CCS book documents pro-West bias
BRICS bankers will undergird – not undermine – Western financial decadence
By Patrick Bond July 10, 2015 — originally published by teleSUR English
The main point of the summit of leaders from Brazil, Russia, India, China and South Africa this week was host Vladimir Putin’s demonstration of economic autonomy, given how much Western sanctions and low oil prices keep biting Russia. In part this sense of autonomy comes from nominal progress made on finally launching the bloc’s two new financial institutions.
But can these new banks address the extraordinary challenges in world finance? For example, more than 60% of Greeks voting in last Sunday’s referendum opposed the neoliberal dictates of Brussels-Berlin-Washington, thus raising hopes across Southern Europe and among victims of “odious debt” everywhere.
Meanwhile, bubbly Shanghai and Shenzhen stock markets were crashing by $3 trillion from peak levels in just 17 days, a world-historic meltdown, at a time Chinese housing prices were also down 20% over the prior year. Beijing’s emergency bail-out measures represent vast subsidies to financiers, just like those used in Washington, London, Brussels and Tokyo since 2007.
Change is urgently needed yet the BRICS’ finance bureaucrats – especially two leading appointees from South Africa – won’t deviate from orthodoxy. Ongoing financial turbulence should offer a gap for the $100 billion Contingent Reserve Arrangement (CRA), which is anticipated to open its doors next month. However, it carries not only a strange name that even many insider experts often get wrong, but is dollar-denominated and structurally hard-wired to support the International Monetary Fund (IMF).
To illustrate, according to CRA rules agreed at last year’s BRICS Fortaleza summit, after 30% of a country’s quota is borrowed – based on double the amount of its own contributions (China at $41 billion, and Brazil, Russia and India at $18 billion each, and South Africa at $5 billion) – then the borrower must next sign a neoliberal IMF agreement.
For South Africa this could prove painful in the period ahead, after Pretoria finds itself borrowing from the CRA to repay the country’s soaring foreign debt. Inheriting $25 billion in apartheid odious debt in 1994, Nelson Mandela’s government worked diligently to repay. But over the past decade, outflows of profits, dividends and interest soared as the largest Johannesburg-based firms (Anglo American, DeBeers, etc) shifted their financial headquarters to London.
The foreign debt ballooned to its present $145 billion, the same level compared to the size of the economy that was hit thirty years ago when PW Botha’s apartheid regime declared a default. To repay short-term debt in a crisis would soon exhaust the $3 billion Pretoria is permitted to immediately access from the CRA, and then the IMF will march in.
New Development Bank to take over World Bank’s nastiest projects
Sadly, even with Greece’s new mandate, there appears no hope for bucking the IMF and European bankers on debt repayment by finding a new bail-out partner in Russia this week. Early rumours that Moscow would invite Athens to join the BRICS New Development Bank (NDB) proved cruelly deceptive.
Once launched next April, the NDB could well fund specific projects in other non-BRICS countries, even Greece if profits there ensure repayment – such as its controversial Chinese port privatisation. However, these are likely to be the sorts of pro-corporate infrastructure deals that even the World Bank finds increasingly difficult to support due to sustained protest against community displacement and climate change, e.g. land grabs, mega-dams and coal-fired power plants.
At the “BRICS-Civil” conference in Moscow last week, the Delhi-based Vasudha Foundation’s Srinivas Krishnaswamy told the BRICS Post that the NDB should be considered “in the light of a new World Bank Energy Strategy which restricted funding of coal projects for developing economies. This was opposed by India, South Africa and other countries dependent on coal to satisfy their energy requirement.”
The BRICS banks will thus ‘complement’ the Bretton Woods Institutions, thanks to a self-mandate dating to early 2014. As Brazil’s finance ministry reminded last week, the CRA “will contribute to promoting international financial stability, as it will complement the current global network of financial protection. It will also reinforce the world’s economic and financial agents’ trust.”
But shouldn’t we question trust in the world’s top financial “agents”? Two examples from South Africa, appointed to the top tier of the NDB last Tuesday, remind us why.
