Single currency of the BRICS countries: fast or even faster
In response to the question posed in the preamble, let's say right away - hardly. But the answer to the suspicious success of the dollar and the problems of traditional currencies is quite. And also advertising for the BRICS itself, good or bad - time will tell.
In any case, the participants extract from the BRICS not so bad profits, both economic and image. And the next summit of the BRICS countries, held in South Africa, ended, perhaps, with truly epoch-making changes. And it's not just about the real prospect of BRICS expansion. The results of the summit were also noticed in emerging and frontier markets.
Russian vector
Much to the surprise of skeptics, the participants agreed to create a single currency, at least for settlements within the association itself. The BRICS Pay payment system has already begun to function. Questions arise: will the new money be digital or cryptocurrency, how realistic is all this and in what time frame can this be done.
The situation in the BRICS countries with their economies can be described as "swan, cancer and pike". And given the behavior of South African President Cyril Ramaphosa, who did not allow Vladimir Putin to the summit, one can predict that this maxim will continue. In the near future - the character of a parody of the famous fable, with the name of the second participant in the genitive case.
To begin with, let’s talk about the “old” members of BRICS.
According to Sergei Lavrov, the head of the Russian Foreign Ministry who replaced the Russian president at the summit, no one will change the acronym BRICS as it expands, because it is already an internationally recognized brand. From such a transparent hint, smoothed over by the rhetoric of a professional diplomat, it follows who is the boss in the house and which five countries will determine the processes of integration of developing and frontier economies.
But even in this core of the world's largest emerging economies there is no single economic trend. In Russia, the situation is rather complex and contradictory: the ruble is falling, the stock market is growing, since it is driven by large commodity corporations, which benefit from a weak ruble when exporting products abroad.
This is their separation and difference from ordinary Russians, who are less and less able to afford the purchase of many durable goods, either purchased abroad or produced in Russia using imported raw materials and parts. Plus, the huge costs of the SVO, which has already moved from the category of a special operation into the category of a positional frontal confrontation that is debilitating for all parties to the conflict.
Chinese breakaway
China is a completely different story. In the wake of the optimism of the state's appetite for investment risks in connection with the phenomenal growth of the economy, state investments were often directed to projects of rather high status. They give China an external gloss in front of the entire world community and business, but the population is hardly really needed.
Money from the treasury was invested in the real estate bubble, in idle empty apartment buildings, in which often not a single apartment was sold in a couple of years from the date of construction. New airports and railway stations have sprouted up across the country, which are now barely used and do not justify the investment in their construction.
Despite attempts to build communism with a human face, China has not been able to reform the main thing: to get rid of the passion of officials to build something such a name for themselves in order to stand out from the category of their own kind. All this took place both in our open spaces, and under the USSR, and already in the post-Soviet era.
In China, the process led to a natural result: a crisis in real estate and construction, as a result of hopeless in terms of return on investment, led to a general downtime of the economy, a devaluation of the yuan and a record difference in the yields of Chinese and American government bonds.
And the Soviet experience
Let us note that in the Soviet Union, for some reason, it was the transport industry that was also chosen as the main object of unhealthy passions of local party princelings. They allowed Tbilisi, with a population of 600, to build a metro, although according to all-Soviet standards it was only available to cities with a population of one million - which means it is necessary to build trolleybus lines in almost every Georgian regional center.
Where are these lines now? Only one remained in Gori.
They decided in Kiev to show their "I" to the Kremlin, built the world's largest (so far) intercity trolleybus line Simferopol - Alushta - Yalta, so in Chisinau they take and launch the Tiraspol - Parkany - Bendery trolleybus.
With the collapse of the USSR, nothing changed: the largest station in the CIS was built in Kyiv - which means even more needs to be built in Minsk. They built the Moscow bus station, which did not justify itself and had to be demolished. But since there are three bus stations in Minsk, it means that both the Northern Gate and the Southern Gate and a bunch of other bus stations need to be built in Moscow so that there is no shame in front of the “younger brother”.
If not in Africa, then where?
In South Africa, which hosted the summit, not everything is going smoothly either. The country is extremely dependent on conditions on world commodity markets. The rand has depreciated sharply, in emerging markets only the Russian ruble (for obvious reasons) and the Argentine peso are worse off.
India and Brazil look a little more positive, but in the latter, economic growth is caused rather by favorable natural conditions (and unsuccessful by competitors in the world's commodity markets). A drought in the United States has led to the fact that, saved by the still remaining rain forests from such events, Brazil has become the world's largest supplier of corn.
The export of Brazilian wheat was also helped by the situation in Ukraine, which reduced supplies to world markets. Against the backdrop of this situation, India looks the most advantageous of all the BRICS countries, where investors have recently diversified their investments by industry, having achieved, in addition to the development of commodity markets, also the growth of IT and pharmaceutical industries.
The situation is even more heterogeneous with regard to the new members of the BRICS, whom it was decided at the summit to accept into its ranks. Strictly speaking, only Egypt and Iran can be unambiguously classified as developing economies. Saudi Arabia, the UAE and Argentina are more likely to be frontier economies, the first two due to some investment restrictions, which, however, are being weakened, as for Argentina, due to the crisis in the national economy, it cannot be attributed to emerging markets.
But regarding Ethiopia’s place in BRICS, this already resembles some kind of joke. International rating organizations do not even classify it as a frontier economy, but quite rightly refer it to the least developed ones. Obviously, there is lobbying from China and Russia here.
Accept everyone - useful
The first has a great interest in general in the resources of all the least developed and most densely populated African countries: an uncultivated field of minerals and cheap labor. In the second, everything as a whole is linked to the strategy in the countries of Central Africa, where PMC Wagner is involved in the control of resources.
The death of Prigozhin and Utkin opens up broad prospects for the activities of "orchestras" in African countries to be placed directly under the control of the state. It is easy to guess that the reformatted Wagner PMC will appear in Ethiopia faster than the BRICS countries make a single currency and even start working on it.
At the moment, even Russian Foreign Minister Sergey Lavrov himself admits that the issue of a single currency remains only at the level of ideas. It is now quite dangerous to create a basket of currencies. The Russian ruble is due to sanctions and the benefits of state-owned Russian corporations from the export of raw materials under pressure. Yuan and rand are weakening.
As for the Argentine peso, before the summit it was generally proposed to replace it with the US dollar, but now there is an idea to tie it to the Brazilian real. As a result of such heterogeneity in the dynamics of national currencies, there is a risk that the processes in any single country of the bloc will collapse its single currency.
And it is by no means a fact that the weakness of this single currency will be beneficial to all BRICS countries, as the weakness of the ruble is now beneficial to Gazprom and Rosneft.
The most likely in this case seems to be a joint release of some kind of digital brixi, which will be something like a general means of calculation. And also - and a showcase of the unexpectedly spreading BRICS around the world.
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