[00:00:00] Peter Slezkine, Host: I'm Peter Slezkine, Director of the U.S.-Russia-China Trialogue project at the Stimson Center. Since the middle of the 20th century, relations among the United States, Russia, and China have had an enormous impact on each country separately and on the world as a whole. The purpose of the Trialogue is to better understand this extraordinarily complex and consequential relationship by directly engaging with experts from all three countries.
In this show, guests from across the political spectrum and from every corner of the globe share their views in their own voice. While the Stimson Center seeks to provide access to a wide variety of perspectives, it does not endorse any particular position. We leave it to the listeners to judge the validity and value of the views expressed by the guests. I hope you enjoy the podcast.
My guest today is Victoria Panova, Vice Director of HSE, perhaps, Russia's top university. Victoria is head of Russia's BRICS Expert Council and Sherpa of Russia in W20. In this episode, we discuss the history of BRICS, Russia's attitude toward the association, and the differences between BRICS and other international formats, such as the G7 and the G20.
[00:01:21] Peter Slezkine: I happen to be in a forest in Latvia by the Baltic Sea, and you, I imagine, are in Moscow at the moment?
[00:01:43] Peter Slezkine: Well, we're going to ask you to tell us all about that particular summit. But I thought we would begin by discussing the long history of BRICS, its many transformations, and your association with it. So, at what point did you personally begin focusing on BRICS?
[00:02:01] Victoria Panova: Well, I can tell you, even a bit beyond that, because I could be comparing how, not only BRICS works, but how all the club mechanisms work. And club mechanism was, like, G7, G20, and BRICS. So, since I was a student, when I started making my Ph.D., I got much more involved into scholarly research of the G8. Remember, there was once G8.
[00:02:36] Victoria Panova: It's also a tricky question, because when the Soviet Union was falling apart, Gorbachev was at the end of the late '80s and early '90s, '91. He was trying to establish contacts with the G7 and trying to establish partner relations. And at the very beginning, neither Gorbachev nor Yeltsin, when the Soviet Union already fell apart, were really taken seriously. Yes, they were invited to sit there. I remember that the first letter that came from Gorbachev to greet the leaders of the G7, it was, kind of, discouraged if you look at their memoirs of their, like, British, for example. But later on, Yeltsin or his prime ministers were invited.
[00:03:24] Peter Slezkine: This was when?
[00:03:25] Victoria Panova: It was September '97. It was the first time, then, like, Russia was invited for the full scale of almost everywhere. But it was more internal American politics, which ensured that this was where Russia needed to be part of it. '98 Birmingham, it was more of an established situation in the UK. But nevertheless, we still had some meetings where Russia was not allowed.
But if we look, like, I personally think that the full membership, because we saw this participation since the early '90s, right? But the full membership could be traced to Kananaskis in 2002, when it was the first time in the history of the G7, G8 that all the countries were listed who would be presiding in which year. Because usually, it was, like, an oral gentlemen decision. And there was a sequence. It was never broken, right? We saw first France, then U.S., et cetera. And Canada and Italy joined a bit later. So, in 2002, it was the first time when, in the documents, we had the written evidence on who presides after who. And Russia, in fact, as a newer member, was not invited as it usually comes to the end, as it happened, like, with Italy and Canada.
[00:04:57] Peter Slezkine: You mean new members are usually put at the end of the line in terms of sequence.
[00:05:00] Victoria Panova: With Italy and Canada, it happened like this. But this time, it was a golden age at the point of Russia West cooperation. And it was put in the list that it'll preside in 2006. So, Germany offered its place. So, that's why they were hosting the summit in 2007. So, it was put in the middle. Well, with regards to golden age, I can say Russia lived through this very turbulent period of the '90s. I'm talking about internal things. But also on the international...
[00:05:35] Peter Slezkine: The collapse of the economy, difficult political situation.
[00:05:38] Victoria Panova: Yeah, default in '98 after their Asian crisis of '97. And there was a danger. And many economists, in fact, feared that there would be another default in 2003 when it was supposed that Russia would not be able to pay properly for its debt to IMF. But energy conjunction in the world, it worked differently. So, this didn't happen.
[00:06:03] Peter Slezkine: Because of energy breaking up.
[00:06:05] Victoria Panova: Yeah, this was one of their reasons. And we saw that Russia didn't go through this another default period and started going out gradually with the, you know, proper political economic decisions. And thus, it managed to talk to the other leaders, not as somebody who bags for something, especially the first Yeltsin, Kozyrev period. But somebody who could be helping, in fact, taken equally, you remember, many people forget about it, but with the Iraqi rift between U.S. and some of the NATO members, in fact, Russia was the one and Putin invited everybody in 2003 to St. Petersburg for the 300th anniversary of their city. And it was the first time when Bush met with, like, German, with French, and they, kind of, shook hands. It was even before the summit.