Karl Marx prefaced Das Kapital with a concern that “Individuals are dealt with here only in so far as they are the personifications of economic categories, the bearers of particular class-relations and interest.” Biographies sometimes perform a useful exercise, if we want to understand why an institution in the making will not in any way “threaten” the hegemony of Washington’s financial agents.
Pretoria’s neoliberal appointees
Relegitimisation of world financial imperialism is explicitly reflected in Pretoria’s two new appointees to NDB leadership:
* NDB vice president Leslie Maasdorp was the main privatiser of South Africa’s state assets and also worked in the local leadership of Bank of America and Barclays – both charged in recent weeks with currency manipulation worth billions of dollars.
* NDB board director Tito Mboweni, who in 2001 was Euromoney’s “Central Bank Governor of the Year”, regularly bragged of learning from the US Federal Reserve’s notorious free-marketeer and financial-liberaliser, Alan Greenspan. From 1999-2009, Mboweni was the most conservative central banker in modern South African history. He not only loosened exchange controls dozens of times, but as a result then had to push interest rates to painful highs while local bank profits soared to among the world’s highest rates.
The two South Africans deployed to the NDB have long enjoyed leadership and key advisory roles at the Johannesburg office of Goldman Sachs, the New York investment bank partly responsible for the 2007-09 global financial meltdown thanks to rampantly illegal lending practices. Its managers first got bail-outs and then faced multi-billion dollar fines but were spared criminal prosecution thanks to carefully cultivated revolving-door relationships in Washington, Pretoria and many other capitals.
Goldman’s lead strategist Jim O’Neill even coined the “BRIC” meme in 2001 to argue that imperialism in the form of the G7 should incorporate the emerging powers. In South Africa, Goldman’s local chief executive Colin Coleman regularly articulates a cringe-worthy pro-government stance, for example, writing in the Financial Times last year, “As one of the five BRICS, South Africa will play a decisive role in global economic development in the coming decades.”
According to Maasdorp in an interview with Independent Online this week, ‘decisive’ is actually ameliorative: “When it comes to the design, engineering and financial packaging of new projects I suspect we will work very closely with the Development Bank of Southern Africa, African Development Bank, the World Bank and others. We will and should benefit from the long years and decades of experience of these institutions.”
He added, “As international adviser of Goldman Sachs from 2002, I played a leading role in expanding the reach of the firm into new market segments including the public sector and the rest of the continent.” As translated by Rolling Stone’s Matt Taibi, “The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”
Maasdorp also witnessed the highest-profile corruption in African infrastructure finance, not only because his South African big business allies are considered to be the “world champs” of money-laundering, bribery and corruption, procurement fraud, asset misappropriation and cybercrime. “I served for example as chairman of TransCaledon Tunnel Authority (TCTA), which is a state-owned enterprise with a mandate to finance and implement bulk raw water infrastructure projects in South Africa, and played an oversight role from a governance perspective for seven years of large infrastructure projects.”
TCTA pipes run from Africa’s highest dams in Lesotho to Johannesburg, which led to what was the world’s most infamous case of construction company bribery in World Bank lending history. More than $2 million flowed from a “dirty dozen” multinational corporations to the Swiss accounts of the leading Lesotho dam official, Masupha Sole, who served 9 years in jail but was then, to everyone’s astonishment, reinstated thanks to his political influence.
Although the World Bank debarred some of the most corrupt companies, thus catalysing the bankruptcy of Canada’s once formidable civil engineering firm Acres International, nothing was done to punish the firms by Pretoria officials, including Maasdorp at the TCTA. Several then reappeared in a construction collusion case involving white-elephant World Cup 2010 stadiums and other mega-projects in which billions of dollars were ripped off.
