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2 THE ROVING
history of the world, BRIC by
BRIC By Pepe Escobar
Goldman Sachs - via economist Jim O'Neill
- invented the concept of a rising new bloc on the
planet: BRICS (Brazil, Russia, India, China, South
Africa). Some cynics couldn't help calling it the
"Bloody Ridiculous Investment Concept."
Not really. Goldman now expects the BRICS
countries to account for almost 40% of global
gross domestic product (GDP) by 2050, and to
include four of the world's top five economies.
Soon, in fact, that acronym may have to
expand to include Turkey, Indonesia, South Korea
and, yes, nuclear Iran: BRIIICTSS? Despite its
well-known problems as a nation under economic
siege, Iran is also motoring along as part of the
N-11, yet another distilled concept. (It stands
for the next 11 emerging economies.)
multitrillion-dollar global question remains: Is
of BRICS a signal that
we have truly entered a new multipolar world?
Yale's canny historian Paul Kennedy (of
"imperial overstretch" fame) is convinced that we
either are about to cross or have already crossed
a "historical watershed" taking us far beyond the
post-Cold War unipolar world of "the sole
superpower." There are, argues Kennedy, four main
reasons for that: the slow erosion of the US
dollar (formerly 85% of global reserves, now less
than 60%), the "paralysis of the European
project," Asia rising (the end of 500 years of
Western hegemony), and the decrepitude of the
The Group of Eight (G-8)
is already increasingly irrelevant. The G-20,
which includes the BRICS, might, however, prove to
be the real thing. But there's much to be done to
cross that watershed rather than simply be swept
over it willy-nilly: the reform of the UN Security
Council, and above all, the reform of the Bretton
Woods system, especially those two crucial
institutions, the International Monetary Fund
(IMF) and the World Bank.
On the other
hand, willy-nilly may prove the way of the world.
After all, as emerging superstars, the BRICS have
a ton of problems. True, in only the last seven
years Brazil has added 40 million people as
middle-class consumers; by 2016, it will have
invested another $900 billion - more than a third
of its GDP - in energy and infrastructure; and
it's not as exposed as some BRICS members to the
imponderables of world trade, since its exports
are only 11% of GDP, even less than the US.
Still, the key problem remains the same:
lack of good management, not to mention a swamp of
corruption. Brazil's brazen new monied class is
turning out to be no less corrupt than the old,
arrogant, comprador elites that used to run the
In India, the choice seems to be
between manageable and unmanageable chaos. The
corruption of the country's political elite would
make Shiva proud. Abuse of state power, nepotistic
control of contracts related to infrastructure,
the looting of mineral resources, real estate
property scandals - they've got it all, even if
India is not a Hindu Pakistan. Not yet anyway.
Since 1991, "reform" in India has meant
only one thing: unbridled commerce and getting the
state out of the economy. Not surprisingly then,
nothing is being done to reform public
institutions, which are a scandal in themselves.
Efficient public administration? Don't even think
about it. In a nutshell, India is a chaotic
economic dynamo and yet, in some sense, not even
an emerging power, not to speak of a superpower.
Russia, too, is still trying to find the
magic mix, including a competent state policy to
exploit the country's bounteous natural resources,
extraordinary space, and impressive social talent.
It must modernize fast as, apart from Moscow and
St Petersburg, relative social backwardness
prevails. Its leaders remain uneasy about
neighboring China (aware that any Sino-Russian
alliance would leave Russia as a distinctly junior
partner). They are distrustful of Washington,
anxious over the depopulation of their eastern
territories, and worried about the cultural and
religious alienation of their Muslim population.
Then again the Putinator is back as
president with his magic formula for
modernization: a strategic German-Russian
partnership that will benefit the power
elite/business oligarchy, but not necessarily the
majority of Russians.
Dead in the
Woods The post-World War II Bretton Woods
system is now officially dead, totally
illegitimate, but what are the BRICS planning to
do about it?
At their summit in New Delhi
in late March, they pushed for the creation of a
BRICS development bank that could invest in
infrastructure and provide them with back-up
credit for whatever financial crises lie down the
road. The BRICS know perfectly well that
Washington and the European Union (EU) will never
relinquish control of the IMF and the World Bank.
Nonetheless, trade among these countries will
reach an impressive $500 billion by 2015, mostly
in their own currencies.
cohesion, to the extent it exists, centers mostly
around shared frustration with the Masters of the
Universe-style financial speculation that nearly
sent the global economy off a cliff in 2008. True,
the BRICS crew also has a notable convergence of
policy and opinion when it comes to embattled
Iran, an Arab Sprung Middle East, and Northern
Africa. Still, for the moment the key problem they
face is this: they don't have an ideological or
institutional alternative to neo-liberalism and
the lordship of global finance.
