The two candidates left in the run off have sadly offered up the most vacuous contest in living memory. Though keen to defend sovereignty, the Left-wing octogenarian Luiz Inácio Lula da Silva talks mostly about his past achievements. The 45-year-old Flavio Bolsonaro principally wants to get his dad, disgraced former president Jair Bolsonaro, out of jail.

It is Flavio who looks the most likely to prevail, to the delight of US interests, from Donald Trump to Big Tech. However, the emergence of a new force in Brazilian politics — the upstart Missão party, led by the former student activist turned political entrepreneur Renan Santos — offers the possibility that this settlement may not hold forever.

Even if he was knocked out in the first round of the presidential election with 2% of the vote, Renan (politicians are known by their first names in Brazil) had led the field among under-24s with 36% in polling earlier this year. Commentators noted that he possesses a rare commodity in today’s digitalized political landscape: the ability to “break out of the bubble” and reach voters on the other side of the political spectrum. Indeed, the limitations of digital age politics is a core theme: “We have never been so polarized and yet there is so little debate”, he told me in a recent interview. Political alignment has become “automatic” so there is never any need to fight over politics. What he hopes to bring is fresh ideas, and transcend the “asphyxiating” effect of social media — which has done so much to shape the dire character of modern Brazilian politics.

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South America is now dominated by conservative governments — all of whom, despite their differences, adopt MAGA-like themes and are friendly to the US president. A slew of new Right-wing politicians are born-online culture-warrior provocateurs: foremost among them is the Bolsonaro-aligned Nikolas Ferreira, who has 23 million social media followers. Renan is scathing of these figures. “The electoral process has become the end in itself, and the mandate is only an instrument for gaining more fame and attention on social media.”

Younger generations in Brazil have grown up under Workers Party governments — 17 of the past 24 years have been under the party of the center-left — and now increasingly identify as Right-wing. Missão stands apart from its own camp for demonstrating a willingness to rethink Brazil’s role in a post-globalization world and presenting this in a forcefully ideological and programmatic package.

Renan is a constant critic of the Bolsonaro clan, their submissiveness to the US, their links to organized crime, and their self-serving culture wars. “Voters care more about a hypothetical trans person entering their bathroom than public security or corruption,” he says in one video. He repeatedly calls out Bolsonaro junior as a “miliciano“, or paramilitary gangster, for the senator’s alleged associations with Rio de Janeiro extortion rackets. Indeed, since Renan was knocked out of the election, the Left has been happy to amplify many of his critiques of Bolsonaro.

Missão are often called far-Right or even fascist by opponents, mainly due to their stance on crime. Under the party’s Direito Penal do Inimigo — “enemy criminal law” — members of organized crime gangs would be treated as enemy combatants and lose their status as persons under the law, much as has happened in El Salvador. The party has even pushed the slogan Prendeu, Matou (“arrest ‘em, kill ‘em”), implying a willingness to use extrajudicial killings appealing to a growing punitive strain in Latin America (and, indeed, the US).

Still, without wishing to explain away these provocations, Missão bucks convention today and in many respects resembles bourgeois modernizers, promising a politics of substance. In a recent post, Renan talked up the late Left-wing British philosopher Mark Fisher; and his defense of democracy and sovereignty stand out amid all the Right wing politicians who have tolerated or encouraged Bolsonaro’s coup-mongering as well as the clan’s lobbying the US against Brazilian national interests.

It is these themes that lead Renan to believe Missão can potentially appeal to Left-wing voters. Victor Marques, a philosophy professor and popularizer of Mark Fisher who has run for office for Lula’s Workers Party, tells me that Missão are at least “thinking through the global dynamics of the crisis of hegemony” — though he adds that he “disagrees with their entire programme.” The prominent progressive intellectual, Miguel Lago, has also praised their ambition: “Missão’s merit is to have outlined a vision for the country — which others have failed to do,” he argues, welcoming a “Right that thinks”. Still, Lago, who has written extensively about reconstructing Brazil, is at pains to emphasize that not only does he disagree with the content of Missão’s propositions in principle, he also finds many of them impracticable.

Where Renan is novel, at least on the Right, is in his understanding of the end of US hegemony: now the US demands explicit alignment, whereas previously it was presumed to be the only game in town. This imposes choices on Latin American countries. It is in this new world disorder that Missão is now seeking to advance Brazil’s interests.

This much is clear in The Yellow Book, a 500-page manifesto. Instead of focusing on Bolsonarist bugbears, it considers how to maximize the country’s rare earth deposits, clean-energy networks, and its status as the breadbasket of the world, so as to overcome regional inequality and unleash Brazil’s potential.

That starts with redefining what it means to be “Right-wing”. Orlando Lima, the editor of Valete, Missão’s in-house magazine, believes the Brazilian Right is stuck in “an intellectual and creative hole”, too obsessed by ideas of American libertarianism and British conservatism that don’t map on to the unique problems faced by Brazil, while the global Right in general is too fixated on being “anti-Left” on issues such as gender identity or migration.

Yet, Missão’s roots lie in the Free Brazil Movement (MBL), libertarians who were often criticized as Right-wing yuppies. For all their anti-establishment rhetoric, they were a young, business-friendly grouping from upper-middle-class backgrounds — and Missão supporters are still mainly drawn from this milieu. The anti-corruption movement they played a large part in advancing served to delegitimize politics, though Renan disagreed when challenged on this point, defending their record.

Still, today the party is expressly political. On founding Missão in 2023, Renan diluted his economic liberalism — he realized that there were too many problems in Brazil for “less state” to be the solution — and instead focused on remedying deindustrialization, low productivity growth, a dependence on imports, and a decadent elite.

Missão also marks a distinct contrast to the racism that pervades the radical Right globally in its embrace of Brazilian society as it is. Lima puts it grandly: he hopes to overcome the nation’s issues with a big civilizational project that would prove that a miscegenated tropical country can succeed in the new global order — finally making good on the long-promised (and much-derided) idea of itself being the “country of the future”. The Yellow Book argues that the decline of the US has left a power vacuum in the Global South that Brazil is uniquely positioned to exploit. De-dollarization would be pursued through the creation of a basket of South American currencies led by the real, while the BRICS+ would be engaged on a pragmatic basis so the country can extract concrete benefits and retain autonomy.

It would also use Brazil’s three “trump cards”: its possession of 23% of the world’s rare earth deposits, the largest behind China; its extraordinarily clean energy matrix; and the major diplomatic strengths of non-aggression and democratic stability. The vision rests largely on two strategic inputs — food and computing. Brazil is already the breadbasket of the world, but producing its own fertilizer would increase its independence. Meanwhile, reversing the brain drain and building data centers would see it become an AI powerhouse.

Rather more controversial is the plan to rid Brazil of its favelas, or informal settlements, in which 8% of Brazilians live (the figure is as high as 25% in Rio de Janeiro and over 50% in the Amazonian capitals). The favela “is more than an urbanistic problem, it is a civilizational plague”, argues the Yellow Book, seeing the remedy as not just a physical but a “spiritual” transformation. There are concerns that the combination of awarding land titles to residents, public service-provision, and housebuilding would cost a lot more than the projected 1.5% of GDP. Moreover, given Brazil’s authoritarian management of its lower classes, it’s not hard to imagine these plans playing out as violent mass expulsions.

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Moreover, the much vaunted “War on Crime” has still more alarming implications in a country where the police already kill 18 people per day, over 6,000 per year, according to official figures. Many of Brazil’s Military Police are already implicated in the criminal gangs known as “milicias“, who vie for territory with the drug traffickers. Missão’s plan — ostensibly in pursuit of territorial sovereignty, nation-building, and political control — could just as well end up in the violent chaos of a multisided armed conflict. Meanwhile the horrific implications of the Prendeu, Matou slogan hardly need spelling out. “The fact that Renan always explains it away confirms it is opportunistic and demagogic,” Lago tells me.

