Diplomatist Magazine Diplomatist August 2018

AFRICA DIARY The re-imposition of sanctions on Iran (for allegedly violating the Iran Nuclear Deal), amid scrambling by the European Union to institute damage-control in keeping the Joint Comprehensive Plan of Action (JCPOA) intact, has, if nothing else, highlighted how urgent and strategically critical to the smooth functioning of the global economy, loosening the grip of the US dollar on global ﬁ nancial transactions has become. Within the BRICS context, Russia and China, as JCPOA signatories, are in pole position to accommodate Iran in local currency transactions in a manner dovetailing, geopolitically, with Iran’s eventual integration into the Shanghai Cooperation Organization (SCO) as a full member as the SCO emerges as the increasingly inﬂ uential Eurasian suborder within the transitioning multi-polar system. Indeed, the case of Iran raises some interesting prospects about future international currency developments given BRICS and China’s championing of ‘BRICS Plus.’ As the EU confronts the urgency of carving out meaningful strategic autonomy from Washington in the economic realm, there is no reason why the BRICS Interbank Cooperation Mechanism (ICM) might not accommodate the euro within local currency transactional equations. Clearly, one of the consequences of US-EU tensions under Trump will be Europe’s geo-economic gravitation toward an expanding transcontinental Eurasian reconﬁ guring of the strategic landscape. At the 2017 BRICS summit in Xiamen, the BRICS-ICM was further elaborated into including the Interbank Local Currency Credit Line Agreement and Cooperation Memorandum. India’s Cabinet approved the signing off on this agreement and cooperation memorandum which relates to Credit Ratings by India’s EXIM bank with member banks within the ICM. According to The Economic Times, the significance of this development was seen as promoting “multilateral interaction within area of mutual interest which will deepen political and economic relations with BRICS nations.” Whether this will extend to nations within ‘BRICS Plus’ remains an open question but one eagerly awaiting answer at the next or subsequent BRICS summits given current Washington-instigated disruptions in international ﬁ nancial ﬂ ows stemming from Trump’s sanctions and tariffs binge. In transitioning toward local currency transactions, this has implications for the evolving role of the New Development Bank (NDB) and its regional centres (the ﬁ rst having been established in Africa to be followed by Latin America). “With loans increasingly being issued by the New Development Bank in local currencies, this represents a threat, albeit symbolically at this stage, to the dominance of the US dollar,” speculated Sunday Independent Group Foreign Editor, Shannon Ebrahim. However, within the ambit of the Interbank Cooperation Mechanism, the communiqué emanating from Sandton noted “with satisfaction the progress achieved on establishing the BRICS Local Currency Bond Fund, and looks forward to starting its operation.” Such a Fund was ﬁ rst broached at the 2017 summit in Xiamen which articulated the intention of establishing BRICS local currency bond markets aimed at avoiding “dollar and euro international transactions.” Though, if the current geopolitical trend is sustained, increasing possibilities of geostrategic realigning of forces in di

Diplomatist Magazine Diplomatist August 2018 | Page 51