BRIC-A-Brac: China Pivot or Spinning like a Top

[GRG55]

Re: BRIC-A-Brac: China Pivot or Spinning like a Top

Nothing like depending on the media to keep us properly informed. No confusion here...


From China Daily:

Fast growth to continue, Xi says

Updated: 2013-04-09 01:31
By Wu Jiao in Boao, Hainan, and Qin Zhongwei in Beijing ( China Daily)

China will grow relatively quickly for a long time, and its market will be open and fair, President Xi Jinping said on Monday, soothing fears over the Chinese economy.

Meeting more than 30 foreign and domestic business leaders at the Boao Forum for Asia Annual Conference 2013, Xi said China's market potential is huge thanks to the country's rapid agricultural modernization, industrialization and urbanization...

From the Wall Street Journal:

CHINA NEWS
April 8, 2013, 4:15 p.m. ET

China's Xi Says Fast Growth Over

BOAO, China—Chinese President Xi Jinping said China's days of breakneck growth are over as the world's No. 2 economy tries to balance expansion with sustainability and increasing environmental awareness.

Speaking before business leaders at the Boao Forum for Asia in southern China on Monday, Mr. Xi said "it's not impossible to grow faster," but added, "we don't want to grow too fast."

"I don't think China can sustain super-high or ultra-high-speed growth," he said, citing the need to balance economic growth with other issues...

[c1ue]

Re: BRIC-A-Brac: China Pivot or Spinning like a Top

None of them are as unwieldy as BRICS...

Certainly true, but equally none of the other associations have the ability to do anything to start with.

The BRICS are exactly what you said - a collection of largish nations with disparate interests. Their unity - what there is of it - exists only because of the other side of the balancing scale.

It is this juxtaposition which is the basis for what the BRICS will or will not do. Historically this model has proven out - as World War I, the Napoleonic wars, and many other examples illustrate: a common foe is the strongest reason to ally there can be.

Do you disagree that there is such a situation?

[GRG55]

Re: BRIC-A-Brac: China Pivot or Spinning like a Top

...Do you disagree that there is such a situation?

Yes. Emphatically.

BRIC is the creation of a Goldman Sachs analyst. Now it's a talk shop with a FLPA (five letter pluralized acronym ) looking for a purpose. Period.

You are trying to rationalize some sort of "common enemy" (the USA), but your arguments apply to a great number of other nations outside BRIC (or BRICS, if you wish). So they should be just as motivated to do something. But apart from this quirky quintet apparently haven't.

I think we've beat this to death, and should just agree to disagree :-)

[c1ue]

Re: BRIC-A-Brac: China Pivot or Spinning like a Top

Yes. Emphatically.

BRIC is the creation of a Goldman Sachs analyst. Now it's a talk shop with a FLPA (five letter pluralized acronym ) looking for a purpose. Period.

BRIC may have been created by Goldman Sachs, but the reality is that the members denoted by BRICS are in fact associated to some degree.

For one thing, the heads of these nations have met 5 times now:

http://www.brics5.co.za/

So while you keep saying there is no interest or commonality, yet they still seem to find the wherewithal to get together in various venues ranging from Russia to South Africa.

[don]

Re: BRIC-A-Brac: China Pivot or Spinning like a Top

Global Finance in Transition conference to take place in Istanbul

On May 7-8, 2013, Istanbul (Turkey) will host the Global Finance in Transition conference. The event is organized by the Central Bank of the Republic of Turkey jointly with the Reinventing Bretton Woods Committee and the Russian Ministry of Finance.

Representatives of G20 finance ministries and central banks, international organizations, research institutions and businesses will take part in the conference. Head of Turkey's Central Bank Erdem Basci, Deputy Minister of Finance of Russia Sergei Storchak and Executive Director for the Reinventing Bretton Woods Committee Marc Uzan will give the opening remarks at the conference.

Five panel discussions are planned as part of the event. They will cover the international financial architecture, in particular, changes in the flow of global investments, local bond markets and growth in emerging economies, incentives and determinants of investment and other issues. In addition it is expected that new instruments and incentives for making the global financial system safer will be suggested during the forum.

http://en.g20russia.ru/news/20130415/781287568.html

nothing here, move on . . .

[don]

Re: BRIC-A-Brac: China Pivot or Spinning like a Top

US hoist by its own pivot petard
By Peter Lee

It is perhaps premature to announce the death of the US pivot to Asia, but the patient looks less than healthy. The US effort to orchestrate a win-win economic and security regime in Asia through selective and constructive pressure on China is being undercut by an ally that sees its importance, security, and prosperity eroding as China rises.

That nation is Japan, which is threatening to frustrate the US plan for a new paradigm in Asia, and replace it with the dismal Middle Eastern model of confrontation and containment, one that the Obama administration is desperate to escape.

In this context, we can take an instructive look at the latest kerfuffle in Sino-Japanese relations, the article by in People's Daily by two Chinese scholars calling into question Japan's title to all the Ryukyu Islands in addition to the Senkakus, including the big one - Okinawa.

Seduced by the prospect of another China-bashing peep show, seemingly oblivious of the Japanese government's concerted campaign to skew coverage of its disputes with China, and too lazy to read the original article (which apparently appeared only in Chinese, got jerked after the intended uproar was generated, and now seems to exist only on Chinese message boards), most of the media missed the true import of the story.