BRICS has been rife with mega-project corruption, and as just one example, the World Bank last year debarred the China Three Gorges Corporation’s subsidiary building dams in Africa. The World Bank “Vice President – Integrity” (sic) responsible, Leonard McCarthy, was himself declared by the finest South African newspaper editor, Ferial Haffajee, to have “ruined our criminal justice system” because of his own political corruption when serving as lead prosecutor of current South Africa’s President Jacob Zuma. In this cesspool, international infrastructure financing is bound up with cronyism; South Africans are well placed to help the money flow.
Mboweni had a central role in the IMF’s 1993 financing deal, one of South Africa’s historic capitulations to neoliberalism. As Mboweni explained in a 2004 speech, he knew that “the apartheid government was trying to lock us into an IMF structural adjustment programme via the back door, thereby tying the hands of the future democratic government… We did not sell out!”
He did indeed: the $850 million loan came with severe economic policy and even personnel conditions attached. Former ANC minister of intelligence Ronnie Kasrils in 2013 termed this deal “the fatal turning point. I will call it our Faustian moment when we became entrapped – some today crying out that we ‘sold our people down the river’.”
As South African Reserve Bank governor, Mboweni braved similar controversy to the IMF’s repeated applause, especially with extreme interest rate increases. As he left, the only major economy with higher rates was Russia’s, and shortly after that, the only one among South Africa’s trading partners where capital cost more was Greece.
Keeping inflation low – since banks hate the devaluation of their main asset, money – was the main reason for Mboweni’s sado-monetarism. Yet self-interestedly, on the eve of the 2008 world financial meltdown he rewarded himself a 28% personal pay raise at a time his institution had declared a 6% maximum inflation target.
Remarked business ezine Moneyweb (normally fans of neoliberalism), “The high-living governor already has a reputation for excessive ego, after attempting to censor what pictures of him are released into the public domain.” The reference is to Mboweni banning photographers from the Reserve Bank because they were “taking pictures when I was wiping off my sweat.”
Is another BRICS possible?
Ironically, at the time Durban hosted the BRICS summit in early 2013, Mboweni used a speech to regional business elites to attack the NDB as “very costly. I would rather take that money and build the Coega Petro SA oil refinery here in Port Elizabeth.” Mboweni also chairs a local oil company.
Will men like Maasdorp and Mboweni fight the poverty, ecological destruction and climate change, privatisation and corruption, illicit financial flows and Resource Cursing associated with current global lending, or will they amplify these features?
A genuine alternative to imperialist finance would be based upon
The sort of default on unpayable, unjustifiable debt that Argentina managed to accomplish in 2002;
Exchange controls that countries like Malaysia (in 1998) and Venezuela (in 2003) imposed on their elites (as did Greece last week);
New regional currency arrangements such Ecuador’s proposed sucre; and
Socially and ecologically conscious financing strategies tied to compatible trade (like ALBA) such as were once proposed and seed-funded by the late Venezuelan leader Hugo Chavez in the stillborn Bank of the South.
Given NDB and CRA positioning and personnel, it is foolish and perhaps dangerous to invest hope in the BRICS’ fake alternative.
“This book is a uniquely valuable resource for development scholars, students and activists. It includes outstanding contributions written by a stellar group of authors. They pierce through every aspect of the discourse around the BRICS, showing the reality beneath the politically engineered triumphalism.” – Alfredo Saad-Filho, Professor of Political Economy, School of Oriental and African Studies, University of London
BRICS An Anti-Capitalist Critique
Edited by Patrick Bond and Ana Garcia
THIS BOOK AIMS TO FILL a gap in studies of the BRICS grouping of countries (Brazil, Russia, India, China and South Africa). It provides a critical analysis of their economies, societies and geopolitical strategies within the framework of a global capitalism that is increasingly predatory, unequal and ecologically self-destructive – no more so than in the BRICS countries themselves.
In unprecedented detail and with great innovation, the contributors consider theoretical traditions in political economy as applied to the BRICS, including ‘sub-imperialism’, the World System perspective and dynamics of territorial expansion. Only such an approach can interpret the potential for a ‘brics-from-below’ uprising that appears likely to accompany the rise of the BRICS.
