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.

Flashback

Just a couple of quick hits which brought me back to last summer. Woke up this morning to news that the Georgian army was rebelling after falling asleep to last Thursday's Daily Show with a clip of the Large Hadron Collider. The never failing race to see who will truly bring about the end of the world, war or science (both?). Seems as though Saakashvili will live to see another day in power as the BBC only has the Rebellion Over story posted. Yet it seems that his presidency is on the same start and stop schedule of the machine that could bring about the end of it all, at least if crazies like this are to be believed:

The Daily Show With Jon Stewart	M - Th 11p / 10c
Large Hadron Collider
thedailyshow.com
Daily Show Full Episodes Economic Crisis First 100 Days

The accelerator was powered up for a short time last fall, fired up on Sept. 9th, just after the war down in Georgia wound down, then burst a pipe 10 days later leaking liquid helium. The Russians bitch slapped the poor little Georgians, taking out most of Gori, a town I visited a few years back to see native son Stalin's statue, almost as quick as the circuit was completed by the beam of low-energy particles fired through the collider's 17-mile (27-kilometer) underground track. In case you missed it, this experiment is out to show the world as it existed fractions of moments after the big bang, with collisions at speeds 99.999999% that of light hopefully yielding the fabled Higgs boson, or God particle - or maybe a micro black hole or strangelet . Meanwhile, the Russians and the Americans along with NATO, continue their proxy war in poor Georgia as fingers are being pointed at the Russians for instigating the attempted coup.

Re-start for the collider was to be early spring, but instead continue on the parallel universe shared with Georgia. NATO exercises are planned around Tbilisi - or more importantly designed because Abhkazia and South Ossetia. The planning of these exercises is almost too blatant a display, but it is playing out as expected. The sound of Putvedev's protests seemed to foreshadow the sounds of the colliders start up hum once again. It seems like yet another play scripted for Medvedev to step from out of Putin's shadow, but I somehow doubt Putin is ready to take a farewell bow.

Of course this bow is exactly what Saakashvili was most likely orchestrating the avoidance of through this 'coup'. While the collider only needed to be warmed from -271 degrees C to allow workers in to do the repair work last year, Georgia's president faces far more internal heat from opposition in his country. Images of protesters camped out in cages blocking the main drag of the capital (yes walked it, it is the only main artery) have reinforced the image of a nation without faith in its leader. Funny how many claimed the Russians lost the propaganda war, the real fight last year, yet I've been swayed to their side by what I've read since. NATO exercises are due to start tomorrow, the collider won't be up and running until September (with Tom Hanks flipping the switch?!?) with real results about the beginning (and end) of the universe not coming in until a year later. Maybe we've got a while to survive if these pesky Ruskies and Georgians can get along, well, until 2012 that is!!!

War in Georgia

Well it's taken 3 months since I first wrote of the impending war, but it looks as though the gloves are finally off. Georgia has launched an attack on the breakaway South Ossetia region and as predicted, the Russians aren't going to sit idly by. The nearly century-long game of cat and mouse seems to have finally come to a head and will surely bring a high casualty total and should also make clear who calls the shots in Moscow, Putvedev. While the Russian security council meets in Moscow, with Medvedev supposedly in charge, Vladimir Putin who is in Beijing for the opening of the Olympics has already said that that "aggressive" action by Georgia would incur a "response" from Russia.

Before you laugh this off remember that there are Russian peacekeepers in the region and many Russian passport holders. It would be interesting to listen in if Dubya and Putin cross paths in Beijing today as the US is an unabashed Georgia supporter. The world's attention may be focused on China, but the Russians are watching, perhaps already retaliating. If this is true it would mark the first time Russian troops have taken action on foreign soil since their withdrawal from Afghanistan in 1989. Various reports have Russian tanks racing towards the besieged South Ossetian capital of Tskhinvali and the Georgians apparently observing a three-hour ceasefire to allow civilians to flee the city. Could be the makings of a full fledged conflict, more news as it comes...