The drift of the article is that after World War II the United States returned sovereignty of the entire Ryukyu chain, not just the Senkakus, to Japan on legally dodgy basis As the estimable Martin Fravel of MIT pointed out (and the Japan Times quite commendably reported), this was not an attempt to claim Chinese sovereignty over Okinawa:

The scholars aren't necessarily saying that the Ryukyus belong to China, said Taylor Fravel, a professor at the Massachusetts Institute of Technology who studies China's territorial claims. They are raising the possibility that Japan's ownership could be disputed because the islands' rulers in past centuries had tributary relations with imperial China, he said.

"These are perhaps the most serious scholars to date to make this insinuation," Fravel said. [1]

The article emerged in the context of Okinawan alienation with rule from Tokyo, disenchantment that has to do with central government highhandedness as well as the continual irritation of the basing issue. Okinawan dissatisfaction is growing as Japanese nationalism (and impatience with Okinawan presumption) becomes the lingua franca of Japanese politics, feeding a sense of disenfranchisement which carries the faintest whiff of separatism. Chinese media follows the unhappy-Okinawa story assiduously.

Xinhua's report on Japan's "national sovereignty day" celebrations - a new exercise in right-wing nationalist hagiography - two weeks ago killed two birds with one stone by a) pointing up Okinawan dissatisfaction and b) linking it to the muddled sovereignty issue:

The Japanese government on Sunday for first time commemorated the day that the country ended the US occupation and recovered its sovereignty in 1952 after its defeat in the World War II.

The government held a ceremony, in which the Japanese Imperial Couple, Prime Minister Shinzo Abe as well as about 390 lawmakers, prefectural governors and government officials participated. ...

Okinawa, Japan's southernmost island prefecture that was returned by the United States in 1972, consider April 28 as "day of insult" and oppose the central government's sovereignty recovery ceremony.

The prefecture's governor Hirokazu Nakaima skipped the ceremony and local assembly members also staged protests in the city of Ginowan in the prefecture, according to reports. [2]

Nudging Okinawans
So, the real purpose of the People's Daily think piece was to encourage Okinawan particularism - or, at the very least, publicly expressed dissatisfaction with Tokyo - and thereby further undermine Japan's rather tenuous claims to the Senkakus.

For bonus points, the article's authors proposed making representations to the United States - which is demonstrably queasy over the whole Senkaku sovereignty issue - to do the right thing, at least behind the scenes, and address the contested issue of overall Rykyu sovereignty:

Although under the current circumstances the United States can't be expected to be upright in speech and action about the matter - it would be a matter of "asking the tiger for its own skin" [exhorting somebody to do something against their own interest] - nevertheless, China should make efforts based on the principles of its position and try achieve a better situation through its diplomacy with the United States.

The Japanese government went predictably batshit over this attempt to support a narrative of Okinawan separatism and US re-insertion into the whole Ryukyu issue on China's behalf and reframed it as a Chinese exercise in territorial aggrandizement that threatened the precious US bases on Okinawa.

The world media - which perhaps will one day be more careful about reporting on Chinese-language stories filtered through the Japanese press - obligingly followed on. The judge's trophy for gormlessness (sorry, no link) goes to a certain Western journalist, who reported the story as:

A mouthpiece of China's Communist party has claimed that the Japanese Island of Okinawa, home to several major US military bases, should be ceded to Beijing.

The consequences of a Japan working to reassert its national dignity and control its economic and security destiny are still underestimated by the punditocracy in United States, if not by the US government itself. Writing in Forbes, Stephen Harner did acknowledge creeping anxieties about Japan's assertive posture:

[Prime Minister Shinzo] Abe, a romantic nationalist, is proving a problematic, and potentially disastrous leader for Japan in its relations with its neighbors (and increasingly, I suspect, with the United States). Both in character and mentality he and his coterie are yesterday's men, not the forward looking leaders Japan needs. [3]

However, Mr Harner chose to look beyond Prime Minister Abe's rather off-putting retro-nationalist persona to conclude with an optimistic vision of Japan's future:

I support Abe's intended change in Japan's constitution because I see it as a necessary step toward a Japanese foreign and defense policy and capability independent of the United States, eventual abrogation of the US-Japan mutual defense alliance, and pursuit by Japan of a Swiss-like (non-nuclear) armed neutrality between the US and China, the only position for Japan that is likely to be stable, sustainable and in Japan's interest over time.

Regardless of who is in the prime minister's seat, I suspect that 21st century Japan is not going to look like the Switzerland of the Pacific.

For instance, I did not notice Switzerland sending the chief of staff of its putatively defensive army 3,000 miles, or nearly 5,000 kilometers, to Kolkata to meet with India's commander for the Eastern Theatre (which handles the frontline duties confronting China in Arunachal Pradesh), apparently to counter-program against the state visit to India of Chinese Premier Li Keqiang, as Japan did this week. [4]

And I wouldn't put my bet on "stable" and "sustainable" either - or "neutral" or "non-nuclear" for that matter.

Japan's politics is now driven by more than a sense of political, economic, and strategic malaise inspired by two decades of slow growth, political gridlock, and the well-founded anxiety that rising China is eating Japan's bento box lunch as a disinterested US looks on.

The ruling Liberal Democratic Party is working to transform Japan's sense of demoralization into a narrative of national crisis that translates into political dominance.

A member of Prime Minister Abe's cabinet told the Wall Street Journal:

Mr Yamamoto said the Abe cabinet viewed Japan as having its back against the wall. "Everyone shares the same sense of crisis," he said. "If we don't do something now, Japan won't ever come back." [5]

Hiahiko Okazaki, head of the avowedly hawkish Okazaki Institute think tank, foresees a sea-change in Japanese attitudes that involves an assisted transition to a Ride of the Valkyries style of nationalism.

