NEW DELHI – A week after US President-elect Donald Trump threatened 100% tariffs on supporters of the “BRICS currency,” major emerging economies such as India are backing away from any BRICS-led de-dollarization initiative. I quickly distanced myself.
“As of now, there is no proposal to introduce a BRICS currency, so I’m not sure what the basis is for (President Trump’s statement),” Indian External Affairs Minister S. Jaishankar said at a Doha conference in New Delhi this week. Said on the forum.
India’s top diplomat acknowledged that discussions continue among the BRICS countries about streamlining and deepening “financial transactions,” but clarified that “countries do not have the same position on this.”
“When it comes to India, the United States is our largest trading partner and we have no interest in a weak dollar,” he said, underscoring that India prioritizes relations with Western countries.
A few days earlier, Reserve Bank of India Governor Shaktikanta Das also said that despite India’s continued attempts to diversify, “there are no steps we have taken specifically aimed at devaluing the dollar, that’s for sure.” “This is not our purpose,” he said. Pool of foreign exchange reserves.
The Indian central bank governor also questioned the viability of the BRICS currency, given the “geographical spread of the countries, unlike the euro zone (common currency system), which is geographically contiguous.” .
Nevertheless, the incoming Trump administration may end up raising the prospects for the BRICS currency in a wild attempt to reassert American primacy.
Meanwhile, a cavalier approach to bilateral relations with emerging powers will only strengthen their resolve to unite and jointly undermine the US-led world order.
Not only India, but also non-Western countries such as Indonesia, Turkey, Malaysia, and Saudi Arabia are likely to not only join BRICS but also contribute more actively to the new “de-dollarization” initiative.
In recent years, the United States has sought international support, gradually building new coalitions to “de-risk” from China, particularly in high-tech items such as high-end semiconductors and the equipment used to make them. It’s coming.
However, President Trump’s unilateralist policies, including high blanket tariffs, will cause emerging powers, especially the BRICS countries, to redouble their efforts to “de-risk” the United States, paving the way for an entirely new world order. There is a possibility.
To be sure, de-dollarization is complex and remains largely aspirational. For example, India has struggled to achieve narrower bilateral non-dollar trade with key partners such as Russia.
Amid a historic boom in India’s imports of heavily discounted Russian crude oil, the Russian government is hoarding US$1 billion a month, but both Western sanctions and India’s capital control measures have left it unspent. I’m worried.
“This is a problem,” Russian Foreign Minister Sergei Lavrov told reporters at a Shanghai Cooperation Organization (SCO) meeting last year. “We have to use this money. But for that, we need to transfer these rupees in another currency and this is currently being discussed,” he added.
Leading Russia experts such as Alexander Knobel have said that Russia’s large amount of “frozen funds” is likely to “reach tens of billions of dollars” and that “the situation is exacerbated by India’s historically high gross trade deficit”. “The chances of reconciliation are diminishing.” with third countries. ”
Similar issues have surfaced in the past amid a boom in non-dollar trade between Iran, another BRICS member that also faces heavy Western sanctions, and major oil customers such as India and China. did.
Nevertheless, the world’s most populous country continues to maintain strong ties with Russia, which has been a major source of weapons and hydrocarbon products for the past few decades.
This week, India’s private refiner Reliance (RELI.NS) signed a major contract with Russian state oil company Rosneft (ROSN.MM). The 10-year contract represents a whopping 0.5% of global supply and is worth about $13 billion annually.
The new contract specifically accounts for about half of Rosneft’s offshore oil exports, with the Indian market being a major customer.
Russian President Vladimir Putin is likely to visit New Delhi in the near future as the two BRICS countries strengthen trade and energy ties. Eurasian power alone accounts for a third of India’s energy imports, while South Asian power has replaced the European Union as Russia’s largest energy customer.
President Trump, who is keen to maintain American supremacy, has said through his social media platform (Truth Social) that partner countries “could face 100% tariffs unless both commit, and the great American “We will say goodbye to selling on the economy,” he warned. It is not a new currency for the BRICS, nor is it backed by any other currency to replace the strong US dollar. ”
The incoming US president reminded supporters of his foreign policy mantra of “Make America Great Again” and warned supporters of the BRICS currency that “they may look for another ‘suck.'” There is no chance that BRICS will replace the US dollar in international trade, and any country that attempts to do so should bid farewell to the US. ”
But with President Trump insisting on a peace deal with Ukraine, some in India hope Western criticism of the country’s long-standing relationship with Russia will ease. Despite this, the South Asian powers have remained consistently non-aligned in their foreign policies and are keen to exploit great power rivalry for their own national interests.
“Every time the West bashes us, we gain credibility in Moscow,” a source in New Delhi told the author, adding that India is a superpower while simultaneously maintaining strong ties with both Washington and Moscow. He emphasized the tendency to pit each other against each other.
On the contrary, India’s government led by Narendra Modi is relatively bullish regarding its relationship with the second Trump administration.
“We had a strong, solid relationship with the first Trump administration…Yes, there were some issues, primarily trade-related, but there were actually a number of issues that President Trump was proactive about. Yes, there was,” Jaishankar said at the Doha Forum. this week.
“From our point of view, there is a certain personal relationship between PM Modi and President Trump. When it comes to politics, we have no divisive issues,” he added. , emphasized that New Delhi wants to leverage personal diplomacy with the next US leader.
Given India’s economic momentum and emerging centrality to global growth, India’s foreign policy tilt will help drive global de-dollarization.
The US dollar currently accounts for more than half of the world’s trade invoices and more than 80% of all international currency transactions. However, President Trump’s policies may inadvertently lead to a gradual decline in the use of the US dollar over the next few years.
Meanwhile, it remains to be seen how the next US administration will deal with unresolved bilateral issues with friendly BRICS members such as India.
“The main concern is the fate of the large number of Indians living in the United States illegally,” an Indian source with close ties to Washington, D.C., told me. As many as 18,000 Indians could face deportation in the coming months if President Trump implements the tough immigration policies he promised during his campaign.
Additionally, President Trump’s fiscal policies, including massive tax cuts, could increase America’s already $36 trillion national debt by $15 trillion. Meanwhile, President Trump’s plan to impose unprecedented across-the-board tariffs could not only spike domestic inflation but also disrupt global trade and undermine the value of foreign exchange reserves held by major trading partners. be.
Malaysian Prime Minister Anwar Ibrahim has welcomed the end of the US-led unipolar world and said it is a starting point for building a more multipolar order, with a corresponding pivot to the BRICS and China. .
Meanwhile, Indonesia’s new president, Prabowo Subianto, has reversed the policies of his predecessor Joko Widodo by actively seeking membership in BRICS. By joining the bloc, these emerging powers are seeking to strengthen ties with Beijing, a major investor and trading partner, as well as express a level of dissatisfaction with the U.S.-led order.
Follow Richard Javad Heydarian of X at @RichHeydarian
