Wednesday, June 18, 2014

Have China and Russia reached the point where they might really go after the Dollar ? ( June 18 , 2014 ) --- Putin Advisor Proposes "Anti-Dollar Alliance" To Halt US Aggression Abroad ....... As with many things these days , one must ask what might China do , how frustrated might China be with US meddling in areas of Chinese National security in the East and South China Seas ? With the BRICS meeting set for Brazil two days after the end of the World Cup ( July 15 - 17 ) , the BRICS may give signals as to what direction they may choose to go !

Putin Advisor Proposes "Anti-Dollar Alliance" To Halt US Aggression Abroad

Tyler Durden's picture

It has been a while since both Ukraine, and the ongoing Russian response to western sanctions (which set off the great Eurasian axis in motion, pushing China and Russia close together, and accelerating the "Holy Grail" gas deal between the two countries) have made headlines. It is still not clear just why the western media dropped Ukraine coverage like a hot potato, especially since the civil war in Ukraine's Donbas continues to rage and claim dozens of casualties on both sides. Perhaps the audience has simply gotten tired of hearing about mixed chess/checkers game between Putin vs Obama, and instead has reverted to reading the propaganda surrounding just as deadly events in the third war of Iraq in as many decades.
However, "out of sight" may be just what Russia's political elite wants. In fact, as VoR's  Valentin Mândrescu reports, while the great US spin and distraction machine is focused elsewhere, Russia is already preparing for the next steps. Which brings us to Putin advisor Sergey Glazyev, the same person who in early March was the first to suggest Russia dump US bonds and abandon the dollar in retaliation to US sanctions, a strategy which worked because even as the Kremlin has retained control over Crimea, western sanctions have magically halted (and not only that, but as the Russian central bank just reported, the country's 2014 current account surplus may be as high as $35 billion, up from $33 billion in 2013, and a far cry from some fabricated "$200+ billion" in Russian capital outflows which Mario Draghi was warning about recently). Glazyev was also the person instrumental in pushing the Kremlin to approach China and force the nat gas deal with Beijing which took place not necessarily at the most beneficial terms for Russia.
It is this same Glazyev who published an article in Russian Argumenty Nedeliin which he outlined a plan for "undermining the economic strength of the US" in order to force Washington to stop the civil war in Ukraine. Glazyev believes that the only way of making the US give up its plans on starting a new cold war is to crash the dollar system.
As summarized by VoR, in his article, published by Argumenty Nedeli, Putin's economic aide and the mastermind behind the Eurasian Economic Union, argues that Washington is trying to provoke a Russian military intervention in Ukraine, using the junta in Kiev as bait. If fulfilled, the plan will give Washington a number of important benefits. Firstly, it will allow the US to introduce new sanctions against Russia, writing off Moscow's portfolio of US Treasury bills. More important is that a new wave of sanctions will create a situation in which Russian companies won't be able to service their debts to European banks.
According to Glazyev, the so-called "third phase" of sanctions against Russia will be a tremendous cost for the European Union. The total estimated losses will be higher than 1 trillion euros. Such losses will severely hurt the European economy, making the US the sole "safe haven" in the world.Harsh sanctions against Russia will also displace Gazprom from the European energy market, leaving it wide open for the much more expensive LNG from the US.
Co-opting European countries in a new arms race and military operations against Russia will increase American political influence in Europe and will help the US force the European Union to accept the American version of the Transatlantic Trade and Investment Partnership, a trade agreement that will basically transform the EU into a big economic colony of the US. Glazyev believes that igniting a new war in Europe will only bring benefits for America and only problems for the European Union. Washington has repeatedly used global and regional wars for the benefit of  the American economy and now the White House is trying to use the civil war in Ukraine as a pretext to repeat the old trick.
Glazyev's set of countermeasures specifically targets the core strength of the US war machine, i.e. the Fed's printing press. Putin's advisor proposes the creation of a "broad anti-dollar alliance" of countries willing and able to drop the dollar from their international trade. Members of the alliance would also refrain from keeping the currency reserves in dollar-denominated instruments. Glazyev advocates treating positions in dollar-denominated instruments like holdings of junk securities and believes that regulators should require full collateralization of such holdings. An anti-dollar coalition would be the first step for the creation of an anti-war coalition that can help stop the US' aggression.
Unsurprisingly, Sergey Glazyev believes that the main role in the creation of such a political coalition is to be played by the European business community because America's attempts to ignite a war in Europe and a cold war against Russia are threatening the interests of big European business. Judging by the recent efforts to stop the sanctions against Russia, made by the German, French, Italian and Austrian business leaders, Putin's aide is right in his assessment. Somewhat surprisingly for Washington, the war for Ukraine may soon become the war for Europe's independence from the US and a war against the dollar.

