Will the BRICS revolt against Iran sanctions
A new round of Iran sanctions appear to be putting a real crimp in the Iranian economy. In the Financial Times, Akshay Mathur and Neelam Deo describe how the sanctions are also pushing emerging nations like Brazil, Russia, India, China and South Africa (the "BRICS") to seek an end-run around the U.S.-dominated global financial system:
'For decades, [the BRICS] have been successfully co-opted to submit to western-dominated institutions, leaving them with little motivation to build their own. Now, the Brics must urgently organize to build institutions of mutual economic benefit. The June 28 deadline that China faces on complying with Iran sanctions, highlights the urgency of the issue.The Brics are a larger oil-importing bloc than the European Union. None is in confrontation with Iran, but they are nonetheless hostage to western sanctions because the conduits of international finance, trade and transportation used for crude oil trade are controlled by the West.
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The authors go on to highlight ways that the BRICS are slowly circumventing this by building alternative global financial structures. There are limits to this project as long as the dollar is the undisputed global currency, but an internationalizing renminbi would help.
While Iranian sanctions are the immediate driver of this quest to create an alternative financial system that's not dominated by the West, steps in this direction were probably going to happen regardless given the divergent interests of countries like China, Russia and Brazil. But there's the rub: As much as the BRICS may object to Iran sanctions, or having their financial transactions mediated through Western institutions, do they really possess the unity of purpose to agree on and create an alternative architecture?
2012 may be seen as the high water mark of the West's ability to leverage its dominance in finance toward coercive ends, or it may see the BRICS' flirtation with an alternative collapse of its own internal contradictions (or poorer than expected economic performance).
(AP Photo)