Episode Transcript
[00:00:00] Speaker A: Nearly eight decades ago, after British theft of trillions of dollars and hundreds of millions of lives, India raised its own flag as an independent democracy. This week it's still raising the stakes, backing its own payment system as a future for BRICS finance, all while preparing for a meeting of the greatest anti hegemonic leaders in the world just weeks away. I'm Afshin Rid Hatzi and you're watching New.
Trump and Netanyahu's defeat against Iran rumbles on like the UK US EU armed genocide in Gaza. That hasn't stopped plans for a new Russia India trade route via Iran and Pakistan though. But that probably wasn't why JD Vance rang Indian Prime Minister Modi in the past few days. If Vance was trying to stop de dollarization, it didn't prevent India this week announcing plans to speed up non dollar transfers within brics. Meanwhile, Iran has announced that it'll be joining the new Development bank, also known as BR bank, and a major BRICS meeting in Jaipur. As for the new Saudi Pakistan Turkey defense pact celebrated by Iran, both India and the UAE have been muted either way. US Ambassador Gore met with both Indian Foreign Secretary Misri and National Security Adviser Doval as India's External Affairs Ministry said India was studying or examining the deal that theoretically involved NATO member Turkey with Pakistan. Doval had already been to Riyadh and it was this week that Moscow announced Saudi and Qatari interest in the international north south transport corridor from Mumbai to St. Petersburg. Trump bombed the Iranian section of the corridor at Indian controlled Chabahar. India has reportedly responded with a deal to have Chabahar managed by Iran until it retakes control when Washington lifts sanctions. Oh, and it's 55 years ago that corrupt U.S. president Nixon broke the link between the dollar and gold, arguably paving the way for a future BRICS currency.
At the end of the show we'll be joined by New Order's Zahra Khan to answer viewers questions asked on our social media. Joining me now though from Washington D.C. is Sarang Chedor, Director of the Global South Program at the Quincy Institute. Sarang, welcome to New Order. So I suppose the main question that is on people's mind is the US Senate has given the Trump the authority to impose the 100% tariffs on any country importing Russian energy.
How do you think that fits in with your argument that periods of transition are especially prone to miscalculation? Do you think Trump will really impose 100% tariffs on India?
[00:02:41] Speaker B: Well, I think you said it right on the fact that this new move is just another and the latest attempt to try and get India to stop buying Russian oil.
And we indeed are in a period of transition.
And you can see that effect of that. Just compare the war in Iran that's ongoing in some ways still with the Iraq war, which itself was very difficult in 2003. In fact, it was a tough war for the US but the US managed to get out through a surge.
And then working with the Sunni tribal leaders in Iraq, it was a tough slog. It lost a lot of soldiers. Tragically, in this situation, the attempt was to corner Iran and get it to sign on the dotted line, as they say. But it has spectacularly failed. And we are seeing.
[00:03:39] Speaker A: Yeah, so in that context, that puts extra pressure, of course, on the United States.
And we've seen the US Buying yen to prop up Japan desperately.
But so surely in that context of all of that, 100% tariffs on India would harm the US economy.
[00:03:56] Speaker B: I think so. I think the dilemma of this oil business is that if you stop Russian oil sales, then you actually reduce the amount of oil in the markets and you raise the prices for everybody, including American consumers. And we are in an election cycle here. We are only three months away from a midterm election, and the situation is very fluid.
So I think there is a rhetoric, there is an attempt, and then there is a reality. There is a circumvention. That is what happens on the ground. And I think what will happen on the ground will be more nuanced and complicated than what is declared in Washington.
[00:04:33] Speaker A: So what, it was just Lindsey Graham's dead body in front of them all that made them say, we'll pass this act? It actually bears no resemblance to reality.
I mean, clearly this would have huge consequences for India because India is not backing down. In fact, the last I heard, India and Russia.
So Putin is saying that India is now interested in the Northern sea routes, let alone India's recent military alignments and tests.
[00:05:06] Speaker B: Yeah, if you look at the numbers, India's oil purchases from Russia have actually surged in the last two months.
We are seeing a peak of those purchases.