How much of a break with the neoliberal Right all this is remains an open question. Its development plans are still weak sauce, even by the standards of Brazil’s own past, while fiscal austerity is item one in their manifesto. “Inequality” hardly features in the Yellow Book, despite Brazil being one of the most unequal societies in the world. Renan meanwhile opposes Lula’s recent (incredibly popular) move to legally guarantee two days off a week as opposed to one — which even Senator Flavio Bolsonaro supported, suggesting the libertarian faith remains strong. In this sense, Missão’s departure from their 2010s neoliberal antecedents is only partial.

Still, whether or not Brazilians agree with the content of Missão’s programme — and many do not — there can be some small hope that their political seriousness, ambition and vision speaks to the possibilities of the emerging post-hegemonic world. For all the passivity-inducing brainrot of social media today, the current moment is also about the breakup of world order, which should force hard thinking, where previously complacency reigned. In place of imported ideas, there is an emphasis on taking the Brazilian experience seriously as a starting point.

Should Flavio win on Sunday, the defense of Brazilian sovereignty and democracy will be paramount from day one. Renan sees this as more propitious for his camp: the Lulista project will fall apart and there will be a mass of people who are still politically conscious looking for something new. But even if Lula pulls off another miracle, the prospects for progressives look grim. Missão should serve as a reminder to the Left that idealism and political commitment used to be their domain.

The Indians don’t complain as much about Donald Trump as the Europeans do; instead, they’ve treated his tariffs as a wake-up call to reduce their reliance on the US. I am writing this column from New Delhi, where I have met with senior Indian politicians and economists. The big theme here is India’s deeper integration into the Brics group and with the countries of south-east Asia. (Brics stands for Brazil, Russia, India, China and South Africa, but the group has recently expanded to include five other countries, including Indonesia and Saudi Arabia.) This strategy is not entirely new: India was already doing business with Russia, which provides its oil and military hardware. And it will continue to do so. But the dial has certainly shifted.

Perhaps the most extraordinary shift is regarding India’s relationship with China. The two nations have long been engaged in a dispute over their unmarked border in the Himalayas. In 2020, 20 Indian and four Chinese soldiers died in clashes along the disputed border in the Galwan Valley in the northernmost part of India. Flights between the two countries were suspended when the Covid pandemic struck and were never resumed. Since then, relations appear to have improved. Last Thursday, India’s largest budget airline, IndiGo, announced it would restart daily flights between Kolkata and Guangzhou. During the Shanghai Cooperation Organization meeting in early September, China’s president Xi Jinping and India’s prime minister Narendra Modi started to patch up their relationship. They agreed to deescalate their border conflict, and to strengthen trade and investment ties. They both have more to gain from co-operation than from conflict.

For a long time, the joke among Western diplomats was that India’s role in the Brics was to keep a watchful eye on Russia and China, and make sure that the two were not getting too close. If that indeed was the plan, it has proven little more than Western wishful thinking. Together, the Brics’ economies are already larger than America’s, Europe’s and Japan’s combined, if you measure their economies in purchasing power as the World Bank does. According to that metric, China and India are the world’s largest and third-largest economies respectively. Each year, they are growing larger relative to the West. Two years ago, Modi set a target for India to achieve developed-nation status by 2047, the centenary of the country’s independence. To achieve it, India would need to grow by 8% every year. It’s not quite there yet — but it’s growing fast.

I suspect that the folk in the US State Department and the Western foreign policy community are clinging on to statistics that measure the size of an economy in US dollars. According to that metric, the US is still top dog — and the combined West is far larger than the Brics. That metric has its economic merits, but it does not account for geopolitics. As part of its sanctions, the West cut Russia off from the dollar markets. China has capital controls. Dollars do not flow freely in and out of these countries. This is why you shouldn’t measure their economies in dollars, but in terms of what their local currencies buy. That’s what purchasing-power parity, or PPP, measures — the “bang for the buck”, in Russia’s case quite literally. The reason Western experts critically misjudged Russia’s capacity to build weapons and to sustain its war in Ukraine is because of their attachment to wrong statistics. If they had looked at PPP, they would have recognized Russia for what it really is: the fourth-largest economy in the world, larger than Germany and Japan.

In the West, delusions also persist about China’s strategy. I recently heard a former Biden administration official boasting about a conversation he had with President Xi, who assured him that China did not support Russia’s war against Ukraine. How could he be so credulous? Perhaps because virtually all geopolitical commentary in the West is deeply afflicted by confirmation bias. The South China Morning Post came closer to the truth when it quoted Wang Yi, China’s foreign minister, telling a European official that China wants Russia to keep on fighting in Ukraine to prevent Washington shifting its focus to Beijing.

Through his trade policies, Trump has driven the Brics countries, and parts of the Global South, closer together. Before Trump’s second term, the US was everyone’s favorite trading partner. It had a huge economy, with a single market and no internal trade barriers. Trump’s tariffs changed the picture. My interlocutors in Delhi were all talking about how Asian countries could trade more with one another to replace the trade with America that is now lost.

They also want to reduce their reliance on the US dollar. This would be a very big deal. But it is easier said than done and will require time. You need a sophisticated financial infrastructure to do this. Currently, India and Brazil conduct most of their trade through US dollars as the vehicle currency, since the US has a mature financial infrastructure and deep capital markets. If they were to wean themselves off the US dollar, the Indians selling goods to Brazil would have to hold the money in the form of Brazilian reais. And the Brazilians would have to hold Indian rupees. This is not at present hugely convenient. But, with their sanctions and tariffs, Biden and Trump have encouraged the Brics countries to move toward trading in local currencies.

The Brics have already started to develop a payment system, Brics Pay, which is based on the same technology as cryptocurrencies. When it’s finally ready to be rolled out, it will make it easier, cheaper and faster for member countries to pay each other in their own currencies. The real appeal of Brics Pay, however, is that the more you can shift your invoicing into local currencies, the less vulnerable you become to US sanctions. In recent years, the US has used its dominance of global financial markets as a weapon to impose its political will on other countries — largely by threatening to cut off local banks from the US dollar markets. Even China is not immune to this. Right now, the US still enjoys what is known as an exorbitant privilege, but it is a privilege that depletes each time it is used.

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Where do the Europeans fit into this picture? The EU and India are currently negotiating a trade deal that is due to be wrapped up by the end of the year. A deal could help both parties to reduce their dependence on the US. Yet there are still big issues to be sorted out in the next round of talks later this month, including Indian duties on cars, and compliance with climate targets.

Even if the deal is agreed, I doubt it will be a game-changer for India. A trade deal with the EU could help India nudge up its growth rates a little. But real change will come from within. India’s bigger game is high tech, and AI will be a big driver of economic growth. European governments talk about AI as if it’s some kind of eccentric American thing. Meanwhile, the Indians have made concrete plans to use AI to improve the productivity of manufacturing. That’s where the future growth will come from. Intra-Asian trade will become more important, but we must not forget that large economies, such as the US or India, derive most of their growth internally. They are not as reliant on trade as European countries typically are.

Once India reduces its dependency on the US, it will not go back to the old days even if Trump is replaced by a Democrat. The US will remain an important power for a long time, with unmatched military strength. China will be the dominant power of the Eurasian continent, supported by Russia. India will play its own game. The Europeans will be stuck between those two systems. They have no strategy of their own to prosper in a world that is becoming less America-centric.

What perhaps left the deepest impression on me during my trip to India was the degree of strategic patience at play. Modi set his economic goal for 2047. China also thinks in terms of timelines way beyond policy horizons in the West. In his 2011 book On China, Henry Kissinger wrote about the Chinese premier: “When asked about the impact of the French Revolution, Zhou Enlai replied: ‘It is too early to tell.’” I always thought of Zhou Enlai’s comment as a joke about how the Chinese think. These days, I am no longer so sure. He might have been dead serious.

