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India Today
3 days ago
- Business
- India Today
As BRICS debates reducing dollar dependence, why India is walking a fine line
When BRICS leaders gathered in Rio de Janeiro recently, the usual choreography of multilateral summits—the handshakes, declarations, talk of reforming global governance—took on a deeper urgency. Beneath the ceremonial gloss, something more fundamental was being contested: who controls the arteries of the global financial system, and how much longer the world can depend on the US dollar as its over two decades, BRICS, comprising Brazil, Russia, India, China and South Africa, has projected itself as a counterweight to Western dominance in global institutions. But until recently, most of its rhetoric about multi-polarity had limited teeth. That has started to Rio summit brought fresh momentum to the bloc's campaign to reduce dollar dependence. A working framework for BRICS Pay, a blockchain-based digital payments system, was unveiled. Leaders also endorsed ongoing studies for creating a BRICS cross-border clearing platform and floated a vision of 'local currency trade corridors' with new BRICS+ entrants such as Egypt, Indonesia, Ethiopia, Bangladesh and the UAE. Russia and Brazil pushed for bolder language—on de-dollarisation, monetary autonomy and the unfairness of a system where one nation's currency doubles as the global Delhi, as always, was careful. Commerce ministry officials are hard-negotiating a trade deal with the Donald Trump administration in Washington DC. Unlike BRICS partners Russia and China, India has much better geopolitical and geoeconomic relations with the US. New Delhi stood with the BRICS group in principle, but not in every detail. External affairs minister S. Jaishankar and finance minister Nirmala Sitharaman reiterated India's support for building alternative financial rails that are more inclusive, less vulnerable to geopolitical coercion, and diversified in scope. Back home, domestic lobby groups, such as the Rashtriya Swayamsevak Sangh (RSS) affiliate Swadeshi Jagran Manch, were much more categorical.'India does not endorse a BRICS common currency. It is not interested in replacing dollar dominance with yuan dominance—or in surrendering monetary sovereignty to a supranational structure in which governance and transparency remain contested,' said Ashwani Mahajan, economist and national co-convenor of the Swadeshi Jagran Manch. The distinction India is drawing is both subtle and strategic. 'We are not anti-dollar. It is anti-weaponisation of the dollar,' Mahajan explained. And New Delhi is building its response through a web of initiatives—some quiet, some ambitious—that seek to future-proof its economy from shocks emerging from Washington, without dismantling the advantages the dollar still sense of urgency has grown in recent years. The Western freeze on Russia's central bank reserves in the aftermath of the Ukraine invasion, the aggressive use of sanctions against Iran and Venezuela, and China's growing fears of financial decoupling have all sparked a reassessment of how secure nations are in a world where financial infrastructure is increasingly New Delhi, too, the question has moved from the hypothetical to the strategic. What if India, in a future border conflict or diplomatic crisis, faces coordinated pressure through dollar markets, payment gateways or credit ratings? What is the insurance policy? Similar caution notes are being circulated by various affiliates of the RSS at various platforms. advertisementThe answer, from India's perspective, lies not in dismantling the dollar system but in building credible alternatives in parallel. Since 2022, the Reserve Bank of India (RBI) operationalised Special Rupee Vostro Accounts with over 30 countries. These accounts allow foreign banks to hold rupees for settling bilateral trade with Indian partners. Countries like Russia, Sri Lanka and Mauritius have signed on. The arrangement isn't frictionless—many nations still require dollars for third-party trade or face issues with rupee convertibility—but it has helped India establish a promising is the India-UAE corridor. In 2023, a rupee-dirham settlement mechanism was formalised. The partnership also saw an agreement on real-time payment system linkage between India's UPI and UAE's IPP (Instant Payment Platform).This is more than symbolic. The UAE is a major oil supplier, a top trading partner and a financial hub. If energy trade can be settled without the dollar—at least in part—it signals a meaningful shift. Mind you, the present dollar gets lot of strength because of acceptance of USD as a petrodollar. The Richard Nixon administration, in 1973, created the petrodollar system via a deal between the US and Saudi Arabia, later extended to OPEC about 80 per cent of oil is traded in US dollar. This forces economies across the world to maintain forex reserves in US dollar to suffice the requirement. About 60 per cent of US dollar bills today are transacted out of the geographic limits of US and their dependencies. BRICS Plus is about half of world's population and controls about 29 per cent of the global GDP. A fractional drift can impact the fortunes of US and its dominance. This is the reason why Trump is threatening an additional 10 per cent of tariff on BRICS counties along