Focus on China.....

Myths breed around China's energy quest
By Jean-Marc F Blanchard and Maya Horin 

Speaking Freely is an Asia Times Online feature that allows guest writers to have their say. Please click here if you are interested in contributing. 

The conclusion of a Sino-Russian US$400 billion, 30-year gas contract last month, Beijing's deployment of an oil rig near the disputed Paracel Islands, and tense encounters between China, the Philippines, and Vietnam in the South China Sea - and between China and Japan in the East China Sea and Diaoyu Islands - have focused renewed attention on China's hunt for energy security. 

China's pursuit of energy, especially foreign energy, is easy to fathom. On the demand side, China's rapid development, status as a manufacturing powerhouse, reliance on energy - intensive infrastructure for growth, burgeoning car culture, and evolving consumer lifestyles have fueled its energy thirst. On the supply side, China's readily accessible energy supplies are rapidly diminishing. All of this, coupled with a desire for cleaner fuel, has put China on a determined quest for energy supplies. 

China's quest has fueled billions of dollars of loan-for-oil and loan-for-gas deals such as its 2004 accord with Angola, its 2006 deal with Russia, and its 2004 agreement with Venezuela. It also has lubricated multi-billion dollar oil and gas purchases such as China's 2009 immense natural gas deal with Australia to purchase natural gas. 

As many know, a major facet of China's pursuit of secure energy supplies entails Chinese energy companies, both state-owned enterprises (SOE) and private ones, making multiple-billion dollar energy-related foreign direct investments (FDI). For instance, in 2010, Chinese SOEs and private firms invested more than $29 billion to make energy acquisitions. Beyond this, Chinese firms have been aggressive in building or facilitating oil and gas pipelines in countries such as Myanmar, Kazakhstan, and Russia. 

Those directing our gaze to China's quest for energy security frequently are critical and, more importantly, often make unwarranted charges about the lengths to which China has been going to realize its energy requirements. 

First, it is hinted that China has used military force to satiate its energy hunger. Second, it is suggested that China has made extreme diplomatic concessions to build or sustain partnerships with energy rich countries. Third, it is implied that China's energy extremism has driven it to build new energy relationships with a slew of countries. Fourth, it is claimed that China's energy dealings are largely with countries like Ecuador and Venezuela that embrace socialism and are distant from Washington. Fifth, it is asserted that Chinese energy FDI in Africa is encountering a lot of problems, putatively as a result of Chinese shortcomings. 

The "facts", though, are not so clear as they are made to be. First, one would be hard pressed to point to genuine instances of China using force to secure energy or facilitate Chinese energy FDI. Indeed, China's most noteworthy uses of force in the South China Sea - Paracels (1974) and Mischief Reef (1995) - occurred before its foreign energy needs became significant. Even if we accept that China used military force, it is not valid to conclude that China is going to military extremes for energy. 

Its assertiveness vis-a-vis its territorial and maritime issues with Japan, the Philippines, and Vietnam are not just about energy, but also have to do with changing relative power positions, territorial integrity and sovereignty, history, national identity, and domestic politics. Second, while Beijing clearly has embraced various diplomatic measures - for example, high-level summitry, financial aid, and supportive political stances - to support energy ties and FDI, the basis for arguing it has gone to extreme lengths diplomatically (sacrificing fundamental principles) is questionable. 

Third, Chinese firms have been investing abroad since the mid-1990s and indeed many massive energy deals took place between five and 10 years ago, with some occurring more than 20 years ago. The 2008 financial crisis also created an opening for the recent surge in FDI by Chinese energy firms, which exploited a buyers' market rather than acted out of desperation. 