The West is all tactics. The East is mostly strategy. You need both because even the most brilliant short-term moves do not add up to a strategy. Just look at the history of US military intervention since World War II. Each of them had their short-term rationale, even Iraq. But has it made the US safer? Has it made the world safer? Has it brought democracy? Has anyone become more civilized as a result?

Israel’s strike against Iran is a classic case of a trade-off where a short-term tactical maneuver is bought at the expense of a weaker strategic position in the long run. I am not the first commentator to observe that Israel’s attack against Iran will succeed tactically, possibly with sensational success, but it will not stop Iran’s nuclear weapons program. Any future Iranian strategic planner will logically conclude from the last series of attacks that Iran absolutely needs the bomb. Other countries in the region might too. Ukraine’s biggest regret is having agreed to give up its Soviet-era nuclear weapons. Had the country kept them, Putin would never have attacked.

Lack of strategic thinking plays an important part in the decline of the West. The biggest strategic own-goal of all has been to drive China and Russia closer together — and Iran closer to both. These countries do not form an alliance in the Western sense. What they have in common is an overriding strategic goal: to become independent of Western coercion.

Our sanctions, our bans, our wars and proxy-wars have had the opposite effect of what we intended. Some, like the sanctions, failed tactically. Russia has outgrown the West and has shifted to a war economy that the Europeans struggle to keep up with. But the most consequential failure of the policy was strategic. The financial sanctions persuaded China and Russia to develop a joint payment system.

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Until a few years ago, the world of finance depended on the US dollar and Western-controlled global payments infrastructure. Part of that infrastructure was Swift, a Brussels-based quango that provides the main networks through which international banks communicate. When Russia invaded Ukraine, one of the first actions taken by Western governments was to cut off some Russian banks from Swift, so they could no longer transact. The West also froze Russian financial assets, a large chunk of which is held in vaults in Belgium. Russia was essentially cancelled by the global financial markets.

The result is that Russia, China and other countries have been developing their own parallel financial infrastructure. The first part is called Brics Pay. Brics stands for Brazil, Russia, India, China and South Africa. The name “Brics” came up 25 years ago as a short-form to denote the five newly-developing economies most likely to succeed. The group has since grown to ten countries, and now includes Indonesia, Saudi Arabia, Egypt, the United Arab Emirates and Iran. They are not like Nato or the European Union. India is a bit of an odd-one out here. What they have in common is a desire to be independent of Western infrastructure monopolies.

Payment systems are to financial capitalism what plumbing is to the water supply — not something we talk about until we have a problem with it. The Western payment monopoly makes it possible for the US and Europe to impose financial sanctions in the first place. But financial sanctions are like the cake you can either have or eat. When you start abusing your monopoly powers and impose sanctions on too many countries, you give an incentive to break out of the system.

Brics Pay was developed by scientists from Saint Petersburg State University. It works differently from Western payment systems. Brics Pay is decentralized. It has no hub, no owner. It is based on the same underlying technology as crypto currencies — the blockchain. Brics Pay is sanctions-proof. No member can sanction any other member. If you want to make yourself independent from the US, starting with the payment system is the smartest thing to do.

I lost respect for virtually every single Russia or China expert in prominent think-tanks because they kept on misjudging this key element of China’s and Russia’s strategy. They still tell us that China and Russia will never align, or that China would step in and stop Putin from using a nuclear bomb. The misjudgments continue on all levels. The previous US administration misjudged the dynamics of the semiconductor ban, through which they hoped to keep China in the digital dark ages for a little while longer. They expressed surprise when Huawei succeeded in integrating a state-of-the-art chip into one of its latest models. The semiconductor ban is a classic case of the unintended consequences of sanctions. China learned how to make semiconductors, and the Russians learned how to build a payment system.

Officials in the US State Department think of the dollar as a political weapon through which they can force their will on others. They got bad advice from macroeconomists who told them that no other currency in the world could ever challenge the dollar. They are not telling the whole story. What is true is that no other official currency will challenge the dollar. The euro started as the world’s second-largest currency for foreign exchange reserves and has now been pushed into third place by gold. Where the observation goes wrong is that it fails to see the true threat. It comes from alternative payment systems, cryptocurrencies and blockchain technologies that allow other countries to diversify away from the US without having to create new currencies of their own. Macroeconomists still live in the world of fiat money and central banks — all creations of modern industrial society. But China and Russia are changing the game. It’s not cricket anymore.

The trouble with our misjudgments is they have no corrective mechanism. If you are a financial trader, your misjudgments cost you money. You cannot keep getting everything wrong and expect to stay solvent. That is not the case in foreign policy, because the people who keep on making those serial misjudgments are not the same people who are paying the price. It is also why dysfunctional economic theories persist even if there is no empirical evidence that supports them. Economists, State Department officials and journalists live in a space of mutually reinforced misjudgments. They celebrate each tactical victory — and never win wars.

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The West did have a strategy once, which is what put us into the position of superiority in the first place. It originated in science and was leveraged by smart political decisions. But it all happened a long time ago. The Second World War was the beginning of a breathtaking series of innovations that started with the Manhattan Project and that were co-sponsored by the US Army: the transistor, the semiconductor, the integrated circuit, the personal computer, the internet, and now AI. It was technology that gave the West a strategic advantage. European integration was in that category of big strategic moves until it turned into a sprawling mess with EU enlargement.

China made two big strategic moves in succession. The first was the policies of economic modernization by Deng Xiaoping, who came to power in 1978. As Frank Dikötter, the Dutch historian, explained in his masterpiece China After Mao, the West misjudged Deng’s reforms as a transition from communism to capitalism. The real goal was to make communism work better. Deng’s reforms were a long-term project. His reforms started in the 1980s and were continued by his successors. When he died in 1997, China was still at an early stage of industrialization. Today, it is one of the world’s most advanced industrial nations.

China’s second important strategic move was Xi Jinping’s decision to leverage critical raw materials, like rare earth magnets, to turn China into the world’s indispensable producer. The US still enjoys the fruits from the digital revolution. But it is no longer alone. And China is about to take a lead in this area too.

A report by Stanford University tells us China publishes more AI research papers than anyone in the world. The big prize in AI will go to those who can leverage it to create AI-based manufacturing: plants that are operated by intelligent robots and are linked to large data centers that optimize the production flow. What is known as Industry 4.0 still requires raw materials as inputs, but China is better placed in this area too. I call that a strategy.

You can think of a tactic as a shiny gift, and of strategy as a gift that keeps on giving. We Westerners are, by our inclination, more tactical than strategic. We like to close in. That is not necessarily a bad thing, for as long as you have an underlying strategy in place.

Chess players know that. One of the greatest chess grandmasters of all time, the American Bobby Fischer, said: “Tactics flow from a superior position.” The West has lost that superior position. So has Israel. We are the aging grandmasters of geopolitics, eager to play one more game.

Since the onset of the conflict in Ukraine, the West has sought to isolate Russia through sanctions and diplomatic pressure. And yet Kazan will be welcoming heads of state or high-ranking officials from 32 countries, including the bloc’s four new entrants — Egypt, Ethiopia, Iran and the United Arab Emirates — as well as numerous other countries interested in membership, including Turkey, the first ever Nato country to consider joining. The UN Secretary-General Antonio Guterres will also be present.

The event testifies to the growing influence of the Global South — or the Global Majority, as the Russians call it — and its search for an alternative to the US-led system. Some 40 nations are reportedly on the waiting list to join, with Saudi Arabia and Indonesia expressing serious interest, further illustrating the growing attractiveness of this “non-Western club”. Membership is seductive to those nations seeking alternatives to Western-dominated economic and financial structures which are often accused of jeopardising the economic development, social stability and national sovereignty of weaker countries.

It’s particularly telling of the West’s tone-deaf approach to the rest of the world that, to the former’s surprise, so many countries expressed an interest in joining the Brics after the outbreak of the Russia-Ukraine war. Ironically, the West’s sanctions regime — and especially the freezing of $300 billion of Russia’s foreign-exchange reserves, an unprecedent act of economic warfare — is what motivated many countries to look for alternatives to the dollar-denominated Western financial infrastructure.

