Committee for the Abolition of Illegitimate Debt

In late January, as I listened to activists and allied academics at New Delhi’s Jawaharlal Nehru University (JNU) and Mumbai’s Tata Institute for Social Sciences (TISS), the magnitude of the responsibility faced by the BRICS BRICS The term BRICS (an acronym for Brazil, Russia, India, China and South Africa) was first used in 2001 by Jim O’Neill, then an economist at Goldman Sachs. The strong economic growth of these countries, combined with their important geopolitical position (these 5 countries bring together almost half the world’s population on 4 continents and almost a quarter of the world’s GDP) make the BRICS major players in international economic and financial activities. ’ leadership suddenly became clearer to me. The Brazil-Russia-India-China-South Africa network’s incorporation into global economic governance is looking tattered after hollow victories last month.

First there was the rebooting of the long-stalled World Trade Organisation WTO
World Trade Organisation The WTO, founded on 1^st January 1995, replaced the General Agreement on Trade and Tariffs (GATT). The main innovation is that the WTO enjoys the status of an international organization. Its role is to ensure that no member States adopt any kind of protectionism whatsoever, in order to accelerate the liberalization global trading and to facilitate the strategies of the multinationals. It has an international court (the Dispute Settlement Body) which judges any alleged violations of its founding text drawn up in Marrakesh.

(WTO) in Nairobi, and then the long-standing International Monetary Fund IMF
International Monetary Fund Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

http://imf.org (IMF) “voice and participation” dispute over voting shares.

In Nairobi, the key player arranging the BRICS’ co-optation into the pro-Western trade deal was a Brazilian, Roberto Azevêdo, the institution’s director-general. Indian peasants needing rudimentary state support are probably the main victims, as this will now be phased out, notwithstanding hundreds of thousands of farmer suicides since the early 2000s.

But BRICS neoliberals cannot chortle about the WTO, because as Financial Times columnist Gillian Tett recently admitted, “the patterns of modern trade and global growth are not behaving in 2016 as western and emerging market financiers might have expected, or as they did during earlier booms.” The main measure of trade vitality, the Baltic Dry Index, is now more than 90% lower than its 2010 peak.

Global finance is even more chaotic what with corporate securities crashing from eastern China west to New York and Chicago. The lack of faith in Beijing’s management of stock markets and of its vast debt load is palpable, a reversal from the 2008-13 period of Western over-confidence in Beijing’s authoritarian capitalism.

Still, huge financial corrections now underway won’t restore healthiness to a world economy suffering vast over-production. According to a recent Goldman Sachs report, the energy, real estate and commodity sectors will receive between a third to a quarter less investment annually through 2017 than in 2014. The only sectors for which the bank projects growing capital investment are software, computer hardware and semi-conductors.

Without substantial real capital accumulation, more financial bailouts are likely in 2016, perhaps including a fourth money-printing “Quantitative Easing” spree in Washington. But as I feared, in late December with hardly any publicity, Republican Party members of the US Congress finally (five years late) agreed with President Barack Obama that China now can pay higher IMF dues and claim a 37% larger stake in the world’s most neoliberal economic institution. In addition, Brazil’s vote grows +23%, India +11%, and Russia +8%.

But the catch is this: thread-bare South Africa loses 21% and six other African states drop more than 25% of their IMF voting power as a result of the vote rejigging, including Nigeria (41%).

IMF Managing Director Christine Lagarde will also this year seek re-election to an office only ever held by white Europeans (just as the World Bank World Bank
WB The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

presidency has been reserved for US citizens). She continues to face persistent corruption charges in the French courts based on the crony-capitalist generosity she exhibited towards a former Adidas sportswear owner who was also a major French Conservative Party donor when she served as Finance Minister in Paris before 2011.

Hope that rebellious Russians might delegitimise the IMF, instead of propping it up with new funds and support, vanished when Vladimir Putin bragged at his press conference last month, “Despite all limitations, we complied with all our [loan repayment] commitments to our partners, including international credit institutions. We pay everything due on time and in full.” Two weeks later, he began vicious budget cuts affecting Russia’s poorest people.