Fourth, while it is true that Beijing has good relations with countries like Venezuela that embrace socialism and are unfriendly to Washington, Venezuela has the world's second-largest oil reserves and is, thus, a logical FDI destination. 

On a related note, China has noteworthy energy investments in Australia, Canada, and Colombia, which are neither socialist nor hostile to Washington. Finally, a few problems in Chad and Gabon do not symbolize the contribution that China's African energy activities make or do not make to China's energy security.

It is important to have a balanced understanding of China's quest for energy security and its overseas energy FDI because if countries mistakenly view China as going to great lengths diplomatically, economically, and militarily to secure energy, then they may mistakenly adopt extreme countermeasures. 

In many cases (Iran, Iraq, and Venezuela), however, China actually has proven quite sensitive to others' concerns. Moreover, if the image is of a China hell-bent on investing in energy abroad regardless of circumstances then one may neglect the fact that Chinese energy firms consider a variety of normal business rationales in their overseas investment and operating decisions, which, in turn, can preclude opportunities for cooperation and pragmatic economic bargaining. Of note in this regard, China has joined hands with India, Indonesia and the Philippines in oil exploration. 

China is a contributor to some of the aforementioned anxieties. After all, its opaqueness drives observers to make worst-case assumptions. It also has not taken sufficient steps to increase awareness of the ways that its energy activities benefit host countries and global energy markets. 

On top of this, it sometimes silent or, worse, cavalier or about environmental and human rights issues surrounding its activities. To address the preceding problems, China must become more transparent and provide more data about what it is doing. 

Regarding benefits, China needs to stress more how it is helping host countries establish integrated supply chains, transform resource endowments into growth, and bolstering energy infrastructure and supplies. In addition, Chinese firms need to become better corporate social responsibility practitioners to win greater public acceptance. China should intensify public diplomacy, too. 

China's quest for energy security and is globe-spanning energy activities merit our attention, but superficial analyses serve no purpose other than to vent gas.

China swims against soft power tide
By Tim Kumpe 

Speaking Freely is an Asia Times Online feature that allows guest writers to have their say. Please click here if you are interested in contributing. 

It could have been a meeting in paradise. As it turned out, China's dream of restoring its rightful place in history seems to have been pushed further behind the horizon. What applies to the United States and its power all the more applies to China. China needs allies; it cannot go it alone. This is the fundamental basis which China's strategy seems to have ignored. 

The status quo changer's strategic actions have changed the

status quo of its geo-strategic environment in an unfavorable way. This in part explains the outbursts of Lieutenant general Wang Guanzhong, the Chinese military's deputy chief of general staff, at the Shangri-La Dialogue, Asia's security summit, in Singapore last week as a reaction to US Defense Secretary Chuck Hagel and Japanese Prime Minister Shinzo Abe's criticisms that pointed out that China was acting outside international law in the East and South China seas. 

Several Asia-Pacific defense ministers at the summit agreed with these criticisms. Thus, instead of limiting US alliances in Asia-Pacific, Beijing became painfully aware of losing its ground. What China has gained by creating facts on the ground it has manifoldly lost in soft power. 

The image Beijing is projecting by its assertive actions in defiance of international law is diametrically opposed to images of benevolence, credibility, and trust, often associated with the concept of soft power. China needs the Association of Southeast Asian Nations (ASEAN) as a vehicle to realize the Chinese dream, but has antagonized many of its members. 

Even more, Beijing's recent actions have also sown further seeds for strengthening the hard-power capabilities of its perceived opponents that are attempting to counter China's rise. Moreover, actions by China that have angered the region justify continued US military role, presence, and support there. Thus, on the balance sheet, China has lost ground in both soft- and hard-power capabilities from which the US and its allies profit. 

Smart power is defined as the skillful combination of both hard and soft power. It relies on a strong military but also heavily depends on alliances, partnerships and institutions. Smart power thinks in terms of goals that involve power with others rather than simply thinking in terms of power over others. As the US rebalancing strategy gradually unfolds, the operationalization of a smart-power strategy becomes all the more visible. 

