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The real BRICS bombshell

Public Policy

Putin reveals ‘fair multipolar world’ concept in which oil contracts could bypass the US dollar and be traded with oil, yuan and gold…

The annual BRICS summit in Xiamen – where President Xi Jinping was once mayor – could not intervene in a more incandescent geopolitical context.

Once again, it’s essential to keep in mind that the current core of BRICS is “RC”; the Russia-China strategic partnership. So in the Korean peninsula chessboard, RC context – with both nations sharing borders with the DPRK – is primordial.

Beijing has imposed a definitive veto on war – of which the Pentagon is very much aware.

Pyongyang’s sixth nuclear test, although planned way in advance, happened only three days after two nuclear-capable US B-1B strategic bombers conducted their own “test” alongside four F-35Bs and a few Japanese F-15s.

Everyone familiar with the Korean peninsula chessboard knew there would be a DPRK response to these barely disguised “decapitation” tests.

So it’s back to the only sound proposition on the table: the RC “double freeze”. Freeze on US/Japan/South Korea military drills; freeze on North Korea’s nuclear program; diplomacy takes over.

The White House, instead, has evoked ominous “nuclear capabilities” as a conflict resolution mechanism.

Gold mining in the Amazon, anyone?

On the Doklam plateau front, at least New Delhi and Beijing decided, after two tense months, on “expeditious disengagement” of their border troops. This decision was directly linked to the approaching BRICS summit – where both India and China were set to lose face big time.

Indian Prime Minister Narendra Modi had already tried a similar disruption gambit prior to the BRICS Goa summit last year. Then, he was adamant that Pakistan should be declared a “terrorist state”. The RC duly vetoed it.

Modi also ostensively boycotted the Belt and Road Initiative (BRI) summit in Hangzhou last May, essentially because of the China-Pakistan Economic Corridor (CPEC).

India and Japan are dreaming of countering BRI with a semblance of connectivity project; the Asia-Africa Growth Corridor (AAGC). To believe that the AAGC – with a fraction of the reach, breath, scope and funds available to BRI – may steal its thunder, is to enter prime wishful-thinking territory.

Still, Modi emitted some positive signs in Xiamen; “We are in mission-mode to eradicate poverty; to ensure health, sanitation, skills, food security, gender equality, energy, education.” Without this mammoth effort, India’s lofty geopolitical dreams are D.O.A.

Brazil, for its part, is immersed in a larger-than-life socio-political tragedy, “led” by a Dracula-esque, corrupt non-entity; Temer The Usurper. Brazil’s President, Michel Temer, hit Xiamen eager to peddle “his” 57 major, ongoing privatizations to Chinese investors – complete with corporate gold mining in an Amazon nature reserve the size of Denmark. Add to it massive social spending austerity and hardcore anti-labor legislation, and one’s got the picture of Brazil currently being run by Wall Street. The name of the game is to profit from the loot, fast.

The BRICS’ New Development Bank (NDB) – a counterpart to the World Bank – is predictably derided all across the Beltway. Xiamen showed how the NDB is only starting to finance BRICS projects. It’s misguided to compare it with the Asian Infrastructure Investment Bank (AIIB). They will be investing in different types of projects – with the AIIB more focused on BRI. Their aim is complementary.

‘BRICS Plus’ or bust

On the global stage, the BRICS are already a major nuisance to the unipolar order. Xi politely put it in Xiamen as “we five countries [should] play a more active part in global governance”.

And right on cue Xiamen introduced “dialogues” with Mexico, Egypt, Thailand, Guinea and Tajikistan; that’s part of the road map for  “BRICS Plus” – Beijing’s conceptualization, proposed last March by Foreign Minister Wang Yi, for expanding partnership/cooperation.

A further instance of “BRICS Plus” can be detected in the possible launch, before the end of 2017, of the Regional Comprehensive Economic Partnership (RCEP) – in the wake of the death of TPP.

Contrary to a torrent of Western spin, RCEP is not “led” by China.

Japan is part of it – and so is India and Australia alongside the 10 ASEAN members. The burning question is what kind of games New Delhi may be playing to stall RCEP in parallel to boycotting BRI.

Patrick Bond in Johannesburg has developed an important critique, arguing that “centrifugal economic forces” are breaking up the BRICS, thanks to over-production, excessive debt and de-globalization. He interprets the process as “the failure of Xi’s desired centripetal capitalism.”

