BRICS: Global Change, Peril And Promise.

by Jerry Alatalo

“But those who desire to be rich fall into temptation, into a snare, into many senseless and hurtful desires that plunge men into ruin and destruction. For the love of money is the root of all evils; it is through this craving that some have wandered away from the faith and pierced their hearts with many pangs.”

– 1 Timothy 5:9-10

World Map1Alphabet Some have attributed today’s wars and violence around the Earth in large part to the rise of BRICS (Brazil, Russia, India, China, South Africa) international financial institutions. Listening to Brazil-born Paulo Nogueira Batista – an Executive Director for eight years at the International Monetary Fund (IMF) – provides affirmation the analysis is most likely correct. The question which arises is can humanity prevent the outbreak of a possible major war over this historic change.

Mr. Batista’s last day of employment at the IMF is June 30, after which he will take the position of Vice President of BRICS new, ready-to-open development bank, marking the first time the IMF, World Bank and other major US/western dominated international financial institutions will have “competition”. The development of BRICS will result in a reduction in the role of the dollar as the world’s major currency. Analysts have concluded that the reason the US, Britain and other western nations invaded Iraq and deposed Saddam Hussein in 2003 was Hussein’s decision to sell oil for euros, instead of the dollar. Analysts believe Muammar Gaddafi and Libya became destroyed by NATO air-bombardment in 2011 because of Gaddafi’s plan for major monetary reform – creation of gold Dinars as the new currency for the continent of Africa.

In both cases, Iraq in 2003 and Libya in 2011, false reasons – lies – were put forth to mould public perceptions in favor of military action to remove those nations’ leaders. The nations of Iraq and Libya, the men, women and children living in those countries, have suffered tremendously ever since those military attacks, and today both nations are in extremely difficult situations struggling to recover some semblance of peace, security and economic normalcy. Depending on the extent to which assertions that monetary choices in Iraq and Libya were the major factor leading to military action to protect the dollar are reflective of truth, one could come to view BRICS’ entry into international finance competition, potentially resulting in the US dollar’s decreased use in global transactions, as reason for concern over escalation of war and violence.

Any study of unsanitized, accurate records of history – such as “People’s History of the United States” by the late Howard Zinn, “Confessions of an Economic Hit Man” by John Perkins, “The Untold History of the United States” by filmmaker Oliver Stone, “The Secret of Oz” documentary by Bill Still, and many others – provides clear evidence that wars become fought for economic, financial, power/control reasons, and not for noble ideals of “democracy and freedom”. Years-long legal engineering of the secretive and massive trade agreements TPP, TTIP and TiSa could accurately be perceived as economic warfare in response to BRICS nations’ early beginnings, meetings and conferences, and continuing development.

The world is changing at a rapid pace, moving from unipolar to multipolar, and the most important consideration for men and women around the Earth is preventing those strongly opposed to this change from reacting through military force.

It is with the intention of providing greater understanding of the BRICS phenomenon and building awareness of both potential positive and negative consequences that Paulo Nogueira Batista’s (PNB) interview has been shared in this post. As the interview begins, host Oksana Boyko notes that Mr. Batista has been “very critical of some of the fund’s methods”.

PNB: “Sometimes the fund has success stories, sometimes the fund has failures… Often the fund makes mistakes or is misguided in its interventions.”

“There are good reasons and bad reasons for delay in going to the fund. Countries are very reluctant to give up part of their sovereignty, part of their autonomy, in terms of policy-making, and are reluctant to fall into the hands of international bureaucrats. Why? Because, among other reasons, these international bureaucrats, comfortably installed in Washington, visiting countries regularly or on a quarterly basis, are out-of-touch very often with political, social, and even economic realities in the countries that rely on the fund”.

“The international institutions, the IMF and the World Bank, their governance is very skewed – very unequal. So, the North Atlantic countries are in control. And often these countries have a short-sighted view of how these institutions should act, in my opinion. So, you find that powerful countries, powerful stakeholders of the IMF or World Bank, subordinating the institutions to their short-term or medium-term political agendas”.

“The way to hell is paved with good intentions. It’s more than intentions, it’s a political issue. Countries often, not only the North Atlantic powers, but all countries in general, are prone to abuse power. So, you may find institutions that are supposed to be multilateral, or global, obey not the theory or even the rules that they work under but their interests – it’s not malevolence, I wouldn’t say malevolence… If you look at it from a historical perspective, Europeans and Americans have been used to rule the world, and they are adapting with difficulty to the fact that the world is changing very quickly”.

“I think Greece is one of the least successful episodes in IMF history. And there’s no end in sight to the economic crisis of the country. For a number of reasons, but if you look at the unemployment activity, fiscal policy, structural reforms, the political impasse that arose after Syriza’s victory – impasse between Greece and its creditors, the so-called Troika – has led to a deterioration in the situation, and things are coming to a head right now. As we speak, the situation is coming to a, one more cliffhanger, and its not clear at all whether this time you will be able to pull, not only Greece but Greece’s creditors, up from the cliffhanger”.

Host Oksana Boyko asked about the different IMF treatment of Ukraine and Greece.