Patrick Bond directs the University of KwaZulu-Natal’s Centre for Civil Society in Durban and is senior professor of development studies; he is also professor of political economy at Wits University in Johannesburg. His books include South Africa: The Present as History (with John Saul), Elite Transition, and Politics of Climate Justice.
Ana Garcia teaches history and international relations at the Federal Rural University of Rio de Janeiro and is an associate of the Institute of Alternative Policies in the Southern Cone of Latin America.
Contributors: Elmar Altvater, Baruti Amisi, Patrick Bond, Omar Bonilla, Einar Braathen, Pedro Henrique Campos, Ruslan Dzarasov, Virginia Fontes, Ana Garcia, Ho-fung Hung, Richard Kamidza, Karina Kato, Claudio Katz, Mathias Luce, Farai Maguwu, Judith Marshall, Gilmar Mascarenhas, Sam Moyo, Leo Panitch, Bobby Peek, Gonzalo Pozo, Vijay Prashad, Niall Reddy, William Robinson, Susanne Soederberg, Celina Sørbøe, Achin Vanaik, Immanuel Wallerstein and Paris Yeros.
South Africa/Jacana: http://www.jacana.co.za/new-releases/new-releases-6593/brics-an-anti-capitalist-critique-detail
India/Aakar: http://aakarbooks.com/”http://aakarbooks.com
UK/Pluto:http://www.plutobooks.com/downloads/catalogues/PlutoNewBooksAW2015.pdf
US/Haymarket:http://www.haymarketbooks.org/pb/BRICS
Neoliberals dominate. How will this affect Brics’ bank?
Patrick Bond (The Star, Johannesburg) 15 July 2015
The RussiaToday tv interview by President Jacob Zuma and the Brazil-Russia-India-China-South Africa (Brics) summit’s Ufa declaration last week together left no doubt about the New Development Bank (NDB) mandate, with $50 billion in capital, of which South Africa’s immediate $5 billion (R62.5 bn) contribution will strain the budget not inconsiderably. “The NDB shall serve as a powerful instrument for financing infrastructure investment and sustainable development projects.”
This excellent-sounding phrase motivates much more open critiques of Washington’s two ‘Bretton Woods Institutions,’ founded in 1944 to reboot a world economy in desperate need of order. In Ufa, as IOL’s Shannon Ebrahim put it, “the World Bank and International Monetary Fund (IMF) got a clear message from the world’s most important emerging economies: don’t use your economic power to threaten us or dictate the terms of our development any longer.”
Zuma was even more blunt about the two Washington institutions, which “want to dictate what you should do. You can’t utilize that kind of assistance the way you want. So, in a sense, it has conditions that will keep you dependent all the time. That’s what we’re trying to take ourselves out of.”
Perhaps unwittingly, is Zuma reiterating his nemesis Ronnie Kasrils’ criticism of the IMF’s $850 million loan to South Africa six months before democracy dawned? The former ANC Minister of Intelligence in 2013 termed this deal “the fatal turning point. I will call it our Faustian moment when we became entrapped – some today crying out that we ‘sold our people down the river’.” Economic policy overly influenced by Washington has failed South Africa, ever since.
Pretoria’s new non-executive director to the NDB, Tito Mboweni, had a central role in the IMF deal and subsequent neoliberal strategies such as record-high interest rates and exchange control liberalisation. As Mboweni explained in a 2004 speech, he knew that “the apartheid government was trying to lock us into an IMF structural adjustment programme via the back door, thereby tying the hands of the future democratic government.” But, he claims, “We did not sell out!”
Greek prime minister Alex Tsipras is trying to explain exactly the same circumstances to the Greek people this week. Though 21 years apart, both countries witnessed 61% votes against neoliberalism (the ANC’s alternative was the Reconstruction and Development Programme). Yet by invoking power far greater than mere democratic elections, the IMF imposed severe policy conditions in both countries: budget cuts, higher Value Added Tax on poor people’s consumption, privatisation, labour casualisation and deregulation.