It should be noted that his conservative vision also involves a repudiation of US tutelage that dovetails with Okazaki's well-honed sense of the Sino-Japanese rivalry, and puts the US State Department on notice that "Japan reborn" is going to be something other than a tractable ally:

The Abe Cabinet is the first conservative government in Japan in a long time. I believe, roughly speaking, conservatism in Japan faces two major tasks.

The first is eradication of the so-called postwar historical view. This view was a product of the US policy in the earlier days of the postwar Occupation. US Occupation authorities taught Japanese children that all of Japan's past and traditions were bad in an attempt to completely eradicate Japan's war potential, both materially and spiritually.

The US revised this policy as soon as the Cold War began in order to make Japan a reliable ally. But the education based on this policy was taken over by pro-communist leftist elements in Japan, whose main purpose was to neutralize Japan in the realm of intellectual and moral capabilities. This led to the emergence of the leftist biased historical view.

No nation can survive when its history and traditions are denied. Eradication of this leftist historical view has been a long-term issue for the Japanese nation and it has to be continuously pursued in classrooms and other educational arenas. [6]

Even if nostalgic nationalists are in the minority in public opinion polls, their acolytes are in power and can set the national agenda, override majority doubts, and, most importantly, foreclose competing options for their successors ... especially if they can invoke the specter of a national crisis.

The constitution beckons
And big doings are expected for the second half of the year - if the Liberal Democratic Party trounces the fractured opposition as expected to control a two-thirds majority in the upper house of Japan's legislature and adds revision of Japan's constitution, including its restrictions on military adventures outside Japan's borders, to the national renaissance/standing up to China dialogue.

So far, Prime Minister Shinzo Abe, has successfully kept the international focus on revival of Japan's stagnant economy through "Abenomics", a gigantic roll of the quantitative easing dice that has not coincidentally strengthened Abe's political hand by delivering two highly anticipated benefits to the LDP's well-heeled corporate base - a skyrocketing Nikkei index and a plummeting yen.

However, his administration has simultaneously engaged in a flurry of diplomatic, economic, and security engagement with China's current and potential antagonists from India and Sri Lanka to Vietnam to the Philippines, Taiwan, and Russia.

On May 3, Asahi Shimbun - which has emerged as a reliable conduit for anti-Abe anxiety inside Japan - reported on the recent visit of Deputy Prime Minister Aso to Sri Lanka:

Deputy Prime Minister Taro Aso's visit to Sri Lanka yielded promises of stronger ties between the two countries, bringing Japan a step closer to its goal of building a coalition against China. ...

Aso and Prime Minister Shinzo Abe are currently conducting a broad range of diplomatic activities to counter China's growing influence. ... When Abe first served as prime minister in 2006, Aso, who was then foreign minister, proposed making the area from Southeast Asia to central and eastern Europe an "arc of freedom and prosperity."

The strategy was intended to contain China by helping Asian countries move forward with democratization and the development of their economies. [7]

Don't worry. Mr Aso said "Arc of Freedom and Prosperity". He didn't say "Greater East Asian Co-Prosperity Sphere", and I do believe that Japan's plans for regional pre-eminence include exploiting the United States, not confronting it.

If and when constitutional revision goes through and the doctrine of "collective self-defense" permits military operations beyond Japan's borders, Japan looks more and more like an destabilizing regional power that relies on a narrative of existential threat, heightened polarization with its enemies, and the expectation that the US has no alternative but to back it up in its disputes with its neighbors even when that works at cross purposes to US interests and objectives for the region.

This creates a dilemma for the United States and its master plan for securing US pre-eminence in Asia. President Obama, for reasons not entirely of his own making but inseparable from his inability to wheel and deal with dictators, decided that G-2 - a US-PRC condominium that would order East Asia to everyone's satisfaction - was not a viable option.

Instead, the Obama foreign policy team decided that a concerted display of forceful (but not hostile!) pressure by the United States and its allies was needed to extract satisfactory Chinese behavior in the short term and integration of the PRC into a US-led liberal-norm diplomatic and economic architecture in the long term.

Call it the "pivot to Asia".

The economic keystone of this coercive architecture is the Trans-Pacific Partnership (TPP), a "high standards trade pact" that pointedly excluded China while not even trying to address the contradiction of welcoming Vietnam - a nation whose rickety mixed-socialist economy mimics the Chinese economy ... from 10 years back.

Unwanted turn on trade talks
With the TPP, perhaps the Obama administration was too clever for its good. I have a feeling - well, I hope - that the Obama administration emitted a hollow groan of foreboding when Prime Minister Abe announced during his US visit that Japan would join the TPP negotiations.

Abe's enthusiasm for the TPP process appears to be genuine - Japan had to lobby all 10 current participants to obtain approval to join - even though the near-term benefits to Japan appear relatively marginal.

In the back-of-the-envelope version (and not taking into account the inevitable backroom deal-cutting, especially in the automotive sector), by conservative calculations the TPP grows total Japanese GDP about 0.5% (with about half of the growth in industrial production offset by a spectacular cratering of agricultural production as domestic rice, beef, and pork lose tariff protection and disappear beneath an import avalanche). [8]

Economic factors aside, the TPP factor has already had a beneficial knock-on effect to Japan's negotiating position in a raft of other trade pacts, as Professor Aurelia George Mulgan of the University of South Wales wrote:

Japan's decision to participate in the TPP negotiations appears to have spurred a whole series of other trade developments, including: the first round of trilateral China-Japan-South Korea FTA talks, beginning less than two weeks after the TPP announcement on 15 March;
the start of serious Japan-EU talks on an Economic Partnership Agreement (EPA) in April; and
the launching of negotiations on the Regional Comprehensive Economic Partnership (RCEP) in May, demonstrating how both emulation and competition can act as triggers for FTA diffusion.

