RUSSIAN READ: Strongmen in power can be useful allies to African and Arab underdeveloped nations grappling with the rudiments of Western-style multi-party democracy and political pluralism, and especially if these strongmen wield power in a former global superpower. “The Russian presidency's main task will be to focus the G-20's efforts on developing measures to stimulate economic growth and create jobs,” declared Russian President Vladimir Putin on Russia assuming the G-20 presidency. President Putin returned to the Kremlin to take up the reins of power when he assumed office on 7 May 2012 to become the fourth president of Russia — he was also the second president of Russia (2000-2008). His grip on power in the Kremlin is impressive in spite of the underlying unease with punches being pulled concerning Putin's perception as a hard-handed potentate. The Moscow G-20 summit was an insightful account of how the world reacts to Russia's rise. The Kremlin published a six-page document addressed to the G-20 and posted on the summit's website. While the Kremlin's blueprint for global economic prosperity is not the official platform of the G-20, it puts Moscow under immediate and intense scrutiny from the international community. Moscow has long discarded the discomforting rigours of the geopolitical Great Game. Or, has it? Officially, Russia strives to avoid getting caught in this dangerous game. Capitalist Russia is running out of time to decide how to husband its abundant resources. Policy-makers in the Kremlin, Putin not excluded in spite of his bodacious bravado and conspicuous machismo, understand all too well that it is just one participant in a complex post-superpower age. Be that as it may, that Russia matters increasingly in international affairs is no great insight — take the grievous case of Syria. Russia holds several key cards, but significantly not the trump card. This seeming correlation between Russia's resurgence as a global power and its relative prosperity is underpinned by a comparison of relative levels of income inequality between industrially advanced nations, emerging markets such as Russia, China, India and Brazil (BRICs) — I deliberately left out South Africa whose inclusion in this group I regard as rather cosmetic — and impoverished, underdeveloped countries. Russia is broadly critical of the West's failure to lay out a vision to replace its neo-colonial policy in the world's poorest and least developed nations. Yet, Russia itself is often reprehended in international forums for focussing eastwards and westwards, rather than southwards. Russia is scheduled to host the G-20 summit in Saint Petersburg on 5-6 September 2013. This is Putin's chance to demonstrate Russia's growing global prowess. Resource-rich Russia is the sixth largest economy in the world. Yet, constrained by his role as Russian president with more pressing political priorities at home, Putin cannot afford to spend more time than is absolutely necessary explaining and defending Russia's positions abroad.
MONEY MATTERS: The Group of 20 (G-20) nations declared on Saturday that there would be no “currency war” and deferred plans to set new debt-cutting targets in an indication of concern about the fragile state of the global economy. The discussion, unprecedentedly, was less concentrated on the dollar — the euro and China dominated deliberations. The corporate dynamos of Europe are becoming less tethered to their shrinking domestic markets for demand. Europe faces up to its stark choices even as the economic crisis intensifies in the eurozone and the debate over how to overcome the euro's debacle is overlaid with contradictions. The sclerosis in Europe's bank balance sheets is clogging the financial arteries of the continent. Key to resolving the problems are financial policy-makers from the G-20, a unique international forum, which groups wealthy industrially advanced countries as well as emerging markets. The G-20 accounts for 90 per cent of the world economy. The Bretton Woods institutions, and in particular the International Monetary Fund, play a pivotal role. “As emphasised by the G-20, global growth is still weak, with unemployment remaining unacceptably high in many countries. The weak global performance derives from policy uncertainty, private de-leveraging, continued fiscal drag, as well as insufficient progress on re-balancing global demand. Implementation of the financial reform agenda to build a more resilient financial system remains a priority,” IMF Managing Director Christine Lagarde extrapolated. “We think that talk of currency wars is overblown. The good news is that the G-20 responded with cooperation rather than conflict,” Lagarde concluded. Is this swing good news for the poorest of the poor? Does the West genuinely believes in the values it preaches? These are pertinent questions that deeply impact the impoverished and underdeveloped world. Western policy-makers have often been caught off-guard by questions concerning the correlation