The New Development Bank launched by the BRICS will soon issue between 3-5 billion yuan in bonds in China in the second quarter of 2016, a senior bank official said on Thursday.
Leslie Maasdorp, NDB vice-president and chief financial officer, was speaking on the sidelines of the Boao forum in China.
The new lender will prioritise projects aimed at developing renewable energy sources, Maasdorp said.
The five countries, Brazil, Russia, India, China and South Africa, hold equal voting rights.
“The New Development Bank plans to issue its first bond in China because the renminbi value is much more stable (compared with local currencies of other BRICS nations). China has a deep, liquid bond market,” Maasdorp was quoted by China Daily.
Maasdorp also said that the new lender intends to finance one project of each member state with the money raised via its first bond issue.
The new financial institution headquartered in China’s Shanghai has been set up to foster greater financial and development cooperation between the five emerging markets.
The Bank will announce its first investment projects next month.
Maasdorp reiterated on Thursday that the BRICS Bank will adopt a lean structure to aid “speed of execution”.
The bank has received an ‘AAA’ institutional rating from domestic credit rating agencies and has appointed Bank of China and China Development Bank as rating advisers, an official statement said.
The founding members of the NDB have already brought in capital of $1 billion as initial contribution.
Standard Chartered and Goldman Sachs have been appointed as advisers for international ratings.
At a press conference in Shanghai last month, Russian Finance Minister Anton Siluanov said the NDB “will soon become a strong and well-respected international financial institution, playing a leading role in the changing international financial architecture”.
On Sunday, Argentina held a runoff vote to pick its next president, resulting in a narrow victory for conservative Let’s Change coalition candidate Mauricio Macri over his center-left Front for Victory coalition opponent, Daniel Scioli. The question on everybody’s mind now is: what should Argentinians, and the world, expect from the new government?
An estimated 80% of Argentina’s 32 million eligible voters went to the polls on Sunday to elect their next president, in a runoff vote between the two leading candidates from the first round of voting, held in late October. With 51.5% of the votes cast in favor of conservative candidate Mauricio Macri, the favorite of the country’s big business and private media, the country is set for a hard right turn.In the run up to the election, analysts in both Latin America and across the loose global coalition of countries opposed to a unipolar world order had worryingly suggested that a Macri victory would result in a rollback to the policies pursued by Buenos Aires over the past decade aimed at challenging US hegemony, both in the region and around the world.
Daniel Scioli, the candidate of the Peronist, center-left Front for Victory electoral alliance, had promised to continue outgoing President Cristina Fernandez’ center-left-oriented politics domestically, and to pursue an independent foreign policy course abroad.
Throughout Fernandez’ tenure (she was elected in 2007) and that of her late husband, Nestor Kirchner (elected in 2003), Argentina had aligned itself with the string of left-wing Latin American governments emerging in the region in the early 2000s, while pushing for new economic and political ties with the BRICS countries, including Russia and China. Now, with Macri’s victory, the country’s multipolar outlook is under threat.
At the moment, Russian-Argentinian political and economic ties are believed to be at historic highs, characterized by the Russian ambassador to Buenos Aires as “excellent” and “extremely constructive and trusting.” Earlier this year, ahead of Fernandez’ official state visit to Moscow in April, Argentina’s Ambassador to Russia, Pablo Anselmo Tettamanti, went so far as to describe relations to be at the highest levels they have ever been in the countries’ 130-year-long history of bilateral relations.
During her visit to Russia, President Fernandez met with President Vladimir Putin, signing over 20 memorandums on economic cooperation, said to amount to an “all-encompassing strategic partnership.”
The agreements included joint projects on the development of hydroelectric, nuclear and fossil-based energy in Argentina, including the construction of the sixth bloc at the Atucha nuclear power plant, along with a $2 billion memorandum on the construction of a new hydroelectric dam. Meanwhile, Russian energy giant Gazprom signed a memorandum on the exploration and development of gas fields with Argentine state gas company YPF, a deal amounting to $1 billion in investments. Russian company Uralmash was also tapped to build a plant manufacturing oil extraction equipment, amounting to an additional $1.9 billion in investments.
In the course of the visit, the two sides promised to conduct consultations on the use of each other’s national currencies for trade, pledging to increase cooperation in the military-technical sphere, accelerating construction of the GLONASS satellite navigation systems, and negotiating on the prospects of increasing bilateral food trade (presently amounting to about $1.3 billion).In the sphere of political cooperation, President Fernandez voiced her support for Moscow’s position that the situation in Ukraine could only be resolved by peaceful means, with the Russian president, for his part, pledging support for “Argentina’s striving for direct talks with Britain to achieve prompt resolution to the Mavinas [Falklands] Islands dispute.”
Visiting Moscow in July, Argentinian Vice President Amado Boudou emphasized that Argentina’s diplomatic moves toward improving relations with Russia were based on the fact that the two countries “share a very strong position with a common vision of the need for a multipolar world to ensure the existence of an inclusive and autonomous policy.”
Now, following Macri’s election victory, Argentina’s strategy of promoting regional integration in Latin America, and a multipolar world order, may be coming to an end. With Mexican economist Ariel Noyola Rodriguez suggesting only months ago that the Russian-Argentinian partnership signaled “Washington’s incapacity to sabotage the construction of a multipolar world,” it seems that the analyst may have spoken too soon.
With Fernandez (and her husband before her) becoming a major thorn in Washington’s side, the latter unhappy over the Peronists’ efforts to extract the country and the region from its subservient position in the US’s so-called ‘backyard’, the election of Macri, who promised to immediately improve relations with Washington, must come as a welcome change.
The conservative politican has already hinted that he would give less weight to Mercosur –the South American trade bloc aimed at ensuring regional economic integration and development, and shift the country’s diplomacy away from close cooperation with the leftist governments of Venezuela, Bolivia, Ecuador and Brazil.
And while his victory may not nullify the economic and other cooperation agreements reached with Russia, China, and other BRICS countries over the past decade, it does threaten Buenos Aires’ general trajectory of development –the country’s moves toward regional integration and a multipolar world independent of Washington’s influence.
For the Argentinian People: A Return to Neoliberalism?
As far as the Argentinian people are concerned, Macri’s victory is feared by his critics to mark a throwback to neoliberal dogmas which plagued the country prior to Kirchner’s 2003 election victory.
For their part, the British and American business press couldn’t help but gloat in the moment, with Financial Times suggesting it was “the beginning of a new political era for South America’s second-largest economy,” and The Wall Street Journal trash-talking Fernandez and her party, and suggesting that her economic policies, “uncivil rants against her political opponents, and a substantial loss of judicial independence and press freedom during kirchnerismo” contributed to Scioli’s defeat. Bloomberg Business, naturally, focused on the election’s effects on the markets, finding it crucial to point out that “in anticipation of a Macri victory, bond yields fell to an eight-year low and the local stock market rallied to a record high.”
But not everyone is convinced that this ‘new political era’ will bring positive changes, at least for ordinary Argentinians. In the run up to the voite, Scioli and his supporters warned that Macri’s proposals, which promised a return to neoliberal economic policies, would amount to “savage capitalism,” eroding social welfare and creating an economy which catered to a wealthy minority.
It’s worth recalling that before the Kirchners, Argentina was viewed as a textbook example of a developing country enveloped by the so-called Washington Consensus, a set of neoliberal economic dogmas which resulted in extremely high unemployment (over 25% in 2003), high poverty rates (nearly 55%), and a high Gini index.Under Kirchner and Fernandez, the country pursued social and economic policies that amounted to the creation of a mixed Keynesian economy, promoting government intervention where necessary, support for medium and small businesses, and a push for export growth via regional economic integration.
According to pan-Latin American news channel Telesur, these efforts resulted in the reduction of unemployment to 6.6% in 2015 (with 5 million jobs created over the past ten years), the reduction of poverty from over 50% to 6.5%, the creation of 50,000 small and medium-sized businesses, a major industrialization drive via the Industrial Parks National Program, increases in the share of GDP spent on education and pensions (from 3.6% and 4.1% in 2003 to 6.5% and 7.7% of GDP in 2013, respectively), and the near doubling of public investment, all the while reducing the national debt from 166% of GDP in 2003 to 41%.
In the areas of social policies, Kirchner and Fernandez began a comprehensive reform of the country’s justice system (making the Supreme Court independent), while annulling the ‘laws of pardon’ which gave immunity to the leaders of the country’s military dictatorship of 1976-1983 accused of crimes against humanity. The country also became the first in Latin America, and the tenth in the world, to pass equal marriage laws, in 2010.
