Guest Post: BRICS Against Washington Consensus

Tyler Durden's picture

As Pepe Escobar explains, way beyond economy and finance, this is essentially about geopolitics - as in emerging powers offering an alternative to the failed Washington consensus. Or, as consensus apologists say, the BRICS may be able to "alleviate challenges" they face from the "international financial system".

The headline news is that this Tuesday in Fortaleza, northeast Brazil, the BRICS group of emerging powers (Brazil, Russia, India, China, South Africa) fights the (Neoliberal) World (Dis)Order via a new development bank and a reserve fund set up to offset financial crises.


The devil, of course, is in the details of how they'll do it.


It's been a long and winding road since Yekaterinburg in 2009, at their first summit, up to the BRICS's long-awaited counterpunch against the Bretton Woods consensus - the IMF and the World Bank - as well as the Japan-dominated (but largely responding to US priorities) Asian Development Bank (ADB).


The BRICS Development Bank - with an initial US$50 billion in capital - will be not only BRICS-oriented, but invest in infrastructure projects and sustainable development on a global scale. The model is the Brazilian BNDES, which supports Brazilian companies investing across Latin America. In a few years, it will reach a financing capacity of up to $350 billion. With extra funding especially from Beijing and Moscow, the new institution could leave the World Bank in the dust. Compare access to real capital savings to US government's printed green paper with no collateral.


And then there's the agreement establishing a $100 billion pool of reserve currencies - the Contingent Reserve Arrangement (CRA), described by Russian Finance Minister Anton Siluanov as "a kind of mini-IMF". That's a non-Washington consensus mechanism to counterpunch capital flight. For the pool, China will contribute with $41 billion, Brazil, India and Russia with $18 billion each, and South Africa with $5 billion.


The development bank should be headquartered in Shanghai - although Mumbai has forcefully tried to make its case (for an Indian take on the BRICS strategy, see here )


Way beyond economy and finance, this is essentially about geopolitics - as in emerging powers offering an alternative to the failed Washington consensus. Or, as consensus apologists say, the BRICS may be able to "alleviate challenges" they face from the "international financial system". The strategy also happens to be one of the key nodes of the progressively solidified China-Russia alliance, recently featured via the gas "deal of the century" and at the St. Petersburg economic forum.


Let's play geopolitical ball


Just as Brazil managed, against plenty of odds, to stage an unforgettable World Cup - the melting of the national team notwithstanding - Vladimir Putin and Xi Xinping now come to the neighborhood to play top class geopolitical ball.


The Kremlin views the bilateral relation with Brasilia as highly strategic. Putin not only watched the World Cup final in Rio; apart from Brazilian President Dilma Rousseff, he also met German chancellor Angela Merkel (they discussed Ukraine in detail). Yet arguably the key member of Putin's traveling party is Elvira Nabiulin, president of Russia's Central Bank; she is pressing in South America the concept that all negotiations with the BRICS should bypass the US dollar.


Putin's extremely powerful, symbolic meeting with Fidel Castro in Havana, as well as writing off $36 billion in Cuban debt could not have had a more meaningful impact all across Latin America. Compare it with the perennial embargo imposed by a vengeful Empire of Chaos.


In South America, Putin is meeting not ony with Uruguay's President Pepe Mujica - discussing, among other items, the construction of a deepwater port - but also with Venezuela's Nicolas Maduro and Bolivia's Evo Morales.


Xi Jinping is also on tour, visiting, apart from Brazil, Argentina, Cuba and Venezuela. What Beijing is saying (and doing) complements Moscow; Latin America is viewed as highly strategic. That should translate into more Chinese investment and increased South-South integration.


This Russia-China commercial/diplomatic offensive fits the concerted push towards a multipolar world - side by side with political/economic South American leaders. Argentina is a sterling example. While Buenos Aires, already mired in recession, fights American vulture funds - the epitome of financial speculation - in New York courthouses, Putin and Xi come offering investment in everything from railways to the energy industry.


