BRICS to end Dollar Rule

BRICS to end Dollar Rule and US Supremacy

Posted: April 15, 2012 in Uncategorized
Tags: Brazil, BRICS, China and South Africa, collapse of western hegemony, end of U.S. Supremacy, India, New Global Financial Order, Russia, U.S. Dollar

3

By Lubov Lyulko

http://extremeprejudiceusa.wordpress.com/2012/04/15/brics-to-end-dollar-rule-and-us-supremacy-2-2/

The “BRICS countries” (Brazil, Russia, India, China and South Africa) in late March held a summit in New Delhi, which can be considered the beginning of a new global financial and political order. In five years this world will be unrecognizable. The Anglo-Saxon model of governance of the world that flourished in the 1990s is losing its way and is being replaced by the Sino-Russian one. Yuan came close to international recognition, and with the adoption of Brazil and India into the UN Security Council the West will lose its political hegemony.

In 2008, the Wall Street’s practice of inflating financial bubbles in alliance with the U.S. Congress led to the collapse of neoliberalism. As Western politicians have not been able to build a coherent model of its resuscitation, the financial crisis is smoothly transforming into the political one. If President Obama advocates for the return of the industry to the country, what kind of subsequent prosperity of the United States are we talking about? The globalized economy has gradually shifted production to China, India and Brazil, where labor is cheaper, and tax and other legislation is much softer. So far there are no obvious reasons as to why Obama will return it to the United States.

This year, the BRICS countries provided 56 percent of world GDP growth, while the share of the richest of seven (G7) is only 9.5. In 2035 the BRICS countries will outrun G7 in terms of the economic potential. The volume of trade within the block grew from $27 billion in 2002 to $250 billion in 2011.

The main interests of the groups include the need to change the present world order, which is based on the global leadership of the U.S. dollar and its leading position as a major world currency. This order was approved by the agreements in Bretton Woods in 1944, at the end of World War II. The U.S. allies in Europe panicked before the inevitable spread of Soviet socialism and were happy to have hidden under the wing of the economically powerful neighbor in the Atlantic.

The economic rationale for cooperation among the BRICS is clear today, but more serious political points of contact are found. Here Russia rules, because it was President Medvedev who most emphatically called for political unity. The unity for the first time was obvious on the Libyan issue.

The countries agreed to abstain on the vote of resolution 1973 of the UN Security Council, and after the military operation were critical of the coalition of NATO. This unity can be described today as “friendship against NATO.” Russia, despite a smaller contribution to the global economy (two to three percent of 18), is considered promising for investments due to the large potential of the consumer market and sustainable autonomous growth.

South Africa (39 per cent of the GDP of all sub-Saharan Africa) joined the block on the invitation to make the alliance global and build a “bridge” to Brazil. In addition, the partners of South Africa in the BRICS gained access to the promising African market, which is particularly important for Brazil and China.

At a recent summit in New Delhi two important statements were made. The first one is geo-financial (about creating a joint Development Bank in future) and the second – geopolitical (condemning the war rhetoric and sanctions of the West against Iran and Syria). It should be noted that the leading U.S. media angrily commented on these statements.
>The Financial Times, for example, published an article stating that the BRICS countries are asking for more power in the IMF.

The paper concludes that if the BRICS are unable to overthrow the American director and replace him with a single candidate, the block will cease to fund the IMF and will focus on the Development Bank mentioned in New Delhi. The American press has stressed that the Development Bank is not to rival the IMF. This is a strange statement, considering that the China Development Bank has a capital of two times greater than the entire capital of the IMF.

The Washington Post noted the BRICS’s opposition to Iran and Syria. The newspaper wrote that the block has made a significant geopolitical move, namely, condemned the military threats against Iran and Syria. In fact, the collective claims were filed against the sanctions of the West that are detrimental to trade with these countries. This means that in case of the negative development of events this position may become more serious.

This was stated by the President of Brazil Dilma Russef, who promised that at the next summit of G20 in July the BRICS will make a joint political statement. Perhaps, the criticism will be heavier at the end of the campaign in the U.S. The BRICS are unwilling to press Obama, who is more acceptable for them than any of the Republican “hawks.”

The Washington Post pointed out that the countries of the block will never find a common platform for a political union. The newspaper quoted a former Indian Ambassador to the U.S. Lalit Mansinha, who assured that all the countries of the Union have issues with China, and said that before challenging the United States they should think hard. He thinks that Beijing and New Delhi have strong border disputes and Russia is increasing its military spending to counter China. There is also rivalry between Brazil and China in Africa and the expansion of the Chinese goods causes discontent of the Brazilians.

However, first, the NATO countries do not always come to a consensus on all issues, and, second, every country has its own internal benefit. The foreign factor that unites the BRICS countries is the desire to push the US dollar from the leading positions, to oust the U.S. from the Middle East, not to decolonize Africa and to deprive it of the economic and hence political influence in developing countries. This is what the Development Bank will engage in. It assumes the creation of lines of credit in national currency and financing of the developing economies.

The work in this direction has been already started, and both China and Russia in recent years reduced their national reserves in US dollars, preferring to invest in other assets. Everything leads to the fact that in five years the Yuan will be a major world currency, and China – the main engine of the global economy.

The mutual trade turnover of the BRICS over the years will reach $500 billion with growth of 28 percent per year. The BRICS will become a major global player in the political arena, all the leaders of the block are convinced. Dmitry Medvedev said after a meeting in New Delhi that “Brazil, Russia, India, China and South Africa must transform their alliance into a full-fledged mechanism for international influence and move from discussion of purely economic issues to developing positions on political issues.”

Medvedev said that the BRICS countries are not satisfied with the fact that the UN is used to cover the actions to offset unwanted modes, and will advocate for the inclusion of its partners as a permanent member of UN Security Council. He was echoed by Prime Minister of India Manmohan Singh, who noted that “the prosperity of the BRICS is associated with the geopolitical situation.” While China is the economic leader, Russia is the political leader of the BRICS. This “axis” is a serious concern for the West, and later through the media it will in every way try to minimize the successes of the BRICS, as it feels threatened.

Traditionally on the sidelines of the world politics, these countries finally got the opportunity to realize their ambitions through the BRICS. For the first time they are talked about as a giant, and not only on the regional scale. With regard to South Africa, after its entry into the union for the first time sub-Saharan Africa ceased to be referred to as “miserable and poor.”

Pravda.Ru