Fortune News | May 27,2023
Sep 10 , 2023
By Simon Johnson
The recent BRICS summit in South Africa marks the start of a new phase of Great Power competition. At the apparent urging of China, the BRICS group (including Brazil, Russia, India, and South Africa) invited six other countries to join: Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates. By some measures, the economic output of this expanded group will rival that of the G7 (the principal developed countries: the United States, Canada, Japan, the United Kingdom, France, Germany, and Italy).
According to public statements by Russian President Vladimir Putin and, more importantly, by Chinese President Xi Jinping, the goal is to build a group that can stand up to Western influence and create the foundation for an alternative international order, with less reliance on the US dollar.
This effort will undoubtedly gain greater attention in the coming year, especially when the expanded membership meets for the first time in October 2024 (in Kazan, Russia). But BRICS+ is unlikely to reshape the world, for three reasons.
The extent of common interest among its members should not be exaggerated.
India has plenty of reasons (based on a great deal of recent history) not to want China to become too powerful. Any group that includes oil and gas producers (Brazil, Russia, Iran, Saudi Arabia, and the UAE) and energy importers has a fundamental fault line. For example, South Africa, where energy shortages (and rolling power cuts) are having serious negative effects on the economy, has no interest in paying more for energy; but selling oil to the world keeps the oil and gas producers' public finances afloat.
The idea of replacing the dollar with other currencies for trade and financial transactions has been around for decades. The problem is that something cannot be replaced with nothing. If the alternative involves the Chinese renminbi, it will require putting a great deal of faith in the Chinese economy, which currently looks more than a little shaky.
When the going gets tough, would the Chinese authorities allow foreigners to sell their renminbi holdings without restriction?
Any alliance with Russia is fraught with dangers at this point. Russia's leadership looks unstable and unpredictable. Rather than backing down from his war of aggression against Ukraine, Putin seems determined to continue disrupting global energy markets (bad for energy importers) and grain markets (very bad for countries such as Egypt). Russia's full-scale invasion of Ukraine has been a disaster for both countries, but Putin is the type of dictator who cannot admit a mistake.
The current cascade of coups across Africa reminds us (and him) how such regimes end.
For centuries, Great Power competition was based on formal empire (ruling other countries) and exercising de facto control through military means, bribery, and unequal trading relationships. From the early 1700s until the 1940s, the British Empire led the world with both types of machinations, but other European countries also had their spheres of influence.
The global system changed after World War II, because the United States (US) took over as the leading Western industrial power, determined to replace a formal empire with much more equal trading relationships. To be sure, there continue to be plenty of complaints about the fairness of that system. But Western Europe did well, and countries such as Japan, Singapore, South Korea, and (in recent decades) China prospered under a relatively open international trading system that encouraged exports of manufactured goods from lower-wage countries to high-income markets.
The Soviet Union's alternative post-war bloc, based on military control over Eastern Europe, fell apart in 1989, two years before the demise of the Soviet Union itself.
The latest phase of the Great Power competition, however, is much more about technology than it is about trade. In retrospect, this shift began during WWII, when the British shared key developments (particularly radar and early thinking about atomic weapons), and the Americans' Manhattan Project went further and faster than anyone could have imagined. Digital computers, semiconductor chips, jet aircraft, life-saving drugs and vaccines, and the internet all came from the West (boosted significantly by US government investments)
In October 1957, the Soviet Union shocked the world by launching the first artificial satellite, Sputnik. But, its rigid and repressive system could not sustain enough creativity or turn good ideas into products that people wanted (other than weapons).
Now, China wants to challenge the West for leadership in new technology to tighten social control through a combination of artificial intelligence and surveillance. This, not the expanded BRICS, is the potential threat to the West.
There is now an active bipartisan discussion in Washington, led by US Senate Majority Leader Chuck Schumer, regarding how much AI we want to develop and with what safeguards. This is healthy and will likely lead to better outcomes (although there is no doubt with imperfections in consumer protection, alongside ongoing concerns about job losses).
In contrast, an open discussion about the technologies China wants to develop and how it directs innovation is not allowed in that country. As was true during the Cold War, a rigid and repressive system is bidding to lead the world in knowledge creation, application, and dissemination.
Will China succeed where the Soviet Union failed?
China is unlikely to win out as long as the West continues to nurture innovation – and manages that innovation responsibly. In this sense, the West controls its destiny.
PUBLISHED ON
Sep 10,2023 [ VOL
24 , NO
1219]
Fortune News | May 27,2023
Radar | Nov 27,2023
Radar | Jan 19,2024
Commentaries | Apr 03,2021
Sponsored Contents | Jun 15,2022
View From Arada | Dec 29,2018
Commentaries | Oct 28,2023
Radar | Apr 29,2023
Fortune News | Apr 03,2023
Viewpoints | Apr 22,2023
Photo Gallery | 97298 Views | May 06,2019
Photo Gallery | 89521 Views | Apr 26,2019
My Opinion | 67348 Views | Aug 14,2021
Commentaries | 65814 Views | Oct 02,2021
Feb 24 , 2024 . By MUNIR SHEMSU
Abel Yeshitila, a real estate developer with a 12-year track record, finds himself unable to sell homes in his latest venture. Despite slash...
Feb 10 , 2024 . By MUNIR SHEMSU
In his last week's address to Parliament, Prime Minister Abiy Ahmed (PhD) painted a picture of an economy...
Jan 7 , 2024
In the realm of international finance and diplomacy, few cities hold the distinction that Addis Abeba doe...
Sep 30 , 2023 . By AKSAH ITALO
On a chilly morning outside Ke'Geberew Market, Yeshi Chane, a 35-year-old mother cradling her seven-month-old baby, stands amidst the throng...
Apr 27 , 2024
The Prosperity Party (PP) - Prosperitians - is charting a course through treacherous...
Apr 20 , 2024
In a departure from its traditionally opaque practices, the National Bank of Ethiopia...
Apr 13 , 2024
In the hushed corridors of the legislative house on Lorenzo Te'azaz Road (Arat Kilo)...
Apr 6 , 2024
In a rather unsettling turn of events, the state-owned Commercial Bank of Ethiopia (C...
Apr 28 , 2024
A dire situation unfolds across public universities, where students face the harsh re...
Apr 28 , 2024 . By MUNIR SHEMSU
A European business lobby in Ethiopia issued a scathing review of the tax system last...
Apr 28 , 2024
The Federal Supreme Court has recently ruled in the prolonged commercial dispute surr...
Apr 28 , 2024 . By MUNIR SHEMSU
Transport authorities placed blame on driving schools and vehicle inspection centres...