THE ROVING EYE: BRICS against Washington consensus

By Pepe Escobar
ATimes.com

July 15, 2014

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.

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.

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.

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.

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.

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 pepeasia@yahoo.com.

ADB grants $300 million to aid Sri Lanka's push to cut fuel oil use, boost renewables

ColomboPage News Desk, Sri Lanka.

July 15, Manila: The Asian Development Bank (ADB) today announced that it has approved a $300 million dual-tranche loan to help Sri Lanka scale up its use of clean energy and cut its reliance on costly petroleum oil for electricity generation.

The loan will help Sri Lanka expand the use of renewable energy for power generation and have major benefits both for poor communities and the broader economy.

"The country's heavy dependence on expensive imported petroleum oil hurts the economy, undermines energy security, and harms the environment," said ADB Principal Energy Specialist Mukhtor Khamudkhanov.

The first $150 million tranche will finance a 30-megawatt (MW), run-of-the-river hydropower plant at Moragolla in Central Province and expand and upgrade transmission lines and other infrastructure in needy areas, including the former conflict-affected Northern and Eastern Provinces. The hydropower plant will generate an additional 97.7 million units of hydropower for the grid, saving about 72,300 tons of carbon dioxide (CO2) emissions every year while improved transmission lines will further reduce annual CO2 emissions by 98,400 tons.

Environmental and social safeguards will be incorporated into the design of the program to minimize impacts, and a mechanism will be developed to guarantee downstream river flows so that sensitive fisheries, including the endangered Green Labeo, will not be adversely affected by the hydropower plant.

The second tranche, expected to be delivered in 2016, will include expanding the 33 kilovolt medium voltage network to improve distribution of electricity to consumers and the development of transmission network facilities to allow power delivery from two 100 MW wind parks due to be built in the Northern Province in 2017 and 2020.

Assistance will also be given for demand-side energy efficiency improvements including the use of smart grid and metering technologies, the retrofitting of buildings with energy saving features, and the installation of cold thermal storage in selected buildings.

The improved transmission system is expected to boost access to reliable power for about 300,000 customers in rural areas and small towns who currently suffer from low quality supplies. The program also supports Sri Lanka's wider energy investment road map, including its plan to increase the share of grid power generated from nonconventional renewable energy sources, such as mini-hydropower, wind power, and solar power, to 20% of the total by 2020.

In addition to ADB funds, there will be co-financing of up to $60 million from France's Agence Française de Développement, and counterpart funds of $80 million from the Government of Sri Lanka, for a total program cost of $440 million. The program is expected to be completed by late 2020.

BRICS create development bank, 'mini-IMF'

By Laurent Thomet
July 16, 2014

The BRICS group of emerging powers on Tuesday created a Shanghai-based development bank and a reserve fund as alternatives to Western-led institutions.

The leaders of Brazil, Russia, India, China and South Africa agreed to launch the institutions to finance infrastructure projects and head off future economic crises.

"We took the historic decision to create the BRICS bank and the reserve agreement -- an important contribution to reconfigure the system of international economic governance," Brazilian President Dilma Rousseff said at a summit in the northeastern seaside city of Fortaleza.

Russian President Vladimir Putin hailed the agreements as "a very powerful way to prevent new economic difficulties."

The five emerging nations first unveiled their plans last year. The New Development Bank aims to rival the Washington-based World Bank while the reserve is seen as a "mini-IMF."

"We need to work to improve economic governance at a global level, increase the representations and voice of developing countries," said Chinese President Xi Jinping.

Rousseff renewed calls for reform at the International Monetary Fund saying it "urgently needs to review its distribution of voting power in order to reflect the unquestionable weight of emerging countries."

- Shanghai headquarters -

The development bank will have initial capital of $50 billion that could rise to $100 billion, funded equally by each nation.

BRICS leaders agreed to put the bank's headquarters in Shanghai. The first president will be Indian while the first board chair will hail from Brazil.

An Africa Regional Center will be based in South Africa, whose President Jacob Zuma failed to convince his peers to place the bank's headquarters in Johannesburg.

The bank will help emerging and developing nations mobilize resources for infrastructure and sustainable development projects, the summit declaration said.

The Contingent Reserve Arrangement will have $100 billion at its disposal to head off potential economic volatility linked to the United States exiting its stimulus policy.