with their partners. Meanwhile, BRICS nations are condemning the unilateral tariffs and are looking for ways to build the infrastructure to create alternatives. New Delhi is also pushing digital public infrastructure as a tool of monetary resilience. The Unified Payments Interface (UPI), widely praised as a revolution in domestic digital payments, is now being exported as a Mauritius, Bhutan, France and the UAE have all signed bilateral UPI linkages. These are modest in value—used for retail and tourism transactions for now—but they lay the groundwork for something larger. In parallel, the RBI is piloting a digital rupee, with plans to eventually test cross-border use cases through projects like mBridge, a multilateral central bank digital currency (CBDC) initiative that includes China, Thailand and the the Rio summit, India backed the BRICS Pay announcement but inserted key qualifiers. Any such platform must be interoperable with existing national systems, not overlaid upon them. It must be based on voluntary participation and adhere to data protection and sovereignty standards. New Delhi also pushed back against calls for a common BRICS officials, speaking privately, note that such a proposal—floated regularly by Russia and Brazil—would inevitably face structural hurdles. Without monetary union, shared fiscal policy or trust-based governance, a common currency would be economically premature and politically hazardous. For India, it would also risk exposure to the yuan in ways it finds the BRICS Bank or the New Development Bank (NDB) has been tasked to draft a blueprint for regional currency pools and clearinghouses. New Delhi is clear that they support the reforms in global financial architecture, and wants safeguards against bloc-based fragmentation. The spotlight is now on the BRICS Plus Finance Ministers Meeting in Johannesburg this November, where the focus will be on governance norms on BRICS Pay, legality on arbitration in local-currency trade disputes and creation of firewalls to ensure BRICS institutions don't become extensions of Beijing's economic influence. The line take by New Delhi is that BRICS can be a platform for resilience but not an ideological crusade against the India's caution is rooted in hard realism. Of all the BRICS nations, it has the deepest integration with Western financial systems. Nearly $800 billion of foreign capital—direct and portfolio—is tied to India's financial markets, with much of it dollar-denominated. Indian corporates raise capital in global bond markets. The sovereign holds substantial reserves in US Treasuries. A sudden or ideological decoupling from the dollar would be economically self-harming. For Delhi, the dollar is not an enemy. It is a tool but not to be solely relied India is seeking, then, is optionality. It wants a world in which the rupee has a larger role in trade settlements, where digital rails offer sovereign control and where financial choke points controlled by others are avoided. It wants backup systems—redundancies in case the first line fails. Its strategic mindset echoes its broader foreign policy approach: multipolar engagement, issue-based coalitions, autonomy over is why India is equally active in non-BRICS platforms that deal with economic resilience. In the Quad, it is part of supply chain de-risking initiatives. In the G20, it has pushed for reform of multilateral development banks and more representative financial governance. In the Indo-Pacific Economic Framework (IPEF), it is working on standards for digital trade and trusted finance. These engagements are not contradictory to its BRICS role—they are complementary. India is choosing to play on all boards, not just the BRICS leg in Brazil provided a timely reminder that pressure to move faster is growing. Russia, squeezed by sanctions and shut out of dollar markets, is eager to build a fully insulated alternative. China, wary of its own vulnerabilities, sees an opportunity to position the yuan as a regional or even global reserve currency. Brazil wants more regional autonomy in South America's financial institutions. India, while supportive of local currency use and dollar-risk mitigation, doesn't want the bloc to drift into ideological anti-dollarism. It views that path as not only economically risky, but strategically balancing act will continue through the rest of the year. The upcoming BRICS Plus Finance Ministers Meeting is expected to push for operationalising BRICS Pay, finalising the governance structure for the clearing platform, and expanding the bloc's trade settlement architecture. A key question will be: who controls it?If China dominates the design and hosting, India is unlikely to endorse it without safeguards. Delhi will also push for greater voice for new BRICS Plus entrants, including Egypt, Ethiopia, Iran and the UAE, to ensure that a new financial order isn't just a club of five, but a broader platform that reflects multiple economic core demand remains consistent: build alternatives that are interoperable, open and trust-based. Don't just replace the US dollar with another hegemon. And don't abandon the existing system unless a better one is credibly is a fine line to walk. But Delhi believes it must. With the global economy fragmenting, financial sanctions becoming more common and geopolitical volatility spilling into trade, the need for monetary resilience has never been clearer. India is not betting against the dollar. But it is betting on a world where dependence on any single system—be it Western or Eastern—is a the grand BRICS dollar debate, India may not be the loudest voice. But it is one of the most strategic. While others chase revolution, India is crafting resilience. And in a multipolar world, that may prove the soundest investment of to India Today Magazine- EndsTune InMust Watch
