BRICS: News and Discussion

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Austin
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Re: BRICS: News and Discussion

Post by Austin »

BRICS to switch to national currency settlement soon - VTB head
We definitely see a growing interest from the countries to make settlements in local currencies,” the CEO of Russia’s second biggest bank said. 40-50 percent of all the mutual settlements among the BRICS countries can be performed in domestic currencies, Kostin estimated, RIA reported.
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Rosneft has signed agreement on oil supplies to India — source
UFA .July 8. / TASS / Russia's oil major Rosneft has signed agreement on oil supplies to India on the sidelines of the BRICS summit, a source close to the negotiations told TASS on Wednesday.

"The details of the agreement will be announced later by both parties," the source said.

In March of this year, Rosneft reported that it planned to sign a contract with Indian Essar for supply of 100 mln tonnes of oil in 10 years in mid-2015. Rosneft is going to supply 5 mln tonnes under the said contract in 2015.

TASS reported earlier Rosneft and the Indian Essar signed a preliminary contract for supply of 10 mln tonnes of oil a year during 10 years in December 2014, while the Indian sources said that the price of oil amounted to $60 per barrel.

In addition, media reports have said that Rosneft is in talks to acquire a strategic stake in India's Essar Oil in the amount of 50% minus one share. It was noted that Rosneft can pay the cost of the package partly in cash and partly in the form of crude oil to be delivered Essar at a substantial discount.
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BRICS trade turnover hit $291bn in 2014 – minister
Trade between BRICS countries increased by more than 70 percent in recent years, reaching $291 billion in 2014, Russian Economic Development Minister Aleksey Ulyukayev said Tuesday at the Moscow meeting of BRICS finance and trade ministers. Russian trade with BRICS stood at $105 billion last year and BRICS’ share of world GDP has risen 11 percent since 2001. “In 2014 our [BRICS-Ed.] countries made up more than 17 percent of global trade, 13 percent of the world market and 45 percent of the world’s agricultural production," Ulyukayev said.
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Re: BRICS: News and Discussion

Post by nandakumar »

ToI is reporting that Essar Oil has signed an agreement to cede 49 per cent stske in the company to Rosneft.
http://timesofindia.indiatimes.com/busi ... 998963.cms
This is a huge deal as the market capitalisation of Essar Oil is roughly Rs 25,000 crore.
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^^ Would be the second biggest buy for Rosneft after TNK-BP acquisition.......I think they are more interested in Refinary business in India along with ESSAR
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Interview with BRICS New Development Bank's president Kundapur Vaman Kamath

Head of NDB: 'Developing countries are coming of age and we can raise money on our own
The New Development Bank, created by BRICS member-states to finance infrastructure projects, has become a crucial topic of discussion at the BRICS/SCO summit in Ufa. According to the leaders of Brazil, Russia, India, China and South Africa, the bank’s creation signifies growing financial maturity and would allow to reduce dependence on Western financial markets and institutions. Government officials are already pitching ideas on how the Bank should invest its money. However it is too early to start talking about financing select projects, according to the Bank’s chief, Kundapur Vaman Kamath (or K.V. Kamath as he is known). In an exclusive interview with TASS on the sidelines of the summit in Ufa, Kamath said the Bank has to hire a team, launch internal procedures and compile a list of potential investment projects. However as early as Spring next year the Bank may start full operation, with total funds 3-4 times larger than the agreed $100 bln charter through borrowings on the debt market including in national currencies of the BRICS nations.

- How will the balance of power be observed in the NDB?


- All founder-members will come together in equal shareholding, so everything is on an equal basis in terms of the board. As far as the operations of the bank are concerned, we are open to business and we will look at proposals from each country. And they will be looked at in the sequence in which they are coming. We realize we will need to work with other partners, to meet aspirations in terms of loans and other assistance for not only our BRICS member-countries as of now, but an increased number of members as it happens, so that will be laid out in our policy as we go along.

- Correct me if I’m wrong. The current charter capital is $100 bln.


- Yes.

- There were also reports there will be a limit of $34 bln per year of investment funding. Is that correct?

- Not to my knowledge, I don’t think we will have any number. What will determine the amount we lend per year is our ability to identify projects we could fund, and will to raise funding for those projects. That would be the sequence. Because you have to maintain your credit rating and you have to maintain your leverage between equity and debt. That will determine the annual lending [volume].

- So there will be both equity financing and debt financing?

- Yes. See, there will be both equity raising by us, which is from the member-states, and debt raising by us from the markets. And we will also lend to our customers, the various countries or the projects in those countries, in equity and in debt.

- If you have a charter capital of $100 bln, how much virtually could you spend on investment projects with a long return?

- Long-term lending follows this model: you have your parent capital, and you can leverage that typically two to three times as debt. So you then have if you fully bring in your parent capital you have another $200-300 bln over that, so you could do $300-400 bln worth of lending. That will happen over a period of time. At this point I cannot say how quickly, because that will depend on how quickly we will set ourselves up and how quickly we will build our project pipeline with various countries.

What is the roadmap for creating the corporate structure of your bank?

- It is underway. It’s a ratification process whereby the various government entities, nations come together and set this up, that process is complete, that’s the first step. That board meeting took place in Moscow [on July 7 – TASS]. As of now, technically I have a white sheet of paper with only the names of my four vice-presidents. Everybody else has to be hired. But our friends in China have given us office space, they’ve already furnished it, so we can move into our offices next week, which we are. So typically that takes time, but it our case it’s ready, we’re moving into our office. And we are in the process of recruiting. To cut a long story short, typically this takes a lot of time to set up, but what we want to do is by April next year we want to make our first loans, so we will have to build teams to identify projects, build simultaneously internal processes and procedures, hire people and then get to the funding process.

- Are you planning to hire your team on a basis of national quotas from the members, or professional qualities?


- I think it’s very simple. For the first three months we will seek help from member-country institutions: the local development banks, local banks. So I’ve started the process of consulting with our own development bank partners, in fact I was having meetings just now, to hire 1-2-3 people from each of the countries. These are the people who will help in starting. For example we need to set up our HR processes, and then we will recruit. Recruitment will be purely merit-based from across our member-countries.

- As far as the projects are concerned, many countries have already expressed their interest in presenting some particular projects to your bank. For example, Russia’s Finance Minister said oil company Rosneft could be interested in attracting money from your bank, or Russian Railways. Do you have any projects in mind already?


- We have asked every country by now to suggest a pipeline of projects. In some places it is at the ministerial level that we’ve asked, in others – at the national development bank level that we’ve asked to share with us the projects that we could do by ourselves or jointly with these institutions. I’m sure we will have a good sheet of projects in the next eight weeks which we will then try to bring to the board for approval in April next year. But as of now it’s just a clean sheet of paper.

- And if we are talking about government influence over bank does any particular government have its own quota for the projects?

- Typically what would happen is we would look at what is being put on our table, what is ready to go and we would do that. I expect it will be on the basis of sequence, depending on the level of preparation of the projects. As of now we are not talking about any quotas, we will look at all projects that come to us. Now we are on the start.

- What is the ultimate goal of the bank? Profit making or supporting infrastructure projects?


- Let us go back to see why this bank was set up. I think the bank was set up clearly to make a position that developing countries are now able to stand on their own feet. Funding needs are large enough and in that there is a need to look at the funding from the point of borrowing. So far the all funding was seen from the point of lender. The lender was from the countries that have the capital, the rich countries. I would say that this bank makes a statement that we can come together and raise our own resources and meet a part of our own growing needs. Of course, we will collaborate with others. And as a banker myself I can say that a project has to be bankable. By bankable I mean that it should be capable of returning the borrowing that has been made and it has to earn return on top of that. The return on top of that can be in various ways. It can be just the interest that is serviced on the loan that is borrowed. Actually it has to be more that that. There has to be return to other stakeholders. So you do a projects which let’s say socially relevant, with a social return that happens as a result. So we need to make sure that those returns happen and people get the benefit from this. We will look at return on a holistic manner, other than the narrow banker’s view – “I get my capital back, I get interest, okay, I am happy”. No, beyond that it has to have relevance to the country that has particular project that we are assisting. So every project we believe will be bankable.