Russia's energy industry of course needs investment and technology from private Western multinationals, just as Made in China developed out of Western investment profiting from a cheap workforce. What the BRICS are trying to present to the Global South now is a choice; on one side, financial speculation, vulture funds and the hegemony of the Masters of the Universe; on the other side, productive capitalism - an alternative strategy of capitalist development compared to the Triad (US, EU, Japan).


Still, it will be a long way for the BRICS to project a productive model independent of the casino capitalism speculation "model", by the way still recovering from the massive 2007/2008 crisis (the financial bubble has not burst for good.)


One might view the BRICS's strategy as a sort of running, constructive critique of capitalism; how to purge the system from perennially financing the US fiscal deficit as well as a global militarization syndrome - related to the Orwellian/Panopticon complex - subordinated to Washington. As Argentine economist Julio Gambina put it, the key question is not being emergent, but independent.


La Stampa's Claudio Gallo introduces what could be the defining issue of the times: how neoliberalism - ruling directly or indirectly most of the world - is producing a disastrous anthropological mutation that is plunging us all into global totalitarianism (while everyone swears by their "freedoms").


It's always instructive to come back to Argentina. Argentina is imprisoned by a chronic foreign debt crisis essentially unleashed by the IMF over 40 years ago - and now perpetuated by vulture funds. The BRICS bank and the reserve pool as an alternative to the IMF and World Bank offer the possibility for dozens of other nations to escape the Argentine plight. Not to mention the possibility that other emerging nations such as Indonesia, Malaysia, Iran and Turkey may soon contribute to both institutions.


No wonder the hegemonic Masters of the Universe gang is uneasy in their leather chairs. This Financial Times piece neatly summarizes the view from the City of London - a notorious casino capitalism paradise.


These are heady days in South America in more ways than one. Atlanticist hegemony will remain part of the picture, of course, but it's the BRICS's strategy that is pointing the way further on down the road. And still the multipolar wheel keeps rolling along.

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The Alarmist's picture

It'll only work if BRICS oligarchs figure out they no longer have a safe haven in the US ... otherwise, its the first place their own money will go.

TeamDepends's picture

Well, they know they have a friend in Harry "Chinee Soluh Ow Fyuchuh" Reid.  You just can't make this stuff up.

knukles's picture

Well I guess that would depend upon what the meaning of the word "is" is, as well as the word, "secure" is.

TeamDepends's picture

".....he can say, without any equivocation, that not even one two-legged sand lice has crossed the border recently.  In fact, it has never happened.  Hallelujah!  Now, where my BRICS dollahs boys?"

TeethVillage88s's picture

didn't I see a story planted yesterday that authority figures had found a Koran, a Prayer mat, and complete Shi-Sha hooka down near the US border?

NOTaREALmerican's picture

And a tour-byne, they found a goddamn TOUR-BYNE.    Probly a tour-bines one of them Muz-lums dropped when he was sneakin-r-cross-r-boarder.    I'm tellin' ya, these muz-lums gonna be runnin' off with our woman-folk, just like they did in that African place, if we don't stop em!

TeamDepends's picture

Not to mention a 72-Virgins Pink Pages, some spent rods from Fukushima, a dog-eared copy of "How To Fly Jumbo-Jets For Dummies", several long-forgotten diseases, Rachel Maddow, Goebbels' corpse, a stench from beyond....

TeamDepends's picture

...numerous copies of "The White Man Land Be Mine" in every language except English, several "the one child too many", Sheila Jackson-Lee and her lollipops, a "chupacabra", underwear as far as the eye can see, an obese Commander Kurtz, several depictions of "Obama The Redeemer", thousands of leaflets entitled "Yo soy Norte Americano aqui"....