[00:07:02] Peter Slezkine: So, when the Americans and the French were fighting about the approach to Iraq in 2002, 2003, Putin was the one who was personally mending transatlantic relations?
[00:07:15] Victoria Panova: Absolutely. That's what he did. So, those were interesting times. We managed not to get into the other economic and financial hole. We got out. Our GDP was growing faster than other economies, where we're in the same boat with who are now BRICS, China, India now with having higher growth rates.
[00:07:38] Peter Slezkine: So, the logic in Russia originally with Gorbachev under perestroika is that Soviet Union is one of the two great powers and there should be a convergence. Convergence resulted in collapse. After living through the turbulent '90s, Russia seeks and gains membership in the club of the dominant developed powers in the G7, which becomes the G8, represents this in some respects. So, in the early 2000s, Putin was at the G8. He's mediating between the French and the Americans who are fighting about the Middle East. And BRICS is a different paradigm that we get to later, which, sort of, places the global South, the developing emerging economies, almost as an alternative to this established Western developed G7 or G8, right? But so, at what point does BRICS emerge? Is it true that it was a Goldman Sachs economist who first coined the term?
[00:08:35] Victoria Panova: Well, no. Goldman Sachs, in fact, he coined the term, but he meant marketing. So, he had to make a product.
[00:08:44] Peter Slezkine: This was when?
[00:08:45] Victoria Panova: 2001, right? So, he had to sell something to their big West investors. So, they had to see where their money could be going in order to get the biggest profits. And obviously, as I said, Russia, at those times, were in the camp of the emerging developing economists that were rising the most.
[00:09:08] Peter Slezkine: So, this Goldman Sachs economist was looking to advise clients about where best to invest in the international market, but also searching for an acronym that would roll off the tongue. So, of the emerging markets, Brazil, India, China, and Russia were selected because it sounded good and it looked good on paper as an economic opportunity.
But at that point, Russia was in a dual role, because on one hand it had been invited as a former and, perhaps, future great power to the club of G7, which then became G8. On the other hand, it was an emerging market alongside states that had not been considered great powers like Brazil.
[00:09:50] Victoria Panova: Well, absolutely. But, like, there was the understanding there has to be more cooperation with the developing and emerging economies. And rationally, it was expressed mostly by Yevgeny Primakov, who was first foreign minister, and then prime minister. And it was, like, '96, '98 when he started pushing for the idea of RIC, the triangle between Russia, India, and China, while Kozyrev and Yeltsin were totally forgetting about the rest of the world and concentrating just on the West and thinking, "Oh, we have to get into the Western family." Many people did not agree with that. They didn't see the potential in putting all eggs in just one basket, right? And Primakov, one of the, you know, most prominent people who expressed that and was pushing it forward, that is why he came up with this idea of triangle -- Russia, India, China. There was this tour of Latin American countries in Brazil being an important strategic partner. It didn't work at that moment, but not because of their economic problems in Russia. But there were some tensions that we still have in the bilateral relations between India and China. But they're now, kind of, overcoming it to work for some bigger purpose.
[00:11:10] Peter Slezkine: But so in the late '90s, early 2000s, basically, from Gorbachev through Yeltsin to Putin, there was a desire to integrate into the Western developed world and membership in the G7 was acknowledgement of that status. On the other hand, there were those, like, Primakov who were looking at non-Western emerging markets and seeking to create ties with them. And so, he came up with something that was a lot like what BRICS would be. So, you have the Goldman Sachs guy coining BRIC, and you have Primakov creating RIC, or seeking to, in the late '90s. So, at what point does BRIC become a coherent international club? When do those countries take this acronym and make it their own?
[00:11:57] Victoria Panova: Well, first of all, Putin was more in the understanding of Primakov in this regard. Yes, he very much thought it is important to continue integration with the Western countries. And I remember, it was very interesting, first time he came after Yeltsin was present in the summits. And in fact, many journalists adored him. Many participants, as well as the leaders, he was a friend of the, like, G7 leaders. And Putin came, and Russia, for the first time, he said, in Russian, it sounds [Russian 00:13:04]. It's not nice to beg. So, he was very much seen as a young, strong leader who finally brought a country not to ask for something, like, for restructure of the debt. He said, "We can do it. We are participants full scale and we are ready to contribute."