- From what financial markets your new bank can get debt financing – from European markets, US or Asian?

- I will start by saying that if you go back to why this bank was set up it was set up in acknowledgement that developing countries are coming of age and that we can raise money on our own. It would mean debt capital also. I think the debt markets in our countries are getting deeper. Clearly as far as the renminbi is concerned, it’s a deep market, the rupee is getting some depth. I’m sure there is local currency depth that is happening. So we will look at the local currency markets in the developing countries, particularly the member-countries, in addition to the hard currency markets. The reason is, we believe that raising local currency de-risks the members from the vast and sharp fluctuations in exchange rates that are happening. So it gives you stability.

So will there be some kind of currency basket which will be introduced?


- Not necessarily a basket. It will be the local currencies of the borrowing members to the highest extent possible which will be used to fund in that country to mitigate the risk. That is our aim. That thought is coming very strongly when we discuss it with governments, with other development banks, that’s something we will be working on.

- Do you have an idea of how to resolve potential conflicts? Say, when a new loan has to be put up, China and South Africa will have different financial capabilities in providing it.


- We will come to that when we face that. We are starting on the basis that every member has put up and agreed to a capital commitment. And we will proceed on that basis.

- And now country will have a veto right for any decision?

- It will be completely a board-driven process with articles on have the voting process will be done, via majority.

- Finally, do you think the BRICS might add a few more ‘letters’?

- Yes, I think in due course we will look at membership, we have to. The timeframe of that I will discuss with the board when it first meets, we are yet to have our first board meeting. We will understand what is in their minds, share our thoughts and proceed.

- But what new countries do you think can join the bank?


- I don’t think we should have any pre-set mind, I would give that privilege to the board to discuss.

Interviewed by Maxim Filimonov, TASS Editor-in-chief, and Dmitry Medvedenko, Head of TASS Economic & Business News
Yagnasri
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Re: BRICS: News and Discussion

Post by Yagnasri »

Some of the Essar group companies are in deep financial problems and they are selling assets etc. The sale of stake seems to be an effort to improve health of the group.
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Re: BRICS: News and Discussion

Post by ldev »

Austin wrote:^^ Would be the second biggest buy for Rosneft after TNK-BP acquisition.......I think they are more interested in Refinary business in India along with ESSAR
India has become the world's 3rd largest oil consumer after the US and China. All oil exporting countries will be interested in locking in distribution arrangements in India including via refinery ownership.

India Becomes 3rd Largest Oil Importer
India is now the world’s third largest importer of crude oil after the United States and China.

The country’s oil imports have steadily climbed along with its growing economy. India has surpassed Japan in terms of oil imports multiple times over the past few years, and could trade spots again. But while they duel it out in the short-term, the outlook is clear. India’s import dependence is rising fast and it will be one of the largest sources of demand growth for the foreseeable future.

The International Energy Agency predicts that India will burn through 4.1 million barrels per day (mb/d) in the second quarter of this year, edging out Japan’s 3.8 mb/d.
Austin
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BRICS adopts Ufa Declaration
Leaders of BRICS countries, some of the world’s most important emerging economies, have adopted the Ufa declaration, the final resultant document of the summit on Thursday.

Following marathon rounds of talks, the five emerging powers signed a raft of inter-governmental agreements and the Ufa Communique.

The BRICS deliberations on the current global political and economic situation were reflected in the document.

The BRICS bloc noted the fragile recovery of global growth and also said they were “concerned about potential spillover effects from the unconventional monetary policies of the advanced economies”.

BRICS accounted for over 17 percent of global trade, 13 percent of the global services market and 45 percent of the world’s agricultural output in 2014. The combined GDP (purchasing power parity) of the five BRICS countries surged from $10 trillion in 2001 to $32.5 trillion in 2014.

The Ufa declaration also asserted that “the NDB (New Development Bank” shall serve as a powerful instrument for financing infrastructure investment and sustainable development projects in the BRICS and other developing countries and emerging market economies”.

The BRICS Bank will approve its inaugural investment projects in the first quarter of 2016 and will work closely with the China-led AIIB. All the five BRICS countries are members of the AIIB.

“We welcome the proposal for the NDB to cooperate closely with existing and new financing mechanisms including the Asian Infrastructure Investment Bank,” said the document.

The Ufa declaration also makes references to the 70th anniversary of the defeat of Nazi Germany, “fascism” & “militarism” during World War II and denounces attempts to rewrite history but stops short of mentioning Japan.

“We express our commitment to resolutely reject the continued attempts to misrepresent the results of World War II. While remembering the scourge of war, we highlight that it is our common duty to build a future of peace and development,” said the communiqué.


China-Japan ties are at an all-time low owing to what China and South Korea say is Japan’s lack of remorse for its war-time atrocities.

China and Russia also said on Thursday they they support the UNSC aspirations of Brazil, South Africa and India.

The BRICS leaders vowed to work close with the UN to uphold international treaties, while criticizing the adoption of “double standards”.

“We emphasize the need for universal adherence to principles and rules of international law in their interrelation and integrity, discarding the resort to “double standards” and avoiding placing interests of some countries above others,” said the document.

The BRICS countries have regularly criticized the interventionist foreign policy approach of Washington, including air strikes in Middle eastern countries, like Syria and Iraq.

In major succor for Russian President Putin, his BRICS counterparts continued to rally behind Moscow by opposing the Western sanctions against Russia over the Ukraine conflict.

“We condemn unilateral military interventions and economic sanctions in violation of international law and universally recognized norms of international relations. Bearing this in mind, we emphasize the unique importance of the indivisible nature of security, and that no State should strengthen its security at the expense of the security of others,” added the Ufa communiqué.

The BRICS also adopted an “Action Plan” that maps the 2016 trajectory of the group.

The Russia-proposed “Strategy of BRICS Economic Partnership”, a blueprint for the group’s trade, investment and commerce ties up to 2020.

Among other things, it will be aimed at increasing the competitiveness of BRICS countries in the global economy.

The five foreign ministries also signed an agreement on creating a joint BRICS website, which will act as a virtual secretariat of the group.

The Central Banks of the five countries have also signed cooperation agreements with the New Development Bank.
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Fully Text of UFA Declaration ( pdf )

http://en.brics2015.ru/load/381158
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Modi proposes 10-point initiative for BRICS nations

Image
Pitching for closer cooperation and coordination among BRICS nations, Prime Minister Narendra Modi today proposed a 10-point initiative that includes India hosting the first trade fair for the grouping and establishing research centres for railways and agriculture.

Calling it 'Das Kadam: Ten Steps for the Future', Modi put forward new initiatives for the BRICS grouping that is formed by major emerging economies.

At the Plenary session, the Prime Minister said that "the challenges that the world is faced with are for every country its important to have consensus, collaboration and cooperation between all major nations".

The proposed initiatives for the BRICS include a trade fair, a Railway Research Centre, cooperation among supreme audit institutions, a Digital Initiative and an Agricultural Research Centre.
They also include State/Local Government's Forum, cooperation amongst cities in field of Urbanisation, BRICS Sports Council and Annual Sports Meet, a film festival and the first major project of NDB to be in field of Clean Energy.

"Also, every country should obey international rules and norms," the Prime Minister said at the BRICS meet which was attended by Russian President Vladimir Putin, Brazilian President Dilma Rousseff and South African President Jacob Zuma besides Chinese President Xi Jinping.

With regard to BRICS, Modi said that it is an "important pillar" in the world of challenges.

Giving a brief on the BRICS Summit, Secretary (Multilateral Relations) in the MEA Sujata Mehta said: "It will be our intention to carry forward the announcements made by our prime minister.

"The first announcement was that we should have an annual BRICS trade fair and our intention is that the first of these will be during India's chairmanship during 2016."