So perhaps it will be just in the nick of time that BRICS leaders meet in Delhi to shore each other up at some point in the second half of 2016 (the date is yet to be announced). Dilma Rousseff still faces a corruption-related impeachment threat; her chairing of the rancid state oil company Petrobas was negligent at best. Probably she will just have celebrated the Olympic Games in Rio, though the FIFA World Cup of soccer in 2014 did her no good.

And like Dilma, Jacob Zuma will, quite likely, sheepishly carry a fresh Moody’s ‘junk-bond Bond A bond is a stake in a debt issued by a company or governmental body. The holder of the bond, the creditor, is entitled to interest and reimbursement of the principal. If the company is listed, the holder can also sell the bond on a stock-exchange. ’ credit rating status to Delhi, along with growing rifts in his party following further shrinkage of the post-1994 majority what with forthcoming municipal elections across South Africa.

Indeed, Brazil, Russia and South Africa will again have below-zero economic growth per person this year, as Putin gets busier distracting his citizens from austerity using Syrian and Ukranian skirmishes. Xi Jinping’s economic problems will continue to multiply, as un-repayable bank loans cascade and “hard landing” becomes the Chinese economy’s description most commonly invoked.

Prime Minister Narendra Modi’s attempts to normalise rampant proto-fascistic tendencies in his ruling BJP party, while hosting BRCS allies and posturing about alternatives to Western institutions, will be cherished by his religious-nationalist support base. Typical is the president of the BRICS New Development Bank, K.V. Kamath, whose reign at the Indian state development bank was a model for commercialisation in contrast to its earlier industrialisation mandate.

I have not seen a better recitation of the damage done by Modi’s “Hindu supremacism, economic neoliberalism and social conservatism” than Nitasha Kaul’s recent catalogue.

Though it is the only BRICS economy deemed healthy by financial markets, so many aspects of life in India are deteriorating, and this was obvious at even the two elite campuses I visited, where political debates raged. One overarching problem is Modi’s withdrawal of nominal subsidies given to help pay for studies and living expenses (a problem now also re-motivating vigorous South African student protest once again),

Another that immediately hit me as I disembarked in Delhi was durable caste discrimination. The catalyst was the suicide of University of Hyderabad PhD candidate and student activist Rohith Vemula (age 26) that morning, on a campus that suffered repeated much abuse of the Dalit “untouchables” and other castes for whom 12% of seats are reserved. Within hours, impressive demonstrations and class boycotts were called at JNU, TISS and many other campuses, with pressure growing on Hyderabad academic leaders to stand down.

The solidarity needed with Dalits and other oppressed castes, with these students and so many other Indians has a reverse mirror image in at least one recent friction, over Zuma’s firing of a neoliberal finance minister (Nhlanhla Nene) and replacement with an inexperienced politician regarded as a stooge in early December.

After investigating, Business Day publisher Peter Bruce suggested last month that Zuma’s initial move was mostly repelled by an awesome economic force, one usually credited with ‘non-interference’ and non-conditionality: “I have reliably learnt that the Chinese were quick to make their displeasure known to Zuma. For one, their investment in Standard Bank took a big hit. Second, they’ve invested way too much political effort in SA to have an amateur mess it up. Their intervention was critical.”

Still, global financial fragility should not distract us from the underlying forces behind the current capitalist crisis, in the tendency to over-accumulate and generate gluts. The Western elite’s hesitancy in fully co-opting ‘sub-imperialist’ BRICS elites, who are trying so hard to make the world system work for their own corporates, reflects how little room there is for manoeuver.

India’s progressive movements will also react to BRICS: probably with another counter-summit and protest, as happened in Durban in 2013 and Fortaleza in 2014. (A farcical pro-Putin ‘Civil BRICS’ was held in Moscow last year.) Though ‘anti-nationalist’ slurs will be hurled at them, activists can grab the opportunity to raise the stakes, at a time there is panic evident in BRICS and Western capitals.