Prashad has noted, the Global North has done
everything to prevent any serious discussion of
how to reform the global financial casino (see The
G-77 awakes, Asia Times Online, April 17,
2012) . No wonder the head of the G-77 group of
developing nations (now G-132, in fact), Thai
ambassador Pisnau Chanvitan, has warned of
"behavior that seems to indicate a desire for the
dawn of a new neocolonialism."
things happen anyway, helter-skelter. China, for
instance, continues to informally advance the yuan
as a globalizing, if not global, currency. It's
already trading in yuan with Russia and Australia,
not to mention across Latin America and in the
Middle East. Increasingly, the BRICS are betting
on the yuan as their monetary alternative to a
devalued US dollar.
Japan is using both
yen and yuan in its bilateral trade with its huge
Asian neighbor. The fact is that there's already
an unacknowledged Asian free-trade zone in the
making, with China, Japan, and South Korea on
What's ahead, even if it includes a
BRICS-bright future, will undoubtedly be very
messy. Just about anything is possible (verging on
likely), from another Great Recession in the US to
European stagnation or even the collapse of the
eurozone, to a BRICS-wide slowdown, a tempest in
the currency markets, the collapse of financial
institutions, and a global crash.
about messy, who could forget what Dick Cheney
said, while still Halliburton's CEO, at the
Institute of Petroleum in London in 1999: "The
Middle East, with two-thirds of the world's oil
and the lowest cost, is still where the prize
ultimately lies." No wonder when, as vice
president, he came to power in 2001, his first
order of business was to "liberate" Iraq's oil. Of
course, who doesn't remember how that ended?
Now (different administration but same
line of work), it's an
oil-embargo-cum-economic-war on Iran. The
leadership in Beijing sees Washington's whole Iran
psychodrama as a regime-change plot, pure and
simple, having nothing to do with nuclear weapons.
Then again, the winner so far in the Iran
imbroglio is China. With Iran's banking system in
crisis, and the US embargo playing havoc with that
country's economy, Beijing can essentially dictate
its terms for buying Iranian oil.
Chinese are expanding Iran's fleet of oil tankers,
a deal worth more than US$1 billion, and that
other BRICS giant, India, is now purchasing even
more Iranian oil than China. Yet Washington won't
apply its sanctions to BRICS members because these
days, economically speaking, the US needs them
more than they need the US.
through Chinese eyes Which brings us to the
dragon in the room: China.
ultimate Chinese obsession? Stability, stability,
The usual self-description of
the system there as "socialism with Chinese
characteristics" is, of course, as mythical as a
gorgon. In reality, think hardcore neo-liberalism
with Chinese characteristics led by men who have
every intention of saving global capitalism.
At the moment, China is smack in the
middle of a tectonic, structural shift from an
export/investment model to a services/consumer-led
model. In terms of its explosive economic growth,
the last decades have been almost unimaginable to
most Chinese (and the rest of the world), but
according to the Financial Times, they have also
left the country's richest 1% controlling 40%-60%
of total household wealth. How to find a way to
overcome such staggering collateral damage? How to
make a system with tremendous inbuilt problems
function for 1.3 billion people?
"stability-mania." Back in 2007, Prime Minister
Wen Jiabao was warning that the Chinese economy
could become "unstable, unbalanced, uncoordinated,
and unsustainable." These were the famous "Four
Today, the collective leadership,
including the next Prime Minister, Li Leqiang, has
gone a nervous step further, purging "unstable"
from the Party's lexicon. For all practical
purposes, the next phase in the country's
development is already upon us.
It will be
quite something to watch in the years to come.
How will the nominally "communist"
princelings - the sons and daughters of top
revolutionary Party leaders, all immensely
wealthy, thanks, in part, to their cozy
arrangements with Western corporations, plus the
bribes, the alliances with gangsters, all those
"concessions" to the highest bidder, and the whole
Western-linked crony-capitalist oligarchy - lead
China beyond the "Four Modernizations"? Especially
with all that fabulous wealth to loot.
Obama administration, expressing its own anxiety,
has responded to the clear emergence of China as a
power to be reckoned with via a "strategic pivot"
- from its disastrous wars in the Greater Middle
East to Asia. The Pentagon likes to call this
"rebalancing" (though things are anything but
rebalanced or over for the US in the Middle East).
Before 9/11, the Bush administration had
been focused on China as its future global enemy
number one. Then 9/11 redirected it to what the
Pentagon called "the arc of instability," the oil
heartlands of the planet extending from the Middle
East through Central Asia. Given Washington's
distraction, Beijing calculated that it might
enjoy a window of roughly two decades in which the
pressure would be largely off. In those years, it
could focus on a breakneck version of internal
development, while the US was squandering
mountains of money on its nonsensical "Global War
Twelve years later, that
window is being slammed shut as from India,
Australia, and the Philippines to South Korea and
Japan, the US declares itself back in the hegemony
business in Asia. Doubts that this was the new
American path were dispelled by Secretary of State
Hillary Clinton's November 2011 manifesto in
Foreign Policy magazine, none too subtly labeled
"America's Pacific Century." (And she was talking
about this century, not the last one!)