Friday, April 16, 2010

The BRIC post-Washington consensus

The BRIC post-Washington consensus .....

By Pepe Escobar

The BRIC countries (Brazil, Russia, India and China) got together in the Brazilian capital, Brasilia, on Thursday with a bang. After meeting Chinese President Hu Jintao, and once again condemning an "asymmetric, dysfunctional globalization", Brazilian President Luiz Inacio Lula da Silva was at his ebullient best: "A new global economic geography has been born." Well, not quite. Not yet.

Anyone across the world fed up with Somali pirates in Zegna suits disrupting global trade is interested in what the BRICs are (potentially) up to. The world's largest developing countries, bound to be the engine of the global economy for the next four decades, are essentially up to what then Russian president Vladimir Putin
outlined in his famous speech in Munich in 2007; forming a new global consensus. Call it the rise of the periphery (the "Second" and "Third" worlds). Call it the dawn of the post-Washington consensus.

It's nothing short of ironic that major players in the current global financial architecture are being forced to acknowledge that the global "economic and political tectonic plates are shifting". No, that was not Lula, but the George W Bush-appointed head of the World Bank, Robert Zoellick. Zoellick even felt compelled to deliver the coup de grace to the patronizing concept of "Third World".

Is the World Bank finally waking up to the real world(s)? The BRICs met in Brazil roughly one week before the World Bank and International Monetary Fund annual love fest in Washington. The old order may resent it, but the BRIC voice is and will continue to be ever more insistent. No wonder; they are shelling more funds to the IMF, thus they should have more say on where the money is going. They want an antithesis of Wall Street: transparency. The 2008 financial crisis - which by no means is over - was unleashed by a Wall Street-biased financial casino.

Strategic and transparent
The BRICs officially met for the first time in Yekaterinburg, Russia, in June 2009. At the time they delved deep into discussing the global financial crisis and advanced the possibility of dumping the US dollar as the world's reserve currency.

Now their common strategy is much more subtle. The leaders in these four countries know it's still too early to think about a common currency; first they need a potent unifying ideal. The inevitable outcome will be a common market, and then a common currency. The euro took 50 years to be born.

So no wonder, at the moment, as China's Foreign Ministry would put it, the mood is still kind of mellow, with plenty of rhetoric about "South-South cooperation", "strategic partnerships", "common development" and "common understanding". But the call for "more transparency" is very substantial; it will be hammered over and over again at the Americans and Europeans during the next Group of 20 (G-20) meeting in Canada in June.

Unlike the US, the BRICs' health is sound; no lingering financial crisis, decent growth rates. All of these countries are regional leaders. Unlike the US - and the rest of the world has noticed it - they have all preserved a very privileged role for public investment in their development model.

The BRICs may represent 42% of the world's population, roughly 15% of the world's gross domestic product, and almost 30% of world trade. But they're not even constituted as a commercial bloc such as the European Union or Mercosur trade blocs. At least not yet.

So the road will be long. BRICs are starting by getting their commercial act together - like setting up closer cooperation between development banks in Brazil, India and China for an array of partnership projects.

In Brasilia, experts for example discussed the Brazil-Argentina experience of trading in local currencies, the real and the peso - and not in US dollars. The next stage, as Russian President Dmitry Medvedev has enthusiastically pointed out, includes multiple cooperation deals on agricultural technology, nuclear energy, aircraft engineering, space exploration and nanotechnology.

The new world order
BRIC is rife in internal contradictions. China and India are on a collision course in terms of Asian preeminence. China is not exactly fond of India trying to get a seat at the UN Security Council. China and India fiercely compete to get as much oil and gas from Central Asia as possible. Russia is acutely aware of Chinese expansion in Siberia. India is not exactly fond of Brazil - one of the world's top food exporters - wanting to slash tariffs on agricultural products. Brazilian Finance Minister Guido Mantega sounds like a US Treasury official when he calls for the yuan to be revalued; cheap imports are killing Brazilian manufacturers as much as it killed America's.