Tsipras’ Monday morning agreement with the IMF and European Union authorities will worsen Greek austerity, just as Pretoria’s budget cuts of 3% for poor people’s grants this year prove that locally, neoliberals remain dominant. Higher inequality, unemployment and social unrest will logically follow, in both countries.
In South Africa’s case, even personnel conditions were attached to the initial deal: Mboweni had to wait an extra five years to become central bank governor because IMF head Michel Camdessus insisted informally in a January 1994 meeting with Nelson Mandela that apartheid-era neoliberals Chris Stals at the Reserve Bank and finance minister Derek Keys be reappointed to their jobs.
Will the BRICS’ NDB and its $100 billion ‘Contingent Reserve Arrangement’ (CRA) fund for stabilisation during financial crisis prove any different? Probably not, for as Peter Fabricius points out (‘Brics bank not entirely free of IMF’), “According to its own articles, the CRA will barely be able to function without IMF backing.” Once Pretoria needs just $3 billion to service a foreign debt which now exceeds $140 billion, the CRA orders that it take on an IMF agreement before more credit is granted.
Indeed the CRA is – like the NDB – initially denominated in US dollars, and repayment of those can be a wicked challenge, as the Passenger Rail Agency of SA learned this week, what with its failure to contemplate the 50% rand devaluation since 2011 and hence a 40% price mark-up on imported locomotives. The BRICS have a great potential for non-$-denominated lending and it would be ideal to break reliance on the US Federal Reserve’s unreasonable power of world money creation, to be sure.
However, asks Fabricius about the NDB and CRA, “Whether they are also politically skewed in their funding, by imposing pro-Western conditionalities, is less clear.” This is indeed the critical question, especially on foreign policy matters where anti-imperialist rhetoric comes easy. You can hear the ‘talk left’ but are you watching the ‘walk right’?
Unfortunately, Pretoria’s neoliberal agenda becomes most visible when considering the personnel deployed to lead the NDB. Mboweni and NDB vice president Leslie Maasdorp are senior advisors to international financier Goldman Sachs and have a long history of endorsing Washington bankers’ logic. Maasdorp was in charge of privatising South Africa’s state assets and chaired a parastatal – the TransCaledon Tunnel Authority – notorious for turning a blind eye to extreme Lesotho mega-dams corruption.
Mboweni joined an elite group of IMF reform advisors in 2006, men like former US Federal Reserve chief Alan Greenspan, who simply shifted some of the deck chairs. China thus got more voting power and African countries less. By 2012 when the BRICS put $75 billion into bailing out the IMF when it needed more money, the only conditionality I found discussed in public was SA finance minister Pravin Gordhan’s Moneyweb interview when he advocated that the IMF be more ‘nasty’ to Europeans (like Tsipras) in need of emergency loans.
In other words, if Pretoria’s neoliberal bloc remains in control, the NDB’s allegedly ‘sustainable’ infrastructure could include items from Eskom chair Brian Molefe’s Brics Business Council project wish-list: new coal-fired generators, Operation Phakisa off-shore oil drilling, and Durban’s $25 billion new port. Even worse, Mboweni last week told Bloomberg, the proposed R1 trillion nuclear deal “falls squarely within the mandate of the NDB”.
Since the same corrupt construction companies will be building NDB-financed infrastructure given our ongoing lack of state building capacity, and since we are still paying off white elephant soccer stadiums that were an unintended adverse consequence of the bribe-laden 2010 World Cup bid, it is time to ask harder questions about ‘sustainable’ Brics infrastructure. We may find that the worst tendencies of the World Bank and IMF are actually amplified in the allegedly alternative financial institutions.
Bond, a joint professor of political economy at UKZN and Wits, is co-editor with Ana Garcia of a new Jacana book, BRICS.
BRICS Establishes A Development Bank
Patrick Bond is the director of the Center for Civil Society and a professor at the University of KwaZulu-Natal in South Africa. Bond is the author of the books, South Africa – The Present as History (with John Saul) and the 3rd edition of Elite Transition.