Now, these gains, which came at a cost of high inflation (offset to an extent by annual negotiations between unions, employers and employees on adjusting wages) are under threat, with Macri’s critics saying his policies (including tax cuts, social spending cuts, and privatization schemes) will favor big business and the country’s oligarchs, sidelining the problems of social inequality, and reverting the country to its 90s’ era social and economic malaise.
Critics have also pointed to Macri’s promises of beginning negotiations with the predatory ‘vulture fund‘ creditors that rejected the debt restructuring which took place following the country’s default in 2002, giving an indication not only of his upcoming domestic economic policy, but also his possible subservience to the Western-dominated economic institutions which Argentina rejected under the Kirchners.Ultimately, only time will tell whether Argentina’s new government will continue to pursue policies based on economic and political pragmatism which have brought Buenos Aires closer to those countries looking to challenge global unipolarity (with some analysts already suggesting that they will).
As far as Argentina itself is concerned, it remains unclear how a return to the neoliberalism which devastated the country’s economy in the early 2000s will do it any good. As Russian social media users commenting on the election results lamented, it seems that too many Argentinians have forgotten the neoliberal catastrophe and ‘de-sovereignization’ of the 90s, processes which Russians themselves know all too well.
Do not take the Latin American revolutions for granted.
They inspired the entire Planet. They brought hope to every corner of our scarred Earth. But now they are themselves in need of our support.
If left alone, they would thrive for decades and centuries. But the Empire is once again on the offensive. It is shaking with fury. It is ready to invade, to smash, burn to ashes all the hopes, all that which had been achieved.
Don’t believe in the “common wisdom” which proclaims that the rulers of the world simply “closed their eyes” more than a decade ago; that George W. Bush was “too busy” ravishing the Middle East, therefore “allowing” most of the Latin American countries to “sneak away” from the iron grip of the Empire.
Such “analyses” are as patronizing as they are false. The Empire never sleeps! What Latin America now has was built on its daring, its sweat, its genius and its blood – it fought against the Empire, courageously, for decades, losing its best sons and daughters. It fought for freedom, for justice and socialism.
The Empire was not “looking the other way”. It was looking straight south, in fury, but for some time it was too confused, too astounded, too shocked at what it was witnessing. Its “slaves” had risen and taken power back into their own hands. They showed to the entire world what freedom really is.
For some time, the Empire was paralyzed by rage and unable to act.
The Empire’s undeniable property, Latin America, inhabited by “un-people” born only in order to supply cheap labor and raw materials to the rich part of the world, was suddenly, proudly and publicly, breaking its shackles, declaring itself free, demanding respect. Its natural resources were now used to feed its own people, to build social housing, create public transportation systems, construct hospitals, schools and public parks.
But after the first wave of panic, the Empire began to do what it does the best – it began the killings.
It attempted to overthrow Venezuelan government in 2002, but it failed. The Venezuelan people rose, and so did the Venezuelan military, defending then President Hugo Chavez. The Empire tried again and again, and it is trying until now. Trying and failing!
“We are at war”, I was told by one of the editors of Caracas-based television network, TeleSUR, for which I made several documentary films. “We are literally working under the barrel of cannon”.
Ms. Tamara Pearson, an Australian revolutionary journalist and activist, who recently moved from Venezuela to Ecuador, explained the difficult situation in Venezuela, a country that is under constant attack from both the US, and the local comprador elites:
“People are suffering a lot. Basic food prices are high, much medicine is unavailable, and various services aren’t working. On one level, people are used to this – the business owners would cause shortages and blame the government before each of the many elections. But usually it’s less intense and lasts just a few months. But this has been going on and getting worse, since Chavez died – over two years now. There is no doubt that the US, and more so, Venezuelan and Colombian elites and business owners are a huge or even the main factor…”
All of revolutionary Latin America is “screaming”.
As I described in two of my recent books, “Exposing Lies Of The Empire” and “Fighting Against Western Imperialism”, the Empire is using similar destabilization strategy against all countries that are resisting its deadly embrace.
Its propaganda is mighty and omnipresent. CNN and FOX TV are beamed into almost all major hotels and airports of Latin America, even in some revolutionary countries like Ecuador. Almost all major newspapers of the continent, including those in Venezuela, Ecuador, Chile and Argentina, are controlled by the right wing business elites. Almost all of the foreign news coverage comes from European and North American sources, making the Latin American public totally confused about Islam, China, Russia, South Africa, Iran, even about their own neighbors.
The local elites continue to serve foreign interests, their loyalties firmly with North America and Europe.
Every left wing Latin American government has been facing bizarre protests and subversion actions conducted by the elites. Destabilization tactics have been clearly designed in far away capitals. They were mass-produced and therefore almost identical to those the West has been using against China, Russia, South Africa, and other “rebellious” nations.
Propaganda, disinformation and spreading of confusion have been some of the mightiest tools of the fascist right wing.
“Economic uncertainty” is an extremely powerful weapon. It was used first in Chile, in the 1973 coup against socialist President Salvador Allende. Pro-Western Chilean elites and businessmen created food shortages, and then blamed it on the socialist government, using El Mercurio and other daily newspapers as their propaganda tools.
Peter Koenig, former World Bank economist and now prominent dissident and critic of the world neoliberal regime, wrote for this essay:
Today Madame Bachelet, the socialist President of Chile has a hard time fighting against the Mercurio inspired Chilean oligarchs. They will not let go. Recently they invited the World Bank to assess the school reform package proposed by Bachelet, basically to return universities to the public sector. Of course, the ‘upper class’ of Chileans knew that the World Bank would come up with nothing less than predicting an economic disaster if the reform is approved. As a result, Bachelet made concessions – which on the other hand are not accepted by professors and teachers. It’s the first step towards chaos – and chaos is what the empire attempts to implant in every country where they strive for ‘regime change’.
But one of the “dirtiest” of their weapons is the accusation of corruption. Corrupt pro-Western politicians and individuals who misused tens, even hundreds of millions of dollars of the peoples money and destroyed the economies of their countries by taking unserviceable loans that kept disappearing into their deep pockets, are now pointing their soiled fingers at relatively clean governments, in countries like Chile and Argentina. Everything in “Southern Cone” and in Brazil is now under scrutiny.
Peter Koenig (who co-authored a book “The World Order and Revolution!: Essays from the Resistance” with leading Canadian international lawyer Christopher Black and me) shows how important it is, for the Empire, destabilization of Brazil, one of the key members of BRICS:
Brazil being a member of the BRICS is particularly in the crosshairs of the empire – as the BRICS have to be destabilized, divided – they are becoming an economic threat to Washington. Brazil is key for the non-Asian part of the BRICS. A fall of Brazil would be a major blow to the cohesion of the BRICS.
There are totally different standards for pro-Western fascist politicians and for those from the Left. The Left can get away with nothing, while the Right has been getting away literally with mass murder and with the disappearance of tens of billions of dollars.
It is, of course, the common strategy in all the client states of the West. For instance, one of the most corrupt countries on earth, Indonesia, tolerates absolute sleaze and graft from former generals, but when progressive socialist Muslim leader, Abdurrahman Wahid, became the President, he was smeared and removed in a short time, on “corruption” charges.
After centuries of the Monroe Doctrine, after mass murder committed in “Latin” America first by Europeans and then by North Americans and their rich local butlers, it will take long decades to fully eradicate the corruption, because corruption comes with the moral collapse of the colonial powers and the local elites. Financial greed is only its byproduct.
The great pre-colonial cultures of what are now Peru, Ecuador and Bolivia did not have corruption. Corruption was injected by Western colonialism.
And now, corruption under left wing, revolutionary governments still exists, since it is difficult to root out all the rats at once, but it is incomparably smaller than under the previous fascist right wing cliques!
The rich in Latin America are heartless, servile (to the Empire) and greedy in the extreme. Latin America has still the most unequal distribution of wealth on earth. True, it is much richer (and even its poor are richer, with some exceptions of Central America, Peru or Paraguay) than Africa or even in Southeast Asia, but this cannot be used as an excuse.
Even the most progressive socialist governments now in power would ever dare to touch, to slap the private enterprises too hard. From this angle, China with its central planning and controlled economy is much more socialist than Ecuador or Bolivia.
