Information Bulletin of the BRICS Trade Union Forum
Issue 4.2022
2022.01.24 — 2022.01.30
International relations
Foreign policy in the context of BRICS
A quest for justice. BRICS countries set trends in global antimonopoly policy: Alexey Ivanov for Rossiyskaya Gazeta (Стремление к справедливости. Страны БРИКС задают тренды мировой антимонопольной политики: Алексей Иванов для «Российской газеты») / Russia, January, 2022
Keywords: expert_opinion, political_issues

At the end of December 2021, the Higher School of Economics hosted a meeting of the BRICS Competition Law and Policy Working Groups on the Development of Competition in the Food and Pharmaceutical Markets. Why is the BRICS becoming a new driver for the development of competition policy on a global scale, and what is the role of the BRICS Competition Centre, working at the National Research University Higher School of Economics? Alexey Ivanov, director of the centre, explained in an interview with "RG".

On monopolization in global markets

Mr Ivanov, what is the role of competition in the development of global markets?

Alexey Ivanov: Without healthy competition, the market economy fizzles out — loses energy. And this happens, as a rule, because of the concentration of market power "in the same hands" — be it the result of collusion or other monopolization of markets. This power allows privileged market participants to act no longer in a competitive but in a monopolistic logic, parasitizing on consumers and other participants in economic relations. Monopolism is a frequent disease of the capitalist system. It causes the signal system of the market and its mechanisms responsible for increasing the efficiency of production and distribution of goods to stall and slow down. This means that it works worse with limited resources, satisfying people's needs and desires worse. The paradox is that monopolies are also a natural, though unwanted, result of the work of the capitalist system — it generates them constantly and, one might say, inevitably. This was well understood in the key capitalist countries as early as the beginning of the 20th century, during the period of active industrialization and the rapid economic growth it caused. As a cure for the development of monopolism, they began to adopt special laws and build multifaceted legal protection of competition — a kind of immunity from market monopolization.

Do these "protective" laws work?

Alexey Ivanov: Antitrust laws have performed very well in the countries of the "capitalist core" and have become an integral part of the design of market institutions worldwide. Since the beginning of the 1990s the number of countries which passed antitrust laws increased more than fivefold: it's no longer acceptable to develop a market economy without proper immunization against monopolistic practices.

However, a crucial part of the global capitalist system has paradoxically fallen outside this immune protection. Despite the widespread proliferation of antitrust laws around the world over the past 30 years, the world remains without antitrust protection at the global market level. Neither the United Nations nor the World Trade Organization (WTO) has established effective legal mechanisms to protect competition on a global scale. This makes the legal regime for competition law very different from, for example, the global regimes for intellectual property or free trade and investment promotion, which are supported by binding international treaties underpinning the same WTO, the World Intellectual Property Organization, etc.

It can be said that the liberalization of world trade and the globalization of the economy in general in recent decades has proceeded anomalously without proper immunization against manifestations of monopolism. Perhaps this is one of the reasons why the global economy is unbalanced today. According to recent reports by UNCTAD and a number of other reputable organizations, the global economy has reached its highest level of concentration of capital since the Great Depression of the 1920s. And we remember well the social disasters that led to such imbalances in those years, but we do little to balance the global economy until it is too late.

Don't the organizations that regulate the world economy know this?

Alexey Ivanov: No, we can not say that the architects of the modern world economy regulation system do not understand this. The original design of the WTO included a universal agreement to protect competition in the global economy similar to the TRIPS Agreement which introduced uniform standards of intellectual property protection for all WTO member countries. Such uniform standards for the protection of competition at the global level could have balanced the processes of globalization, just as industrial growth in the United States in the early 20th century was balanced by antitrust legislation. However, during the Uruguay Round of trade negotiations in 1994, this agreement was excluded from the WTO architecture. By the way, the prototype of the WTO — the International Trade Organization (ITO), established in 1948 as part of the UN, contained in its charter a detailed regulation of various forms of monopolistic activities, which were prohibited at the global level. Unfortunately, the WTO did not work due to the beginning of the Cold War and the aggravation of relations between economic blocs.

The absence of an international legal regime to protect competition opens up great room for monopolism precisely at the global level. Many countries, including the U.S., still often overlook the monopolistic activities of their companies at the global level. This creates certain distortions in the global economy, when blatantly unsightly practices, banned at the national level, become the norm in international trade.

How can this situation be changed, and is it possible now?

Alexey Ivanov: The ideal solution would be to adopt an international agreement to protect competition, as conceived by the ITO and done in relation to intellectual property protection, for example. But the likelihood of such developments is low, firstly, because of the low functionality of the key international organizations today - neither in the UN nor in the WTO it is impossible to reach consensus on more acute problems, and secondly, because of the lack of U.S. interest in transferring regulatory powers in this area to international organizations. The U.S. simply does not benefit from this, especially in the technological sphere.

Another possible solution to the problem is to develop rules to protect competition in global markets that would not be universal, but would cover a significant range of countries, thereby forming a critical mass of support for appropriate rules of conduct for global business and thereby making them the standard of good economic practice at the international level de facto. But the U.S. and the EU have already established appropriate mechanisms of cooperation — primarily within the Organization for Economic Cooperation and Development (OECD), which grew out of the so-called "Marshall Plan" for the postwar reconstruction of Europe, as well as various forms of bilateral cooperation. And the countries outside this "capitalist core" are generally excluded from these cooperation formats or participate in them only as observers. As a result, the development of fair competition rules for global business rarely takes into account the interests of countries outside the close community of developed economies. The lack of more inclusive formats for developing and negotiating competition rules at the global level is obvious. That is why it is difficult to overestimate the importance of cooperation between the BRICS countries in the antitrust sphere.

