Episode 260: BRICS and the Economic Role of Emerging Global Powers with Yaroslav Lissovolik

Coordinated and Produced by Elisa Garbil

In this episode Dominic Bowen and Yaroslav Lissovolik dive into the challenges and opportunities of BRICS! Find out more about the economic Asymmetries and power dynamics, consensus and decision-making, future strategies, BRICS’ role in global governance, Russia’s position, future cooperation, BRICS plus, international risks and opportunities, and more!

Yaroslav Lissovolik worked in the International Monetary Fund, in Washington, where he was Advisor to the Executive Director for the Russian Federation (2001–2004). In 2004 he joined Deutsche Bank as Chief Economist and became Head of Company Research in Russia in 2009, and then a member of the Management Board of Deutsche Bank in Russia in 2011. In 2015–2018 Yaroslav Lissovolik was Chief Economist and subsequently Managing Director of Research and Member of the Management Board at the Eurasian Development Bank (EDB). From 2018 to 2022 he has been Senior Managing Director — Head of Research at Sberbank Investment Research (CIB). In 2023 he founded BRICS+ Analyticsto conduct in-depth research on the future trajectories of BRICS+ development.   

Yaroslav Lissovolik graduated from Harvard University (magna cum laude) with a BA degree in Economics, and received an MSc in Economics degree from the London School of Economics (LSE). He also received his PhD degree in Economics from the Moscow State Institute for International Relations (MGIMO, red diploma) and a Doctorate in Economics from the Diplomatic Academy. Yaroslav Lissovolik is also a member of Bretton Woods Committee.  He has published several books and numerous papers on Russia’s entry into the WTO, BRICS and other economic policy issues.

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Transcript:

[00:00:00] And, yes. I think, that, this is something that is a stabilizing factor, not just for the global economy, this greater south south cooperation, but also for the developed economies in terms of migration, in terms of investment, in terms of trade

Elisa Garbil: Welcome back to the International Risk Podcast, where we discuss the latest world news and significant events that impact businesses and organizations worldwide.

Dominic Bowen: Hi, I’m Dominic Bowen, host of the International Risk Podcast, and today we are diving into the fault lines within the bricks and the global community. Now, this is an ambitious but potentially fragmented block that’s seeking to reshape global governance with inclusion of countries like Iran, Egypt, Saudi Arabia.

The Bricks Plus now spans. What many would view as autocracies, fragile economies, and also powerful energy states, but does that make it a serious alternative to the G seven? Well, to unpack that today we’re joined by Yaroslav Lissovolik and Yaroslav founded the Bricks Plus [00:01:00] Analytics firm to conduct in-depth research On the future trajectories of Bricks Plus development, and he’s been working for the IMF, the International Monetary Fund in DC where he was the advisor to the executive director for the Russian Federation.

He was also the chief economist at Deutsche Bank and he became the head of company research in Russia. He was also the chief economist and subsequent managing director of research and member at the management board of the Eurasian. Development Bank. He’s a member of the Bretton Woods Committee and he is published several books and numerous papers on Russia’s entry into the World Trade Organization, bricks and other economic policy issues.

In our conversation today, with Yaroslav left, I think we’re gonna gain good insight on The Bricks, the Bricks Plus, and the economic role of emerging global powers. Yaroslav, welcome to the International Risk Podcast.

Yaroslav Lissovolik: Thank you so much, Dominic. It’s a pleasure.

Dominic Bowen: Yaroslav Over the past two years, we’ve seen a really significant, I’d say, red rhetorical push from bricks leaders, particularly [00:02:00] China and Russia, towards de dollarization and financial sovereignty.

Now, talk of a shared bricks, currency, or trade in local currency has been framed as potentially a counterbalance to US economic dominance. When you look at the fundamentals, when you look at the economic asymmetries amongst brick members, I think there’s some starkness there, and I’d be really keen to hear your thoughts on this.

You know, countries like China have capital surpluses, commodity dependent exporters like Russia and Saudi Arabia, and then you’ve got heavily indebted states like Egypt and, and Ethiopia. So, it looks like the convertibility and the volatility of many of the currencies is something that needs to be considered.

