The Russia's "U-turn to the East" started and turned into a strategic course long before the famous Crimean events. However, "the light at the end of the tunnel" for the BRICS transformation into the real, working union of states is far from being seen.
The BRICS with its own financial system?
Russian President Vladimir Putin said at the Summit of five states in Ufa, that Russia considers it a promising idea to ??switch to trade for national currencies within the BRICS.
At the end of July an agreement on creating a pool of conditional currency reserves of the BRICS came into force. Each central bank of a BRICS member state reserves a certain amount as insurance for emergencies. The accepted BRICS obligations are as follows: China (owner of the world's largest foreign exchange reserves) – $41 billion, Brazil, India and Russia – $18 billion each, South Africa – $5 billion. A few days earlier a New Development Bank opened in Shanghai. As early as the next year it will be engaged in investment into infrastructure projects of the BRICS countries.
According to Dilma Rousseff, the President of Brazil, the Development Bank and the currency pool will not compete with the International Monetary Fund. They will focus on supporting the BRICS member states only. But, no matter what anyone says, the BRICS countries moved from words to deeds in the process of creating an alternative banking system.
According to the Russian Deputy Foreign Minister Sergei Ryabkov, as early as June the BRICS countries have started consultations on the establishment of a multilateral financial system similar to SWIFT. The purpose of the system is to escape the control of the US and the EU in international payments. This would protect the countries against the risks associated with arbitrary decisions in this area made by the countries, under the jurisdiction of which the payment systems operate.
However, experts point out some nuances. "Some countries should agree to invest to this general fund more than periodically withdraw for a certain period of time to make the bank work like the IMF. I'm not sure that China is ready for it", – emphasizes Alexander Knobel, Head of the Laboratory of International Trade of the Gaidar Institute.
Meanwhile, simultaneously with the BRICS Bank, China is creating a Bank of Asia, which will also have a capital of about $100 billion, and this project is considered in China to be even more promising.
Besides, settlements in national currencies are stalled because of the traditional instability of the developing countries' currencies.
The BRICS without economic controversies?
When the summit was held in Ufa, analysts of the Global Trade Alert (GTA) published some disappointing results of a study of customs wars observed around the world from November 2008 to June 2015. It turned out that over this period more than 5 thousand measures restricting the trade of another country have been taken. Every second measure was aimed against one of the BRICS countries. But most of the measures were taken by the other BRICS countries.
Unfortunately, to date the BRICS countries account for almost 40% of discriminatory measures taken in the world. And about 60% of protectionist measures taken in the world over the past six years affected at least one of the BRICS countries, their commercial interests have been violated in more than 2.7 thousand cases.
The GTA also noted that the exports of all the BRICS countries except China has stagnated over the last four years, and decreased by the end of the first quarter of 2015 by 10–30% compared to the level of 2011. In China the growth of exports practically stopped in 2014. Thus, we can expect further escalation of the customs disputes.
"Strengthening the economic ties with Russia is in the interests of the BRICS", – says Zhang Jun, Director of the Department of International Economic Cooperation of the Chinese Ministry of Foreign Affairs. Meanwhile, China is the second largest trading partner of Russia after the EU, while the Russian share in the total Chinese trade does not exceed 3%.
At the same time the instances of clashes of economic interests between Moscow and Beijing are increasing. In particular, over the last 10 years, the Trans-Siberian and Baikal-Amur Railway cargo turnover grew by 50% and continues to grow requiring modernization of the railways. But, according to Oleg Dunayev, chairman of the Russian Federation Chamber of Commerce and Industry Logistics Committee, there is a threat of trade flows going into other transport corridors, such as the "New Silk Road", which is strongly promoted by the PRC.
Also Russian authorities grow silent when the question arises how the goods will be divided between the Chinese "Silk Road" and the Russian Northern Sea Route.
The BRICS as a military bloc?
"The Soviet Union does not exist anymore as well as the Warsaw Pact, and NATO not only exists but is expanding. And we do not forge military alliances with China, we do not have the bloc solution," – said Vladimir Putin at the St. Petersburg International Economic Forum.
Nevertheless, the integration processes have significantly accelerated in the military sphere. This summer a new project is added to those already implemented in the framework of military-and-technical cooperation with India. An agreement has been signed between the "Zvezdochka" Ship Repair Centre and the Indian company Pipavav Defence & Offshore Engineering to establish a joint venture to repair submarines of the Project 877 EKM. India has already purchased a total of ten submarines of this project.
Joint Russian-Chinese projects for building a heavy long-haul airplane and helicopter are "non-combatant". But any high-tech production can master the manufacture of dual-use items in the long term.
Also, Russia has apparently stopped to be deterred by Beijing's passion to copy someone else's military equipment. In particular, China signed a contract with "Rosoboronexport" in September 2014 for the purchase of four squadrons of S-400.
However, even hypothetically it makes no sense for Russia to go on further than launching joint production of a defensive nature, and joint exercises.
As the BRICS is apparently dominated by China, the establishment of a military bloc implies subordination of Moscow's military interests to Beijing. This is unacceptable.
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So, BRICS remains a geopolitical structure. Russia should be interested in strengthening the political aspects of integration against the background of the Ukrainian crisis and the transformation of the G8 into the G7.
But the trouble is that the other members of the association have their own political goals and ambitions that often strongly disagree with Russia's ones. Accordingly, the long-term political alliance is hardly possible.
Thus, it appears that Russia has already received maximum attainable advantages from the existence of the BRICS. Everything else is "still up in the air" and "possible in the distant future." And the eulogies referring to the bright prospects of cooperation within the BRICS so frequently heard in this country border on self-deception, which is fraught with strategic errors.
Although, of course, a possibility of closer friendly individual relations with each of the member countries of the BRICS still exists.