BRICS plays an increasingly important role in antitrust regulation

How effectively can the BRICS countries defend their economic interest?

Alexey Ivanov: The BRICS countries are an interesting group of economies united by the fact that they are not members of the "closed clubs" of the "capitalist core" countries for several reasons. They are in many ways strangers to the still dominant international affairs of the United States, the EU and their closest allies. And each country is alien to this tight group for different reasons and to different degrees, but this does not change the basic problem of their low involvement in the development of the rules of the game in the global economy, which took shape during the "Washington Consensus" years of the 1990s and early 2000s. Due to their differences — economic, social, geopolitical — the BRICS countries are hardly capable of forming a unified agenda for world development by analogy with the "Washington Consensus" that has already lost its force. However, it is precisely because of their differences that the BRICS countries can agree on what kind of world economy they would not like to see. And the key word that already virtually unites them on this issue is "multipolarity" — in other words, the diversity of formats, ways and means of organizing economic life. What the BRICS countries lack is diversity in global economic life. There are too many rigid forms imposed by the dominant group — either that or nothing, or, as the Americans say, "take it or leave it". For example, either protect the patents of multinational companies under the terms of TRIPS Plus, or cut yourself off from global value chains. There is no third option, as they say. But this approach is nothing but a manifestation of monopoly in the organization of the world economic system.

Do the BRICS countries have a different approach to this problem?

Alexey Ivanov: The BRICS countries, be it China, Russia or South Africa, are vitally interested in a greater variety of global models of economic life so that financial and technological standards, digital platforms and pharmaceutical solutions are not dominated by one point of view, one approach. It is not just a matter of resentment that we have not been "called in" to design financial markets or determine the rules of global digital platforms, but it is also a matter of sustainability and balance in the global economy. The crisis of 2008 clearly demonstrated how fragile the current mono-regime of global economic governance is. Just as monocultures in agriculture lead to unsustainable ecosystems, so monomodels in the organization of the global economy lead to imbalances. Biodiversity is the basis for the sustainability of any ecosystem in nature.The diversity of formats for organizing and organizing world markets is the basis for sustainable development of the world economy. Maintaining this socio-economic diversity is the essence of a healthy pro-competitive policy. In a deep sense, the protection of competition is the protection of socio-economic diversity, the prevention of monopolization of the processes taking place in the economy. The dominant actors do not benefit much from this struggle for diversity, because it reduces their monopolistic rents. But a more diverse, multi-format system of organization of the world economy seems important for countries which are already able to compete on a global level, but which are in a less advantageous position due to such a monopolistic structure of the world economic system.

Is such a model possible today, and under what conditions?

Alexey Ivanov: For a long time the antimonopoly sphere has not been a priority for BRICS cooperation for a number of reasons. One of them, of course, was the perception of the antitrust law in its so-called "Chicago version", i.e. in the form of a set of formally defined rules of conduct in the market, developed and actively promoted in the 1980s and 1990s in the United States and Western countries as a whole by a group of economists, lawyers and politicians, who are commonly called the Chicago School of antitrust law.This group, actively supported by the neoliberal governments of Reagan, Thatcher, and others, did much to weed out antitrust law's original political function of balancing distortions in the functioning of the market economy. Until recently, this gave developing countries the impression that antitrust law could only be applied in one way, as it was interpreted by the OECD under the influence of the Chicago School. Monopoly in the marketplace of ideas has also affected antitrust law itself. However, both the "Washington Consensus" in organizing the world economy and the "Chicago Consensus" in antitrust law have finally collapsed.

Moreover, they collapsed first and foremost in the Western countries, which was greatly contributed to by the financial crisis of 2008. From the mid-2010s, a process of active rethinking of the principles of antitrust regulation began, which has especially accelerated in the last two years. In the U.S. and Europe, antitrust law has been increasingly talked about as an essential tool for balancing the digital economy and generally dealing with the socio-economic risks of technological and related social transformation. A return to the original meaning of antitrust law, heavily distorted by subsequent interpretations of the Chicago School, has become the leitmotif of antitrust discussions worldwide. And it is in this capacity that antitrust law turned out to be especially attractive for the BRICS countries. Its original meaning as a tool for increasing the diversity of forms of economic life and counteracting the socio-economic excesses of technological revolutions corresponds to the meaning of cooperation between the BRICS countries as a whole.

How do the BRICS countries interpret cooperation in this sphere?

Alexey Ivanov: Cooperation in the antimonopoly sphere can be situational. Common shared principles do not mean that the BRICS countries are obliged to act strictly according to a certain scheme in all circumstances. Competition law is in itself a more flexible tool for managing economic processes than other legal institutions. The nature of antitrust regulation is to combat abuses and distortions, and they can take the most unexpected forms. Much depends on socio-economic conditions, and consequently, the role of the healthy discretion of the regulator is high. The competition authorities of the BRICS countries should, in a good way, have an appetite for joint action to protect competition in global markets. And it comes, as you know, during meals.

Specific examples of cooperation: food markets

What are the formats of cooperation possible at this stage?