The expansion of the Brics, coupled with the growing interest from the Global South, underscores the geopolitical power shift underway — from the West to Rest. Indeed, the Brics bloc already wields considerable economic clout. The group’s combined GDP, when adjusted for purchasing power parity (PPP), accounts for 35.6% of the global economy, surpassing the G7’s share of just over 30%. In terms of population, the disparity is even more striking: Brics nations are home to 45% of the world’s population, while the G7 accounts for less than 10%. With India, China, and Russia’s GDP expected to grow by approximately 4% this year, compared with 2% for Western economies, and with more countries set to join, the Brics have the wind of history in their sails. No wonder this summit is being described as a “Bretton Woods for the Global South”.

Nonetheless, Western countries have often dismissed the institutional relevance of the Brics, pointing out that the bloc is little more than a loose association of countries with often diverging economic and geopolitical interests. Furthermore, it has failed to offer a concrete alternative to the Western systems. While it is true that the Brics have privileged economic and infrastructural mutual cooperation, and the wider concept of “connectivity”, over formalised governance structure, this might be about to change.

Russia has played a driving role in the Brics’ evolution, instrumental in the initial formation of the group, the hosting of its first summit, the admission of South Africa, and the subsequent push for expansion. Positioned as a mediator between China and India, Russia has managed to maintain a key role within the organisation, making it a vital player in any institutional leap forward.

Now Russia has set the bloc a new strategic goal: de-dollarisation. The sanctions against Russia and the freezing of its assets by Western powers have underscored the need for financial independence, making the de-dollarisation agenda not just aspirational but a necessity — not just for Russia but for other countries as well. The main response so far from the rest of the Brics has been to increasingly settle their international trade in national currencies rather than the dollar, with remarkable outcomes: the volume of trade settled in the currencies of member nations has already surpassed that of dollar-based transactions.

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But aside from the creation of the New Development Bank (NDB), which operates as an alternative to Western financial institutions like the IMF and World Bank, little has been done so far in terms of creating a valid alternative to the Western international financial-monetary infrastructure — a new Bretton Woods, so to speak. Could Kazan mark the beginning of a new era in this respect? So far details have been sparse, but in recent months speculation has been rife about the Brics’ plan to launch, possibly during the summit, a full-blown new global monetary ecosystem.

This would include a much-touted “Brics currency” — a unit of account used to settle international transactions and manage balance-of-payment problems, not to be confused with an actual supranational currency à la euro — as well as a groundbreaking blockchain-based international payment system aimed at providing an alternative to existing global financial systems, such as Swift, and the dollar-based financial infrastructure. The system would use blockchain technology to enable secure, transparent and immutable payment transactions across Brics member countries. Blockchain’s decentralised nature would eliminate the need for a central intermediary, making cross-border payments more efficient and less susceptible to censorship or interference from external entities.

The proposed payment system would not only support the de-dollarisation agenda but also provide a much-needed financial safety net for countries facing Western sanctions. If successful, this initiative could become the cornerstone of a new, decentralised global financial order that relies on digital technologies to challenge the dominance of the dollar. As Oleg Barabanov, programme director of the Valdai Discussion Club, a Moscow-based think tank, explains, this “could be the first step towards truly strengthening de-dollarisation within the Brics and broader non-Western world”. At the same time, countries “will retain full sovereign control over the traditional currencies of the Brics countries”.

Of course, this programme presents political as well as technical challenges. It’s important to note that not all the member states are on the same page on this issue. While Russia and China (also) want to use the Brics as a means to challenge the global dominance of the US — hence Russia’s insistence on the need for the new payment system to be completely decoupled from the dollar — not all members agree with this adversarial approach. Countries such as India, Saudi Arabia or Turkey are arguably more interested in rearranging the seats around the global table rather than building a new dining room altogether. But at a time of growing power bloc rivalry — and as the West leans more and more towards an “either you’re with us or against us” zero-sum mentality — how long will they be able to keep a foot in both shoes?

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The 2024 Brics summit in Kazan couldn’t come at a more pivotal time for global geopolitics and economics. With significant economic and demographic weight, the Brics have the potential to reshape global governance, especially if they succeed in creating an alternative global financial architecture. Challenges remain, as noted, particularly in terms of managing the group’s non-hierarchical structure and accommodating the various positions of existing and aspiring members, but the Kazan summit may very well lay the groundwork for a new era in global economic relations.

How should the West react to these momentous changes? Given there’s little it can do to stop the ineluctable shift towards multipolarity, threatening countries that move away from the dollar, as Trump recently did, will only achieve the opposite effect; indeed, Western countries, especially in Europe, are already paying a high price for the West-Rest decoupling. They could choose, instead, to engage with the rest of the world on an equal footing, in the knowledge that a smaller share of global GDP doesn’t necessarily mean a lower standard of living — a lesson the Americans could learn from many European countries.

But the current geopolitical confrontation is about much than just economics. It’s about the end of five centuries of Western global dominance. And if history is anything to go by, we know that established powers rarely, if ever, accommodate the rise of other powers. No wonder, then, that the current global clashes are increasingly framed in civilisational terms. As Russia, Iran and China gather in Kazan to posit their new world order, it is quite possible that rather than auguring a new era, the meeting will be remembered as just another step on the road to conflagration — something which, arguably, is already playing out on the European eastern front as much as across the Middle East.

The global growth rate is being dragged down by the big beasts, namely the G7 countries and China — but elsewhere things are looking up. Modi’s India is humming along at more than 6% a year, with Indonesia close on its heels. While there are still laggards in the developing world, such as South Africa, other perpetual slow-growers including Mexico and Brazil are now coming up strong. Significantly, this growth is generally being engineered amid fairly conservative fiscal conditions, suggesting that expansions will have a better chance of becoming sustainable.

The same cannot be said of the world’s largest economies. There is much excitement in the US about Joe Biden’s green transformation programme, but it is not yet clear if this debt-fuelled boost will outlast the spending spree. In fact, once one strips new debt from new growth, the G7 economies are close to flatlining. They would have collapsed altogether during the pandemic had it not been for their governments borrowing trillions to keep them afloat — something that can’t be said of most developing countries, which weathered the storm fairly well. In this state, the ageing and debt-saddled West will struggle to restart its economic engines.

This seems to be the direction in which China is headed as well. An alleged Chinese spy at the heart of Westminster may have captured the media’s attention this week, but Beijing’s bigger story is one of diminishment. While it may sound impressive, China’s growth rate of more than 5% is significantly less than what its leadership had expected. Moreover, given China’s heavy reliance on debt to keep boosting its economy, it’s not even clear how much of China’s expansion can count as growth. With its population ageing rapidly, the Middle Kingdom’s dream of one day resuming its historic place as the world’s largest economy now looks to be in jeopardy.

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If there is spirited debate among economists as to whether China will be able to escape its funk, there is broad agreement about how it sank into it. Over the last 40 years, and particularly in the two decades straddling the turn of the millennium, China built its economy by exploiting its massive labour force. By repressing wages so as to attract investment in the manufacturing of goods wanted by the rest of the world, it was able to allocate nearly half its economic output to investment. The result was an unprecedented buildup of a world-class industrial base.

There are obvious limits to this strategy. Eventually, the world gets tired of being a sink for one country’s output. Overseas markets were saturated by “Made in China” goods and recent moves in China’s trading partners have put a crimp in its ability to keep exporting its way towards growth. In the US, for instance, the Biden administration has largely continued with its predecessor’s attempt to reduce trade with China, and even though Europe won’t go so far, talk is growing of the need to “de-risk” trade. As a result, China has reached the mature phase in its development; now it has to shift from an investment-based model towards a consumption-based one — in which rising incomes enable more of the economy’s output to be consumed locally.

