G7 and BRICS: the clash of the worlds
The tension between two blocks is rising, the cauldron of opposing interests is ready to bear a new cold war, very different from the one we knew. This new conflict has new territories and spaces, completely new scale and dimension. In the end of June leaders of two emerging blocs met to discuss – and they certainly talked about the new rivalry that is shredding the world. What are the main projects they have announced and what are they telling us about the near future?
The first of the meetings was held in the German castle of Elmau on the 26-28 of June. The G7 group, previously G8, without Russia since the annexation of Crimea, consists of France, Italy, USA, Canada, UK, Japan and Germany along with the representatives of the European Union. Those are the old powers of recent centuries who have carved the history of the whole globe. Their main political weapon is their wealth, accumulated over 19 and 20th century, and projection of political power that comes with it, with dozens of corporations and financial groups who held the technological power of their motherlands. Alongside that, G7 members are also strongly connected via a list of different historical alliances, Japan-USA, UK-USA, AUKUS, NATO or already mentioned EU. It is easy to say that combined they also represent a sort of military bloc.
The second group, BRICS, named after its members, Brazil, Russia, India, China and South Africa, held their online meeting between 23 and 24 June. As we can see those countries were not so welcomed through their most recent history among the so-called beacons of democracy. Apart from the colonial history shared by some of them, some of them are also seen as authoritarian regimes, or fallen democracies. But what’s the most common thing among them is being most often at the beginning of the supply chains or just a reservoir of mining companies. Some might call them a ‘factory of the world’. This factory, just like the Hegelian slave, has fed Western countries for decades, without them really recognizing that fact.
But the COVID-19 pandemic, with its further consequences, blocks of global supply chains, soaring global inflation and recession, has shown us that the so-called Global South counts. The war in Ukraine has just confirmed that.
As we read in the Global Times: “The historic mission of BRICS is essentially to consolidate, defend and expand a multipolar international order, based on international law and the United Nations, and overcome centuries of underdevelopment and entrenched inequality between the Global North and Global South”.
Now there is a lot to be “defended” or even to be “achieved” for the members of Brics and their allies in fighting for multipolar international order. The world order without Russia, even if it’s not participating in the G7, is not possible to be stable.
The grain supplies and fertilizers stuck in Ukraine due to Russia’s actions, but also Russia’s supplies limited by the sanctions, shows the strength of grain and food factor, which can in near future start the series of revolutions across Africa and Middle East, and then produce another immigration cataclysm. Putting at stake the fate of Italy, Spain and France, which is now in a peril.
It shows that interests of African countries and Middle Eastern states also have to be considered by Northern hegemons. Till now they practically have never been considered into equations.
What’s more, gas sanctions and soaring prices of fuel imposed because of the war in Ukraine are creating a huge crisis in Europe, with general strikes and demonstrations all over the continent. We will see that in Poland, which is right now full of people’s anger and dissatisfaction, but yet without a declared enemy to fight with. The same is seen in France, with democracy in a profound crisis and Macron’s coalition with the far-right. Even worse the things are in the UK, literally at the brink of social collapse, political and economical.
Sanctions imposed on Russia have created a space for another conflict of two blocks. One of the aims of BRICS was always creation of the new currency system, independent from the american dollar, which leads to the US hegemony on the global markets. To this moment, the US dollar’s preeminence in the global financial system, backed by market and military strength, made sanctions imposed by President’s of US the force to be reckoned with.
However the sanctions on Russia might have been at some point too strong. They showed that this kind of power, when the dollar is the main invoicing currency of international trade and the main currency of financial institutions, is too powerful, when imposed so imperiously by only one big player. Russia and China knew that before the war, but now the example of Russia makes other countries like Brazil, India or even Saudi Arabia to rethink twice every possible future trade agreement.
What if in the end they also are going to be the target of US sanctions? Countries that might have felt this way did not condemn Moscow’s aggression despite widespread condemnation from the West.
In fact, none of the BRICS nations has spoken out against the Russian invasion, only issuing vaguely worded calls for peace through negotiations.
As it was put by Xi Jinping during BRICS meeting according to an English-language state media transcript:
“To politicise the global economy and turn it into one’s tool or weapon, and willfully impose sanctions by using one’s primary position in the international financial and monetary systems will only end up hurting one’s own interests as well as those of others, and inflict suffering on everyone”.
His voice was supported by Wladimir Putin’s remarks. “The Russian Financial Messaging System is open for connection with the banks of the BRICS countries. The Russian MIR payment system is expanding its presence. We are exploring the possibility of creating an international reserve currency based on the basket of BRICS currencies,” he said, according to an official English-language transcript from the Kremlin.
