Ufa, Russia (NEO) – On July 8-10 the capital of Bashkiria Ufa will be housing two summits at the same time – BRICS and the Shanghai Cooperation Organisation. Since the SCO summit will be held back to back with the BRICS summit, it will only increase the individual importance of each of them since the leaders of these two largest associations will be able to hold a joint meeting.
The Shanghai Cooperation Organisation- is a regional international organization that was founded in 2001 by China, Russia, Kazakhstan, Tajikistan, Kyrgyzstan and Uzbekistan. Its initial objective was the coordination of mutual efforts to combat terrorism, separatism and extremism in Central Asia, but later on SCO started addressing economic matters, providing a platform to promote cooperation in such sectors as energy, transport, agriculture, telecommunications, science and technology, humanitarian efforts and many others. As the authority of SCO grows, many countries have expressed their desire to join the organization, in particular, applications for full membership were filled by Pakistan, Iran and India, while Armenia, Azerbaijan, Bangladesh and Syria seek observer status.
BRICS is built by five very influential countries: Brazil, Russia, India, China and South Africa. One can even say – five civilizations, some major ones in the world. It is characterized by a common approach to international security issues, common views of the financial and economic architecture of the modern world. BRICS states are the states with rapidly growing economies, which, according to some analysts, will overtake the “Big Seven” by 2050. It is a truly enormous power that houses more than 43% of the world’s population, more than 20% of world’s GDP. Therefore, we are talking about a truly significant part of the world.
According to the official BRICS site, Russia’s President Vladimir Putin hopes to reach an agreement on the launch of the Development Bank along with reaching the final decision on the establishment of a pool of foreign currency reserves in Ufa. The initial idea on the creation of such a pool was announced a year ago in the Brazilian city of Fortaleza. The purpose of such a tool is to reduce the impact of currency fluctuations on BRICS countries. Previously this task was fullfilled by the IMF, however, due to the fact that the already limited resources of the IMF are spent on strengthening euro and other national currencies of the developed countries, the establishment of a currencies pool for BRICS seems like a timely decision. The initial size of the pool will be 100 billion dollars. It has already been announced that China will make the largest contribution by giving 41 billion dollars.
It is expected that every member of BRICS will allocate a total of 10 billion dollars for the creation of the BRICS development bank – so at some point its capital must reach 100 billion dollars. The headquarters of the Bank will be located in Shanghai, while a renowned India’s financier occupying the position of the first chairman. Thus, this bank is being created to finance infrastructure projects in BRICS countries along with other developing countries. But BRICS states are not the only ones that are capable to participate in the founding of the bank and the reserve fund, other emerging economies such as Mexico, Indonesia and Argentina will be able to take part in it too. These new financial entities are but the first step in overcoming the Western domination in the banking sector that should allow the creation of an alternative for the dollar economic model.
The defining feature of BRICS is that each member country is representing a number of its regional partners, while it remains a regional leader. BRICS summit in Durban (South Africa) became a platform for a broad cooperation of all the countries to the south of the Sahara desert. The next summit in Fortaleza (Brazil) was a platform for the broad cooperation of Latin America countries. A similar platform will be provided in Ufa, since a number of CIS states has already expressed their willingness to participate in the summit.
The West fears that BRICS is getting stronger, even despite the fact is going through tough times due the impact sanctions had on Russian economy. For the West the most dangerous thing about BRICS is that it is capable of torpedoing the Bretton Woods system, and above all the International Monetary Fund, World Bank, World Trade Organization. This system has not been built overnight and the United States still has the final say in it.
The increasing importance of the yuan as a reserve currency causes some serious discontent among American ruling elites. The sitting United States Secretary of the Treasury Jack Lew has already stated that new players are challenging American leadership in the international financial world. He urged the US Congress to reform the IMF for it to be able to withstand the Chinese threat. While witnessing as Washington’s most loyal allies are packing up and leave to stop being exploited, knowing that they were the basis of America’s dominance, Lew added that Washington’s international influence is seriously threatened.
Indeed, the world has changed, the share in the GDP rates are completely different and the only thing that is allegedly keeping dollar afloat is “the power of American weapons”. It can not and will not be the basis of the US dominance anymore. For far too long America has been living in debt that it is unable to pay, stealing the wealth of the world in exchange for green papers with images of the dead American presidents.
That is why BRICS is nothing more than a collective leap towards a multipolar world that keeps Washington irritated. The White House considers BRICS a major threat to the hegemony of the United States. In response Washington is using economic and propaganda means, that have already been unleashed against Russia, along with Brazil, India and China. Leon Panetta, a former director of the Central Intelligence Agency, at a PBS show has openly stated the need to resist the consolidation of BRICS countries that are transforming themselves in a single geo-political mechanism. After noting that Americans live in a world where there’s new powers such as China, Brazil and India, not to mention, of course, of Russia, challenge American hegemony, Leon Panetta urged Washington to ensure that BRICS “would not undermine the stability of the world.”
Sean Goforth, a professor at Coastal Carolina University has even coined a new term – VIRUS (by using the initial letters: Venezuela, Iran, Russia): “Venezuela, Iran and Russia – is a virus that threatens the United States and Western order. “
As Washington witnesses the growing deterioration of the unipolar world order, it is actively trying to mobilize its allies to maintain the fragmentation of the world in order to prevent the formation of new centers of power, including BRICS. Each member of this unit is being treated individually. With India, the US is trying to draw it into its military-political orbit, with China the White House is building tensions in Southeast Asia, South Africa is being pushed aside, Brazil is being surronded with pro-American regimes of Colombia, Paraguay, and Uruguay. With Russia Washington has probably used every single trick it has in its book, from instignating Ukrainian nationalism to force a civil war in the Ukraine and fueling fascism in the Baltic, to attempts to drive a wedge between Russia and Kazakhstan and the usage of the North Caucasian bandit underground to its best interests.
However, history puts everything in its place. Today people of the world understand that they should pay no heed to the provocations that are being organized by the White House, instead they would be better off pursuing the ideology of a multipolar world, embodied in BRICS.
Valery Kulikov, political analyst, exclusively for the online magazine “New Eastern Outlook”.