A few days ago, as I was flying from Ecuador to Peru, I read that the number of multimillionaires in Latin America was actually increasing, and so is the social gap between the rich and the rest of the societies. The article was using some anecdotal evidence, saying that, for instance, in Chile alone, now, more Porsche sports cars are sold than in the entirety of Latin America few years ago. As if confirming it, I noticed a Porsche auto dealership next to my hotel in Asuncion, the capital of the second poorest country in South America. I asked for numbers, but the Porsche manager refused to supply them, still proudly claiming that his company was “doing very well”.
So what do they – the “elites” – really want? They have money, plenty of money. They have luxury cars, estates in their own countries, and condominiums abroad. What more?
As in Thailand, Philippines, Indonesia or Kenya, and all over the West, they want power. They want to feel unique. They want to be admired.
The Socialist governments allow them to stay rich. But they force them to share their wealth and above all, they shame them. They are also trying to minimize the gap – through education, free medical care and countless social projects.
That is, of course, unacceptable to the elites. They want it all, as they always had it. And to have it all, they are ready to murder, to side with the darkest foreign interests, even to commit treason.
Increasingly, the interests of the local elites are very closely linked to foreign interests – those of the Empire and those of the private sector.
As I was told in Ecuador, by Ms. Paola Pabón, Assembly Member representing Pichincha area:
Behind the involvement of the US, are some ex-bankers such as Isaiah brothers, who lost power here, escaped courts and went to live in the United States, but there are also huge economic powers such as Chevron. It means that there are not only political interests of the US, but also private, economic ones.
Predominantly, the local elites are using their countries as milking cows, with very little or zero interest in the well being of their people.
That is why their protests against Latin American revolutions are thoroughly hypocritical. They are not fighting for improvements in their countries, but for their own, selfish personal interests. Those shouts and the pathetic hunger strikes of the “opposition” in Venezuela may appear patriotic, but only thanks to propaganda abilities to the Western mass media.
The elites would do anything to make all revolutions, all over Latin America, fail and collapse. They are even spending their own money to make it happen.
They know that if they manage to remove progressive forces from power, they could rule once again, totally unopposed, as their counterparts do in all other client states of the West – in the Middle East, Africa, South and Southeast Asia, and Oceania.
The temptation is tremendous. Most of the elites in Latin America still remember well, how it feels, how it tastes – to control their countries unopposed, and with full support from the West.
Eduardo Galeano, the great Uruguayan writer and revolutionary thinker, once told me: “I keep repeating to all those new leaders of Latin America: “Comrades, do not play with poor people’s hopes! Hope is all they have.”
It appears that hope has finally been takes seriously, in Bolivia, Uruguay, Venezuela, Ecuador, Chile, Argentina, Brazil, Nicaragua and elsewhere.
It was also taken seriously in Honduras, but hope was crushed by the US-orchestrated coup. In Paraguay, under a semi-progressive priest who preached liberation theology, hope was taken semi-seriously, but even that was too much in the country that had been ruled, for decades, by fascist cliques. In 2012, a constitutional coup followed by an appalling massacre of predominantly indigenous people, and fascism returned.
After these two setbacks, Latin America shook, but kept moving forward. Hugo Chavez died, or was murdered by the North, depending which theory you subscribe to. His demise was a tremendous blow to the entire continent, but still, the continent kept moving. “Here, nobody surrenders!” Chavez shouted, dying, but proud.
“President Correa of Ecuador is one of very few leaders of the “original project””, said Paola Pabón. “Lula in Brazil will not be able to stand for reelection, anymore, mainly due to corruption scandals. Mujica is not in power, anymore, and Cristina Fernandez will be retiring. Evo Morales does not have regional influence, and even Maduro does not have… For this reason, Ecuador is so important, strategically. If ‘they’ hit us, if there is a successful coup, it would be tremendous victory for them, to destroy a President with regional importance; who speaks for the region… and also, because Ecuador is one country where the government actually functions well.”
Walter Bustos, who used to work for this government, is alarmed by developments in Ecuador and the entirety of Latin America. Both he and Paula Pabón realize how fragile the Latin American revolutions are. While driving with me to an indigenous area of Riobamba, Walter lamented:
In case there is a military coup in Ecuador, the difference between here and Venezuela would be enormous: while in Venezuela, Chavez incorporated the military into his revolution, in case of citizens revolution in Ecuador, we have no security; we cannot count on support of the military in case there is some armed, political or economic attack against us.
Hugo Chavez was not only a great revolutionary, but also a tremendous strategist. He knew that any great revolution has to be fought, won, and then defended. Winning the battle is never enough. One has to consolidate forces, and uphold the victory. Chavez was first thinker, and then soldier.
Correa, Morales, Fernandez go forward, brave, proud but unprotected. Under their governments, the lives of ordinary people improve tremendously. That is what matters to them. They are decent and honest beings, unwilling to dirty themselves with intrigues, speculations and conspiracy theories.
But their great success will not gain them any recognition from the Empire, or from their own elites. The success of socialism is the worst nightmare for rulers of the world and their local butlers.
This is how President Salvador Allende died in 1973. He dismissed all rumors, and then all warnings that the coup was coming. “I am not going to arrest people just because of some suspicion that they may do something”, he used to say. After the coup took place, he died proudly, a true hero, committing suicide by marching towards the helicopter gunships and fighter jets that were bombarding the Presidential Palace of La Moneda. But he was not the only victim. As a result of the coup, thousands of Chilean people died, and tens of thousands were savagely tortured and raped. Chile did not die, but went into a horrific coma, from which it only recently manages to recover.
Henry Kissinger summarized the moral corruption/collapse of his country’s regime when he uttered his memorable phrase:
I don’t see why we need to stand by and watch a country go communist due to the irresponsibility of its people. The issues are much too important for the Chilean voters to be left to decide for themselves.
Despite his great intentions, President Salvador Allende failed his people. He underestimated the bestiality of the Empire, and the result were millions of broken lives.
Since then, the Empire’s selfishness and brutality only evolved. The more successful leaders like Correa become, the more real is the danger of a coup – of a devastating, deadly attack from the North, and subversion from within.
The fragility of Latin American revolutions is obvious. The elites cannot be trusted. They showed on many occasions how far they are willing to go, committing treason, collaborating with the West against their own nations: in Chile, Peru, Colombia, Mexico, Honduras, Venezuela, Paraguay and Bolivia, to name just a few cases.
Appeasing both the elites and the Empire, while fighting for social justice and true independence, is impossible. The elites want to have full control of their countries, while the Empire demands full submission. No compromise could be reached. The history speaks clearly about that. And the Empire demonstrated on countless occasions that Latin American democracy would be respected only if the people vote the way that suits Washington.
Latin America has to learn how to defend itself, for the sake of its people.
Its closer and closer cooperation with China and Russia is essential. A coherent regional defense agreement should follow.
The next few years will be crucial. The revolutions have to be institutionalized; they cannot depend only on charisma of its leaders.
Constant sabotages and coup attempts, like those in Venezuela, should not be tolerated. They lead to chaos and to uncertainty. They break countries economically and socially.
It is clear what the Empire and its servants are doing: they are trying to push Latin American revolutionary countries against the wall, as they pushed, in the past, North Korea. They are trying to make them “react”, so they could say: “You see, this is true socialism, this defensive, hermitic and paranoid system.”
The path will not be easy. It will be dangerous and long.
Latin America can only survive through international cooperation and solidarity. It would also have to fight legally, at home and abroad. Those who are committing treason and those who are interrupting development of the country should face justice.
The left wing governments that are ruling South American countries won democratic elections: much more democratic than those in Europe and the United States. If the individuals and groups act against the expressed will of their own people, they should be taken to courts.
If a powerful country tortures other countries and shows total spite for their people, it should face an international legal system. The United States demonstrated, countless times, that it considers itself well above the law. It even forced several government in Latin America and elsewhere, to give its military personnel immunity. One of these countries is Paraguay, historically flooded with CIA, DEA and FBI agents.
In order to legally restrain the Empire, huge international pressure would have to be built. Like in the case of Managua, which legally sued the US for many acts of terror committed against Nicaragua. The Empire will most likely refuse to accept any guilty verdict. But the pressure has to be on!
All this would be meaningless without dedicated, constant coverage of the events by independent or opposition media, be they huge new state-funded networks like RT, TeleSur, CCTV or Press TV, of progressive independent media like Counterpunch, VNN, or ICH. It is essential that Latin Americans demand information from these sources, instead of consuming the toxic lies spread through CNN en Español, FOX, EFE and other right wing Western sources.
The battle for the Latin American people and for their freedom is on. Do not get fooled, it has been on for quite some time, and it is very tough fight.
Latin America is one of the fronts of the integrated fight for the survival of our Planet.