Time of India
4 days ago
- Business
- Time of India
Why a BRICS currency and de-dollarisation are not in India's interest
When the US President Donald Trump described BRICS as pursuing an 'anti-American' agenda and threatened member countries with additional tariffs – possibly up to 10 percent – if they sought to build an alternative financial system to the US-led global order, it reflected a perception rather than a reality. Such rhetoric overlooks the broader transformation in the global economic architecture. BRICS, now expanded to 11 countries (Brazil, Russia, India, China, South Africa, Saudi Arabia, Egypt, United Arab Emirates, Ethiopia, Indonesia, and Iran) and comprising 45 percent of the global population and around 35 percent of global GDP, is not an inherently adversarial bloc. It is a reflection of the multipolar world that is emerging and seeks to create space for a more inclusive and balanced global order. Its evolution is aimed less at weakening the United States and more at amplifying the voice of the Global South in institutions that have traditionally favoured a few. The real strategic anxiety for Western-led institutions stems from BRICS' push for financial reform and discussions around de-dollarisation. The proposal of a BRICS currency by the Brazilian president in 2023 attracted attention, but no consensus has been reached among member countries. A shared currency faces serious practical hurdles. BRICS is a multi-regional, heterogeneous grouping whose members come from vastly different political systems and economic landscapes. Relations among some member states are not entirely smooth either, ranging from strategic competition to transactional partnerships. Moreover, unlike the Eurozone which evolved into a monetary union with policy coordination, BRICS lacks a common economic zone, a central fiscal authority, or even a network of free trade agreements across its members. These structural inconsistencies make the idea of a unified BRICS currency aspirational rather than immediately feasible. The most tangible form of financial cooperation under BRICS so far is BRICS Pay, a cross-border payment mechanism launched in 2018 to reduce dependence on the SWIFT network. Yet even this initiative remains underdeveloped and largely supplementary to existing systems. Former Reserve Bank of India Governor Shaktikanta Das described the use of local currencies in trade as a risk-management tool rather than a genuine push toward de-dollarisation. External Affairs Minister Dr. S. Jaishankar echoed this sentiment in October 2024, stating clearly that India 'has never been for de-dollarisation' and that 'there is no proposal to have a BRICS currency.' These official positions reaffirm India's pragmatic stance toward the evolving financial narrative within BRICS. The most pressing technical challenge lies in pegging a hypothetical BRICS currency. Currencies like the Chinese yuan or renminbi, the Russian rouble, and the UAE dirham are more likely to be chosen as benchmark anchors because of their high levels of floating liquidity and circulation in global trade. The Indian rupee, by contrast, is still relatively under-internationalised and would have a limited role in determining the value of such a currency. If pegged predominantly to the more robust currencies of other BRICS economies, the new BRICS currency could diminish the relative value of the rupee. This would weaken India's monetary leverage and raise the cost of external transactions, especially when such a currency would be limited for use within BRICS markets and lack universal acceptability like the US dollar. India's trading patterns further reduce the appeal of a BRICS currency. Although India's trade with BRICS nations is substantial, a significant portion of its trade lies outside the bloc. The proposed BRICS currency would offer limited utility in transactions with non-member economies, and would thus be an inefficient substitute for the US dollar. The dollar's role as a global reserve currency and its near-universal acceptance across markets continues to serve India's trade interests more effectively than a restricted-use currency. Moreover, pegging to yuan, rouble or dirham would not only increase India's dependence on these specific economies but also provide disproportionate economic influence to China and Russia, countries with whom India has complex strategic relationships – though with Russia, India maintains a friendly strategic partnership that is rooted in history and shared interests. A BRICS currency would also challenge India's monetary sovereignty. For such a currency to function, macroeconomic policies would need to align – an improbable outcome given the divergent development models and national priorities of BRICS members. India has historically preferred to maintain policy autonomy, and being party to a common