What’s more, Putin noted also that the total international reserves of the BRICS countries this year amount to about 35% of world reserves. He also said trade between the Russian Federation and the BRICS countries increased by 38% to reach $45 billion in the first three months of 2022.
Russia right now might be the main advocate of leaving the burden of the dollar, but her program is becoming more and more popular among the so-called second world countries, especially those not seen as democratic. Russia’s commitment to diversifying its foreign exchange reserves, encouraging the exercise of the procedure steps in the yuan and reforming the monetary system by changing the international monetary funds, is seen as an occasion for other countries to leave dollar-zone markets. But as we can see Russia is accompanied by China, which has been trying to build its own currency system around juan. A decentralised system will attract countries subject to US sanctions. It would even appeal to major US allies who hope to promote their own currencies to the detriment of the dollar.
Somewhere in the background, there loom issues involving countries who were made in the last years to support the line of the BRICS countries. One of them is Bolivia, whose lithium resources are under eyes of global scrutiny as the government is still negotiating with various companies, among them are companies from Argentina, US, China and Russia. Only one of those countries represents old world order. And not only Bolivia is at stake here, also other countries of Latin America have to decide the fate of their resources. Wenezuela, Chile, Brazil and Argentina, with their anti-American leanings, are among them – and they do not give a lot of hope for the White House.
Brazil is the most intriguing power here, since the far-right forces of Jair Bolsonaro and left-wing forces of Lula Da Silva are also strongly anti-yankee. From the American point of view, ‘there is no alternative’ for Brazil. Lula has already expressed his thoughts on the war in Ukraine, clearly on the side of the anti-Nato camp. As well as Pope Francis I, whose views on the war side exactly with the feelings of Latin America as a whole. Which is not shocking at all – South America witnessed enough of coups and social sabotage staged and backed by the CIA, supported by the White House.
John Bolton’s testimony shows another burst in the condition of the West.
His last theatrical bragg about organising coups all over the world shows that there is little reflection among Washingtonian elites,
despite some brand new strategies created during the G7 summit to counter “Belt and Route Initiative” the central point of Xi’s “Major Country Diplomacy”. At the beginning in 2013 only 70 countries signed up for the project, among them Bangladesh, Russia and Indonesia, however as of March 2022, 146 countries were listed as having signed up to the BRI. The main aim of this project is to create a to construct “a unified large market and make full use of both international and domestic markets, through cultural exchange and integration, to enhance mutual understanding and trust of member nations, resulting in an innovative pattern of capital inflows, talent pools, and technology databases”. The budget of the project is still rising with every year, in 2015 it was estimated that the project would need 160 billion dollars related only to infrastructural projects such as airports, railway connections, infrastructure hub etc. from China to Poland, from India to Russian Siberia. The project is right now present in Africa, Asia and Eastern Europe, and has been slowed down in the latter because of the war in Ukraine, but nothing tells us that it will stop elsewhere.
To counter the greatest infrastructural program ever announced, the old hegemons during the G7 summit has presented a completely new approach, the so-called “Partnership for Global Infrastructure and Investment”.
The project is openly an answer for the Chinese initiatives. Ursula von der Leyen straightforwardly says that the latter is not profitable for Europe, which wants to have power over distribution lines over the world.
What’s more, investments made under those projects are going to be value driven, pro-democratic and pro-liberal. One of the main slogans is feminism and fight for women participation in the social processes. This edge of the G7’s initiative is completely different from the Chinese one, because the latter is advertised as a pure business without any ideological inclinations.
What endeavours are going to be done as a part of this policy? One of them is construction of a vaccine factory in Senegal, which could independently supply Africa with the medication, the next one is optical fibre connection from France to Singapore worth 600 million dollars. The last concrete one is construction of solar panel infrastructure in Angola, with the estimated cost of 2 billion dollars.
But as Biden put during the summit, those investments are not going to be a charity, they have to present some value for the markets of G7 countries.
The example of that is the atomic power station in Romania, which will bring, according to Biden, thousands of jobs in the USA and Romania as well.
Many experts say that this initiative is already late, and looks like a spontaneous response of an unprepared student, but it shows us that the fight for the Global South is entering a new phase.
The USA is also going to counter pro-juan or pro-independent currencies initiatives of Brics countries, but right now as we have seen global trade exchange is deteriorating. What will come next is a new stage in which countries like Mexico, Turkey and Saudi Arabia would need to stand on one of the sides.
Right now the power of G7 countries is greater than that of China and Russia, even more than that of the entire BRICS group, whose main advantage is the rising population. However, the same billions of dollars in terms of the approach to Europe or the American solution marked by economic extension and disregard of civilization might not be enough to attract the South.
The interesting times are just waiting ahead.
Cover photo: the roundtable meeting of G7 member states leaders, June 2022. Source.
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