But at the same time, we are witnessing another situation. In 1999, it is the G7 that is coming up with the idea of the G20. The countries of the West, they thought, "Okay, we have to involve more of the developing countries in order to solve some of the issues that we cannot solve on our own." But what is important, along with the G20, G8 started having on a leaders level this outreach format. In 2005, during UK presidency, they decided to invite the biggest economies, the most important systemic ones from emerging world -- China, India, South Africa, Brazil. And around this time, it was also Russia realizing more and more that our interests lay not just with the West. We are much bigger than that. Some interests fall together with the developing world, some with the developed world. And thus, there has to be a more cooperative approach in this regard. And, during our presidency in 2006.
[00:14:07] Peter Slezkine: Presidency of G8.
[00:14:08] Victoria Panova: In the G8, yes. Russia invited as outreach same countries as was in 2005. And I can tell you that I heard some critique from our Western partners, saying, "Why did you do that? They will think they are important. Then, we'll have to talk to them on a permanent basis."
And so, we said, "Okay,it's your opinion, but we are the chairing country. We have the right to invite who we think is proper." So, we did that. And I can tell you it was a very different process, because from what I remember, we've been in close consultations already with all the outreach five countries.
[00:14:51] Peter Slezkine: Which countries are those? India, China, who else?
[00:14:54] Victoria Panova: China, Brazil, South Africa. I believe Egypt was their fifth one. And so, they were informed of what's been happening. And we had consultations with them on a regular basis throughout the year. Next year, it was Germany who was presiding. Despite previous critique, they said, "Okay, we already have those countries. We should launch a Heiligendamm Process of permanent consultations." So, it's, kind of, institutionalized. And over that time, Russia was also, kind of, talking more and more to those countries and seeing more projects of their own.
So, we had Heiligendamm and L'Aquila. L'Aquila is 2009 Italy. It was, like, a full name of this outreach, but with the institutionalization leaders level of the G20, this, kind of, died out. But at the same time, we saw the birth of BRICS, because in 2006, during Russia's presidency, we already had a separate meeting on the sidelines of the United Nations General Assembly foreign ministers of India, China, Russia, and minister of defense of Brazil talking together and discussing issues of the common importance for them.
And at the same time, the underlying process of dialogue between those countries following Primakov idea, following convergence with interest coming from China, from Brazil, from India, realizing themselves more and more as global powers. That brought a good moment for the BRICS to start.
[00:16:36] Victoria Panova: Yeah. But interestingly, the very first meeting was held in December of 2008. Well, 2006 was on the sidelines of the United Nations General Assembly. We also had some representatives of those countries coming. So, the St. Petersburg Economic Forum. But in December 2008, we had an academic forum. So, all scholars from these countries came to Moscow, and it preceded, in a way, with a summit in Yekaterinburg in 2009. So, I wasn't there at that point, but our big wise men from the four countries, they were deliberating on what they could be doing on international arena in order to put forward their calculation.
[00:17:19] Peter Slezkine: So, there was an unofficial meeting in Moscow in 2008 with experts from India, China, and Brazil to discuss possibilities of quadrilateral cooperation. And then, a number of months later, there was the first official BRIC meeting in Yekaterinburg, Russia.
[00:17:40] Victoria Panova: Yeah, absolutely. But you know what? This academic forum, together with business forum, they were recognized in 2013 in Durban as official outreach format. So, we have it every year since 2008. And since 2013, it is recognized. And I can tell you, such big initiatives, like new development bank and network university, they came from BTTC and academic forum.
[00:18:09] Peter Slezkine: Both the expert meeting and the first official meeting were held in Russia. Was that an accident? Could it have happened in Delhi? Or was the Russian leadership particularly eager to put this format together?
[00:18:22] Victoria Panova: Well, I can tell you that Russia was serious about pushing forward the format, so I don't think it was a coincidence. And the other countries were ready to look at how it works, to see if it corresponds to the interest as much as, for example, like, previous more informal consultations or bilateral formats. And I guess Yekaterinburg did work out fine as we had next year in 2010 further invitation of South Africa.
[00:18:52] Peter Slezkine: So, South Africa was added at the third meeting officially, was proposed at the second meeting, and South Africa provides the "S" at the end of the BRICS acronym.
[00:19:02] Victoria Panova: Yeah, already a big "S."
[00:19:03] Peter Slezkine: Why? So, it used to be a little "s" and now it's BRICS with a big "S," all capital letters. Why was South Africa chosen by the original four?
