AMU Asia Homeland Security Intelligence Opinion

China Heads Southwest, Fires Up BRICS Summit

By Brett Daniel Shehadey
Special Contributor for In Homeland Security

Chinese President Xi Jinping is heading to Brazil on July 15-17 to attend a summit of emerging non-Western economic powers. The BRICS summit includes: Brazil, Russia, India, China and South Africa.

The BRICS nations addressed the global recession of 2007-2008 as an economic crisis caused largely by a Western driven financial system. Many states specifically blamed Western national economic policy decisions, like that of the U.S. Federal Reserve as exclusive to the greater needs or consequences in their actions. In other words, they continue to feel cheated, dependent and hold too little flexibility during a future crisis.

The BRICS are determined to meet again for the sixth time in an effort to create an alternative international currency that is no longer dependent on the U.S. dollar. Greater efforts to establish an alternative non-Western financial system will also be on the docket. There are many reasons for this but even with an increase in power-share to China, the U.S. (15%) and Japan (8%) alone account for the top two most powerful with over 20 percent of the voting power, versus China’s five percent. That means the U.S. has the most say in World Bank matters and China, the second largest state GDP, is in third place behind one bitter regional fiend and a strategic rival. For them it’s a no-brainer.

The BRICS bank will not be their alternative to the World Bank and the IMF at first. It is stocked with only $100 billion in order to act as a greater solidarity to any Western or international financial lapses. Eventually, however, if the $24 trillion dollar team of BRICS ever get past their many differences, they might build an economic alliance model based on structural designs of the West, granting competitive loans with the World Bank to states in development as well as themselves. They still lack the ability to innovate and share the level of political and humanitarian principles so far. They use an old idea with even less or absent liberal principles.

Last year, in Durban, South Africa, the BRICS had not reached an agreement but decided to continue their efforts for funding commitments. Large currency exchanges and pledges between the countries have taken place since the Great Recession and as a result of these subsequent BRICS meetings.

President Xi says that they have finally reached consensus on the BRICS development bank. “There are all kinds of different considerations, but the goal is to establish the BRICS bank as soon as possible,” Chinese Vice Foreign Minister Li Baodong. The bank could begin lending within a few years and directly competing with Western economic power on the world stage.

Xi is also too busy to attend the games at Brazil’s World Cup and instead will visit Argentina, Cuba, and Venezuela after Brazil; among his busy schedule. China is hard at work in South America and this should demonstrate the Chinese onslaught into the Southwestern sphere of influence. This is his second trip to the region since taking office in last year.

The new Prime Minister of India, Narendra Modi, is also an added face among BRICS players. This is reported by open sources to be his first multinational summit in attendance. He is expected to counter the momentum of China primary and Russia’s secondary leadership roles of the BRICS. India is looking to play a more powerful international role. Meanwhile, Brazil and South Africa are in the process of consolidating regional power roles; Russia is trying to hang on with the appearance of an international leader plagued by serious regional Eastern European and Central Asia projects. Even China is having trouble getting out to sea.

A $100 billion start-up capital is hardly nothing. China has the highest stake of some $50 billion, which makes sense, as they are the largest economy and the furthest state along to push international development access into African, Asian and South American states.

The World Bank in comparison to the proposed BRICS bank is over three times the size in total assets ($324 billion dollars) in 2013, now consists of five institutions, 188 states and has had 60 more years to mature. The BRICS bank seems a third of their equal already in financial backed wealth, in spite of only being 20 percent of the world’s economic participation.

While BRICS states intents of having a currency reserve shield and a joint lending programs in the works are substantial, BRICS is still very much experimental but one must see past the institution itself, which is insignificant. It is necessary to look further along at the unseemly players uniting in common cause with greater single-issue political-economic intent. Although, they face a score of hardships and issues which hold them back, the doubters the more conservative international skeptics and doubter are now proved wrong. The reality is that Bretton Woods is history.

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