People who admire this part of the world, all those who have been inspired by Latin American revolutions, should participate in the struggle.
The best sons and daughters of this continent are now fighting in their own, quixotic way, as they always did: frontally, with exposed heart, totally unprotected. But their fight is just, and they are in this battle in order to defend the people.
Their opponents are rich, deceitful and brutal. But they are also selfish and they fight only for their own interests. They are not loved by their nations. If they lose, Latin America will win!
Those countries defending themselves against the Empire should unite, before it’s too late. Now as Latin America is rising from its knees, it becomes clear who are its foes and who are real friends, real brothers and sisters!
This scarred but stunning continent of courageous poets, of dreamers and revolutionaries should not be allowed to fall. In Caracas, Quito and La Paz, they are fighting for entire humanity.
Andre Vltchek is a philosopher, novelist, filmmaker and investigative journalist. He covered wars and conflicts in dozens of countries. His latest books are: “Exposing Lies Of The Empire” and “Fighting Against Western Imperialism”.
Recent news has shown China quickly gaining ground against a West which has for centuries maintained hegemony over Asia Pacific. Beyond Asia, China has been steadily expanding its influence throughout Africa and the Middle East. Together with Russia, Iran and other nations of the “East,” they are constructing what is commonly referred to as a “multi-polar” world order.
This multi-polar world order stands in contrast to the unipolar order the West has sought to impose for decades after the end of the World Wars and is a continuation of Western imperialism carried out by the British and other European empires during the decline of the Ottoman Empire.
But is what the East doing truly building an alternative to the West’s brand of hegemonic imperialism? Or is it simply more of the same under a different label? Moreover, is the West’s behavior coaxing other nations to unify under a singular, consolidated banner, only to be rolled under the West’s vision of an international order ruled from Washington, Wall Street, London and Brussels?
These are questions that must be asked and explored particularly by the people who gravitate toward the East the most. They understand the threat of Western hegemony and the very real damage it has and still is inflicting upon humanity. From the devastation of Iraq and Afghanistan, to the wars raging in Yemen, Syria and Libya, Western designs have taken unstable tinderboxes around the globe and turned them into raging infernos.
Naturally, people look for a force to counter such inhumane violence, bloodshed and shameless exploitation and manipulation. They see that counter in Russia, China and those in their spheres of influence. And while in the past these nations have indeed served as counterweights to the forces of fascism or imperialism, one must always be careful not to simply back one hegemon over another.
For Moscow, Beijing and across the other BRICS nations, they must understand that the support and success they enjoy is specifically because they offer what many believe is an alternative to, not a replacement for Western hegemony. The world sees BRICS as a viable alternative specifically because they are not setting up military bases in foreign lands, intervening militarily thousands of miles from their borders and working with nations instead of coercing them. As soon as they cease to uphold these principles, they will cease to serve as a relevant alternative to the West.
China in particular has been long criticized by the West for doing business with any nation regardless of their so-called human rights record. The West however, makes these criticisms because it disrupts their ability to exploit human rights as a pretense to meddle diplomatically, militarily and economically in any targeted country. Meanwhile, the West gladly has conducted long-term business with the most egregious human rights offenders on Earth, the Saudi regime chief among them.
China has repeatedly, sometimes even painfully reasserted the primacy of national sovereignty in ruling over all international relations. It must not only continue to reassert this message diplomatically, but also pragmatically throughout its foreign policy. Not only is it a matter of self-interest, preventing foreign interests from dictating to Beijing what it should do within its own borders, but it helps set a solid precedent in establishing a new multi-polar global order.
Supranational Institutions Old and New
Russia, China and the rest of BRICS are themselves creating a variety of supranational institutions and military alliances to compete against those of the West, particularly the IMF, World Bank, NATO, and even the UN itself. However, while doing this, they must ensure the preservation, even the encouragement of national sovereignty as the primary organizing principle among these new institutions. And not just on paper, but especially in practice, whether it suits BRICS at the moment or not.
This is because whether those special interests behind BRICS and standing in apparent opposition to the West realize it or not, the very reason they have been given an opportunity by the global public is specifically because they are perceived as being different from the West and the Western way of using their global wealth and influence. And whether it serves their interests immediately or fully, they must fulfill these expectations or suffer the same backlash the West is now facing, both at home and abroad.
The world is changing economically, technologically and culturally. These shifts have not boded well for the concept of “globalization” or even supranational institutions. To seek to create doppelgangers of existing and failing Western supranational and international institutions seems folly at best.
Understanding this, and balancing competition with the West’s existing and still potent institutions, against the changing dynamics of the coming future is essential for the survival and eventual success of BRICS and the multi-polar world they claim to want to create.
A world where technology now empowers one individual to do what once required many people and tremendous resources, constitutes a shift in the balance of power between local communities, nations and global alliances and power brokers. Even if the people have yet to realize this, they will soon. The future of BRICS depends on a collective understanding that fighting this coming shift will lead BRICS to the same cliff the West is currently dangling over.
For the people themselves, they must understand that they have always been in the driver’s seat, even if insidious hands have reached past them to take the wheel for the majority of this trip. Realizing that the people, not special interests have the ability to steer the world toward a path we would all like to see it on is our greatest bet. We need not obsessively support one bloc over another, subscribing almost religiously to political parties, personalities and brands, but should instead agree on a set of principles and only back those as long as they uphold those principles.
By attaching ourselves to political parties, personalities and brands, we stand only to be inevitably disappointed. On the other hand, principles are inextinguishable, indomitable and everlasting. In the ongoing game of geopolitics, if ever we want to finally break the continuous turning of the wheel of history, we must stop following those whose hands are turning that wheel, and follow the principles that always and forever lead forward.
When Russia, China and the rest of BRICS stand up for national sovereignty, non-interventionism and non-military expansionism, we should applaud them not because they are simply BRICS, but because of the principles they are upholding. When they fail to do so, we must also, and as equally as vocal, condemn them.
Russian national security advisor Nikolai Patrushev has alleged that Western countries have used capital outflows from BRICS countries as a pressure tactic.
India and Brazil, among the BRICS countries, are most vulnerable to capital outflows as they rely heavily on external funding.
Western countries have pulled out more than $3.5 trillion over the last 10 years and $1.5 trillion from BRICS countries over the last three years as a mechanism to pressure the group, Russian Security Council Secretary Nikolai Patrushev said Tuesday.
“International financial institutions are being used by the West more and more often as an instrument of pressure. Over the last 10 years, the total capital outflow from the BRICS economies has reached $3.5 trillion, and more than half of that total left over the last three years,” Patrushev said during a BRICS security meeting in Moscow.
Patrushev added “the creation of BRICS development bank is an important step in ensuring economic security of the BRICS countries.”
India’s Central Bank Governor Raghuram Rajan, had also said earlier that India needs to build a “bullet-proof national balance sheet” to deal with the fallout on the economy from outflow of capital.
Greece has been invited by Russia to become the sixth member of the BRICS New Development Bank (NDB). The $100 billion NDB is expected to compete with Western dominance and become one of the key lending institutions.
The invitation was made by Russian Deputy Finance Minister Sergey Storchak on Monday during a phone conversation with Greek Prime Minister Alexis Tsipras, according to a statement on Greece’s Syriza party website. Tsipras thanked Storchak, who’s currently a representative of the BRICS Bank for the invitation, and said Greece was interested in the offer.
“The Prime Minister thanked Storchak and said he was pleasantly surprised by the invitation for Greece to be the sixth member of the BRICS Development Bank. Tsipras said Greece is interested in the offer, and promised to thoroughly examine it. He will have a chance to discuss the invitation with the other BRICS leaders during the 2015 International Economic Forum in St. Petersburg,” the statement said.
During the 6th BRICS summit in Fortaleza in June 2014 the members agreed to forge ahead with the $100 billion NDB, as well as a reserve currency pool worth over another $100 billion. In March this year, Russian President Vladimir Putin ratified the NDB.
The new bank is expected to challenge the two major Western-led institutions, the World Bank and the International Monetary Fund. It will finance infrastructure projects in the BRICS countries and across other developing countries and is expected to start functioning by the end of 2015, with the headquarters in Shanghai.
Russia and Greece have been strengthening economic cooperation, as both countries have their own issues. While Russia is stuck in a so-called ‘sanctions war’ with the EU and the US, Greece is struggling to repay its multibillion euro debt to the troika of international lenders – the IMF, the ECB and the European Commission.