Crouching Bear, Snarling Dragon

The first foreign visit by a newly elected president is a highly symbolic gesture. I remember a few years ago, well almost eight long and torturous years in fact, shortly after Dubya was "elected", the uproar caused in Canada by the fact that his first trip abroad was to see Vicente Fox in Mexico instead of the traditional visit to his northern neighbour. It was seen as a deliberate snub to the Canadian government and a move towards the south as the previous three presidents had begun a tradition of smiling to the north first. So what can be read into Russia's newly elected President's first foreign diplomatic trip? This weekend Putvedev is visiting China.

Sino-Russian relations are possibly at an all-time high. Both economies are booming and both are looking to flex their muscle. Apart they are strong, together they hope to bring down American hegemony, a fact the hasn't been lost by any of the American presidential candidates, even if the electorate has missed it. Maybe if we weren't so inured to Dubya's failings it might have been a bigger part of the news coverage, but George W truly scored a triple crown of incompetence over the past couple months of foreign trips. In addition to being rejected by King Faud in Saudi Arabia in his request for more oil and trying to compare Barack Obama to Nazi appeasers in Israel he was also rebuffed by outgoing Russian president Vladimir Putin in Sochi, on the Black Sea. So long Vladimir, remember me, I'm the guy who looked into your eyes and got a sense of your soul, let's be friends, let us point interceptor missiles your way. NO! Now, with Putvedev in China, along with his Chinese counterpart Hu Jintao, they wasted no time signing a joint statement, marking the first time they have come together in denouncing the plan.

With the rise in US power since the end of the Cold War and fear of Islamic extremism in Central Asia, it should have come as no surprise that both Russia and China's unease would lead to closer ties. The Sino-Russian Treaty of Good Neighborly Friendship and Cooperation (yes, it's real name! Maybe I'll call it the SRTGNF&C),in 2001 marked a real turning point. Since then bilateral trade volume has surged from $10.67 billion in 2000 to $48.17 billion last year, with Putvedev stating a target of $60 billion for this year. Of that $48 billion, almost $7 billion of it is oil flowing into China, which will exponentially grow once the East Siberia-Pacific Ocean oil pipeline and its branch to China are completed. Of course all of this growth has been driven by the transformation of the USSR to capitalist Russia and the opening of the Chinese market to capitalism, as the west and especially America probably would have wished for 20 years ago. At the same time as buying Chinese goods and Russian oil, America has also done everything in it's power to improve their future prospects, seemingly investing in their future. While borrowing money mainly from China daily to fund a war whose most pronounced effect globally has been increasing terrorism and the price of oil from $25 to $135 a barrel. Driving the value of the dollar down, thus increasing the cost of importing, mainly from China to buy more crap and finance the debt. Oh, yeah, about that war on terror...

Ostensibly on the pretext of training for joint responses to terrorist threats (and extremism and separatism, hello Taiwan), the Russian and Chinese armies have been staging manoeuvres together since their inaugural Peace Mission 2005, a result of the war on terror and the aforementioned SRTGNF&C. The week of August 18-25 of that year saw joint war games involving 10,000 troops, cruise missile capable Russian heavy bombers and units of the army, navy, air force, marine airborne and logistics units from both countries. Week 2 saw an amphibious landing in Eastern China, not far from Taiwan. In what has been evolving towards an "anti-NATO" group, the SCO, or Shanghai Cooperation Organization (China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan), played host to more "anti-terror drills" in 2007 on an even grander scale. In addition, through this group, both China and Russia are seeking to increase their influence, and reduce American influence in Central Asia both economically and militarily. Not only are they securing oil supplies, they've gone so far as to demand the US military out of it's member countries, with Uzbekistan complying. Yes, the names may be unpronounceable, but they are important staging posts for the war in Afghanistan. Remember Nixon in China? Neither do I, but I've read that it was a trip designed to counter fears of Soviet hegemony in Asia, an attempt to enlist China's support in America's containment strategy. The present American administration seems to have done everything possible to push them together.

