Russia and China's Payment Issues Triggered by US Sanctions
An analysis featured on RT has raised the question, "Has the US finally succeeded in choking off Russia’s biggest trade lifeline?" The piece discusses the unexpected compliance of Chinese banks, regardless of their size, with US sanctions due to the fear of secondary sanctions. This development has been reported by Russian domestic media, as noted by RT’s financial expert Henry Johnston.
This development has caught BRICS enthusiasts off guard, as it contradicts the popular belief that BRICS is an anti-Western bloc. It also challenges claims that the US dollar is on the verge of collapse, that Russia and China are allies resisting the West, and that a new world order has replaced the previously American-led unipolar one. In reality, the US dollar remains the world's reserve currency, Russia and China are facing payment problems instigated by the US, and multipolarity is yet to fully emerge.
China's Economic-Financial Interdependence with the West
China's economic and financial interdependence with the West imposes certain limitations on its sovereignty. This was addressed by Lavrov in an interview with RBC last week, where he acknowledged China's dependence on the West due to the size of its economy and the volume of its trade relations with the US and the West as a whole. Lavrov expressed confidence that China will gradually reduce this dependence and move towards forms of communication with its partners that will not be subject to such dictates.
Lavrov's acknowledgment of the issue contrasts with the denial often exhibited by top Alt-Media influencers for ideological reasons. This highlights the importance of not covering up politically inconvenient facts.
Understanding the Reality of BRICS
The reality of BRICS is becoming clearer in light of these issues. BRICS is a network of countries that voluntarily coordinate their policies to accelerate financial multipolarity. However, the extent and speed of their progress are limited by structural constraints and their ties with the West. If BRICS was an anti-Western bloc as many believe, Chinese banks would not comply with the US' anti-Russian sanctions.
Interestingly, India has shown more resilience to Western pressure than China. Despite India's close ties with the US, Sberbank’s Deputy CEO confirmed that there are no restrictions on its operations in India. This is noteworthy as it handled 70% of Russia’s $65 billion trade with India last year.
Lessons for BRICS Enthusiasts
BRICS enthusiasts should take these developments into account and adjust their worldview to more accurately reflect reality. There is no shame in being wrong, and it's understandable why many people have high hopes for BRICS. However, it is better to be aware of the facts and temper expectations than to be caught off guard when reality hits.
BRICS' Role in Financial World Order
Despite the challenges faced by BRICS, as evidenced by Russia and China's payment problems triggered by the US, the group is still gradually reforming the financial world order in a fairer direction for the Global Majority. As Johnston concluded in his feature article, "The fading hegemon still has a few trump cards it can play with some effect – and it is playing them now. But every time it does, it brings closer the day in which those cards will be rendered obsolete."
Bottom Line
The recent developments in the financial world order, particularly the payment problems faced by Russia and China due to US sanctions, have shed light on the reality of BRICS and its role in global finance. While the group faces challenges, it is still contributing to the gradual reform of the financial world order. What are your thoughts on these developments? Share this article with your friends and discuss. Don't forget to sign up for the Daily Briefing, which is delivered every day at 6pm.