Greece is trying to find a compromise with its international creditors to have a further €7.2 billion bailout unlocked. So far Athens has been settling its IMF repayments on time. The country started repaying €750 million in debt interest Monday, but Finance Minister Yanis Varoufakis warned Greece’s finances are “a terribly urgent issue,” and the country could default by next month if no proper measures are taken.
Greece’s government has agreed a number of strategic deals with Russia during Prime Minister Alexis Tsipras’ visit to Moscow in April, including participation in the Turkish Stream project that’ll deliver Russian gas to Europe via Greece.
It was rumored Russia was ready to help Athens, but President Putin said Greece hasn’t formally asked Moscow for help. Instead of direct financial assistance Russia could help out by buying Greek state assets in privatization sales, or in other investment projects, the President said in April.
There is media confusion about what is going on in Yemen and the broader Middle East. Pundits are pointing out that the US is looking schizophrenic with policies that back opposite sides of the fight against al-Qaeda-style extremism in Iraq and in Yemen.
But it isn’t that hard to understand the divergent policies once you comprehend the underlying drivers of the fight brewing in the region.
No, it isn’t a battle between Shia and Sunni, Iranian and Arab or the much-ballyhooed Iran-Saudi stand-off. Yes, these narratives have played a part in defining ‘sides,’ but often only in the most simplistic fashion, to rally constituencies behind a policy objective. And they do often reflect some truth.
But the ‘sides’ demarcated for our consumption do not explain, for instance, why Oman or Algeria refuse to participate, why Turkey is where it is, why Russia, China and the BRICS are participants, why the US is so conflicted in its direction – and why, in a number of regional conflicts, Sunni, Shia, Islamist, secularist, liberal, conservative, Christian, Muslim, Arab and Iranian sometimes find themselves on the same side.
This is not just a regional fight – it is a global one with ramifications that go well beyond the Middle East. The region is quite simply the theatre where it is coming to a head. And Yemen, Syria and Iraq are merely the tinderboxes that may or may not set off the conflagration.
“The battle, at its very essence, in its lowest common denominator, is a war between a colonial past and a post-colonial future.”
For the sake of clarity, let’s call these two axes the Neo-Colonial Axis and the Post-Colonial Axis. The former seeks to maintain the status quo of the past century; the latter strives to shrug off old orders and carve out new, independent directions.
If you look at the regional chessboard, the Middle East is plump with governments and monarchies backed to the hilt by the United States, Britain and France. These are the West’s “proxies” and they have not advanced their countries in the least – neither in self-sufficiencies nor in genuine democratic or developmental milestones. Indebted to ‘Empire’s’ patronage, these states form the regional arm of the Neo-Colonial Axis.
On the other side of the Mideast’s geopolitical fault line, Iran has set the standard for the Post-Colonial Axis – often referred to as the ‘Resistance Axis.’ Based on the inherent anti-imperialist worldview of the 1979 Islamic revolution, and also as a result of US/UK-driven isolating sanctions and global politics, Tehran has bucked the system by creating an indigenous system of governance, advancing its developmental ambitions and crafting alliances that challenge the status quo.
Iran’s staunchest allies have typically included Syria, Hezbollah and a handful of Palestinian resistance groups. But today, in the aftermath of the Arab Spring counter-revolutions – and the sheer havoc these have created – other independent players have discovered commonalities with the Resistance Axis. In the region, these include Iraq, Algeria and Oman. While outside the Mideast, we have seen Russia, China and other non-aligned nations step in to challenge the Neo-Colonial order.
Neo-Colonial Axis hits an Arab Spring wall
Today, the Neo-Colonials simply can’t win. They lack two essential components to maintain their hegemony: economy and common objectives.
Nowhere is that more clear than in the Middle East, where numerous initiatives and coalitions have floundered shortly after inception.
Once Muammar Gaddafi was overthrown in Libya, all parties went their own way and the country fractured. In Egypt, a power struggle pitted Sunni against Sunni, highlighting the growing schism between two Gulf Cooperation Council (GCC) patrons Saudi Arabia and Qatar. In Syria, a heavyweight line-up of Turkey, Qatar, Saudi Arabia, France, the US and UK could not pull together a coherent regime-change plan or back the same horse.
In the vacuum created by these competing agendas, highly-organized al-Qaeda-style extremists stepped in to create further divergence among old allies.
Western hegemons – the original colonials and imperialists – grew fatigued, alarmed, and sought a way out of the increasingly dangerous quagmire. To do so, they needed to strike a compromise with the one regional state that enjoyed the necessary stability and military prowess to lead the fight against extremism from within the region. That would be their old adversary, Iran.
But the West is geographically distant from the Mideast, and can take these losses to a certain extent. For regional hegemons, however, the retreat of their Western patrons was anathema. As we can see, Turkey, Saudi Arabia and Qatar have recently rushed to resolve their differences so they can continue to design the region’s direction in this Western vacuum.
These counter-revolutionary states, however, share grandiose visions of their own regional influence – each ultimately only keen to achieve their own primacy. And the continued ascendance of Iran has really grated: the Islamic Republic seems to have moved from strength to strength during this ‘Arab Spring,’ picking up new allies – regional and global – and consolidating its gains.
For Saudi Arabia, in particular, Iran’s incremental victories go beyond the pale. Riyadh has, after all, staked its regional leadership role on a sectarian and ethnic divide, representing Arab and Sunni stakeholders against “Iranian” and “Shiite” ones. Now suddenly, not only are the Americans, British and French dallying with the Iranians, but the GCC itself has been split down the center over the issue of ‘engagement vs. confrontation’ with the Islamic Republic.
Worse yet, the Saudi efforts to participate in the overthrow of Gaddafi, squash uprisings in Bahrain, control political outcomes in Yemen, destabilize Syria, divide Iraq and conquer Egypt seem to have come to naught.
In all instances, they have yet to see cemented, meaningful gains – and each quagmire threatens to unravel further and deplete ever more Saudi funds
Today, the Saudis find themselves surrounded by the sickly fruits of their various regional interventions. They have endured recent attacks by violent extremists on their Iraqi and Jordanian borders – many of these recipients of past Saudi funding – and now find themselves challenged on a third border, in Yemen, by a determined constituency that seeks to halt Saudi interventions.
Beyond that, Syria and Lebanon have slipped out of Riyadh’s grip, little Qatar seeks to usurp the traditional Saudi role in the Persian Gulf, Egypt dallies with Russia and China, and Pakistan and Turkey continue a meaningful engagement with Iran.
Meanwhile, the Iranians don’t have to do much of anything to raise the Saudi ire. Iran has stepped up its regional role largely because of the Saudi-led counter-revolution, and has cautiously thwarted Riyadh’s onslaughts where it could. It has buoyed allies – much like NATO or the GCC would in similar circumstances – but with considerably less aggression and while cleaving to the letter of international law.
The Saudis see Iranian hands everywhere in the region, but this is a fantasy at best. Iran has simply stepped into an opportunity when it arises, met the threats coming its way, and utilized all its available channels to blunt the Saudi advances in various military and political theaters.
Even the US intelligence community’s annual security assessment – a report card that regularly highlights the “Iranian threat” – concludes in 2015 that the Islamic Republic of Iran has “intentions to dampen sectarianism, build responsive partners, and deescalate tensions with Saudi Arabia.”
Yet all we hear these days blaring from Western and Arab media headlines is “Shia sectarianism, Iranian expansionism and Persian Empire.”
Tellingly, the American intelligence assessment launches its section on “terrorism” with the following: “Sunni violent extremists are gaining momentum and the number of Sunni violent extremist groups, members, and safe havens is greater than at any other point in history.”
And US officials admit: many of these Sunni extremists have been assisted and financed by none other than Washington allies Saudi Arabia, Turkey and Qatar.
The Yemeni theater – a final battleground?
A senior official within a Resistance Axis state tells me: “The biggest mistake the Saudis made is to attack Yemen. I didn’t think they were that stupid.”
In the past week, the Saudis have cobbled together yet another Neo-Colonial ‘coalition’ – this time to punish Yemenis for ousting their made-in-Riyadh transitional government and pushing into the southern city of Aden.
The main Saudi adversaries are the Houthis, a group of northern, rural highlanders who have amassed a popular base throughout the north and other parts of Yemen over the course of ten years and six wars.
The Saudis (and the US) identify the Houthis as ‘Shiites’ and ‘Iranian-backed’ in order to galvanize their own bases in the region. But Iran has had little to do with the Houthis since their emergence as a political force in Yemen. And WikiLeaks showed us that US officials know this too. A 2009 cable from the US Embassy in Riyadh notes that Yemen’s former Saudi-backed President Ali Abdullah Saleh provided “false or exaggerated information on Iranian assistance to the Houthis in order to enlist direct Saudi involvement and regionalize the conflict.”