So there is no sign of any backing down. And there are, by the way, tactical adjustments. So I don't expect the numbers to stay as high. There may be some pullback. There may be some attempt to circumvent. Bottom line is India and Russia have a very long partnership that goes back to the early 70s and even earlier.
It has paid off for both countries, not just economically, but in terms of security, in terms of strategy, in terms of their common perspective of the Global order.
And when the US has turned so volatile and difficult to rely on, then these sorts of partnerships that have stood the test of time become even more important.
[00:05:53] Speaker A: But why is it that no one's frightened of the United States anymore in a sense? I mean that shows that India doesn't seem to care one way or the other. Every time Trump announces on Truth Social or from the Oval Office that he's going to tariff BRICS countries doesn't seem to bother Modi at all.
[00:06:13] Speaker B: Yeah, I think India, like a global south country, has to be careful even as it tries to create alternatives and maintains its non US partnerships because the US is still the most powerful player in the world. We are not quite in a stage where unipolarity is passed behind us and we are in a completely new era. We are in this transition period. And in the transition period you can get significant damage from a relationship with the US that is not good. So I think India, like many global south countries, tries to have the best of both worlds in the short term, maintains that connection with the us maintains the investment in the relationship with the US in the longer run though, all of these global south middle powers are looking to diversify away, create new partnerships, create new channels of prosperity and security so that when the day comes when unipolarity is behind us, truly then they have a much, much better set of options.
[00:07:14] Speaker A: And so India has to respond to all these threats and provocations from the United States with this continued multi alignment. I mean India did say national fast PA systems as an alternative to a BRICS currency. Do they need a BRICS currency now or are all these pay systems that have emerged in the past few months, some of them going to just replace dollar trade anyway. They don't need per se a BRICS currency. Announcement in Delhi in a month's time they can just say we have all the infrastructure built to bypass the dollar.
[00:07:51] Speaker B: Right. I think a BRICS currency is really a fantasy because it would require.
I'm coming to that. Yes, creating a common currency makes no sense, but it's also very difficult because it would require surrendering sovereignty by these countries, their central banks. And that's just not on with the diversity you have in brics. But what you can do is circumvent the dollar by direct national payments using national currencies or local currencies as they're also called, to settle bilateral trade between any two members of brics, but ideally even the entire BRICS grouping, settling trades through an electronic system of transferring balances that occur between different countries so that you get a kind of equilibrium of settlement.
But for that you really need a technological infrastructure, you need a legal infrastructure internally to brics. And then you need the political go ahead by the leaders of those countries to say, okay, we are ready, let's turn on the switch and let's go. And we are still not there yet. I think every BRICS summit that we see, there's an advance in that direction, there are steps taken forward in that direction. The infrastructure is being created, the political will is being generated given that the US is still not able to get out of this volatile, unreliable and in many ways damaging mode for many of these global south countries.
And so I think with every passing year the chances of actually having this alternative system of circumventing the dollar, of having something like BRICS pay goes up.
[00:09:35] Speaker A: I have to say I was speaking to one, I was speaking to one macro economist who's reportedly written a paper about Bretton Wood too which is being circulated in the corridors of power. He said it is like flicking a switch actually because it's so exponential, this trade. And when you look at the number of payment systems, so there's in India, it's a UPI Rupe, SFMs international transactions of UPI. Brazil has SML for international and SPFs of course for Russia they have National Systems of Pigs, South Africa, SAMOS, China, Union Bay. It's amazing. Saudi Arabia, sorry, UAE J1 and Enbridge, Iran has shut down. I mean it's just amazing how all of this is just come together in the past few months and it is flicking a switch, isn't it?
[00:10:24] Speaker B: Yeah, I mean I think the technology and the channels are emerging and have emerged. But there is still a question of political will afshan because ultimately the countries have to wholeheartedly commit to it politically given the fact that the US has issued very specific threats on the dollar. I think many states will hold back just a little bit for a year or two.
[00:10:46] Speaker A: But is it at the state level?
Isn't it business to business?
I mean it doesn't matter what the states are saying.