The American plan to balance this new alliance in Central Asia has been the velvet revolution idea, working off the successes in the Ukraine of the orange revolution and the rose revolution of Georgia. However, with the possible exception of Kyrgyzstan, it's been a complete failure, most notably in Uzbekistan where yet another American staged coup attempt went awry in 2005 in Andijan. Two other wild cards, both of whom are observer states in the SCO, are Iran and India. With Iran obviously tilting to the east, India's role of possible kingmaker is undeniable. Donald Rumsfeld might have said of the 2005 Peace Mission "...I guess I don't find it notable" and continued, "I mean, countries do that. We are obviously observing what's takes place, but I didn't see anything in it that was threatening to Taiwan or anyone else." However, America has taken notice, witness the latest good cop-bad cop game played by McBush and Bush before and during Bush's last visit with Putin in Sochi. The reality is, for those of us who missed it the first time around, a new cold war is definitely forming with most of the same players playing different roles.

When a Bear Sleeps on Your Doorstep...

No, this isn't an image from a May Day parade during the Soviet era. This is 2008, where once again the Russian military used the annual event to flex it's military muscle for the world to see. Why now you might ask. Well, in case you missed it, Russia is once again a world power, and this time it's not just militarily, but financially as well. What can a former superpower that has endured more than a decade of humiliating loss of prestige do with new found oil wealth and a supply of leftover weaponry from a half century long cold war? Well, make their neighbours uncomfortable for starters.

Starting today, we'll see three consecutive days of fireworks out of the world's largest nation. First, Dmitri Medvedev (from here on, referred to as Putvedev) will be sworn in as president, Thursday, Putin will be appointed Prime Minister and then Friday will see World War II victory celebrations. The first two events have been expected by the world for months as part of the Putin Plan, but it's the celebrations and military parades on Friday that might actually capture the world's attention. We'll be treated to a display that may serve as a warning that the Russian bear has tired of the insults from the west. From support for Kosavar independence from Russian buddy Serbia, to plans to install a missile shield system in Poland and the Czech Republic to Ukrainian and Georgian aspirations to join NATO, picture Russia as the puny kid who gets pushed into the sand one too many times by the bully. Then one day he finally decides to work out so he can get even, the Russian bear's work out regimen is called high oil prices, prices which show no sign of slowing down (In fact Goldman Sachs just released a report predicting $150-$200 in the next year). The state's share of Russia's oil production has risen to 44 percent, from 6 percent in 2000. The gas industry is almost entirely in the hands of state-run OAO Gazprom, the world's largest producer.

The first warning signs are already clearly visible, although in a remote corner of the Caucasus that most people confuse with an American state, Georgia. Georgia has faced huge problems with the regions of Abkhazia and South Ossetia almost from the moment of independence from the USSR in 1991. Both regions are ethnically different from Georgians and have therefore been fighting for their own independence with, many say, Russian aid. North Ossetia is located within Russia's current borders and Abkhazia is home to a couple of former military bases. Now, following civil wars, the powers that be saw fit to place Russian peacekeepers in these areas and agreements were signed limiting troop numbers by both Tblisi and Moscow. It could be a coincidence but ever since the west embrace of an independent Kosovo, Russia has been increasingly making their presence felt in the region. April 16th, Russia declares it will seek closer economic ties with the region. After claiming to have shot down an unmanned Georgian drone on March 18, video surfaces of another drone shot down on April 20th, this time clearly showing that it was a Russian MiG fighter.

Finally, April 29th, Russian begins moving more troops into the Abkhazia region.

So, where will this all lead to? As likely as not, simply more posturing from both sides in an effort to gain support from the international community. On the other hand, it is important to know that most people in the Abkhazia region have been issued Russian passport and they use the Russian ruble, not the Georgian lari as currency. At the same time NATO and the EU are likely to continue to make their push east, making the slumbering bear more and more nervous. How the "new" administration under Putvedev reacts to being poked by a stick while sharpening its claws will be interesting to see.