And allegations that Iran arms the Houthis also fall flat. Another secret cable makes clear: “Contrary to ROYG (Republic of Yemen Government) claims that Iran is arming the Houthis, most local political analysts report that the Houthis obtain their weapons from the Yemeni black market and even from the ROYG military itself.”
Saleh was deposed in 2011 as a result of Arab Spring pressures, and in a twist worthy of the complicated Middle East, the wily former president now appears to be backing his former adversaries, the Houthis, against his old patrons, the Saudis.
The Houthis are adherents of the Muslim Zaydi sect – which falls somewhere between Sunnism and Shiism, and is followed by around 40 percent of Yemenis. Saleh, who fought the Houthis in half a dozen wars, is also a Zaydi – evidence that Yemen’s internal strife is anything but sectarian.
In fact, it could be argued that the Houthi – or Ansarallah movement – are a central constituency of Yemen’s ‘Arab Spring.’ Their demands since 2003 have, after all, largely been about ending disenfranchisement, gaining economic, political and religious rights, eliminating corruption, railing against the twin evils of America and Israel (a popular Post-Colonial Arab sentiment), and becoming stakeholders in the state.
To ensure the balance continued in their favor during the Arab Spring, the Neo-Colonial Axis installed a puppet transitional leader upon Saleh’s departure – an unelected president whose term ran out a year ago.
Then a few months ago, the Houthis – allegedly with the support of Saleh and his tens of thousands of followers – ousted their rivals in the puppet regime and took over the Yemeni capital, Sana’a. When the Saudis threatened retaliation, the Houthis pushed further southward… which brings us to the war front amassing against Yemen today.
This is not a battle the Saudis and their Neo-Colonial Axis can win. Airstrikes alone cannot turn this war, and it is unlikely that Riyadh and its coalition partners can expect troops on the ground to be any more successful – if they are even deployed.
The Houthis have learned over the past decade to fight both conventional and guerilla wars. This relatively small band of highlanders managed in 2009 to push 30 kilometers into Saudi territory and take over several dozen Saudi towns. When coalition-partner Egypt last fought a war with ground troops in Yemen, it became Gamal Abdel Nasser’s ‘Vietnam’ and nearly bankrupted the state.
Even majority-Sunni Pakistan, a traditional pipeline for staffing GCC armies, seems wary about this conflict. It too is fighting elsewhere on the same side as the Houthis, Iranians, Syrians, Iraqis – against violent Sunni extremists inside its borders and from their bases in neighboring Afghanistan. No amount of Saudi money will quench the anger of militant-weary Pakistanis if their government commits to this Yemeni fight – against the very groups (Houthis) that are battling al-Qaeda in the Arabian Peninsula (AQAP).
And, yes, it is ironic that the United States is now providing assistance and intelligence for the Saudi-led coalition – against the Houthis, who are fighting al-Qaeda.
But as mentioned earlier, this is not Washington’s neighborhood, and it does not approach this fight with the same goals of its close ally, Saudi Arabia.
The Resistance Axis official explains:
“The Americans see all outcomes as good: If the Houthis win, they will help get rid of al-Qaeda in Yemen. If the Saudis win, well, these are still the US’s allies. And if both sides enter a protracted war, that is “not a problem either,” referring to the ever-present US interest of selling weapons in conflict zones.
Despite a global ban, the United States has sold the Saudis $640 million worth of cluster bombs over the past two years, some of which have been used to carpet bomb parts of Yemen in the past few days. The cluster munitions were part of an overall $67 billion worth of arm deals with Saudi Arabia since the Arab uprisings kicked off in 2011.
The Iranians, meanwhile, are not doing much of anything, except insisting – like the Russians and others – that the bombardment of Yemen is criminal and that Yemenis need to solve their own problems via an internal dialogue.
And why should they make any moves? The Saudis are digging their own graves right now – and hastening the demise of the entire Neo-Colonial project in the Middle East, to boot.
“Tehran realizes that the fact that Riyadh had to bring together a major coalition to fight a group that is only on the outskirts of Iranian influence is a victory in itself,” says the US-based, conservative risk-analysis group, Stratfor.
Riyadh’s move to attack Yemen has just dragged the not-so-financially-flush Kingdom into yet another military quagmire, and this time directly, bypassing proxies altogether. Every airstrike in Yemen – and it is clear in the first few days that dozens of civilians, including children, have been killed – threatens to draw more adherents to the Houthi cause.
And every day that the Houthis are tied up in this battle, AQAP gets an opportunity to cement its hold elsewhere in the country. The net winner in this conflict is unlikely to be Saudi Arabia, but it may just be al-Qaeda – which is guaranteed to draw the Post-Colonial Axis into the strategically vital waterways surrounding Yemen.
The Arab League, under Saudi Arabia’s arm-twisting, just upped the ante by demanding that only a complete Houthi surrender (laying down weapons and withdrawing) would end the airstrikes. This ultimatum leaves very little room to jumpstart dialogue, and shows shocking disregard for the normal goals of military engagement, which try to leave ‘negotiation windows’ open.
It may be that the Saudis, who have rapidly lost influence and control in Syria, Iraq, Lebanon, Oman, and other states in the past few years, have decided to go to the wall in Yemen.
Or it may just be some posturing to create momentum and bolster bruised egos.
But conflict has a way of balancing itself out – as in Syria and Iraq – by drawing other, unforeseen elements into the fray. With all the conflicts raging in the Middle East and encroaching on their borders, the Post-Colonial Axis has been forced to take a stand. And they bring to the field something their adversaries lack: common objectives and efficiency.
This is possibly the first time in the modern Mideast we have seen this kind of efficiency from within. And I speak specifically of Iran and its allies, both regional and external. They cannot ignore the threats that emanate from conflict, any more than the west can ignore the jihadi genie that threatens from thousands of miles away. So this Post-Colonial Axis moves further into the region to protect itself, bringing with it lessons learned and laser-focused common goals.
The Neo-Colonials will hit a wall in Yemen, just as they have in Syria, Iraq and elsewhere. Their disparate objectives will ensure that. The main concern as we enter yet another storm in Yemen is whether a flailing Empire will turn ugly at the eleventh hour and launch a direct war against its actual adversary, the Post-Colonial Axis. The Saudis are a real wild card – as are the Israelis – and may try to light that fuse. When the threat is existential, anything goes.
Yes, a regional war is as much a possibility over Yemen as it was over Syria. But this battle lies on a direct border of Saudi Arabia – ground zero for both violent extremism and the most virulently sectarian and ethnocentric elements of the anti-Resistance crowd – and so promises to deliver yet another decisive geopolitical shift in the Mideast. From Yemen, as from any confrontation between the two global blocs, a new regional reality is likely to emerge: what the Americans might call “the birth pangs of a new Middle East.”
And Yemen may yet become the next Arab state to enter a Post-Colonial order.
Sharmine Narwani is a commentator and analyst of Middle East geopolitics. She tweets @snarwani
Russia has adopted an updated version of its military doctrine, which reflects the emergence of new threats against its national security. NATO military buildup and American Prompt Global Strike concept are listed among them.
The new doctrine was approved on Friday by President Vladimir Putin. Its core remains unchanged from the previous version. The Russian military remains a defensive tool which the country pledges to use only as a last resort.
Also unchanged are the principles of the use of nuclear weapons which Russia adheres to. Their primary goal is to deter potential enemies from attacking Russia, but it would use them to protect itself from a military attack – either nuclear or conventional – threatening its existence.
The new sections of the doctrine outline the threat Russia sees in NATO’s expansion and military buildup and the fact that the alliance is taking upon itself “global functions realized with violation of international law.”
The doctrine lists among major foreign military threats “the creation and deployment of global strategic anti-ballistic missile systems that undermine the established global stability and balance of power in nuclear missile capabilities, the implementation of the ‘prompt strike’ concept, intent to deploy weapons in space and deployment of strategic conventional precision weapons.”
Another new point in the doctrine is that one of the Russian military’s goals is to protect national interests in the Arctic region.
The document also points to the threat of destabilization of countries bordering Russia or its allies and deployment of foreign troops in such nations as a threat to national security.
Domestically, Russia faces threats of “actions aimed at violent change of the Russian constitutional order, destabilization of the political and social environment, disorganization of the functioning of governmental bodies, crucial civilian and military facilities and informational infrastructure of Russia,” the doctrine says.
