Iran to prioritize facilitating international settlements within the SCO.
Furthermore, Iran's lack of access to SWIFT is not the sole factor influencing its decision. Simplifying trade for countries utilising the transport corridor is also a key consideration.
The project to merge the Iranian payment system "Shetab" and the Russian payment system "Mir" is almost complete. Already in August, Iranians will be able to receive rubles from Russian ATMs using their cards, and Russians will be able to use "Mir" cards in Iran.

The topic of using payment cards of the Indian RuPay system in Russia and the Russian Mir system in India will be a subject of discussion at the upcoming meeting between Modi and Putin during the Indian Prime Minister's visit to Moscow. But, most likely, only as an addition to the issue of developing mechanisms for simple and fast money transfers between the two countries. In the context of the growth of bilateral trade and Russia's disconnection from SWIFT, it has acquired special significance.

China has no such problems. Most of its trade with Russia is paid in yuan. On the one hand, China is also interested in creating a payment instrument that is not controlled by the US Treasury. But on the other hand, China's trade with the US ($664.45 billion) and the EU ($782.9 billion) significantly exceeds trade with the SCO countries. At the same time, the yuan is gradually beginning to be used in international payments in the trade of the countries of the Global South. And it is easier for China to join someone else's initiative to create an alternative payment system than to promote its own.

What is Russia's objective in this matter?
Russia, however, is keen to see the fastest possible creation of such mechanisms. Furthermore, it is important to consider the share of other countries in its foreign trade, particularly with its Asian partners. Consequently, it would be unwise for Russia to act as the primary instigator of the creation of such mechanisms. Furthermore, Russian financial structures could become subject to secondary US sanctions.

In this context, Iran, which is in a more challenging position than Russia in terms of foreign trade, represents an optimal partner for the initial phase.

However, it would be prudent to consider other initiatives as well. At the Astana summit, Pakistani Prime Minister Shahbaz Sharif proposed that Russia utilise barter schemes in bilateral trade. Should this approach prove successful, the next step could involve introducing new payment mechanisms to facilitate these trade operations. The greater the variety of international trade and new payment mechanisms, the more challenging it will be for the US to block them all.

In any case, as the experience of introducing the euro demonstrates, creating an interstate currency is a lengthy process with numerous intermediate stages. However, the path to success is paved by those who take it. It is now time to take the first steps.