currency would curtail that flexibility, potentially undermining domestic growth and inflation control mechanisms. In essence, India would risk ceding economic space to geopolitical competitors under the guise of collective financial reform. India's position on de-dollarisation has also been carefully measured. Rather than pursuing wholesale abandonment of the US dollar, India has explored bilateral and limited local currency trade mechanisms, particularly with countries facing dollar shortages. Such arrangements help maintain trade momentum in the short term but are not designed to challenge the dollar's dominance. They are adaptive rather than transformative. Even within the BRICS framework, India has refrained from endorsing any sweeping move away from the dollar. Its foreign policy approach is rooted in strategic autonomy and pragmatism, not ideological alignment against the West. This does not mean India is unwilling to reform the global financial system. On the contrary, India has consistently advocated for greater representation of the Global South in Bretton Woods institutions such as the IMF and the World Bank. The demand is for a more inclusive and fair institutional framework that gives countries like India a greater say in global financial governance, rather than for a separate bloc-based architecture. India's priority is to democratise decision-making within existing structures, not dismantle them. In this, the BRICS platform can play a constructive role as a voice for global equity but not necessarily as a challenger to the dollar. Another limitation of the BRICS currency proposal is its potential to increase financial volatility rather than reduce it. Aligning with highly fluctuating currencies such as the rouble or yuan exposes India to risks stemming from external geopolitical developments. For instance, sanctions on Russia or capital controls in China would have ripple effects on a BRICS currency, pulling India into crises not of its own making. Similarly, the dirham's value is closely tied to energy market volatility, something India would prefer to avoid anchoring its currency to. The relatively stable dollar still provides India with a safer and more predictable trading environment. Despite this, there is space for cooperation within BRICS on financial innovation. Cross-border digital payment systems, improved financial transparency, and coordinated efforts to reduce transaction costs in South-South trade are achievable goals. These do not necessitate a common currency. Local currency trading, when conducted in a controlled and transparent manner, could improve resilience for BRICS members during periods of external shocks. However, any initiative that threatens to undermine India's economic sovereignty or binds it to unevenly matched partners would be counterproductive. India is also cautious about deepening financial integration with countries like China and Russia through a common currency. Political and military tensions with China and transactional complexities with other BRICS partners mean that India would be wary of any economic arrangement that could tilt strategic leverage in favour of these nations. Additionally, the fact that India does not have substantial local currency trade agreements even with major BRICS players like China and Russia underlines its discomfort with the idea. A controlled bilateral engagement is preferable to a wholesale reordering of its trade ecosystem. The United States' threats of punitive tariffs and aggressive protectionist measures based on laws like the International Emergency Economic Powers Act may generate headlines but will do little to prevent the organic evolution of multipolar economic partnerships. In fact, such actions may hurt American exporters and producers more than they dissuade countries from seeking alternative arrangements. At a time when global economic cooperation is key to recovery and growth, punitive measures are likely to be seen as regressive and self-defeating. Ultimately, BRICS is a platform that enables India to pursue multilateral diplomacy and elevate the concerns of the Global South. It is not a vehicle for establishing an economic order dominated by a few powerful states, nor should it become one. India's interest lies in maintaining strategic autonomy, preserving its monetary flexibility, and engaging with the world through dialogue and innovation. De-dollarisation and a BRICS currency do not serve these objectives. For India, the challenge is not to find alternatives to the dollar but to make the global financial architecture more inclusive and fair. And that begins not with new currencies, but with structural reform of existing institutions. In conclusion, while BRICS has evolved into a meaningful global platform, the notion of a shared currency or coordinated de-dollarisation lacks coherence and utility for India. The Indian economy thrives on diversity, flexibility and openness. Tying its fate to a new and untested monetary experiment would undermine the very strategic space it has worked so hard to preserve. For India, the future lies not in rejecting the dollar, but in reshaping the financial world to reflect a more balanced and equitable order where all voices are heard, and none dominate. Facebook Twitter Linkedin Email Disclaimer Views expressed above are the author's own.
