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Today's briefing is a ~4.8 min read:

• 🤝 2022 BRICS Summit: arguing for a non-US led world.
• ➕ Plus: More violence at the Spain-Morocco border, an Italian watchdog shuts down Google Analytics, and Europe prepares for a cold, expensive winter.

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The BRICS Summit: high on ambition, low on substance

In two sentences: Two ambitious but largely unworkable economic proposals came out of this year’s BRICS summit: a bloc-wide free-trade agreement, and a new reserve currency. Both were presented to make the bloc look like a viable alternative to the US-led world order in the eyes of non-western countries.

 The future? Source: Giphy.

Clash of the summits

If the 48th G7 summit kicked off on Sunday in Germany but everybody is otherwise busy with judicial news from the US, did it even happen? 

What about if the BRICS grouping of countries held its 14th annual summit the weekend before, and even fewer people noticed... did it even happen?

It turns out the answer to both questions is yes; and the BRICS meeting even threw up a few interesting takeaways.

But before we dive in, here’s a quick refresher…

• BRICS is an acronym for the economic grouping of Brazil, Russia, India, China, and South Africa.

• Taken together, the five countries currently make up ~25% of the world’s GDP, and have a combined population of 3.27 billion people.

• None of the BRICS countries are G7 countries, although India and South Africa are attending this week's G7 Summit as specially-invited guests.

Two big economic ideas

It was China’s turn to host this year's BRICS Summit, but it was held virtually for the third year in a row due to China's 'Covid-zero' policy. Two interesting proposals came out of the meeting:

🤝 1. A BRICS free-trade agreement

China floated the idea that the five BRICS countries could negotiate a free-trade agreement to strengthen economic ties and jumpstart trade.

• During his speech, Chinese President Xi Jinping urged the BRICS countries to invest in “more inclusive and resilient” economic growth.

But according to Finance Professor Michael Pettis, a BRICS trade association would require Brazil, India, and South Africa to run huge trade deficits to absorb Russian and Chinese imports, and would require Russia and China to invest substantial amounts of their savings imbalance into Brazil, India, and South Africa. 

Pettis doesn’t see that happening:

• “This idea strikes me as coming from a bunch of politicians or journalists who think they're playing a game of Risk rather than from economists who recognize how global trade and capital works.”

Ouch.

💰 2. A BRICS reserve currency

For obvious reasons, Russian President Vladimir Putin suggested the bloc develop its own reserve currency to protect the five economies from escalating geopolitical tensions.

• The BRICS reserve currency would be comprised of a basket of roubles, reais, rupees, renminbi, and rand. (You're rrrrright to be wincing at the cavalcade of bad puns we'll come up with if this actually happens.)

While the idea of establishing a new reserve currency isn’t unthinkable, it’s far easier said than done. As our friends over at Lykeion noted in “What Would It Take for the USD to Lose its Reserve Status?”:

• “Unseating a global reserve currency is the sort of process that happens over decades, not years, and usually has more to do with the decline of the dominant power (US) than the rise of a challenger (China).”

ING's global head of markets Chris Turner explains the thinking behind the proposal:

• “This is a move to address the perceived US-hegemony of the IMF”, which “will allow BRICS to build their own sphere of influence and unit of currency within that sphere.”

Making their case

The BRICS 2022 Summit avoided taking controversial positions on some of the most pressing global issues like Russia’s invasion of Ukraine, how to manage the South China Sea, or China's claim to Taiwan.

And the BRICS's two economic proposals are - let’s be honest - implausible, at least over the short and medium term. 

But coming up with credible, workable solutions wasn't the point. Rather, the summit was a chance for China (and Russia) to outline what a non-US dominated world might look like. Now it's over to the G7 to argue the other side of the case.

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Europe

🇧🇬 Bulgaria
Bulgarian MPs have voted to lift the country’s veto on North Macedonia’s EU membership talks if certain preconditions are met.

• North Macedonia’s slow path to EU accession talks has been stalled by its so-called ‘history dispute’ with Bulgaria.

