Jaishankar Asserts India’s Global Strategic Autonomy on The Eve of Last Month’s Bric’s Summit in Russia
Summary: During the BRICS summit, Indian External Affairs Minister S. Jaishankar emphasized India’s stance on maintaining its strategic autonomy, rejecting the BRICS bloc’s push for a common currency aimed at de-dollarization. India clarified that it will continue using the U.S. dollar in international transactions where accepted, as it has no intent to oppose the dollar’s global role. India views the de-dollarization agenda, primarily driven by Russia, China, and Iran, as a move to sidestep U.S. sanctions. A key concern for India is the potential dominance of the Chinese yuan within any proposed BRICS currency, given China’s significant GDP share within BRICS. China’s limited currency convertibility and opaque financial policies further deepen India’s skepticism. Jaishankar noted that unlike the European Union, BRICS lacks a unified democratic structure, making a currency union challenging. India’s symbolic rupee-based trade agreements do not counter the dollar, as they exclude key trading partners like the U.S. and China. Additionally, there are concerns about economic instability within a currency union, as seen in the EU’s experience with Greece during the 2008 crisis, where Germany bore much of the bailout cost. India, therefore, remains cautious, prioritizing its own financial stability and autonomy over aligning with BRICS’ currency plans, which lack the consensus needed for immediate implementation.
JAISHANKAR ASSERTS INDIA’S GLOBAL STRATEGIC AUTONOMY ON THE EVE OF LAST MONTH’S BRICS SUMMIT IN RUSSIA
External Affairs Minister Jai Shankar has rightly cold-shouldered Russia, China, and Iran Axis’ self-interest-propelled hurry to de-dollarize the BRICS and establish a common “BRICS CURRENCY.”
External Affairs Minister S Jaishankar has said India is not interested in the de-dollarisation agenda and will use the US dollar wherever it is accepted as a form of payment.
He emphasized that there was no ill-will directed at the US dollar. He said that We’ve never intentionally aimed at the US dollar. It’s not a part of our economic, political, or strategic agenda. While some BRICS nations may have pursued de-dollarization, our focus is different. We have a genuine concern, as we often engage with trading partners who face difficulties obtaining dollars for transactions.
India knows well that the RUSSIA-CHINA-IRAN AXIS war cry for de-dollarization is a CAMOUFLAGE TO ESCAPE THE AMERICAN SANCTIONS; THESE COUNTRIES CALL IT THE “WEAPONISATION” OF THE DOLLAR!
THE DISADVANTAGE TO INDIA FROM A “COMMON” BRICS CURRENCY—CHINESE HEGEMONY OVER THE NEW CURRENCY
Of all the BRICS currencies, only the Chinese Renminbi (RMB) is accepted by other countries as an INTERNATIONAL CURRENCY, along with the four other established international currencies, the USD, Euro, the Japanese Yen (JPY), and the British Pound (GBP).
In October 2016, the IMF acknowledged the global acceptance of the RMB, adding it as one of the five SDR currencies. Despite China being the world’s largest exporter and having a GDP accounting for 15% of the global total, the share of the Yuan (RMB) as an international currency remains relatively small, standing at only 2.5% of the global total by the end of 2023.
- The USD share—————– 66%
- Euro share———————–23%
- British Pound share————9.5%
- Japanese Yen share————9.0%
- China’s Yuan share————-2.5%
China has kept almost all its foreign currency assets, $3.31 trillion as of September 2024, in US dollars. AS A SAFE HAVEN, knowing its currency’s poor global usage status, the Yuan is not yet fully convertible on Capital Account transactions.
China, which represents 70% of the BRICS’ combined GDP and is the world’s second-largest economy after the U.S., naturally seeks to have significant influence in shaping the characteristics of the proposed BRICS common currency.
THERE IS NO WAY INDIA CAN ACCEPT THIS HEGEMONY, GIVEN THE DECADES-LONG ENIMITY BETWEEN THE TWO ON THE DISPUTED BORDER.
Also, the Indian Rupee will be unable to independently challenge the Yuan or the other four established global currencies in the foreseeable future. Hence, prudently, India has placed its bets with the world’s strongest currency, the USD and has parked a predominant percentage of its $ 616 bn financial assets IN THE USD.
India’s “Bilateral Rupee Trade Agreement,” established in July 2022, is largely symbolic and does not pose a challenge to the US dollar.
While the agreement with 22 countries marks a positive step, it excludes India’s top three trading partners—China, the US, and Japan. The total trade with these nations is only around $7 billion (estimated from individual 2024 trade figures, as official data is not yet available), compared to India’s overall cross-border trade of $31 billion.
Without the inclusion of these major trade partners, the agreement remains symbolic until these countries agree to engage in bilateral trade using the rupee.
In October 2023, Russia, which was allowed to export oil to India subject to the price limit of $60 as per the Western sanctions but accept only Rupee payments, asked India to pay for the imports in Chinese Yuan as it had no use for the accumulated INR since the beginning of the Ukraine war. India, however, refused to oblige Russia.
This scenario could apply to countries like Germany, the UK, and the UAE, particularly when they do not require an equivalent amount of goods and services from India in return. They cannot easily sell the INR in the global market since India’s chronically trade-deficit rupee has no significant global demand.
OTHER DISADVANTAGES OF A COMMON CURRENCY
If and when it is established, the BRICS currency will only be the “Currency of a Union” and NOT the member countries’ currency.
This has the following disadvantages:
The primary drawback of the proposed BRICS common currency lies in the fundamental differences in political systems among its members. Unlike the European Union, which consists exclusively of democracies, China has been under authoritarian rule since 1949, with leaders like Xi Jinping being unaccountable to the people. Xi’s primary ambition is to assert Chinese dominance in the Asia-Pacific region, with broader goals of global hegemony, both militarily and economically, in direct opposition to democracies, including the world’s oldest and most established democracy—India. This poses a significant challenge to India’s interests.
In financial matters, Xi is likely to act in an opaque manner, keeping his intentions close to his chest, which could undermine the interests of other BRICS members. Meanwhile, Putin’s Russia, heavily reliant on China, will likely play the role of a silent accomplice.
A currency union involving a bankrupt nation can quickly lead to a crisis, as seen during the 2008 financial meltdown when well-off countries, like Germany, were forced to bail out Greece. The same risk could arise within a BRICS currency union if a member nation faces financial collapse.
The members shall have to compromise their financial autonomy even at the cost of their national interests and monetary policy flexibility, such as setting their own interest rates, budget deficits and public debt levels. They also cannot devalue their currencies to boost exports when needed. Spain and Greece are stark examples of this drawback during the 2008 meltdown.
The weaker economies of the Union exert adverse pressure on the stronger ones.
The debt crisis began in 2008 with the collapse of Iceland’s banking system, then spread primarily to Portugal, Italy, Ireland, Greece, and Spain in 2009, leading to the popularisation of a somewhat offensive moniker (PIIGS). It led to a loss of confidence in European businesses and economies. Germany, the largest country by GDP in the EU, had to bear most of the contributions towards Greece’s multiple bailout packages.
This can happen to China and India when some of the fragile new entrants or others face bankruptcy when BRICS has a common currency.
The “prototype” of a new “Brics Common Currency” displayed by Putin on the eve of the Summit last month (printed as a sample by someone) evoked laughter across the world. Putin got the point and said the common currency was a long-term plan, and Russia had no plans to confront the US dollar soon.
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