New Indian Express
6 days ago
- Business
- New Indian Express
BRICS Summit: Key takeaways for Indian business
CHENNAI: India emerged as a key architect of the BRICS agenda—driving local-currency trade, global governance reform, green investments, and digital regulation. These developments offer strong tailwinds for sectors spanning finance, infrastructure, technology, agriculture, and clean energy. With India set to assume BRICS Chairmanship in 2026, its businesses are well-positioned to capitalise on newfound opportunities. Following are some of the highlights from the Summit as far as such opportunities are concerned: National Currencies BRICS leaders, including India, endorsed increasing trade settlements in national currencies, aiming to reduce reliance on the US dollar. While the idea of a common BRICS currency remains off the table, discussions around payment systems such as BRICS Pay and national-currency settlement frameworks are gaining momentum. A new BRICS Multilateral Guarantee (BMG) mechanism, backed by the New Development Bank (NDB), was unveiled to help mobilise private investment, particularly in infrastructure, climate-related, and sustainable projects. This is expected to lower financing costs and stimulate capital inflows into India. The NDB also reaffirmed its commitment to strengthening its regional presence, with existing projects in India and plans to expand its office in Gujarat. Indian infrastructure, climate, and manufacturing sectors are likely beneficiaries. India joined other BRICS members in renewing calls for reforming global institutions such as the IMF, World Bank, and UN Security Council to provide greater representation for emerging economies. This agenda closely aligns with India's longstanding diplomatic goals. Climate and technology India's green energy and agri-tech sectors are expected to benefit from a collective push toward climate action and sustainable development. Member nations called on developed countries to finance the Global South's climate transition and expressed support for initiatives such as the Tropical Forests Forever Facility and the BRICS Grain Exchange. The summit also focused on digital regulation, including the need to address the unauthorized use of artificial intelligence and to strengthen data protection rights. These discussions are particularly relevant for India's fast-growing digital and AI industries. Enhanced frameworks for e-commerce and data privacy are likely to support continued growth in the domestic tech sector. India also advocated dismantling export restrictions among BRICS countries to promote more seamless trade and supply chains. This complements India's broader push for deeper South–South economic collaboration. A bilateral meeting between Prime Minister Narendra Modi and Chinese President Xi Jinping led to agreements on de-escalation along the Line of Actual Control and the resumption of border patrols. This development may help restore investor confidence, particularly in India's electronics and manufacturing sectors, which have been affected by geopolitical tensions. The BRICS joint statement also included a firm condemnation of terrorism and a call for enhanced intelligence-sharing. India, facing persistent cross-border threats, stands to benefit from stronger security cooperation within the bloc. Impacts The new guarantee fund and the shift toward local-currency trade could reduce borrowing costs and mitigate currency risks for Indian exporters and infrastructure developers. Initiatives like the grain exchange, forest protection funding, and clean economy programs will likely boost India's agri-tech and clean-tech industries. With AI governance and data protection now part of the BRICS agenda, Indian tech firms gain greater clarity on regulatory direction, which should support their expansion across software, AI, and e-commerce markets. Improved India–China ties may ease supply-chain constraints and open the door to more stable cross-border collaboration. More importantly, India's leadership on global institutional reform, climate finance, and the expansion of the BRICS bloc enhances its international standing. According to global economic analysts, this could attract further foreign investment and reinforce the goals of Atmanirbhar Bharat.