Even within that, there’s the new development bank within the bricks, and I think lending has potentially remained overwhelmingly in actually US dollars. So I wonder if this ambition is more symbolism or if the operational barriers are surmountable. So how realistic to start with, do you think the idea is of a unified BrickX currency or just simply de [00:03:00] dollarization?

Yaroslav Lissovolik: Well, I think, the idea of a common bricks currency is certainly on the back burner now firmly. and this is, I would say more because of the political disagreements or, the views within the block, that it’s too early to advance a project like that within, the, bricks or the bricks plus, perimeter.

and I think currently the emphasis is firmly on increasing the use of national currencies and mutual transactions and developing an infrastructure for conducting. Payments, across, Brix members. So it’s more about, I would say settlements and national currencies. And the share of those is increasing partly, on the back of the trend that we’re seeing, a very emphatic trend, which is the rise in the share of south, south trade, meaning trade between developing economies, including bricks, economies.

and that [00:04:00] is something that. Fundamentally supports the case for the use of national currencies, and, increases the demand for the use of national currencies and mutual transactions. again, the, issue of, brick’s, common currency is something that I think will be relegated in the foreseeable future, to the academia.

And, it is, researchers, think tanks that are to explore, the possibilities. I personally believe that there are, possibilities to. Develop, this currency, at least in the very initial stages of say, a unit of account whereby this is not say a physical currency, but a basket of currencies that is calculated on the basis of the weights of individual.

Currencies of Brix members. By the way, when it was just five BrickX members, all of the Brix economies, currencies started with a letter R, right, so ruble, rant, rial, et cetera. part of the reason [00:05:00] For naming, the potential currency, R five was precisely because of that amazing coincidence.

coincidence aside, you have to base such serious and important issues on some very fundamental economic, factors. And, certainly the progression towards a unified currency that is, say either a digital currency or something that, is used in mutual transactions, that will require a greater preparation, including greater agreement amongst, bricks, economies, on the various modalities of how this operates.

For the time being, I think there’s the agreement that, all modes of payment are open. If it’s the dollar, it’s fine. The dollar can be used as well. And I think there’s a total understanding amongst the bricks and the bricks plus economies, that dollar dominance and the continued, dominant role of the dollar is likely to, stay, with the world economy for quite some time.

But what the Brix economies want, I think [00:06:00] fundamentally is greater optionality in terms of. The mode of payment in terms of the payment mechanisms and national currencies in that regard could be another option to compliment either transactions in Euros or dollars.

Dominic Bowen: And so if we consider some of the fundamentals, if we look at some of the fundamental economic factors, it’s no secret that China’s economic scale far exceeds that of any other bricks. Member China accounts for over 70% of the blocks, GDP, and. Has been increasingly assertive in shaping brick’s agenda from infrastructure investment to even things like digital governance.

So it will be of no surprise that a cemetery often creates friction. Now, countries like Brazil and India have already pushed back against perceived China overreaching other. Multilateral settings. Mm-hmm. And with newer, smaller members like Ethiopia and Iran, the power balance is likely to become even more pronounced between China and some of the others.

So if the bricks is to avoid becoming a vehicle for Chinese or, or maybe even Russian foreign [00:07:00] policy, it needs guardrails. And I, I think it needs structures that protect the voice and agency of the less dominant members. So do you think it’s possible for Bri to. Institutionalized a decision making framework that balances economic dominance with the interests of smaller or less influential members.

And this is not unique to Brix. This is something that people have been calling for with the United Nations Security Council. It’s been things that people have been calling for with other decisionmaking bodies like the World Bank and IMF. So this is not a new challenge, but how do you think the Bricks is going to work to create an effective strategy there?

Yaroslav Lissovolik: Well, first of all, the key principle with which, B Brix operates is the consensus principle. So if there is any issue, that, any of the members, any of the core members, have, they oppose this, initiative, in this or that way. Then, this initiative is not, implemented.

and I can give you an example, the Bricks Plus Initiative that was launched by, China. and that was in 2017. And, the Bricks Plus Initiative was about [00:08:00] inviting other countries, developing countries to the bricks. The Bricks plus summits. it wasn’t just anymore, just the core of the bricks, economies that were to be there to discuss matters.

at the summit it was also, developing economies from different parts of the world. And this, bricks Plus format was held, by China in 2017, successfully 2018. Again, South Africa conducts the same format. Everything seems to go smoothly. Then comes 2019 and its Bolsonaro presidency, and Bolsonaro decides that he doesn’t like the Bricks Plus format.

