BRICS....

While returning from my trip from Surat to Mumbai earlier this week, I was sitting next to a man who was on his way to Maputo that night to visit an entrepreneurship center that he had founded there, and he was to dine with a big Government official of the Mozambique Government soon.

He was a counselor, a teacher, an entrepreneur, and it was a pleasure to talk to such a man about all the topics that interest me - Africa, China, India, governance, and the global economy. In fact, I started talking to him when I noticed he was reading Joseph Stiglitz's latest book, Freefall, which was published in 2010. So I mentioned to him that Mr. Stiglitz had visited India recently and he said yes, he had met with him in Cochin when Mr. Stiglitz stayed at his friend's hotel, the last surviving Jewish hotel in the city!

The second interesting thing about the person was that he knew Mohammad Yunus very well, and he was telling me about how corrupt the entire microfinance industry in Bangladesh has become, and how these companies are now raking in millions in aid money from the rest of the world, and using it for so many things other than actually funding the bottom of the pyramid. An example he gave me was of many top micro-finance people in Bangladesh coming to Calcutta for their shopping trips and booking expensive suites in the five star hotels there. Something quite similar to the stories I hear of Pakistani elites coming to Delhi for their wedding shopping trips.

He was telling me of how the Chinese built their Embassy in Maputo by bringing in prisoners from the mainland and making them work in chains! And this shitty country wants to be the leader of the new world. Unless the new world is a mirror image of the medieval world, I do not think that this'll go down too well with most of the world. Of course, most of our society is still barbaric, what with the human trafficking, torture, exploitation, ruthless pursuit of wealth, but that's the price we have to pay for being God's most imperfect creation.

Definitely the biggest parasites sucking off the third world are their own. The reason I bring this great meeting up is because I mentioned to him that I am happy that the BRICS are coming up, no matter how much I despite the Chinese, I am keen to see a new block of emerging nations that is standing up to the economic hegemony of the developed white world.

So the Professor said he didn't agree with the concept of BRICS. In a way, the entire legitimacy of the BRICS, and its earlier avatar, the BRIC, seems to have stemmed entirely from the fact that a person doing God's Work at Goldman Sachs coined the term. So he was of the opinion that the BRICS are destabilizing the polarity of the world and that will only lead to a greater power struggle in the future. Then I told him that my opinion was that the BRICS were only making the global economy more equal, and I told him that I look forward to the day when the first world becomes irrelevant mostly to the economic future or strength of a third world nation. In my mind, south-south cooperation is the way to go forward.

Since last week, when the national media was/is too busy covering the war between the Chief of Army Staff and the Shitty Government of the Union of India, the leaders of the emerging world met in New Delhi, including the Head of the Shitty Government of the Union of India.

While all the 5 nations have their own unique and individual ambitions and ways of doing things, they also have a lot in common. Each of the 5 states, while grouped together as emerging nations, are in various stages of economic development, and of course, each with their own unique sets of problems. However, given the globalization of the world today, and each economy connected to every other, they also share a lot of common opportunities and problems, and I suppose at the bottom of it all, the need to reduce the dependence on the developed white world is something that is very important.

So while they can't see each other eye to eye, and some more comfortable with one member than the other, and some not comfortable with each other at all, such as India and China, its unlikely they will ever find a plank to stand together on. China's entire economy is based on the western consumption model and becoming the factory of the world. It is in their interest that the developed world keep consuming what they produce. Eventually, as they would agree too, it will run out. Russia is slowly reemerging as a power thanks to the uninterrupted rule of Vladimir Putin, Brazil growing rich quick and turning into the world's raw material warehouse, and South Africa, as the Professor on the train said, was fast on its way to becoming the next Zimbabwe!

India? Oh India, India. All that potential, and all that talent, and we end up with such a hodge podge of medieval feudal mindsets and colonial legacies and new age democracies and a society in such a agitated state of upheaval that I am sure nobody can be sure of which way our country is headed anymore.

One interesting development that the leaders talked about was a BRICS Bank. The talk coincides with the recent American nomination of former Dartmouth President Dr. Jim Yong Kim as the next President of the World Bank, following the tradition of US and Europe sharing the 'responsibilities' of running the World Bank and the International Monetary Fund between them.

He is competing with two strong candidates from the emerging world, Dr. Ngozi Okonjo-Iweala of Nigeria and Jose Antonio Ocampo from Columbia. Most of the world outside the United States and Western Europe would like to see some fairness and merit involved in selecting the post, and Stiglitz wrote recently that its ridiculous in today's day and age that the US still gets to choose the head of such an important body.

Okonjo-Iweala has been widely acclaimed to be the most qualified candidate for the multilateral development institution's top position.

In a related development, a group of former World Bank officials has written a letter backing Okonjo-Iweala, to be its next president.

Traditionally, the post is given to the candidate put forward by the US, the BBC reported.

But in an open letter, 35 former economists and managers said the bank should choose the next chief on merit.

The letter in support of Okonjo-Iweala, which is signed by high-ranking managers and economists, including Tunisia's central bank chief, Mustapha Nabli, criticised some aspects of the selection process.

Under an informal arrangement, in return, Europe appoints a European as head of the International Monetary Fund (IMF), a sister Bretton Woods institution. It is currently run by Frenchwoman Christine Lagarde.

Emerging economies have become increasingly unhappy with this system and are pushing for change.

The leaders of Russia, Brazil, China, India and South Africa recently called for a review of that weighted voting system.

So given this scenario that there are loud grumblings of unhappiness at this decades old arrangement between the two economic blocs, its quite possible that the BRICS Bank could possibly emerge as a bank for the third world sometime in the future. At the same time, all these nations are very deeply connected to the United States. In fact, Dr. Kim was in New Delhi recently and met the Prime Minister and other cabinet ministers and officials.

In another outcome of this Fourth BRICS Summit, the members said they are keen to start trading in their own currencies.

 Again, this talk of reducing the influence of the USD as the world's common currency has been on for a while, and once the global economy tanked, everybody realized that perhaps its best to hold onto those Dineros. Iran has been trying to trade with countries in their own currencies for a while now to sell its oil, and this is one big conspiracy theory that this is the reason why the US is going to war with it because it is bypassing the global oil exchanges that trade in USD at New York City and London.

This is something I whole heartedly welcome. The US is feeling the pressure these days because there is nobody to sponsor its wars for it, and other nations are raring to go ahead.

I think what the Professor was trying to tell me was that the world may not be able to sustain another pole. The BRICS will create another pole and they are getting more and more powerful. Even with their own individual ambitions and plans, there is a lot they can work on together, and as much as I hate to say it, China's a part of it too.

Thus a better solution the way forward is perhaps not a strong BRICS, but a stronger G20. A group of the world's twenty most powerful nations, including the 7 strongest developed economies, will be a more equitable group and can combine the best of both worlds.

A ‘multilateral letter of credit confirmation facility agreement’ was signed among the five participating banks — Brazil’s Banco Nacional de Desenvolvimento Economic e Social, Russia’s State Corporation Bank for Development and Foreign Economic Affairs (Vnesheconombank), Export-Import Bank of India, China Development Bank Corporation and Development Bank of Southern Africa.