The Diplomat
02-07-2025
- Business
- The Diplomat
Decoding ASEAN's Measured Engagement with BRICS
Following Thailand and Malaysia, Vietnam last month became the third Southeast Asian 'partner country' of BRICS. BRICS partnership, an extended cooperation mechanism established at the grouping's Kazan Summit in October 2024, allows countries to engage with the grouping in a flexible manner. In addition to these three nations, Indonesia in January became the first nation in Southeast Asia to attain full membership in BRICS. Why did Bangkok, Kuala Lumpur and Hanoi only join BRICS as 'partner countries' while Indonesia was determined to seek full BRICS membership? By pursuing partner status, Thailand, Malaysia, and Vietnam are walking a fine line between BRICS and the West, which remain at odds on many important issues. With 10 full members and 10 partner countries across three continents, BRICS now accounts for 40 percent of global gross domestic product (GDP), positioning it as a powerful platform for countries seeking to reduce their dependence on the West. Thailand, Malaysia, and Vietnam –all of which pursue foreign policies aimed at strategic balance – fit this profile. Thailand pursues 'proactive diplomacy,' opening to collaboration with 'all sides.' Prime Minister Paetongtarn Shinawatra recently underlined the importance of engaging with global economic institutions, including BRICS, to boost the country's economy. Malaysia considers its economy as 'highly open' and maintains a 'neutral' foreign policy. Hence, joining BRICS is a vital step towards diversifying the country's economic relations. Meanwhile, Vietnam remains committed to 'bamboo diplomacy' – an overarching foreign policy strategy rooted in multi-alignment, multilateralism, and strategic autonomy. Hanoi's partnership with BRICS allows it to lay low geopolitically while enhancing its ability to 'influence international affairs' through the bloc, via 'forums and meetings that facilitate dialogue, cultural exchange, and cooperation' in security and economic matters. However, BRICS partnership is not a risk-free endeavor. Heavily influenced by Russia and China, the bloc is advancing a de-dollarization agenda aimed at challenging U.S. financial dominance. In the wake of the Ukraine war and Russia's SWIFT exclusion in 2022, Moscow has pushed BRICS members to advance this agenda by building an alternative international payments platform, thereby strengthening BRICS' role in the global financial and monetary system. In 2024, Russia announced a series of initiatives – including the BRICS Pay e-payment system, the BRICS Bridge cross-border payment platform, and the BRICS Grain Exchange – as part of its broader efforts to establish an independent economic and financial framework relatively immune from Western influence. But a vision of a single BRICS currency and the bloc's efforts to reduce Western dominance are stoking anger in Washington, with President Donald Trump threatening to impose a 150 percent tariff on products from BRICS nations should they continue attempting to undermine the U.S. dollar. Trump's warning makes full BRICS membership a highly precarious choice for the three developing countries. An economic alignment with BRICS through full membership could put Thailand, Malaysia, and Vietnam's efforts to deepen economic ties with the U.S. and other Western partners at risk. The stakes are even higher as all three countries are still negotiating with the Trump administration to reduce the 'reciprocal' tariffs in early April. During Trump's 'liberation day' tariff announcement, Thailand was hit with a 36 percent tariff, Malaysia 24 percent, and Vietnam 46 percent, and all three nations are under pressure to reach agreements before the new tariff rates take effect on July 8. In this context, pursuing full BRICS membership could derail their ongoing negotiations with Washington. Partner status, which entails limited voting and decision-making power within BRICS, may offer a lower-risk alternative for these countries. Moreover, full BRICS membership is unlikely to offer substantial additional economic benefits for the three countries, which already have or are negotiating free trade agreements (FTAs) with most major BRICS economies: with China through the ASEAN-China Free Trade