Alexey Ivanov: The first common case that the antimonopoly authorities of the BRICS countries considered in close cooperation, discussing not only the problems of their national markets, but more general issues of organizing the world economy, concerned the food sector. In 2015, during the Russian BRICS Presidency, the first working group of the antimonopoly authorities of our countries was created — it was devoted to the study of competition problems in global food markets. The activity of this working group consisted not only in the exchange of experience but above all in identifying the problems of global agri-food markets. This has required competition authorities to take a fresh look at the state of competition in their countries through the lens of global agri-food value chains. In this case, for the first time, a working format was tested in which the BRICS academia came together to help antitrust agencies. Scientific and expert support for the working group of BRICS antitrust agencies on food markets has been coordinated since 2015 by the HSE-Skolkovo Institute for Law and Development, but included scientists involved in antitrust law and regulation of agrifood markets from all BRICS countries. In close cooperation with the antimonopoly authorities of our countries they prepared an extensive report on the competition problems in the global agrifood markets and the ways to solve them. We presented the report at the BRICS antimonopoly conference in Brazil on November 7, 2017 — coincidentally, on the centennial of the Russian Revolution. The report, which was recently published in abridged form as a book by Cambridge University Press, significantly changed the way BRICS antitrust agencies analyze agri-food markets. But most importantly, this work has brought concrete practical results for the antimonopoly cooperation of our countries.

In what way did it manifest itself?

Alexey Ivanov: Our work has coincided with a series of global deals of economic concentration in the agri-food sector. Over several years, the number of companies involved in the world's key crop breeding and related agrochemical business has declined dramatically, as these markets steadily moved from a competitive to a close oligopoly state. As we found out, this process was caused by a change in approaches to patent protection for biotechnological inventions in the United States and the EU, as well as by a dramatic technological change in the industry itself. The dramatic acceleration of breeding work, and the emergence of the ability even in conventional breeding programs, which do not involve transgenic technology, to quickly and efficiently achieve given properties in plants, made this market interesting for big capital. Add digitalization, which allows you to build an effective "last mile" of seed and agrochemical sales, and you have a winning combination of powerful network effects and scalable, advanced technology solutions that is interesting to any multinational company. Naturally, when global capital enters an area, it sets its own rules of the game and strives for global dominance. This is what has begun to happen along the entire length of global food chains. In 2015-2018, the working group focused on the primary sector of the value chain in the agro-industrial complex — the markets for seeds and agrochemicals. This allowed it to take a proactive stance on a number of global economic concentration deals that were taking place in the world at the time. The most effective both in terms of demonstrating the possibilities of antitrust cooperation between the BRICS countries and real economic effects for our countries was the deal to coordinate the merger of two global agro-technology giants — Bayer and Monsanto. The new global conglomerate combines the latest technology platforms for breeding and agrochemical work and the most powerful digital platform for precision farming. Due to the consolidation of technologies, big data and platform solutions, the combined company could have an excessive impact on the state of competition both in the entire global market and in the markets of the BRICS countries separately.

Has the work of the BRICS Working Group On Food Markets influenced national law enforcement?

Alexey Ivanov: Our antitrust regulators have to act within their national boundaries, but the global view of the problem and understanding of how global agri-food markets are structured and how they are transformed has made national enforcement much more effective. And the consensus among BRICS antitrust agencies within this working group has dramatically increased the bargaining power of our antitrust agencies in dealing with global corporations. In the absence of an international competition regime, many multinational companies either ignore the antitrust requirements of smaller countries or behave in ways that make it as difficult as possible for non-key jurisdictions to make tough antitrust decisions. There are many strategies for doing this, including restricting the provision of information, manipulating procedural rules, etc. It is precisely the cooperation of antitrust agencies that can reduce the effectiveness of such strategies by global companies. In the Bayer-Monsanto case, for the first time we managed to build communication between BRICS antitrust agencies and global corporations in such a way that the negotiations on the terms of the deal were conducted in a more or less consolidated way, taking into account the interests of all BRICS countries and the developing world as a whole. A direct result of this work was the application of such measures of antimonopoly response to the increasing economic concentration in the global agro-food sphere, which made it possible to significantly reduce the negative consequences of this transaction. In particular, at the request of the FAS of Russia and similar requirements of other BRICS regulators, the united company Bayer-Monsanto provided a whole package of unique technological solutions to our breeders, and also undertook to adhere to fairly strict non-discriminatory requirements in the operation of its digital platform, which excluded the rapid monopolization of the Russian market of solutions for the digitalization of the AIC. This decision of FAS Russia, made in close cooperation with the antimonopoly agencies of the BRICS countries and based on the deep scientific expertise provided within the working group by experts from BRICS universities, became a precedent for effective cooperation in the antimonopoly sphere for the benefit of the development of our economies.

What kind of follow-up did this have in the future?

Alexey Ivanov: The precedent showed the antimonopoly authorities the prospects and potential for possible cooperation in the format of such working groups and their close interaction with the scientific community. After this case, one can definitely say that the antimonopoly authorities of the BRICS countries began to think more actively about closer cooperation. It was precisely for its expansion and deepening on the basis of the HSE-Skolkovo Institute for Law and Development that the BRICS Competition Centre was created in 2018, designed to become a point of crystallization, on the one hand, of the academic circles of our countries, and on the other, scientific support for joint projects of the antimonopoly authorities of the BRICS countries.

Digital markets: in search of new approaches

How does the BRICS Antitrust Track solve the problems of the digital economy?