TeamDepends's picture

....Cheney's hunting buddies' face, a scabies catapult, the missing Malaysian Airlines flight 370, the Clintons' Mena Diaries, pretty much all the Fast And Furious assault rifles, Blackwater mercs doing what they do, countless disgusted saguaro cacti, McCains future gardeners....

knukles's picture

So lemme get this straight.  The BIS, World Bank,et al., have never done anything constructive, but in fact represent artifices to enable the New World Order, whilst claiming grand services and unsubstantiated benefits for mankind like uh... um... yeah.... I can't last a one.  Nobody has any idea what services of any value they offer let alone purport to offer.
Try reading their websites.
So, no wonder the BRICs want to have their very own BIS, World Bank, IMF, et al, so that they can now control the completely dysfunctional no purpose international financial organizations which they claim they have no need of...
Sure, it moves them away from dollars, but so does denominating international trade in currencies other than... and central banks are entirely capable of clearing amongst one another without the BIS, WB, IMF, etc.
Just ask GS or the Morgue
More synthetic institutionalized horseshit as far as I can tell.

Oh, but they can have some more conferences.
And won't have to listen (pestered by) the likes of Timmah and Loo

TeethVillage88s's picture

No, No, No

BIS was very important in supporting Fascism, Nazis, and the Third Reich in WWII. Keynes said so and saved the institution in 1944, I believe.

Late add:

We probably expanded capabilities in the Fed & TBTF Proxies, CIA proxy banks to fulfill an organic BIS capability.

Greenskeeper_Carl's picture

Ya I was thinking the same thing. I also loved how he kept laying the blame for Argentina solely on the IMF and 'vulture capitalists'. Not defending either of those things, by any means, but it completely glosses over who deserves most of the blame- their government. Same as everywhere else. On one hand, they were fucking stupid to loan money to fucking Argentina so soo after a big default and deserve to lose money for their stupidity. But Argentina is Iin the position because their corrupt socialist govt can't pay for all the goodies it promised all it's people. A country with such a abundance of farmland that can't even feed itself is beyond belief. And the idea that this BRICS bank and their central banker types will be any different from the IMF is laughable. This isn't going to be some kind of global bank for goodness, not will they create some new gold backed super currency that will dominate all others. It's simply a new IMF type bank that wants to rape the world just like all the other ones, they just want to do so without the dollar.

matrix2012's picture

@ Greenskeeper_Carl

and precisely who's the so-called Argentinian government during the 1970s?

Last time I checked it revealed it's a govt ruled by military junta, carried out The Dirty War in Argentine.

More specifically it's related to OPERATION CONDOR (Spanish: Operación Cóndor, also known as Plan Cóndor, Portuguese: Operação Condor), a dirty war propped up by the Uncle Sam/Ciiiaiyehhh practically in the entire Latin America.

Read on the rest at the net :-)

Monty Burns's picture

Correct.  No doubt those parasitic vampires got more than their pound of flesh but hadthe Argentinian governments not tried to buy popularity by way of massive borrowing for bread and circuses they wouldn't be in the position they now find themselves.

Ghordius's picture

knukles, you make a very important mistake, here. the World Bank and the IMF are one thing, the BIS a completely different one

BRICS are pushing since years for a "rebalancing" of the shareholding quotas of the IMF (it's sister, the World Bank, is seen as not reformable and less relevant anyway)

the US Congress is against this IMF "reform"   <<--- THIS IS WHAT IS SELDOM MENTIONED, IN THE US

meanwhile, the BIS... is just a shared facility for all national and central banks (well, the 60 major ones). no big player is interested in reforming the BIS

the problem in trying to think in terms of NWO is that... the question is "who's NWO"? and the question is posed by the BRICS

meanwhile, the echos of Washington's resistance to IMF "reform" still live with us, in form of "SDR global currency" theories, of which even ZH's Tyler is getting... tired

post turtle saver's picture

man the Tylers just gotta keep fuckin' this chicken, don't they...

yogibear's picture

The only thing to stop Washington's and the Fed's reckless behavior is a full blown currency crisis.

NOTaREALmerican's picture

Hmmmm,  i've seen a few of these sentences someplace else...

midtowng's picture

Until they unpeg their currencies, it's still just talk.

Dr. Engali's picture

One step at a time. It's a marathon, not a sprint.