From a US perspective, the RCEP and China-Japan-South Korea FTA are both potentially rival blocs to the TPP, but Japan will be advantageously positioned in all three. This has not escaped Chinese commentators who note how Japan has welcomed the opportunity to maximise their profits by establishing a footing in the TPP while not closing the door to cooperation with China through means such as the China-Japan-South Korea FTA. [9]

Trade blocs, in addition to their economic significance, are also important geopolitical gambits in the Japanese struggle to deal with China. Per Mulgan:

Abe ... recently told the Japanese Diet, "Japan's TPP participation will result in Japan and the United States virtually leading the TPP ... there are advantages to Japan and the United States forming a team to make rules for the free trade area."

Which is why despairing groans should rise from the bosom of the Obama administration. As noted above, unanimous agreement is stipulated for a new nation to join the TPP negotiations. Behind closed doors, apparently lesser powers such as Brunei allow the US to speak on their behalf on membership issues.

But I doubt Japan's plans for its future security and prosperity involve surrendering to the United States the precious right to blackball China.

If Japan is able to join the TPP club on its own terms, it will probably possess a de facto veto over any PRC application to join the talks. In other words, if current political trends continue, China may never join the TPP. TPP policy toward China - the key raison d'etre for the TPP - will become hostage to Japan's priorities and strategy.

For the United States, that raises the possibility that the pivot to Asia will not create a region-wide open market system with Chinese buy-in that will give full play to US competitive advantage in technology, patent-protected products, and sophisticated services, thereby enriching the US corporations that are the TPP's most enthusiastic promoters and, in fact, are basically writing the treaty's texts and talking points and supporting the initiative through campaign contributions and public relations expenditures.

Instead, maybe the Asian economy will plod ahead with only two cylinders firing: a continental Eurasian bloc of state capitalist economies that look to China as their primary demand engine, and a maritime bloc of Asian democracies banded together by their shared China-related security anxieties (which Japan will happily foment) but hobbled by the fact that the two biggest participants, Japan and the United States, both want to export their way out of their economic slumps.

Hijack, Middle East style
If Japan holds the whip hand for US policy in Asia, it will be an unwelcome recapitulation of the fiasco in the Middle East that the Obama administration is trying to leave behind.

In the Middle East, the United States has largely lost control of the security agenda thanks to the Arab Spring, but also thanks to the desire of key US allies to seize the initiative and shape policy through their unilateral actions. Israel and Saudi Arabia advance a narrative of existential crisis centered on Iran and its nuclear program and conduct independent security policies that exacerbate regional polarization and force the US to abandon rapprochement with Iran and back the narrower priorities of its allies instead.

Following the precedent of America's vexatious allies in the Middle East, Japan is also advancing a narrative of national crisis, polarizing the region into pro- and anti-China blocs, and exploiting the security alliance to invoke US support that would otherwise be given grudgingly or not at all.

I have the feeling that President Obama hoped and expected that by pivoting to Asia - a region of peace, prosperity, and rapid growth generally sympathetic to a dominant US security role - the US would find a way of profitably leveraging its military and economic advantages into market and diplomatic opportunities throughout Asia.

Unfortunately, by piggybacking on the pivot - basically "soft China containment that dares not speak its name" - Japan is working to wrong-foot the US and establish itself as the key security and economic intermediary in an Asia bifurcated into China and anti-China blocs.

The Obama administration is showing various signs of unwillingness to proceed down this dangerous, expensive, and well-trodden path. Tom Donilon, the National Security Adviser openly frets about the difficulties of managing the Chinese relationship, difficulties that are certainly exacerbated if they include Japan openly goading the PRC to advance its own destabilizing regional agenda in the expectation of US backing.

Kurt Campbell, the proud pappy of the pivot, now cautiously redefines it as "a rebalancing", as if the game-changing injection of the US into the Association of Southeast Asian Nations' island disputes with China never happened, and the most important goal of the US Asian effort was no more than the sweet, sweet victory of slaking the thirst of freedom-loving (and, occasionally, Muslim-massacring) Burmese with legal, un-smuggled Coca Cola.

In recent weeks there have been valiant attempts to assert that the pivot as conceived by the United States was "not about China", in the words of Chairman of the Joint Chiefs of Staff, Martin Dempsey. [10]

And, in a way that the Obama administration never anticipated, this is true. The pivot to Asia isn't about China anymore. It's about Japan.

Notes:
1. China questions Okinawa ownership, Japan Times, May 8, 2013.
2. Japan marks first sovereignty recovery day, April 29, 2013.
3. China Should Not Hyperventilate Over Japanese Constitutional Revision, Forbes, May 5, 2013.
4. Japan Army Chief Visits Kolkata, Zeenews, May 7, 2013.
5. Science Minister Says Abe's Third Arrow Points to Medical, Energy Finds, Wall Street Journal, May 5, 1013.
6. Conservative tasks in Japan, Japan Times, April 23, 2013.
7. Japan strengthens ties with Sri Lanka as part of plan to rein in China, Asahi Shimbun, May 3, 2013.
8. Estimating the TPP's Expected Growth Effects, Research Institute of Commerce, Trade and Industry data.
9. Japan, US and the TPP: the view from China, East Asia Forum, May 5, 2013.
10. America's Pivot to Asia: A Report Card, The Diplomat, May 5, 2013.