Alexey Ivanov: The next big project for the BRICS Competition Centre after the analysis of food markets was the study of the challenges to antimonopoly regulation posed by the digitalization of the world economy. The digital economy inherently represents a new economic structure that changes many aspects of business and its interaction with consumers.

The working group of the antimonopoly authorities of the BRICS countries on the digital economy began its work immediately after the completion of the food project and in the fall of 2019 at the BRICS antimonopoly conference, which was held in Moscow. The working group presented a detailed report on the key challenges and problems that the processes of digital transformation of the global economy represent for the antimonopoly authorities.In 2019, many experts still insisted that the growth of digital monopoly power was a temporary phenomenon, and that the same antitrust tools as for industrial economy markets could be limited to curbing it. In our report we pointed out the incorrectness of such an approach - the digital economy has a number of features in the organization of interaction between market participants, methods of accumulation and retention of market power, etc. The classical law of supply and demand does not work in the digital economy. The most successful players in the digital economy are those who were able to subdue consumer demand. Pricing as a market signaling system also ceases to work with the widespread adoption of price algorithms and price control in digital ecosystems, in which a good half of the entire global economy is now immersed. Is it possible to say that on the digital platform of a particular cab aggregator, for example, there is a free association of supply and demand? The role of the organizers of digital platforms and ecosystems is somewhat reminiscent of the role of the State Planning Committee in a planned economy.These digital plans substitute for market relations, extending their influence to all new areas of economic life. This raises the question for competition authorities: "How to regulate relations within such digital ecosystems?" In our report, we tried to outline possible ways to transform antimonopoly regulation in the digital economy. And, to our satisfaction, we hit on many trends that have become fully apparent as early as 2020 and 2021. We anticipated many of the new mechanisms of antitrust regulation that have now taken shape in the form of draft laws in the US, Europe, and China in that report.

How has digital transformation affected the antitrust practices of the BRICS member countries?

Alexey Ivanov: For China, for example, the digital economy has caused a systematic review of its entire antimonopoly agenda. If until 2020 the antimonopoly policy in China was very restrained and tailored according to the Chicago model traditional for industrial countries, then, faced with the challenges of the digital economy, the Chinese regulator took a systematically different position - proactive, dynamic, involved. Recent antitrust cases against Alibaba, Tencent, Meituan, DiDi and other leaders in the Chinese digital economy could grace the portfolio of any leading antitrust agency in the world. China quickly moved in the antitrust sphere from the role of a diligent student to the role of a trendsetter.

By the way, it should be noted that many of the discussions that we had with our Chinese colleagues in 2017-2020 were vividly reflected in the antimonopoly policy of this key BRICS participant. The head of the The State Anti-Monopoly Bureau of China, Ms Gan Lin, was in Moscow in the autumn of 2019 at the presentation of a report on the digital economy prepared by the BRICS Competition Centre, and also participated in a number of joint consultations and discussions on BRICS antimonopoly cooperation. "I believe that the BRICS Competition Centre has great potential to help deepen cooperation between our agencies, define a common agenda for BRICS antitrust authorities, and organize ongoing consultations on all relevant issues," she said at a recent meeting of our countries' antimonopoly heads. Such support from our Chinese colleagues cannot but inspire hope in the prospects of antimonopoly cooperation between the BRICS countries.

Last November, China hosted the 7th BRICS International Competition Conference, where a draft report on possible approaches to the antimonopoly regulation of digital ecosystems was presented. Tell us more about it.

Alexey Ivanov: The basis of this approach is the understanding that ecosystems are a special type of organization of market relations and bear greater resemblance to complex living systems than to industrial organizations. Antimonopoly regulation of such complex living systems should be built based on a number of features — taking into account the great importance of "weak ties", high flexibility, variability and adaptability of such systems. In ecology and biology, a great deal of experience has already been gained in studying and working with complex living systems. We are implementing the project together with the International Institute for Applied Systems Analysis (IIASA), which has rich experience in studying and mathematical modeling of complex systems. In our opinion, it is time to transfer this experience to the antitrust sphere. In my presentation at the recent BRICS Antitrust Conference, I drew attention to the cyclical nature of the development of living systems, that ecosystems are always in flux, and that within them there is dynamic interaction of different origins. These ideas, according to our Chinese colleagues, resonate with traditional Chinese ideas about the cyclical development of all living things according to Wu-Xing, the five-element matrix of the evolution of living systems. Wu-Xing is actively used in Chinese medicine not just to cure, but to prevent diseases, because that should be the task of an ideal doctor, according to Chinese healers. It would be good if anti-monopoly regulation in the digital economy were also aimed at preventing such distortions in the development of the market system, which are already too late or too dangerous to correct. The synthesis of the latest ecological knowledge and the millennia-old Chinese tradition, in our view, can give an important impetus to the transformation of antimonopoly regulation in the era of digital ecosystems.

Equitable Access to Medicines: The Role of Antitrust Regulation

In the fall of 2020, the BRICS Competition Centre, which worked on the basis of the HSE-Skolkovo Institute for Law and Development, was transformed and became an independent division of the Higher School of Economics. What are the tasks set for it?

Alexey Ivanov: The centre was given the status of a key research and expert organization for securing cooperation between the BRICS countries in the antimonopoly sphere by a decree of the Russian government of September 24, 2020. With the onset of the pandemic, issues of drug provision and control of the new coronavirus infection also came to the fore. These topics were the subject of discussions in another BRICS Antitrust Working Group on Pharmaceutical Markets. Two BRICS countries, India and South Africa, initiated the critical issue of temporarily removing patent protection from coronavirus vaccines at the WTO in order to increase their production worldwide. This approach was also supported by China and Russia.