On the face of it, this shouldn’t be difficult to achieve. One of the reasons that China’s saving rate is so high — some 45% compared to a G7 average of half of that — is that it does not have the sort of welfare state that exists in Western countries. As a result, Chinese households build up large rainy-day funds, storing much of it in real estate, which only adds to the country’s economic woes since it further inflates the housing bubble that has so worried the government. In addition to direct transfers of money to boost consumption, such as stimulus cheques, the Chinese state could encourage its citizens to spend more by providing them with the sort of healthcare that removed the necessity to self-insure to such an extent. If Chinese families knew they could rely on state care to cover a long-term illness, they might not feel the need to squirrel away so much of their earnings.

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That, however, is proving to be an obstacle for the ruling Communist Party. Part of the resistance to changing its economic strategy is ideological: Xi Jinping frequently muses that welfare will sap Chinese resilience. But part of it is practical. China has the administrative infrastructure needed for big public investment programmes, from building housing blocks to high-speed railway lines, but lacks the capacity for a similar ambition in delivering services to their citizens. When faced with an economic slowdown, the Chinese authorities keep doing what they do best — borrowing tons of money to fuel yet more big public works programmes. But the problem is that these merely add new capacity to an economy that already has too much of it, leaving the country with even heavier debts in the meantime.

China’s economic woes are part of a wider global trend. The two-track world economy, in which the big powers are slowing and the rising ones are catching up, began to take shape in the wake of the 2008 financial crisis, and it seems to have ossified since the pandemic. It was only a matter of time before the consequent economic redistribution began to alter the geopolitical landscape. Although Western observers still tend to see the world through Cold War lenses, merely substituting China for the old Soviet Union as the opposite pole in the global political economy, the emerging world order is actually a lot more complicated.

Along with the recent Brics Summit in South Africa, the G20 revealed a more assertive developing world that is less willing to sing superpower tunes. If India and other developing countries — including the African Union, which secured a permanent seat at the table of what will now become the G21 — feel they got what they wanted out of the Summit, the same probably can’t be said of the US, China, or Russia. While the final declaration on the war in Ukraine didn’t deliver the condemnation that the Western allies had wanted, it didn’t exactly leave Russia off the hook, regardless of what Russian foreign minister Sergei Lavrov would have us believe.

The same was true at the Brics summit a few weeks ago. Widely seen as a success for its South African host, Russia tried but failed to enlist support there for its position and ended up looking somewhat isolated. Countries such as India are quite happy to buy Russia’s oil and natural gas at the knock-down prices resulting from sanctions, but they’re not going to line up in its camp. As for China, Xi sat out the G20 Summit, probably as a snub to his Indian rival, only to watch as it produced a blueprint for a trade corridor between Europe and Asia that will rival China’s Belt and Road Initiative. Xi has long wanted to position himself as the head of a rising world; Modi may have exploited his absence to take his place.

What all this reveals is a range of rising middle powers that will pick and choose from what the major powers have to offer, whether it be trade concessions or aid, without offering them blanket support. India not only won the African Union a seat at the table but also engineered language favourable to the multilateralism and World Bank reform it favours. Rather than a world which is polarising into two camps, therefore, what we are witnessing is a world in which middle powers are skillfully playing the US, China, Russia, and Europe off against each other, securing concessions from all as each of the superpowers tries to curry favour with as many of them as possible.

Meanwhile, something interesting is going on in the background. To say that big economies are floundering obscures the fact that for many people, their individual circumstances may be turning a corner. In Western countries, house and share prices have been falling in real terms, but real wages have, after decades of stagnation, recently turned positive. It will take a while before people begin to feel the cost-of-living crisis is receding, but there are reasons to believe that reversal may prove permanent. After decades of rapid expansion, the growth of the global labour supply has begun slowing. The consequent rise in labour’s bargaining power has shown up in recent pay settlements across the developed world, where competition to attract immigrant workers will get more fierce.

In short, while the world economy slows, the poor get richer and the rich stand by. Not only is the developing world’s share of global income rising, but within Western countries, the share of income that goes to labour looks set to rise too. If this is what the end of growth looks like, many could be forgiven for saying “bring it on”.

And on that front, the gathering in Johannesburg succeeded. The organisation announced its first expansion since its founding in 2009: next year, the five original Brics members — Brazil, Russia, India, China and South Africa — will be joined by Saudi Arabia, the United Arab Emirates (UAE), Egypt, Iran, Ethiopia and Argentina (provided the current government wins the upcoming elections, which seems unlikely). Even more significantly, the summit underscored the bloc’s inclination to use its increasing economic clout to challenge the Western-dominated global order. The combination of these two elements — growing economic muscle and political boldness — means that the bloc (to be renamed Brics Plus) has become a full-blooded geopolitical actor that can longer be ignored.

In demographic and economic terms, the power of the Brics, especially in light of its recent expansion, is all too evident. With its new members, the bloc will represent almost half of the global population. In terms of purchasing power parity (PPP), the most appropriate measure for comparing the relative economic size of countries, it already represented nearly one third of global GDP — more than the US-led G7’s economies, which account for 30%. The latest additions will bring its share up to 37%.

This gap with the West will only widen, considering that emerging and developing countries are predicted to grow at much higher rates in the coming years, and that more countries are likely to join. More than 40 countries have reportedly expressed interest in joining, and 22 of them have formally asked to be admitted. In other words, the overwhelming majority of the world’s population lives in countries that are either already in the Brics or aspire to be.

The importance of this becomes even more apparent if we look at what countries produce, rather than just how much they produce. Over the past decades, Western economies have become increasingly financialised and seen their industrial production stagnate, meaning that a large part of their GDP doesn’t represent the production of actual goods but rather of financial assets. If we look at actual production — manufacturing — the gap between the West and the Brics is even starker: the G7 countries as whole contribute to global manufacturing output roughly as much as China does on its own.

But the growing power of this new alliance is about much more than just GDP and the production of stuff; it’s also about resources. The integration of two of the world’s top oil producers — Saudi Arabia and the UAE — means that the Brics members will account for more than 40% of global oil production. The fact that two of America’s staunchest allies in the Persian Gulf have decided to join a China-led (and increasingly politicised) alliance exemplifies better than anything else the paradigm shift underway. US officials can downplay the significance of the event as much as they want, but its symbolic value is clear — especially if we consider that the two Gulf countries are joined by Iran, one of America’s most notorious arch-enemies.

For the US, however, the consequences are likely to be more than just symbolic. The move potentially represents a serious threat to the petrodollar system. During the Seventies, Saudi Arabia made a deal with the US in which it agreed to list its oil on the global market in dollars; the dollars received by Saudi Arabia for its oil sales — the so-called petrodollars — would then be recycled back into the US in the form of deposits and purchases of US Treasuries. This, combined with the fact that any country that wants to buy oil has to purchase dollars to do so, has allowed the US to run a massive trade deficit for decades without seeing the dollar depreciate. It has been one of the keystones of America’s post-war global hegemony, allowing Washington to sustain a regime of perpetual war, on top of exercising financial dominance over much of the world.

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In recent years, however, cracks have started to appear in the petrodollar system. Not long ago, Saudi Arabia announced that it was considering pricing its oil in other currencies — first and foremost the Chinese yuan — while the UAE has already sold oil to China using the yuan. Saudi Arabia and the UAE’s entry into the Brics is therefore likely to provide further momentum to this gradual shift away from the petrodollar system.

As a group, too, the Brics has leaned towards an explicitly pro-de-dollarisation stance. Last year, for instance, they announced plans to develop an international currency along the lines of the synthetic alternative proposed by Keynes 70 years ago, the bancor. At last week’s summit, Brazil’s President Lula reaffirmed it as a priority, though it is unlikely to happen anytime soon. In the meantime, the Brics’s plan is to encourage the use of local currencies in international trade, as well as increasing the percentage of the bloc’s loans financed in local currencies.