• Amongst other requests, Bulgaria insists North Macedonia recognise the Bulgarian roots in the Macedonian language, and include ethnic Bulgarians in the preamble of its constitution.

🇩🇰 Denmark
Danish lawmakers have agreed to impose Europe’s steepest corporate carbon tax to curb emissions.

• The new carbon tax will be superimposed on top of the existing EU carbon quota system.

• The country is working towards achieving its target of reducing greenhouse gas emissions by 70% from 1990 levels by 2030.

🇮🇹 Italy
The Italian privacy guarantor has effectively banned Google Analytics for violating data protection rules.

• According to the regulatory body, Google’s efforts to anonymise IP addresses are insufficient, which then makes the transfer of EU data to the US unlawful.

• The decision follows similar rulings from Austrian and French authorities.

🇪🇸 Spain
Around 2,000 people gathered in Madrid over the weekend to protest the ongoing NATO Summit and called for the military alliance to be dissolved.

• The NATO Summit, which begins today, is expected to cover the Finnish and Swedish membership applications, and the endorsement of a new strategic concept to address risks posed by China.

• Research from polling company YouGov shows that support for NATO membership across Europe has risen since the start of the war in Ukraine.

🇪🇺 The EU
The head of the International Energy Agency has warned Europe to prepare for a complete halt of Russian gas this winter.

• According to Fatih Birol, the gradual decline of Russian gas flows in recent weeks could be a warning of what’s to come.

• In an effort to get ahead of the issue, the EU passed a regulation requiring member states to fill their underground gas storage facilities to at least 80% capacity before this winter season.

The border wall between Morocco and the Spanish enclave of Melilla. Credits: Getty Images.

The Spain-Morocco border turns deadly, again

The incident: At least 23 people have died after thousands of immigrants attempted to scale the border fence between Morocco and the Spanish enclave of Melilla.

• Two autonomous Spanish cities - Melilla and Ceuta - sit along Morocco’s northern Mediterranean coast.

• African Union Commission chief Moussa Faki Mahamat called for a probe into “the violent and degrading treatment of African migrants” by Moroccan and Spanish security forces.

Fortress Europe: Over the past two decades, the EU has spent millions of euros beefing up its border security to crack down on what it terms ‘irregular immigration’.

• The EU's Border and Coast Guard Agency, Frontex, has been allocated a budget of €5.6 billion for 2021-2027, nearly double the funds of the previous budgetary cycle.

Europe’s focus on stopping irregular immigration has resulted in increasingly-violent incidents at its borders, with Frontex accused of performing illegal pushbacks.

Using migrants as leverage: Morocco knows Spain views surges in irregular immigration - particularly from Africa and the Middle East - as a threat to national security.

• Critics say that Morocco has been using its land border with the two Spanish enclaves - or more specifically the implied threat of mass emigration - as political leverage.

• That's why Spain’s recent backing of Morocco’s sovereignty claims over Western Sahara is seen as a response to the sudden rush of 10,000 immigrants into the Spanish town of Ceuta last year.

As analyst Samia Errazzouki explains: “It’s very useful for the European Union to have non-EU countries, like Morocco, do the dirty work of policing its borders. For EU, it deflects immediate responsibility and blame. For Morocco, it gains key security contracts (including money and weapons).”

📺 What's on TV? 

Love Island Season 8, obviously. While some of us would love to use this space to recap villa drama, we'll recommend something a little more universally appealing: HBO Max's hit Tokyo Vice.

• The new show follows the true story of American journalist Jake Adelstein, played by Ansel Elgort, as a crime beat reporter in 1999 Tokyo.

The show gives a dramatic look into the "neon-soaked underbelly of Tokyo", where the famous Japanese crime gang the yakuza ran the show. It's engrossing stuff.

Tokyo Vice has already premiered stateside, with streaming to come in more locations. Check out the official trailer here. 

Today's newsletter was written by Valentina Calvi and John Fowler. Edited by Helen Zhang and Aine Stapleton.
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