In this regard, Russian President Vladimir Putin noted: "There is an idea that, in my opinion, deserves attention, namely, to remove patent protection from vaccines against COVID-19 altogether. And this not only does not contradict but, as far as I understand, corresponds to certain rules of the World Trade Organization, which provides for the removal of such patent protection in extraordinary circumstances. A pandemic is an emergency situation. Of course, Russia would support such an approach". According to a number of experts, the removal of patent protection from vaccines would greatly accelerate the pace of vaccination in developing countries, which are now the main sources of new strains of coronavirus precisely because of the low level of immunization of the population. It is not for nothing that the coronavirus's most dangerous and infectious mutations, the delta and omicron strains, came from India and South Africa. If the BRICS proposals to remove patent protection were not blocked in the WTO by the EU countries, primarily Germany, then now, probably, the level of human immunity would be significantly higher.

How did this topic develop further at the BRICS level?

Alexey Ivanov: The problems of unbalanced patent protection of medicines, which harm both public health and innovative development in the pharmaceutical industry, have become the subject of active discussions within the BRICS antimonopoly working group on pharmaceutical markets. The BRICS Competition Centre also provided active scientific and methodological assistance to this work. One of its direct results was a change of approach to the mechanisms of compulsory licensing in pharmaceuticals in our country. These mechanisms are a civilized way of balancing patent rights when they conflict with important public interests. As with real property, intellectual property in all countries of the world is subject to balancing mechanisms, often arising from antitrust requirements. Almost all developed jurisdictions have used and continue to use compulsory licensing mechanisms in one way or another, especially for the healthcare sector. The WTO calls for this in the 2011 Doha Declaration on TRIPS Agreement and Public Health. In Russia these mechanisms were not used until the end of last year, which drastically reduced our negotiating power in relations with global pharmaceutical companies and the possibility of developing the national pharmaceutical industry.

What decisions were made in a practical sense, and did they lead to?

Alexey Ivanov: The decision was made to issue the first compulsory license in the history of modern Russia for a drug for the treatment of coronavirus infection, owned by the American company Gilead. It finally changed the anomalous practice of refusing to protect our own interests in the development of the national healthcare system and proactively stimulate competition in our country's pharmaceutical industry. The decision was challenged in May 2021 in Russia's Supreme Court but it held up. The BRICS Competition Centre assisted the FAS and the Russian government in this issue's scientific and methodological study, involving a wide network of international experts. The BRICS countries are very close to each other in understanding that the current patent protection regime, which evolved in the world in the 1990s and cemented within the WTO, is often harmful to both social development and innovation. This consensus of the BRICS countries can become the basis for a systematic revision of the intellectual property protection regime in the world in order to reduce the share of rental income in the global economy and increase the competitive dynamics. The initiative of India and South Africa to remove patent protection from vaccines is the first consolidated approach of the BRICS countries to this topic, albeit not a successful one. The development of this area will be one of the priorities for the BRICS Competition Centre for 2022.
India and the Post-Pandemic Geopolitics / C. RAJA MOHAN (Индия и постпандемическая геополитика) / India, January, 2022
Keywords: expert_opinion, political_issues

The rise of China and its expansionism, the reassertion of Russia, the reordering of US global priorities, and the breakdown of the post-Cold War global political and economic order have opened up unprecedented challenges and opportunities for India. If Delhi's deepening conflict with Beijing underlines the new challenges, the growing intensity of India's strategic cooperation symbolises the new opportunities. Further, India's emergence as a power of some consequence has improved New Delhi's ability to take advantage of new possibilities and limit some of the negative fallout. India's success now depends on how quickly it can restructure its traditional worldview.

As the COVID-19 pandemic persists two years after it enveloped the world, the pre-existing strategic trends in international politics have accelerated. The pandemic has not only increased the awareness of the dangers of overdependence on China for manufactured goods, including pharmaceutical drugs and medical equipment, but also triggered political calls for greater resilience in the supply chains. Moreover, China's growing influence in multilateral institutions such as the World Health Organisation has been brought into clear focus. The US trade disputes with China have led to a new recognition in Washington that America needs to strengthen its domestic industrial and technological capabilities.

The US pushback against China in the security domain, which began well before the pandemic, has now acquired a sharper edge. The Biden Administration in Washington has fully embraced the Trump Administration's initiatives in the Indo-Pacific and reinforced the Quadrilateral Forum (that brings together Australia, India, Japan and the United States). Biden took a step forward in unveiling the AUKUS–a new military partnership between Australia, the United Kingdom, and the United States. It involves the transfer of nuclear-powered submarines to Canberra by Washington and London as well as trilateral cooperation on emerging strategic technologies like cyber and artificial intelligence.

Meanwhile, there has been no resolution of the military crisis between India and China triggered by Beijing's aggression in the Ladakh region in the spring of 2020. The military friction between India and China in the high Himalayas boiled over into a deadly clash between the troops of the nations in June 2020—the first in many decades. Despite continuous engagement at the military, diplomatic and political levels, Delhi has been unable to persuade Beijing to vacate the aggression and restore the territorial status quo ante in Ladakh. As it comes to terms with Chinese hostility and unwillingness to abide by the terms of bilateral engagement negotiated earlier, Delhi had no option but to reassess its China policy and adapt to the new geopolitical dynamic triggered by Beijing's rise.