He doesn’t. conduct, the bricks plus meetings, and then for nearly three years you have a discontinuity in, the Bricks Plus format. and only, after, China regained, the, presidency in 2022, it relaunched this initiative and it’s now ongoing for four years in a row. So basically, this is to show that when there are disagreements, certain initiatives.

Might [00:09:00] not be pursued, altogether and. of course with the expansion now, you have, various issues arising. One of the key issues is, of course, that the consensus is more difficult to reach. You already had a tremendous difference within the bricks, block in terms of policy stance, structures of economies, et cetera, when there were five.

Now you have even, greater divergence. You also now have not just the big economies. You also have small economies like the United Arab Emirates, for example. And, we are already seeing that at times it is very difficult to arrive, at a consensus. So now the key issue for bricks that they’re thinking about something that they’re discussing.

Is how to deal with this issue. I think one of the, themes that is, being discussed now is precisely the institutionalization, the possibility that bricks might, create a secretariat, for example, that something that. Starting to be, I think, discussed a bit more, currently, by the way, just for your [00:10:00] understanding, Brix is not an organization, it’s not an institutionalized group.

it’s almost like you could call it a network of, developing economies. but, there’s no, kind of institutional core or secretariat or headquarters or anything like that. So there’s a discussion on that. And I’m not convinced at this stage that this will be the path that will be chosen, but it’s one of the possibilities.

Another issue that is being discussed is to mimic some of the mechanisms that are used, by the likes of the G 20. And the G 20 uses a mechanism that is called the Troika. Last year’s presidency, current presidency and next year’s presidency working together. And that is kind of the mechanism that allows for greater coordination, continuity in terms of, the policy priorities from one presidency to the other.

That’s something that is being discussed. I think at certain levels, it has been even adopted, by Brix and basically, yeah, the fundamental issue is, how, going forward will, [00:11:00] Brix retain this capability to move ahead with some sweeping initiatives perhaps.

Retaining consensus, it’s very difficult. So one of the, paths in that regard may be what is called the pl lateral path, whereby it doesn’t have to be all, members of bres that have to agree on a certain initiative. It’s enough if it’s three or four, and they deci decide to pursue this initiative.

And then the rest basically agree with the fact that they’re not participating for the time being. But this initiative. But those that have chosen to be on board with this initiative will pursue this, going forward. So it’s kind of this plural, lateral approach that may gain traction and is the most likely, in my view, going forward for bricks in the coming years.

Dominic Bowen: Yeah. Thanks for explaining that. And I think the consensus principle and the diversity of bricks is one of its strengths. Undoubtedly, yes. But it’s also one of its sources of potential paralysis. And you know, you’ve got democracies like South Africa and, and Brazil sitting alongside what are often referred to as autocratic regimes like Iran, [00:12:00] like China, like Russia.

These are really different governance systems. They’ve got different priorities, they’ve got different legal norms and on issues like climate change, internet governance, and even military non-alignment, the divergence is wide and persistence and the international risks and priorities concerning these countries is also significantly different.

So other than creating a secretariat, which has very obvious benefits other than forming a chore, which I, I think is a, is a great mechanisms in, in many, many different environments. What mechanisms do you think should be created in the bricks and the bricks Plus to resolve policy disagreements to, support this?

Greater cooperation amongst what are divergent political systems and, and divergent priorities?

Yaroslav Lissovolik: Yes. Well, you have currently, the mechanisms that have to do with the ministerial meetings at various levels. so foreign ministers meet health ministers. To discuss their own priorities, whether it’s, geopolitical shocks and geopolitical conflicts, it’s the foreign ministers that convene and discuss and try to develop a common approach, [00:13:00] to the key issues on the international arena.

And then with, epidemics and, various, shocks with respect to, the. Health sector. You have, the health ministers recently, for example, meeting and agreeing on common approaches to supporting vaccination cooperation and, and issues like that. basically it’s, a certain framework of ministerial meetings and expert meetings at the same time.

