Southeast Asia has its reasons for pivoting to BRICS – Asia Times
The sudden reversal of Southeast Asia toward the BRICS countries is a major game-changer that some in Washington anticipated.
In recent days, Malaysia extensive its interests to visit Brazil, Russia, India, China and South Africa. Thailand and Vietnam are even interested in joining the Association of Southeast Asian Nations, which is a group of nations.
In Indonesia, there’s growing recognition that Argentina, Egypt, Ethiopia, Iran, United Arab Emirates, Saudi Arabia and another” International South” countries have a place in vying to join this burgeoning international business.
Anwar Ibrahim, the prime minister, made the declaration in an interview with Chinese media prior to Li Qiang’s attend to Malaysia, announcing his intention to re-join the union, which has grown by a whopping 2 % in the last year. That dynamic is luring the Global South countries, primarily because it provides access to funding and a political movement that is unconstrained by Washington’s influence.  ,
Joe Biden, the US senator, might find the South Asian stumbling block particularly troubling. Since the Biden time, a provincial shield has been built to counteract China’s growing influence and attempts to replace the US dollars in trade and finance.
Relationships between the US and some ASEAN people are clearly deteriorating. This, at a time when , Saudi Arabia , is looking to step out the “petrodollar”. As China, Russia, and Iran square off against old partnerships, Riyadh is intensifying de-dollarization work.
” A gradual reform of the international financial environment may be afoot, giving way to a planet in which more local economies can be used for international purchases“, says analyst , Hung Tran at the Atlantic Council’s Geoeconomics Center. The money would continue to be important but without its enormous influence, which would be complemented by currencies like the Taiwanese renminbi, the euros, and the Chinese yen in a way that’s proportionate to the global footprint of their economies.
Tran points out that “in this environment, how Saudi Arabia approaches the consists continues to be a significant predictor of the economic coming.”
Malaysia’s excursion tells the story. Anwar Ibrahim, the prime minister, made a world impact by supporting Western finance. That was in the late 1990s, when Anwar’s liberal tendencies clashed with Mahathir Mohamad’s stances.
Mahathir shut Anwar down. The door was opened to Deputy Premier Anwar, who was afterwards imprisoned. Anwar’s efforts to improve competition and establish equal using fields were even reversed. Capital controls were imposed by Mahathir and Malaysia Inc. were circling the vehicles.
Then it’s Anwar who’s turning away from the Adam Smith- encouraged guidelines he once championed — and toward the , BRICS.
” We have made our plan apparent and we have made our choice”, Anwar tells Chinese internet outlet , Guancha. The proper process will begin immediately, according to the statement. As far as the Global South is concerned, we are totally supportive”.
Anwar gave a shoutout to Argentine President Luiz Inacio Lula da Silva, who is determined to end the economy’s dominance.
” Last month, Malaysia had the highest expenditure ever, but the money was also attacked”, Anwar explains. ” Well, it has eased in the past few months. But it does n’t make sense, it goes against basic economic principles”.
Anwar documents that the question is: Why? He claims that” a coin that is completely outside the two nations ‘ business structure and useless in terms of economic activities in the country has become prominent merely because it is used as an international money.”
Among the many reasons for Anwar’s ideological reversal is China’s emergence on the global scene, providing a regional growth engine. Another: the” Western narrative” surrounding events like Hamas’s October 7 attack on Israel.
” People keep talking about October 7, which annoys me”, Anwar says. Do you want to obliterate 70 years of history by repeating one event? This is the Western narrative. You see, this is the problem with the West. They want to control the conversation, but because they are no longer a colonial power and independent nations should be free to express themselves, we can no longer accept it.
In late May, Thailand announced it’s applying for , BRICS , inclusion in part to boost its presence on the world stage. If approved, Bangkok would likely become the first ASEAN economy added.
According to Nikorndej Balankura, a spokesman for the foreign ministry,” Thailand believes that BRICS has an important role to play in strengthening the multilateral system and economic cooperation between countries in the Global South, which aligns with our national interests.” ” As for economic and political benefits, joining BRICS would reinforce Thailand’s role on the global stage, and strengthen its international cooperation with emerging economies, especially in trade, investment and food and energy security”.
Thailand’s bid, according to Soumya Bhowmick, an associate fellow at the Observer Research Foundation think tank, supports Beijing’s wider strategic objectives of boosting its economic influence in Southeast Asia.
” For China”, Bhowmick notes,” Thailand’s membership represents an extension of its regional influence, complementing its Belt and Road Initiative. This is in line with China’s strategic goals of fostering stronger economic ties and the creation of new infrastructure in Southeast Asia.
The first BRIC grouping was created in 2001 by Goldman Sachs economist Jim O’Neill. The members formally joined forces in 2009; A year later, they added the” S” when South Africa joined. In 2023, the BRICS doubled in size by luring more , Global South , nations.
Today, BRICS nations account for half the world’s population and two- fifths of trade, including top energy producers and importers.  , BRICS nations also account for 38 % of global petroleum imports, led by China and India.  ,
The grouping could give the Global South a greater voice in international affairs and challenge the domination of existing institutions, according to Daniel Azevedo, an analyst at Boston Consulting Group.