But these internal contradictions pale compared to the BRICs' common agenda of being very careful not to antagonize Washington. As much as they know that the new multipolar world cannot have a center - which at the moment is in a Washington that, with the exception of military hegemony, is largely impotent - China, for instance, has built an economy battling with Japan to become the world's second-largest economy by profiting from the current US-centered system.

The BRICs may complement each other in many aspects (Brazil and China are the best example; China has toppled the US as Brazil's largest trading partner). But a key problem is that they cannot speak for the rest of the developing and undeveloped world - as much as China will keep successfully exporting its "model" of soft power, belief in multi-polarity, non-political interference, integrated development and technology transfer.

The world anyway will never become "flat" - this is a silly neo-liberal, simplistic fantasy. A new global political consensus would have to be formulated by the United Nations - but not a UN dominated by the US; ideally this should be under a reformed UN, with an expanded and fully representative UN Security Council. One thing is certain; entrenched elites in both the US and Europe (which for all practical purposes is now a midget in the global arena) will fight the dilution of their power tooth and nail.

BRICs anyway will keep insisting on remaking the global financial architecture - and that starts with profound reforms at the Bretton Woods institutions. They will be increasingly more powerful inside the G-20 - and that has already reduced the Group of Eight to irrelevancy. It's very enlightening to see how they have evolved their common position on burning issues such as the Iranian nuclear dossier: once again they have stressed in Brasilia they want dialogue, not confrontation, sanctions and threats.

So the BRIC name of the game may be evolution - not revolution. But the game itself is clear; full speed ahead towards the post-Washington consensus.

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).

Last week’s BRIC countries summit in Brasilia witnessed the
beginning of what will surely become a trend over the next few
decades: BRIC coordination against the United States on important
issues in international society.

From the invention of the ‘BRIC’ acronym by Goldman Sachs up until
now, BRIC countries have tended to focus on the economic realm and
avoided seeking to transplant the bloc’s economic clout into the
political arena. The growing influence of BRIC countries and the lack
of any institutional alternative for coordination preclude that this
will not be the case forever.

At Brasilia, the leaders of the BRIC countries laid the groundwork for
future forays into international politics.

According to reports, the prospect of Iran sanctions figured
prominently in summit discussions, though it didn’t make it into the
final communiqué. During the summit, a senior Indian official was
quoted as saying, “All of us agreed that we don’t think sanctions
will help solve the current problems with Iran.” That the BRIC
countries would come down against Iran sanctions is no surprise, for
all of them have a stake in protecting the Iranian energy sector.
China and India need an unencumbered Iranian energy sector for their
own imports, while Russia and Brazil are motivated by other political
considerations. What is surprising however is that the BRIC forum
carries enough sway to dislodge India from concert with American
interests; accord that has been taken for granted in post-nuclear
compromise US-Indian relations. As American decline continues to erode
Washington’s once-unrivaled international influence, the appeal of
the BRIC forum for voicing opposition will only increase.

Though it’s easy to discount this kind of language as pompous
ceremony, the BRIC countries call for a, “multipolar, equitable, and
democratic world order” is also significant enough to warrant
analysis. It is a manifestation of the BRIC countries’ desire to
reform certain elements of the current international order. Broadly
speaking, this would entail an overhaul the United Nations and the
International Monetary Fund (IMF) to make them more representative of
the developing world and consequently less dominated by American

Interpret this statement as a warning shot for future BRIC efforts to
usurp the US dollar as global reserve currency under the auspices of
the IMF. Another goal is an overhaul of the United Nations Security
Council, though it is one that carries a divide within the bloc, for
veto-welding members of the BRIC countries are hesitant to see their
power diluted.

The ‘democratic world order’ spoken of in the BRIC countries
communiqué does not refer to internal democracy, but rather is lip
service paid to China’s conception of international society. In
Beijing’s view, international society should hold state sovereignty
as sacrosanct and international institutions should simply enable
state cooperation while respecting sovereignty. This view precludes
any international criticism of human rights or outside support of
self- determination, or ‘splittist’, movements. If, in the future,
BRIC countries codify their cooperation in the form of a charter, this
conception of international relations will likely be adopted as a
means to delegitimize the possibility of any new ‘humanitarian
interventions’ by NATO....

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