Pepe Escobar, born in Brazil, is the roving correspondent for Hong Kong/Thailand-based Asia Times and analyst for Toronto/Washington-based The Real News. He has extensively covered Pakistan, Afghanistan, Central Asia, China, Iran, Iraq and the wider Middle East. He travels extensively. He lives between Sao Paulo, Paris and Bangkok. Since the mid-1980s he has lived and worked as a foreign correspondent in London, Paris, Milan, Los Angeles and Singapore/Bangkok. He was contributing editor to The Empire and the Crescent (Amal Books, Bristol); Tutto in Vendita (Nuovi Mondi Media, Italy); and Shia Power: Next Target Iran? (Vallentine Mitchell, London) and is associated with the Paris-based European Academy of Geopolitics.

Pepe Escobar is a published author. His latest book is Empire of Chaos. His other books include Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007), Red Zone Blues: a snapshot of Baghdad during the surge (Nimble Books, 2007), and Obama does Globalistan (Nimble Books, 2009).


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BRICS against Washington consensus

These are heady days in South America in more ways than one.

This Russia-China commercial/diplomatic offensive fits the concerted push towards a multipolar world – side by side with political/economic South American leaders.

by Pepe Escobar

Asia Times

The headline news is that this Tuesday in Fortaleza, northeast Brazil, the BRICS group of emerging powers (Brazil, Russia, India, China, South Africa) fights the (Neoliberal) World (Dis)Order via a new development bank and a reserve fund set up to offset financial crises.

The devil, of course, is in the details of how they’ll do it.

Russia's President Vladimir Putin (L) shakes hands with China's President Xi Jinping as India's Prime Minister Narendra Modi (R) looks on during the VI BRICS Summit in Fortaleza July 15, 2014. REUTERS/Paulo Whitaker

Russia’s President Vladimir Putin (L) shakes hands with China’s President Xi Jinping as India’s Prime Minister Narendra Modi (R) looks on during the VI BRICS Summit in Fortaleza July 15, 2014. REUTERS/Paulo Whitaker

It’s been a long and winding road since Yekaterinburg in 2009, at their first summit, up to the BRICS’s long-awaited counterpunch against the Bretton Woods consensus – the IMF and the World Bank – as well as the Japan-dominated (but largely responding to US priorities) Asian Development Bank (ADB).

The BRICS Development Bank – with an initial US$50 billion in capital – will be not only BRICS-oriented, but invest in infrastructure projects and sustainable development on a global scale. The model is the Brazilian BNDES, which supports Brazilian companies investing across Latin America. In a few years, it will reach a financing capacity of up to $350 billion. With extra funding especially from Beijing and Moscow, the new institution could leave the World Bank in the dust. Compare access to real capital savings to US government’s printed green paper with no collateral.

And then there’s the agreement establishing a $100 billion pool of reserve currencies – the Contingent Reserve Arrangement (CRA), described by Russian Finance Minister Anton Siluanov as “a kind of mini-IMF”. That’s a non-Washington consensus mechanism to counterpunch capital flight. For the pool, China will contribute with $41 billion, Brazil, India and Russia with $18 billion each, and South Africa with $5 billion.

The development bank should be headquartered in Shanghai – although Mumbai has forcefully tried to make its case (for an Indian take on the BRICS strategy, see here )

Way beyond economy and finance, this is essentially about geopolitics – as in emerging powers offering an alternative to the failed Washington consensus. Or, as consensus apologists say, the BRICS may be able to “alleviate challenges” they face from the “international financial system”. The strategy also happens to be one of the key nodes of the progressively solidified China-Russia alliance, recently featured via the gas “deal of the century” and at the St. Petersburg economic forum.

Let’s play geopolitical ball

Just as Brazil managed, against plenty of odds, to stage an unforgettable World Cup – the melting of the national team notwithstanding – Vladimir Putin and Xi Xinping now come to the neighborhood to play top class geopolitical ball.

President Vladimir Putin (left) talks to Elvira Nabiullina, a former economy minister, who now leads Russia's central bank.

President Vladimir Putin (left) talks to Elvira Nabiullina, a former economy minister, who now leads Russia’s central bank.

The Kremlin views the bilateral relation with Brasilia as highly strategic. Putin not only watched the World Cup final in Rio; apart from Brazilian President Dilma Rousseff, he also met German chancellor Angela Merkel (they discussed Ukraine in detail). Yet arguably the key member of Putin’s traveling party is Elvira Nabiulin, president of Russia’s Central Bank; she is pressing in South America the concept that all negotiations with the BRICS should bypass the US dollar.

Putin’s extremely powerful, symbolic meeting with Fidel Castro in Havana, as well as writing off $36 billion in Cuban debt could not have had a more meaningful impact all across Latin America. Compare it with the perennial embargo imposed by a vengeful Empire of Chaos.

