BRICS + 6: A Global Plan B
08/24/2023
During the three decades since American global pre-eminence culminated in the break-up of the Soviet Union, there have been examples of dominance - the first Gulf War; the killing of Osama bin Laden; the defeat of ISIS - and indications of decline - the Iraq War; the Afghanistan exit; repeated Russian expansion efforts; Chinese ascendency. An institutional evolution is also working against American dominance.
The network of international organizations is complex: the United Nations; military alliances such as NATO; regional forums such as the Association of Southeast Asian Nations or the Economic Community of West African States. Some have been central to American economic and political dominance - the G-7 (the United States, Britain, France, Germany, Italy, Canada, Japan, and the European Union); the expanded G-20 (a less formal discussion group which also includes Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea, and Turkey) the World Bank which provides loans and grants to the governments of low and middle income countries for the purpose of pursuing capital projects; and the International Monetary Fund which provides loans and other financial aid to its 190 member countries, offers technical training and financial advice to enable sustainable growth, and brings discipline to wayward regimes. Most rely on American funding and support the US dollar as the favored international reserve currency.
Nature abhors monopolies. Plan B began in 2001 with a Goldman Sachs investment manager identifying Brazil, Russia, India, and China as the emerging economies (and investment opportunities) of the 21st century. Spurred by Russia, the leaders of the BRICS countries started meeting in 2009 to provide a platform for its members to challenge a world order dominated by the United States and its Western allies. South Africa joined in 2010. The leaders meet annually, established a New Development Bank in 2014, and have attracted much attention from developing countries who chafe at American financial control and resented the hoarding of Covid vaccines by the rich countries of the G-7.
This week's meeting in South Africa represents a milestone for the BRICS with China's desire for rapid expansion largely overcoming a more cautious stance of India and Brazil who are more concerned about offending the United States. The result - the addition of Argentina, Egypt, Ethiopia, Iran, the United Arab Emirates, and Saudi Arabia - reflects a major set-back for American foreign policy:
- Iran is celebrating the failure of the longstanding American isolation policy;
- While President Putin could not attend in person (since host South Africa would have been obligated to arrest him under World Court charges as a war criminal), there was little complaint about the Ukraine War or his grain embargo;
- The inclusion of Egypt, Saudi Arabia, the UAE, and Iran threatens to isolate Israel in the Middle East. It also establishes a coalition of oil and gas producing countries - along with Russia - who have no interest in the G-7 obsession with climate change.
- At this point the BRICS have rejected China's call for an international currency to replace the dollar in global trade, instead calling for greater exchange of member currencies.
Reflective of our internal politics, the two hours of Wednesday's Republican debate had no mention of BRICS or the risk of default on US bonds caused by Congressional disfunction, and only passing references to the implications of our $32 trillion debt and our emerging trade war with China. At some point the Wall Street Journal, the New York Times, and a politician or two will ask "What happened to the world that the "Greatest Generation" bequeathed to us?"
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bill bowen - 8/24/2023