BRICS Summit 2024: Russia, China Push For Alternative Payment System

A joint declaration adopted by BRICS member countries at a summit in Kazan, Russia, has called for the creation of an independent payment system based on national currencies, in response to what they deem "illegal" sanctions damaging the global economy.

The summit, attended by the nine BRICS members, including Prime Minister Narendra Modi, Chinese Premier, and South African President Cyril Ramaphosa, also saw UN Secretary-General António Guterres arrive late on Monday.

BRICS member countries issued the Kazan Declaration, which calls for the "elimination" of "unilateral economic sanctions and secondary sanctions that are contrary to international law." These countries together account for about 35 per cent of the global economy.

However, the summit communique indicated that little progress had been made on an alternative payment system. Final agreements on the payment system may not have been reached between the members, according to Foreign Secretary Vikram Misri.

“My understanding is that no final agreements have been reached yet. There have been intense discussions. There has been a certain amount of research that has been commissioned on these issues,” Misri said at a special briefing on the BRICS summit on Monday.

The BRICS membership includes the initial five — Brazil, Russia, India, China, and South Africa — and has since grown to include Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates.

Speaking at the summit, Russian President Vladimir Putin said: "The dollar is being used as a weapon. We really see that this is so. I think that this is a big mistake by those who do this." He highlighted that nearly 95 per cent of trade between Russia and China is now conducted in rubles and yuan.

Russia is working on creating a payment infrastructure to bypass the SWIFT payment system, based in Belgium. This move is part of a broader de-dollarisation initiative, aimed at reducing reliance on the US dollar.

Ahead of the summit, a new cross-border payment system, BRICS Pay, was introduced at the BRICS Business Forum in Moscow. The platform aims to simplify transactions between BRICS nations, cutting transaction costs and time, and shielding economies from currency fluctuations and geopolitical tensions.

In his speech at the summit on Wednesday, Chinese President Xi Jinping said "the reform of the international financial architecture" is "pressing," and he called for "the connectivity" of financial infrastructure among BRICS members and the expansion of the New Development Bank (NDB).

The NDB, established by BRICS in 2015, serves as an alternative financial institution to the World Bank and the International Monetary Fund.

The summit comes amid ongoing tensions between Russia and the West, following Russia's invasion of Ukraine in February 2022, which has led to the United States and other Western countries imposing sanctions on the Kremlin and potentially on its enablers.

One of the most significant aspects of these sanctions is financial. Moscow and Beijing are continuously exploring ways to get around the restrictions.

The attempt to de-dollarise the global economy, however, concerns some BRICS members, particularly Brazil and India, who do not want their rapidly expanding club to become entirely pro-Chinese and anti-Western.