India will be the next chair of BRICS for 11 months beginning February next year.
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BRICS Ufa Summit Yields ‘Exceptional’ Results – Brazilian President
http://sputniknews.com/politics/2015071 ... z3fSfy8bJ1
“The 7th summit of the BRICS, held in Russia, has achieved exceptional results in the framework of our relations.”

I think it was a very successful summit of the BRICS, in addition to having been very well organized.”
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Putin, Modi talk yoga and strategy
On a lighter note, the Indian PM thanked the Russian President for helping to make the International Day of Yoga (on June 21) such a success across Russia and said Yoga would provide holistic healthcare to the world. Putin light-heartedly said that Yoga "looks difficult," which is why he has not tried it.

Putin, who holds an 8th Dan black belt in Karate, said, "I don't know how to do yoga. When you people do it, it looks difficult. That is why I have not tried it."

"It is very special to be in Russia, a nation whose remarkable friendship with India has always been known," Modi said in a statement on his arrival in Ufa. Talking of the close relationship between India and Russia, said he will be visiting Russia again later this year for the annual bilateral summit meeting.
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Post by Philip »

PM Modi also made a veiled attack on the west's sanctions against Russia according to Indian media reports today,saying that they were contributing to the global eco woes. It appears that the initial euphoria wit the US is waning thin after a year in office,as the US keeps denying us defence high-tech while Russia is willing to help develop for us a cutting edge new attack sublease of another SSGN.
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http://rt.com/business/272974-putin-rus ... ment-card/
According to Putin, Moscow “allowed its partners to do it, thinking that economy is beyond politics.”

“It turned out that it is not the case,” he said, adding that the economy “is used as an instrument of political struggle.”


That’s why Russia has to make decisions and that doesn’t mean Russia is going “to build a wall” around its borders, he said.

“We will use all instruments of cooperation with all countries – with the US, EU and Asian countries,“ he said, adding that Moscow will develop relations “first of all, with those who want to cooperate with us.”

“BRICS countries want this [cooperation], these are powerful countries with prospects of strategic development, these are future leaders of the world and of the global economy.”
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India and Pakistan pledge to develop infrastructure in SCO region
http://tass.ru/en/world/807701
Indian Prime Minister Narendra Modi told an expanded meeting of the Council of the Heads of State of the Shanghai Cooperation Organization (SCO) member countries held in Ufa that India actively participated in the SCO activities as an observer but would like to do everything possible to establish ties and promote physical interrelatedness in the region.

According to Modi, the North-South transportation corridor will contribute to achieving these goals. India would like to contribute to infrastructure development in the SCO region, the Indian prime minister said.

He added that India would support efforts aimed at creating favourable environment for removing barriers, building up trade and increasing investments in the region.India’s vast market will make its contribution to the prosperity of the entire SCO region, Modi stressed.

Pakistani Prime Minister Nawaz Sharif said in turn that SCO’s enlargement thanks to accession by India and Pakistan would fairly reflect the region’s changing geopolitical landscape.

The Pakistani prime minister said that his state possessed vital land and sea routes, which would contribute to promotion of interrelatedness within and beyond the SCO boundaries.

"Pakistan’s participation will make it possible to connect Eurasia to the Arabian peninsula. We are committed to provision of peace in Afghanistan and Central Asia. That will also contribute to establishing trade ties and security in the region," Nawaz Sharif said.
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Putin says he’d prefer start yoga with spiritual practices

http://tass.ru/en/russia/807762
UFA, July 10. /TASS/. Russian President Vladimir Putin said on Friday he’d prefer to begin practicing yoga with spiritual practices.

"Yoga is about the development from the physical to the spiritual. Let us say I have started with the spiritual," Putin said smilingly when asked at a news conference whether he had already begun practicing yoga. "But this also means efforts to refine oneself."


At a meeting with Indian Prime Minister Narendra Modi on Wednesday, the Russian president promised to try to practice yoga to the best of his abilities. "Yoga is something I've never done so far but it can't help being attractive. I'll see what my condition permits me to do proceeding from the level of my physical fitness," Putin said. "When you look at real yogis, it seems no one can attain this kind of perfection and the thought stops you.".
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Feltman admitted that BRICS countries have great political weight, but they or any other group of countries cannot be considered as an alternative to the UN Security Council.

Read more: http://sputniknews.com/politics/2015070 ... z3fhyJjvBU
Ban Ki-moon to Welcome BRICS' Intention to Reform UN Security Council


BRICS seems to be making an impact on UN

UNSC is feeling the weight of BRICS
BRICS Strong, But Unable to Replicate UN Security Council - UN Official
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"And Putin's hopes were immediately realized," Mirzayan noted. "On the sidelines of the summit, the prime ministers of the two conflicting countries held closed-door talks, which resulted in an agreement by the Indian leader to visit Pakistan for the summit of the South Asian Association of Regional Cooperation." The analyst emphasized that "of course, joint participation in the SCO will not resolve all the problems in Indo-Pakistani relations. However, the very fact of this participation has turned the SCO into a platform where the leaders of India and Pakistan will be able to regularly shake hands, and to discuss problems in bilateral relations."


Read more: http://sputniknews.com/analysis/2015071 ... z3fi2jZxZO
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Rosneft eyes Indian solar power market

The move is as much a sign of Rosneft’s interest in the Indian market as it is the potential of solar energy in the country

“Representatives from Rosneft have met the Indian government officials. They want to set up a capacity ranging between 10,000MW (megawatts) to 20,000MW,” said a government official who spoke on condition of anonymity. At an investment of around Rs.6 crore per MW, a 10,000MW capacity will entail an investment of around Rs.60,000 crore.


Russian energy companies are looking at new investment avenues in the aftermath of the collapse of international crude prices and also to work around the economic sanctions imposed on the country by the US and the European Union. At the same time, India is seeking to expand its energy mix by encouraging more investment in green power.

Rosneft’s interest also stems from India’s plans to install 100,000MW of solar power capacity by 2022. India needs as much as $200 billion to meet its target and the government aims to provide green power at less than Rs.4.50 a unit.

This initiative comes in the backdrop of news that the Essar Group plans to sell as much as 49% of Essar Oil Ltd to Russia’s OAO Rosneft, in which the largest shareholder (with a 69.5% stake) is the Russian government.

Rosneft’s businesses include hydrocarbon exploration and production, upstream offshore projects, refining, and crude oil, gas and product marketing in Russia and abroad.India on its part has been trying to secure energy resources in Russia by leveraging its historical association with the country. Indian investments in Russia, mainly in the hydrocarbon sector, total around $4.25 billion.

Queries emailed to a Rosneft spokesperson remained unanswered till press time; an Essar Group spokesperson said in an email that the group is “not privy to any such plans of Rosneft”.

Rosneft’s move also reflects happenings in the oil and gas market, a former bureaucrat said.

A petrogas giant coming to India in the renewable energy sector could well point to a certain nervousness in the petroleum sector in respect of price stability. Investment in India at this point of time also indicates that other international markets are not very attractive investment destinations,” said Anil Razdan, India’s former power secretary.

Crude oil prices in the Indian energy basket averaged at $61.75 per barrel in June, as against $84.16, $105.52, $107.97 and $111.89 in 2014-15, 2013-14, 2012-13 and 2011-12, respectively.

Razdan also warned about the poor finance health of India’s state electricity boards that buy power from generators and which could derail any investment in green power generation.

“For sustaining this kind of investment in the renewable energy sector, the Indian power sector will have to ensure that the distress in the distribution segment is eliminated at the earliest,” he said.

State electricity boards are laden with debt of Rs.3.04 trillion and losses of Rs.2.52 trillion.

There has been a growing interest from overseas investors in the Indian renewable energy space. SoftBank Corp., along with Bharti Enterprises Ltd and Taiwan’s Foxconn Technology, in June proposed to invest at least $20 billion in solar energy projects in India through a joint venture, SBG Cleantech Ltd. US-based First Solar Inc. and China’s Trina Solar are among firms that are considering plans to set up manufacturing facilities in India.

