After successfully passing the test of strategic autonomy for India at the just concluded summit of the Shanghai Cooperation Organisation (SCO) at Tianjin in China on August 31 and September 1, Prime Minister Narendra Modi faces another test on Monday September 8 at the virtual meeting of the BRICS nations convened by the President of Brazil Luis Inacio Lula da Silva who is in chair of BRICS group for the year 2025. Narendra Modi will take over BRICS presidency from Lula next year and host the summit in India in 2026.
Brazil is not a member of SCO but the BRICS declaration announced in July this year after the summit in Rio de Janeiro, shared almost the same views on Trump’s tariff war against its trade partners. Like India, Brazil is also impacted by highest tariff among the Latin American countries and that too for political reasons. President Lula has convened this virtual meet as a follow up of BRICS declaration but this also coincides with the objectives of the latest SCO declaration.
President Lula as the BRICS President is favouring a common strategy of BRICS nations to meet the challenge of President Trump. He is working on some immediate joint measures to take on the unilateralism of Trump. The Monday meeting is expected to discuss those steps. Chinese President Xi Jinping, President Putin and the Indian Prime Minister will have to take part in that discussions to finalise the strategy proposed by the BRICS President.
Since the measures being suggested by President Lula will be in concrete nature, those are expected to further antagonize President Trump who is already angry with both President Lula and Indian Prime Minister. India will have to take a decision on that. It all depends on Narendra Modi whether he will be a part of that suggested strategy or he will favour a more compromised approach to keep the option open for India concluding trade talks with the USA. Commerce Minister Piyush Goyal said on Tuesday that he was hopeful of the conclusion of India-US trade deals by November this year.
In fact, the Indian commentators have mostly focused on the political part of the SCO declaration, they did not give much emphasis on the economic part of the SCO declaration as also the earlier July declaration of BRICS summit. There are many major measures in the economic area to meet the US challenge in both the declarations. President Lula will be following up those in his suggested strategy to meet the US challenge, it is learnt.
The SCO declaration, in its economic part has underlined joint strategy to oppose the unilateral coercive economic measures that contradict UN charter and economic rules. President Trump has totally ignored the World Trade Organisation (WTO) and its charter. American journalists quip that Trump has set up his own ATO American Trade Organisation and he goes by it not by WTO of which the US is a founder member. India has already gone to WTO recently protesting against some of the US trading malpractices, but now, the BRICS President wants that these complaints against the US will be supported by BRICS members jointly. At the global level, President Lula wants to put pressure on President Trump through his proposed strategy.
SCO declaration has also suggested the setting up of a Development Bank of its own. Already BRICS members have a development Bank named New Development Bank (NDB) which has been functioning since 2015. This SCO Bank will be an addition for the developing countries in getting cheap finance for their infrastructure and other development projects. In fact BRICS NDB has so far advanced loans of US$ 39 billion to the developing countries. The SCO Bank will take care of the other countries which are not entitled to get assistance from the BRICS Bank.
Another important suggestion is increasing the share of national currencies in mutual settlements. This will lead to less use of US dollar in country to country transactions. Trump blasted the BRICS nations for their move for dedollarisation and threatened to punish the involved countries. But what the BRICS and SCO are suggesting is within the rights of the member countries. India is not in favour of any official move for dedollarisation but the government is entitled to deal with Russia in rupee to roubles or with China through Chinese currency. If more countries resort to inter country transactions through own local currencies, that will have an adverse impact on the global hegemony of US dollar.
For India, another significant area of interest is the part of the SCO declaration corroborated by the BRICS statement as well. This calls for expansion of cooperation in energy, including energy security, infrastructure protection and approval of the roadmap for implementing the SCO energy cooperation development strategy till 2030. In SCO declaration, there was a call for support for China’s One Belt One Road (OBOR) initiative and efforts to align it with the development of Eurasian Economic Union. India did not agree to this part. PM Modi asserted his strategic autonomy.
That way in the coming virtual meet on Monday also, he can assert India’s strategic autonomy, if he feels any part of the strategy is not in India’s interests. But India has to support the overall line of Lula’s proposed strategy. Both Washington and Beijing will monitor carefully how the Indian PM deals with the issues at this virtual meet. (IPA Service)