Brazil, Russia, India, China and South Africa: BRICS go over the Wall

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By Pepe Escobar

Global Research, March 27, 2013

Asia Times

Reports on the premature death of the BRICS (Brazil, Russia, India, China and South Africa) have been greatly exaggerated. Western corporate media is flooded with such nonsense, perpetrated in this particular case by the head of Morgan Stanley Investment Management.

Reality spells otherwise. The BRICS meet in Durban, South Africa, this Tuesday to, among other steps, create their own credit rating agency, sidelining the dictatorship – or at least “biased agendas”, in New Delhi’s diplomatic take – of the Moody’s/Standard & Poor’s variety. They will also further advance the idea of the BRICS Development Bank, with a seed capital of US$50 billion (only structural details need to be finalized), helping infrastructure and sustainable development projects.

Crucially, the US and the European Union won’t have stakes in this Bank of the South – a concrete alternative, pushed especially by India and Brazil, to the Western-dominated World Bank and the Bretton Woods system.

As former Indian finance minister Jaswant Singh has observed, such a development bank could, for instance, channel Beijing’s know-how to help finance India’s massive infrastructure needs.

The huge political and economic differences among BRICS members are self-evident. But as they evolve as a group, the point is not whether they should be protecting the global economy from the now non-stop crisis of advanced casino capitalism.

The point is that, beyond measures to facilitate mutual trade, their actions are indeed becoming increasingly political – as the BRICS not only deploy their economic clout but also take concrete steps leading towards a multipolar world. Brazil is particularly active in this regard.

Inevitably, the usual Atlanticist, Washington consensus fanatics – myopically – can see nothing else besides the BRICS “demanding more recognition from Western powers”.

Of course there are problems. Brazil, China and India’s growth slowed down. As China, for instance, became Brazil’s top trading partner – ahead of the US – whole sectors of Brazilian industry have suffered from the competition of cheap Chinese manufacturing.

But some long-term prospects are inevitable. BRICS will eventually become more forceful at the International Monetary Fund. Crucially, BRICS will be trading in their own currencies, including a globally convertible yuan, further away from the US dollar and the petrodollar.

That Chinese slowdown

It was Goldman Sachs’ Jim O’Neill who coined the term BRIC (no South Africa then) in 2001. It’s enlightening to check what he thinks about it now.

O’Neill points out that China, even growing by a “mere” 7.7% in 2012, “created the equivalent of another Greek economy every 11-and-a-half weeks”. China’s slowdown was “structural and cyclical” – a “planned downturn” to control overheating and inflation.

The BRICS push is part of an irresistible global trend. Most of it is decoded here, in a new United Nations Development Programme report. The bottom line; the North is being overtaken in the economic race by the global South at a dizzying speed.

According to the report, “for the first time in 150 years, the combined output of the developing world’s three leading economies – Brazil, China and India – is about equal to the combined GDP of the long-standing industrial powers of the North”.

The obvious conclusion is that, “the rise of the South is radically reshaping the world of the 21st century, with developing nations driving economic growth, lifting hundreds of millions of people from poverty, and propelling billions more into a new global middle class.”

And bang in the middle of this process, we find an Eurasian epic; the development of the Russia-China strategic relationship.

It’s always about Pipelineistan

Russian President Vladimir Putin is taking no prisoners; he wants to steer the BRICS towards “a full-scale strategic cooperation mechanism that will allow us to look for solutions to key issues of global politics together”.

This will imply a common BRICS foreign policy – and not only selective coordination on some themes. It will take time. It will be hard. Putin is very much aware of it.

What makes it even more fascinating is that Putin advanced his ideas during last week’s three-day visit to Moscow by new Chinese President Xi Jinping. He went out of his way to stress Russian-Chinese relations now are “the best in their centuries-long history”.

That’s not exactly what hegemonic Atlanticists want to hear – still eager to frame the relationship in Cold War terms.

Xi retributed in style; “We did not come to see you for nothing” – as is partially detailed here. And wait till China’s creative drive starts yielding dividends.

Inevitably, Pipelineistan is at the heart of the ultimate BRICS complementary relationship.

China’s need of Russia’s oil and gas is a matter of national security. Russia wants to sell more and more of it, diversifying away from the West; moreover, Russia would more than welcome Chinese investment in its Far East – the immense Trans-Baikal region.

And by the way, the “yellow peril” is not taking over Siberia – as the West would have it. There are only 300,000 Chinese living in Russia.

A direct consequence of the Putin-Xi summit is that from now on Beijing will pay in advance for Russian oil – in exchange for a share in a number of projects, for instance as in CNPC and Rosneft jointly exploring offshore blocks in the Barents Sea and other blocks onshore Russia.

Gazprom, for its part, clinched a long awaited gas deal with CNPC; 38 billion cubic meters a year delivered by the ESPO pipeline from Siberia starting in 2018. And by the end of 2013, a new Chinese contract with Gazprom will be finalized, involving gas supply for the next 30 years.

The geopolitical ramifications are immense; importing more gas from Russia helps Beijing to gradually escape its Malacca and Hormuz dilemma – not to mention industrialize the immense, highly populated and heavily dependent on agriculture interior provinces left behind in the economic boom.