China is expected to make the biggest contribution, $41 billion, followed by $18 billion each from Brazil, India and Russia and $5 billion from South Africa.

The summit comes as the economies of some BRICS countries, which together represent 40 percent of the world population and a fifth of the global economy, are cooling down, with Russia and Brazil expecting just one percent growth this year.

Experts say the new bank and fund will give the group the backbone of a formal organization.

- Marathon summits -

The talks in Fortaleza will open a series of marathon summits and bilateral meetings in Brazil, with BRICS leaders meeting with South American presidents in Brasilia on Wednesday.

The Fortaleza summit allowed Xi and India's new Hindu nationalist Prime Minister Narendra Modi to meet face-to-face for the first time.

Modi said the BRICS must act as a "united and clear voice for a peaceful, balanced and stable world."

For Putin, who visited Argentina and Cuba before coming to Brazil, the trip has given him a chance to hammer home his calls for a "multipolar" world amid tensions with the West over the Ukraine crisis.

Russia has been kicked out of the G8 group of industrialized nations over the Ukraine crisis.

The United States is threatening to impose new economic sanctions on Russia over accusations that it is backing pro-Moscow separatist rebels in eastern Ukraine.

The BRICS summit declaration voiced "deep concern" over the situation in Ukraine and called for "comprehensive dialogue, the de-escalation of the conflict and restraint from all the actors involved, with a view to finding a peaceful political solution."

Rousseff said BRICS leaders "lament the lack of concrete progress" in Ukraine and other world hotspots, including Iraq, Syria and the Israeli-Palestinian conflict.

After Wednesday's BRICS-South America summit, Xi will launch the China-Latin America forum on Thursday, highlighting Beijing's growing interests in a region that long was seen as the back yard of the United States.

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 BRICS leaders create development bank

July 16, 2014

The leaders of the group of five BRICS (Brazil, Russia, India, China and South Africa) emerging market countries signed on Tuesday a deal to create a new development bank and an emergency reserve fund, Brazil's President Dilma Rousseff announced at a summit of the group here.

"The agreement towards setting up the BRICS New Development Bank is a significant step. I am happy the initiative announced in 2012 in Delhi has become a reality," Prime Minister Narendra Modi said.

The new bank will be headquartered in Shanghai, China. The first president of the bank will be from India while the first chair of the board of governors will be from Russia.

Sources said India's demand for an equal share in the bank has also been accepted.

The deal was reached after intense last-minute negotiations to settle a dispute between India and China over the headquarters of the new bank, which will have initial capital of $100 billion to invest in infrastructure projects.

The impasse reflected the difficulties that BRICS nations face in working together to build an alternative to Western-run multilateral institutions that have shaped world finances since the end of World War-II.

Failure to agree on the headquarters would have been an embarrassment for the BRICS, a group better known for its anti-Western rhetoric than agreement on concrete actions to reshape the world's financial architecture.

An official, who declined to be named, said leaders changed their positions late on Tuesday night and agreed to sign the deal.

The Curtain Must Fall on Anti-National NGOs

By Ananda-USA

July 14, 2014

Indeed the curtain must fall on the antics of these errant NGOs, prancing about as Law Unto Themselves, subject to no law, and behaving more as anti-government organizations (AGOs) than they are non-government organizations (NGOs).

There are those, especially US Diplomats, who even as they foment discord and civil disobedience in the country, spout various homilies to Sri Lanka on the need to preserve the right to “free expression” and “freedom of action” as if the players are always dutiful and not puppets manipulated from abroad, and referees are never needed to regulate the NGO game.

If that were true, why then does the US not blindly trust its own citizen investors to play by the rules even in financial markets? Why does the US have a Securities and Exchange Commission (SEC), the Treasury, and various permanent Congressional Senate and House Committees to exercise oversight, and regulate the financial and monetary markets?

We Sri Lankans also know very well how rich and powerful nations knowingly undermine, destabilize and overturn governments of other countries using “human rights” and “democrazy” as convenient balleyhooed pretexts, and destroy countless lives by converting their national refuges into absolute anarchies.
We also know that these purveyors of “human rights” and “democrazy” are experts in DOUBLE STANDARDS, doing the exact opposite of what they preach to others when their own nations are threatened.