PNB: “Ukraine can be seen as a second Greece. …Ukraine, the fund is trying to, let’s say learn, from the failure in Greece. Greece was too little, too late in terms of restructuring; that put an extra burden on the problem and the country itself. In the case of Ukraine, not as early as I would have liked. … 2015 – better late than never – and the program calls for restructuring, ironically, June 30. June 30 has become a fateful day both for Greece and Ukraine, as you know Greece has a major payment that’s been bundled for June 30. By the way, for me June 30 is another significant date because that’s my last day at the fund”.

“It’s very important to compare Greece with Ukraine. Are we facing double standards here? Is Ukraine getting better treatment than Greece because the fund has since learned, or is it because Ukraine, for political reasons, has a special treatment that is not granted to Greece? Then you have the political factors. What is the political nature of the government in Kyiv? What is the political nature of the government in Athens? All those questions are not explicitly there always, but they are of course in the background”.

The discussion turns to IMF reform…

PNB: “There’s a change in plateau in terms of cooperation of the BRICS since 2012. So I think that’s one factor. About the fund, I think there’s a sense of disappointment no doubt. For me, for example, I’ve been working so hard on IMF reform in the last eight years… We achieved some things, but much less than I would have expected, say, back in 2010. So I think the west has to decide, does it want to run the institutions that it controls into the ground by making them uncapable of adapting to a changing world in a quick manner, or do they want to realize that, no, the world is changing fast, we need to open space… One Chinese delegate once said, quite rightly, ‘You have a large, very large, and oversized share of a bad cake. Do you want to reduce your share, and have a smaller share of a better cake?’ And that’s the question they haven’t answered”.

“I think the United States did more than vote for reform in 2010. It actually played a very important role in putting forth reform. If you would have asked me five years ago ‘would it be possible for the United States to become the major blocking factor in the implementation of IMF reform?’ I would have answered quite confidently ‘No’. And I would have been wrong, because the US has since become the major blocking factor. Whether it’s a tactical consideration, to put the blame on Congress – ‘I want to do it, but Congress doesn’t allow me’ – I really wouldn’t know”.

Ms. Boyko points out that the US, without reform, has the “best of both worlds”, so why would they want to change?

PNB: “You touch on a very important point. It was a political agreement at the highest level in 2010, that the countries including the BRICS would provide borrowed resources to the fund as a bridge to the implementation of reforms. We did our part, we provided the resources that we pledged, but the reform did not come. So, it’s a matter of whether you want to have a… Does the United States, do the Europeans want to have a big influence on the multilateral world or are they content to just frustrate everyone? That’s the question they need to ask themselves. They have an incentive. The incentive is to keep the value for the international community – let’s put it this way – of institutions that they created, and where they have a controlling interest. If they don’t want to recognize this… Of course, there are internal divisions…”

IMF reform was/is apparently possible without the approval of the US Congress, but because such reforms would have lowered US voting power below the threshold where the US could assert veto power, it became opposed by the US.

Ms. Boyko talked about “western countries more assertive recently than developing countries”….

PNB: “The west is declining in relative terms but it still rules, and the rest of the world is increasing its weight, but it’s perhaps still not used to having a global view of matters. I think the BRICS are a partial exception to that, let me tell you. If I were to select from the non-west part of the planet – a part of the planet that introduces alternative ideas, that has a global view, I would say it’s the BRICS. It’s the BRICS. I think that one advantage that the BRICS have is that we have experienced what it is to be a developing country, relatively poor, debtor to the IMF… As you mentioned at the beginning of our conversation, not so long ago Brazil was under an IMF program. Russia was under IMF program not so long ago, I think in the 90’s. India in the early 90’s.”

“When someone comes to the board, Greece or Ukraine or whatever, we look at the issue and we have the memory. As a young official in the Brazilian government, I was involved in negotiations with the IMF in the 1980’s during the debt crisis. We have the experience so I think we need to use that experience to have an empathetic approach to the problems of other countries”.

Host Oksana Boyko: “…10 years ago 90% of world currency in the form of US dollar, now it’s 60%. If that trend intensifies, it will have significant social, economic, political consequences on the United States. The United States may become subjected to a new kind of experience. Doesn’t that guarantee that Washington will fight tooth-and-nail to prevent the BRICS plans from being realized? … because it threatens its own well-being?”

PNB: “The United States can do a lot, but it can’t do everything. There are certain trends that the United States cannot deal with, although it might wish to. The United States has resisted any reduction of the role of the dollar, so this is a long-standing issue. It will continue well past my departure from this planet. I don’t think we will solve it, but I do think you’re right that we have signs already – especially with China’s rapid rise – that other currencies will become, including emerging market countries, increasingly important in the world”.

Ms. Boyko: “Do you think your expertise will be helpful in undermining the western dominance of the global financial institutions?”

PNB: “I don’t think that’s the way we see it. The way that the BRICS countries see those institutions – the bank in Shanghai and the monetary fund – is not ‘against’ anyone. They’re pro-BRICS and pro-developing countries, so we take a soft approach”.


(Thank you to WorldsApart RT at YouTube)


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