Peter Lee writes on East and South Asian affairs and their intersection with US foreign policy.

http://www.atimes.com/atimes/Japan/JAP-02-100513.html

[astonas]

Re: BRIC-A-Brac: China Pivot or Spinning like a Top

US hoist by its own pivot petard
By Peter Lee

http://www.atimes.com/atimes/Japan/JAP-02-100513.html

Great find, thanks for posting, don!

US influence seems to be slipping everywhere: Europe, Asia, and the Middle East.

[don]

Re: BRIC-A-Brac: China Pivot or Spinning like a Top

Overextended for sure.

Hey, here's an idea. Why don't we remain a Great Power, with a superb defense, and stop trying to rule the world.

Goodbye FIRE, hello re-industrialization . . .

[c1ue]

Re: BRIC-A-Brac: China Pivot or Spinning like a Top

Another sign of Abe's "All In Vs. China" strategy: there have been substantive noises about resolving the Kurile islands controversy.

[don]

Re: BRIC-A-Brac: China Pivot or Spinning like a Top

It appears that nearly all countries can be destabilized with ethnicity wedge issues. Is the US immune?

[radon]

Re: BRIC-A-Brac: China Pivot or Spinning like a Top

Nationalism can fix that, we just need a common scapegoat. I was thinking evil white bankers.

[don]

Re: BRIC-A-Brac: China Pivot or Spinning like a Top

Russia's Plan For The BRICS To Dismantle The Dollar System

Sunday, May 12, 2013 at 3:38PM
Contributed by Valentin Mândrăşescu, Editor of Reality Check @ The Voice of Russia. Former commodity trader, economist, journalist

The status of the US dollar as the world reserve currency gives the US a number of advantages over other countries. The world’s most important commodities are priced and traded in dollars, even if most of these commodities are not produced in the US. The fact that the world’s financial system is based on the dollar allows the Federal Reserve to export inflation to other countries, while the Federal Government runs a huge deficit with impunity.

So far, only China has been active in challenging the dollar supremacy. The internationalization of the yuan is an official priority of Chinese leaders. Currency swap agreements with major trade partners like Brazil, France, or Australia are small but important steps in the Chinese strategy. Changing the world financial system is not an easy task and certainly a very challenging undertaking for China. Now, it seems that Beijing has found an ally in the Kremlin. And there appears to be a consensus between the BRICS countries: the urgent necessity to dismantle the dollar system.

A week before the recent BRICS summit in Durban, the Kremlin administration has silently produced a document which describes the Russian strategy in the context of BRICS cooperation. The document makes for a fascinating read for anyone brave enough to plow through the dense Russian legalese. The strategy has been designed in the “inner circle” of Vladimir Putin’s team, so it is safe to assume that it represents the official view on the BRICS future.

In Russia, politics are Byzantine; the fact that the Kremlin decided not to hide the document or leak it to a chosen few journalists, but publish it outright is a very strong signal, a very vocal angry signal directed at the US. A signal that the Western media chose to ignore.

In the recitals section of the document, the authors point out that “there is a common desire of the BRICS partners to reform the outdated global financial and economic framework that doesn’t take into account the growing economic weight of the emerging markets.” Moreover, the Russian strategists view the BRICS as a tool to reform the way the world is being governed. Then the document hammers home its message:

Russia assumes that, given enough political will of the leadership of the BRICS countries to advance their cooperation, this alliance can become one of the key elements of a new system for global governance, primarily in the economic and financial domains.

Move aside New World Order! The BRICS are coming to change the world.

The goals are clear. In the section titled “Strategic goals,” the first point on the BRICS’ agenda is the reform of the world financial system in order to make it “fairer, more stable, and more efficient.” In the later chapters, it is spelled clearly that this “reform” is actually a dismantling of the dollar system.

It is worth noting that the place of this issue in the list of the BRICS’ priorities speaks volumes about its importance. Judging by the order of priorities, depriving the dollar of its status as the world reserve currency is more important than “preventing breaches of sovereignty” (a.k.a. the “Syrian problem”) or “expanding economic cooperation.”

The language used in this document indicates that it has been written or strongly influenced by Sergei Glaziev, the president’s economy advisor, who is known for masterminding the economic aspects of the Eurasian Union between Russia, Belarus, and Kazakhstan. Glaziev has repeatedly accused Fed Chairman Ben Bernanke of starting “a currency war” against the emerging markets. He also believes that Bernanke’s policy will ultimately lead to a military confrontation: “the conservation logic of the current financial and political system leads to a further escalation of military and political tensions, including the start of a major war” (read more).

A whole chapter of the strategy document is dedicated to step-by-step instructions on dismantling the existing global financial system. The list of measures includes:

• Reformation of the world currency system in order to create a representative, stable and predictable system of world reserve currencies;
• Reduction of the risks of destabilization of currency and equity markets linked to massive cross-border flows of capital;
• Increasing the use of national currencies in the trade between BRICS countries;
• Increasing the level of cooperation between BRICS countries in order to promote their interest in the domain of world trade;
• Strengthening the BRICS Exchange Alliance;
• Creating independent rating agencies.