Moscow sees international cooperation with countries sharing its effort to increase security, particularly members of BRICS, the OSCE, the Shanghai Cooperation Organization and others as the key to preventing military conflicts, the doctrine states.
Traditional threats that Russia must deal with mentioned in the doctrine include extremism and terrorism, proliferation of weapons of mass destruction and rocket technology and actions of foreign intelligence services.
The document notes that modern threats are increasingly drifting from a military nature to informational, and states that the likelihood of anyone launching a fully-fledged war against Russia is decreasing.
At the end of June, 2014, a New York Second District Judge ruled in favour of a hedge fund, NML Capital, and against the Republic of Argentina. The issue at stake was if a hedge fund that bought debt paper three years after a debt restructuring, had or not the right to collect on the same terms as the rest of creditors. The ruling was, yes it has. The problem is that in the original debt restructuring creditors received new instruments with a strong haircut that made the payback possible for Argentina, while the old instruments do not have any debt reduction. In this way, the profitability of the hedge funds in buying, in 2008, those old unwanted instruments of a debt rescheduled in 2005, and unpaid since 2001, will be of 1,600%. The way the hedge fund works is through buying, at a very heavy discount, the debt paper that was not included in the rescheduling, and then suing the Argentine Government for full payment of capital plus all the interest due. Interest comes free when debt paper is under impaired value credit category. Elliott Associates, major shareholder of NML Ltd., has made a reputation for cornering Governments in times of need and getting away with it. Panama was the first one, Congo, Peru, Argentina amongst others. Their argument is that these lawsuits discipline the debtors.
The international relevance of this sort of activity is that it brings to the fore the nature and presence of US law and rulings in international finance. Most US dollar-denominated debt is issued under US law and subject to the Southern district courts of New York City, those near Wall Street. This means that if Botswana borrows from Uganda in US dollars, it is almost certain those contracts will be written under NY law. The ramifications of this are that any legal action between those two countries will be subject to New York law, with the implication that New York law becomes world law and is applied worldwide, becoming a mechanism of coercion. The enforcement of payment in the ruling is executed through bank account or asset embargoes. For example, in 2012 the Argentine frigate Libertad was seized in a port in Ghana under orders from the New York judge. She was released after some months under a ruling from the UN International Tribunal for the Law of the Sea because she holds diplomatic immunity.
The last ruling includes non-dollar denominated instruments signed under British and other laws, with the argument that the payment due to one creditor is equally due to all. Ecuador, a debtor that defaulted and bought its debt at a 70% discount in 2008 decided in May 2014 to buy back 80% of the held out debt plus interest and got it over with. The huge return on investment for unpaid bondholders was less of a problem for Ecuador than the likelihood of having its accounts frozen after the new loans were disbursed, given it is a dollar denominated economy.
Vulture funds are hedge funds specialised in buying debt paper from problem debtors who have solved or are in the process of solving a default problem. They jump over their prey, the struggling country, purchase his debt instruments not included in the final debt restructuring arrangement at a small percentage of face value and sue the country for full payment including interest. If the country is undergoing duress, the fund is perfectly happy to subject her citizen’s to more hardship in exchange for a huge profit. This is possible because debt papers before 2001 did not have collective action clauses (CAC) yet, which means that if most creditors agreed to a debt workout solution, this included only those who joined voluntarily. With a CAC, if a large portion of the creditors are in favour of a workout, all instruments are included.
The lack of CAC was made evident when Elliott sued Peru in the 1990s and won the case in 2000. Peru had undergone the longest sovereign default in history, from 1984 to 1994, and came out with a debt restructuring that included a sharp haircut and new Brady bonds. Only four instruments were left at Swiss Bank Corp., the Peruvian manager of the Brady deal, belonging to Banco Popular, a bankrupt bank closed in 1992. These four instruments were sold by Swiss Bank, the agent for Peru’s debt, to Elliott not to Peru, after the Brady deal had been signed in what appeared to be a breach of contract on Swiss bank’s side. Elliott then sued Peru and apparently got a helping hand from a Peruvian lawyer who happened to be an official at the Ministry of Finance in 1994. There was much information passed in 1994 from the Ministry of Finance to the creditors leading to the trial of Finance Minister Camet, responsible for this operation. He died in 2013 serving prison term at home for this and other cases.
Elliott sued Peru for 100% of capital. It had paid 5% of the face price of the papers. On top it sued it for unpaid interest since 1984. The profitability on the Peruvian operation was 1,600%. Peru’s case was made using the Champerty Doctrine that says that no debt purchased with the sole purpose of harming a debtor should be taken into account by the US judiciary. Investors who become creditors through the purchase of debt instruments at a time when the debtor is undergoing hardship should not be taken into legal consideration. Nevertheless, the New York judge ruled against Peru. Amongst the group of investors was a former US ambassador to Peru. It remains unclear if the former ambassador was there on his own right or as a representative of the US State Department. The Peruvian Government lost the case and the appeal and as a result all Society for Worldwide Interbank Financial Telecommunication (SWIFT) dollar transactions were blocked. After that, Elliott sued Peru in the Belgian courts that ruled in favour of Elliott and prevented the use of Brussels based Euroclear. It then proceeded to use Clearstream in Luxembourg, but knowing this would also be blocked. The argument of the Belgian Court was pari passu, all creditors should be treated equally.
The Argentine operation
NML associates, a subsidiary used by Elliott to do the Argentine operation, purchased 50 million dollars of debt paper that had not entered the restructuring scheme in 2005 and has sued for 1,500 million USD. The holders of those unrestructured papers sold them to NML in 2008 after the 2005 swap was arranged and before the 2010 swap was finalised. They then started the legal proceedings that have lasted six years until finally the judiciary ruled in favour of NML. The Argentine debt is held with creditors in many jurisdictions and not all are subject to US law, theoretically. Equally there are dollar and non-dollar denominated instruments and agent banks operating outside the US. The ruling however starts from a peculiar reading of the principle of pari passu, equal payments must be made to all creditors either if they restructured or if they did not, regardless of the law applied in their contract. The Trustee in charge of making the payments is Bank of New York who must abide by this ruling and comply with the law.
This ruling essentially takes away the incentive to restructure sovereign debts normally done on the basis of debt reductions. Worse, it places legal creditors who underwent the restructuring procedure on the same basis as highly speculative investors who operate on bad faith buying the debt after the swaps are finalised, in the spirit of Champerty. The gravest consequence is that a New York ruling is converted into a global ruling for any Argentine assets held by anyone anywhere. An explanation was given that the ruling is not meant to be a precedent which means the ruling was done as a specific punishment reminding the ruling of the Court of the Hague against Austria in 1931 when it decided it wanted to form a customs union with Germany. Then as now, if it is not a precedent, it is a punishment. The question is why.
Argentina’s position is that it is the right of a sovereign debtor to restructure its debt. It believes in the principle of non-intervention in foreign states and does not admit legal actions executed outside the natural range of the justice of the United States. In so doing it believes it is defending the property rights of the holders of Argentine bonds, especially those whose right is not governed by justice of the United States. But also of those who entered willingly and in good faith in the swap agreements of 2005 and 2010 and who this ruling has declared, for all purposes, invalid. Argentina is opening the fight by depositing the money at the Bank of New York so bondholders will collect. As the money belongs to the bondholders, they should be able to do so. This is the sense of a communique published in the international press in July, 2014, a week after the ruling was made public.
The vultures, being what they are, have a press campaign stating that Argentina does not want to pay any of its debt nor comply with US law. Argentina, on its side, has informed the clients it will pay through Euroclear which should protect them from the US international payment embargo, as book entry accounts in Euroclear enjoy unconditional immunity from attachment.
The international support given to Argentina is an expression of what is globally perceived as being an unjust ruling from a court that should not have extraterritorial functions over currencies and assets that are not US assets. The capture of a payment for Cuban cigars traded between Germany and Denmark under US law is an expression of the extraterritorial use of US law, which is unacceptable. If the international system is going to evolve it must go in the direction of international law and international courts and not in the direction of local law with a local court with global ramifications. This implies a new financial architecture which, following the lines of the BRICS in terms of financial reforms, could mean the creation of a clearing house and greater use of non-dollar means of payments in international transactions. The creation of an international financial law process in the United Nations sphere, similar to that being developed for international trade law (UNCITRAL), is vital. This should come together with the development of the concept of international tribunals for debt arbitration in order to obtain reasonable debt workouts of sovereign defaults following the principles of fair and transparent arbitration that should begin with a debt audit, keeping the Champerty principle in mind.