Equally symbolic, in political more than economic terms, is the admission of Ethiopia. Not only is Ethiopia Africa’s second most populous country, after Nigeria; it is also where the headquarters of the African Union are located, in the capital Addis Ababa. The move here should be read as a message to the entire continent that the Brics is open to any African country that may want to join, as well as an affirmation of the bloc’s commitment to helping developing countries — Ethiopia is also one of Africa’s poorest countries. In his speech (read by the Chinese commerce minister), Xi Jinping in particular insisted on the role of the Brics as a fundamental vehicle for the development and emancipation of the Global South — primarily Africa.

Not that these countries need much convincing. Many African nations have already asked to join the Brics, along with several more in the Middle East and Latin America. There are strictly economic reasons for this: the bloc’s approach to global affairs and development — based on the principles of inclusive multilateralism and sovereign equality, and opposition to economic coercion — is seen by many nations as a better alternative to the current Western model, and as an opportunity to break away from economic and financial Western control.

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As ever, there are deeper factors at play, too. For some, the Brics represents a “geopolitical umbrella” ostensibly offering a degree of protection in the face of the West’s increasingly aggressive foreign policy, epitomised by the Biden administration’s “dual containment” strategy against China and Russia, and the expansion of Nato and Nato-like alliances around the world. For others, the motivation might be the opposite: they might, as Branko Milanovic suggests, view the Brics as “the only place where nations not interested in participating in the new Cold War, or even in a possible hot war between the superpowers, can ‘runaway’ in order not to have to choose sides”. For others still, the motivation is more ideological: it is about explicitly challenging and weakening the West’s 500-year-old grip on global affairs, in what may be likened to a new decolonisation movement. This is particularly evident in some African countries.

On this issue, however, not everyone in the bloc is on the same page. Russia and China, for obvious reasons, favour transforming the group into a full-blooded political organisation speaking up for the Global South, countering US and Western hegemony, and spearheading the creation of a more equitable multipolar world order. In his speech, Xi said that the US “has gone out of its way to cripple emerging markets and developing countries; whoever is developing fast becomes its target of containment; whoever is catching up becomes its target of obstruction”.

South Africa’s Cyril Ramaphosa, meanwhile, drew a direct parallel between the Johannesburg summit and the Bandung Conference of 1955: “The Conference called for the recognition of the equality of all nations, large and small. We still share that common vision of a fair and just world.” Isaias Afwerki, the President of Eritrea, one of the many non-member countries invited to the summit, was even more scathing: “US exceptionalism — or pax americana — has unleashed malaises that have gravely impaired global progress for almost a century now. Illegal and unilateral sanctions; weaponisation of US dominated financial, economic and judicial institutions; as well as other punitive instruments in their toolbox are routinely invoked [by the US and its allies] to punish those who do not toe the line…”

Yet not all members agree with this confrontational approach. Modi’s India, in particular, which has very good relations with Washington and the West, including in the security field, is concerned about the Brics’s evolution into an explicitly anti-Western organisation led by China and Russia, and favours a more neutral approach — non-Western but not anti-Western. For the time being, however, it appears to be losing ground to the latter two, whose anti-hegemonic stance enjoys widespread support in the Global South.

Next year, then, will prove crucial for the future of the Brics — and of the world as a whole. Not only will membership of the new countries become effective, but Russia will also assume the annual presidency of the bloc. In other words, a country engaged in a de facto military confrontation with the West — assuming the war is still ongoing — will be representing an organisation encompassing half of humanity. If last week’s summit didn’t mark the start of a new world order, it will certainly start then.

The Brics acronym was coined more than two decades ago by Lord Jim O’Neill, formerly Goldman Sachs’s head of global economic research, and it has stuck — unlike the initial expectations for the group. Only this week, O’Neill himself suggested that the collective of emerging economies — Brazil, Russia, India, China and South Africa — has not “achieved anything since they first started meeting”.

Yet the aggregate numbers remain impressive. Jointly, the group holds $4.4 trillion in reserves. Its New Development Bank (NDB), a counterpart to the World Bank, is capitalised at $100 billion, and the Brics Contingent Reserve Arrangement (CRA), equivalent to the IMF, also stands at $100 billion. Between them, Brics countries are home to more than two-fifths of the world’s population.

Despite this success, Brics members disavow any competitive or confrontational aspirations against the developed world in general, or the G7 in particular. Sotto voce, they make it clear they regard themselves as the new kids on the block, emphasise their common purpose and extol their bountiful resources. Look deeper, however, and one finds more conflicting sub-agendas in Brics than the group lets on.

First, the two biggest players, China and India, are prickly neighbours. Apart from the ongoing 60-year border dispute that has claimed hundreds of lives, the two are highly competitive in developing world countries, particularly in the Indo-Pacific region, and are certain to clash at this year’s summit over China’s ambitions to expand the group to bring in more “non-aligned” members. Twenty-two states have formally applied to join, among them Iran, Argentina, Saudi Arabia and the United Arab Emirates. India — which, in terms of GDP, would beat France, Italy and Canada to a seat at the G7 — wants to keep things reasonably tight.

Second, embattled Russia hopes to use the Summit to push its own agendas, primarily garnering developing-world support for its imperial ambitions in Eastern Europe and driving a de-dollarisation of the international financial markets, possibly through some form of Brics currency. This might seem a forlorn hope in the short term, but it’s perhaps obliquely attainable in the distant future, through the strengthening of the Chinese renminbi against a weakening dollar. Again, India, alarmed by Russia’s putschists methods in Africa and locked into deep market relations with the US and the Middle East, is unlikely to be convinced. The absence from the meeting of Russia’s president Vladimir Putin, because of the possibility of arrest under an International Criminal Court warrant (he is expected to appear by video link), indicates exactly how embattled his country’s position is.

Third, the Brazilian and South African governments will likely pursue a narrative aimed at creating an ostensible “non-aligned” lobby in world geopolitics, inside or outside the Brics group, that is, in reality, an anti-America front, something that may become too confrontational for India’s liking. They hope, perhaps erroneously, this will play well with the punters back home. Yet the duo is unlikely to be making any of the big calls: Brazil and South Africa’s combined shareholding in Brics, if measured by nominal GDP, amounts to 7.3%; South Africa is at 1.62%, which is perhaps why O’Neill has always argued the country should not be part of the club at all.

Lastly, the Brics are divided on key issues of energy policy. Resource-poor India and China favour alternative energy systems. Russia and South Africa are prodigious producers of coal, and, in the case of the former, oil.

So, what does Ramaphosa hope to gain from this gathering of fraternal yet deeply wary confreres? He certainly hopes to use it to add weight to his public argument that, regarding the Ukrainian war, there is a middle way between blind support for the United States and Europe on the one hand, and Russia and its silent sponsor, China, on the other. Amid a resurrected Cold War, he wants a resurrected “non-aligned” movement — or, to use the buzzword, “Global South states”.

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Few in the developing world would disagree with the objective; many feel the US has acted badly in attempting to lead-pipe third-party nations into picking sides. But Ramaphosa also seeks to use the Brics Summit to promote Africa, to advance Russian interests in Africa, and to divert focus from the multiple self-induced crises that confront him at home. Sixty-nine heads of Global South states, including all African heads of state but no developed world ones, have been invited as “observers”.

The extent to which African leaders respond to the invitation will be a guide to some key questions: the attraction of the Brics option, the resilience of US influence in the Global South, increased Russian and Chinese activity in Africa and, lastly, the status of Ramaphosa himself at both home and abroad. His vulnerability, ironically, may well be his chumminess with Russia.

The nature of South Africa’s relations with Russia hardly needs rehearsing: its persistent refusal to condemn the Russian invasion of Ukraine, the holding of joint naval exercises with Russian naval forces, clandestine arms trading between the countries, and the unhealthy predominance of Russian oligarchs financing the perennially cash-strapped ruling African National Congress. Ramaphosa was also instrumental in organising a quick-fire “peace mission” to Ukraine and Russia in June, with seven rounded-up African heads of mostly minor states. He was also front and centre in the recent Russia-Africa Summit in St Petersburg, though attendance by African heads of states was down — 17 this year, compared to 43 at the Sochi 2019 Summit, which had heralded Russia’s new and ardent embrace of Africa.