Since the Durban Summit, at least one of those measures has been implemented: RT reported that “China’s Dagong Global Credit Rating agency is to set up the joint venture with US-based Egan-Jones Ratings Co (EJR) and Russia's RusRating JSC to challenge the three major US ratings agencies.” As BRICS countries try to achieve the rest of their stated goals, it remains to be seen if the dollar system survives the joint onslaught of the biggest emerging economies.

http://www.testosteronepit.com/home/...ar-system.html

[don]

Re: BRIC-A-Brac: China Pivot or Spinning like a Top

Fox leads tiger into China's crosshairs
By Peter Lee

There is a delicious flavor of Western bewilderment about the never-ending parade of Japanese nationalist shenanigans. The most recent entry was Osaka Mayor Toru Hashimoto's endorsement of the World War II Japanese military brothel system, aka "comfort women":

In the circumstances in which bullets are flying like rain and wind, the soldiers are running around at the risk of losing their lives. If you want them to have a rest in such a situation, a comfort women system is necessary. Anyone can understand that. [1]

Hashimoto - who seems to have way too much of his mental space occupied by visions of sexually rampaging soldiers - made his remarks in the context of promoting the Okinawan sex-worker industry as a legal source of relief for the hard-working American military men based on the island.

Toru Hashimoto ... told reporters Monday that he visited with Marine Corps Air Station Futenma's commander last month and told him that service members should make more use of Japan's legalized sex industry.

"There are places where people can legally release their sexual energy in Japan," Hashimoto said during a video press conference Monday in Osaka. "Unless they make use of these facilities, it will be difficult to control the sexual energies of the wild Marines."

Hashimoto said that the commander responded with a bitter smile and told him that brothels are off-limits to US service members. [2]

Bitter smile, indeed.

Perhaps the US government took little comfort from Hashimoto conflating the sexual needs of the US military today with those of the Imperial Japanese Army.

For those who have been following the Okinawan issue - and China's rather malicious and successful highlighting of particularist sentiments among the Okinawan population as part of its campaign to undermine Japan's claim to eternal and uncontested sovereignty over the Senkakus - it was noteworthy that there were also Okinawan protests against Hashimoto's comfort-women remarks.

Since most comfort women on Okinawa during World War II were Korean, Okinawan objections are apparently more along the lines of resentment against the sexual impositions involved in contemporary Tokyo-imposed US basing rather than the historical revisionism on the comfort women issue that inflamed opinion in China and South Korea.

As China continues to push the Okinawan hot button with its questioning of Japanese sovereignty over the Ryukyu Island chain, expect more media focus on the most loaded question in Okinawa/Japanese history: the Battle of Okinawa in 1945.

Japanese nationalists have worked assiduously to shape the official narrative - down to the wording of memorial plaques - to depict Okinawa as the frontline of Japanese resistance. However, many Okinawans consider the battle - which resulted in the death of over 100,000 Okinawan civilians in the Japanese military's Gotterdammerung defense - as an atrocity in which Okinawa and Okinawans were sacrificed to buy time for the Japanese home islands. (In the event, fear that the bloody action on Okinawa would be replicated across the four "home islands" reportedly convinced US president Harry Truman to short-circuit the war by dropping atomic bombs on Nagasaki and Hiroshima.)

A vocal sector of Okinawan public opinion regards Japanese nationalist revisionism as an effort to deny Okinawan suffering and submerge it beneath an untrue narrative of Japanese heroism.

Asia-Japan Focus reported in 2012 on the fracas over a plaque commemorating the Japanese army headquarters on Okinawa (which, interestingly and tragically, was sited at Shuri Castle, the "pre-eminent symbol of the Ryukyu Kingdom" according to the translators):

A controversy has arisen over Okinawa governor Nakaima's deletion of the word suteishi (sacrificial stone) [this doesn't mean "sacrificial stone" in the exalted sense of a "consecrated altar"; it refers to a disposable position and losable game piece in the board game of go] from the draft that was prepared for the translation of the description for the explanation panel about the 32nd Army HQ Shelter. Hitherto, the word suteishi has been used as a key term that directly captures the essence of the Battle of Okinawa. This word also symbolises "postwar" Japan-Okinawa relations, in which Japan regained its sovereignty with the San Francisco Peace Treaty, while abandoning Okinawa to US military domination, and forcing it to bear the burden of the US bases, even after Japan regained administrative rights over Okinawa. [3]

There is nothing new about Japanese nationalism with a World War II denialist tinge.

Despite efforts to keep it buttoned up (members of the ruling Liberal Democratic Party distanced themselves from Hashimoto's remarks), nationalism keeps bubbling up, and its emergence into the Japanese political mainstream is an unpleasant surprise for American pundits. After all, "peaceful, progressive, and democratic Japan" is more than a useful cliche in the compare-and-contrast framing opposite "assertive, oppressive, and communist China".

A cooperative, helpful Japan is the linchpin of US efforts to orchestrate a soft containment of China based on US-friendly liberal norms and justified by the idea that the unruly Chinese dragon needs to be kept in its cage by an alliance of the US and Asian democracies.

Japan "going off the res" and behaving like a war-loving dingbat creates obvious problems for the optics of the "pivot to Asia".

Japanese nationalism also complicates the US narrative with its healthy dose of anti-Americanism (including a sub voce tendency to blame the US-imposed constitution, US-demanded yen appreciation, the US-inflicted global financial crisis, and US blind infatuation with the strategic and economic importance of China for Japan's long-term woes), and a remarkable and embarrassing hostility toward critical US ally South Korea as Japan's zero-sum rival for economic and diplomatic leadership among the Asian democracies.

The fact that a bona fide Asian democracy can act so "assertively" also calls into question the lazy liberal assumption that democratization is a panacea that automatically translates into tolerance, transnational amity, de-escalation of tensions, and regional stability.

