Patrick Bond: All the governments behind the New Development Bank practice intense neoliberalism
PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I’m Paul Jay. And welcome to another edition of The Bond Report with Patrick Bond, who now joins us from South Africa.
Patrick is the director of the Center for Civil Society and professor at the University of KwaZulu-Natal in South Africa. He’s the author of the recently released book, written with John Saul, South Africa: The Present as History.
Thanks for joining us, Patrick.
PATRICK BOND, DIRECTOR, CENTRE FOR CIVIL SOCIETY: Great to be back with you. Thanks, Paul.
JAY: So you just get back to South Africa. You were in Brazil, where the BRICS countries were meeting. And what is it? Brazil, India–[incompr.] go in order, I guess–Brazil, Russia, India, South Africa. What am I–who am I missing? China, of course. And the headline coming out of those meetings was they’re founding this new international development bank that’s going to be funded with $50 billion for development money and something like $100 billion for reserves in case there’s financial crisis, to help bail certain countries out.
And there’s been a debate–we’ve had one on The Real News, and it’s lots of differing opinions around the world–on the significance of all of this. And there seems to be two schools of thought, which is, one, that these BRICS countries that are now very big–the South-to-South trade is now larger than the North-to-South trade, I think by $2.2 trillion I saw in The Washington Post. They’re very big economies. They’re all of the top ten economies in the world. And that this is a move by them to break away from U.S. financial hegemony, break away from the global finance system dominated by the IMF, World Bank, which, of course, are controlled by the Americans. The other school of thought is this is, within the context of the U.S. managed/dominated global finance system, carving out just a little bit of independent space. So talk–you were at these brick meetings. What’s your take on this?
BOND: Yes, indeed, you’ve nailed it. The question simply is: are the BRICS an anti-imperialist force potentially, especially on the world financial scene? And maybe with geopolitics, many aspects, from the United Nations to territorial contestations, expansionism, is this an anti-imperialist, maybe inter-imperialist rivalry? Or is it, as the great Brazilian Ruy Mauro Marini put it 40 years ago, a sub-imperialist project? In other words, is it not against world capitalism but within? And, as the Chinese news agency announced when the BRICS Bank came about this week, this is to stabilize the world economic order. And that’s my impression. I know we’ve seen on The Real News a wonderful debate with Michael Hudson and Leo Panitch.
My sense is that because so much of what the Chinese do (the biggest economy in BRICS, second in the world) is to use their incredible [financial power]–over $3 trillion of reserves–to continue to bail out the U.S. dollar and United States government by buying Treasury bills–and there’s never intent to end that. There’s a little bit of an easing of dollar buying and deals with Russia recently that entail non-dollar energy-based purchases.
However, the New Development Bank, the $50 billion bank that could go a hundred plus the $100 billion contingent reserve arrangement, they are being reported by some to be the alternative to Bretton Woods institutions the World Bank and IMF. Everyone we talked to from the official delegations who came to the Civil Society summit to brief many of the NGOs and social movements did confirm that these would be complementary institutions. They would operate under what are called sound banking principles. And every precedent we’ve seen in these countries, the five BRICS countries with their own development banks, show that they are indeed very much part of a neoliberal, extractivist, export-oriented, and overconsumptionist to model. They aren’t really going to break and do anything new the way the Bank of the South was purported [to] by Hugo Chavez before he died as a much richer reform that would have really set up an alternative.
JAY: Yeah, I don’t quite understand how one would think they’re going to be anti-neoliberal, when all of these countries are as neoliberal as any other neoliberal country domestically, internally–I mean, you could say maybe slightly different in Brazil and maybe not as extreme in Brazil, although a lot of Brazilians think it is. But how could they be anti-liberal when they won’t make any–they don’t try to–for example, they’re privatizing like crazy domestically, wages are low, I mean, on and on.
