A new world without "exorbitant privileges"
Professor Jeffrey Sachs on why the Global South is gravitating towards BRICS
By Alexander Gasyuk, Rossiyskaya Gazeta correspondent, special to International Affairs
The recently held BRICS summit in Kazan was a great success. Implementation of its declaration will help create a truly multipolar and UN charter based world in which the US will lose its huge advantages of world's key currency owner. Dozens of countries will want to join this international platform not only because it represents the fastest growing part of the global economy, but also because there is no habit of intimidating other nations in the BRICS, as the United States and the EU do. All this according to Jeffrey Sachs, a renowned Columbia University Professor of economics and outspoken public policy analyst, who shares his perspective on BRICS with International Affairs magazine.
What is your take on the outcome of BRICS 16th summit in Kazan?
The Summit was a great success. The Kazan Declaration is very strong, the goodwill among the nations was clearly evident, and the future work program for the BRICS is positive, ambitious, and achievable. The BRICS are helping to usher in a true multipolar, multilateral world that is pledged to operate according to the UN Charter and international law.
What to your mind BRICS countries have managed to achieve since its foundation in 2009 by Brazil, Russia, India and China?
The BRICS countries have forged an important bond amongst themselves, established new institutions such as the New Development Bank, supported a new multilateralism, and helped to forge improved relations among countries, such as the recent China-India agreement on the borders and the rapprochement between Iran and Saudi Arabia. The next steps, innovating in international finance, technology, and infrastructure, will also be notable.
What role could this international platform play in reshaping existing global order and what does it mean for fading western geopolitical and financial domination?
The role of the dollar will most likely diminish significantly in the next decade. This is for three main reasons. First, financial innovations (such as digital central bank currencies) will enable improved methods for international settlements. Second, the US has abused its privilege of being the world’s key currency. By weaponizing the dollar, for example freezing Russia’s balances, the US is driving countries away from the dollar to safer stores of value. Third, the relative weight of the US in the world economy is gradually declining, and this too means a long-term shift towards non-dollars payments and stores of value.
During recently held summit in Kazan it was decided by BRICS leaders to develop its own cross border payment system. If successfully created will it shaken US dollar domination in global trade?
Yes. As just explained, the role of the dollar will diminish, and this will force fiscal adjustments in the US as well, since the terms on which the US Government borrows from the rest of the world will become less favorable. America will lose some of the “exorbitant privileges” that came with having the world’s key currency.
How do you access further possible enlargement of BRICS?
Clearly there are dozens of countries that will want to join. The process, however, will be somewhat gradual, since the BRICS will also need time to develop the new set of institutions and their proper management and governance.
Why is Global South (represented in Kazan by 30+ countries) so interested in this platform?
The BRICS are the fast-growing part of the world economy, and do not bully other countries as the US and EU got into the habit of doing. It’s natural that many more countries will want to join the group.
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