GooseShtepping Moron's picture

Putin knows what he's doing moving slowly. The BRICS will consolidate their directorship of the world's resources, manufacturing, and finance before they do anything so brash as burst out into the open and declare the end of the dollar. They are fighting this battle to win it, not to strut and show off. The only way to win a geopolitical battle when you are starting out as the underdog is to go slowly and cautiously, building up a base of support by increments and carefully wooing allies with a proven track record of trust and reliability.

Every student of statecraft and diplomacy should pay attention to what Putin and Xi are doing now, for they are patiently winning the battle for the 21st century and doing so masterfully.

TeethVillage88s's picture

The general public knows nothing of statecraft and diplomacy.

I think this is a European concept just taught in the USA to Elites, college students, and the "government universities".

Don't ask me to list the government universities, Jesuit universities, or other big Geopolitical Players. I suspect if you see degrees in international relations this is a sure sign.

Ghordius's picture

"statecraft and diplomacy" are interests, like all intellectual pursuits. and those interests are "naturally" greater if your country has a more "varied" history

take the Luxembourger Juncker. his country can't ignore neither France nor Germany nor the bigger Belgium and Netherlands

his father was forcefully drafted by the WWII-invading German Army, to fight on the Eastern Front against Russia

meanwhile the US general public has a history of having the luxury of being able to mostly ignore both "statecraft and diplomacy", as well as "all that foreign stuff"

nothing and nobody to blame, imho, just facts from history and geography

take the two most popolous countries of the world, China and India. did they ever have the luxury of being able to ignore the rest of the world? yes. and they did, for a long while. until it was impossible

when was the last time Washington saw hostile, armed soldiers of a foreign army? 1812. if those soldiers had burned down the White House ten or even fifty years ago, interest in "statecraft and diplomacy" would be for sure higher, in the US

Raging Debate's picture

Moron - What side is our Senate and Congress on? I don't see a war at all. What gives you an idea there is one?

TeethVillage88s's picture

It is the nature of power that there is an enemy.

It focuses the citizens.

it will likely be Russia, China, Cuba, Venezuela, or maybe Argentina, but I'm not connected in any way. Within the US government an all clear was passed for Russia after the fall of the USSR. But there is a reserve of skepticism.

If you were being sarcastic, the I'm looking dumb here.

Russia is now fairly wealthy, per capital earnings are up. The sold off a lot of commodities proving reserves. Russia & the BRICS look very independent and like the are slowly moving ahead on 5 or 10 year plans. Strategic Planning is very effective.

Raging Debate's picture

Teethvillage - It was sarcasm and the users name I was addressing was Gooshteping Moron. Hence the abreviation to "moron".

I grow weary of individuals blaming there fellow Americans. They offed William F. Buckley for arguing what was right. We do not lead but there have been leadership that went against the grain.

When America said no overwhelmingly to bail out the bankers they did not listen, or Obamacare or the open border. It is the rule of law they violate openly. Are you or I allowed to do the same? No? That is because we have no power nor control. People did protest "free trade" another example of being ignored.

"First they ignore you then they ridicule you, then they fight you and then they lose" - Ghandi
Problem is, this takes mass awareness first and time.

So why would Moron act like "we deserve it?" The cycles to apathy are inevitable as corruption. No one on this plant deserves to be exploited or murdered. Sure, a lot of us are waking up the hard way. False information has been fed to the public for decades.

It is like the movie Animal House when the other frat boys demolish Flounder's car. "You fucked up, you trusted us!"

GooseShtepping Moron's picture

Just for the record Raging Debate, I wasn't blaming anybody at all. I'm not sure where you got that from. I was simply drawing attention to the skillful moves Putin was making. And allegations of William F. Buckley's assassination are certainly news to me. It seems pretty clear that he died of natural causes.

I know that Putin isn't perfect, but I believe that he at least apprehends correctly what the object of politics is supposed to be. It's refreshing to see that there are still world leaders who live in reality and behave like responsible adults.

Not Too Important's picture

Putin and Xi don't have to do much of anything. Japan is buried under a layer of radioactivity, and increasing daily. It'll die by itself shortly, no reason to hurry it up.