BOND: That’s right. I mean, the only big difference with the pure neoliberal agenda is that at least in a couple of the cases [we’ve seen] quite substantial state involvement in promoting a quite predatory extractive capitalism. We’ve certainly seen on this continent, Africa, the worst of many of these countries, the Brazilians with Vale, the big mining house in Mozambique next-door here, the South Africans all over the continent and the Chinese quite notorious for doing deals with dictators simply to extract raw materials and to put infrastructure in place. [It’s] the same that the old colonial powers did: roads and dams and railroads, the bridges, the ports, basically to get the minerals and the petroleum and the cash crops out of the country. Russia’s also coming in in a big way.
JAY: Just let me add to the Vale story in terms of this, the way the sub-imperialism works. Vale also owns the biggest nickel mine in Canada, Inco, and essentially forced the workers after a strike that lasted almost a year into a very concessionary contract, which starts to push the Inco workers, Sudbury Canadian workers closer to conditions that are in developing countries. I mean, Vale is a mining powerhouse all over the world and mostly owned by Brazilians.
BOND: Yes. And the encouraging thing, especially coming from some of the Canadian activists and connecting in through the United Steelworkers, is a North-supported South-South campaign against Vale that links up African and Latin American parts of Asia where this big company’s very active. And I feel that would be the future of BRICS–BRICS from below, let’s call it–of solidaristic work, where increasingly not just Western corporate targets and the IMF and World Bank, but now also some of the major Southern targets are those that in common are displacing peasants and wrecking the environment and basically dislodging any national autonomy for an autonomous development, because they are really replacing, in many cases, the West. They’re becoming the same neocolonial kinds of forces that so many people have struggled against. And just because it’s from the South and because there’s a lot of leftist rhetoric, especially anti-imperialist chatter about the IMF being controlled by the United States, that doesn’t mean that we’re going to see a gentler and kinder kind of economic development. But indeed all the evidence so far here in Africa is that this is more extreme, uneven, and combined development visited upon people and environment by BRICS-country corporations.
JAY: So let’s assume that this is not–this BRICS development, the new bank, it’s not anti-capitalist, it’s not anti-neoliberal, it goes along with the current form of global finance capitalism. But that doesn’t mean they don’t want to make some room between themselves and U.S. domination. It doesn’t mean that Russia and China, you know, which are very big economies, especially–as you said, China is number two now, and I guess it’s not going to be that long before it’s the largest economy in the world–don’t want to get pushed around anymore within that system. And this was a bit of what Michael Hudson’s point was. I think it was–we may go back with those two guys again so we can get a chance to develop it further. But, I mean, World War II, the countries that fought World War II were all part of global capitalism. It didn’t stop them from going to war with each other.
BOND: Well, that’s the question: will there be inter-imperial rivalries from what is currently a fairly coordinated set of contributions from these five countries to stabilizing world capitalism? One example is the $75 billion that just two years ago the BRICS together, mostly China, contributed to recapitalizing the International Monetary Fund. Now, what they expected, just as you say, is a bigger piece of the pie, a seat at the table. They got that seat, for example, in the Copenhagen Accord, where four of the five BRICS (not Russia, but they were soon to join), they basically endorsed Barack Obama’s plan, which left the UN powerless and had voluntary emissions cuts, which aren’t really happening and ensure that the planet will warm four degrees. In other words, it was an awful deal, and Obama needed those four of the five BRICS to facilitate and to re-legitimize this most destructive type of capitalism, fossil-fuel addicted. I think what the BRICS want is a little more respect.
And in January this year, the International Monetary Fund could not reform, because in the U.S. Senate, the Republicans wouldn’t allow them to basically get more voting share. The problem is that when you see the voting share rise from China, you know, you have to say, well, who’s losing? And it’s indeed Africa. And then you see the kinds of technocrats that all of the BRICS countries contribute to multilateral governance, and they’re basically neoliberals themselves. Certainly the South Africans–Trevor Manuel, the finance minister for many years, has often been mooted as an IMF managing director or a World Bank president candidate, and he’s about as neoliberal as you come.