It doesn’t have to be this way. Never underestimate the power of Chinese centripetal capitalism – especially when BRI hits a higher gear.

Meet the oil/yuan/gold triad

It’s when President Putin starts talking that the BRICS reveal their true bombshell. Geopolitically and geo-economically, Putin’s emphasis is on a “fair multipolar world”, and “against protectionism and new barriers in global trade.” The message is straight to the point.

The Syria game-changer – where Beijing silently but firmly supported Moscow – had to be evoked; “It was largely thanks to the efforts of Russia and other concerned countries that conditions have been created to improve the situation in Syria.”

On the Korean peninsula, it’s clear how RC think in unison; “The situation is balancing on the brink of a large-scale conflict.”

Putin’s judgment is as scathing as the – RC-proposed – possible solution is sound; “Putting pressure on Pyongyang to stop its nuclear missile program is misguided and futile. The region’s problems should only be settled through a direct dialogue of all the parties concerned without any preconditions.”

Putin’s – and Xi’s – concept of multilateral order is clearly visible in the wide-ranging Xiamen Declaration, which proposes an “Afghan-led and Afghan-owned” peace and national reconciliation process, “including the Moscow Format of consultations” and the “Heart of Asia-Istanbul process”.

That’s code for an all-Asian (and not Western) Afghan solution brokered by the Shanghai Cooperation Organization (SCO), led by RC, and of which Afghanistan is an observer and future full member.

And then, Putin delivers the clincher;

“Russia shares the BRICS countries’ concerns over the unfairness of the global financial and economic architecture, which does not give due regard to the growing weight of the emerging economies. We are ready to work together with our partners to promote international financial regulation reforms and to overcome the excessive domination of the limited number of reserve currencies.”

“To overcome the excessive domination of the limited number of reserve currencies” is the politest way of stating what the BRICS have been discussing for years now; how to bypass the US dollar, as well as the petrodollar.

Beijing is ready to step up the game. Soon China will launch a crude oil futures contract priced in yuan and convertible into gold.

This means that Russia – as well as Iran, the other key node of Eurasia integration – may bypass US sanctions by trading energy in their own currencies, or in yuan.

Inbuilt in the move is a true Chinese win-win; the yuan will be fully convertible into gold on both the Shanghai and Hong Kong exchanges.

The new triad of oil, yuan and gold is actually a win-win-win. No problem at all if energy providers prefer to be paid in physical gold instead of yuan. The key message is the US dollar being bypassed.

RC – via the Russian Central Bank and the People’s Bank of China – have been developing ruble-yuan swaps for quite a while now.

Once that moves beyond the BRICS to aspiring “BRICS Plus” members and then all across the Global South, Washington’s reaction is bound to be nuclear (hopefully, not literally).

Washington’s strategic doctrine rules RC should not be allowed by any means to be preponderant along the Eurasian landmass. Yet what the BRICS have in store geo-economically does not concern only Eurasia – but the whole Global South.

Sections of the War Party in Washington bent on instrumentalizing  India against China – or against RC – may be in for a rude awakening. As much as the BRICS may be currently facing varied waves of economic turmoil, the daring long-term road map, way beyond the Xiamen Declaration, is very much in place.

Pepe Escobar via The Asia Times

8 Comments on "The real BRICS bombshell"

  1. Davy on Thu, 7th Sep 2017 6:28 am 

    Pepe Escobar is an extremist preaching for Asian consumption. I have never read one of his articles that has balance to it. He is regularly on ZH. He does present facts with relevance. The Bric nations have become a counterweight to the western unipolar mentality. Yet, every one of the Brics is a basket case. The Bric bank is a joke. Russia and Chinese trade is nowhere near wht has been crowed about since last year. It makes sense to have a multipolar world. The dollar needs to lose importance. Yet, don’t think for a minute this means Asia and the brics are going to enjoy a full blown renaissance. It will be more like a struggle with survival. The honeymoon already ended 2 years ago. The only country showing significant growth is China and they are shaping up for a huge financial crisis. Russia has been strengthened by sanctions but it is still mired in low growth. Oil and gas are not enough to make a nation great. It takes a diversified economy and that has always been something Russia has struggled with. India launched a cashless society that has backfired into declining growth for a country needing high growth. South Africa and Brazil are a mess with nothing to indicate recovery.

