The BRIC Summit is understood to have discussed the need for an alternative monetary trading system to save their earnings getting devalued due to the likely US dollar slide in the market triggered by over printing of the greenbacks. In a last week’s address, Russian President Dmitry Medvedev proposed that countries must begin to encourage a mix of currencies in bilateral trade to reduce over-dependence on US dollar.

Medvedev had also proposed to give greater emphasis on the IMF’s Special Drawing Rights. Russia further indicated that $400bn in the US Treasury would be relocated to the IMF. Reserve rich nations including China and Russia have huge holdings in the US Treasury.

BRIC member states hold a total of $2.8 trillion in international reserve assets excluding gold, 42 percent of the world’s total. BRIC nations also account for 15 percent of the $60.7 trillion global economy.

Last month, China and Brazil have signed an agreement to integrate respective currencies in their bilateral trade to reduce transaction costs incurred while currency exchange. It should be recalled that China’s central bank governor Zhou Xiaochuan had had suggested few months ago to dump US dollar as the global reserve currency and replace it with a different standard run by the IMF.

The summit is learned to have discussed various global issues including climate change and economic crisis besides the reliance on USD. Though it is unlikely to seal a concrete deal on the use of local currencies in bilateral trade, the member nations are expected to reach a tacit understanding in phasing out USD from future trade.

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Lula’s proposal seemed to be very genuine since early this year China became the largest trading partner of Brazil by displacing the US. Brazil’s exports to China, which primarily consist of iron ore and soy products, jumped to $5.6bn earlier this year, up from $3.4bn for the same period in 2008. The most significant agreement out of the 13 accords signed by Brazil and China was $10bn loan to Brazil in exchange with up to 200,000 barrels of oil per day for the next decade.

According to sources, Bank of China (BOC), the world’s third largest bank by market value, will open its first branch in Brazil in two or three months, purportedly a quick response to Lula’s call. In September, Brazil and Argentina signed a similar pact under which traders from both countries could trade in local currency with the US dollar as secondary option. The figures from the Brazilian central bank and trade ministry in last month showed, the two Latin American nations traded $22.6mn in local currency out of more than $1.6bn of total trade.

China is promoting the yuan as an international currency after signing 650bn yuan ($95bn) in swap agreements with Argentina, Indonesia, South Korea, Hong Kong, Malaysia and Belarus since December. Though there are many sceptics to the practicality of the idea, Shi Lei, an analyst in Beijing at the nation’s largest foreign-currency exchange said trading yuan or local currency would be a reality with the agreeing nations in a couple of years’ time. The emphasis should be to first start yuan settlement with Hong Kong and build an offshore yuan center to expand channels for yuan use, he added.

China holds $1 trillion investment in the US government debt, the world’s largest such holding, and the country is worried that the US’ ‘spending’ program to counter the recession will weaken the US dollar and eventually devalue the Chinese holdings. This fear has prompted China with the support of likeminded trading partners to minimize over-dependence on the US dollar as the ultimate invoicing currency.

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The officials in the Sasastra Seema Bal (SSB) that guards the Indo-Nepal border stated the seizures of red sandalwood had become a commonplace issue all along the porous Indo-Nepal border. According to sources, this year alone about 450 tons of red sandalwood has been seized as compared to previous year’s 1000 tons.

The sandalwood is procured largely felling trees illegally from the Mysore region about 150km away from Bangalore and brought to any of the Eastern states of India including Bihar and West Bengal. Later it reached the final destination, China through Tatopani on Arniko Highway in North Nepal, the largest Sino-Nepal trade point. Nepali traders from Tatopani claimed that Arniko Highway was completely taken over by smugglers as conventional trade routes were heavily guarded.

Under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) the sandalwood tree is protected, and any trading of sandalwood domestically or otherwise requires the government of India authorization. Sandalwood mafia in connivance with some state department officials is helping the trade to flourish despite such a trade activity invites heavy fines and rigorous punishments as per Indian law.

In Malaysia, the modus operandi is to declare the shipment of sandalwood as galvanised iron. Harun said last month the Timber board had seized a container loaded with 269 sandalwood logs worth more than $1mn that was trying to hoodwink the authorities through similar method. It should be noted that exporting the same imported goods from Malaysia the containers do not pass through the Customs formalities once again.

Fragrant sandalwood is widely used in the manufacturing of incense sticks, perfumes and toilet soaps. On the other hand, show pieces, handicrafts and some musical instruments in China are made out of red sandalwood. It has been told that even red sandalwood goes into the making of butts of firearms in China due to its curving capacity and strength. All varieties of sandalwood are used in various medicinal applications and beauty treatments.

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