JAY: Okay. So let’s say that they are as neoliberal as they come. But at the geopolitical level–like, for example, let’s take the leadup to the war in Iraq. Now, France is not part of BRICS, but France, for its own reasons, its own interests, stood up to the United States at the UN Security Council in quite an interesting way. So did some of the other countries. I mean, China, I think, actually could’ve been, certainly, bolder than they were, but they couldn’t get–the Americans couldn’t get the votes they wanted to give a clear-cut authorization of the Iraq War. It didn’t stop them from doing it illegally anyway, but it was an important moment. And with an institution like this new bank, and perhaps even building on that–for example, right now there’s the sanctions against Russia over the Ukraine. There’s a story in The New York Times today that it’s not going to have that much effect. One of the major Russian oil companies was targeted for sanctions, and one of the sanctions was going to make it more difficult for it to get capital in the Western capital markets. And now, apparently, they’re just going to borrow the money from the Chinese, and so the sanction’s not going to affect it as much. So I guess my question is is that within this context of global and neoliberal capitalism, getting to a more multipolar world, getting to a point where some of these other bigger powers can push back against the United States, which clearly is the biggest military operation on the planet and is the one that keeps starting major war after major war, is this–whatever room they can create for themselves, isn’t this a good thing?
BOND: Well, it could be if the modus operandi operates in a way that reduces U.S. power systematically. But as we’ve seen, when there are inter-imperial rivalries, that can often lead to a much more dangerous outcome. For example, the way to handle the kinds of pressures that the U.S. puts on other countries–the coalition of the willing, certainly, in the UN Security Council in 2003, the U.S. was unable to get authorization, because the Chinese and Russians and French wouldn’t support–they would veto the approval. But, you know, in May they then approved that the U.S. could run Iraq, having invaded it.
What was interesting this week on that front was that the UN Security Council reforms that are being proposed for many years to widen up the permanent members with a veto to move from five to ten by adding three BRICS–South Africa, Brazil, and India, as well as Germany and Japan–those ideas, which you’d have thought perhaps China and Russia would have supported to get more of their allies on board in the Security Council, they didn’t. It was quite a revealing memorandum that was released at the end of the BRICS summit in which the BRICS only said that it would be an increased role for the these other three smaller countries, as opposed to China and Russia.
JAY: So this inter-imperialist rivalry is even amongst the BRICS countries. And we even saw this with a big fight between China and India about where the bank was going to be–this new bank was going to be based.
BOND: Well, indeed. There was a lot of face-saving. And I can just imagine these finance ministers, reserve bank governors, and all of their bureaucrats fighting over the fine details. They eloquently and geometrically resolved that by setting up all kinds of mechanisms to appear that each of the five countries got a little piece. For example, in South Africa, Johannesburg will have a branch plant of the BRICS bank, and that will allow South Africa to help control the funding flows in and out of Africa, which is South Africa’s so-called gateway role that they’ve desired, and that would be very much an example of South imperialism insofar as the hinterlands of the BRICS countries are under the thumb of the regional hegemons, South Africa in Africa probably wanting now to have a more regularized extraction system of the valuable member minerals and petroleum from this continent.
However, I think you’re right that we will probably see the kind of tensions in a logic of expansionism, territorial ambitions of a Russia and China. Well, Russia now, of course, moving to the West to try to capture some of the ground lost when the USSR fell apart, China moving aggressively even into Vietnamese territorial waters to grab islands, of course the conflict with Taiwan and Japan, these are moments where I think there’s a fair bit of danger, and not just in the symbolic sense of territorial expansionism, but actually in potential alliances, that the BRICS will become an inter-imperial force with a more aggressive approach to capital accumulation. And that’s where these two logics come together.
That’s why I think the Leo Panitch and Michael Hudson lines of argument have to be resolved, because we have to understand what it is if we are facing, from countries in the BRICS, a need for populations to try to discipline very aggressive leaders and those leaders are very much in tune with the capital accumulation desires of their major corporates. They’re all very, very different, and our corporates here in South Africa have all run away to London and to New York. They’ve basically delisted from the main stock market here, and the capital flows out of this country. But in the other cases, big corporates–and state corporates, in the case of China–do have an incredible influence on these geopolitical arrangements. And those are going to be increasingly dangerous, because the room for growth, and especially the ecological constraints to growth, are really facing us quite squarely.