BRICS Establishes a Development Bank
SHARMINI PERIES, EXEC. PRODUCER, TRNN: Welcome to the Bond Report on the Real News Network. I’m Sharmini Peries coming to you from Baltimore.
BRICS, the economic bloc made up of Brazil, Russia, India, China, South Africa, met in Ufa, Russia this week. One of its key objectives is to form a New Development Bank considered an alternative to the World Bank and the IMF. The bank will be located in Shanghai and chaired by Indian banker K V Kamath for the first six years. Then Brazil and Russia will take their respective turns. Each country is expected to contribute its lion’s share to the bank. The upper house of Russia just allocated $100 billion in foreign reserves for the bank. The pool is intended to protect national currencies from the volatility of global markets. The idea is that in the event of a financial emergency like that of Greece at the moment, the BRICS countries would no longer have to depend on the likes of a Troika.
But will the BRICS development bank be any different? Will this new formation be able to address the issues faced by struggling and ailing economies of China and Russia, India, Brazil, and South Africa? Here to discuss all of this with me is Patrick Bond. He is joining us from Durban, South Africa. He has recently edited a book on BRICS with Ana Garcia titled BRICS: An Anti-Capitalist Critique.
Patrick, thank you so much for joining us today.
PATRICK BOND, DIRECTOR, CENTER FOR CIVIL SOCIETY: Thank you very much. Great to be back with you, Sharmini.
PERIES: So Patrick, in the past two years the Russian economy has tanked. The stock market in China was in a freefall on the eve of this meeting. Are these large economies now looking to BRICS alliance to reinvigorate their economies?
BOND: Well, that would be a mistake. Because in fact, all the BRICS, especially now with China’s $3 trillion crash of the main stock markets from the peak just about three weeks ago to today, and the 20 percent crash over the last year of its property market, the sort of horrible potential of a hard landing that would send the world economy into a tailspin, that now is certainly possible. And certainly the Brazilian economy’s very, very weak at about 1 percent. South Africa will grow 1 percent or go into recession. India has not been as strong as past years. And the currencies of all of the BRICS is also under great threat. Because as the United States begins to move towards higher interest rates, that’ll take liquid capital out.
So I think the broader, macroeconomic perspective for BRICS as a potential backstop for world economic growth that we had seen the last 15, 20 years, that potentially is now over. That would be very sad, because certainly Europe’s in a deep depression and the U.S. economy’s not doing very well, either.
However, the merits of a slower growth might be more balancing, because we’ve seen such extraordinary, uneven development. Extreme differentiation, inequality, and ecological destruction. So whether the period ahead can be managed now is a question. Maybe the BRICS financial institutions will be part of that management.
PERIES: Which reminds me of, the main purpose of the meeting itself was to form a development bank. What of any significance came out of it?
BOND: Yes. Well, you’re right. The 2015 BRICS summit in Ufa had as its centerpiece the actual naming of the directors of the bank and more of the details, and promised that by April 2016 the BRICS New Development Bank, the NDB, will be up and running and making project loans.
That’s different than the other function, the continent reserve arrangement, CRA. The CRA, a strange name for what is in effect a short-term financial monetary emergency fund, $100 billion. That’s probably going to be important for at least one of the BRICS, South Africa, as we move into potential debt crisis. Our debt is 40 percent of GDP level, our foreign debt, and that is the same level in 1985, about 30 years ago where we suffered a default, and a run that even put enough pressure on the white minority government, the apartheid regime, that forced it to make concessions and nine years later to agree to democracy.
So these financial moments in a country’s political life can be important, as we’re certainly seeing with Greece. But the other four countries have enough reserves that I don’t think the continent reserve arrangement is going to be used anytime soon. It’s really a notional reserve. And if it were to take the currency that China is now spending on buying U.S. Treasury bills, that would be a terribly important step. However, all the indications are that China is continuing to buy T bills and maintains a record holding. That’s very unfortunate. It basically locks China into a buying relationship with the U.S. in terms of T bills, the Treasury bills, at which point the U.S. has enough debt that it can allow its consumers to borrow and then to buy Chinese goods. And that’s the sort of death grip of the world economy that locks in these extreme imbalances that we’ve been having.
