Despite Trump’s affinities with authoritarian leaders such as India’s Modi and Russia’s Putin, he continues to destabilize the existing neoliberal consensus and now BRICS countries are taking up the neoliberal mantle, says Patrick Bond
GREG WILPERT It’s The Real News Network and I’m Greg Wilpert in Arlington today. A G20 Summit with the leaders of the world’s largest economies just concluded this weekend in Osaka, Japan. The meeting itself did not result in any major decisions but in a variety of smaller ones, which indicate the general direction in which some of the world’s largest countries are heading. For example, the US and China in a side meeting between President Donald Trump and President Xi Jinping, agreed to set aside further escalation of the trade war. Also, all countries except the United States agreed to push forward on fulfilling the targets set by the Paris Climate Agreement. Among the important side meetings that took place, was one between the so-called BRICS countries— Brazil, Russia, India, China, and South Africa. Here, key leaders such as Russia’s President Putin and China’s President Xi expressed concern about the uncertain and unstable trade climate that the US has brought about recently. Here’s what President Putin had to say.
Please help us make real news!
PRESIDENT VLADIMIR PUTIN The situation in the global economy is worrying. It is symbiotic that international trade has ceased to become a driver of economic growth and is going through a heavy burden of protectionism and politically-motivated restrictions and barriers. We can see weak business activity, growth of world debt, high volatility in financial and raw materials markets. In particular, it is related to difficulties which global trade is facing. It is clear that it needs to be adapted to present day developments. And in this context, the goal of reforming the World Trade Organization is becoming a priority. We believe any attempt to destroy the WTO and to decrease its role to be counterproductive.
GREG WILPERT Joining me now to analyze the recent G20 meeting is Patrick Bond. Patrick is Professor of Political Economy at Wits University in South Africa. Also, he is the Co-editor of the book, BRICS: An Anticapitalist Critique. Thanks for joining us today, Patrick.
PATRICK BOND Thank you very much for having me, Greg.
GREG WILPERT So let’s start with the role that Trump is playing. On the one hand, he’s a leader who’s somewhat similar to Russia’s Putin, India’s Modi, Brazil’s Bolsonaro, and even Japan’s Shinzo Abe. But on the other hand, he seems to be throwing everyone off balance, especially with his ideological allies by calling into question longstanding alliances. What’s your sense of the role that Trump is playing in all of this, and what effect is he having on the usually cozy relations between many of these countries?
PATRICK BOND Greg, at least here from Johannesburg, this is a world that seems upside down now. This is a world in which Donald Trump has ceded the neoliberal vanguard to at least three of the major eastern countries— China, Russia, and India— who had their own meeting, the RIC countries, to sort out the Belt and Road. It’s very, very difficult because China and Russia have one agenda and India is very opposed especially to China’s incursions through Kashmir. But setting that aside, those are three countries, as you heard from Vladimir Putin, who have the capacity to try to restore, sort of, corporate multilateralism. And ironically, it may be that with US capital going through some major changes now that Donald Trump has taken on the paleo-conservative— not even the neoconservative of the Bush era, and certainly not the neoliberal agenda of the Obama regime, which was to expand those multilateral agencies like the World Trade Organization. But instead, the “America First” protectionism does correspond with the kind of limits that I think US capital is reaching in the world economy.
Putin describes the weakness in the world economy in terms of the recent problems of trade investment debt. But in fact, most of these declines, most of the shrinkage let’s say trade to GDP of global finance, the financial flows to GDP cross-border, or foreign direct investments, as the UN Conference on Trade and Development even has just reported last month, those have been in decline actually since the peaks of globalization in 2007. And so for the past 12 years really in some ways, it’s been an era of de-globalization and Trump in a sense, as do Brexit proponents like Boris Johnson, they sort of reflect capital in retreat. You could say it’s simply Trump bullying, and that would be a perfectly valid hypothesis. He’s simply trying to get the best deal he can for US capital, but I actually think there may be a bigger structural problem here that helps explain why at least four of the BRICS— Russia, India China, and South Africa— are game for a bigger WTO, while Bolsonaro’s more with Trump and Trump is in retreat from multilateral neoliberalism.