JAY: And when push comes to shove, it seems these nationalist–the state agendas trump the sort of global financial integration. I mean, we haven’t had a breakout of war like we’ve had World War I and World War II, and that probably has a lot to do with nuclear deterrent and things. We’ve had endless smaller proxy wars. The two certainly aren’t incompatible, that you have a shared global finance system and contention and fights that break out into all-out war.
BOND: Well, that’s right. You see, the old theory of imperialism of a Lenin and a Bukharin was about these inter-imperial rivalries of states being pushed and pulled by their big corporate elites into their own hinterlands, into colonial orders, that would be then the basis for the kind of tensions that lead to world wars, as we’ve seen. Things have been different with a superpower in the United States and a kind of imperialism, the type that Rosa Luxemburg described, in which capital meets the non-capitalists, and that becomes the primary focus of the super-exploitative systems. I think that’s actually what BRICS represents in a more profound way. The difference is a Rosa Luxemburg kind of approach to studying imperialism, in which capital and the non-capitalists are the key site of super-exploitative tensions, not the inter-imperial rivalry of different powers in the North, but rather the power of the Global North against the Global South–shall we say, in other words, the capitalists and the non-capitalists. And that’s where, actually, the BRICS exacerbated and amplified the tensions, and I think that’s where a great deal of the social resistance has occurred across the world. The new data from the African Development Bank, of all places, studying protests in Africa of this month–and they’ve increased even on the 2011 and 2012 rates. And this is because of kind of an intensified metabolism.
JAY: So let’s talk about ordinary people, not the elites running all these countries. You know, for people living in the United States, it’s pretty straightforward, in the sense that, you know, if you want to take a progressive the position on U.S. foreign policy, you’re opposed to its seeking and achieving hegemony and militarization and so on and so on. But if you’re in one of the BRICS countries, do you consider this a positive development for your own people? And, obviously, let’s start with South Africa, ’cause that’s where you are. I mean, is this–you know, it’s not going to transform the conditions of South Africa, but is this something positive or not? I’m talking about BRICS and the new bank and all of this.
BOND: The BRICS Development Bank could be a very dangerous phenomenon, because to the extent that the anti-imperialist movements and solidarity movements have actually begun to discipline, say, the World Bank, which is under pressure not to make any new coal-fired power plant loans, the last one being here in South Africa in 2010, $3.75 billion, the biggest such loan ever by the World Bank, that then, that refusal to make these kinds of dreadful loans, pushes the borrowers like the South African government to a BRICS bank. And I think in many ways what we’re seeing with BRICS is a recommitment to an extractive and predatory kind of capitalism, desperation capitalism, that will be more dangerous for ordinary movements struggling to retain their own integrity of community, their livelihoods, the nature around them. The proof of that will be in 2016 and when we start seeing what kind of loans the BRICS bank gives.
Now, the rhetoric sounds good. They’ve–BRICS has actually asked Joe Stiglitz to be one of the main advisers and put a position paper together in 2011. And so what you’ll hear this week in Fortaleza, for example, lots of rhetoric about sustainable development and inclusivity, when you hear those words, look at the details, because when they’re using them, it often means they’re planning to do the opposite, and instead of infrastructure in local currency for water systems, sanitation, housing, clinics, schools, and so forth, we’re much more likely to see megaprojects that help multinational capital from BRICS and from the West.
JAY: Okay. So, then, the proof is going to be in the pudding, then. We still have to really see what they’re going to do with it.
BOND: And I think the proof is also whether the geopolitical relations tighten up, because if the West gets more aggressive towards Russia, for example, having just thrown Russia out of the G8–it was a G7 meeting a couple of months ago–and then the G20 is meant to meet in Australia and November. Will it be the G19, throwing Russia out for the reasons you’ve already mentioned? And then the BRICS have already said, well, if you throw Russia out, then make it the G15, because we’re also leaving. There’s some very interesting maneuvering going on at the level of these multilateral arrangements. So far, all evidence is that the BRICS are stabilizing world capitalism, but there may be some surprises ahead as these geopolitical tensions might compete with the overall project of accumulation.
JAY: Okay. Thanks for joining us, Patrick.
BOND: Thank you very much.
JAY: And thank you for joining us on The Real News Network.
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