North America is also buried under a similar layer of radioactivity (blown here at 3,000 mph in the jetstream) and also increasing daily, especially with the WIPP plutonium pump belching in New Mexico. Three years of immune system depression due to the radiation, then flood the country with drug-resistant disease carriers. Anyone that works in local pest control/vector control will tell you what happens when rats overrun a given populated area, if the rats have lethal diseases doctors can't cure, everyone is weak to begin with and someone is shovelling the sick carrier rats in by the container load.

And I'm just guessing here, but possibly most of the US armed forces are stationed in Japan and the US, now thoroughly contaminated with radiation, and certainly the troops along the southern border are having their bases overrun with disease carriers. As those troops get rotated, they will continue to spread those diseases to other bases. (Watch for a reduction in BRIC/US joint forces cooperation/exercises)

If I was an epidemiologist in the insurance industry, I would have to say it all looks like it's being done on purpose, and I wouldn't want to pay any claims.

Putin and Xi are the ones with the comfy chairs and popcorn watching this shitshow.

TuPhat's picture

Radiation doesn't depress the immune system.  I think you are buried under a lot of what you used to think you knew but didn't.

AllWorkedUp's picture

Yep, unpeg and back their currencies with some form of hard assets, either gold, silver, oil or grains. Otherwise, their currencies are bigger crap than USD fiat.

Sorry boys, if you want to take on the USD you better pack some punch. A fiat challenge wil get you crushed.

F0ster's picture

BRICS bank may let all these poor IMF indebted victims like Argentina default on their bonds. That will set off a major derivatives collapse that will wipe out the USD and FED etc. 



TeethVillage88s's picture

Weird, that USA is doing a carry trade as a safehaven ZIRP (unless I'm mistaken)... while it uses military, financial, and political supremacy to push other countries around in support of our military Empire.

-Train the Troops
-Exercise the Special Operations & Intelligence Agencies
-But show some Restraint to the International Community
-Show Respect for other Countries Sovereignty
-Don't force possible socialist leaning countries to adopt the IMF/WB, Central Bank, and US Military Presences
-Show some Class and be an Example to the World for Democratic Ideals and for Good Capitalism
-The outcome would have been most nations, 95%, would have turned from Communism on their own
-As it is Geopolitics played by the USA looks like the Roman Empire

NOTaREALmerican's picture

Yeah, but when we won the battle with the godless commies there was nothing holding back the rabid Ubber Mericans from wanting to spread freedom-n-democracy to the rest of the world.   We forget that our leaders were, before they were leaders, normal Mericans.  And all Mericans know that the rest of the world really wants to be Merican and we, as Mericans, are called by God to spread freedom-n-democracy to the people of the world who want nothing more than to be Mericans; which why so many of them are trying to come to Merican because they want to be like Mericans.   So, to protect Merica, and keep people from wanting to come TO Merica, we turn them into Mericans there, where they can live in freedom and have free-enterprise like everybody dreams of doing here.

TeethVillage88s's picture

Mericans don't live under democracy(we are a military Republic)... so there is a PR message(narrative), and an Inside Message(we will aggressively pursuit resources and relationships based on money).

-Manifest Destiny to Rule the World

How do u argue with an Asshole supporting interventionism in all other counties???

Focus on the costs, the improbability? The failed wars, the cost benefit fail. The tragic lose of culture, language, businesses, economies, homes, personal savings, and personal traditions, skills, motivation, inheritance.

stant's picture

Swift system used as a weapon wasn't so swift.

Winston Churchill's picture

The historians,if we survive the transition, will mark using the SWIFT system

as a weapon, to have been the pivot in history that ended Pax Americana.

There will be no gradual decline, a rabid dog is killed quickly before it can bite.

Think months, not years.

stant's picture

Yep Obama and his bro reich own that . Bitchez

Fuku Ben's picture

The chess board was becoming too one sided. So let's add a new player. These are just NWO lackeys playing their parts and at the same time jockeying for power and position in the future one world hierarchy. Break the BRICS! End the FED! Free us all!