[00:19:12] Victoria Panova: Well, in fact, a lot of it came from China. And it's a known fact that China was very much promoting that. But it corresponded with all the countries' idea, that Africa is absolutely absent at the moment from global decision making. So, we need to have it at the table in order to ensure universality and comprehensiveness of our decisions.
And I know that, at some points, there were discussions, not in BRICS, but in the scholar debates, who could be representing itself as a leader of Africa. So, many say, okay, there's no single leader. So, there could be three countries that are represented in the whole of Africa, like, South Africa, Egypt, and Nigeria. But at that point, for a number of factors and also the desire of South Africa to fight for its interest on international arena, also, its objective economic parameters, proved that probably it was, like, the best first step in order to get into African continent and to start ensuring that its voice is heard in BRICS and wider.
[00:20:26] Peter Slezkine: So, the first four members had a clear understanding that they wanted Africa to be represented, settled on South Africa, and South Africa itself expressed interest. But you mentioned that China had a particular interest in adding South Africa. Why did China want to do this?
[00:20:43] Victoria Panova: Well, it was important for China, with itself growing its economy and spreading into different markets, bringing about this idea of Belt and Road, of course, it has to encompass different emerging economies of the world. But as I said, yes, China was very much proposing it, but it was not just the desire of China, because it did correspond with the rest of the group. Similarly, many say current expansion was pushed by China. And there were different ideas within both Brazil and India of how they should be done, whether they should proceed at all. And there were lots of publications, if you remember that. They were, kind of, against it. But leaders came and they decided.
[00:21:34] Peter Slezkine: We'll get to the recent rounds of expansion in a moment. You said that, when Primakov from the '90s had an idea of creating a China, India, Russia triangle, the tension disputes between India and China made that impossible at the time. Why was that not an issue with the original BRIC and then BRICS? What was the relationship between India and China like in those early meetings?
[00:22:01] Victoria Panova: Well, because by that time,when you look at more global problems, that cannot be achieved by the countries on their own. They understand they have to pull resources in order to get what is vital for their road development. Of course they will put things that are less important behind. They would not forget about them. And we saw it, we saw several times that those relations were sparking again. But it didn't break the group. And it even provided for some extra platform for them to talk. But also, it provided for a stimulus to be agreeing on the terms of those conflicts in order not to forget and not to, let's say, fail the big ideas that needed to be discussed at the summits.
And that's the same to what we have with the current incoming members. It's not rosy relations between them, either. We have some bilaterals in between as well. But you saw with the first two summits that they were a part of, this didn't come up as their problem on the agenda. So, yes, it's still not resolved. So, BRICS is not a miracle. It's not a magic wand in order to ensure that countries solve their bilateral issues very fast. No, it doesn't work like that. This will continue to be on the agenda. They had some breakthrough and heading last year at Kazan Summit. They agreed on some necessity to move forward on the bilaterals.
[00:23:36] Peter Slezkine: India and China did?
[00:23:37] Victoria Panova: Yeah. So, let's see how it goes. At least, so far, I'm seeing, kind of, a positive path and I didn't see more. Nothing sparking, hopefully, between them. We saw other conflicts. Like, for me, unexpected rather, like, Thailand, Cambodia, for example. But the BRICS members seem to be valuing their membership too much and willing to try to overcome their bilateral issues.
[00:24:04] Peter Slezkine: So, can you go through the history of BRICS since its founding and divide it into stages, if that makes sense, or moments when the agenda may have shifted in a new direction or the self-conception of the format changed?
[00:24:24] Victoria Panova: Initially, it was more about economics and finance. And if you look at the first summits, many of it was about the reform of their international Bretton Woods institutions. So, primarily, it was more about pushing economic and financial interests of their emerging economies. But what we see now, it's a comprehensive mechanism, because we have three pillars -- politics and security, finance and economy, people to people and culture -- that are taking more or less equal place in their dialogue.
And if you look nowadays, politics or governance is occupying a huge place. Look at the last declaration, right? Very strong. At the beginning, they were trying to be more mild and asking very generally to reform the United Nations to bring peace to all conflicts. Now, if you look at political section, governance section, they are pointing out specific problems that are yet not solved and not looked at by the West, and in fact are blocked from the West, like geographic representation and membership for secretariat. And as we know, secretariat now doesn't play just technical role, which it should play.
[00:25:53] Peter Slezkine: Are you talking about the UN secretary?
[00:25:55] Victoria Panova: Yeah. We're talking more and very precisely about necessity to have more geographic diversification, because I don't remember figures right now, but absolute majority of those who are employed for secretariat, they are from the West.