You have, Expert level discussions that are typically part of the calendar of this or that presidency, within Brix. And another very important issue, which I think is more Asian or Chinese, if you will, in terms of its approach to these matters, is what the Chinese referred to as people to people, contacts people to people, exchanges, cultural.

Dialogue. That’s something that of course doesn’t work instantaneously, if you will. It doesn’t necessarily work in the short term, but this is something that in the medium to longer term, creates greater scope to overcome, various [00:14:00] divisions and develop, more scope for understanding.

Dominic Bowen: And Brix plus members are actively advocating for reforms to make global governance more equitable, more multipolar, and, and this is evident from the collective push to reform institutions like the IMF, like the world banker expansion of memberships to include more members from the global south, and explicit calls to shift away from traditional power imbalances.

Do you see the bricks as an organization? It’s positioning itself as a, as a challenge to the existing global order or, or something more of a, complimentary reformist group?

Yaroslav Lissovolik: I really think the latter. I really think it’s, a, a group that seeks to become yet another pillar and the international global economic architecture to support.

The already existing pillars. If you look at the declaration of, the summit in Rio this year, there is explicit support that is expressed by all of the Briggs economies to international institutions such as the WTO. And by the way, the head of the WUTO was [00:15:00] invited to participate in the the Brick Summit this year.

Then, to the IMF as well as one of the key pillars that is to ensure greater, stability of the international financial, system. And, of course, the Brix economies make it clear that, their support, hinges on the understanding that going forward. The Bretton Woods institutions and the IMF in particular will need to reflect to a greater degree the actual economic weight of, developing countries, which has grown quite substantially.

And their share and the global economy has of course, increased substantially. So accordingly, if you look at the statements, from this year’s, summit, the president of Brazil, Lula, he called for an increase in the share. Of, votes of, bricks economies to something that is closer to, 25%.

Currently. This, would be somewhere around, 20%. Depending on the scope of countries that you take, whether it’s just the core or you include the partnership belt, still there’s very [00:16:00] significant scope in the view of, the Bris economies to increase it in line. with, the actual weight in terms of, the share in GDP, the share in the global economy.

so these discussions are ongoing and I think, the bricks will be launching new initiatives to try to convince other members of the global community and other members of the IMF that that share needs to, increase. but other than that, really my view is, that, the, approach, coming from, Brex with regard to the existing institutions is a complimentary one.

It is supportive of the existing institutions and, for example, mechanisms, such as the new development bank. They cooperate actively with a World Bank, with a Bretton Woods institution. In 2020, uh, three, there was a common platform that was created, by the World Bank to co-finance, development projects, including in the sustainability sphere.

And the new development bank was part of that, platform. So the Bretton Woods institutions [00:17:00] effectively are working together with Brix and with Brix institutions such as MDB, and dealing with some of the key global challenges.

Dominic Bowen: So, you talk about supporting existing institutions and cooperations with existing multilateral institutions, and you’ve written extensively on this and the financial alternatives and, and de dollarization. I think you’re a, a really loud and, and clear voice. that. I, I’m wondering, you’ve got Russia.

It’s got a very volatile currency right now for obvious reasons. It’s got limited foreign reserves as far as I understand, and right now it has a restricted status in global banking. So I’m wondering how the bricks can maintain credibility when they’re advocating for, you know, new financial systems or alternatives or better or improvements to the financial system When potentially, Russia’s involvement undermines global trust in the bricks monetary ambitions. Is there, is there a potential. Contamination in, in that?

Yaroslav Lissovolik: not really. I mean, if you look squarely at the economic side of things, I would actually argue that, in terms of macroeconomic policy, Russia [00:18:00] has been quite strong, not just in the past several years, but even over a longer period of time.

In terms of, adopting, fiscal rules, monetary policy rules, if you look at the monetary policy framework currently, the central bank, despite tremendous opposition from, you know, including the business circles, has been maintaining, really, one of the record highs, policy rates, out there to keep inflation in check.

if, we’re talking about the capital account, of course, it is, not an open one now, but previously, say, if you take, the year 2006, Russia actually opened, the, capital account and it was an open capital account, I think for well over 10 years. And, gradually I think, projects, such as greater cooperation in the monetary sphere, greater integration into the global economy, they will lead the block and its members to, adopt, superior economic practices. And I think with time you will see. That in line with what we see to some degree with China, that [00:19:00] some of the members will start to lift some of the existing restrictions and the capital count while still having restrictions will have less and less restrictions.

