Institutions and Competition

Bilateral deals could trump BRICS game

December 4, 2016

At the four nation "BRIC" summit in Ykaterinburg in 2009 the group buzzed up an ambitious agenda that moved the Sorosistas and other predatory speculators to take profits by betting against the dollar.


These items included the need for a new reserve currency to countervail the dollar, launching a collective economic security arrangement to mediate global affairs, and calling for the reform of international financial institutions so that they fully respect the institution of social inclusion as an entitlement as it was proffered by the UN Development Program and certain NGOs.


Beijing in 2010 plays "the China card"... South Africa joins "BRICS"

Historically underreported by western media, open sources indicate that China has been a longtime behind the scenes power player in the South African economy, which is considered by most experts and pundits as the "most developed" on the continent.


With South Africa suffering from slow growth, the Chinese renminbi (sometimes referred to as the yuan or "redback") played an important role helping stabilize the economy and mediating populism and the varying levels of anger (as noted by humans, or, algorithms) that often trigger social explosions.


What followed in South Africa press and other global media outlets was escalation of the coverage of corruption and other charges against sitting president Jacob Zuma and members of his inner circle. Generally speaking, such charges tend to destabilize governments, and help foment impeachment movements and other forms of internecine warfare and political fratricide. Zuma is calling in his markers to ensure himself a soft landing when the dust settles.


BRICS bank promoting inclusive lending and sustainability but on limited scale

Still, South Africa has continued to support the creation of an independent BRICS credit rating agency that would analyze and rate the creditworthiness of RMB bonds and other instruments issued in the fiat money of other BRICS clubmembers.


The idea was to offset what BRICS nations see as an ongoing inherent bias among western credit rating agencies.  That  independent BRICS credit rating agency, however, has yet to come to fruition. Recently, India prime minister Narenda Modi's publicity aides told media that the project does not yet have an official timetable.


Even without a BRICS credit rating agency, the New Development Bank has  so far in 2016 sold around three billion RMB denominated (around $450 million) in "green bonds"  that could promote sustainable growth and reduce "carbon footprint". These instruments were sold on the China interbank market and included Chinese purchasers and buyers from other nations.


Another 10 billion yuan in "green bond" deals are in the pipeline. The BRICS Post online zine has noted that the NDB (New Development Bank) has plans to issue "green" instruments in Russia  and India (presumably in Ruble and Rupee local currencies).  These projects appear, however, to be advancing rather cautiously.


Piketty, populism and predatory capitalism

The BRIC group was a clever marketing scheme created by Goldman Sachs. It followed in the tradition of "The Asian Tigers".  It had nothing to do with promoting "western-style democracy" or "kinder, gentler capitalism. And the concept was put in play a decade before Thomas Piketty's theories about the state power using taxation to limit the flow of capital to the few at the at the top of the economic pyramid came into vogue.


Tapped to challenge the major powers who lead the world economic order by 2050, the BRIC or BRICS club doesn't overtly propagate an ideology.  One might ask, however, whether elements of the Pancasila political philosophy developed by Soekarno of Indonesia could enhance the BRICS idological experience.  One might also ask whether Indonesia should be invited to become a member of the organization.


While one can contend that the group is young, it clearly lacks a personality, what the french call panache, or elan.  This does not bode well for the future of a group that has received so much hype from western media.  Coverage often consists of BRICS leaders meeting on "the sidelines" of  some other organization's function. When asked, the "man or woman on the street" in major metropolitan areas of BRICS member nations know next to nothing about the organization or what it does (or doesn't do) for them.


There is no BRICS Thomas Piketty to hold forth on "BRICSonomics."


During a media photo opportunity at the most recent meeting in Goa  in which the BRICS leaders all were supposed to hold hands in a show of solidarity, the current president of Brazil, Michel Temer, standing next to Russian president  Vladimir Putin, did not hold Putin's hand. What kind of message does that image send about the BRICS?


Recently the officialist BRICS Post did an analysis of how Brazil's ongoing crisis is testing president Temer's leadership ability.  


Beyond the BRICS the future is all about megadeals

The Russia-China energy deal at around $60 billion is an example of a bilteral megadeal that overshadows anything the BRICS are likely to implement for decades to come.  So is the big Russia-Turkey nuclear power and natural gas megadeal. The recently announced India-Japan nuclear deal is a megadeal.


The recent oil and gas find in the U.S. state of Texas estimated to be worth around one trillion dollars will generate several megadeals.


BRICS officials and bureaucrats meanwhile, will continue to compete for capacity capital in the crowdfunding environment that is the legacy of outgoing UN secretary general Ban.  Looking for money with the world focused on finding the estimated $30 trillion dollars to fund the non-binding COP 20 "global warming" deal will make life for the various institutions under the growing BRICS bureaucracy complicated.


They could get more complicated if the incoming Trump administration does not look kindly on the BRICS. We might even start seeing tweets about a "BRICSIT."








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