[00:26:11] Peter Slezkine: The absolute majority of those that are full-time staff in the UN secretariat are Western.
[00:26:16] Victoria Panova: Yeah. So, this is one of the issues that has been raised for some time already. But now, it's very clearly put into the final document. That's one thing.
Another thing, they're very concrete about conflicts. As I said from the very beginning where they were more mild and, kind of, general, they, in fact, put out their positions. On some points, they're, like, national positions where they recognize it. But they were very strong on Gaza, very strong on Iran. There's very strong position of BRICS on unilateral sanctions. Very strong position on terrorist attacks that are launched by states for terrorist groups.
I think that's a new stage from this point of view. So, yes, gradual from mostly economic and financial to comprehensive, but now even not afraid of putting what it really thinks onto the paper and then into the real world. That's a change. I think it's recognized itself as an important factor and they're ready to take responsibility, not just in pushing some of their own projects in the absence of movement from the West, like on IMF, on World Bank, but they're ready to be more assertive in fighting for equitable world, not against the West. Once again, it's important to say because, yes, many see it as a threat. Trump sees it as a threat. But you saw, in fact, when you start threatening a group like that, it brings you to the absolutely opposite situation.
Many experts were saying that BRICS will dissolve. Every year, I hear the same -- it wouldn't survive. For more than 15 years, I have heard that BRICS will dissolve very soon. I know a number of attempts to have bilateral carrots and sticks for each of the BRICS members and incoming BRICS members in order for them to like BRICS less. But the idea behind it, that, yeah, we don't want to be enemies, but we do mind our own development. And for this development, we cannot have limitations imposed by the other richer, bigger, stronger countries. We want our own way. If we can do it together, that's the best. And we are very precise of how this could be done together. This is an important point from their point of view, evolution of BRICS.
[00:29:00] Peter Slezkine: So, what does BRICS stand for now? So, in Brazil, there was, I think, in the recent summit in Brazil, there was an emphasis on the status of the Global South. But of course, I mean, China thinks of itself as part of the Global South, despite being the biggest economy in the world. Russia, geographically at least, is in a very different position. What is the BRICS' agenda, the BRICS' self-conception, the BRICS' mission now?
[00:29:27] Victoria Panova: Well, Global South remains an important ocean. And I can tell you, we do have continuous debates on how to term this because, like, in Russia, you mentioned how geographic position, yes, we could be part of the emerging EMDCs, right?
[00:29:46] Peter Slezkine: What is an EMDC?
[00:29:48] Victoria Panova: Emerging markets and developing countries. But we're the most northern... well, one of the most northern countries in the world. It's like one-third of it lies in the permafrost. And that's why we're suggesting that terminology of world majority or global majority.
[00:30:05] Peter Slezkine: As opposed to Global South?
[00:30:06] Victoria Panova: Yes, in order to be more inclusive. But we're still working on that. So, some kind of compromise is we say sometimes not Global South, but Global South and East, because China is not as much also the south. So, we are working. And in fact, when we either say Global South or Global South and East or global majority, we understand each other.
[00:30:33] Peter Slezkine: Right. So, what is there in common between world majority Global South and Global South and East? All these concepts share what characteristic?
[00:30:43] Victoria Panova: They share the characteristic that it involves BRICS plus countries, not just those who are members of the BRICS, but countries that were deprived of possibility to develop in a just and, you know, appropriate manner and whose interests have to be insured on the global arena. And that is why, if you look at the declarations, BRICS do not only look into themselves and their own development, but they are talking about the possibility of having those changes institutional and structural in their global international mortal that will reflect interests of those countries. Not just BRICS, as I said, but all African countries, all Asian countries, as much as possible, of course, big and small. At least, that's the idea that lies behind it.
[00:31:31] Peter Slezkine: How did the war in Ukraine in 2022 change the organization and the sanctions that were then levied against Russia?
[00:31:39] Victoria Panova: Well, first of all, it's not an organization, right, like, the G7 or the G20. I hate when people call it organization.
[00:31:50] Peter Slezkine: So, how did the association change after the Russia-Ukraine War entered a new stage and Western sanctions were levied against Russia?
[00:32:00] Victoria Panova: Well, if you look at last year in Kazan, Russia didn't seem like a country which was isolated or was alone on their international arena. We had objective reasons why Lula da Silva didn't come.
[00:32:25] Peter Slezkine: I know. It doesn't sound real the way I said it, but it is real, right? So, it was an injury that prevented him from coming.