PERIES: Now, Patrick, you just edited a book with a number of your colleagues on the BRICS. And what are some of the pros and cons you saw coming forth?
BOND: Well, we’ve really heard from progressive analysts a mixed message. And there is a, especially third world-ist, if I may say, a sort of pro-South position that is welcoming the BRICS. And you see it on a number of the easings and some important writers have been welcoming BRICS as a potential alternative to the International Monetary Fund, the World Bank, and maybe a geopolitical power relationship.
However, our careful study shows a couple of things that I think the book, which is being published in the U.S. by Haymarket and Britain by Pluto, here in South Africa by Jacana, and in India by Aakar. The book, with about 25 key authors from many of the BRICS countries and international experts, does a couple of things.
One is to show that internally the BRICS are extremely uneven and the balance of forces largely favors neoliberal or market-oriented pro-corporate figures. And that is very much shown today by the new BRICS directors of the New Development Bank from South Africa, who are two of the most extreme neoliberals we’ve had in economic policy. The new vice president of the BRICS, Leslie Maasdors, previously in charge of the privatization of South Africa’s state assets and the former central bank governor is now a director of the New Development Bank, is named Tito Mboweni, and he’s really known as one of the most austerity-oriented governors that the central bank here’s ever had.
And that means the second part of what we’re arguing, which is that there’s a tendency to fit in rather than oppose the world financial elites. That is to say it’s not going to be against world finance, but accompanying world finance that the New Development Bank lends project loans. It will be picking up some of the worst loans that even the World Bank won’t do. Dirty energy loans, megadams, maybe land grabbing, especially here in Africa. That’s one concern.
And especially a concern, secondly, that the International Monetary Fund will be actually empowered by the contingent reserve arrangement. And the reason is that the CRA is set up that after you borrow 30 percent of what you can legitimately borrow from that CRA, 30 percent of your quota, before you get the next 70 percent you have to go to the IMF to get a standby agreement, a structural adjustment austerity policy.
So one of the great hopes we’ve had in this, Sharmini, is that the Greeks would say we don’t like the IMF, we’re going to default. We might exit the Euro so that we aren’t under the same sort of pressure from European Union and the European Central Bank to basically be part of a German bank-centric model. And then we’re going to borrow from a foreign power. Maybe Russia, there was some talk, and maybe China with all the money they have, and be able to keep afloat while we default and arrange a default. Much like Argentina did, and therefore not go into complete panic, crisis, bank closures and all the rest of it.
Now, that probably isn’t going to happen. That was our big hope, that the BRICS would be an alternative geopolitical arrangement. But I think it would be wishful thinking for progressive analysts, now that they know much more about the details of the BRICS New Development Bank, to actually argue that Greece has any hope there. Greece is going to have to take this very strong, courageous stand that’s so overdue to introduce its own currency and not hope that it can just borrow from the BRICS bank and therefore pay off the IMF. And the reason is that the BRICS bank will make project loans in April 2016, only. It’s not ready to do anything yet.
And that would mean the kinds of loans that, what would be bankable in Greece, something like port privatization of the Chinese. That’s strongly opposed by the dock workers in Greece, and I don’t think then there’s any scope for the contingent reserve arrangement to fund Greece, because you have to be a member of BRICS. And they really have limited membership to just the five main countries.
So all of those together, Sharmini, mean if you’re still arguing and hoping that the BRICS will be some kind of anti-imperialist answer, you should look more closely. Our sense, using Ruy Mauro Marini, the great Brazilian dependency theorist’s argument, is that instead of anti-imperialist we are looking at sub-imperialist relationships.
PERIES: Patrick Bond, thank you so much for your take on BRICS. And we look forward to having you back on and perhaps debating somebody that is pro-BRICS.
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