There are devastating events in life that are hard to come to terms with and last week was one such shock – the loss of Alexey Mozhin, one of the leading intellectuals in Russia on the world economy and international economic relations. I had the honor of working under his leadership in the Russian Executive Office of the International Monetary Fund (IMF) and his insights and views played a critical role in forming my own take on how things worked in the global economy. His perspectives on international developments were prescient and profound, his goal was not just to observe and interpret but also find the ways to address the mounting ills of the global economy through concrete economic policy measures. Even more than that, his aspiration was to imagine a global economic system that would be revitalized through greater optionality of financial instruments, currencies, settlement mechanisms and economic development models.
One of my most vivid recollections of meetings with Alexey Mozhin was during his visit to Moscow and a discussion we had over tea and coffee in 2007 before the 2008-2009 financial crisis. At a time when most of the pundits and observers of the world economy were still calling for ever higher stock market records, sky-high commodity prices and inflows into EM, Alexey Mozhin struck a different note – in his words the coming years would unleash a crisis unlike anything witnessed before, a new type of crisis with powerful spillovers across the globe. His vision played out in less than a year with a force that was to redraw global markets’ regulatory frameworks. His unparalleled experience at the IMF (he served as Russia’s Executive Director to the International Monetary Fund (IMF) for 32 years (1992–2024) and as the Dean of the Executive Board of the IMF since 2014) gave him a unique edge in understanding the inter-play between geopolitics and international economics – something that also enabled him to foresee the severe downturn in the international relations and the deleterious impact this had on the state of the markets and the world economy.
Being in the very epicenter of the international financial system and having witnessed within the IMF the passing of the world economy through a string of crises – from the Asian crisis of 1997 to 2008-2009 global financial crisis and the 2020-2021 pandemic – gave him a keen sense of how economic fragilities coalesce into “perfect storms”. In this respect, his key concern was the instability of the international economic system that relied excessively on the economic plight of the West. The latter in his view was increasingly susceptible to moral hazard problems associated with the reserve currency status of the USD and the Euro, resulting in fiscal policy loosening that stoke growth in the already high levels of public debt. The constraints on the fiscal side resulted in severe underfinancing of infrastructure development and the problem of de-industrialization that he saw as being one of the key concerns for economies such as the US. Furthermore, the current push to re-industrialize in the US is inviting further economic policy excesses in the form of rampant protectionism, with severe negative spillover effects for the global economy. It was this vicious circle of economic policies and outcomes that fed Alexey Mozhin’s pessimism regarding the future of the unipolar system and its vulnerability to bouts of new crisis shocks.
But predicting crises, while arguably a sought-after quality for any economist, was not his fundamental objective – the key theme for Alexey Mozhin was the reform of the international monetary system. In particular, it was the creation of alternatives to the current unipolar setup of the world economy and within this track his focus was on the so-called R5 project (the name of the project comes from the fact that all core BRICS-5 currencies start with the letter R), namely the creation of a common BRICS currency. To discuss the possible modalities of the BRICS common currency and the broader global economic conditions, Alexey Mozhin formed an expert group composed of representatives from BRICS economies that included among others his former colleagues from the IMF Executive Board[1]. His approach to leading this group (of which I was very proud to be a member) was very democratic and open to diverging views. In line with his proposals, the creation of the R5 in the form of an accounting unit would not be fraught with significant difficulties and could be a feasible initial step towards a graduation of the R5 project to higher levels of maturity later on. He also outlined his suggestions for the possible modalities of the future currency and the relative shares of the five BRICS national currencies that could constitute the R5 basket[2].
A related theme that he considered crucial was the expansion in the role of the Special Drawing Rights (SDR) as a potential global currency that could operate alongside the national currencies and play the role of a means of payment as well as a store of value and reserves. In effect, his idea was to take a project that has already gone through several stages at the global level and carry it further to its logical conclusion – if the SDR already performed the role of a reserve currency as well as a unit of account (in IMF transactions), why not take it to the level of a full-fledged global currency? As has often been the case with such projects and ideas, they were relegated to the back-burner by the grim geopolitical realities of the current international financial system.
Alexey Mozhin’s approach to issues such as globalization and trade liberalization was pragmatic rather than ideological – he saw significant benefits as well as costs and drawbacks that accompanied the previous phases of the globalization process. Instead of “creative destruction” in building a multipolar system, he favored dialogue and an evolutionary path to reforms that acknowledges existing realities and constraints. Such a balanced and pragmatic approach to reforming the international monetary system as well as his ability to listen to his colleagues at the Board were arguably among the key characteristics that enabled him to deliver such a unique contribution to the work of the IMF.
In the end, the legacy of Alexey Mozhin is that of advancing a vision of a better future for the world economy via concrete proposals and initiatives. As with so many Russian intellectuals that have passed away too soon to reveal their full potential contribution, we and our descendants will be asking the question of what the world would have been like if Alexey Mozhin had been able to deliver his ideas and vision to the fullest. After his work at the IMF, he was perhaps one of the key figures within the BRICS+ space who could have led the efforts to build the foundations of a more balanced global economic system. His ideas have already charted trajectories, however, that his friends and colleagues from across the world will seek to put into practice. A true visionary capable of discerning the future contours of the emerging multipolar economic system, Alexey Mozhin, will be remembered for his ability to combine all the qualities that make not just a great economist and a skilled diplomat, but an intellectual whose foresight and ideas have outpaced the drift of our time.
[1] https://tass.ru/opinions/22114983
[2] https://tass.ru/interviews/17281219
Yaroslav Lissovolik, Founder, BRICS+ Analytics
Image by Ekaterina Chesnokova via RIA Novosti