US-based SunEdison Inc. had also said it plans to establish a joint venture with Adani Enterprises Ltd to build a solar photovoltaic manufacturing facility in India with an investment of around $4 billion.

The Narendra Modi-led government has pushed renewable energy to the top of its energy security agenda, seeking to minimize India’s dependence on coal-fuelled electricity. Renewable energy accounts for only 35,777MW of India’s total power generation capacity of 272,503MW.
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BRICS bank, AIIB to break IMF, World Bank monopoly: China think tank
All the BRICS, (Brazil, Russia, India, China and South Africa) economies have become founding members of the AIIB, while China, India and Russia turned out to be the three largest shareholders of the bank," an article titled "BRICS cooperation helps to build new international framework" published in the Global Times daily said.

"The establishment of the BRICS New Development Bank, an emergency reserve fund, and the AIIB will break the monopoly position of the International Money Fun ..and the World Bank (WB)," said the article written by Liu Zengyi, research fellow of Shanghai Institutes for International Studies.

"It will motivate the IMF and the WB to function more normatively, democratically, and efficiently, in order to promote the reform of international financial system as well as democratisation of international relations, it said.
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Putin wants to make Russia visa-free for BRICS
Russian President Vladimir Putin has instructed the government to develop visa-free travel for short-term visits and transit by foreign tourists from BRICS countries, reported the Kremlin website on Tuesday. The deadline to submit proposals is set for October 30.

The BRICS bloc comprises five developing economies – Brazil, Russia, India, China and South Africa.
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Re: BRICS: News and Discussion

Post by panduranghari »

Austin wrote:BRICS bank, AIIB to break IMF, World Bank monopoly: China think tank
All the BRICS, (Brazil, Russia, India, China and South Africa) economies have become founding members of the AIIB, while China, India and Russia turned out to be the three largest shareholders of the bank," an article titled "BRICS cooperation helps to build new international framework" published in the Global Times daily said.

"The establishment of the BRICS New Development Bank, an emergency reserve fund, and the AIIB will break the monopoly position of the International Money Fun ..and the World Bank (WB)," said the article written by Liu Zengyi, research fellow of Shanghai Institutes for International Studies.

"It will motivate the IMF and the WB to function more normatively, democratically, and efficiently, in order to promote the reform of international financial system as well as democratisation of international relations, it said.
Funny. US will break China before Chinese actually do something. AIIB is useless now. Why was the AIIB created? To recycle the excess dollars that Chinese had after they had bought tons of US T Bills. Now the Chinese are forced to sell the T Bills as they have no excess dollars left. Where will the spare funding for AIIB come from?
Austin
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Re: BRICS: News and Discussion

Post by Austin »

Selling excess Dollar by which you mean Forex by Central Bank is a normal thing every central bank does it from time to time , do you think China can keep accumulating T Bills infinitely ? Those huge forex are there partly to defend the Yuan from the kind of situation we saw.

The point of AIIB or BRICS bank in the former IIRC india is the 2nd largest Funder and in the latter its equally dived among all brics but for china , is to fund its own program without relying on diktat of IMF and to create niche space for their own currency via Currency Swapping.

Right now China is the big dog , second only to US so if China break then the rest all breaks as well , you better than any one knows no central bank is good right now neither ECB , Fed or CHinese . The Stock Market collapse and the global upheaval it created ( and we are told Chinese Stock Market has nothing to do with its economy ) is a good indication where China is now.
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Re: BRICS: News and Discussion

Post by panduranghari »

Its OK to piggy back China for sometime. But the perfidous nature of the Han is only equal to the Brit. We need to create a path for our own. And the NAM of chacha nehru is a good template. Only needs dharmik tilt.

Chinese have the most to loose with the changes in the global economic order.
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Re: BRICS: News and Discussion

Post by ramana »

Do you still think of it as China's Minksy moment?
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Re: BRICS: News and Discussion

Post by Austin »

panduranghari wrote:Its OK to piggy back China for sometime. But the perfidous nature of the Han is only equal to the Brit. We need to create a path for our own. And the NAM of chacha nehru is a good template. Only needs dharmik tilt.

Chinese have the most to loose with the changes in the global economic order.
I am not sure if piggy backing is the right term because we dont stay in era where Government Decides whats good for busssiness and who to trade with or not , At best Government creates policies and environment to aid bussiness.

IF Indian business finds it profitable to trade with china they would do it , same goes for US-China trade or trade with any other country , For the past 2 decade US business finds it good to trade with China so they made it into manufacturing hub and same goes for our frontier into IT business with US.

ITs more of Mutual Interest that would define our business with China , I hope at some point of time our own Rupee gets free floating and becomes a strong currency to trade with atleast within BRICS nation . Right now China is the Top Dog so we might just take advantage of this and make most use of it for promote our business interest in China.
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Re: BRICS: News and Discussion

Post by Philip »

Good observation Pandu.We have squandered the immense goodwill and prestige that we had with NAM who looked to India as the undisputed leader of NAM. The high point was Mrs/ Gandhi's leadership after the great victory of '71. Here,we/she showed that we could show the US,Nixon,Kissinger and co,the Brits and Chinese the upturned finger as we dismembered Pak right under their noses despite the immense diplomatic,military and financial support Pak recd from the US/West,China and the Arab states. This was made possible by the "insurance policy" that the Indo-Soviet Treaty of Peace and Friendship provided.Soviet warnings to the West and China not to intervene militarily or face the consequences, gave us confidence needed to deefat Pak. The first Pokharan N-test that followed after '71 was another great achievement for India which established us as a member of the N-club,who barged in without any invitation! Sadly,in more recent times,our lackeys of the Congress/UPA preferred to be butlers to the White House and other Western entities.

India must once again strengthen the NAM movement and cement ties between its members as the Western world's economic medicine has ceased to work as as we are seeing,the EU is in dire straits both economic and social thanks to the human wave of refugees invading it from the Muslim world.
BRICS offers na alternative to the fossilised thinking and regulations of the neo-colonialists.
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Re: BRICS: News and Discussion

Post by panduranghari »

China has moved way past its Minsky moment. addendum - Its a Minsky event rather than Minsky moment that MSM refers to. This in uncharted territory for the CPC.

Look at China differently than what is being portrayed.

The CPC believed in 2009 that this is the time to become the centre of universe.

The maritime silk route, AIIB, BRICS bank, its own version of Trans pacific partnership are its efforts to become the centre like London once was or NY as it is now.

The CPC has bet big on its success. We as Indians must do the best to undermine them. The Americans are already doing that in their own way.

By some estimates Chinese have invested over 4 trillion $ in this whole exercise. Its coming apart at the seams. Lets help speed up its demise.

Chinese are dangerous when they are in this situation. They waged war in 1962 for something far less problematic.

2023 was supposed to be the year of economic parity with US. It surely aint happening. As it looks, unless CPC bails out the stock market, the people will loose confidence. The Chinese economy is not tanking, their stock market is. But the people investing in the economy have a huge say in the stock market. They cannot loose. One acts like a insurance against another.

China and US are so joined in the hip here in economic terms, they will prop each other up but only as long as the ROW supports this nonsense.
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Re: BRICS: News and Discussion

Post by Austin »

Good Read

What China’s slowdown means for BRICS
S C Ralhan, specially for RIR
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Re: BRICS: News and Discussion

Post by panduranghari »

Philip wrote:India must once again strengthen the NAM movement and cement ties between its members as the Western world's economic medicine has ceased to work as as we are seeing,the EU is in dire straits both economic and social thanks to the human wave of refugees invading it from the Muslim world.
BRICS offers na alternative to the fossilised thinking and regulations of the neo-colonialists.
What would be the approach to new NAM? BRICS itself is a sham. When it dies no one would bother writing even an obituary.