GREG WILPERT Yes. That’s a very interesting point. Now. At the G20, the US and China, like I mentioned, one of the main achievements of that meeting was that they agreed to continue negotiations over their trade dispute. Now, this dispute seems to have dominated that meeting, so what do you see as being at the heart of this dispute, and do you think it will come to any resolution anytime soon?
PATRICK BOND Oh. It’s certainly the rise of a competitive, potentially co-hegemonic, or even new hedge harmonic power in Chinese capitalism. And the cutting edge of that is certainly the high-tech sector where Huawei has really been the vanguard firm. But don’t forget— there’s two other vast firms that handle the equivalent of Twitter and Facebook as well as Amazon and those are called Tencent and Alibaba. And maybe, the correlation to the way Big Data relates to the US state in terms of its surveillance is what China has been able to do with Tencent and Alibaba— a full spectrum surveillance and social control system that’s coming online next year, and pilots have been in place. It’s called Social Credit and it rates everyone according to their social behavior. If you’re an environmentalist and you go out in the thicket because say, Sinopec has exploded a pipeline nearby, not an unusual problem. Well, you’re probably not going to be able to go on a fast train or on an airplane.
As for the millions of Hong Kong citizens out protesting, they’re going to have trouble when facial recognition catches them if they are on the mainland. These are the kinds of technological advances that with 5G, a much, much more rapid mode of communication that put the United States— especially Facebook, Apple, Alphabet, Netflix, Google, Amazon, and Microsoft— in second place. I think that’s probably what we’re walking [inaudible] is a massive battle over the potential terrain for corporate and state power. But you know, there’s a lot of good reasons why China deserves the kinds of pressure that Trump is giving them. Those include the manipulation of their currency there. If you’re a corporate, you obviously want intellectual property and China’s notorious for stealing that. China’s also extremely tough on local investors, you know, demanding transfer technology— all manner of activities that the Chinese state has been able to use with its power, with its totalitarian controls, ensure that its corporates can advance at the cost of the foreign direct investors. So I think all of those things, Greg, reflect that certain capitalists in the US really do want China much weaker at the global scale. And certainly, with that trade deficit at record levels— it’s well in the $400 billion a year range— China’s completely out-competing the US.
The only thing really in all of this the US can turn to is its power of the US dollar. The hegemony of the dollar is critical. The Chinese renminbi, for example, is only about 2%, while US dollars are still about 62% of international financial transactions and the Euro around 20%. The yen and a few others are much less. I think that might be one of the most important coming battles and it might be led by Russia, which wants to de-dollarize as quickly as possible. They’re under sanctions and [inaudible] and there’s lots of talk of trying to move some of that [inaudible] south trade into local currency tradings, while even the BRICS New Development Bank has begun a little bit more seriously to issue loans in local currencies. I think that might be one we’d watch. Just like the pound lost its international standing against the US dollar in the Great Depression, we might see another big crash if that’s on the route. It’s certainly driven by Chinese overproduction, massive overcapacity at the world scale. And the US won’t be that well-equipped to compete and maybe will lose much more of that strength of the dollar to, well, in a sense, economically bully the rest of the world and to continue to print money through quantitative easing but with no cost.
GREG WILPERT Yeah. That’s quite an interesting point that actually I noticed that a number of different leaders made, specifically Putin as you mentioned, and it seems to be driven by this effort to become independent from the US dollar. It seems to be driven also to some extent by the sanctions that the US has imposed on different countries, and other countries’ efforts to get around these sanctions. In particular, I think the role of Iran and of India play a role in all of this, but what I’m wondering now, assuming that this might move in this direction, the BRICS countries, as you mentioned earlier in our discussion, seem to be taking on this strange role reversal where they are becoming more the advocates of neoliberalism and neoliberal principles. Now, is that something—I mean, where does that come from? I mean, in the sense that, wasn’t it always the most developed countries that wanted to impose neoliberalism? Why is it that these developing countries—I mean particularly India and Russia, but Russia is not really a developing country, but still, usually it’s the most developed countries that have the most interest in pushing neoliberalism. And now, we have countries such as India and maybe even South Africa pushing neoliberalism. Why is that?
