A Ton of BRICS; The Good the Bad and the Ugly in Globalization
March 27, 2013
Christof Lehmann (nsnbc),- The BRICS summit in Durban, South Africa is being concluded with the successful establishment of a BRICS Development Bank, a BRICS Rating Agency to oppose the moody (criminally blackmailing and corrupt) Moodys or Standards & Poor rating agencies, the probable inclusion of the ailing but still potent north African powerhouse Egypt, and other developments, which will be coming down like “A Ton of BRICS” on the (f)ailing US and EU economies.
Also other nations, who are not part of “The Club” have reasons for concern. In Asia it would be nations like Laos, the DPRK, Nepal and Vietnam and a similar quartet can be found in Latin America and Africa. Forgetting that there is the Good, the Bad and the Ugly side to globalization, regardless which nations are driving it, would be extremely naive.
That the BRICS is a brick which is so brittle that it is about to fall apart or experience a premature death, as Ruchir Sharma, the head of Morgan Stanley´s emerging markets investment department sees it is most likely based more on wishful thinking than on a sound assessment of reality. Ironically, Ruchir Sharma´s downgrading of the BRICS chances for success, can be seen as a eulogy for Wall Streets moody rating of the BRICS.
The move to create a BRICS rating agency is a refreshing and much needed renewal in an international environment where rating agencies are best known for being moody and for having a poor standard with regard to ethical integrity.
It is too early to say whether the BRICS rating agency will be better, or if it will be(come) as moody and poor in its standards as the ones that have dominated (tyrannized) global markets so far. It remains to be seen. I am sure that some Wall Street brokers who are worst hit by the all too prevalent ludo-mania will already buying options (betting) on the issue, and who can blame them, with an administration in Washington that reimburses the gambler´s losses with tax-payer´s money.
Under any circumstances, a BRICS rating agency will bring a fresh breeze into a stagnant pond and maybe revitalize the business of rating. If one medical practitioner gives a diagnosis about a malign systemic disorder, as true as it may be, it is always good to have the possibility of consulting a second opinion before one goes shopping for a good burial site.
The creation of a BRICS Development Bank is a real step forward and the decision to endow it with a start capital of USD 50 billion should turn it into a moderately powerful developmental powerhouse among global banks. Infrastructure projects, developmental projects can be facilitated with far greater independence from traditional global banking houses and more independent from the (f)ailing US and EU economies.
Neither the USA nor the EU will have a say in this bank, which has the potential to facilitate the development toward a viable alternative to the Bretton Woods system. The BRICS Development Bank could ideally become an alternative to disaster capitalism and casino capitalism driven development and create viable, feasible, beneficial infrastructure where it is most needed.
In some regards BRICS members have been stepping on one another´s feet rather than conquering protected new markets and it may very well be, that the increased economical and political cooperation will result in a less infighting and more aggressively expanding cartel. An improved trade balance between BRICS members is most likely one of the results which will transpire, as the final outcome of Durban is being analyzed.
The trouble with the creation of cartels, in which members protect each other from harming each other´s economies by swamping them with cheap products without at least a due compensation, is that such cartels predominantly will have to seek their expansion on the cost of national economies beyond the cartel´s borders. Swamping other, weaker national economies with cheap products.
Both the USA and the European Union have their trade barriers well in place. Likely targets are countries like Nepal, to be increasingly targeted by India, Laos, to be increasingly targeted by China, and so forth. As good as the development may be for a nation like India, a country with an immense need and potential for the development of infrastructure, as bad or ugly may such a development become for weak neighbors.
The visit of Chinese President Xi Jinping in Russia was a crucial world-political signal. The first official visit abroad as President of China resulted in stronger political, economical and military ties between Russia and China.
The fact that China has agreed to buy large quantities of Russian oil is not merely based on the fact that China has an immense hunger for oil. The deal was a clear signal to Russia. As it can be read in a 2012 interview by Iranian journalist Kourosh Ziabari with the scribe, it was a reward and long expected compensation for Russian losses, resulting from the European Union´s Third Energy Packet, Russia´s role with regard to the Syria crisis and more. (1
Both Russia, China and India experience energy security problems, and the potential “new kid on the brick, Egypt, is also being targeted.
Russia, as already mentioned, faces a literal war about Syria and the PARS gas pipeline project already.(2 NATO is planning the establishment of the Kurdish Corridor which has absolutely vital consequences with regard to Caspian oil and gas pipeline projects.
China withdrew from the Iran Pakistan pipeline project. (3 The move was among other based on price-risk assessments. Construction on the Iran – Pakistan pipeline was begun in 2013 and the pipeline will, according to current plans end in Pakistan´s norther Baluchistan province, where the USA is fanning the flames of a low-intensity conflict. (4 China may at a later time decide whether it will finance a prolongation of the pipeline, but finds the project within the current geo-political situation too risky.
Both India and China have serious energy security concerns related to western and Bangladeshi attempts to destabilize Myanmar, and in particular Myanmar´s Rakhine State. The building of the pipeline from Myanmar to India, through Bangladeshi territory has been delayed multiple times because of a lack of convergence in the energy requirements of India and Bangladesh. As a response to known security risk factors related to previous and current attempts by Bangladesh to fight a proxy war in Myanmar´s Rakhine State, Myanmar decided to diversify the risk by building a double, oil – gas pipeline to China. Also this pipeline could be threatened if Myanmar or Myanmar´s Rakhine State are further destabilized. (5a,b,c
China will over the coming years experience increased pressure with regard to the South – East China Sea, the South China Sea, Japan, and there are indications for that the USA is planning a careful return to Vietnam. The ongoing low-intensity conflict in Malaysia over the “Kingdom of Sabah” seems to be tied to western attempts to limit Chinese access to resources. (6
The new kid on the block, Egypt, which owns part of the considerable gas resources in the eastern Mediterranean Levantine Basin, and which already has experience one “Arab Spring Regime Change” is most likely seeking closer ties to China and Russia for the very same reason. The BRICS powers openness toward Egypt could indicate that especially Russia is attempting to reassert its traditionally much stronger influence in the Middle East and over Egypt.
The downside of the closer cooperation within the BRICS is that the cartel may be tempted to secure the growth of the BRICS members economies by overpowering small, vulnerable economies which are struggling already. This, potentially ugly side of globalism can best be demonstrated by looking at Laos.
Laos is already struggling with adapting to the opening of the inner market of ASEAN in 2014. Even though the government of Laos is working hard at fulfilling the conditions for entering the open market, the country may have to ask, probably will ask for dispensations and more time. Laos has a rich cultural life. Especially rural families maintain a rich, traditional life based on small family farms, small productions. (7
Whether BRICS (+E ? ) should be counted to The Good, The Bad, or The Ugly Globalist Cartels will ultimately be determined by how “the ton of bricks” that is about to come down on the worlds economies will handle mechanisms to encourage the development of the weakest economies, alleviate poverty, raise social development and more, without destroying the national economies and cultures around it. A rotting plastic bag in a natural habitat does not become a lesser threat because it does not have Coka Cola printed on it, and self-hating western anti-imperialism is naive if it is uncritical toward globalism because is is driven by nations which oppose US/NATO imperialism and hegemony.
Related article: The World Bank: Rejecting “The Rule of Law”
1) China will force peaceful solution to Syrian crisis on West: German pundit. Koursh Ziabai interviews Christof Lehmann.