between democracy and development. But they may want to pay a little more attention, too, to what is happening in the emerging markets. China and India have emerged as critically important economies in spite of Western indifference and prospered without an American “Marshal plan”. China displaced Japan as the world's second largest economy last year, and India is widely expected to overtake the United States as the world's second largest economy around the middle of this century with China being the largest economy, pushing America into third place. The global economic downturn is a symptom of these radical changes afoot. The G-20 includes the United States, Canada, Mexico, Brazil, Argentina, Britain, France, Germany, Italy and a representative of the European Union, Russia, Turkey, Saudi Arabia, India, China, South Korea, Japan, Indonesia, Australia and South Africa. The G-20 is as much a political grouping as it is ostensibly economic. Note that Iran, for instance, is not a member — and there is no point in pondering why the Islamic Republic has been excluded from this exclusive club of the haves and the wannabes. There is no place for the have-nots in the G-20. Emerging markets speak on behalf of the poorest of the poor, presumably explaining and defending the positions and interests of the impoverished and underdeveloped nations at G-20 summits. Broadly, the emerging markets see plenty of scope for cooperation with poor and underdeveloped countries. The poorest of poor and the least developed nations bristle with accusations of neo-colonial designs and political duplicity by Western powers. In public they are less accustomed to criticise the agendas of emerging markets such as Brazil, China and India. But what exactly is the agenda, if any, of emerging markets in forums such as the G-20? “BRICs countries demanded that major developed nations pay attention to their monetary policy spillover and that major developed countries' implementation of excessively relaxed currency policy has an influence on the world economy, particularly for developing countries. Developed countries promised to consider the foreign spillover of their macro-economic policy, especially currency policy,” Chinese Vice Minister of Finance Zhu Guangyao interjected in Moscow this week.
CURRENCY CONFLICTS: “We are all agreed on the fact that we refuse to enter any currency war,” French Finance Minister Pierre Moscovici declared in Moscow. And, other Western financial policy-makers concurred. Jens Weidmann, president of Germany's Bundesbank expressed grave concerns that certain governments are eroding the independence of their central banks. Weidmann also warned against the politicisation of exchange rates. He dismissed “competitive devaluations” as dangerous. “Currencies should not be used as a tool of competitive devaluation. Countries shouldn't make the mistake of the past of using currencies as a tool of economic warfare,” British Finance Minister George Osborne observed. So what are the reasons behind the West's obsession with and innate fear of a currency war? The answer some argue is that financial policy often plays second fiddle to political will in the West, in particular, and the world in general. “Monetary Fascism was created and propagated through the Chicago School of Economics. Milton Friedman's collective works constitute the foundation of Monetary Fascism. Knowing that the term ‘Fascism' was universally unpopular, Friedman and the Chicago School of Economics masquerade these works as ‘Capitalism' and ‘Free market' economics,” writes economist James Kennedy in an all-absorbing article entitled “The dark age of money” in CounterPunch. Communist bombast? Hogwash? Not quite. “Monetary Fascism, as conceived by Friedman, uses the powers of the state to put the interest of money and the financial class above and beyond all other forms of industry (and other stakeholders) and the state itself. In democracies and first world nations this is achieved through lobbying, campaign donations, financial incentives, revolving door regulators and through other means. As such, the state is co-opted into altering regulations/legislation, diverting investigations/prosecutions or creating tax loopholes for the benefit of the financial class/industry. Ultimately, these actions undermine state sovereignty,” Kennedy notes. “For the rest of the world, state interests and sovereignty are undermined through the IMF, the World Bank and other global monetary agencies,” he extrapolates. “Monetary Fascism has a strong preference for political rather than capital investments,” Kennedy concludes. And, this argument appears to me to be the key to demystifying the G-20 deliberations in Moscow this week. It also helps to unriddle Russia's befuddlement. Putin is making the assumption that Russia is a global power, and acts accordingly. The very notion of enrichment resonates across cultures. The prospect of prosperity, however, may prove fanciful for the vast majority of the world's poor.
