BRICS logo in the background of a grain field. Photo: Russia's Pivot to Asia.
Russia proposed creating a BRICS grain exchange that would serve as a new trading platform for the world’s largest producers and consumers of food grains. The measure could help depoliticize global markets and eliminate intermediaries in the form of Western exchanges, according to experts consulted by Sputnik.
The dominance of the United States in the world economy did not start with the dollar. After the Second World War, the US became the leading supplier of wheat and corn. As a result, the entire modern infrastructure of the global grain market has been shaped by Washington. Thus, the benchmarks are made by the Chicago Mercantile Exchange (CME), and the US dollar is primarily used as the settlement currency.
Nevertheless, the US is not the leader in global grain exports. Russia is the leader, and its BRICS partners are also among the top. Despite this, “they cannot fully participate in the formation of prices for basic agricultural products” and face manipulation by third countries, said Russian President Vladimir Putin at the 16th BRICS Summit in Kazan.
Consequently, according to the Russian president, the task emerges of protecting national markets “from negative external interference, speculation, and attempts to provoke an artificial shortage of food products,” a task that would be entrusted to the BRICS grain exchange.
“The new trading platform would depoliticize the grain market,” said Jajimurad Beljoroyev, an economist associated with the Patrice Lumumba Peoples Friendship University, to Sputnik.
According to the expert, the Chicago and Paris exchanges are practically devoid of the market price-setting mechanisms declared in economic theory, and “the collusion of sellers, pouring unreliable information through affiliated and controlled media is a common practice of speculators.”
The Russian Union of Grain Exporters (RUSGRAIN) estimates that the BRICS commodity exchange comprises 30-40% of the global supply of major cereal crops. The countries in the group produce approximately 348 million tons of wheat per year (44% of the global production), with a consumption of 323 million tons (41%). Russia accounts for 20-25% of the global revenue in this field.
Thus, the BRICS grain exchange involves both the main suppliers and the largest buyers. The proposed mechanism eliminates intermediaries, at least in the form of the Chicago Exchange.
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“The world is divided into two parts: the USA with its satellites and Russia and China with their partners. So, it is logical to establish transparent relationships with partners, including logistics, settlements, and liquidity,” emphasized Anatoly Tikhonov, director of the Center for Agribusiness and Food Security at the Russian Presidential Academy.
The BRICS exchange will alleviate uncertainty and ensure supply stability “amid global logistical disruptions and the growing food shortage,” underlines the South China Morning Post.
Consequently, as noted by the participants at the BRICS summit, a common commodities exchange could be the next step.
“In the event of success with the cereals, conditions will be created to move forward with the formation of a complete infrastructure for broader and deeper commercial interaction in various sectors,” commented Aleksandr Prisiazhniuk, director of the investment department of the Russian Agricultural Bank.
Russia proposes creating a separate platform for diamonds and precious metals. As experts emphasize, this will help combat trade barriers in the market and not only strengthen the geoeconomic influence of the BRICS but will also become a serious challenge for the West.
Consequently, this will weaken the BRICS system’s dependence on the dollar and promote constructing an alternative financial infrastructure, which Western countries fear so much. As The Economist acknowledges, this would allow BRICS members and partners to circumvent unilateral coercive measures, and the BRICS bloc would become a key political and economic force on a global scale.
(Sputnik)
Translation: Orinoco Tribune
OT/SC/SF