As his gofer efforts continue to be coolly received by the majority of African leaders, Ramaphosa’s Russophile position runs the risk of sidelining him and South Africa from the doyen position that the country and its president has always assumed since liberation. Indeed, if India has claims to a place at the G7, Nigeria has an even greater claim to Africa’s seat at Brics: its GDP is now larger than South Africa’s.

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Samuel Ramani, in his new book Russia in Africa, intensively tracks Russian post-Cold War engagement in Africa. The theme of that diplomacy, although sometimes erratic, is a long-term strategy: patience in ambition, opportunism in deployment and lupine in execution. “By combining counterinsurgency operations, arms sales, autocracy promotion and soft-power tools, such as media outreaches, educational diplomacy, debt forgiveness and humanitarian aid, Russia could remain an attractive partner for African countries and preserve a unique niche between France, the United States and China,” he writes.

The target countries for such attention share certain disfiguring features: fragile states under weak leadership, volatile internal politics, collapsed national institutions, despairing polities, emigrating elites, biddable security services and vacuums created by the departure of agencies once able to guarantee sovereign stability. To these tottering autocratic regimes, Russian Private Military Companies (PMCs) make an offer they cannot refuse: private security support to maintain power in return for control or shares in mining operations and preference in infrastructural contracting.

Since its renewed interest in Africa in 2019, Russia’s fingerprint can be seen wherever there is existent chaos: in Libya, Burundi, Congo, Central African Republic, Guinea, the Sudan and, most recently, in Niger. This is particularly true in the Sahel and Maghreb, where the West’s reckless and naïve support of the Arab Spring in 2010 destroyed stable autocratic regimes and left a mishmash of theocratic zealots, bandits and irredentist nationalists, opening the way for the independent and muscular Russian PMCs such as the Wagner Group, with its billions of dollars in revenue from its mining and oil operations in Africa and the Middle East. A Blackwater on steroids, Wagner is dangerously independent and ferocious. In asymmetrical warfare, they offer their clients something the judicialised military of the West cannot: brutal, indiscriminate efficiency.

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The involvement of Wagner in coup or counter-coup activities on the continent has raised huge concern among African leaders, most recently in the Niger coup which the Economic Community of West African States (Ecowas) vows to crush. But curiously, and damagingly, President Ramaphosa — known here as “Cyril the Silent” — has not taken a firm public position on Wagner, despite the fact mercenary activity is outlawed under the African Union’s Covenant on Mercenarism, effective since July 1985. Indeed, one of Ramaphosa’s predecessors, Thabo Mbeki, was the driving force behind its implementation and instrumental in closing successful white South African mercenary operations across the continent following the democratic transition in 1994.

After its bizarre, two-day quasi mutiny in June, Wagner’s role as Putin’s stormtroopers in Europe appears to have run its course. It now proclaims that Africa is its future, another troublesome legion consigned to the farthest part of an empire. Thinking South Africans, watching the complex forces at play in their Brics summit, conscious of the fragility of their nation and alert to the possibilities of tumult at the elections next year, pray that they remain out of reach.

Not happening, said Vincent Magwenya, spokesperson for South African President Cyril Ramaphosa. There were no legal grounds for refusing the Nord docking permission. In this, he was right. But the row has served to remind us what drives the ruling African National Congress’s policy towards Russia and its allies: ideology and nostalgia, self-interest and greed.

The old guard of the ruling African National Congress, who still haunt every crevice of government here, have not forgotten that Russian support was crucial in their 80-year anti-apartheid struggle, finally won in a negotiated settlement in 1994. Many of the ageing elites studied at Russian or Bloc country universities. They may have forgotten the USSR’s egalitarian mantras in their rush to become wealthy, but nostalgia still lingers. The Russians have not been slow to capitalise on it.

Jacob Zuma, the disgraced former President currently facing criminal charges over alleged corruption in a 1999 arms deal, commissioned Russia’s Rosatom energy company to build eight nuclear plants in 2014. If completed, at a cost of £50 billion, the plants would have provided 23% of South Africa’s energy — and given the Russians an effective stranglehold over the country’s economy. Karyn Maughan and Kirsten Pearson, in their 2022 book, Nuclear, suggest the deal was clinched after Zuma received medical treatment in Russia for poisoning. The former President alleged a toxin had been administered by one of his wives at the behest of the CIA. No proof of this poisoning has ever been provided, but there is plenty of evidence of a strong bond forged between presidents Zuma and Putin afterwards — the latter reportedly knowing a bit about poisons.

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The nuclear deal was eventually scuppered in April 2017, when the Western Cape High Court, in response to two applications from activist environmental groups, declared that any such agreement needed the approval of Parliament. The Treasury, which had opposed the deal as unaffordable and unlawful from the start, breathed a sigh of relief. The decision was, however, catastrophic for the finances of the ruling African National Congress. Even before Zuma’s tenure, many major donors to the party’s coffers came from the legions of shady businesspeople who benefitted from what became grandly known as State Capture — that is, put simply, the embezzlement of public money. The nuclear deal, dwarfing in nefarious intent the infamous 1999 arms deal in terms of potential kickbacks, would have set up the ANC for decades.

Worse was to follow. The new President, Cyril Ramaphosa, launched a laudable if achingly tardy crack-down on corruption four years ago, insisting on transparency in party funding. This instantly deprived the ANC of its steady flow of murky money. And donations have dried up: the big corporations who had generously funded Ramaphosa’s bid to wrest the ANC leadership from Zuma in 2017 have long since given up on him, out of exasperation with his hesitant mismanagement of the country. Attempts to raise funds from within the party have also failed. The ANC and its supporting elites have proved in nearly three decades to be far better takers than givers.

The party is now technically bankrupt. Among other debts, it owes a court-ordered £1.5 million to a poster manufacturer for services rendered in the last elections. Staff are regularly unpaid, and they spontaneously strike and picket their own party conferences — wreaking havoc on efforts to prepare for the crucial Elective Conference later this year, at which an embattled Ramaphosa will go for a second term. Neither can the party’s former Treasurer General help much: he is fighting his own corruption charges relating to the procurement of protective equipment during the free-for-all that was South Africa’s Covid response.

Much conjecture surrounds the origin and purpose of a cache of dollar bills, allegedly worth in the millions, stolen two years ago from inside a sofa in Ramaphosa’s game lodge. The whistleblower was Arthur Fraser, the former head of Zuma’s privatised State Security Agency. Fraser also served as head of the prison services, during which time he unlawfully let Zuma out of prison on health grounds while he was serving a sentence for contempt of a commission into state corruption — a commission which Zuma had himself appointed. Sound bizarre? Not for South Africans. The theft of the dollars is under a typically ponderous investigation by law enforcement authorities, but nobody expects a result before the Elective Conference. If the moola was intended as the ANC’s bailout money, from whence came it?

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The only discernible source of legitimate income for the ANC is via Chancellor House, the party’s in-house investment company. Its biggest stake is in the South Africa’s fourth-largest manganese miner, United Manganese of Kalahari. UMK was the sole declared donor to the ANC in the 2021-22 financial year, to the tune of £500,000, as disclosed in the latest Parliamentary filings. And UMK — wait for it — is part-owned by the Russian oligarch Viktor Vekselberg’s conglomerate Renova Group.

Vekselberg ostensibly sold off his interest in UMK after sanctions were imposed on him by the United States in 2018: he ranks near the top of the United States’ Least Favourite Russians list, primarily for his inner-circle place in the Kremlin, and for leading a technology hub that was subsequently deemed by American authorities to be a front to access US intellectual property. But he remains invested in UMK through a new vehicle, a trust of which he owns 25%. And the oligarch may well object to the seizure of yachts: his motor yacht Tango was impounded in April by Spanish authorities.

