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Foreign Affairs

BRICS Build A New World Order
By Rakesh Krishnan Simha, May 2011 [[email protected]]

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Hear that giant sucking sound? It is the  swish of wealth transferring from the West to the East.

Something stupendous happened in the  middle of a recession last year. At a time when vast swathes of Europe were  being laid waste by an economic tsunami, world trade grew fastest in the last  50 years. It is not hard to figure where this growth was taking place – not in  Europe or the United States.

The long anticipated South-South show is  now a reality. Trade data show a paradigm shift from the advanced nations,  which will show an import growth of 0.9-1 percent, while the emerging economies  will exhibit import growth of 4.5-5 percent this year. What this means is that  the emerging nations are trading more among themselves while the West is being  edged out of the fastest growing markets.

But behind these statistics hides another  story – the United States, the flagship of the Anglo-American empire, is  listing. And from its shadow is emerging a new world order being drafted by the  BRICS – Brazil, Russia, India, China and the latest member, South Africa.

Since the G-7 has turned into a gabfest,  the BRICS will increasingly set the global economic agenda. This is not a  replay of the Great Game – geopolitical manoeuvres aimed at top dog status –  though you can never discount that possibility entirely. The BRICS have no  empire ambitions, and in fact are a diverse group of multi-ethnic nations with  very little in common. Russia and South Africa are literally and racially poles  apart, and India and China are on opposite ends of the freedom index.

This rainbow coalition is as far removed  from the racially homogenous Anglo-American empire as it could possibly be. But  what brings them together is a common desire to clean up the huge mess created  by the current regime.

Take high oil prices. Western intervention  in Iraq is largely responsible for ballooning oil prices. If oil had prices had  increased organically – like the price of any other industrial commodity, say,  steel, cement or even silicon – the current price would be $35-50 a barrel.  Instead, oil has been hovering in the $100-$150 range the past few years. Western  military invasions have only added fuel to the already heated West Asian region.  This one factor has weakened the global economy, hurting virtually everyone on  the planet.

Again, Western bankers in tandem with  their central bankers have spewed financial toxins into the world’s markets. Instead  of earning reasonable profits by making their capital productive, they are spinning  off imaginary financial instruments – such as derivatives – and creating virtual  wealth. Since this wealth is transient by nature, the gainers are the bankers  because only they know when the collapse is coming. They cash out, leaving  millions out of pocket.

The BRICS have indicated that this  Western way of doing business has to end. Following the recent BRICS summit on  Hainan island in China, Brazilian Finance Minister Guido Mantega told the  International Monetary Fund in Washington that the United States and other  Western countries were attempting to “export their way out of difficult  economic situations” by printing money.

The trillion-dollar illicit book-cooking  revealed at the financial giants of New York and London is trifling when  compared with the US Federal Reserve’s skulduggery. For instance, the Feds are  known to illegally buy their own bonds through banks in the Caribbean. These  banks funnel hundreds of millions of Federal dollars into the bond market, artificially  shoring up interest rates.

For countries like China and Japan,  which buy hundreds of billions of dollars worth of these treasury bonds  annually, even a half percent rise in the interest rate can result in huge  losses. Such illegal operations and monetary debasements to revive America’s  internal economy have failed. Instead they have succeeded in sparking inflation  in the emerging economies.

The BRICS have so far sidestepped the  issue of such market manipulations carried out at the highest level of American  officialdom, but under the current uncertain economic climate they are left  with few options but to do the unthinkable – ditch the American dollar.

Undoubtedly, the dollar is the lynchpin  of American intervention around the globe. The IMF and the World Bank draw developing  countries into their orbit with the promise of dollar loans that will build huge  projects create a thriving private sector and make the ruling elites very wealthy.  This has worked remarkably well and dozens of countries have taken the bait, of  course with disastrous results for the ordinary people.

John Perkins, who was employed by US  agencies to play a leading role in the economic enslavement of several developing  nations, wrote the explosive Confessions of an Economic Hitman. He says, “The  World Bank is not really a world bank at all; it is, rather, a US bank. Ditto  its closest sibling, the IMF.”