INTERNATIONAL IMBROGLIO: Handling the West's current economic crises may simply fuel global disillusionment with the G-20's political, financial and economic agendas. The economically disadvantaged and politically disfranchised watch helplessly as the powers that be jostle for position rather than engage in problem-solving. Africa, one of the world's most benighted continents has serious challenges to overcome. Africa has been more than disappointed at the lukewarm response to its hardships and pleas for help, even in terms of the most rudimentary humanitarian assistance. The continent has developed a surly reputation of late by seeming incapable of mastering multi-party democracy and political pluralism. “Africa's classic depiction in the mainstream media, as a giant basket case full of endless war, famine and helpless children creates an illusion of a continent utterly dependent on Western handouts. In fact, the precise opposite is true — it is the West that is reliant on African handouts,” points out political pundit Dan Glazebrook. Resentment with regards to injustice is fast spiralling out of control. Glazebrook sticks a spanner in the works, or workings, of Western capitalism by pinpointing the root problems of Africa's persistent underdevelopment. But how and why are certain nations selected for the accolade of G-20 membership? South Africa has the largest economy in Africa with a quarter of the continent's Gross Domestic Product (GDP) of $554.6 billion in 2011 according to the purchasing power parity, ranking the 25th in the world and with a per capita GDP of 11,000 or 77th worldwide. South Africa is also a member of BRICs, as aforementioned, and of the G-20. But, with all due respect, can South Africa speak on behalf of a continent of one billion people? There are 50 million South Africans, including five million descendants of European colonial settlers. The “Rainbow nation” is celebrated as a beacon of democracy and racial harmony and South Africa has one of the most liberal and progressive constitutions in Africa and the world. In November 2006, South Africa became the first country in the African continent to legalise same-sex marriage. Yet, it is estimated that 500,000 women are raped every year in South Africa and child and baby rape are among the highest incidences in the world. Moreover, South Africa is ranked among the ten countries in the world with the most flagrant income inequality indices as measured by the Gini coefficient. And, the “Rainbow nation” has, according to World Bank estimations, one of the world's widest gaps between per capita Gross National Income and its Human Development Index ranking. What then does that say about Africa's sole “representative” at the G-20? The curious conundrum of Saudi Arabia representing the Arab world at the G-20 is another case in point. The oil-rich kingdom's GDP per capita is $26,500 ranked the 38th nation worldwide. Egypt is by far the most populous Arab country, but it was not considered competent enough for G-20 membership. Was Saudi Arabia chosen randomly to represent Arabs? The real question is whether it is its religious authority and prestige, its petroleum leverage or its financial clout that ensured the kingdom a place in the G-20 club. The G-8 — the eight most economically powerful, politically influential and militarily superior Western nations and Japan, the token non-Western nation in the August group — is considered to be something of a global conspiracy of the international superpower elite. Even as China's economic impact in the world soars, it is excluded from the exclusive club of the G-8. A select few nations of colour are included in the G-20, but their inclusion is decidedly political, even though it purports to be essentially economic. And, membership is replete with political symbolism. Spain, the world's 13th largest economy and the fifth largest in the EU and fourth largest in the Eurozone is the 23rd most developed country in the world in terms of the Human Development Index. Spain has a GDP per capita of $33,000 and yet it is, unlike its former colonies in the Americas — Argentina and Mexico — not a member of the G-20. In sharp contrast, Argentina with a GDP of $716.4 billion, the 21st largest economy and the 51st in terms of per capita GDP with $17,516 is a G-20 member state. Even so, the G-20 member states supposedly meet regularly to discuss weighty financial matters. I, personally, find these observations about the composition — geographical distribution, ideological orientation, and Human Index Development ranking — fascinating, albeit disturbingly revealing. G-20 nations presumably have a mission. They are systematically egged on to adopt the “stakeholder capitalism” prevalent in the United States. They should not raise hopes that cannot be meet, especially as far as the disadvantaged are concerned.