[00:32:28] Victoria Panova: It is real. Yes. And the rest, we had 36 global leaders that came, including international organization heads. So, it was a big gathering.
From this point of view, I would say it didn't change much from the position of Russia, because starting from 2022, of course, countries are cautious. They don't want to be very much under fire of illegal sanctions that Russia has imposed. We have, I believe, 23,500, the biggest amount of sanctions levied on us. And of course, there has to be some changes in logistics, in trade routes, in how it all works. But if you see, none of the BRICS countries said, "Oh, yeah, we will join the sanction. We wouldn't trade with Russia. We wouldn't work with it." They all continue to trade with us. In fact, if you look, some of the BRICS countries have even much bigger turnover, trade turnover, with Russia, in fact, using the opportunity...
So, from the point of view of decisions that are taken, I would say, in fact, 2022 played against the West. In which way? In BRICS. I'll give you a historic parallel. You remember when OPEC used embargo and it was taken very seriously and we had the International Energy Agency created, and then policies started to be coherent and more emphasis was made on technological advancement in this area.
And this is how the West managed to make a leap when it encountered trouble of limitations on how much energy it could be getting. It didn't really result in physical deficit. But that was a wake-up call. And it helped them in terms of economic and technological development a lot.
Here, in a way, similarly. When Russia was, kind of, deprived of swift, had sanction when dollar and swift was used as a weapon against it, many BRICS countries, they continue using dollar and continue trading in swift, but it's a huge wake-up call because everybody understands that this could be used anytime against them. And all those countries are together because they want to be independent. And in fact, what did change a lot, they started much more intense negotiations of bringing about a new payment system, not instant, parallelly, because those who are friends with the U.S. and West, they want to benefit from current trade relations, and they will. But of course, they're interested in having some parallel system that will be ensuring their independence and their ability to foreign trade and for sovereign trade between themselves.
So, in fact, this Ukraine crisis pushed some of the issues that were on top of the agenda at their very first years of BRICS deliberations, because de-dollarization, in fact, was quite, well, at least loud, the first couple years. Then, it tuned down and they shifted to other issues that were more relevant. Although, 11 years ago, they did strike the framework agreement on trade in national currencies. There is such thing.
[00:36:15] Peter Slezkine: But it didn't go. So, that was a theme early on, de-dollarization, national currencies.
[00:36:22] Victoria Panova: Very briefly. De-dollarization was on, for some time, use of national currencies. In fact, China was very persistent. So, they developed it much, not just within BRICS. So, they were very consistent in putting more national currencies in their trade with other countries, not just BRICS countries. So, framework agreements is one thing.
Yes, they put in CRA (contingent reserve arrangements) and new development bank, but this was, first of all, responding to a stalemate in negotiations on IMF, on World Bank leadership, et cetera. But it was more local, in a way, if I can put it this way.
But this crisis gave urgency to those issues once again. And that's why they started discussing the ideas of how they could remain independent in a situation, well, once global public goods, public services that were said that they are public and they cannot be deprived from everybody, right? Once this word was broken, it started being used as a weapon.
So, in fact, it gave opposite results. And threats do paint opposite results.
[00:37:39] Peter Slezkine: So, what are the results? I understand that, now, it is a very important item on the agenda, de-dollarization, the creation of alternative payment systems not controlled by Washington and the West. But how much progress has been made toward realizing these objectives? The dollar seems as strong as ever, and it's not clear if there's a real workable alternative to swift. Or, has some progress been made in these areas?
[00:38:04] Victoria Panova: Well, it's a much longer process than... you know, those people who are not finances, they would think it could be easy. I can tell you that the use of NDB, in my mind, was very fast, because similar issues within the G7 took about 10 years to realize.
[00:38:23] Peter Slezkine: NDB is the development bank of BRICS.
[00:38:25] Victoria Panova: New Development Bank, yes. It got realized just within two and a half years after it was raised first time and discussed in our economic forum. So, from the BTTC, BRICS Thank Tank Council, to when it was opened and already launched two and a half years. So, it's fast. And in here, we do have a number of, I believe, quite workable options. But the technical details need to continue to be run because there are different legal systems.
[00:38:54] Peter Slezkine: We're talking about alternative payment systems now, so there is progress being made, but this is still a difficult technical issue to resolve.
[00:39:02] Victoria Panova: And of course, nobody would be talking about particularities of that before its launch.