BRICS , Azevedo adds,” creates a forum that, at minimum, gives , emerging markets , the opportunity to align on global topics and new opportunities to promote mutual , economic development  , and growth. And it’s evolving steadily”.
Azevedo notes that as the BRICS build political and , financial institutions , and a payment mechanism for executing transactions,” there are important potential implications for the future of , energy , trade, international finance, global supply chains, monetary policy and technological research”.
Global companies will need to take these new geopolitical and economic realities into their investment strategies, according to Azevedo. They ought to also improve their ability to take advantage of opportunities and reduce risk.
The BRICS have n’t always demonstrated their viability as a bloc. Five core nations are present, with nothing else in common besides some economists ‘ imagination. The BRICS frequently seem to be focused solely on improving access to China’s rapidly expanding economy and doing little else.
Paul McNamara, investment director at GAM , Investments, speaks for many when he observes that the , BRICS , is still an acronym in search of cohesive economic argument. Would most current global elites care about the BRICS without China at the core, asks McNamara?
As such, says Ian Bremmer, president of Eurasia Group, the “impotence of , BRICS” , makes joining the group” a low- stakes gambit with some potential upside. It may help Thailand, which is its biggest trading partner and most worrying military threat, win over China. But, if not, what has Bangkok really lost”?
Vietnam traveled to Russia earlier this month to take part in the BRICS summit. According to Deputy Minister of Foreign Affairs Nguyen Minh Hang, Hanoi is eager to collaborate with like-minded developing nations.
At a time when political dysfunction is at its worst, and all this is happening amid deteriorating American finances. As the national debt approaches US$ 35 trillion – on the way to , US$ 50 trillion , – Biden’s Democrats and Donald Trump’s Republicans are barely on speaking terms.
This is not appropriate for either investing in government funding in the short run or making necessary upgrades to promote innovation and productivity over the long run. Additionally, it implies the threat of a second Capitol Hill insurrection similar to the one that occurred on January 6, 2021.
That event played a direct role in the August 2023 move by Fitch Ratings to revoke Washington’s AAA credit grade. Extreme polarization, explains Fitch analyst Richard Francis, “was something that we highlighted because it just is a reflection of the deterioration in governance, it’s one of many”.
The key is now how Moody’s Investors Service, which still assigns Washington AAA, responds to the chaos caused by Trump’s campaign promises to win back control. And as Biden attempts to overthrow Trump, Biden uses new trade sanctions.
This puts US Treasury securities in a high degree of risk. Japan and China alone have US government debt totaling$ 2 trillion. Any sudden run on the dollar could trigger a fire sale, sending US yields skyrocketing.
The Federal Reserve’s reluctance to lower interest rates as was widely anticipated increases the chance of a policy error in this regard. One of the most well-known Fed errors in history was missing the subprime crisis ‘ level of distress in credit markets in 2007.
As Fed Chairman Jerome Powell’s team prolongs the “higher for longer” era for yields, developing economies are increasingly in harm’s way. That’s especially so as the dollar’s surge hoovers up global capital.
These worries fall under the umbrella of the broader BRICS’s plan to pool more than US$ 100 billion in foreign currency to absorb financial shocks. Members can use the funds in emergencies, preventing them from visiting the International Monetary Fund. Since 2015, the bank that the BRICS created has approved tens of billions of dollars of loans for infrastructure, transportation and water.
The , BRICS currency  , project has been gaining traction since mid- 2022, when the 14th BRICS Summit was held in Beijing. Vladimir Putin, the president of Russia, stated there that the BRICS were developing a “new global reserve currency” and were willing to expand its use.
Brazil’s Lula , also has thrown his support behind a BRICS monetary unit. Why ca n’t a bank like the BRICS bank use a currency to finance trade between Brazil and China, as well as Brazil and all other BRICS nations? he asks. Who made the decision to use the dollar as the reserve currency following the end of gold parity?
Fernando Haddad, Lula’s finance minister, has been making a point about the more prevalent use of local currencies in bilateral trade instruments like credit receipts. The focus, he says, must be phasing out the use of a third currency.
The benefit is that trade transactions are resolved in the currency of a non-membership-based nation, he claims.
Economist Vikram Rai of TD Bank points out that” there is great potential for regionally dominant currencies and a multipolar international regime to emerge,” with the roles being “filled now by the dollar shared with the euro, a more open yuan, future central bank digital currencies, and possibly other options we have yet to see” within the next ten or two.
Analysts at Moody’s warn that the Americans going overboard on tariffs, concerns about default and weakening institutions are threatening the dollar ‘s , reserve currency status.
” The greatest near- term danger to the dollar’s position stems from the risk of confidence- sapping policy mistakes by the US authorities themselves, like a US default on its debt for example”, Moody’s argues. The dollar’s global role is threatened by weak institutions and a political pivot toward protectionism.
It’s difficult to believe that America could lose much more than just the economic plot as Southeast Asia increasingly leans toward the BRICS.