I think the approach that you see from countries such as China is an evolutionary one, not a big bang one, so to say. so I think gradually you will see that there’s greater liberalization and greater, intention on the part of bricks to try to compete more for, the capital flows than the global economy.

Dominic Bowen: Yeah, I, I think that’s what quite positive that that greater liberalization and, and greater and enhanced competition for countries in the global South and for developing and, underdeveloped countries to be able to access capital, I think is, is very positive. And, you know, I want to emphasize that, I don’t think anyone would really reasonably argue that bricks is solely a Russian grouping of countries.

It, it’s not, but Russia is a dominant member of. Of bricks. And of course over the last few years, Russia has become increasingly isolated from Western markets, from financial institutions due to the war in Ukraine and the, the sanctions regimes against [00:20:00] it. How do you respond to people that say that, that Russia is now using bricks, not for cooperation, but using it as a.

geopolitical lifeboat to escape the isolation. And in the process, perhaps hijacking, Bri’s original development goals, growth goals, ability to have a, a fair and reasonable voice in the multipolar system.

Yaroslav Lissovolik: Well, my line is that, bricks is a long, long-term, solution, for the global economy. Brix is the key.

Platform that boosts, south South cooperation and south south, trade, south south investment are stabilizing factors. This is something that the global economy needs tremendously and for Russia, to be part of that platform is obviously, very important to have the opportunity.

To participate in this process of growing south, south, corporation. And, yes. I think, that, this is something that is a stabilizing factor, not just for the global economy, this greater south south cooperation, but also [00:21:00] for the developed economies in terms of migration, in terms of investment, in terms of trade imbalances.

So, my sense that, bricks, is, also, an important vehicle, if you will. For greater, trades, and economic diversification for a lot of the, developing economies and also for Russia, for several decades, Russia’s trades, and a lot of its efforts were directed towards boosting economic operation and boosting trade and investment with Western economies.

And, a lot of the time it, didn’t. Result in, let’s say very fast wins, so to say. If you take the example of WTO accession Russia was, trying to become a member of the WTO for nearly several decades. but, now, Think, comes the time when, a lot of the, bricks, economies that are looking to use the Bricks platform and the Bricks Plus format of cooperation to diversify the geographical structure of their trade.

And the same, with regard to Russia, bricks, that [00:22:00] these are fast growing, markets. So this is. Something that increases the scope for greater exports, for countries that participate, in this platform. and then, a lot of these, economies, they also have, relatively high.

import duties, relatively high, trade barriers. So there is significant scope if there are accords, trade accords for trade liberalization to get, more of a preferential margin if these trade accords are indeed concluded within BrickX, and bricks plus framework. So basically the return that you get from trade and economic operation within the bricks plus framework because of hire.

Economic growth than in a lot of the Western developed economies. And because there’s scope for significant reduction in trade barriers, that is a great, opportunity to boost, trade cooperation and diversify trade before. Again, I would say that especially if you we’re talking about Russia in, preceding decades, since the 1990s, trade has been.

I [00:23:00] think there, there was a very significant under trading vis-a-vis the, the global south, the developing countries.

And I think.

Dominic Bowen: India, Brazil, South Africa, they’ve been walking a, a delicate line, I see it, they’re cooperating with the bricks and, and actively participating, but at the same time, they’re maintaining strong ties with, with Europe, with, with North American countries. Conversely, you’ve got, China becoming increasingly assertive as it’s becoming more economically and militarily and, technologically more, more assertive and more powerful.

Iran. had pariah status for some time, and that’s obviously only increased recently with potential nuclear ambitions and potential human rights abuses. Then of course, you know, Russia’s, ongoing militarism. These are potentially not aligned with the western world and with much of the world’s advanced economies.

I know if we look economically, that’s one thing, but the world obviously doesn’t work in silos. It works economically, politically, multilaterally, it works militarily. is there signs or, or do you worry about potential fractures within bricks? Because we can’t just look at the economies, we’ve gotta look at the political base.