[00:10:53] Speaker B: No, I think in many cases. Well, many of these countries have major public sector companies owned by the governments and ultimately the national regulators and national governments have to okay these sorts of things. They can't just happen and take over trade between breaks by themselves.
[00:11:12] Speaker A: And I mean a lot of those government employees are now being paid in these systems. But I mean do you think the people in Washington are looking at that and saying look, Trump did threaten them with 100%, he threatened 500% tariffs at one point, but it just doesn't matter anymore.
[00:11:31] Speaker B: No, I think in the US people are looking at the numbers of the dollars usage in global transactions, looking at how resilient the dollar is still in payments for energy, for example, for oil in the Gulf reserves.
If you look at countries holding foreign exchange reserves, which are stocks, not flows, so these are things that you are accumulating.
The dollar is still well ahead of anyone else.
There's a path dependence here. Over the decades the dollar has reached or had reached a peak of just being the global currency. De facto that doesn't change overnight. And if you look at some of these path dependent numbers, the dollar still looks pretty good. So I think in Washington there isn't a panic that I've seen about the dollar suddenly becoming irrelevant.
What I think people are acknowledging is that at the margins the dollar is getting eroded. That understanding has come in and that's why you get these kinds of threats to brics and so on. But I don't think there's a sense of panic yet. Now we may see a situation where the dollar remains high dominant in a certain sense for a while, erodes slowly, slowly, slowly, till one day it suddenly starts tanking in terms of its usage. This graph could be quite non linear until it actually happens in a very quick timeframe we may just see a slow erosion and that could take some years.
[00:13:03] Speaker A: Sarang Chador will continue after the break. Keep watching.
Foreign.
You're watching New order Sarang Chedore in part one we were talking about the threats of tariffs and how de dollarization is not going to happen quite suddenly. Of course, sanctions. I mean the famous Lancet study that showed 38 million have been killed by US sanctions between 1971 and 2021. The sanctions continue and especially relevant this week because apparently India and Iran signed some sort of deal about Chabahar, that key Iranian port controlled by India to evade the sanctions by assigning control to a local Iranian company until Trump lifts sanctions at some later date or ends the war. I mean, do you think that part of the war in Iran was to destroy the international north south trade corridor from Mumbai to St. Petersburg?
[00:14:09] Speaker B: I'm not sure that was really one of the major objectives. I think that the corridor hasn't generated the kinds of volumes it hasn't even really started.
[00:14:17] Speaker A: But why pick on this port?
[00:14:18] Speaker B: Yeah, yeah. No, I mean there may be a military reason.
The point is that fundamentally this war has a lot of collateral damage. The war of course was driven by factors that have little to do With India, it was driven by the situation in the Middle east and the United States priorities for a long time for overthrowing the power of Iran in the region. And that's been a very long standing project, has not succeeded really and is not succeeding now.
India is one of the countries among many others. In fact, the whole world, that's a collateral damage of this thing. The whole world's economy has been held hostage because of a project conceived in Washington, ill conceived, I should say, in Washington. And Chabahar is just one of them.
But even before that, Afshin, the relationship of Iran in terms of energy with India and other countries was damaged.
If you remember back in the first Trump term, we had a very strong sanctions demand from the US Maximum pressure campaign of zero purchase of Iranian oil.
And almost every country complied with that. This is, I think 2019 or so, 2018 time period, except China. China continued to buy Iranian oil. It still does. India reduced purchases very substantially to essentially zero. And Iran used to be a very major source of oil for India and today it is not the case. Russia, of course, has become a very major source. So I think the collateral damage has been happening for years on this.
The attempt has been to isolate Iran from its region where it lives. And India is the biggest country in the region essentially in terms of population and the economy, next to China.
And that has succeeded partially. One has to say it has succeeded partially.
[00:16:16] Speaker A: You don't see the Iran war as a sideshow in one sense, that the ultimate enemy of US hegemony is brics, as seen by the hawks in Washington. Of course, BRICS members say we just want multipolarity, a multi nodal world in that is a great attack place, a great target because of its centrality in the Eurasian trading networks as a staging post to China. And it would be interesting to split up China from India, of course, and to split up China from Russia. I mean, aren't these things being talked about in Washington which make one think the attack on Chabahar was not just coincidentally, dental collateral?