    Putin is right about a multipolar world. It is fair and it is right but don’t expect to get there overnight. He is likely right about NK and sanctions but surely more must be done before NK develops enough missiles and bombs to have a second strike capability. The US is wrong continuing to manhandle the world for its own ends. Yet, if the world thinks it can corner the US like a wild animal bad things will happen. The US will have to be allowed to decline over time. This will be a very delicate maneuver to turn a superpower but it must be done. Those who are Asiaphiles and Europhiles who preach the collapse of the US and their chance at superpowerdom are living in a fantasy world. The world is overly connected now and brittle to change. Change will have to take time and it can only go so far. A sudden change will likely mean complete collapse. Fairness has limits in a competitive cooperative world. North America is too important in too many ways for it to fall apart especially with a world in overshoot both with population, consumption, and systematically.

    Is there a way forward? It does not look good. All the major powers have a showdown with reality especially financially. Will NK war blow up in all of our faces? As the US enters a trajectory of economic and military decline the rest of the world will have no choice but to manage that decline as best they can. Unfortunately China, Europe, and the dog’s tail that is the rest of the world all are in very difficult situations themselves. No region is sparkling. Problems everywhere have been extended and pretended. We are all living the beginning of a climate nightmare. Don’t preach to me about the fake Paris accord because it allowed coal to still be freely exploited in Asia, why because it was fair. Yea, fairness will end soon when the walls start tumbling down. The best we can salvage is a multipolar world of fighting one crisis after another with the understanding many of us have no choice but to work together. Many places will be left to die in irrelevancy. It will be the core that will be maintained just as a body does when confronted with hypothermia. The US is part of that core so get used to it Pepe.

  2. Makati1 on Thu, 7th Sep 2017 7:09 am 

    Sorry Davy but the BRICS is real and moving forward to take down the USD and build an alternate trade/financial system. The IMF is on board that plan. As are many countries now.

    Trying to put down one author out of hundreds who have said basically the same thing these last few years, is more of your Asian denial bullshit and method of rebutting a fact when you have nothing to support your side.

    Prove he is wrong. Prove that gold/yuan/oil will not change the way countries do business. You have no idea how many countries want to get out of the Petrodollar and free of the Empire. Clue: Most.

    Meanwhile, you might want to watch this: “Crumbling America”

    America is dying from a thousand cuts.

  3. Davy on Thu, 7th Sep 2017 7:30 am 

    Makat, you have any numbers in relation to the total? Remember to include the total to get a realistic picture of reality not you extremist version. Your future is possible but it is not reality. It is just an old man’s fantasy like everything else about you.

  4. Cloggie on Thu, 7th Sep 2017 7:35 am 

    Escobar doesn’t like Washington too much and I don’t blame him for that one.

    He is a Brazilian and hence loves the BRICS (as a European the only BRICS country I “love” is Russia). The long term superpower to be reckoned with is China though. I do not share Escobar’s enthusiasm for that country, although there is no proof yet that they intend to copy the behavior of the US any time soon.

    Better not to take chances. Long term European aim should be to incorporate Russia into the European world and take a lot of European-Americans with us from a balkanized North-American heritage after diversity there will have said “poof”.

  5. Cloggie on Thu, 7th Sep 2017 7:53 am 

    Yesterday two Merkel election rallies and twice it was yet again used as an anti-Merkel event:


    Torgau (traditional Anglo-Soviet hangout spot)

    Finsterwalde (“Darkwood”)

  6. Sissyfuss on Thu, 7th Sep 2017 10:38 am 

    Clognostcator, I am no admirer of the Fraulein and believe the videos exposition of the amount of vitriol directed at her but in the last poll I observed she had a healthy lead on her opponents. Have you any updates, oh Great Swami?

  7. yoshua on Thu, 7th Sep 2017 11:27 am 

    Since it’s not oil for ruble backed by gold, but oil yuan gold, this must be seen as: China has declared war against the Petrodollar.

  8. onlooker on Thu, 7th Sep 2017 11:38 am 

    Yes, increasingly all the planet is immersed in a zero sum game, meaning winners and losers. China is simply attempting to fortify its position and continue being one of the winners. And within countries who will also are seeing this dynamic of consolidating wealth and power even as more and more people get left behind.

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