We’ve gotta [00:24:00] look at, diplomacy and, and military actions, rule of law. How do these things potentially impact the future relationship and potential fractures?

Yaroslav Lissovolik: It’s interesting that a lot of the observers, they believe that this diversity or differences within, breaks their major weakness. My firm conviction is that these differences and this diversity is a tremendous.

Strength. the synergies that could be brought about by, the differences in the economic systems, and the approaches of these various countries, they could also be tremendous for, not just for the global south, but for, the global economy. And, yes. I think, if, you, look at countries such as, India or South Africa or Brazil as well, that have, quite strong gateways to cooperation with the west and the global south. They could play the role within, bricks of building the outreach and greater cooperation. With, the developed world with, say the development [00:25:00] institutions of the global north of developed economies, my view is that at some point in time, almost inevitably, you will have, bricks, and bricks plus, evolving towards a format whereby the involvement and the participation of.

Developed economies, their regional blocks or their development institutions. this is something that I refer to in my research as Bricks plus Plus. So the Bricks Plus Initiative launched in 2017 is about the global south, but if you add another plus, and this would definitely be a plus, I think.

for the global South to have that outreach and to have, discussions on economic cooperation, between the bricks and bricks plus block with the, say, the regional blocks of the developed world. I think this would be something that would be supported by these economies and eventually I think by the, the majority of Brix members.

Dominic Bowen: I completely understand, and I, and I agree that diversity generally, generates, positive synergies. I was actually having a conversation [00:26:00] with a senior European business leader today actually about that, that very same topic. And we know that different strengths, different perspectives, adds, value.

But I know in practice when we look at. All companies, when we look at multilateral organizations, they struggle. Asian struggles with this. The African Union struggles with this. Sure, sure. I mean, the European Union, the flag bearer of democracy struggles with this. But you see

Yaroslav Lissovolik: this is the challenge that generates the response that could be so constructive and so important for the global economy when you have G seven.

These are the countries that mostly, I would say, sing from the same songbook most of the time. I mean fundamentally in terms of values, right? In terms of civilizational views, if you will. I mean this is something that you could say has a great degree of homogeneity in it, in this block, and they don’t have to traverse these tremendous cultural divides.

That the bricks have to deal with. But for bricks, the potential contribution to the world economy, [00:27:00] to the world community is precisely that. If they do succeed, and I hope they do traversing these cultural divides, then this is a major contribution to the global dialogue, to global economic cooperation.

And they have to innovate because if they just. Copy what the G seven or the G 20 are doing, they will not be able to deal with this tremendous challenge. They have to innovate and think of new approaches. So one of the things that I’m trying to do with my project, the Bricks Plus Analytics, is precisely to try to come up with new concepts of how to bridge these divides.

and one of the things that, I’ve been talking about for quite some time. Both at the global level and at the level of Bricks Plus is to create a platform, not for individual countries, but for regional blocks, for regional integration arrangements. So for example, America Sewer, asean, other regional blocks starting to talk to each other, starting to cooperate with each other, to open borders and to [00:28:00] liberalize trade to each other.

This is on the basis of what is being done, say potentially in bricks. Plus, the same thing you can do at the global level in G 20. You can create what I call a regional 20, 20 regional integration blocks, the leading integration blocks across the global economy. They sit down together. They discuss and exchange, their best practices in terms of economic regional integration.

They also discuss the possibility of reducing trade barriers. Now the WTO is less operational. So at the level of WTO you don’t have the possibility of, trade liberalization as much. Not a lot is coming from the level of certain individual economies. I won’t name them, individually, but at the regional level, what we’re seeing is that, increasingly trade policy is starting to be delegated to the regions.

It is the regions blocks like meor, blocks like the EU and others that are really determining the trade policy for the respective members of their, regional blocks. [00:29:00] So for me. This is the biggest question mark out there. When I look at the global economic architecture, when I look at bricks and bricks, plus, why is there not a platform for a dialogue and cooperation?