What can be the only unifying aspect that can make neo NAM successful? Or can it supplant UN?
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Re: BRICS: News and Discussion

Post by Austin »

This is a very good report on all BRICS country , nice comparision table

BRICS Joint Statistical Publication 2015

http://www.gks.ru/free_doc/doc_2015/BRICS_ENG.pdf

Our Public Expenditure on Health is just 1.2 % of GDP the lowest among all BRICS nation ( check pg 13 )
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Re: BRICS: News and Discussion

Post by A_Gupta »

"India Asks BRICS to Invest; Woos With Low Corporate Taxes"
http://www.ndtv.com/india-news/india-as ... es-1234628
Moscow: India today asked BRICS partners to invest in its flagship programmes like 'Make in India' and 'Skill India', asserting that the government has laid down a clear roadmap for lowering corporate taxes which has created immense opportunities for foreign investors.

While addressing a meet of BRICS (Brazil, Russia, India, China and South Africa) Ministers of Industries, External Affairs Minister Sushma Swaraj also made a strong pitch for removal of structural impediments for increasing trade engagement amongst members of the group.

"We have laid down a clear roadmap for lowering corporate taxes. There is also a renewed thrust on public investment in infrastructure. All these create immense opportunities for companies from BRICS countries to work in India," Ms Swaraj said.

India also invited the BRICS partners to actively participate in its flagship initiatives including 'Make in India' ,'Smart Cities' and 'Skill India'.
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Re: BRICS: News and Discussion

Post by NRao »

Brazil's pro-austerity Finance Minister Joaquim Levy replaced
Brazil's President Dilma Rousseff has replaced her finance minister as Latin America's largest economy struggles to recover from recession.
One more brick falls.
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Re: BRICS: News and Discussion

Post by NRao »

Satya_anveshi
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Re: BRICS: News and Discussion

Post by Satya_anveshi »

$3.5B Russian debt to fUkraine is guaranteed by IMF. Now fUkraine is saying it does not want to pay Russia and US/IMF is OK with it despite flagrant violation of the IMF guarantee.

Not only that, US/IMF are working to provide more loans to fUkraine.

The main 60k ft point about all this is if Russia in association with China and other Eurasian partners is actively working to create an alternative to IMF, then IMF is not beholden to honor its promise. It is also a message to the AIB that if you give loans then we will actively work to scuttle those loan repayments making your alternative unviable.

This is going to be the dynamic and AIB must formulate its response to survive and thrive in such a dynamic.

A tit-for-tat response is to find a too big to fail munna that has borrowed from IMF and make them meet fUkraine's fate and then protect and make them survive on life support.
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Re: BRICS: News and Discussion

Post by Satya_anveshi »

The IMF Changes its Rules to Isolate China and Russia - Dec 18, 2015 - Must Read in Full (sorry for highlights but this is lengthy so some folks can jump to those sections)

http://www.counterpunch.org/2015/12/18/ ... nd-russia/
The nightmare scenario of U.S. geopolitical strategists seems to be coming true: foreign economic independence from U.S. control. Instead of privatizing and neoliberalizing the world under U.S.-centered financial planning and ownership, the Russian and Chinese governments are investing in neighboring economies on terms that cement Eurasian economic integration on the basis of Russian oil and tax exports and Chinese financing. The Asian Infrastructure Investment Bank (AIIB) threatens to replace the IMF and World Bank programs that favor U.S. suppliers, banks and bondholders (with the United States holding unique veto power).

Russia’s 2013 loan to Ukraine, made at the request of Ukraine’s elected pro-Russian government, demonstrated the benefits of mutual trade and investment relations between the two countries. As Russian finance minister Anton Siluanov points out, Ukraine’s “international reserves were barely enough to cover three months’ imports, and no other creditor was prepared to lend on terms acceptable to Kiev. Yet Russia provided $3 billion of much-needed funding at a 5 per cent interest rate, when Ukraine’s bonds were yielding nearly 12 per cent.”[1]

What especially annoys U.S. financial strategists is that this loan by Russia’s sovereign debt fund was protected by IMF lending practice, which at that time ensured collectability by withholding new credit from countries in default of foreign official debts (or at least, not bargaining in good faith to pay). To cap matters, the bonds are registered under London’s creditor-oriented rules and courts.

On December 3 (one week before the IMF changed its rules so as to hurt Russia), Prime Minister Putin proposed that Russia “and other Eurasian Economic Union countries should kick-off consultations with members of the Shanghai Cooperation Organisation (SCO) and the Association of Southeast Asian Nations (ASEAN) on a possible economic partnership.”[2] Russia also is seeking to build pipelines to Europe through friendly instead of U.S.-backed countries.

Moving to denominate their trade and investment in their own currencies instead of dollars, China and Russia are creating a geopolitical system free from U.S. control. After U.S. officials threatened to derange Russia’s banking linkages by cutting it off from the SWIFT interbank clearing system, China accelerated its creation of the alternative China International Payments System (CIPS), with its own credit card system to protect Eurasian economies from the shrill threats made by U.S. unilateralists.

Russia and China are simply doing what the United States has long done: using trade and credit linkages to cement their geopolitical diplomacy. This tectonic geopolitical shift is a Copernican threat to New Cold War ideology: Instead of the world economy revolving around the United States (the Ptolemaic idea of America as “the indispensible nation”), it may revolve around Eurasia. As long as the global financial papacy remains grounded in Washington at the offices of the IMF and World Bank, such a shift in the center of gravity will be fought with all the power of the American Century (indeed, American Millennium) inquisition.

Imagine the following scenario five years from now. China will have spent half a decade building high-speed railroads, ports power systems and other construction for Asian and African countries, enabling them to grow and export more. These exports will be coming on line to repay the infrastructure loans. Also, suppose that Russia has been supplying the oil and gas energy needed for these projects.

To U.S. neocons this specter of AIIB government-to-government lending and investment creates fear of a world independent of U.S. control. Nations would mint their own money and hold each other’s debt in their international reserves instead of borrowing or holding dollars and subordinating their financial planning to the IMF and U.S. Treasury with their demands for monetary bloodletting and austerity for debtor countries. There would be less need for foreign government to finance budget shortfalls by selling off their key public infrastructure privatizing their economies. Instead of dismantling public spending, the AIIB and a broader Eurasian economic union would do what the United States itself practices, and seek self-sufficiency in basic needs such as food, technology, banking, credit creation and monetary policy.

With this prospect in mind, suppose an American diplomat meets with the leaders of debtors to China, Russia and the AIIB and makes the following proposal: “Now that you’ve got your increased production in place, why repay? We’ll make you rich if you stiff our New Cold War adversaries and turn to the West. We and our European allies will help you assign the infrastructure to yourselves and your supporters, and give these assets market value by selling shares in New York and London. Then, you can spend your surpluses in the West.”

How can China or Russia collect in such a situation? They can sue. But what court will recognize their claim – that is, what court that the West would pay attention to?


That is the kind of scenario U.S. State Department and Treasury officials have been discussing for more than a year. The looming conflict was made immediate by Ukraine’s $3 billion debt to Russia falling due by December 20, 2015. Ukraine’s U.S.-backed regime has announced its intention to default. U.S. lobbyists have just changed the IMF rules to remove a critical lever on which Russia and other governments have long relied to enforce payment of their loans.

The IMF’s role as enforcer of inter-government debts

When it comes down to enforcing nations to pay inter-government debts, the International Monetary Fund and Paris Club hold the main leverage. As coordinator of central bank “stabilization” loans (the neoliberal euphemism for imposing austerity and destabilizing debtor economies, Greece-style), the IMF is able to withhold not only its own credit but also that of governments and global banks participating when debtor countries need refinancing. Countries that do not agree to privatize their infrastructure and sell it to Western buyers are threatened with sanctions, backed by U.S.-sponsored “regime change” and “democracy promotion” Maidan-style.

This was the setting on December 8, when Chief IMF Spokesman Gerry Rice announced: “The IMF’s Executive Board met today and agreed to change the current policy on non-toleration of arrears to official creditors.” The creditor leverage that the IMF has used is that if a nation is in financial arrears to any government, it cannot qualify for an IMF loan – and hence, for packages involving other governments. This has been the system by which the dollarized global financial system has worked for half a century. The beneficiaries have been creditors in US dollars.