In the immediate post-colonial period, India tended to reject the notion of geopolitics and its emphasis on the enduring primacy of power and its distribution in shaping international relations. India's unique brand in world affairs was defined by universalist notions such as "One World," and calls for co-existence amongst rival blocs in the Cold War, peaceful resolution of disputes, opposition to alliances, anti-imperialist solidarity with the post-colonial world, and campaigns against apartheid and for nuclear abolition.

However, it was never easy to sustain this ambitious framework amidst the pulls and pressures of the real world. Within the neighbourhood, New Delhi sought to preserve the subcontinental sphere of influence inherited from the Raj. The 1962 war with China shook the idealism of the 1950s, and Jawaharlal Nehru turned to the US for military assistance. As shifting great power relations shaped India's regional security environment, Nehru's successor, Indira Gandhi, turned to Soviet Russia to balance the Sino–US entente. For India, it remained a persistent struggle to reconcile its declared idealism and the foreign policy practice that demanded compromise and realpolitik.

Overarching this tension was something far more consequential: India's relative economic decline and, with it, the strategic salience, as it turned inward and limited its commercial engagement with the world. Finally, the change of domestic economic orientation in the 1990s reversed India's relative decline. As high growth rates since the turn of the 21st century put India on the path to becoming the third-largest economy, New Delhi began to rethink the nature of the post-Cold War world and its own place in it.

India's self-perception as a champion of abstract norms and universal principles began to change in favour of a more realistic appreciation of power and its role in shaping the global order. To cope with the unipolar moment in the 1990s, India joined Russia and China to promote a multipolar world, even as it opened up to a rapprochement with the US. Eventually, as China's rise began to seriously constrain India's regional and global advance in the 21st century, New Delhi moved closer to Washington. The persistent border crisis on the China frontier helped Delhi overcome the enduring hesitations on a strategic embrace with Washington.

As it intensifies its security partnership with Washington, Delhi is also complementing the US partnership by trying to build a coalition of middle powers that could limit the turbulence generated by the rivalry amongst the US, China and Russia. This is particularly important in light of the uncertain trajectory of domestic politics in the US and the potential surprises in China. India has begun to devote greater energies to the development of strategic partnerships with middle powers such as France in Europe and Japan in Asia.

The collaboration amongst the middle powers of special importance comes at a time when the US is rethinking the role of its alliances in Europe, the Middle East and Asia. While President Donald Trump castigated US allies for being "free riders", Joe Biden has underlined the importance of alliances in restoring US leadership in the world. But Biden is also looking beyond alliances to like-minded partners to take on greater responsibilities for regional security. Biden is also shifting focus from the prolonged interventions in the Middle East to coping with the China challenge in the Indo-Pacific. In the east, America wants its allies to contribute more to regional security.

While many of the US treaty allies are dismayed by a potential American resizing of its post-war global commitments, India is in a position to approach this in a positive framework. The readjustment of the US security role in Europe and Asia provides an opportunity for India to take on more responsibility in terms of security in its neighbourhood and beyond. This would require that India transcends its traditional temptations to act alone and find ways to work with other powers on regional and international security, through bilateral, plurilateral and multilateral mechanisms.

As a major beneficiary of economic globalisation, India must actively prevent a breakdown of the international economic order, now strained by the tensions between the world's two largest economies—the US and China—as well the disruptions triggered by new technologies and the impact of climate change. Instead of responding to the new global economic challenges within the old North–South perspective, New Delhi must contribute to the construction and maintenance of a new consensus amongst the major economic actors for sustainable global growth and fair distribution of benefits and costs. The post-pandemic world has seen India's political engagement with emerging ideas on cooperation amongst democratic states, on building resilient supply chains, and strengthening ad-hoc security coalitions such as the Quad (involving India, US, Australia, and Japan).

As India responds to new global opportunities, the constraints on the country are more internal than external. Without a more rapid and higher-quality growth, India's international performance will remain underwhelming. Equally important is the need to maintain internal coherence. The vast diversity at home has long complicated India's nation-building challenge. In this regard, internal political divisions will not only reduce New Delhi's ability to benefit from global possibilities, but also invite external meddling in its domestic politics.
Thoughts on a Rising India / STEPHEN J. HARPER (Мысли о восходящей Индии) / India, January, 2022
Keywords: expert_opinion

Light illuminates; shadows define. Amidst the gathering clouds of global turbulence and disruption, India's rise as a self-defined democratic power holds great promise for the world order.

Even before the worldwide trauma unleashed by the COVID-19 pandemic, globalisation and rapid advances in technology had already been reshaping societies across the globe. There is now more wealth and opportunity than ever before, but there is also growing agitation from globalisation's uneven affects. Disruptions to economic norms and national identities have led to politics becoming more fragmented and polarised, while zero-sum behaviour by authoritarian regimes has weakened the rules-based order.

The pandemic has only strengthened the headwinds that the post-war international order was already struggling to manage. That a transatlantic consensus would provide replicable templates for governance around the world is no longer a popular assumption, not even in its Western core. These challenges do not undermine the fundamental strengths of the democratic capitalist model, which continues to provide prosperity, security and resilience, wherever it is fully embraced and thoughtfully applied. However, they do suggest that the model requires new champions.