Reaper's picture

Putin and the others are hacking at the roots.

fishwharf's picture

Without a doubt there is at least one American who hope the BRICS pull it off -- ME.

sangell's picture

I realize a lot of people here believe in this thing called BRICS and they are some sort of alternative power center but you need to remember the term BRICS was not born of some international alliance but of a Goldman Sachs executive , Jim O'Neill, to describe a group of 2nd tier economies. Brazil and India for example view the US more favorably than China or Russia according to an interesting PEW survey put our yesterday in the Washington Post. As does South Africa. The only part of BRICS that the Pew survey would show as valid is R and C where Russia and China both view the US as their main threat. Almost NO other country in the world named Russia or China as their main ally.

litemine's picture

Maybe,not Yet.  If this alternate currency appears to be will get legs. The USA threatens though it's treasuries on wether or not cancell these that are held by RUSSIA. Now since there is no Transparency, and sound trust is GONE......I for one look forward to Diversification from the System that is failing. This is for future generations and a checkstop against the 300 families that hold the financial reins.............Justice and retribution comeath from all sides......Oorah................Payback will be a Bitch.

Global Observer's picture

Policy decisions are not made by popular consensus. Moreover, people in, say, Brazil or India, can view the US favourably and yet find nothing wrong with an alliance that will bring their country benefits. While Brazil, India and South Africa are strong multi-party democracies, there is a broad consensus within each country, among the potential claimants to power, on how they should conduct themselves in multi-lateral and international arena. People themselves may be cool these kind of alliances because their benefits are not for the shortterm and cannot be felt in the shortterm. Which is not bad because there won't be too much domestic pressure to see the fruits of the alliance quickly since there are no expectations of any.

LibertarianMenace's picture

The term neoliberal seems to be the latest favorite epithet peddled by prog pettifoggers.


On another note, there's no way the BRICS forfeit the magical powers bestowed by the counterfeit, and create an asset backed trading unit. That would require too much fiscal discipline. They just don't want the US cornering the fiat market.

Greenskeeper_Carl's picture

Thank you. I've been saying that all day on several of these threads. This isn't going to be some gold backed currency, since that would impose fiscal restraint, which none of these govts, especially china wants. They are just tired of being told what to do and bullied around by the SWIFT system and sanctions and banking laws we can enforce due to our control of it. That is all. Everyone on here seems to think they are creating some gold backed super currency, which will collapse the dollar by the end of the year. We may well end up destroying the dollar soon, but it will be a self destruct, not this new brics bank

Global Observer's picture

On another note, there's no way the BRICS forfeit the magical powers bestowed by the counterfeit, and create an asset backed trading unit. That would require too much fiscal discipline.

There is no need to back the trade currency, if one is issued, with specie. The bank is a multi-lateral institution with all the 5 holding the same voting power. If the bank issues too much currency, it will devalue the currency and hurt the savers (net-exporters) and if it issues too little it will push up the value of the currency and hurt the borrowers (net-importers). The beauty of this arrangement is that it is a group that has net-exporters (Russia and China) as well as net-importers (other three) and their own conflicting interests will ensure that the currency will be stable in value.

If they decide to back it by metals, the prices of metals will skyrocket giving huge purchasing power to those hoarding a lot of the metals in bullion form. Most of the hoarded metal is outside the groupng and it is not in their interests to push the value of a commodity most of which is held outside their bloc.

LibertarianMenace's picture

I'm sure anything is possible, but I'm considering what's most likely when it comes to any brand of .guvs. Their methods of finance rarely include discipline but as you say it may not be impossible. After all, the unintended consequences of a law sometimes have merit.

While it's heartening to see the dollar get some much needed competition, the competition is coming from foreign governments. Decisions taken by statists in other capitals won't do much for me. When it comes to money, we need something truly revolutionary, or should I say reactionary: Free Banking/Competitive Note Issue. While much maligned, the Bitcoin effort was on the right track in terms of competitive money. The counterfeit needs to be privatised, not monopolized. Specie backing would occur spontaneously, and spontaneity has the virtue of independence from the decrees issued by another group of henchmen attending a soccer match.

GreedKillz's picture

Critique of CRONY Capitalism is what it should say