Single BRICS currency is ‘a very long-term project’ says Dirco official

“BRICS is not about de-dollarisation,” a senior Department of International Relations and Cooperation (Dirco) official told Parliament on Wednesday. And BRICS was certainly not trying to de-dollarise to help Russia evade Western sanctions, insisted the official, Ben Joubert, SA’s “sous-sherpa” — or deputy head — of the BRICS section.

Joubert was briefing Parliament’s Portfolio Committee on International Relations and Cooperation about last month’s BRICS summit held in Kazan, Russia, under Russia’s presidency.

“The issue of de-dollarisation is not what BRICS is doing,” said Joubert. “The idea of a BRICS currency is a very, very long-term project. It is not something that we are easily contemplating at this moment.

“To have your own currency, as the EU has shown us, is a very, very long-term project and it comes with a significant sacrifice of your sovereign monetary policy authority.

“So, I don’t think BRICS is at that level and I am sure no BRICS countries are ready to sacrifice that amount of monetary policy autonomy. So, de-dollarising in this context is not at stake.”

Read more: BRICS Summit 2024 — everything, everywhere, all at once as bloc appears to stray from its core business

Trading savings

However, Joubert confirmed that BRICS was working to increase trade among its members in their own currencies. He said the currencies of the BRICS members were floatable and were traded on international financial markets.

“So we would like to use our own currencies when we trade between us. It is, for us, not making sense to be trading with India in US dollars when there is a perfectly floatable rupee and a South African rand to engage in that bilateral trade.”

Joubert noted that the African Continental Free Trade Area secretariat had calculated that if African countries traded more among themselves in their own currencies, they would save $5-billion per annum.

Joubert noted that at last year’s BRICS summit in Johannesburg, leaders had tasked their finance ministers and reserve bank governors to consider how to make financial settlements and payments between BRICS member states in their national currencies, using correspondent bank accounts and developing suitable infrastructure.

Read more: ‘BRICS bank’ throws weight behind use of local currencies for trade and financing

At the Kazan summit last month, the leaders tasked the finance ministers to continue this work and report on progress at the next summit, in Brazil next year, he said. He added that Brazil had made it clear that increasing the use of local currencies would be a priority for it when it chaired BRICS next year.

MP Emma Powell, the Democratic Alliance (DA) spokesperson on international relations and cooperation, said the push for de-dollarisation was primarily being led by Russia and China to reduce reliance on the US dollar in international trade and so to bypass Western sanctions.

“But we believe that this proposal is fraught with risks,” Powell said, adding that there were divisions within BRICS on de-dollarisation and that “South Africa must align itself with more cautious voices on the matter advocating for a balanced approach.”

Joubert retorted, “I would like to make it very clear categorically that the discussion in BRICS to de-dollarise is not about evading sanctions. Indeed, I have mentioned the fact that nobody would be ready to sacrifice a significant amount of monetary policy authority for that matter.

“So the idea of discussing a BRICS currency to deal with anything, whether it is resources or soft commodities or anything else, would be a very long-term project.”

He noted that South Africa continued to deal with Russia because it did not respect any sanctions that had not been imposed by the UN.

SA’s diplomatic integrity

DA MP Ryan Smith noted that the Kazan Declaration of the BRICS summit last month had committed the body to respect international law, the UN Charter, human rights and the peaceful resolution of conflicts.

He asked how South Africa was ensuring that its BRICS partners stuck to these principles, particularly respect for international law, “given that there are several heads of state of BRICS member states who are in violation of international law in terms of their actions in their particular regions in the world”.

Read more: 2024 BRICS Summit to be chaired by Russia — Fairer global order or bigger Putin support group?

Powell added that the agreement that underpinned SA’s Government of National Unity “outlines a foreign policy framework that’s based on human rights, constitutionalism, peaceful conflict resolution and, of course, enhanced trade cooperation.

“These principles are fundamental to our domestic agenda and to our international standing.”

She asked Joubert whether SA’s association with BRICS members Russia and Iran risked compromising SA’s diplomatic integrity and moral standing. She cited Russia’s invasion of Ukraine and Iran’s extensive violation of human rights, especially in its treatment of women and its suppression of protests against that treatment.

She warned that SA was in danger of being associated with the anti-Western rhetoric emanating from BRICS, compromising its much greater economic relations with the West.

Joubert replied that because BRICS was an informal formation of nine member states with equal veto rights, it was not always possible to achieve positions in BRICS that were “100% aligned to what we see our national position would be. We would always aim to get as close as possible to that position.”

He insisted that SA’s position in BRICS was not anti-West and that it saw BRICS as a means to reform the existing global political and economic system, principally the UN.

BRICS plus, plus

He confirmed that at the Kazan summit, the leaders had offered partnership in BRICS to 13 countries. The summit decided not to name the countries until they had responded to the invitations. However, Joubert confirmed they were Bolivia, Cuba, Indonesia, Kazakhstan, Malaysia, Nigeria, Thailand, Turkey, Uganda, Uzbekistan, Vietnam, Algeria and Belarus.

He explained that the partners would not be full members. They would be invited to BRICS partner sessions at BRICS summits and foreign ministers’ meetings. They might also be invited to other ministerial meetings and the BRICS parliamentary forum. Being partners would create a pathway to becoming full BRICS members.

It is believed that the Kazan summit was reluctant to announce the names of the countries invited to be partners because at last year’s Johannesburg summit, the five original BRICS countries — Brazil, Russia, India, China and South Africa — had announced that they had invited Argentina, Egypt, Ethiopia, Iran, the United Arab Emirates and Saudi Arabia to become full BRICS members.

Most accepted, but the new rightwing government in Argentina explicitly declined and Saudi Arabia has never accepted.

Joubert said it was hard to say why Saudi Arabia had not accepted membership but he thought it had been influenced by domestic, regional and global geopolitical issues, particularly relating to the US. He noted though that the Saudis had been active in participating as a special invited country at some BRICS meetings.

He was also asked if Ibsa — the India, Brazil and South Africa forum of BRICS democracies — would be holding a summit soon. He said there was a plan for the Ibsa leaders to meet informally on the margins of the current G20 summit in Brazil and Brazil, as the Ibsa chair was planning to host a summit next year. DM