Not just for individual economies, but for regional integration blocks. And you can do the same thing, a similar platform, not just for regional integration blocks in terms of trade, but also regional development institutions, regional development banks. Together they wield more financing power than the World Bank.

if you bring them together, you can, look at solving a lot of the issues regarding climate, regarding other, key challenges for the global community. You take regional financing institutions, that’s another layer of regionalism that is a very important one. You bring them together, something that the IMF has been starting to do.

In the past several years. And yeah, this is yet another buffer that could contribute to global financial stability. I think the global economy and all of us will [00:30:00] need to rediscover the, the importance of regionalism. and I think going forward, and already probably now as we speak, I think regionalism is the main driver of trade liberalization in the global economy.

With projects like the African, continental free trade area with, the EU America sewer free trade, deal that with the completion of negotiations, the FTA negotiations with America Sewer, we’re starting to see a lot of those deals, trade deals being done on the regional level, and that’s a very interesting and very important trend that I see.

Dominic Bowen: Yeah, it’s a very important trend, and I agree that there’s big challenges. There’s big risks, but there’s even bigger opportunities. And I think significant innovation is needed to bridge these divides. But I think everyone benefits if there are mechanisms established that converts diversity into effective coordination rather than, rather than just gridlock.

And, and I’ll just take the moment to remind. Our listeners to go to the International Risk Podcast website and subscribe to our newsletter. So you’re getting the latest news podcasts, book reviews and articles in your inbox [00:31:00] every second week. But Yaroslav I’d love to hear from you. we hear about more members, we hear about the bricks plus countries like Saudi Arabia, Egypt, and Iran.

You’ve talked about the Bricks plus plus. How are members selected? Is it just if a country wants to join, they can join, or is there a selection criteria? Is there a panel that says you can come but you can’t? How does that work?

Yaroslav Lissovolik: That’s a great question, and don’t think I have a really good, answer to, to your question.

I think, the, criteria have been mostly formulated by, the representatives of Bris economies in terms of the general principles that they expect the new members to abide by. And a lot of these, statements had to do with the sharing of values, the bricks values. and, I think this may have well been the case.

my view is that certainly, there were some other factors that were at work for sure. one of them, was the, role of this or that economy, the candidate economy in their respective region and the global economy. if it’s a. Global or [00:32:00] regional heavyweight, an economy that can lead its region, that is viewed as a regional leader that I think increased the chances of that economy, being, part of the block.

Just to remind you, when we were with five countries and, bricks, these were all pretty much. Leaders in their respective regions. Brazil and South America, obviously the largest. And, one of the leading, drivers of regional integration South Africa in, Africa, I think its inclusion, into Briggs was also driven.

By these considerations. Then India, with regard to South Asia, then you have, China, with regard to, Southeast Asia and East Asia. so really I think that kind of, principle. continued with respect to that expansion, to, include members such as Egypt, which is seen as yet another, heavyweight, in Africa.

one of the leading, economies in terms of, size, in terms of its role and regional integration. Ethiopia, has host [00:33:00] the headquarters of the African Union and is obviously traditionally seen as a very important. Driver of, African integration, et cetera. So, this, issue I think, was very important, from what I understand, from the statements that we’ve seen, coming from, Brix officials.

Another issue that was important was for the, membership or the resulting membership. To be representative of, the main regions of the global south, meaning Africa, Asia, Latin America. And in that regard, I think there were some concerns that were voiced about, Latin America not having quite as many members within the core as, for example, Eurasia.

and that is an issue that I think will be, one of the key to watch out for in the future waves of expansion if and when they happen. I think eventually, B Bricks members will want to see more of a balance between these three key regions of the global South Latin America, Africa, and [00:34:00] Asia. what this means that they want to re, establish more of a balance in terms of membership.

that means that probably, more, members, in the next waves will need to come from Africa and Latin America.

Dominic Bowen: And there’s a lot of complex global challenges and international risks today, but what are the biggest internal risks that could fracture or stagnate bricks in the next decade?

Yaroslav Lissovolik: Well, I think, in terms of, internal, risks, pertaining to, specifically to BrickX, I would single out, the need for greater pragmatism and the need for greater focus on. Economic policy issues? I think there’s still tremendous scope for cooperation in, trade sphere. I’m still surprised that there’s not quite as much of coordination in terms of trade policy we’ve seen.