Few are as capable of or appropriate for occupying this mantle as India. For all its monumental challenges as a nation—its multiple divisions, its colonial past, its socialist legacy—the Republic of India stands as a tribute to the emancipatory potential of freedom and democracy. Indeed, the coming decades will be shaped in no small part by the choices India makes as it seeks to rise to its "great-power" potential. This journey is taking place amidst a shift in the centre of gravity of economic power from the Atlantic system to the Indo-Pacific region and during immense technological and political transformations.

India's rise is also set against the backdrop of a bi-polar contest for global supremacy between China and the United States (US), along with the increasing decoupling of their economic models. Most emerging economies have sought to prioritise their own development in a multi-polar environment and to protect themselves from the fallout of this strategic competition. However, the world is increasingly being pushed towards a real choice: Free markets governed by the rule of law and democratic norms vs. a state-directed, neo-mercantilist model of trade, investment and debt. Countries will invariably gravitate towards a rules-based world of free nations or a hub-and-spokes global order with Beijing at its centre.

India did not need Chinese aggression in Ladakh to demonstrate on which side of these choices it should fall. The country is, by its very nature, a deeply pluralistic society that will naturally resist any inclination to authoritarian governance. It is also an inherently entrepreneurial nation that has thrived when presented with the opportunities that democratic capitalism affords. Thus, as India emerges from its non-aligned legacy and becomes a real player in the international arena, its success will rest on the democratic model at home and appropriate partnerships abroad. The bold policy directions of Prime Minister Narendra Modi indicate a clear understanding of India's growing importance in the world, its needs and its potential.

One of those needs is greater opportunities for the largest working-age population in the world. External Affairs Minister, Dr. S. Jaishankar, has rightly highlighted that by 2030, India's human capital will be a key feature of its diplomacy. Yet more than half of India's workforce is still employed in the agricultural sector, which accounts for a mere 15 percent of the country's gross domestic product. There is an urgent requirement for long-term structural realignment—a generational transformation—to prepare this diverse workforce for the new realities of the Fourth Industrial Revolution.

Further, India will have to undertake substantial economic reforms to realise its income goals. Harnessing technology to overcome its rigid bureaucracy, robust federal engagement with state governments, more emphasis on the private sector, and better governance of state institutions will be essential moving forward. India's recent policy innovations towards economic formalisation, such as the delivery of services through Aadhaar and the introduction of the GST (Goods and Services Tax), have been significant steps in the right direction. Early measures towards the privatisation of key sectors are encouraging. Necessary structural reform in agriculture is being debated. Additionally, India must scale what is already the world's third-largest start-up ecosystem.

Finally, at a time when nations are reasserting the primacy of their own economic interests, an Indian agenda of economic dynamism and mutual benefit will need to be pursued at the international level. A well-articulated trade agenda is essential, which will advance India's place in global supply chains and build confidence in the country as a destination for investment. It must avoid both the pitfalls of export-oriented protectionism and the re-colonisation of Indian sectors. Doing this right will not only make India a truly wealthy country, but also enhance its global leadership and provide the world with a stronger and more stable trading order.

India has already achieved a lot. Its 3,000-year-old civilisation has had wide cultural impacts on all of humanity. Modern India has put a lie to the notion that democratic governance and economic progress are incompatible with extreme social diversity and high initial levels of poverty. After Independence, India left behind the famines of the past. Since the 1990s, it has undertaken an economic transformation that is destined to achieve great heights. Now, should India make the right choices, it will discover the potential of helping to lead the world to greater prosperity and peace.
Rising India 2021: A Note from a Tropical BRICS Member / RENATO G. FLÔRES JR (Поднимающаяся Индия 2021: Заметка тропического члена БРИКС) / India, January, 2022
Keywords: economic_challenges, expert_opinion

Indian civilisation and culture may be the only ones in Asia—and likely in the whole world—that can balance the equally ancient and powerful Chinese traditions. With its massive size in many socio-economic dimensions, India is essential to the world geopolitical scenario. Equally important is its identity as a diverse and pluralistic, functioning democracy—qualities that place it at the forefront of game-changing nations.

The visibility that a rising India is experiencing—owning partly to the annual growth of at least five percent for nearly 40 years—brings new domestic demands and tough challenges to the country's human capital. There is much to be done in building basic infrastructure, improving social indicators and bridging inequality, especially for India's increasingly young population. If the country succeeds in achieving economic prosperity while maintaining its historically tolerant and multiple nature, the world—developing countries in particular—will certainly have an inspiring model to emulate.

Many opportunities lie ahead. India is well-suited for fully embracing the digital economy, leapfrogging classical stages in the manufacturing and even services sectors. The country's conciliatory approach to disputes and its strategic autonomy policies are crucial in an increasingly fragmented world of non-global governance. India can aim to become an efficient and reliable international trouble-shooter, credible across continents.

Such an encompassing attitude is key in situations like those at the World Trade Organisation (WTO), for instance, where stubborn positions taken by key powers have left the institution in a serious stalemate. India's outstanding track record in Geneva vis-à-vis its savvy diplomats—similar to those of another BRICS member, Brazil—will be instrumental in finding a solution that, in principle, must also be supported by China. Without India's involvement, in a global alliance or key common purpose groups to restructure the WTO, failure is to be expected. The same applies to the recently contested World Health Organisation.

At the same time, India must rethink its health and trade policies. The fragile structure of its rural population, with complex relations with the agricultural sector and certain industrial practices, already makes both endeavours a difficult task. The geographical imbalances and the contrasting and competing Chinese exporting machine further exacerbate the problems.