A less obvious but, I expect, to US diplomatic strategists, more pressing problem is that nationalist ideals are serving as a justification for an independent-minded Japanese foreign policy that plays lip service to US objectives but actually exploits US backing in order to advance Japanese interests at the expense of US goals.

In the US, we call it "The tail wagging the dog".

In China (and Japan), the relevant proverb is "The fox pretending to the tiger's might". (In the Chinese proverb, the fox claims that people respect him more than the tiger. "Just walk behind me, and you'll see how people fear me." The gullible tiger follows the fox and is chagrined to see all the other animals fleeing, apparently, before the fox.)

My personal shorthand for the situation is "Japan as the Israel of East Asia".

I think this is a metaphor that troubles the US government as well. After all, one of the attractions of pivoting to Asia and away from the Middle East was that the United States would be leaving a region in which its freedom of movement was constrained at enormous financial, military, and diplomatic cost by Israel's ability to substitute its own security narrative (existential threat of Iran's nuclear weapons) for the US priority, at least for the Obama administration (normalizing relations with Iran and resolution of the Palestinian issue).

Instead, I have a feeling that Japan under nationalist rule will be more interested in encouraging polarization between pro-China and pro-US blocs in Asia - thereby providing Japan with a favored and decisive role - than it will be in behaving like the good, obedient ally assisting the United States as it manages its relationship with China, soon the world's largest economy, at the expense of the interests and anxieties of an increasingly marginalized Japan.

By this reading, the Senkaku crisis - which forces the United States to line up with Japan against China over some Taiwanese rocks the Obama administration cares nothing about - is like money in the bank for Japanese Prime Minister Shinzo Abe. Therefore I'm not expecting that crisis to go anywhere soon.

US anxieties about Japan are creeping into the news sections and editorial pages, albeit with continued allegiance to the old tropes of the "China rising" menace and the "loyal Japanese ally".

In a stern Gray Lady editorial that read like an exercise in US imperial nostalgia that does not translate well into a 21st century reality of increasingly assertive Asian nations, the NY Times acknowledged the inconvenience of provocative Japanese nationalism while presuming to lecture both sides on where their real interests lie:

The right-wing nationalists who took power in December may be equally unwilling to put Japan's past behind it, although the government of the new prime minister, Shinzo Abe, took a positive step on Tuesday when it said it would abide by official apologies that the country made two decades ago to victims of World War II. China and Japan have strong economic ties and are critical to regional stability. Both will lose if they stumble into war or otherwise cannot resolve this escalating dispute. [4]

And, via Sinocism, Ian Burama wrote in the same oblivious vein in Wall Street Journal:

Things, in short, are back to square one: Pax Americana containing China, with Japan as Washington's loyal vassal. This might seem a stable, even comfortable, position from the US point of view. In fact, it isn't. For a long time, the Chinese put up with the US being the policeman of East Asia, because the prospect of a more independent, fully rearmed, even nuclear Japan would be worse. But Japan's role as a kind of cat's paw of American dominance, with Japanese nationalists compensating for their subservience by indulging in bellicose talk, will be the source of ever greater tensions, which are bad for everyone, including the US. [5]

I think public-arena US pundits are a little bit behind the curve here. We're now drifting away from the comfy post-World War II narrative of "Japan is completely dependent on us" and "everybody wants to club together to contain the Chinese" to the brave new world of eroding US dominance, the emergence of China as an economic linchpin, and "US objectives are hostage to Japan's forward Asian policy".

China seems to sense an opportunity here. Global Times, the Chinese populist/conservative mouthpiece, unloaded on Abe in an editorial (not an op-ed, please note) whose true audience is probably the US government, rather than bewildered Western observers:

But set against the background of Japan's economic depression, Japan's national political ambitions which Abe represents are full of loss, resentment and urgency.

In the few months since taking office, Abe impressed Japanese public by his hatred of Japan's defeat in place of a normal hard-line diplomacy. He hates the result of World War II instead of hating those who started the war. He does not accept China's rise through peace and hard work and rails against the general trend of East Asia's development.

China cannot change Abe's value nor influence his strategic choice. China should lower its expectations toward the bilateral relationship.

As for Abe himself, we should have no expectation. We believe that there is no need for Chinese leaders to meet him during his term. That would not alleviate the bilateral relationship but will undermine our own image. China should maintain its current indifferent interactions with Japan and try to reduce chances of crisis.

The next chance for China to improve the bilateral relationship will come after Abe's term. Before this, China should show Japan its confidence through indifference. [6]

The message here, other than the Chinese government is righteously pissed off at Japan, is that the US pivot - with its hope of modulated pressure leading to more desirable Chinese behavior - is on life support. China, using the excuse as well as the reality of Japanese nationalism, is digging in for a period of confrontation, not conciliation or concession.

The key question is whether the PRC will be mollified by some self-serving olive-branch extension by the Abe government. I think not. I think the PRC is hunting for bigger game. Global Times is urging the PRC leadership to write off Japan for the duration of Abe's prime ministership.

It sees Japan's nationalist preoccupations as the chance to deepen the wedge between Japan and the United States, and push the US to a more "G2" (ie US + China) Asian regime.

If the US desires a good working relationship with China, it will have to do so at the expense of distancing itself from Japan and undermining the basic premise of the pivot - that the Asian democracies and the United States are not driven by vulgar and diverse national interests and instead, indivisibly and completely, share the noblest multilateral values and goals and interests in confronting China.