Statements coming from, Trump, from the US with regard to, bricks. and currently, it’s, still hard to see what a common response, is, from [00:35:00] bricks on the trade front. on these, economic policy issues, I think there needs to be, more of a focus in terms of not just trade, but also financial cooperation, for example, one of the potential areas, that could receive a significant boost in the coming years in that regard would be the, resuscitation, if you will, of the Briggs CRA mechanism. That’s something that is meant to provide resources for countries that are experiencing balance of payments, gaps and macroeconomic difficulty. So that mechanism is not operational yet, and it’s taken too long, really, for Briggs to try to do something about that.

so this is one focus that I think, is. Important, pragmatic economic agenda. I think another one is, overstretch with regard to expansion if they go too far. and I think, there’s already the realization that there needs to be a pause with expansion. And probably for at least the next several years, we won’t see.

waves of expansion. In terms of bricks membership, there’s clearly [00:36:00] an, understanding that in order to forge consensus and to safeguard consensus, you need to spend time and to. Try to, establish, various channels of cooperation, economic cooperation with, the new members. and also with the partnership built apart from the expansion and the core, there are almost as many, partners of, Brix economies.

And you also need. To make sure that there is, a critical degree of coordination with these, economies as well. if they go too far with, expansion, a lot of that ability to, forge consensus and to agree on the Critical set of issues may be undermined. So those would be, some of the risks, and of course the risks that have to do with the well-known rifts that, at times flare up.

And the, the most important one being the, China India, divides. I think. We’re now seeing, normalization. And of course, I think there’s a clear understanding that [00:37:00] relationship between China and India is absolutely critical for the future of b Bris and the the future of global South and south south, corporation.

my view is that, Platforms like Brix, they could be precisely the platforms that to some degree, through greater economic cooperation through, greater common interest, they could, bridge some of these divides within the global south. And that would be potentially then a tremendous contribution towards, global economic growth and global economic development.

Dominic Bowen: thanks very much for explaining that Yaroslav. And just to wrap up in the last one minute, Yaroslav you’re very well traveled. You, you work on a lot of international organizations. When you look around the world, what are the international risks that concern you the most?

Yaroslav Lissovolik: I mean, all of the risks that we’ve seen in the past, what, five, six years, whether it’s the pandemic, and I think the pandemic, elicited a lot of the weaknesses in terms of international coordination. The coordination needs to be greater, and my view is that engaging and [00:38:00] bringing on. Regional integration arrangements and their respective regional, financial institutions would go a long way towards improving the effectiveness of this common, stimulus to, avoid, excessive, global, economic, downturns and, of course geopolitics.

And, I think that there’s a tremendous, possibility. For, the world economy and for the global community to progress there. I think we’re seeing some of the members of the international community becoming more active, in this vein, for example, the, the United Arab Emirates becoming increasingly active in mediating disputes.

So it’s not just the likes of, Switzerland, if you will, but, United Arab Emirates as an economy that is increasingly, playing a role. by the way, again, There’s ample research to show that in terms of peace mediation, regional organizations have been playing an increasing role especially in Africa.

And, this is something that, goes to my point that, looking at all of the [00:39:00] stakeholders, not just. the national economies, the national level, but looking at what the regionalism and regional organizations can give to the global community and global development is very important.

Dominic Bowen: Thanks very much for your insights and thank you very much Yaroslav for coming on the International Risk Podcast.

Yaroslav Lissovolik: Thank you. Thank you so much, Dominique. It’s been a pleasure. Thank you. That

Dominic Bowen: was an interesting conversation with Yaroslav Lissovolik. He founded the Bricks Plus Analytics firm in 2023. I really appreciated hearing his thoughts on the bricks and the economic role of emerging global powers in the global south. Today’s podcast was produced and coordinated by Elisa Garbil. I’m Dominic Bowen, your host.

Thanks very much for listening. We’ll speak again next week.

Elisa Garbil: Thank you for listening to this episode of the International Risk Podcast. For more episodes and articles, visit the international risk podcast.com. Follow us on LinkedIn, blue Sky, and Instagram for the latest updates, and to ask your questions to our host, Dominic Bowen. See you next time.