In this U.S.-centered worldview, China and Russia loom as the great potential adversaries – defined as independent power centers from the United States as they create the Shanghai Cooperation Organization as an alternative to NATO, and the AIIB as an alternative to the IMF and World Bank tandem. The very name, Asian Infrastructure Investment Bank, implies that transportation systems and other infrastructure will be financed by governments, not relinquished into private hands to become rent-extracting opportunities financed by U.S.-centered bank credit to turn the rent into a flow of interest payments.

The focus on a mixed public/private economy sets the AIIB at odds with the Trans-Pacific Partnership (TPP) and its aim of relinquishing government planning power to the financial and corporate sector for their own short-term gains, and above all the aim of blocking government’s money-creating power and financial regulation. Chief Nomura economist Richard Koo, explained the logic of viewing the AIIB as a threat to the US-controlled IMF: “If the IMF’s rival is heavily under China’s influence, countries receiving its support will rebuild their economies under what is effectively Chinese guidance, increasing the likelihood they will fall directly or indirectly under that country’s influence.”[3]

Russian Finance Minister Anton Siluanov accused the IMF decision of being “hasty and biased.”[4] But it had been discussed all year long, calculating a range of scenarios for a long-term sea change in international law. The aim of this change is to isolate not only Russia, but even more China in its role as creditor to African countries and prospective AIIB borrowers. U.S. officials walked into the IMF headquarters in Washington with the legal equivalent of financial suicide vests, having decided that the time had come to derail Russia’s ability to collect on its sovereign loan to Ukraine, and of even larger import, China’s plan for a New Silk Road integrating a Eurasian economy independent of U.S. financial and trade control. Anders Aslund, senior fellow at the NATO-oriented Atlantic Council, points out:

The IMF staff started contemplating a rule change in the spring of 2013 because nontraditional creditors, such as China, had started providing developing countries with large loans. One issue was that these loans were issued on conditions out of line with IMF practice. China wasn’t a member of the Paris Club, where loan restructuring is usually discussed, so it was time to update the rules.

The IMF intended to adopt a new policy in the spring of 2016, but the dispute over Russia’s $3 billion loan to Ukraine has accelerated an otherwise slow decision-making process.[5]

The Wall Street Journal concurred that the underlying motivation for changing the IMF’s rules was the threat that Chinese lending would provide an alternative to IMF loans and its demands for austerity. “IMF-watchers said the fund was originally thinking of ensuring China wouldn’t be able to foil IMF lending to member countries seeking bailouts as Beijing ramped up loans to developing economies around the world.”[6] In short, U.S. strategists have designed a policy to block trade and financial agreements organized outside of U.S. control and that of the IMF and World Bank in which it holds unique veto power.

The plan is simple enough. Trade follows finance, and the creditor usually calls the tune. That is how the United States has used the Dollar Standard to steer Third World trade and investment since World War II along lines benefiting the U.S. economy.

The cement of trade credit and bank lending is the ability of creditors to collect on the international debts being negotiated. That is why the United States and other creditor nations have used the IMF as an intermediary to act as “honest broker” for loan consortia. (“Honest broker” means in practice being subject to U.S. veto power.) To enforce its financial leverage, the IMF has long followed the rule that it will not sponsor any loan agreement or refinancing for governments that are in default of debts owed to other governments. However, as the afore-mentioned Aslund explains, the IMF could easily change its practice of not lending into [countries in official] arrears … because it is not incorporated into the IMF Articles of Agreement, that is, the IMF statutes. The IMF Executive Board can decide to change this policy with a simple board majority. The IMF has lent to Afghanistan, Georgia, and Iraq in the midst of war, and Russia has no veto right, holding only 2.39 percent of the votes in the IMF. When the IMF has lent to Georgia and Ukraine, the other members of its Executive Board have overruled Russia.[7]

After the rules change, Aslund later noted, “the IMF can continue to give Ukraine loans regardless of what Ukraine does about its credit from Russia, which falls due on December 20. [8]

Inasmuch as Ukraine’s official debt to Russia’s sovereign debt fund was not to the U.S. Government, the IMF announced its rules change as a “clarification.” Its rule that no country can borrow if it is in default to (or not seriously negotiating with) a foreign government was created in the post-1945 world, and has governed the past seventy years in which the United States Government, Treasury officials and/or U.S. bank consortia have been party to nearly every international bailout or major loan agreement. What the IMF rule really meant was that it would not provide credit to countries in arrears specifically to the U.S. Government, not those of Russia or China.

Mikhail Delyagin, Director of the Institute of Globalization Problems, understood the IMF’s double standard clearly enough: “The Fund will give Kiev a new loan tranche on one condition that Ukraine should not pay Russia a dollar under its $3 billion debt. Legally, everything will be formalized correctly but they will oblige Ukraine to pay only to western creditors for political reasons.”[9] It remains up to the IMF board – and in the end, its managing director – whether or not to deem a country creditworthy. The U.S. representative naturally has always blocked any leaders not beholden to the United States.

The post-2010 loan packages to Greece are a notorious case in point. The IMF staff calculated that Greece could not possibly pay the balance that was set to bail out foreign banks and bondholders. Many Board members agreed (and subsequently have gone public with their whistle-blowing). Their protests didn’t matter. Dominique Strauss-Kahn backed the US-ECB position (after President Barack Obama and Treasury secretary Tim Geithner pointed out that U.S. banks had written credit default swaps betting that Greece could pay, and would lose money if there were a debt writedown). In 2015, Christine Lagarde also backed the U.S.-European Central Bank hard line, against staff protests.[10]

IMF executive board member Otaviano Canuto, representing Brazil, noted that the logic that “conditions on IMF lending to a country that fell behind on payments [was to] make sure it kept negotiating in good faith to reach agreement with creditors.”[11] Dropping this condition, he said, would open the door for other countries to insist on a similar waiver and avoid making serious and sincere efforts to reach payment agreement with creditor governments.

A more binding IMF rule is that it cannot lend to countries at war or use IMF credit to engage in warfare. Article I of its 1944-45 founding charter ban the fund from lending to a member state engaged in civil war or at war with another member state, or for military purposes in general. But when IMF head Lagarde made the last IMF loan to Ukraine, in spring 2015, she made a token gesture of stating that she hoped there would be peace. But President Porochenko immediately announced that he would step up the civil war with the Russian-speaking population in the eastern Donbass region.

The problem is that the Donbass is where most Ukrainian exports were made, mainly to Russia. That market is being lost by the junta’s belligerence toward Russia. This should have blocked Ukraine from receiving IMF aid. Withholding IMF credit could have been a lever to force peace and adherence to the Minsk agreements, but U.S. diplomatic pressure led that opportunity to be rejected.

The most important IMF condition being violated is that continued warfare with the East prevents a realistic prospect of Ukraine paying back new loans. Aslund himself points to the internal contradictions at work: Ukraine has achieved budget balance because the inflation and steep currency depreciation has drastically eroded its pension costs. The resulting lower value of pension benefits has led to growing opposition to Ukraine’s post-Maidan junta. “Leading representatives from President Petro Poroshenko’s Bloc are insisting on massive tax cuts, but no more expenditure cuts; that would cause a vast budget deficit that the IMF assesses at 9-10 percent of GDP, that could not possibly be financed.”[12] So how can the IMF’s austerity budget be followed without a political backlash?

The IMF thus is breaking four rules: Not lending to a country that has no visible means to pay back the loan breaks the “No More Argentinas” rule adopted after the IMF’s disastrous 2001 loan. Not lending to countries that refuse in good faith to negotiate with their official creditors goes against the IMF’s role as the major tool of the global creditors’ cartel. And the IMF is now lending to a borrower at war, indeed one that is destroying its export capacity and hence its balance-of-payments ability to pay back the loan. Finally, the IMF is lending to a country that has little likelihood of refuse carrying out the IMF’s notorious austerity “conditionalities” on its population – without putting down democratic opposition in a totalitarian manner. Instead of being treated as an outcast from the international financial system, Ukraine is being welcomed and financed.