Notes:
1. Japan WWII 'comfort women' were 'necessary' - Hashimoto, BBC News, May 14, 2013.
2. Osaka mayor: 'Wild Marines' should consider using prostitutes, Stars and Stripes, May 14, 2013.
3. We Cannot Allow Governor Nakaima to Falsify the History of the Battle of Okinawa, Japan Focus, March, 2012.
4. China's Evolving 'Core Interests', New York Times, May 11, 2013.
5. The Sinocism China Newsletter, May 13, 2013.
6. Abe brings Sino-Japanese ties to abyss, Global Times, May 14, 2013.

http://www.atimes.com/atimes/Japan/JAP-01-170513.html

Peter Lee writes on East and South Asian affairs and their intersection with US foreign policy.

[astonas]

Re: BRIC-A-Brac: China Pivot or Spinning like a Top

Fox leads tiger into China's crosshairs

Great contribution, don! Thanks for sharing!

[GRG55]

Re: BRIC-A-Brac: China Pivot or Spinning like a Top

Yes, I referred to that:

"...I find the idea of some sort of durable BRICS association fanciful as it serves no function in developing logical bilateral trade arrangements between pairs of participants, and I've never been able to see what sort of multi-lateral arrangement (trade or otherwise) made any sense among these four (now 5) completely disparate nations..."

Likewise there is a logical pairing between South Africa and India. One needs more raw materials (albeit not on the same scale as China) and one needs to develop more resource exports if it intends to grow its economy. Geographic proximity (Indian Ocean region) would seem one supporting element. Both are members of the British Commonwealth, have a common working language at the government and commercial level, there are long established ties between those countries including a long established Indian business and professional community in South Africa. I don't see how an association with Brazil, China or Russia aids that in any way, in the same way as I don't see how BRICS is in any way useful in a China-Russia trade relationship.

But the inevitably falling apart Russia might prove very useful to one partner in the China-Russia trade relationship.

Oil slump leaves Russia even weaker than decaying Soviet Union

By Ambrose Evans-Pritchard
8:48PM BST 22 Oct 2014


It took two years for crumbling oil prices to bring the Soviet Union to its knees in the mid-1980s, and another two years of stagnation to break the Bolshevik empire altogether.

Russian ex-premier Yegor Gaidar famously dated the moment to September 1985, when Saudi Arabia stopped trying to defend the crude market, cranking up output instead. "The Soviet Union lost $20bn per year, money without which the country simply could not survive," he wrote.

The Soviet economy had run out of cash for food imports. Unwilling to impose war-time rationing, its leaders sold gold, down to the pre-1917 imperial bars in the vaults. They then had to beg for "political credits" from the West.

That made it unthinkable for Moscow to hold down eastern Europe's captive nations by force, and the Poles, Czechs and Hungarians knew it.

"The collapse of the USSR should serve as a lesson to those who construct policy based on the assumption that oil prices will remain perpetually high. A seemingly stable superpower disintegrated in only a few short years," he wrote...

...Vladimir Putin's Russia is a weaker animal in key respects, a remarkable indictment of his 15-year reign. He presides over a rentier economy, addicted to oil, gas and metals, a textbook case of the Dutch Disease.
The IMF says the real effective exchange rate (REER) rose 130pc from 2000 to 2013 during the commodity super-cycle, smothering everything else. Non-oil exports fell from 21pc to 8pc of GDP.

"Russia is already in a perfect storm," said Lubomir Mitov, Moscow chief for the Institute of International Finance. "Rich Russians are converting as many roubles as they can into foreign currencies and storing the money in vaults. There is chronic capital flight of 4pc to 5pc of GDP each year but this is no longer covered by the current account surplus, and now sanctions have caused foreign capital to turn negative, too."

"The financing gap has reached 3pc of GDP, and they have to repay $150bn in principal to foreign creditors over the next 12 months. It will be very dangerous if reserves fall below $330bn," he said.

"The benign outcome is a return to the stagnation of the Brezhnev era [Застой in Russian] in the early 1980s, without a financial collapse. The bad outcome could be a lot worse," he said...

...Whatever the Saudi motive, Russia is already reeling. The central bank governor Elvira Nabiulina told the Duma last week that plans are afoot to cope with a protracted slide in oil prices to $60. "We are working on a stress scenario, an emergency scenario so to speak," she said...

...Moody's said the central bank has burned through $60bn of foreign reserves since the end of last year propping up companies starved of dollar liquidity. The total has dropped to $396bn on its estimates (leaving aside the Reserve Fund) and is becoming a sovereign credit risk.

This time Russia is not facing Reaganesque rearmament, but it is facing nuclear-tipped sanctions, more destructive than many realise in a globalised banking system. It is not a stretch to say that American regulatory power has never been so far-reaching, or imperial. The result is that Russian banks, companies and state bodies are shut out of the global capital markets, unable to roll over $720bn of external debt...["Boris: What's the number of that BRICS Bank everyone was talking about a few months ago?"]

...Andrey Kuzyaev, head of Lukoil Overseas, said it costs $3.5m to drill a 1.5 km horizontal well-bore in the US, and $15m or even $20m to drill the same length in Russia. "We're lagging by 10 years. Our traditional reserves are being exhausted. This is the reality for our country," he said.

Lukoil warns that Russia could ultimately lose a quarter of its oil output if the sanctions drag for another two or three years...

...For details, try the World Economic Forum's index of competitiveness. Russia ranks 136 for road quality, 133 for property rights, 126 for the ability of firms to absorb technology, 124 for availability of the latest technology, 120 for the burden of government regulation, 119 for judicial independence, 113 for the quality of management schools, 107 for prevalence of HIV, 105 for product sophistication, 101 for life expectancy and 56 for quality of maths and science education. This is the profile of decline...