PATRICK BOND Oh. I think the adoption of a more neoliberal agenda reflects an internal balance of forces so that you’d say in each of these major countries— now, it would take Brazil as an important exception— the circuits of capital have moved to finance and merchant profitability as opposed to productive profitability. That would mean for the case of China, for example, that as it’s overproduced and facing falling profits in its core productive sectors, it needs to export. The WTO has been the most crucial weapon of any out there multilaterally, and the United States knows that and has been basically sabotaging the WTO. It won’t allow the main force within the WTO, the adjudication panel, to even appoint its new members, so it’s really, completely paralyzed. There’s a Brazilian who runs the WTO, Roberto Azevedo, who’s always complaining now about Donald Trump shutting down the WTO. I’ll give you another good example of this multilateral neoliberal support that BRICS countries have been giving. Well, let’s say until Bolsonaro was elected, because this has changed matters. That would be the International Monetary Fund because they had voting restructuring in 2015 and that meant that China went up 37% and India went up 23%, the Brazilians 11%, the Russians 8%.
So in other words, the BRICS nearly got to that 15% point where they could exercise veto power. They’ve become an important bloc within the IMF, a neoliberal bloc. They supported Christine Lagarde’s reappointment, even though she was under first prosecution and then actually conviction for negligence in a corruption case for 400 million euros dating to where she’d been the Finance Minister. That’s one indication that the BRICS work within the IMF, but the critical point is that somebody had to lose when the IMF changed its votes, so who’s lost? It would be the Nigerians and Venezuelans, a 41% decline in their vote in the IMF. Even the South Africans lost 21%. In other words, four of the BRICS moved up the ladder by stepping on the heads of poorer countries, and I think that reflects this coalescence of interests between the capitals of the world in which the BRICS businesses have actually moved to the point where they are sub-imperial accumulators. So they’re, sort of, happy that their governments are achieving the status of multilateralism to defend their corporate interests as they go out around the world.
The Chinese are most aggressive, but the Indians have major firms— Russians in energy, Brazilians in mining and construction. They’re very, very important, export-oriented, and internationally aggressive, and often much more predatory even than Western corporates. And so, we’ve seen certainly in this continent, in Africa, extraordinary cases of BRICS companies just absolutely looting, raping these poorest countries. And I think these are—I mean, the most recent example in Zambia involved an Indian company that’s now the largest investor in our traditionally biggest company in South Africa, Anglo American. That company, Vedanta, had to delist from London and is basically under prosecution for extraordinary violations of human rights and environmental conditions in Zambia, as well as back home in India. It’s that kind of— that’s Anil Agarwal and his company Vedanta— these are the kinds of companies that we’re seeing more and more.
And I think in many ways, Greg, this sets the stage for sub-imperial politics in which these countries become the deputy sheriffs of world capitalism. At the very same time, the sheriff has, you know, basically departed the Big House. Donald Trump is in retreat from the WTO, clear enough, not even talking about the UNFCCC, the climate discussions, or IMF. It’s in these major bodies we really see this multipolarity, is a generous way to put it. But I would say, rising sub-imperial accumulation is what I would fear most because I know the South African corporate elites and the state that serves them can be absolutely a reactionary agent. For example, engaged in a massacre of mineworkers at a place, Marikana, where the main investors, now our President Cyril Ramaphosa, and the company involved, Lonmin, a London company, was once called the “unacceptable face of capitalism” by a conservative British Prime Minister. It’s that degree of extreme power and accumulation that I think we can look forward to until resistance rises strongly to prevent this.
GREG WILPERT Okay. Unfortunately, we’re going to have to leave it there. It’s a very fascinating discussion and I hope I’ll be able to pick it up again very soon. I was speaking to Patrick Bond, Professor of Political Economy at Wits University in South Africa. Thanks again, Patrick, for having joined us today.
PATRICK BOND Thank you. Great to be with you, Greg.
GREG WILPERT And thank you for joining The Real News Network.