The upshot – and new basic guideline for IMF lending – is to create a new Iron Curtain splitting the world into pro-U.S. economies going neoliberal, and all other economies, including those seeking to maintain public investment in infrastructure, progressive taxation and what used to be viewed as progressive capitalism. Russia and China may lend as much as they want to other governments, but there is no international vehicle to help secure their ability to be paid back under what until now has passed for international law. Having refused to roll back its own or ECB financial claims on Greece, the IMF is quite willing to see repudiation of official debts owed to Russia, China or other countries not on the list approved by the U.S. neocons who wield veto power in the IMF, World Bank and similar global economic institutions now drawn into the U.S. orbit. Changing its rules to clear the path for the IMF to make loans to Ukraine and other governments in default of debts owed to official lenders is rightly seen as an escalation of America’s New Cold War against Russia and also its anti-China strategy.

Timing is everything in such ploys. Georgetown University Law professor and Treasury consultant Anna Gelpern warned that before the “IMF staff and executive board [had] enough time to change the policy on arrears to official creditors,” Russia might use “its notorious debt/GDP clause to accelerate the bonds at any time before December, or simply gum up the process of reforming the IMF’s arrears policy.”[13] According to this clause, if Ukraine’s foreign debt rose above 60 percent of GDP, Russia’s government would have the right to demand immediate payment. But no doubt anticipating the bitter fight to come over its attempts to collect on its loan, President Putin patiently refrained from exercising this option. He is playing the long game, bending over backward to accommodate Ukraine rather than behaving “odiously.”

A more pressing reason deterring the United States from pressing earlier to change IMF rules was that a waiver for Ukraine would have opened the legal floodgates for Greece to ask for a similar waiver on having to pay the “troika” – the European Central Bank (ECB), EU commission and the IMF itself – for the post-2010 loans that have pushed it into a worse depression than the 1930s. “Imagine the Greek government had insisted that EU institutions accept the same haircut as the country’s private creditors,” Russian finance minister Anton Siluanov asked. “The reaction in European capitals would have been frosty. Yet this is the position now taken by Kiev with respect to Ukraine’s $3 billion eurobond held by Russia.”[14]

Only after Greece capitulated to eurozone austerity was the path clear for U.S. officials to change the IMF rules in their fight to isolate Russia. But their tactical victory has come at the cost of changing the IMF’s rules and those of the global financial system irreversibly. Other countries henceforth may reject conditionalities, as Ukraine has done, and ask for write-downs on foreign official debts.

That was the great fear of neoliberal U.S. and Eurozone strategists last summer, after all. The reason for smashing Greece’s economy was to deter Podemos in Spain and similar movements in Italy and Portugal from pursuing national prosperity instead of eurozone austerity. Opening the door to such resistance by Ukraine is the blowback of America’s tactic to make a short-term financial hit on Russia while its balance of payments is down as a result of collapsing oil and gas prices.


The consequences go far beyond just the IMF. The fabric of international law itself is being torn apart. Every action has a reaction in the Newtonian world of geopolitics. It may not be a bad thing, to be sure, for the post-1945 global order to be broken apart by U.S. tactics against Russia, if that is the catalyst driving other countries to defend their own economies in the legal and political spheres. It has been U.S. neoliberals themselves who have catalyzed the emerging independent Eurasian bloc.

Countering Russia’s ability to collect in Britain’s law courts

Over the past year the U.S. Treasury and State Departments have discussed ploys to block Russia from collecting under British law, where its loans to Ukraine are registered. Reviewing the repertory of legal excuses Ukraine might use to avoid paying Russia, Prof. Gelpern noted that it might declare the debt “odious,” made under duress or corruptly. In a paper for the Peterson Institute of International Economics (the banking lobby in Washington) she suggested that Britain should deny Russia the use of its courts as an additional sanction reinforcing the financial, energy, and trade sanctions to those passed against Russia after Crimea voted to join it as protection against the ethnic cleansing from the Right Sector, Azov Battalion and other paramilitary groups descending on the region.[15]

A kindred ploy might be for Ukraine to countersue Russia for reparations for “invading” it, for saving Crimea and the Donbass region from the Right Sector’s attempt to take over the country. Such a ploy would seem to have little chance of success in international courts (without showing them to be simply arms of NATO New Cold War politics), but it might delay Russia’ ability to collect by tying the loan up in a long nuisance lawsuit.

To claim that Ukraine’s debt to Russia was “odious” or otherwise illegitimate, “President Petro Poroshenko said the money was intended to ensure Yanukovych’s loyalty to Moscow, and called the payment a ‘bribe,’ according to an interview with Bloomberg in June this year.”[16] The legal and moral problem with such arguments is that they would apply equally to IMF and US loans. Claiming that Russia’s loan is “odious” is that this would open the floodgates for other countries to repudiate debts taken on by dictatorships supported by IMF and U.S. lenders, headed by the many dictatorships supported by U.S. diplomacy.

The blowback from the U.S. multi-front attempt to nullify Ukraine’s debt may be used to annul or at least write down the destructive IMF loans made on the condition that borrowers accept privatizations favoring U.S., German and other NATO-country investors, undertake austerity programs, and buy weapons systems such as the German submarines that Greece borrowed to pay for. As Foreign Minister Sergei Lavrov noted: “This reform, which they are now trying to implement, designed to suit Ukraine only, could plant a time bomb under all other IMF programs.” It certainly showed the extent to which the IMF is subordinate to U.S. aggressive New Cold Warriors: “Essentially, this reform boils down to the following: since Ukraine is politically important – and it is only important because it is opposed to Russia – the IMF is ready to do for Ukraine everything it has not done for anyone else, and the situation that should 100 percent mean a default will be seen as a situation enabling the IMF to finance Ukraine.”[17]

Andrei Klimov, deputy chairman of the Committee for International Affairs at the Federation Council (the upper house of Russia’s parliament) accused the United States of playing “the role of the main violin in the IMF while the role of the second violin is played by the European Union. These are two basic sponsors of the Maidan – the symbol of a coup d’état in Ukraine in 2014.”[18]

Putin’s counter-strategy and the blowback on U.S.-European and global relations

As noted above, having anticipated that Ukraine would seek reasons to not pay the Russian loan, President Putin carefully refrained from exercising Russia’s right to demand immediate payment when Ukraine’s foreign debt rose above 60 percent of GDP. In November he offered to defer payment if the United States, Europe and international banks underwrote the obligation. Indeed, he even “proposed better conditions for this restructuring than those the International Monetary Fund requested of us.” He offered “to accept a deeper restructuring with no payment this year – a payment of $1 billion next year, $1 billion in 2017, and $1 billion in 2018.” If the IMF, the United States and European Union “are sure that Ukraine’s solvency will grow,” then they should “see no risk in providing guarantees for this credit.” :idea: Accordingly, he concluded “We have asked for such guarantees either from the United States government, the European Union, or one of the big international financial institutions.” [19]

The implication, Putin pointed out, was that “If they cannot provide guarantees, this means that they do not believe in the Ukrainian economy’s future.” One professor pointed out that this proposal was in line with the fact that, “Ukraine has already received a sovereign loan guarantee from the United States for a previous bond issue.” Why couldn’t the United States, Eurozone or leading commercial banks provide a similar guarantee of Ukraine’s debt to Russia – or better yet, simply lend it the money to turn it into a loan to the IMF or US lenders?[20] { this is not some brilliant chess although it seems like when you are beholden to the suparpawah...this is simple logic...mere gall of articulating it andbacking thm with actions make them appear to be playing chess - that's the fkd up world we live in}

But the IMF, European Union and the United States refused to back up their happy (but nonsensical) forecasts of Ukrainian solvency with actual guarantees. Foreign Minister Lavrov made clear just what that rejection meant: “By having refused to guarantee Ukraine’s debt as part of Russia’s proposal to restructure it, the United States effectively admitted the absence of prospects of restoring its solvency. … By officially rejecting the proposed scheme, the United States thereby subscribed to not seeing any prospects of Ukraine restoring its solvency.”[21]

In an even more exasperated tone, Prime Minister Dmitri Medvedev explained to Russia’s television audience: “I have a feeling that they won’t give us the money back because they are crooks. They refuse to return our money and our Western partners not only refuse to help, but they also make it difficult for us.”[22] Adding that “the international financial system is unjustly structured,” he promised to “go to court. We’ll push for default on the loan and we’ll push for default on all Ukrainian debts.”

