Diplomatist Magazine Diplomatist August 2018 | Page 51

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