That’s how Russian gas fits into the Chinese Communist Party’s master plan; configuring the internal provinces as a supply base for the increasingly wealthy, urban, based in the east coast, 400 million-strong Chinese middle class.

When Putin stressed that he does not see the BRICS as a “geopolitical competitor” to the West, it was the clincher; the official denial that confirms it’s true. Durban may be solidifying just the beginning of such a competition. It goes without saying that Western elites – even mired in stagnation and bankruptcy – won’t let any of their privileges go without a fierce fight.

Pepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007) and Red Zone Blues: a snapshot of Baghdad during the surge. His new book, just out, is Obama does Globalistan (Nimble Books, 2009).

Brazil, Russia, India, China and South Africa: BRICS go over the Wall | Global Research

 

[Speeder 2]

Pepe Who? Here is a more in-depth view :




BRICS in the Great Wall

Sergey Strokan (a journalist, essayist and a poet)




The Durban summit marks the point when BRICS becomes a real, rather than a paper tiger, and a defining moment for the relations between the bloc’s member states, as each of the five countries pursues its own national agenda.

Probably, the most thought-provoking question is why BRICS is of so much interest to China, which traditionally abstained from making unions or joining alliances that could have limited its activities in the world arena. It seems that Beijing’s commitment to BRICS can be seen through the prism of US-Chinese global rivalry. From the Chinese perspective, the main role BRICS has yet to play is to help China force out the US dollar as the main and single world currency and challenge American dominance in the existing world economic order.


Paradoxically enough, the “Chinese economic miracle” was largely created by the Americans themselves with the help of the US dollar. At the time of the cold war, after a long period of trade and economic blockade against “Red China” the two countries established diplomatic relations in 1972 and resumed bilateral trade. Four years after that the “dollarization” of China became a real possibility.


At one point, the Chinese appeared to be so articulate in playing the game by American rules that they started outdoing the Americans. Relatively inexpensive Chinese goods of fair quality flooded shops from the East to the West coast. The U.S. trade deficit with China in 2011 exceeded $300 billion, with the trade turnover hovering slightly over $500 billion.


Beijing also bought heavily into US debt, holding bonds worth some $1.2 trillion, which is unlikely to ever be exchanged for real money or goods. Nevertheless, the U.S. authorities are working hard to reverse the Chinese trade offensive, mainly by demanding that Beijing raise the exchange rate of its currency, the yuan, to the US dollar, thus encouraging American exports and making Chinese goods less competitive.


China has raised the value of its currency slowly. But Washington has demanded that Beijing take “a big leap” and raise the yuan by 20-50%. The Chinese leadership will not do that of course.


Being unable to force Beijing to change the rules of trade, the United States resorted to “heavy weapons”. In response to China’s stubbornness, America came up with the Pivot to Asia strategy proclaimed by US Secretary of State Hillary Clinton in November 2011.The strategy calls for greater concentration in the Asia Pacific Region and containment of China. As part of the Pivot to Asia, the United States is creating an increasingly tangible threat along the routes used for trade and transportation of raw materials from Africa and the Middle East to China.


In August of last year, Hillary Clinton toured Africa, during which she criticised growing trade between China and African countries ($166 billion in 2011) and proposed to offer Africans loans and military assistance as an alternative. In addition to that, growing Western pressure on Iran has already resulted in reduced supplies of oil so badly needed by China. The notable warming of relations between the United States and India in recent years is largely attributed to Washington’s desire to sour the rapidly growing Indian-Chinese commercial ties ($70 billion in 2011) and New Delhi’s political contacts with Moscow and Beijing within BRICS.


Under such circumstance Beijing understands that while full-fledged war with America is practically impossible, a new type of confrontation is almost inevitable. The future strategic competition between China and America can be defined as a “cloud war” as its form can change and its boundaries are hard to determine.


Chinese analysts believe that world finances are one of the forms of a limitless “cloud war”. On the one hand, the dominance of the US dollar gives tremendous advantages to the United States and allows Washington to meet the cost of global dominance with the help of military and economic levers and support the “American way of life”. On the other hand, the US dollar is passing through hard times. One bad vote in US Congress would be enough to cause a collapse of the US currency that serves as the foundation for the global financial system.


However, a blow may come from the outside. If the world’s leading emerging economies abandon the dollar this could undermine Pax Americana. Chinese strategists are mulling over the use of such “cloud weapons” if America resorts to military and economic measures as part of the Pivot to Asia.


The Chinese also think it would be too dangerous for them to stand up to the United States alone. Beijing believes risks can be shared by engaging other rapidly growing economies, which are wary of the United States, in the global anti-dollar drive. These are China’s BRICS partners: Russia, India, Brazil, and South Africa. The great distances between them are not a hindrance to joint action on the world financial front.


Spelling out its new concept of “peaceful rise”, which will make China a truly independent global centre of development, Beijing regards its BRICS partners as reliable allies in the struggle against the dominance of the US dollar as this serves the interests of all its members.

This is how BRICS will provide the bricks for the China’s new Great Wall.


BRICS in the Great Wall ? RT Op-Edge

 

[Arya Desa]

I absolutely refuse to have an alliance with the brazilians. In sheer scope and ability they are underwhelming. I can understand Russia and China, they are powerful and capable people. But brazilians? That defeats the legitimacy of this organization: an Asian power bloc to counteract Pax Americana.