[00:39:08] Peter Slezkine: Well, then a question connected to this, if you can share it. The U.S. recently passed legislation concerning stable coins, cryptocurrency, digital currency tied to American dollars. Is there any work in BRICS being done in this direction? Is there consideration of the possible utility of digital currencies? Because in the case of this particular American legislation, the idea was to preserve dollar hegemony using these tools.
[00:39:36] Victoria Panova: Of course, because this is one of the options for, like, in terms of possible use of new technologies. And I think it would be much more coherent for all sides if new standards and new rules and regulations for the new areas be digital currency, be artificial intelligence, with other issues, advanced issues. It would benefit much more if we come on a joint standard. BRICS are working on those, of course. But probably, for United States, to think that if it wants to impose just its own thinking and its own regulation on the others, even having EU, it doesn't seem to be an independent actor.
So, I don't think it would work well. So, as BRICS is working on those areas quite strongly recently, maybe it makes sense to stop seeing it as a threat and stop threatening everybody, that if you work with BRICS, you are an enemy of ours, right? It makes sense to see how U.S. can benefit from having more relations and offering. You came about in the '70s with a G7. You have to realize now it's not a trilateral world of U.S., Europe, and Japan. It is much more diverse. And just disregarding other strong powers who have different ideas would not lead to a win-win situation. It would lead to a lose-lose situation. Same for United States. So, it's much longer answer than you probably expected, but yes, we do consider that. And I believe it would make sense to have some goodwill on the part of the United States to be joining forces together in order to look into such systems.
[00:41:32] Peter Slezkine: How would that work? Right now, BRICS is seeking to develop alternative payment systems, use national currencies, perhaps, digital currencies backed by national currencies in order to avoid existing sanctions, possible future sanctions, and generally, control from Washington. But if the war in Ukraine ends and Russia-U.S. relations improve, if Trump and Xi strike some grand bargain around Taiwan or a good trade deal, is there a, sort of, BRICS' vision for an overarching economic system that would be devised together with the West and not as an alternative to it or together with the U.S.?
[00:42:17] Victoria Panova: So far, that's what we are discussing within a number of formats, both track two and official track. But now, we're coming out of the current realities. And we do need, probably, United States to come out and say, "Yes, we're ready to work together." Because now, we would be only thinking for you, guys, what could be good for you. And that's how you usually approach others. You think, "Okay, this is good for us. This is good for you. Let's do it this way."
BRICS countries do not work this way. It's a very foreign concept. We're very different. We try to understand each other. It's sometimes very difficult. But some issues or things that seem to be very obvious to one country, say, okay, this is good for everybody. No, it doesn't work like that.
So, we're discussing some models of cooperation. And systems where we understand how it would work for other countries with whom we have dialogue and outreach. We might think of how could U.S. be involved, and we're ready for this constructive dialogue. But I guess we need you guys to be part of it in order to have it, but not as a mentor, as one of us. It's my personal opinion. I'm just an expert. I'm not an official. But from what we do discuss, what are the principles and what are the main guiding lines for the international system that would be working for all. But it's precise, concrete BRICS edifice. They need to be put together by all sides. We can be building something for us, thinking that it could be good for you, but it might not be good for you. So, if you guys want to be part of the process, you need to rethink your own approach to us, to BRICS. You need to rethink your own approach to other country as a subordinate. It is not. And start thinking not of lose-lose but win-win.
[00:44:23] Peter Slezkine: But if Trump were to propose U.S. membership in BRICS, BRICS would not accept it at the moment.
[00:44:30] Victoria Panova: Not in current situation, of course, because you do have sanctions against... like, one of the criteria, you have to have respectful relations and no sanctions with all the BRICS countries. U.S. will have to first learn how to be able to talk to others as equals.
[00:44:48] Peter Slezkine: But not even just talk. So, in terms of formal BRICS rules, the U.S. would have to eliminate all sanctions against Iran and Russia before it could technically join BRICS.
[00:44:59] Victoria Panova: And China.
[00:45:00] Peter Slezkine: And China. Well, I don't know if we have sanctions against China. I guess, for maybe the Uyghur stuff, mostly tariffs.
[00:45:05] Victoria Panova: Well, technological limitations you do.
[00:45:08] Peter Slezkine: Export controls count. So, finally then, what is the logic of BRICS expansion? There was a major round of expansion recently -- Egypt, Ethiopia, UAE, Iran, Indonesia, right?
[00:45:21] Victoria Panova: Yes. And we have Saudi Arabia who was invited. They said they would join. But then, they have a, kind of, status where they come for some meetings. And I remember, last year, presidential aide said, "Oh, no." They decided they wouldn't join. And immediately, Saudi said, "No, no, no, we didn't say that. We'll be part of it. We're still thinking." So, they're participating.
