Sri Lanka will benefit from BRICS pay system once in place

Dr. Saman Weerasinghe

Former Sri Lankan Ambassador to Russia Dr. Saman Weerasinghe shared his views with the Daily Mirror on the importance of being a member of BRICS (acronyms for its founder states -Brazil, Russia ,India, China and South Africa). Sri Lanka has now applied to join the international organisation in the Global South. Excerpts:  

 Sri Lanka has placed on record its request to join BRICS. What is your view on its relevance for Sri Lanka?

By being a member of BRICS Sri Lanka can benefit enormously.Economically, we can benefit immensely. After we obtain BRICS membership, we get the membership of NDB- National Development Bank.

The bank will support public and private collaborations in development projects through loans, equity guarantees and  other financial instruments. The NDB will cooperate with international funds.  It means we access other financial institutions the world through the NDB to get financial assistance.  Currently, we are getting assistance from the World Bank and the International Monetary Fund (IMF). Once we become a NDB member, we can get even further assistance for infrastructure development.  

At the same time the bank is planning to set up a special BRICS payment system which will improve the efficiency of transactions.  It is similar to SWIFT pay system in the world. SWIFT is the western interbank payment system.

This will be an alternative system in the global economy. It will make a big difference. Now there is a monopoly in the global payment system. In case the SWIFT payment is suspended, you cannot do any global transactions. It can be done for political purposes too.  But, if there is an alternative system like BRICS pay, all the countries can use it.  

I see starting from last year, the Central Banks of BRICS countries are buying gold. You can see this trend. It means they are going to introduce BRICS system, BRICS currency. This will be a reality within a short time. They will give you a guarantee from the gold. So that’s why they are acquiring large amounts of gold reserves.  Among BRICS countries, they transact in their own currencies at the moment. Very soon, they will transact in BRICS currency.   

BRICS represent roughly 45 percent of the world population and 35 of the global Gross Domestic Product (GDP).  With the inclusion of Iran and the United Arab Emirates (UAE), BRICS account for 50 percent of the global oil production. That is also important for Sri Lanka. So, we can negotiate with these countries through BRICS and get some concessions to Sri Lanka in oil purchases. This is the most important thing now for us to solve the oil problem. When you consider regional cooperation, it is very important for us.

 How do you see its value in regional cooperation?   

Now, some countries in Asia are going to be partners of BRICS. India is a partner of it. The other countries too have applied.  Iran and the UAE are already members of it.  

When Sri Lanka applies, it can also follow the conditions stipulated by BRICS for these countries. Then, in the same fashion, we can get the same benefits to Sri Lanka in terms of trade, loans for execution of private or government projects at  concessionary rates and partnerships. 

 As a former diplomat, how confident are you that Sri Lanka will get its membership? 

I’m confident Sri Lanka will get it because all the main countries in BRICS will support us. They will vote for us and give their support. They are very close friends of Sri Lanka.  In addition to main countries such as Russia, South Africa and   Brazil, the newly joined countries are also friends of Sri Lanka.

We have very good bilateral relations with these countries.  Then, China is also among the main countries supportive of us.  We are a small country. There is a no threat to any other big country from us. That’s why they will welcome us.  I think we will get the membership especially because India, Russia and China will support us. Finally everybody will support us.   

 You mean if these three main countries- India, Russia and China- support us, we will get it?

Yes, everybody will fall in line then.

Sri Lanka is a victim of geopolitical contests among the major powers, particularly involving China and India. Can BRICS help Sri Lanka ease this tension? 

We have to follow a non-aligned policy. We have to be friends with all the countries and seek assistance to improve our economy and social development. We should not be centric as otherwise we will favour a few countries.  The countries will also ask the same thing leading to a conflicting situation.   

When two countries ask for the same thing, we have to select one. In that case, we are going to favour one country over the other.  It will be a big problem. That is why, we should remain non-aligned.

We have to think of our national interests first. We have to think what we are gaining from this project and this membership. We have to green-light any project only after that. National interest will be a priority of the new government, I believe.  I know some bilateral agreements entered into previously are not 100 percent good for Sri Lanka.     

 Can you name a few agreements which are harmful to Sri Lankan interests?

I am not in a position to name all of them because I am a former ambassador.  But, I know there are some problematic agreements. I think we have to go with a non-aligned policy. Then, like in the past, we will get more benefits from all over the world. If you look at the Kampala Declaration of the 19th summit of heads of state and governments of the Non-Aligned Movement (NAM) held between January 19 and 20, 2024 in Kampala, Uganda, we can use it as a blueprint for foreign policy. We are also part of that. So, we can use this policy as our foreign policy in future.

We should make sure that we have no enemies. We can negotiate with the countries according to our national interests for any project. 

You mentioned about BRICS currency. That is basically going in the direction of de-dollarisation? We can use both the dollar and BRICS  currency because there is no restriction.

You can be a member of BRICS   and do business with member countries using BRICS currency. When you are doing business with Europe and the United States, you can use the US dollar. There is no conflict at all.

 What kind of advice can you give to the current government in the implementation or  execution of its foreign policy as an ambassador?

The new government was   established recently. So, I can see still they are using the non-aligned policy. External Affairs Minister of India Dr. S. Jaishankar visited Sri Lanka immediately. He invited our President to visit India.

He was invited to attend BRICS summit in Kazan, Russia. Unfortunately, he did not attend there due to the election. But a high-ranking delegation went there.  

Japan already announced that they are going to start their projects. They are also quite comfortable with the new government. That is why, I think, if they follow a non-alliance policy, nothing will happen.  The IMF can give assistance.  At the same time, BRICS Bank also can help us.

If we are getting IMF assistance, why shouldn’t we get help from the BRICS Bank? There is no harm from the BRICS Bank. We need Foreign Direct Investments (FDI). 

 What are the areas for improvement in relations with Russia?

I have served in Russia for two years. We are exporting tea, garments and fish products to Russia but have a  very small turnover with Russia compared to other countries. But we can expand this cooperation but initiative should be from Sri Lanka. Russia is a big country. Their turnover with India exceeds US$ 19 billion. But India is a big country. We can target US$ 1 billion trade volume with Russia. Currently, it is less than US$ 500 million.

For that, our private companies and enterprises should go to the Russian Federation and actively participate in trading with their counterparts.

There is still potential for further expansion in free trade with Russia.  The war with Ukraine is also affecting trading with Russia as transferring money is not easy.  But these problems will ease soon.  

We can aslo benefit from investments by being a member of  BRICS as the organisation accounts for 22 percent of global merchandise exports with China alone accounting for nearly two-thirds.

If we can get membership, our exports also can go to these countries under regulations which will be favourable to Sri Lanka more than now. BRICS is also comparably a big organisation.