The changing world economic balance of power

The BRICS nations—Brazil, Russia, India, China and South Africa—are in the process of organizing a new economic bloc that could rival the European Union and the North American free trade area.   They are holding a summit meeting which began yesterday in Durban, South Africa.

Financial Times 2010.  Double click to enlarge.

Financial Times 2010. Double click to enlarge.

Pepe Escobar, the intrepid foreign correspondent of Asia Times in Hong KongSingapore, explained the significance of the BRICS summit meeting.

The BRICS push is part of an irresistible global trend. Most of it is decoded here, in a new United Nations Development Programme report. The bottom line; the North is being overtaken in the economic race by the global South at a dizzying speed.

According to the report, “for the first time in 150 years, the combined output of the developing world’s three leading economies – Brazil, China and India – is about equal to the combined GDP of the long-standing industrial powers of the North”.

The obvious conclusion is that, “the rise of the South is radically reshaping the world of the 21st century, with developing nations driving economic growth, lifting hundreds of millions of people from poverty, and propelling billions more into a new global middle class.”

via Asia Times Online.

The Economist.  Click to enlarge.

The Economist. Click to enlarge.

The BRICS economies are diverse but complementary.  China and India are important and growing manufacturing nations.  Brazil, Russia and South Africa are important producers of raw materials.

If present trends continue (which may not happen) they could dominate the world economy in a few decades.   RT News reported that the governments of Egypt, Mexico and Indonesia have expressed interest in joining the BRICS bloc.

BRICS representatives at the South African summit discussed creating a new Bank of the South that would give Third World nations an alternative to the International Monetary Fund, the World Bank and the World Trade Organization, and pledged $10 billion to the new BRICS bank.   They also discussed creating their own credit rating agency, so that their finances won’t be subject to the opinions of Moody’s or Standard & Poor’s.

China and Brazil signed an $80 billion trade agreement in which they’ll trade in their own currencies rather than dollars.  China recently replaced the United States as Brazil’s largest trading partner.

President Obama’s secret negotiations to create a Trans-Pacific Partnership Agreement, which would lock governments in to current rules concerning corporations and finance, can be seen as an attempt to head off the emergence of a new bloc in which the United States would play no part.

I don’t see that I, as a middle-class American, am threatened in any way by the emergence of BRICS.   I don’t think that the International Monetary Fund or the World Trade Organization operate in my interest or the interests of American working people.  We Americans can thrive if we as a nation turn away from military dominance and devote ourselves to creating a productive economy.

The key BRICS relationship is the one between China and Russia.  It brings to mind my reading about geopolitics years ago—whether world power came from dominating the Eurasian Heartland or from dominating the world’s sea lanes.  The nuclear-powered U.S. Navy commands the seas, but doesn’t affect the present-day equivalents of China’s overland Silk Road.

China is turning to Russia for the oil and natural gas it needs to fuel its economic growth.  Since Russia’s own reserves of oil and gas are dwindling, this means Russia must develop new supplies in the warming Arctic in the long run and control the oil and gas of Central Asia—what Pepe Escobar calls Pipelineistan—in the short run.

Last week Chinese President Xi Jinpin met with Russian President Vladimir Putin in Moscow.  Escobar reported that the result is an agreement by China to pay in advance for Russian oil, in return for a share in Russian oil development projects in Siberia and offshore.  Pipelines across Central Asia will give China access to Iranian oil by land, which would negate any U.S. naval blockade of Iran.  Pepe Escobar explained the significance.

The geopolitical ramifications are immense; importing more gas from Russia helps Beijing to gradually escape its Malacca and Hormuz dilemma – not to mention industrialize the immense, highly populated and heavily dependent on agriculture interior provinces left behind in the economic boom.

That’s how Russian gas fits into the Chinese Communist Party’s master plan; configuring the internal provinces as a supply base for the increasingly wealthy, urban, based in the east coast, 400 million-strong Chinese middle class.

When Putin stressed that he does not see the BRICS as a “geopolitical competitor” to the West, it was the clincher; the official denial that confirms it’s true.

via Asia Times Online.

Click on BRICS go over the wall for Pepe Escobar’s report and commentary on the BRICS meeting.

Click on BRICS nations fail to launch new bank for a later report from Al Jazeera English.

Click on UN 2013 Human Development Report for a broader picture of progress in the Global South.

Click on The BRICS Post | New insight on emerging global economies for a web log devoted to the BRICS nations.

Click on TransPacific Partnership Will Undermine Democracy, Empower Transnational Corporations for a report on TPP by TruthOut.

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