Even prior to the security conference in Singapore, the US has taken great pains to strengthen its alliances with South Korea, Japan, and some Southeast Asian countries such as the Philippines and Vietnam. As a part of smart-power strategy, America is gradually delegating more responsibilities towards its allies. 

Regarding regional security, Japan, as the United States' strongest ally in Asia-Pacific, is expected to play a more active role. This is exactly what Japan is doing as can be seen by its actions and policies. 

Amid rising tensions between China and other claimants to the South China Sea, Japanese Prime Minster Abe promised 10 patrol ships to the Philippines to strengthen their surveillance activities as well as support to Vietnam. Thus, Japan is doing its part to contribute to regional security and to implement the principle of realizing goals with others. We can see that to strengthen its Asian partners, the United States is not going it alone, but relies on its alliance partner Japan. 

In addition to its actions, Tokyo also demonstrates through its policies that the US is exercising power with others. In support of implementing US smart-power strategy, Japan's strategy of "proactive pacifism" is designed to get China back in its proper place. Japan supports the Southeast Asian countries to protect themselves against Chinese claims in territorial disputes. Abe's strategy of proactive pacifism has a dual function. It is seeks to contain China and at the same time attempts to establish strong ties with Southeast Asia. Furthermore, concerned over China's possible use of force to change the status quo in the East China Sea, Japan intends closer cooperation with ASEAN "to ensure that the rule of law be respected in settling territorial disputes". 

All in all, The Shangri-La Dialogue has both winners and losers, which can be measured in terms of smart power and the combination of hard and soft power. It was a clash of titans, a visible battle between un-smart power strategy and smart power strategy: Beijing versus Washington, and its allies and friends. 

So far, Beijing's un-smart power modus operandi has not been very beneficial in winning friends throughout the region. China's actions didn't attract but antagonized. On balance sheet, its attempts to gain power have backfired and translated into losses of both hard and soft power. 

Against the backdrop of heightened tensions in the East and South China seas, countries of the Asia-Pacific region are increasingly troubled by Chinese expansion. Consequently, whereas China lost much of its soft power charm, the US and Japan gained in terms of credibility, trust, and attractiveness. Beijing's loss is Washington's, Tokyo's, and its allies' and friends' gain. 

Instead of backing off and leaving its regional allies unsupported, the US has reiterated its commitment to be a guarantor for regional security. Instead of weakening the US and its allies, recent events have rather strengthened them. Chinese behavior has encouraged and facilitated the justification for bolstering long-term hard power build-up. Thus, Beijing has emboldened the US position in Asia and at the same time made it easier to justify bolstering US allies and friends with military support. 

The actions and commitments made by Japan and the United States prior to and at the Asia Security Summit in Singapore have produced tangible smart-power advances Both have reiterated their strong commitments as guarantors for regional security. 

In line with smart power strategy, closer ties and cooperation are sought to deal with an increasingly assertive China boldly claiming the region's commons. China's strategic status quo changing actions have kicked off strategic countermoves. Beijing's assertiveness is countered by a smart-power strategy which is gradually gaining momentum. 

If Beijing hasn't dropped its pursuit of the Chinese dream, it will have to adapt its un-smart-power strategy and shift towards a smart-power strategy backed up by integrity. The international community isn't against greatness, but it opposes greatness without integrity. International law is neither American nor Chinese. No responsible power is above the law. 

Great power demands great responsibility. If China wants to be recognized as a responsible stakeholder in Asia-Pacific, it will have to act in accordance with rather than in defiance of international law. This is what makes a country great in a true sense. Although soft power, as a part of smart power, is a descriptive rather than a normative concept, in the long-term its success depends on the agents' integrity which affects its credibility. Without credibility the agent is unable to create trust in the target and it will lose its ability to attract. 

Therefore, an increase of smart power coupled with integrity wouldn't harm China. In fact, it would be very welcome. Not only would Beijing profit from the proper implementation, but it would also be beneficial for the other countries in Asia-Pacific. The pursuit of a smart-power strategy coupled with integrity will enable China to realize the Chinese dream of "a prosperous nation with a strong military" without antagonizing the countries in Asia-Pacific.

