BRIC-A-BRAC

Sometimes it's tough to take the media filter glasses off. We live in a world where all the important information is brought to us thanks to these internets, pity the fools that have to rely on the idiot box. So how is it that the most obvious of patterns are impossible to discern? The collage painted by the press should allow us to see the world how it really is, yet we miss the most obvious. Self-fulfilling prophecies such as last week's BRIC meeting spring to mind as the media simply brushed over the fact that the 4 nations that make up 43% of the world's population met last week to try to chart a mutually beneficial path through the future. The G8 will meet next month and there will be wall to wall reporting yet a group formed by the prediction of a Wall Street analyst gets swept under the carpet.

Reuters declares: Much-Trumpeted BRIC Summit Ends Quietly. "BRIC" is an acronym for Brazil, Russia, India and China, the world's four major developing countries. Jim O'Neill, global head of economic research at Goldman Sachs, first started the idea of BRIC in 2001. While it's obvious today thanks to the economic growth of these countries, which averaged 10.7% from 2006-8, it was only the idle talk of an analyst predicting the economic world of 2050, when the four countries would together pass the G7 in size. Since then we've watched the US economy lead an implosion of western economic power as these four nations have made strategic manoeuvers to position themselves to be exactly what we knew they'd be, the masters of our world. With Brazil and Russia pumping out the raw resources, China and India will consume the world.

The June 16 summit in the Russian Urals city of Yekaterinburg marked a huge step toward BRIC cooperation as a group. The fact that they have now met formally is story enough, but at the same time, the Russian city hosted another meeting, this a more formal grouping, the SCO, Shanghai Cooperation Organization (China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan, with Iran, India, Mongolia and Pakistan as observer states). Even more interestingly, both India and Iran took part at the most senior level as the Indian Prime Minister Manmohan Singh and Iranian president Mahmoud Ahmadinejad attended. Yes, just days after the election in Iran, Mahmoud was there, yet we barely heard a whisper of the meetings as his nation's spiral towards revolution captured our attention along with David Letterman's 14-year old rape inciting. Background buzz as we stumble towards a real new world order.

While BRIC countries account for 15 percent of the $60.7 trillion global economy, China is the world's largest holder of U.S. Treasuries with $767.9 billion while Russia holds around $400 billion in their foreign reserves. More importantly, Russian President Dmitry Medvedev has made proposals on giving a greater role to the International Monetary Fund's Special Drawing Rights that echo ideas from Chinese central bank chief Zhou Xiaochuan. China, Russia and Brazil have pledged to help capitalize the IMF as they seek more influence at the fund. Together, the BRIC have a 15-percent share of the world economy and a 42-percent share of global currency reserves. Last week Brazil and Russia joined China in announcing they would shift some $70 billion (50 billion euros) of reserves into multicurrency bonds issued by the International Monetary Fund. Tiring of the inequity of the system, Brazil, for example is the world's 10th largest economy, but has just 1.38 percent of the IMF board's votes, compared to 2.09 percent for Belgium, an economy one-third the size, they are starting to make noise about changing it.

Navel gazing is far more interesting as it seems more important whether or not Obama, and America, are doing enough, or meddling too much in the Iran election quagmire. The future is just the Heisenberg uncertainty principle at work, que sera, sera, plus there's the Jon and some chick thing to worry about, or Letterman. America has put the BRIC on the path to controlling the world, why would they need to worry about where the road goes? Of course looking forward to the year 2050 involves a myriad of uncertainties, it seems forecasts for when the combined BRIC GDP will pass the G7's are being revised with every new report, from 2050 to 2045 to 2032, sure to change again due to the current financial crisis. Of course they'll be potholes on the road to cooperation, not the least of which will be inter-BRIC conflict, particularly between China and Russia as they vie for dominance in Asia. China announced plans at the SCO summit to give $10 billion of loans to Central Asia, upstaging traditional power Russia whose promises of aid have not been fully delivered amid the financial crisis. But India's economy is projected to be 90% of the US while China will have grown to 130% by the year 2050. Not only will the BRIC dwarf the G7 in global importance, but the N11 (harder to make an acronym for an 11 nation group: Bangladesh, Egypt, Indonesia, Iran, Korea, Mexico, Nigeria, Pakistan, the Philippines, Turkey and Vietnam. Maybe BEIIKMNPPTV) will rival the economic size of the present elite 7 nations.

Notice how all these numbers assume unlimited resources to achieve growth. There will be a far more interesting chess game played with a more level economic table. China locks up resources in African nations without any of those human rights strings attached. Russia is circling the arctic, winning the new polar race. Markets are necessary too, and the US is sure to remain an important one, making killing the greenback a double edged sword, especially for China. Comments by Russian President Dmitry Medvedev questioning the dollar's role pushed down the U.S. currency by 0.9 percent against other key units, thereby hurting the value of China's investments. Baby steps towards independence from the west and the dollar will be the key word, but they'll add up quicker than you think.