Area and the Regional Comprehensive Economic Partnership, with India through the ASEAN-India Free Trade Area, with the United Arab Emirates (UAE) through the Comprehensive Economic Partnership Agreement (Thailand and UAE are on the fourth round of negotiation for a bilateral FTA ), and Indonesia through the ASEAN Free Trade Area. All of this raises the question of why Indonesia decided to seek full BRICS membership, a step that former President Joko 'Jokowi' Widodo was hesitant to take . At the BRICS Summit in 2023, Widodo received an invitation from BRICS leaders for Indonesia to join the bloc as a full member, but he declined the invitation. First, Indonesia has explicitly communicated its ambition to expand its influence beyond ASEAN by engaging with larger multilateral mechanisms. As Southeast Asia's leader in key geoeconomic indicators, including GDP, population, and land area, Indonesia is the only Southeast Asian member of the G-20. Since 2024, the country has also set its sights on becoming the first Southeast Asian nation to join the Organization for Economic Co-operation and Development, aiming to achieve membership within the next two or three years. Thus, it is not surprising that BRICS has been on Jakarta's radar. Indonesia's 'bebas-aktif' (free and active) foreign policy provides a strong foundation for deepening its engagement with multilateral organizations in both the Global North and South. Second, Indonesia's decision to join BRICS also reflects clear economic reasoning. Membership in BRICS serves as a stepping stone for Jakarta's efforts toward membership of the New Development Bank (NDB), the bloc's strategic lending vehicle. As the Indonesian government is seeking funding for its stalled capital relocation project, access to NDB's infrastructure loans could provide the country with much-needed fiscal relief. Moreover, BRICS membership enhances Indonesia's economic alignments with Global South states, particularly those in the Middle East – a region of growing strategic interest for President Prabowo Subianto's administration. Following Jakarta's official accession to BRICS in January, Prabowo conducted a week-long visit to the Middle East in April, securing a $10 billion investment commitment from the UAE for Indonesia's newly established sovereign wealth fund, Danantara, and establishing a strategic partnership with Egypt. In addition, despite Western sanctions on Iran, Jakarta has maintained robust trade ties with Tehran and has signed a preferential trade agreement that includes a provision for barter-style payments. At last year's BRICS Summit in Kazan, Malaysia's Economy Minister Rafizi Ramli discussed the potential for deeper ASEAN–BRICS cooperation, noting that Malaysia – as chairman of ASEAN in 2025 – saw 'tremendous synergies between ASEAN and BRICS.' This message echoes the broader strategic ambitions of ASEAN countries in strengthening their engagements with the bloc and suggests that, when engaging with external actors, ASEAN member states – regardless of their individual political and economic status – do not act in isolation, but instead seek input and coordination with their regional counterparts. Nonetheless, the four ASEAN countries must engage with BRICS in a pragmatic and cautious manner, because there is no such thing as a free lunch. While BRICS membership and partnership presents a range of strategic opportunities, it also entails costs and could 'bring pitfalls in the short term, if not carefully managed.' These countries now face heightened vulnerability amid escalating strife between BRICS and Western powers to shape the global order and global economic governance. To maintain their non-aligned stances, Jakarta, Hanoi, Bangkok, and Kuala Lumpur must remain cautious of political coercion, economic overdependence, and the risk of being drawn into a BRICS-or-West rivalry. The good news, however, is that the U.S and other Western countries have thus far refrained from opposing these ASEAN states' deepening engagement with BRICS, suggesting a degree of strategic tolerance. Moving forward, what matters most is how these four countries calibrate their level of participation in BRICS initiatives to make the most of the group's economic clout while carefully avoiding being perceived as taking sides.