Who has not heard of the restriction of civil liberties of US Citizens under the Patriot Act, or the Massive Spying by the National Security Administration (NSA) revealed by Edward Snowden? That spying violates the privacy protections guaranteed to American citizens by the US Constitution which now lies in tatters. While the privacy of American citizens is being violated willy-nilly, foreign citizens, both high and low, have no rights at all, as demonstrated by the NSA’s spying on Angela Merkel, the Chancellor of Germany.

In my view, the US Government, and indeed  any government, has the duty and the right to gather intelligence needed to protect the people of its nation, as necessity dictates. In that sense, the Patriot Act was quite appropriate to protect the United States in the aftermath of 9/11.

My problem is that the US does not accord the same rights to other nations and their governments to protect their own people just as the US protects Americans. Instead, they castigate, isolate, sanction and actively undermine other nations and their governments who act legitimately to protect their people.

If the United States was beset by 1426 NGOs, funded and directed by foreign nations, inimical to the United States, who are actively sowing civil discord, undermining the national government, what would the US do?

We can get some idea of what the US would do, by examning the actions the US has taken against the WikiLeaks founder Julian Assange who is not a US citizen, and Edward Snowden, a US citizen, who exposed the NSA spying.

I know what the US would do, they would SHUT DOWN, PUNISH and EXPEL all those who engage in such activities, under the treason and national security laws of the United States. And that is as it should be.

During the last 30 years, NGOs operating within Sri Lanka brought our Motherland to its knees, aiding and abetting foreign powers in their great game. They were among the principal supporters of the LTTE who prevented the early defeat and eradication of Tamil Terrorists in Sri Lanka. They are RESPONSIBLE for extending that awful war from a couple of years to three long decades, and extinguishing the lives of 150,000 lives of Sri Lanka's innocent citizens. I ACCUSE these foreign nations of that awful crime!

Today, they are playing that same game in Syria …… demolishing the government that protected its people, setting Syria’s various communities at each other’s throats, transforming the majority of its people into hapless refugees … all in the name of undermining the principal ally of Iran in the Middle East.

And here they are again, buying and selling Sri Lankan political puppets, working in collusion with the defeated Tamil Terrorists, and their surviving political proxy, the TNA, attempting to convert Sri Lanka into another Somalia, inciting and encouraging Tamil Nadu politicians to assail Sri Lanka at every turn in their quest for a Greater Tamil Nadu, pitting India against China, all driven by their FEAR of a RESURGENT China, and their perceived NEED to CONTAIN China.

It is not a useful exercise to ask whether Sri Lanka’s alliance with China, or India’s, or the Western Neo-Colonialists' interference in Sri Lanka came first. We Sri Lankans, who bore the brunt of their Machiavellian strategies,  know very well the answer to that question in the pain of our wounds and the loss of our loved ones; we need not debate it ad infinitum as if it were an interminable did the chicken or the egg come first riddle.

What is IMPORTANT, and ESSENTIAL, to Sri Lanka’s future survival is to CONTROL, OVERSEE and REGULATE the behavior of ALL NGOs, both foreign and local, whether registered under the NGO Act or the Companies Act, with the central government or with a regional government body, operating in Sri Lanka. 

Enact the laws necessary to REGULATE their behavior, and LEVY a significant SPECIAL TAX on NGOs sufficient to pay for the Government Departments and Personnel necessary to oversee and regulate their own NGO activities. Higher the tax, fewer will be the number of fly-by-night NGOs.

Examine the history of the registered NGOs, their finances and the sources of their finances, for Anti-National Activities. SHUT DOWN those who are merely in the NGO business to enrich themselves, or to engage in anti-national activities as paid tools of foreign powers. PUNISH not only the NGO as a corporate entity, but also its managers as individuals, not only with IMPRISONING the managers, but also by CONFISCATING the PERSONAL PROPERTY of the managers of ERRANT NGOs. That will go a long way towards bringing fear and discipline into the ranks of the NGOs.

In the future, apply a 3-strikes-and-you-are-out law to NGOs. The slightest infringement of the NGO Law earns them one strike, and 3-strikes will earn a SHUT DOWN, and if a foreign NGO … permanent EXPULSION of all personnel from Sri Lanka.

