Story #4: The BRICS Build Independent Systems

“Many analysts believe that the international system is sliding towards multi-polarity, a world in which no single great power is in a position to dominate its peers. But among those who subscribe to this view, there is some debate over just how the coming multi-polar order will operate.” ~ Peter Harris

For several years, The Saker has joined us quarterly on the Solari Report to cover the shift from a unipolar world dominated by the United States to a multi-polar world in which a number of powerful states and players compete and cooperate in a more complex balance of power.  The Saker will be joining us again in 2018. These are discussions you don’t want to miss.

The BRICS nations have been organizing individually and collectively for years to build greater financial independence from the United States, the G-7 and their global institutions such as the IMF and World Bank. This last year was marked by significant progress with China and Russia taking numerous concrete steps both in partnership and with the BRICS nations.

As the world adjusted to the surprise of the Trump victory in November 2016, China’s Xi Jinping stepped into the globalist shoes at Davos and assured the world that China would continue its commitment to globalization.

As one of his first acts in office, President Trump cancelled America’s participation in the Transpacific Partnership. China looked for opportunities to reorganize trade in the Pacific region.

In March, in response to pressure from the US, the SWIFT system cut off remaining North Korean banks. The message was clear – the SWIFT system could be used to compromise national sovereignty.

In March, the Bank of Russia announced it had opened a representative office in Beijing.

In September, the US threatened China that it would be cut from SWIFT if China violated the North Korean sanctions.

In October, China announced the launch of a yuan-rubble payment system and a plan to price oil in yuan using a gold-backed futures contract in Shanghai. Russia announced the creation of a CryptoRubble.

In November, Russia announced plans to sell Yuan Bonds.

Also in November, the Russian Security Council directed the Russian government to develop an independent Internet for the BRICS.

Four of the five BRICS nations – Brazil, Russia, China  and South Africa – are major gold producers. In December 2017, the BRICS moved forward with a gold trading system.

During December, President Trump published a new national security policy, which emphasized increased tensions and competition with Russia and China.

December also saw the US pass tax reform expected to repatriate trillions in cash and corporate operations back to the United States. Both China and Russia responded.

While Russia and China were building financial independence, they continued to build global economic ties and allies around the world.

Throughout the year, India maintained closer ties to the United States, helping to lead the way to a cashless society. Great for the Internet and software firms, this move was a harsh one for the Indian people.

What’s ahead in 2018? Expect the great unraveling to continue as the US, China, and Russia compete more aggressively for capital, global market share, and soft power influence as Asia continues to grow and build out space, satellite, naval capacity, and transportation and trade linkages across Eurasia. As the New Year begins, Bloomberg reports that China may slow or halt the purchase of US Treasuries (China denies) and the US has blocked Jack Ma’s bid for Moneygram.

Despite sanctions and low oil prices, Russia has successfully maintained very low levels of debt. China, however, has borrowed significantly, including in dollars.  How China manages its debt will have significant global implications, particularly if the United States aggressively insources manufacturing and other global operations.

The convergence of Asian per-capita incomes with G-7 levels will be one of the defining investment and economic trends of the next two decades. Watch for it in the news throughout 2018.

 

 

 

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