Two days after final at Maracanã, BRICS leaders will meet in Fortaleza

In the end, Xi Jinping prevailed. A self-declared soccer fan, Xi Jinping had long ago signaled that he'd like to visit Brazil during the upcoming World Cup. Acceding to China's demands, Brazil agreed to not only schedule Xi's highly symbolic state visit in the week after the final (it marks 40 years of the bilateral relationship), but also organize the 6th BRICS Summit on July 15, just two days after the World Cup Final at Maracanã Stadium in Rio de Janeiro.
The decision marks the end of months of uncertainty for many NGOs around the world which were desperate to schedule parallel meetings to the summit. After all, the yearly BRICS Leaders' Summit is not only an important moment for senior government officials to meet up - it has also turned into a point of reference for civil society in the Global South to interact and coordinate joint action. In this sense, the BRICS idea has been a success: Although incipient, intra-BRICS ties on civil society level have increased markedly since the government leaders decided to develop a more institutionalized format six years ago.
Summits in Brazil, India and South Africa are particularly important because they allow freer, more spontaneous interaction between academics, policy makers and NGO representatives. Summits in China, on the other hand, tend to be staged in difficult-to-access venues and even the track II events between academics and the banquets in China tend to provide little space for frank debates.
President Rousseff decided to organize the BRICS Summit in Fortaleza as a favor to a political ally, Governor Cid Gomes of the state of Ceará, who will be crucial in undermining the candidacy of Eduardo Campos, one of Rousseff's rivals in her bid for reelection in October 2014. For the BRICS Summit, the decision will have mostly negative consequences. To begin with, the city's hotel infrastructure is precarious. Fortaleza will host a World Cup quarter final on July 4, and prices of hotel rooms and flights even in the week after the tournament are already extremely high. An Indian diplomat privately complained that the city lacked hotel rooms adequate for state leaders and joked that India's new Prime Minister may just as well sleep in a tent, as Libya's Muhammar Gaddafi used to do during state visits abroad. In addition, the South African, Russian, Chinese and Indian embassies in Brasília will have to transport their limousines for the state leaders to Fortaleza, 2000 km away from the capital. Finally, no matter what the outcome of the World Cup, the international media and Brazil's population will certainly still be focused on the tournament's aftermath and eclipse any meaningful decisions taken at the summit - such as the creation of the BRICS Development Bank.
And yet, the decision to postpone the summit (Brazil had initially proposed late March or early April) has one important positive consequence: Rather than outgoing Manmohan Singh, India's new Prime Minister will participate, allowing the meeting's debates to look ahead with greater confidence. It may be one of the newly elected leader's first international trips, and will serve as a litmus test of India's continued commitment to the grouping.
Organizing a large international summit just two days after the greatest sports event on earth involves challenges and risks for President Rousseff. Protests may mar the tournament, as occurred during the 2013 Confederations Cup, possibly denting her approval ratings. The BRICS Summit could be criticized by some who argue that Brazil's claim to a greater role in the world is misguided and that it should focus on internal challenges instead. All that, alas, is unlikely to matter much to the population should Brazil's head coach Felipe Scolari deliver and win, as widely expected, the final on July 13.

BRICS aim to finish development bank preparations by July summit

WASHINGTON Fri Apr 11, 2014 4:39am IST
A traffic policeman stands on duty outside the Sheraton Hotel, the venue of BRICS Summit in Sanya, China's Hainan province, April 13, 2011. REUTERS/Jason Lee/Files
A traffic policeman stands on duty outside the Sheraton Hotel, the venue of BRICS Summit in Sanya, China's Hainan province, April 13, 2011.