[00:16:59] Speaker B: Yeah, it may not have been coincidental, but it was not the main reason. The main reasons are tied to the Israel, Iran US imbroglio. And that's been cooking for a while. It's been simmering for a while. But I do agree with you, if that's what you're hinting, that there are other objectives that emerge from it. So BRICS is clearly seen. I think it's seen in some ways an overestimation of BRICS threat at this time to the United States. BRICS is an important and interesting development. It's a coalition of Global south countries, a certain set of Global south countries and what I have called the Global east, which is Russia and China.
And these two loose blocks, if you will, loose groupings have come together in brics for a certain purpose. And the purpose is economic development. Essentially it is about mutually supporting each other in creating new markets.
It's about energy, it's about health, it's about all of those things.
It's also secondarily about talking about a different kind of a world order that has sovereignty at its center, that is more multipolar and so forth. This is something BRICS summits have said ever since 2009, the first year that the leaders met.
So BRICS is still loose, it still has modest impact, although it has an impact.
And it is building, as we just discussed, infrastructure and cooperation and actually delivering some things on the ground with development finance, with its new Development Bank.
In a sense it's.
A super coalition in the making that is strengthening every year, step by step.
And I think that started to worry some in Washington.
But again, I should also say that it's Washington's own self goals that have given the oxygen for brics coming together.
Had the world been run, or let's say managed, whatever word you want to use by the major powers in the west in a way that was working for the Global south, that was achieving some of the goals that everybody wants, was solving some of the problems like climate change, then there would not have been such an interest in BRICS. With 10 countries in the core, Saudi Arabia still flirting with it, another 10 as partner countries, and another 30 or so waiting in the line to join BRICS, we wouldn't have seen that. So it's America's missteps in large measure that give oxygen to the rise of brics and more. These missteps continue, the more brics will strengthen.
[00:19:46] Speaker A: Yeah. And I mean, do you think it's lucky for brics that journalists in NATO nations are so ignorant of brics and about brics and so uneducated as are the think tanks? Obviously not the Quincy Institute about what BRICS is, which is allowing, say the new Development bank to, albeit slowly and a lot of people saying it's too slowly developing their alternatives to the destruction of the IMF World bank system. I mean, the idea that Iran said that it wants to join the new Development bank and is going to, it said that in Jaipur this week, that's not going to be reported in NATO in your CNN news or American multinational American mainstream media, is it?
[00:20:37] Speaker C: Yeah.
[00:20:37] Speaker B: There's a dismissive attitude towards brics. The argument is that these, these countries are too diverse, they don't have common enough interests and so forth. I've seen that change though in the last two years or so. We are seeing some elements of the media, including the mainstream channel, starting to say, well, the BRICS summit is happening, what does it mean? And asking, at least asking the question as to whether this can lead to something bigger. So that's a start.
To be fair, brics, as I said, is still an earlier stage grouping. This is not a full fledged block that is robustly coming together and creating new trade agreements with each other, for example, or has delivered on a payment system or has this incredible new vaccine research center that's sitting in one of the BRICS countries as a massive research complex. These are the sorts of things that BRICS is going to have to do in order to be a potent force beyond a sort of interesting and significant group that is rising. It has to rise fully and that will take time given the sprawl of the countries. But again, like I said, I think if the global system continues not to deliver for the global south in particular.
[00:21:55] Speaker A: Yeah, well, the levels of violence, it better do it quickly because the levels of violence that are meted out against it is not lessening anytime soon, just quickly. On Europe, those Western European countries, they are powerless to prevent presumably any India, Russia trade. Because one notes that while Western European leaders are always screaming on about countries not to trade with Russia, they at no level have phoned up Modi or Jaishankar and said, you must immediately stop buying Russian energy. There's just no way a Western European country has an iota of the power that India does.
[00:22:35] Speaker B: They don't have the power and they don't have the credibility, to be honest. I mean, Europe is buying Russian energy, we shouldn't forget.