India's immersion in the trade network of the Association of Southeast Asian Nations (ASEAN) along with Japan and South Korea demands a shift in policy, something evident in its refusal to participate in the Regional Comprehensive Economic Partnership (RCEP), involving ASEAN itself, Japan, South Korea, China, Australia and New Zealand. While India's motives are understandable, it must shed its protectionist views and adopt a wiser trade strategy. This goes beyond the "non-reciprocal trade liberalisation policy" towards a few small neighbours or attempts to profit from the present economic tensions between the US and China.

A great India must also find stable solutions to the challenges brought about by its relationships with neighbours such as Pakistan and Bangladesh. This "neighbourhood deficit," adding clay feet to the subcontinent giant, must cease; more diplomatic skills and stronger political will, combined with large doses of patience are required for sure.

If India acts as it can and deserves in the international scene, its projection in Iberian America, along with the clever inroads it has been making in Africa and Eurasia, will match the normal care dispensed to the US and European partners. Iberian America may seem strategically meaningless, since it lies outside of India's sphere of influence, but the people of the region yearn for strong foreign partners besides those in the traditional Atlantic rule-making axis and the Chinese alternative.

In the post-COVID-19 world, relevant middle powers with fine negotiating skills and a co-operative attitude will stand out. The numerous roles that India is able to play in this scenario will aggravate latent dangers, stretching to perilous limits the number and capabilities of its human capital, as well as exposing prevailing domestic shortcomings.

Finally, no great power can subsist without joy: The joy of being what it is, of believing in its worldview. Think of the flourishing mid-1950s to mid-1960s United States, with Hollywood musicals framing with colour, song and dance the glory of the consolidated superpower. India, despite its manifold problems, is a land of colourful festivals and joyous celebrations. If Bollywood is a factory of illusions, it also shows the strength and creativity of a nation that may lead without causing fear or sadness, always aware of a lighter and many times brighter side of life—naïve at the surface, perhaps, but deeply engaging and constructive.

Investment and Finance
Investment and finance in BRICS
NDB successfully issues CNY 3 bln RMB bond in China Interbank Bond Market (НБР успешно разместил облигации на сумму 3 млрд юаней на межбанковском рынке облигаций Китая) / China, January, 2022
Keywords: ndb

On January 27, 2022, the New Development Bank (NDB) successfully issued CNY 3 billion RMB-denominated Bond in the China Interbank Bond Market. With this issuance under the Bank's second RMB 20 billion Bond Programme in China, the total outstanding amount of RMB bonds issued by the NDB has reached CNY 20 billion, making the Bank one of the largest panda bond issuers in the RMB market.

The net proceeds from the sale of the Bond will be used onshore as general corporate resources of the NDB and to finance infrastructure and sustainable development activities in the Bank's member states. Pending their use, the net proceeds from the sale of the Bonds will be invested as part of the NDB's liquid assets.

The transaction saw strong interest from both onshore and offshore RMB investors and the issue was subscribed 1.5 times. The geographical distribution of investors was as follows: Mainland China – 84%, HK SAR and Macau SAR – 8%, Asia excluding greater China– 8%. Investor distribution by type: Bank treasury – 75%, Security – 18%, Central bank and official institution – 7%.

"We are delighted by the strong support seen on our first Renminbi bond in 2022. It is a clear demonstration of investors' confidence in the New Development Bank and its strong commitment to raising funding in the local currency of our member countries. The NDB is a regular issuer in the China Interbank Bond Market and the Bank will continue to build its RMB bond curve," said Mr. Leslie Maasdorp, NDB Vice President and Chief Financial Officer. "China's bond market is expanding rapidly. As a multilateral bank aiming to become a premier development bank for emerging economies and developing countries, NDB has noticed great opportunities brought by China's commitment to open up its capital markets. The NDB will continue to explore further local currency bond issuances in China as well as other member countries."

Bank of China (BOC) acted as the lead underwriter of the Bond. Industrial and Commercial Bank of China Limited, Agriculture Bank of China, Deutsche Bank, DBS Bank (China) Limited, China International Capital Corporation Ltd. (CICC), CITIC Securities acted as joint-lead underwriters.

Bond Summary Terms

Issuer New Development Bank (NDB) I
ssuer rating
AA+ (S&P) / AA+ (Fitch) / AAA (JCR) / AAA (ACRA)
Amount RMB 3,000,000,000
Book building date January 26, 2022
Settlement date January 27, 2022
Maturity date January 27, 2025
Tenor 3 years
Denominations RMB
Listing China Interbank Bond Market
Lead Underwriter Bank of China
Joint-lead underwriters Industrial and Commercial Bank of China Limited, Agriculture Bank of China, Deutsche Bank, DBS Bank (China) Limited, China International Capital Corporation Ltd. (CICC), CITIC Securities

Background information

NDB was established by Brazil, Russia, India, China and South Africa to mobilize resources for infrastructure and sustainable development projects in BRICS and other emerging market economies and developing countries, complementing the existing efforts of multilateral and regional financial institutions for global growth and development. In 2021, NDB initiated membership expansion and admitted the United Arab Emirates, Uruguay, Bangladesh and Egypt as its new member countries.

In October 2020, the NDB has successfully registered its second RMB Bond Programme in the China Interbank Bond Market. The NDB was granted approval to raise up to RMB 20 billion in the China Interbank Bond Market within 2 years of the Programme registration date. The proceeds of the Programme will be used to finance infrastructure and sustainable development projects in the Bank's member countries.
Made on