[00:45:46] Peter Slezkine: I mean, number of partner countries.
[00:45:48] Victoria Panova: And 10 partner countries, because we had Vietnam joining, kind of, claiming that recently. It used to be nine. Now, it's 10.
[00:45:55] Peter Slezkine: So, what's the logic of the expansion? How much of this is driven by, you said that, in the Kazan meeting, it didn't look like Russia was isolated because there were so many world leaders in the country. Was this a major driver for expansion, Russia's desire to show that it wasn't isolated? How are new members selected? They're all very different in size and economy and geography.
[00:46:15] Victoria Panova: Well, you're talking about tactics. Like, this is just one thing. And having invited countries for membership, it's not just for once or twice. So, you cannot say, "We wanted to demonstrate." No. It's just something that came about, I'd say, incidentally. We were having regular work and we had so many countries interested in coming in order to decide on issues of common interest. But expansion itself, the decision on it happened one year earlier in 2023, in Johannesburg, in South Africa. In fact, we invited, preliminarily, it was six countries. Argentina did agree, but then Milei came and said, "No, no, we don't want to be part of it." But he's an interesting character.
[00:47:06] Peter Slezkine: When he won the election unexpectedly, he withdrew Argentina from consideration of BRICS membership immediately.
[00:47:14] Victoria Panova: Yes. If you look at the G7 and BRICS, we have some things that are very opposite. First of all, you guys are more hierarchical. So, United States does lead the dialogue. In BRICS, we're very horizontal. China is the biggest, but it doesn't lead the dialogue. When it is presiding, it leads the dialogue. But that's it. It doesn't have anything that it directs others. China cannot dictate India. It cannot dictate Russia. And it doesn't, because they realize they wouldn't do it.
That's the first difference. The second difference is that we don't cross each other's red lines. We understand there are national specificities and some things that other country cannot allow itself to do. So, we don't try to nag this country and say, "Oh, you are bad, and you have to either go ahead with the rest or not."
And the big third one is, G7 always posits as exclusive club. So, yes, you invited Russia first as outreach to, kind of, avoid some revisionist policies, whatever, right? So, there were different reasons behind that. But you didn't really... the rest, you looked out to outreach as, kind of, some subordinate countries to you. So, G7 positions itself as exclusive. And it's been for, by the way, 50 years already.
I know G7 once invited China, but also, in a similar account as they were invited Russia with, "Okay, you will go through stages." And China said, "No, no, no, I don't want to be part of that." G7 wants to keep it a closed club. BRICS always said it is an inclusive club. So, while, of course, there has to be a reason behind how many countries could be joining and what procedure they could be joining, how the partner process would work, because it's efficiency as well, at the same time, we cannot neglect that, if countries want to join you, you have to be responsive. You cannot be saying, "No, it's closed, full stop." We have more than 30 countries that are, kind of, in line for that, right? And there had to be a next step. It's a very difficult one, because of course, once you enlarge, it takes much more effort to agree on things than a group of five and group of 10. So, yes, we understand efficiency cannot be compromised because we did reach a number of interesting ideas and then projects that have to be, not just kept, they have to develop further. They have to bring more benefits to it. And they have to serve the purpose of why they were created.
And that is why we have to be cautious about how we manage those two waves of expansion. So, I would say there has to be a pause now. It doesn't start being exclusive nowadays in the number of 10. But we have to realize how the newcomers are integrated into everything that we have, because it's a huge amount of projects. And some of them are not as loud as NDB, for example. But each of them, like, NTI architecture, 13 groups, working groups on each cutting-edge technology issue, scientific projects. They have to get into those. And I can name many others.
So, after this is solved, then we'll continue seeing whether BRICS needs further expansion, or it could be working on their proposition of the new international model or reformed international relations in its current form, together with its partner countries. So, it all has to be seen. But the idea is that it's inclusive, so we cannot let others down. But we have to ensure efficiency. That's why we'll have a pause and see how the integration process comes and what each country could be getting and contributing to the BRICS with its inclusion.
[00:51:24] Peter Slezkine: Okay. Well, thank you for giving us a tour of BRICS, of one of the hottest clubs, it seems, on the scene right now, if we just look at the line at the door, for those who want to get in. So, yeah, so thanks again for joining.
[00:51:41] Victoria Panova: Thank you. Thank you, Peter.
[00:51:46] Peter Slezkine: Thanks for listening to the Trialogue Podcast. Make sure to subscribe to the show so you don't miss out on any episodes.