Still, it is not only these skeins of party and personal interest that inspire South Africa’s position on the Ukrainian invasion. At its heart lies something broader: realpolitik. South Africa is a proud member of the BRICS club, alongside Brazil, Russia, India and China. It is Africa’s token member of a group which is widely seen on the continent as a counterbalance to the historic power and influence of the developed western nations. The BRICS’s New Development Bank, set up in 2014, has a loan book only slightly smaller than the World Bank’s, while not being encumbered by a $160 billion commitment to patch up Western economies after their self-immolation in the pandemic. Neither is 35% of its investment tied to the chimera of climate change mitigation.

South Africa has a $25 billion share of the bank — which has not been sapped, as the IMF has in propping up the euro. The Contingent Reserve Arrangement (CRA) gives unlimited drawing rights to club members that need to stabilise their currencies. China and Russia’s foreign currency reserves are eight times larger than the US and Europe’s combined, give or take a few problems on Russia’s side in accessing its share while sanctions remain. China has the four largest banks in the world and owns 55% of the world’s shipping. Russia, despite having a Third World army, is self-sufficient in energy and food. These nations are, in short, worth keeping on-side.

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Russian trade only comprises a minuscule 0.4% of South Africa’s total trade — and Russian investment in South Africa is a puny $1.5 billion compared to South Africa’s $5.13 billion stake in Russia. But South Africa’s dependence on Russia isn’t straightforwardly economic. Rather, it stems from a need to keep the BRICS club happy, particularly China and India — the latter having extensive personal and financial dealings with South Africa’s hugely entrepreneurial Asian minority, much of it through Dubai.

China has been investing heavily if not always ethically in Africa. So far it has sunk $70 billion in the continent, $25 billion in South Africa alone, creating an estimated 400,000 jobs. In February this year, it promised another $300 billion. The problem, a big one, is that its targets remain largely in the extractive industries and its practices are generally rip-and-run. There is little skill transference to the locals and limited social investment. And the increasing number of expatriate Chinese workers-turned-settlers do not easily assimilate wherever they land in the continent.

South Africa still takes money where it can find it: most recently $497 million from the World Bank to bail out its crippled electricity grid, and $4.3 billion from the IMF in emergency post-pandemic support. But the financial and fraternal allure of the BRICS club to South Africa is still overwhelming — and it is more important, Ramaphosa’s government firmly believes, than taking sides in a distant, intra-Slav war over an old border dispute. Besides, the argument goes, why should South Africa trust the US and Europe? A fair question, given America’s friends once included Vietnam, Iran, Afghanistan, Libya and Iraq.

So, while Russia moves to the next stage of total and irreversible war and China uses the pandemic as an excuse to keep its borders shut and reduce its exposure to the global economy, South Africa, like many other non-aligned nations, is manoeuvring. The aim is to be on the winning side of the real conflict behind the one involving tanks: the battle between old Western and new Eastern money. And while that battle is playing out, no fugitive Russian super yacht is ever going to be refused safe harbour in Cape Town.

Why were their crystal balls so inaccurate? Was today’s inflation simply unforeseeable? The straightforward answer is: no. The initial inflation was caused by the disruptions brought on by the lockdowns and was perfectly foreseeable using basic macroeconomic models taught in undergraduate classes. Yet most economists seem to have missed this — largely because, starting in March 2020, they stopped focusing on economic problems and became armchair epidemiologists, offering opinions on how the virus spread and what might stop it.

There was no meaningful economic discussion during the pandemic; normal repairs and maintenance appear to have been neglected, leading to serious problems with supply chains. In 2021, for example, there were 1,946 factory fires — the most ever recorded in a single year and an increase of 129% over the previous year. And these problems have been supercharged by recent geopolitical developments, the most obvious being the war in Ukraine.

As with the lockdowns, economists and policymakers repeatedly misjudged the effect of imposing sanctions on Russia. Most commentators thought they would lead to a collapse in the rouble and the disintegration of the Russian economy. The sanctions would “reduce the rouble to rubble”, predicted Joe Biden. This has not happened. The rouble is currently 30% higher than it was pre-war and while Russia is facing down a recession, the Bank of Russia is slashing interest rates rapidly, signalling that the worst is over.

While the sanctions have not impacted Russia as many assumed they would, they have crippled the Western economies. Before the war, it was fashionable to say that Russia only had an economy the size of Italy’s. This was always misleading. When properly adjusted for relative prices, Russia has an economy substantially larger than the United Kingdom. And it is not simply the size of the Russian economy that was underestimated, but also its importance in the markets for core goods.

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For example, Russia produces large amounts of the world’s fertiliser. It accounts for 19%, 15% and 14% of the world’s potassium, nitrogen, and phosphorus exports respectively. Fertiliser is obviously key to growing foods, so disruptions to these markets tend to increase food inflation. Russia produces large amounts of basic foodstuffs too, and is the largest wheat exporter in the world. Put simply, the Russians punch above their weight in the production of the necessities for life. While they may not, say, have a world-leading social media industry, they produce a great deal of the goods that we simply cannot do without.

But Russia’s real economic trump card is energy exports, particularly energy exports to Europe. Prior to the war, 40% of gas and around 25% of oil consumed in Europe came from Russia. And as European countries have ramped up weapons shipments to Ukraine, Russia has started to close the taps, driving up prices and further exacerbating the inflation.

These are the most powerful short-term drivers of inflation, but if we look further down the track there are long-term trends that look even more ominous. It is, for instance, becoming increasingly clear that the war in Ukraine has driven Russia and China much closer together, with the two countries opening up important new trade links. This appears to be part of a broader shift in which the BRICs countries (Brazil, Russia, India and China), as well as Argentina, Iran, and Saudi Arabia, attempt to decouple from the Western-led global economic system. Recently, the BRICs announced that they would attempt to establish a new reserve currency to challenge the US dollar.

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Until now, the West has benefited from the cheap labour and raw materials provided by the developing world. But at a certain point it was inevitable that the developing world would decide it is done playing second fiddle to the West. That day appears to be here, with Russia and China ushering in this new age. Without easy access to cheap labour and raw materials, prices in the West will have to rise — and living standards will have to fall accordingly.

Amid all this, there is every chance the BoE will find it cannot control inflation. Normal or “cyclical” inflation occurs when the economy runs too hot, labour markets tighten up and workers demand higher wages, which are then passed on to consumers in the form of higher prices. Central banks then raise interest rates to slow the economy and the inflation is rung out of the system.

Yet while wages are certainly rising now, it is not clear that this is a core driver of inflation. More likely, the inflation is being driven by the after-effects of lockdowns and by the enormous and chaotic geopolitical shifts that we are witnessing. And if this is true then interest rate hikes by the BoE could make the situation even worse. It wouldn’t just cause a recession, but an inflationary recession — the worst of all possible outcomes, as it means rising unemployment and rising prices.

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The BoE does appear to be aware of this prospect. In their Monetary Policy Report in May, they stated that they “can’t do anything about the global supply problems or the energy prices that are currently pushing up inflation”. So why are they proceeding with the interest rate hikes? The most likely answer is that they realise that they need to try something. If inflation gets completely out of control, it will crush living standards and irreparably damage the economy. The BoE likely figures that they need to give tightening monetary policy a shot and see if it works. If it does, then they will have done their job; if it doesn’t, at least they know that they tried their best.

Either way, the stakes are enormously high. If the BoE fails to squeeze inflation out of the system and it turns out that price rises are reflective of a new global economic order, living standards in Western countries will decline at a rate never seen before in history. Since the Second World War, and especially in the last 40 or so years, we in the West have based our entire way of life around commerce and rising living standards. If it turns out that this era is now over, how will we choose to live? Will we be able to accept a lower standard of living? Or will modern society fragment? If the interest rate hikes by the BoE fail to tame inflation, we could soon be about to find out.