Cuba’s former leader Fidel Castro, center, meets with Russia’s President Vladimir Putin, right, in Cuba on Friday. Putin began a Latin American tour to boost trade in the region. July 12, 2014.

Cuba’s former leader Fidel Castro, center, meets with Russia’s President Vladimir Putin, right, in Cuba on Friday. Putin began a Latin American tour to boost trade in the region. July 12, 2014.

In South America, Putin is meeting not only with Uruguay’s President Pepe Mujica – discussing, among other items, the construction of a deepwater port – but also with Venezuela’s Nicolas Maduro and Bolivia’s Evo Morales.

Xi Jinping is also on tour, visiting, apart from Brazil, Argentina, Cuba and Venezuela. What Beijing is saying (and doing) complements Moscow; Latin America is viewed as highly strategic. That should translate into more Chinese investment and increased South-South integration.

This Russia-China commercial/diplomatic offensive fits the concerted push towards a multipolar world – side by side with political/economic South American leaders. Argentina is a sterling example. While Buenos Aires, already mired in recession, fights American vulture funds – the epitome of financial speculation – in New York courthouses, Putin and Xi come offering investment in everything from railways to the energy industry.

Russia’s energy industry of course needs investment and technology from private Western multinationals, just as Made in China developed out of Western investment profiting from a cheap workforce. What the BRICS are trying to present to the Global South now is a choice; on one side, financial speculation, vulture funds and the hegemony of the Masters of the Universe; on the other side, productive capitalism – an alternative strategy of capitalist development compared to the Triad (US, EU, Japan).

Still, it will be a long way for the BRICS to project a productive model independent of the casino capitalism speculation “model”, by the way still recovering from the massive 2007/2008 crisis (the financial bubble has not burst for good.)

One might view the BRICS’s strategy as a sort of running, constructive critique of capitalism; how to purge the system from perennially financing the US fiscal deficit as well as a global militarization syndrome – related to the Orwellian/Panopticon complex – subordinated to Washington. As Argentine economist Julio Gambina put it, the key question is not being emergent, but independent.

In this piece, La Stampa’s Claudio Gallo introduces what could be the defining issue of the times: how neoliberalism – ruling directly or indirectly most of the world – is producing a disastrous anthropological mutation that is plunging us all into global totalitarianism (while everyone swears by their “freedoms”).

It’s always instructive to come back to Argentina. Argentina is imprisoned by a chronic foreign debt crisis essentially unleashed by the IMF over 40 years ago – and now perpetuated by vulture funds. The BRICS bank and the reserve pool as an alternative to the IMF and World Bank offer the possibility for dozens of other nations to escape the Argentine plight. Not to mention the possibility that other emerging nations such as Indonesia, Malaysia, Iran and Turkey may soon contribute to both institutions.

Pepe Escobar G8
No wonder the hegemonic Masters of the Universe gang is uneasy in their leather chairs.

This Financial Times piece neatly summarizes the view from the City of London – a notorious casino capitalism paradise.

These are heady days in South America in more ways than one. Atlanticist hegemony will remain part of the picture, of course, but it’s the BRICS’s strategy that is pointing the way further on down the road. And still the multipolar wheel keeps rolling along.

Pepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007), Red Zone Blues: a snapshot of Baghdad during the surge (Nimble Books, 2007), and Obama does Globalistan (Nimble Books, 2009).  He may be reached at [email protected]

Copyright 2014 Asia Times Online (Holdings) Ltd. All rights reserved.

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Posted by on July 16, 2014, With 0 Reads, Filed under Africa, Americas, Australia & Oceana, China & Asia, Europe, Middle East, Trade & Economics, World Affairs. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

2 Responses to "BRICS against Washington consensus"

  1. rexw  July 18, 2014 at 8:08 pm

    Yes, great article indeed. The emphasis being given to BRICS and hopefully BRICS +++++ , if acted upon, could be the salvation of the world. The way it is going at the moment with flagrant examples of US terrorisim, Israeli murder and mayhem and all the sycophants of American / Israeli / Saudi criminality, governments from almost every country, means that the US empire will come to a close ONLY after many more examples from the “home of the free” of US style terrorism. While the US people tolerate being screwed by the Jews, it will continue.

    Get a newspaper going Am,erica, one that is honest and not Jewish owned.

    Imagine if it was proposed that Jews in the US could be charged with un-American activities, prosecuted to the letter of the law, a future law, that is. It would be a different country overnight because every Zionist masquerading as a patriotic American would have the option of leaving the US, hopefully for the Arctic, or going to prison.

    America as it was, once again. Right now it is little Israel. “We own America” said Netanyahu. How right he was and still is.

    Go BRICS. You have my vote.

  2. Debbie Menon  July 17, 2014 at 6:00 pm

    Great article by Pepe. A real boost for a better world portended by BRICS summit and the tour of LATAM by Putin and Jinping. Thank God, there are such principled and positive leaders at this time when the region is going through a major economic and political turmoil instigated by US/Israel and NATO.

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