In these ways, we can safeguard our Resplendent Isle, our Mother Lanka, from the depredations of these parasites dancing to the tunes of foreign paymasters.

Sri Lanka tipped as Asia’s new island of growth

FT.lk
July 11, 2014

A renowned investment banking and equity markets specialist has described Sri Lanka as the new island of growth for Asia and tips the post-war rebounding nation to be the next Singapore and even do better than the region’s city state.

In an analytical article titled ‘Sell Singapore, Buy Sri Lanka’ on seekingalpha.com, specialist Fraser Dennis makes a compelling case for Sri Lanka and its future prospects.

“Singapore is showing signs that its extraordinary growth of recent years may be reaching an end as it reaches its 50th birthday. Sri Lanka is putting in place a strong foundation upon which rapid economic growth can be achieved. Two island nations with strategic locations and significant Chinese investment but high economic growth is more likely in Sri Lanka over coming years than in Singapore,” says Dennis in the article, which can be found at http://seekingalpha.com/article/2305515-sell-singapore-buy-sri-lanka.
Noting ‘why on earth should any sensible investor consider such a trade recommendation?’ and that it also may be akin to comparing apples and oranges, the specialist gives various insights and explanations backed with recent performance of Lankan economy, plans and policies underway for the future.

In his article, he states: “Let’s go back to 1956 when the father of Singapore, Lee Kwan Yew first visited Colombo, the capital of Sri Lanka. A mere nine years before Singapore independence, LKY stated that Singapore should aspire to being like Colombo. It had two universities, foreign exchange reserves, a strategically-critical location and enviable infrastructure owing to its position as a key Allied HQ during the war compared to Singapore which had been occupied by the Japanese. Step forward to today and it is Singapore that has the foreign exchange reserves, amazing infrastructure and world-renowned education and it is Sri Lanka that is recovering from a period of war….”

“However, as any sensible investor knows, in deploying capital, it is not the past that is important, but the future. As Singapore reaches the ripe old age of 50 next year, it seems likely to be Sri Lanka’s turn to produce the economic growth over the next 50 years that Singapore has produced since independence in 1965,” he added.

Dennis, who has been living and working in Asia for over 24 years, analyses Singapore’s past growth as well as future prospects and where necessary points to Sri Lanka’s future potential, emphasising that Singapore’s current and future weaknesses lead to Sri Lanka’s advantage and opportunities.

Some of the key advantages of Sri Lanka which is similar to Singapore included strategic location, new infrastructure, enormous tourism potential, a world class product in Ceylon tea, wealth of natural resources and its new economic and political allies.

“Over the past five years, a transformation has taken place around a country which promises so much,” says Dennis. “Whilst the potential of the country is clearly high, it may come as a surprise that so much has been achieved in such a short period of time since the end of the civil war? The answer is the China factor! Whilst Chinese investment may be one of the factors now hurting Singapore, it has certainly propelled Sri Lanka and looks destined to continue to support the island’s expansion,” noted the specialist.

“China recognised the strategic importance of Sri Lanka and has been the largest investor in its infrastructure expansion. Of course, this has led to tension with India, for whom Chinese influence is less attractive. However, the Sri Lankan Government of President Rajapaksa has embraced Chinese investment whilst trying to reassure India that its intentions are not inconsistent with maintaining close links to its neighbour. It isn’t just money that is flowing from China either, tourists from China increased 137% in the first half of 2014 to over 52,000,” he added.

Dennis also tips the Colombo Stock Exchange to be a future star with reforms from its current position as a “frontier market” for investors.  He also expects Foreign Direct Investments to grow in real estate, the strategic investment in tourism, energy, agriculture and minerals and other private equity investments will be joined by internationally listed opportunities for international investors to participate.

“Singapore’s reputation for its rule of law and fairness will not be matched by Sri Lanka for many years to come. Many will also be concerned by continuing investigations into the approach taken by the Sri Lankan Government in ending the civil war and by allegations of corruption within the country,” says Dennis.

“However, the question has to be posed. If the past 50 years belonged to Singapore, will the next 50 years belong to Sri Lanka? At least today, it seems likely that at least for the next few years, the growth opportunities are more likely to lie in the Indian Ocean than in the South China Sea,” concludes Dennis in his article.