[00:22:41] Speaker A: That's true. Britain buys Russian energy as well.
[00:22:45] Speaker B: Yeah, right. So Russian oil and gas is coming in for a year. Ever since the war started, it has been coming in, there have been declarations we're going to stop it, but I haven't seen that happen yet. So I think the standing, the credibility of Europe today is quite short on these things and this is a new sort of world we are living in. Yeah, The US is still the most powerful player. It's important and nobody wants to blow up that relationship. But these other middle powers in the Global south are creating more and more space for themselves to make their own choices.
Just compare today's world to the 1990s, when the United States essentially wrote the new rules of the post Cold War era, everybody was knocking on the door of Washington to be let into this club or the other.
The door to prosperity was trade with Washington.
Security arrangements were often done with some sense of input from Washington.
We had the WTO set up by Washington. Essentially. All of that looks like some ancient time today. Today, yes, those institutions are still there, but there are these newer arrangements. Emerging countries are signing trade agreements with each other when the US has gone against trade.
Countries are building new security partnerships with each other, not relying anymore so much on the US So all of this tells me that we are not past a unipolar world, but we are exiting it.
And honestly, middle powers no longer have to kowtow so much to capitals in the West. They do have to take them into account. They do have to be careful.
They do have to do certain things below the radar.
But nevertheless, in the long run, they see grounds for optimism in creating a more multi aligned set of relationships in a more multipolar world.
[00:24:46] Speaker A: Sharang Chador, thank you.
[00:24:49] Speaker B: Thank you, Akshay.
[00:24:56] Speaker A: And now it's time for questions from you, the viewers, through Zara Khan.
[00:25:00] Speaker C: Happy Independence Day. And we're waiting for the Kohinoor. But more importantly, the questions from our
[00:25:05] Speaker A: viewers first, Independence Day. Doesn't Britain still.
Yeah, we gave you all the trillions of dollars in reparations back.
[00:25:12] Speaker C: Well, we're waiting on that. SOF has asked, if the UN is not a body within significant influence anymore, how does India benefit from a potential seat at the Security Council?
[00:25:21] Speaker A: Is the UN Security Council still even meeting? That's the big irony. Just as India may get closer to getting its seat on the UN Security Council, the power of the United nations itself becomes pointless anyway. So, I mean, I was going to ask Sarang Chador about that at the Quincy Institute because Global south and everything. But is the UN even important? After the war in Yugoslavia that destroyed that, without a UN resolution since Bill Clinton destroyed it, no.
[00:25:50] Speaker C: And Taylor Russ has asked, is this multipolar Global north versus Global south just a rich versus poor battle?
[00:25:56] Speaker A: Yeah, it is partly that. I mean, all poor countries no longer though, are not weak. I mean, the IMF says that poor countries have 61% of global GDP by PPP.
So actually, poor and rich may not be the best way to explain what this multipolarity is really about. I think arguably it is about curbing the violence of countries like Britain, the United States, France, Germany. That's what the Global south is going to have to contend with to stop them being as cruel and violent as they have been for so many centuries.
[00:26:33] Speaker C: And finally, SystemGov has asked, I think a very big question. Is the end of United States near?
[00:26:39] Speaker A: You know, Sarang Chidor didn't think that. He said, oh no, don't say it's happening. 57.1% of global foreign exchange is still the dollar. And in fact, I don't know. When did you last use cash? People using less and less cash, but more and more dollar cash is being printed. Why is that? There'll always be a room for corruption as long as the United States is around. So it's not the end of the United States yet.
But of course, BRICS could change all of that in Delhi in a few weeks time. That could change everything. Shanghai Cooperation Organization meeting in Kyrgyzstan at the end of this month.
Maybe it's up to India to decide that.
[00:27:18] Speaker C: I was born in the 90s and absolutely a child of the digital age, so I do not use cash. But thank you for those answers, Afshin. We'll be back again for our season finale.
[00:27:26] Speaker A: Thanks, Zahra. And remember to follow us on xsewordertv and ask your questions. It may be yours that gets answered next Sunday. We'll keep following the shifts reshaping the world and the trophy choices that will determine India's place in it.