Perkins, who walked away from the empire  in disgust, elaborates how the dollar achieved its undeserved dominance and how  the rest of world that trades in dollars pays an indirect tax to the United  States. “During the 1950s and 1960s, credit purchases were made abroad to  finance America's growing consumerism, the Korean and Vietnam Wars, and Lyndon  B. Johnson's Great Society. When foreign businessmen tried to buy goods and  services back from the United States, they found that inflation had reduced the  value of their dollars—in effect, they paid an indirect tax.

Their governments demanded debt  settlements in gold. On August 15, 1971, the Nixon administration refused and  dropped the gold standard altogether. “Washington scrambled to convince the  world to continue accepting the dollar as standard currency. Under the Saudi  Arabian Money-laundering Affair (SAMA), the royal House of Saud committed to  selling oil for only US dollars. Because the Saudis controlled petroleum  markets, the rest of the Organization of Petroleum Exporting Countries was  forced to comply. As long as oil reigned as the supreme resource, the dollar's  domination as the standard world currency was assured — and the indirect tax  would continue.”

Considering that much of global trade  takes place in dollars, the American exchequer benefits hugely from this  indirect tax windfall. Therefore, the demise of the dollar as the international  currency will well and truly end the era of America prosperity. Already around  45 million American are known to be living in utter poverty, with starvation an  everyday reality for many.

The official US jobless rate is 10  percent but according to experts this figure does not include people who have  stopped looking for work and others who are unable to seek work. If these  factors are included, the US unemployment figure is closer to 17 percent – or  51 million Americans without shut out of the job market. How the rest of the  country will cope in the post-dollar era is anybody’s guess. Perhaps a  one-third reduction in American incomes would be the most likely scenario. This  is not a projection – it is as inevitable as tomorrow.

The US Government is aware of this. The  current interventions in Iraq, Afghanistan and Libya and the threat of action  against Iran are desperate attempts to shore up the empire through military  means.

It is notable that France, which openly  distanced itself from the US-led NATO throughout the Cold War, has now thrown  in its lot with the empire. This is partly owing to President Nicolas Sarkozy’s  internal weaknesses and also because France is faced with a similar economic implosion.

What about the other major powers? Many  like Germany and Japan are sitting on the fence. If the euro collapses, Germany  might peel away from Europe and return to the deutsche mark, and ally itself  with the BRICS. Most of Europe, barring the Baltic nations and Poland with  their suicidal hatred for Russia, will follow their leader because Germany has  proved it takes good care of its trading partners. German pragmatism and its  famous Ostopolitik (look east policy) will likely prevail over right wingers  peddling European racial solidarity.

Turkey, once keen on European Union  membership, has been snubbed so long that over 70 percent of the country now  wants nothing to do with the lily-white club. The Turks could also go with the  BRICS.

Under such circumstances, the  Anglo-American empire despite its rock solid camaraderie — which has held true  through two world wars, the Korean War and the Vietnam War and is fighting  shoulder to shoulder in Afghanistan and Iraq — may itself split.

Minor members like Australia and New  Zealand may be forced to make difficult choices – stick with China or go down with  the USA.

Despite the emergence of China as a  major military adversary, India’s massive military build-up and a resurgent  Russia, the Anglo-American empire, with over 400 million consumers, won’t be  fading into the sunset and will remain a key player in world affairs for  several more decades. What will change is that its military adventurism will be  clipped by the BRICS, to the relief of the rest of the world.

There is a reason for that. The  Anglo-American empire has been responsible for the annihilation of native  populations in North America, Australia and Canada. The English were  single-handily responsible for the drain of wealth from India, and the  destruction of the country’s trade, guilds, agriculture, industry, and its  ancient educational system.

In contrast, the Indian Hindu and  Russian Slavic empires greatly benefitted the conquered peoples. These empires  were not essentially exploitative. The scientifically advanced Hindu empires,  for instance, spread their civilization and vibrant religion across Asia,  extending in an arc from the tip of Taiwan to Arabia, leading to a remarkable  renaissance in these formerly intellectually barren regions.

The Russians modernised the Turkic  nations of Central Asia. A Mongolian was able to travel to space because of  Russia. This might appear to be minor quibbling but can you think of any  Pakistanis that travelled to space on an American rocket despite 65 years of military  ties between the two partners in arms? On the contrary, they are being hit by  rockets.