There are major flaws in the international financial architecture that allow the supreme court of the leading debtor country in the world to rule over the lives of millions of people in another land in an unjust, unfair and non-transparent manner. The ruling affects the position of other bondholders in non-dollar denominated instruments issued under other legal domains and opens the possibility of embargoes worldwide. It also opens up the possibility of disavowing the debt to international bondholders, following the same logic in reverse.
The practice of extorting money from troubled nations in favour of a minuscule group of investors who purchase debt paper after debt negotiations with the rightful creditors are finished, with the sole purpose of extorting an unfair profit from it, is sanctioned by US law. This is called the Champerty Doctrine. This sort of practice was outlawed in New York by Judiciary Law §489 http://codes.lp.findlaw.com/nycode/JUD/15/489#sthash.TroVCUs0.dpuf. The rulings from the New York courts, however, seem to favour the vultures and the application of the rulings worldwide has dire consequences on the debtor.
The lesson from the NML-Argentina case is that non-OECD countries in the future should not issue debt instruments in US dollars nor be subject to New York law and courts, given the risk expressed above. Given the world power structure change, BRICS should continue to develop a new international financial architecture. International trade should equally not be settled in US dollars and a new non-OECD international clearing house should be started to prevent harassments from dubious US rulings. International capital is not going to give up its power to extort wealth from distressed countries.
Newcastle and Fortaleza, 15 July, 2014.
– Oscar Ugarteche, Peruvian economist, is the Coordinador del Observatorio Económico de América Latina (OBELA), Instituto de Investigaciones Económicas de la UNAM, México – http://www.obela.org. Member of SNI/Conacyt and president of ALAI http://www.alainet.org
 “Ecuador Sells $2 Billion in to Bond Market,” Bloomberg, 17 June, 2014, at http://www.bloomberg.com/news/2014-06-17/ecuador-plans-bond-market-return-today-five-years-after-default.html
 “Argentina’s Woes don’t Chill Ecuador’s New York Bond Sales”, Bloomberg, June 24, 2014 at http://www.bloomberg.com/news/2014-06-24/argentina-s-chilling-effect-on-new-york-debunked-by-ecuador-sale.html
 Congreso del Perú. Comisión Investigadora de la Corrupción. Caso Elliott. Junio, 2003. Fallo judicial. http://www.congreso.gob.pe/historico/ciccor/anexos/CASO%20ELLIOT%20ASSOCIATES%20LLP%20TOMO%20II.pdf
 Rodrigo Olivares-Caminal, “The Pari Passu Interpretation in the Elliott Case. A Brilliant Strategy but an awful (mid long term) outcome”, Hoftsra Law Review, 2011, Vol. 40, pp. 39-63.
Conversations with various Argentine officials over the February to June 2014 period.
 “Don’t worry about an Elliott vs Argentina precedent”, January 11, 2013, http://blogs.reuters.com/felix-salmon/2013/01/11/dont-worry-about-an-elliott-vs-argentina-precedent/
 “US snubs out legal cigar transaction.” Copenhagen Post, February 27, 2012. http://cphpost.dk/news/us-snubs-out-legal-cigar-transaction.898.html
Mérida – Venezuela participated in the gathering of the BRICS emerging powers and Latin American regional blocs in Brazil this week, where new agreements were hailed as beginning the creation of a new global financial architecture.
Several multilateral meetings were held in the city of Fortaleza, including the 6th BRICS (Brazil, Russia, India, China and South Africa) Summit, and meetings between China and the Union of South American Nations (UNASUR) and the Community of Latin American and Caribbean States (CELAC).
During the BRICS summit, the five emerging economies created a new development bank and a multilateral reserve fund, each of which will potentially hold US $100 billion of pooled capital. The reserve fund will be used to support members of the bloc against adverse economic conditions or external impacts.
The creation of the new institutions is partly motivated by dissatisfaction with the terms of the financial hegemony exercised by the U.S. and its European allies through the IMF and World Bank.
“The strength of our project has positive potential: we want the global [financial] system to be fairer and more equal,” said Brazilian president Dilma Roussef to media.
On Wednesday and Thursday China met with the UNASUR and CELAC blocs in order to explore strategies through which the Asian power could deepen its involvement in Latin America.
In the meeting with UNASUR countries it was discussed how BRICS and UNASUR could create more ties. After the meeting, Venezuelan president Nicolas Maduro reported that it had been proposed that the new BRICS Development Bank and UNASUR’s Bank of the South adopt a common strategy in the regional and global economies.
“The [new] financial institutions have the same objectives: the construction of a new financial architecture that benefits economic development in conditions of equity for our countries; where speculative financial capital is ended, where the looting of our economies is ended, and productive investment which creates employment and wealth is promoted,” he said to Telesur on Wednesday.
The Venezuelan president also argued that closer relations between BRICS and Latin America represented a “win win alliance” and “the birth of the multi-polar world”.
“In the past we were dominated powers, and now we are emerging countries and blocs,” he said.
The BRICS bloc has become a key trading partner for Venezuela. Commerce with the bloc increased by 72% from 2006 – 2013.
Meanwhile, agreements reached on Thursday between China and the CELAC bloc, which brings together all countries in the Americas apart from the U.S. and Canada, included the establishment of a $1 billion investment fund for infrastructure projects in Latin America, and a Chinese offer of scholarships for 6,000 Latin American students.
Other funds potentially worth $15 billion to support Latin American development were also discussed.
Latin America has become an important source of Chinese investment and exports, while South American powers have increasingly turned to China as a source of financing, technology transfer, and destination to export primary materials.
A top level delegation led by Chinese President Xi Jinping is currently touring the continent to further deepen China’s economic involvement in Latin America, with visits including Brazil, Argentina, and Venezuela, where Xi Jinping arrives today.
Venezuela also held several bilateral meetings in Fortaleza, including with China and Colombia.
The South American OPEC nation agreed to import a further 1,500 Chinese-made Yutong buses for the expansion of its public transport system. A Yutong factory is being built in Venezuela to begin domestic production of the vehicles, which will open next year.
The Venezuelan and Chinese central banks also reached an agreement to share information on statistical methodologies, monetary policy, and funding mechanisms. Both parties called the accord a “breakthrough” for enhancing economic ties.
Since 2001 the two countries have constructed what has been labeled as a “strategic alliance”. A high level bilateral session initiates in Caracas today with the arrival of Chinese president Xi Jinping.
Fortaleza, Brazil – After some tough rounds of negotiations, BRICS nations (Brazil, Russia, India, China and South Africa) have created not only a new $100 billion Development Bank, but also a $100 billion foreign currency reserves pool.
The announcement was made after a plenary meet of the five BRICS heads of state in Fortaleza on Tuesday.
Shanghai finally won the bid to host the Bank while India will get the presidency of the Bank for the first six years. The Bank will have a rotating chair. The Bank will also have a regional office in Johannesburg, South Africa. All the five countries will have equal shareholding in the BRICS Bank.
The five Finance Ministers will constitute the Bank’s board which will be chaired by Brazil.
The Bank will initially be involved in infrastructure projects in the BRICS nations.
The authorized, dedicated and paid in capital will amount to $100 billion, $50 billion and $10 billion respectively.
The idea of the BRICS Bank was proposed by India during the 2012 Summit in New Delhi.
BRICS have long alleged that the IMF and World Bank impose belt-tightening policies in exchange for loans while giving them little say in deciding terms. Total trade between the countries is $6.14 trillion, or nearly 17 percent of the world’s total. The last decade saw the BRICS combined GDP grow more than 300 per cent, while that of the developed word grew 60 per cent.
Apart from the new development Bank, the group of five leading emerging economies also created a Contingency Reserve Arrangement on Tuesday.
BRICS central banks will keep their reserves in gold and foreign currencies.
China will fund $41 billion, Brazil, India and Russia $18 billion each and South Africa with $5 billion. The funds will be provided according to a multiple. China’s multiple is 0.5, which means that if needed, the country will get half of $41 billion. The multiple is 2 for South Africa and 1 for the rest.
BRICS Finance ministers or central banks’ governors will form a governing body to manage the CRA while it will be presided over by the BRICS President.
The BRICS CRA will not be open to outsiders.
Meanwhile, at the Summit in Fortaleza, Russian President Vladimir Putin said BRICS must form an energy alliance.
“We propose the establishment of the Energy Association of BRICS. Under this ‘umbrella’, a Fuel Reserve Bank and BRICS Energy Policy Institute could be set up,” Putin said on Tuesday.