The basis for Russia’s legal claim, he explained was that the loan was a request from the Ukrainian Government to the Russian Government. If two governments reach an agreement this is obviously a sovereign loan…. Surprisingly, however, international financial organisations started saying that this is not exactly a sovereign loan. :?: This is utter bull. Evidently, it’s just an absolutely brazen, cynical lie. … This seriously erodes trust in IMF decisions. I believe that now there will be a lot of pleas from different borrower states to the IMF to grant them the same terms as Ukraine. How will the IMF possibly refuse them?

And there the matter stands. As President Putin remarked regarding America’s support of Al Qaeda, Al Nusra and other ISIS allies in Syria, “Do you have any idea of what you have done?”

The blowback

Few have calculated the degree to which America’s New Cold War with Russia is creating a reaction that is tearing up the world’s linkages put in place since World War II. Beyond pulling the IMF and World Bank tightly into U.S. unilateralist geopolitics, how long will Western Europe be willing to forego its trade and investment interest with Russia? Germany, Italy and France already are feeling the strains. If and when a break comes, it will not be marginal but a seismic geopolitical shift.

The oil and pipeline war designed to bypass Russian energy exports has engulfed the Near East in anarchy for over a decade. It is flooding Europe with refugees, and also spreading terrorism to America. In the Republican presidential debate on December 15, 2015, the leading issue was safety from Islamic jihadists. Yet no candidate thought to explain the source of this terrorism in America’s alliance with Wahabist Saudi Arabia and Qatar, and hence with Al Qaeda and ISIS/Daish as a means of destabilizing secular regimes seeking independence from U.S. control.

As its allies in this New Cold War, the United States has chosen fundamentalist jihadist religion against secular regimes in Libya, Iraq, Syria, and earlier in Afghanistan and Turkey. Going back to the original sin of CIA hubris – overthrowing the secular Iranian Prime Minister leader Mohammad Mosaddegh in 1953 – American foreign policy has been based on the assumption that secular regimes tend to be nationalist and resist privatization and neoliberal austerity.

Based on this fatal long-term assumption, U.S. Cold Warriors have aligned themselves not only against secular regimes, but against democratic regimes where these seek to promote their own prosperity and economic independence, and to resist neoliberalism in favor of maintaining their traditional mixed public/private economy.

This is the back story of the U.S. fight to control the rest of the world. Tearing apart the IMF’s rules is only the most recent chapter. The broad drive against Russia, China and their prospective Eurasian allies has deteriorated into tactics without a realistic understanding of how they are bringing about precisely the kind of world they are seeking to prevent – a multilateral world.

Arena by arena, the core values of what used to be American and European social democratic ideology are being uprooted. The Enlightenment’s ideals of secular democracy and the rule of international law applied equally to all nations, classical free market theory (of markets free from unearned income and rent extraction by special vested interests), and public investment in infrastructure to hold down the cost of living and doing business are to be sacrificed to a militant U.S. unilateralism as “the indispensible nation.” Standing above the rule of law and national interests, American neocons proclaim that their nation’s destiny is to wage war to prevent foreign secular democracy from acting in ways other than submission to U.S. diplomacy. In practice, this means favoring special U.S. financial and corporate interests that control American foreign policy.

This is not how the Enlightenment was supposed to turn out. Classical industrial capitalism a century ago was expected to evolve into an economy of abundance. Instead, we have Pentagon capitalism, finance capitalism deteriorating into a polarized rentier economy, and old-fashioned imperialism.

The Dollar Bloc’s financial Iron Curtain

By treating Ukraine’s nullification of its official debt to Russia’s Sovereign Wealth Fund as the new norm, the IMF has blessed its default on its bond payment to Russia. President Putin and foreign minister Lavrov have said that they will sue in British courts. But does any court exist in the West not under the thumb of U.S. veto?

What are China and Russia to do, faced with the IMF serving as a kangaroo court whose judgments are subject to U.S. veto power? To protect their autonomy and self-determination, they have created alternatives to the IMF and World Bank, NATO and behind it, the dollar standard.

America’s recent New Cold War maneuvering has shown that the two Bretton Woods institutions are unreformable. It is easier to create new institutions such as the A.I.I.B. than to retrofit old and ill-designed ones burdened with the legacy of their vested founding interests. It is easier to expand the Shanghai Cooperation Organization than to surrender to threats from NATO.

U.S. geostrategists seem to have imagined that if they exclude Russia, China and other SCO and Eurasian countries from the U.S.-based financial and trade system, these countries will find themselves in the same economic box as Cuba, Iran and other countries have been isolated by sanctions. The aim is to make countries choose between impoverishment from such exclusion, or acquiescing in U.S. neoliberal drives to financialize their economies and impose austerity on their government sector and labor.

What is lacking from such calculations is the idea of critical mass. The United States may use the IMF and World Bank as levers to exclude countries not in the U.S. orbit from participating in the global trade and financial system, and it may arm-twist Europe to impose trade and financial sanctions on Russia. But this action produces an equal and opposite reaction. That is the eternal Newtonian law of geopolitics. The indicated countermeasure is simply for other countries to create their own international financial organization as an alternative to the IMF, their own “aid” lending institution to juxtapose to the U.S.-centered World Bank.

All this requires an international court to handle disputes that is free from U.S. arm-twisting to turn international law into a kangaroo court following the dictates of Washington. The Eurasian Economic Union now has its own court to adjudicate disputes. It may provide an alternative Judge Griesa‘s New York federal court ruling in favor of vulture funds derailing Argentina’s debt negotiations and excluding it from foreign financial markets. If the London Court of International Arbitration (under whose rules Russia’s bonds issued to Ukraine are registered) permits frivolous legal claims (called barratry in English) such as President Poroshenko has threatened in Ukrainian Parliament, it too will become a victim of geopolitical obsolescence.

The more nakedly self-serving and geopolitical U.S. policy is – in backing radical Islamic fundamentalist outgrowths of Al Qaeda throughout the Near East, right-wing nationalist governments in Ukraine and the Baltics – the greater the catalytic pressure is growing for the Shanghai Cooperation Organization, AIIB and related Eurasian institutions to break free of the post-1945 Bretton Woods system run by the U.S. State, Defense and Treasury Departments and NATO superstructure.

The question now is whether Russia and China can hold onto the BRICS and India. So as Paul Craig Roberts recently summarized my ideas along these lines, we are back with George Orwell’s 1984 global fracture between Oceanea (the United States, Britain and its northern European NATO allies) vs. Eurasia.
habal
BRF Oldie
Posts: 6919
Joined: 24 Dec 2009 18:46

Re: BRICS: News and Discussion

Post by habal »

Going back to the original sin of CIA hubris – overthrowing the secular Iranian Prime Minister leader Mohammad Mosaddegh in 1953 – American foreign policy has been based on the assumption that secular regimes tend to be nationalist and resist privatization and neoliberal austerity.

Based on this fatal long-term assumption, U.S. Cold Warriors have aligned themselves not only against secular regimes, but against democratic regimes where these seek to promote their own prosperity and economic independence, and to resist neoliberalism in favor of maintaining their traditional mixed public/private economy.
as per this narrative, INC is secular and nationalist and anti-US but NDA is communal and pro-US (In US/west eyes). Both are khujli to USA but NDA less so. Given syrian example, one may infer that terror strikes will increase during UPA regimes. MMS could have been manchurian candidate to curb anti-US streak inherent in UPA.
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