There lies the difference. Russian ties  with Mongolia were not exploitative, but America’s relationship with Pakistan  is based on the usefulness of the South Asian country as a geopolitical  military base.

If the past is any indication, it is likely  that a world ruled by the BRICS will be a more egalitarian place.

From the 16th to the 20th  centuries the West crept ahead of the East primarily through colonialism and  slavery. England, Spain, France, Germany, Belgium, Portugal and the Netherlands  colonised virtually every nation on the planet. It is a measure of the  thoroughness of colonial activity in Asia that only one country, Thailand,  remained untouched by the West.

Slavery gave a huge advantage to the Western  nations. According to economists, free labour reduced input costs by over 20  percent. This margin alone sufficed to beat down the then more advanced  economies of the East. It also freed up European men to explore, think and  innovate.

An aspect of the Anglo-American empire  is that its drivers are a tightly knit circle of wealthy oligarchs, mostly  bankers who are rarely seen in public. Unlike the political classes, they have  no ideological underpinnings. This was proved when they backed the hard core  communists against middle Russia during the Russian civil war in 1917. Again,  they have no qualms about trading with the hardcore reds in China, as long as  the Chinese buy their bonds and produce cheap trinkets for the Western masses.

This oligarchy has also despatched its  young to die in numerous wars around the world. It is worth noting that while  the elites of Russia, India and China have sent their boys to fight in wars, in  the United States the rich sent their children of serving age to Canada or the  Peace Corps to avoid being conscripted into the fighting military.

The wealthy in the Anglo-American world  have a striking disconnect with their masses. In the United States, 5 percent  of the population owns 60 per cent of the national wealth, making it the most  unequal society in the world. Across the Atlantic, approximately 20 percent of  the UK’s population lives in poverty. Worse, Britain remains the most class-bound  society in the world, with a permanent and growing underclass with absolutely  no social or economic mobility.

It is extremely likely the Western  tycoons will try to cushion the impact of their fall by linking up with entrenched  oligarchs in the emerging nations – perhaps by bribing key officials and  leaders or by offering a share in the spoils.

There is already one clear example of  that. In February 2011, Mukesh Ambani of India’s Reliance Industries, announced  a multi-billion oil exploration deal with British Petroleum, which was exposed  by Wikileaks as a prime mover of the Iraq war. The US-educated Ambani said he  was delighted to partner with “one of the finest deep water exploration  companies in the world”.

There are other weaknesses the West  might exploit.

In 1991, the Russians looked on while the  West pummelled their long-time ally Iraq into the Stone Age. Next, it was Slavic  cousin Serbia that NATO bombed for 42 days. And now the legitimate leader of another  Russian client, Libya, is being bombed out of power.

In each instance, Russian inaction is inexplicable.  A possible explanation is that there is a section of power brokers in Moscow  that believes it can buy the West’s goodwill by sacrificing some of Russia’s key  interests.

A similar tribe exists in India  comprising tiny elite that has been brainwashed into believing that in the  Anglosphere lies their salvation. The current Oxbridge educated Prime Minister,  an unelected and accidental elevation to India’s top job thanks to dynastic  politics, is one such example. This gentleman has gone to the extent of blathering  off that British rule was good for India.

Factoring in fifth columns such as  Eurocentric Russians and Anglophile Indians, it would be impossible to write  off the Anglo-American empire totally.

The West is by no means the only game in  town. Growing Islamic imperialism in a crescent stretching from Turkey to  Indonesia will be a huge challenge. The large Muslim minorities in India,  Russia and China are also getting radicalized, spawning terrorist movements.

Building a new world order will be an  epic exercise. In that backdrop, mutual jealousies will appear minor irritants.  India and China, for instance, may sort out their decades-old border dispute in  the larger interest of cohesion.

How the BRICS deal with such issues will  test the fabric of their alliance more than any confrontation with the West.

(About  the author: Rakesh Krishnan Simha is a features writer at New Zealand’s leading  media house. He has previously worked with Business world, India Today and  Hindustan Times, and was news editor with the Financial Express.)

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