The Great White North

In case you missed it, there's a Canadian election around the corner. I know, it's easy to miss with the one happening down south, but Stephen Harper is doing his best to be seen, in the Great White North. The Canadian Prime Minister is in the middle of a trip to make sure the world (read Russia) hears about the new extension of Canada's jurisdiction over icy Arctic waters to 200 nautical miles off its coast. Territorial waters are usually defined by the 1982 United Nations Convention on Law of the Sea as a belt of coastal waters extending at MOST twelve nautical miles from the baseline (usually the mean low-water mark) of a coastal state. At the same time as battling the Ruskies to the north he's fighting a legal battle against charges he's an authoritarian ruler at home.

The election call may come September 5th. Also known as the writ period, once the election is called it can take place anywhere from 36 days to infinity later. That's right, there's no maximum limit to the number of days from the call to the handing in of the writs (vote results), by the electoral officers in each district (currently 301 across Canada). The Prime Minister can ask the Governor General, the Queen's rep, for an election anytime he chooses. Just as Harper didn't go to the opening ceremony for the Olympics, the GG isn't going to be in Beijing for the para-lympics opener on September 6th, making him available for a visit. We don't have this whole complicated set date thing like in the US. Harper had been pushing a bill to fix the election for October of '09, but with the world's economy going in the tank, getting out sooner is better. This is a hidden danger for the Democrats and Liberals if elected, they could get holding the bill when the debts need to be paid.

Harper's Arctic adventure is all about Russia. The Russian's were down there (up there, but underwater) with a sub awhile back and have been busy re-asserting their geo-political power elsewhere in the world. Part of that aforementioned UN Convention on the Sea gives Canada, Russia, the US, Denmark, and Norway ten years to submit their map of the Arctic sea bed after ratifying. The economic rights of countries on the Arctic Ocean extend 320 kilometers from their shores. They can base claims on the reach of their continental shelf, creating the potential for overlapping stakes. The Canadians ratified in 2003 and are currently cooperating with the Danes in mapping, though we've disagreed about much of the Arctic in the past. Their technique? Setting explosives off Elsemere Island to seismically map the ground under the Lincoln Sea region of the Arctic Ocean. While the Americans haven't ratified the treaty yet (surprise!) they've been busy mapping the Chukchi Cap and elsewhere. Only a year ago the US was most concerned with the Canadians' inability to do the work, not about the Russians even as they planted that flag.

In order to change that perception, Harper's government has been trying to convey a new, tougher image. Since coming into office, Harper has visited the north seven times. This time while trying to talk about environmental concern, he said "Whether it is the thawing of the Northwest Passage or the suspected resource riches under the Arctic seabed, more and more countries are taking an interest in the waterways of the Canadian Arctic." Of late, Canada has: bought eight arctic patrol ships, decided to fast-track native land claims, announced a series of scientific and infrastructure projects such as building a scientific research base in Churchill and upgrading it's rail line and port, announced plans to develop a new deep water port at Nanisivik, on Baffin Island and a northern army training base at Resolute, and most recently launched a search for a lost ship?!

The tired sounding irony is that the rush for perhaps 25% of the Earth's resources is being precipitated by the melting of the north, and the opening of the Northwest Passage that sailing ships sought 500 years ago, so we can burn more oil to finish the job quicker. Earlier this year in May, the leaders of the five competing nations met on Greenland to discuss the looming problem of who gets what. There are many issues, such as the application Russia submitted to the UN for the right to own the 1.2 million square kilometres along the Lomonosov underwater mountain chain the same one which Denmark thinks is a continuation of Denmark, while Iceland whose not even part of the group, also claims it. The US Geological Service (USGS) thinks Greenland may have the largest crude and natural gas reserves in the Arctic region. Crude reserves in the north-eastern part of the island exceed 30 billion barrels. Yet, after the conference the countries said they did not see a need in elaborating the new international regime to administer the Arctic Ocean and the Russian representative Sergei Lavrov, was even more specific in his statements: “We do not share uneasy forecasts pertaining to the future clash of interests of Arctic and even non-Arctic states under global warming conditions, which lighten the access to natural resources and transport routes."

Even during the Georgian conflict Pravda was declaring "Arctic region likely to become the center of World War III". Sounds even more important that an election, Canadian at least. The image of a strong leader claiming and exerting strength buys votes in the sticks. Oh yeah, while this is all going on, Harper is fighting a legal battle over a Liberal expert claim that he is an authoritarian ruler. It's all part of a defamation suit against the party in which he is hoping to claim $3.5 million (Canadian I assume). The two North American claimants don't have a common front, they have disputing claims. One voice best be found as events in the North are already being compared to Georgia, and once again, the Russians seem to have the edge so far.

Guide to numbers for last picture:
1) North Pole: Russia leaves its flag on the seabed, 4,000m (13,100ft) beneath the surface, as part of its claims for oil and gas reserves
2) Lomonosov Ridge: Russia argues that this underwater feature is an extension of its continental territory and is looking for evidence
3) 200-nautical mile (370km) line: Shows how far countries' agreed economic area extends beyond their coastline. Often set from outlying islands
4) Russian-claimed territory: The bid to claim a vast area is being closely watched by other countries. Some could follow suit