(Reuters) - The BRICS bloc of emerging economies will have all preparatory work done for setting up its development bank by the group's summit in July, South African Finance Minister Pravin Gordhan said on Thursday.
The bank Brazil, Russia, India, China and South Africa plan to support infrastructure projects has been slow in coming, with prolonged disagreements over its funding, management and headquarters.
The group, which has struggled to take coordinated action on most issues in the past year after the scaling back of U.S. stimulus prompted an exodus of capital from their markets, is hoping their leaders will officially launch the bank at their July meeting in Brazil.
"We've made very good progress on the new development bank and most of the formal documentation is ready," Gordhan told journalists after a meeting of the BRICS finance ministers in Washington.
"There will be a few issues left, which will be resolved between now and the middle of July when we hope the summit will take place."
The start-up capital of $50 billion would eventually be built up to $100 billion. Russia has proposed that each member contributes an equal, 20 percent share, but the share distribution is still to be decided, a BRICS source said.
The bank was first proposed in 2012. The proposal was approved last year at a BRICS summit in South Africa. The group's other project, a $100 billion fund designated to steady currency markets, has also been off to a slow start, but Gordhan said progress has been made on that project, as well.
"On the contingency reserve arrangements, we're also almost 90 percent of the way towards agreement. Formal documents are ready and we have the basis to reach 100 percent agreement before the summit."
The BRICS are also concerned that the U.S. Congress has failed to ratify reforms to the International Monetary Fund that would double the Fund's resources and give more say to emerging markets, such as the BRICS.
"We've discussed our mutual concerns about the slow pace of the IMF reforms and the kind of stalemate that we find ourselves in currently and we hope work with everyone to find an equitable solution," Gordhan said.
"But clearly a lot depends on the U.S."
Some officials from the Group of 20 advanced and emerging economies have suggested moving ahead on the reforms without the United States, although U.S. approval would be necessary for any major decision to go forward because of Washington's controlling share of IMF votes.
Gordhan declined to comment on what could be done, saying only that "there are a number of options being explored" that need further "cooking."
"We believe it's in the collective interest of all us to have a strong and well-resourced IMF but also an IMF that is increasingly even-handed in the way it approaches both advanced economies and emerging markets as well," he said.

Narendra Modi likely to visit Brazil in July

Sandeep Unnithan  New Delhi, May 19, 2014 | UPDATED 11:17 IST
An image of what the sixth BRICS summit could look like. by Sandeep Unnithan
An image of what the sixth BRICS summit could look like. by Sandeep Unnithan
It is now almost certain that Narendra Modi's first overseas photo-opportunity will be with President Vladimir Putin and President Xi Jinping of China.
As Prime Minister, Modi is to attend the sixth BRICS summit to be held in Brazil in July 2014 where Putin and Xi Jinping will join the host Brazilian President Dilma Roussef and South African President Jacob Zuma.
"It will be the Prime Minister-designate's first overseas multilateral visit," a senior MEA official said, not ruling out the possibility of it being preceded by other bilateral visits.
The sixth BRICS summit, a grouping of the emerging economies of Brazil, Russia, India, China and South Africa, was slated to be held at the seaside town of Fortaleza, north-eastern Brazil, in March but reportedly postponed at China's request to sometime in mid-July this year.
A January 2014 blog report suggests that the summit was postponed so that Xi Jinping, a self-confessed soccer fan could watch the finals of the 2014 FIFA World Cup to be held in Rio de Janeiro on July 13.
"Modi starting off with a BRICS Summit will seen a great signal that India believes in a "multipolar world order", " says G Parthasarathy, former Indian High Commissioner to Islamabad. "This could be followed up by bilateral visits to Japan, Vietnam and South Korea."
President Barack Obama dialed Modi on Friday night and congratulated him on his emphatic victory. Obama told Modi that he looked forward to working closely with him to "fulfill the extraordinary promise of the U.S.-India strategic partnership." US officials have said that Modi is free to visit the United States, there remains a legacy of past bitterness. Modi as Gujarat Chief Minister was denied a visa to visit the US in 2005. The administration of US President George W Bush cited a 1998 law banning entry to foreigners who have committed acts violating religious freedom for the 2002 Gujarat riots where over 1000 persons were killed.
Indo-US ties were strained this year over the December 2013 arrest and detention of Devyani Khobragade, India's deputy consul general in New York. In a May 3 interview to Aaj Tak, Modi denied any bitterness and emphasized the economic aspects of the Indo-US ties.
"There is no need to hurry a visit to Washington as it would seem undignified given how they have behaved," Parthasarathy says adding Modi will have ample opportunity to meet Obama during the East Asian and G 20 Summits both to be held in November this year.