|BRIC countries account for 21 per cent of world trade, while the EU countries account for 24 per cent [EPA]
We interrupt this programme to announce the end of two centuries of Western domination.
Well, not yet. At least not this Thursday, in Washington, when finance ministers and central bank governors of the BRICS group of emerging powers - Brazil, Russia, India, China and South Africa - get together on the margins of a G-20 meeting.
Brazilian finance minister Guido Mantega started the ball rolling last week, when he announced the BRICS would “talk about what to do to help the European Union get out of this situation” - ie the European-wide financial meltdown.
Hold your horses. Was this an emerging cavalry to the rescue? Could this be the end of the eurozone (eurotrash?) self-induced liquidity panic? Or was it just the BRICS graphically showing the writing on the global economic wall?
The basic (Brazilian) idea was for BRICS financial muscle to buy some extra European sovereign debt. But only “solid” bonds - from Germany or the UK - would qualify. The rationale is that BRICS would win by diversifying reserves - China at $3.2tn, Brazil at over $350bn, India at over $320bn - and making more money than investing in US Treasury bonds.
But the thing is selected BRICS have already started diversifying their reserves for quite a while – especially China.
India was not very enthusiastic about the Brazilian idea.
Nor was Russia; Moscow, via Arkady Dvorkovich, President Dmitry Medvedev’s chief economic adviser, stated flat out the Europeans must come up with a clear strategy for rescuing the PIGS (Portugal, Ireland and Italy, Greece, Spain) before Moscow starts buying more eurozone bonds.
No wonder Brazil finally decided to drop the idea.
We want a bite of your apple
The context of this G-20 meeting is quite juicy; on one side, we have the Europeans almost imploring the Americans to support the idea of a tax on financial transactions - already flat out rejected by Wall Street, via US Secretary of the Treasury Timothy Geithner.
On the other side, we have the Americans absolutely fed up with the eurozone financial circus that is directly threatening the global economy.
In steps “saviour” China. But how?
Ask not what Beijing could do to Europe; ask what Europe has done to Beijing.
Well, not much.
NATO’s bombing of Libya into democracy - or weaponised Islamists running Tripoli - translated into massive losses for China, including the lightning repatriation of over 36,000 Chinese workers, and the cancellation of dozens of contracts.
NATO’s war also happened to be fundamentally opposed by the BRICS. Libyans formerly known as rebels have already threatened to sideline Brazilian, Chinese and Russian companies when it comes to dividing the fresh Libyan loot.
What China is flirting with is the possibility of leading a BRICS response in the form of credit lines to the eurozone - instead of bond buying. Only China - with its stratospheric reserves - would be able to pull it off.
But what Beijing really wants can be gleaned from what top adviser to China’s central bank Li Daokui said at the recent World Economic Forum in Dalian: “The incremental parts of our foreign reserve holdings should be invested in physical assets.”
Translation; “We would like to buy stakes in Boeing, Intel, and Apple, and maybe we should invest in these types of companies in a proactive way.”
Daokui said there is an astonishing “$10tn” waiting to be invested in the US; over the collective dead body of the Republican party, one might add.
Daokui also said only after “the US Treasury market stabilises” would China be willing to “liquidate more of our holdings of Treasuries.”
The operational word here is “liquidate” - not “diversify”.
That is, Beijing really wants to get rid of all those US dollars. Meanwhile, it will keep buying any available foreign assets in sight - as well as, inevitably, US dollars.
So Europeans should not get too excited; Beijing is as fond of euro debt as it is of dollar debt.
The IMF secret
The European Union does not need a bail out. It is already drowning in a tsunami of euros. What it needs is political will.
The only realistic solution for the European crisis would be a move towards a federal Europe (think of the United States of Europe).
That would imply that the accumulated debt of all these countries - Portugal, Italy, Ireland, Greece, Spain - would be Europe’s debt (and also imply, on a positive register, no more speculation). The economy would be centralised, managed on a European-wide scale.
There’s absolutely no evidence European-wide citizens are ready to accept such a project. Thus, the crisis is never-ending.
The BRICS’s ultimate fear is that this perpetual eurozone wasteland, plus American stagnation, will lead to a global contraction wreaking havoc all across Asia, South America and Africa.
Public opinion in the developing world has long memories. Many would dream that as much as the IMF “helped” the global South by applying its dreaded “structural adjustments” - deregulating everything in sight and transferring more wealth to the already wealthy - the BRICS might now impose their own rules to “save” Europe.
That would mean, in practice, permanent seats at the UN Security Council for the “B” and “I” in BRICS (“R” and “C” already have then). Brazil would demand real free trade in agriculture. And China would demand real freedom of investment.
But everyone knows that won’t happen.
"China does not hand out free lunches"
- Financial Times
Still the facts on the ground force China to support the eurozone one way or another. It’s natural for Beijing to buy at least some European debt - thus lifting the euro and accumulating political capital for itself.
But as the Financial Times correctly evaluated, “China does not hand out free lunches”. As much as Moscow and Brasilia, Beijing is urging the Europeans to get their act together.
Even mired in crisis Western Europe, as a whole, is still the number one economy in the world; according to The Economist, a little less than 24 per cent of the global total, compared to the BRICS at 21 per cent. Yet the Europeans hold 32 per cent of the votes at the IMF, while the BRICS control only 11 per cent. That leads us to what the BRICS as a whole are really after.
The BRICS want to force a new correlation of forces at the IMF. To this end, the strategy is to softly undermine the power of the US dollar a little further, and to defy Europe a little more forcefully; but without betting on the US dollar, or the euro, or both, crashing.
This strategy will eventually lead to the BRICS becoming more integrated with each other than being dependent on the West. Call it the road map for the definitive end of two centuries of Atlanticist domination.
Pepe Escobar is the roving correspondent for Asia Times. His latest book is named Obama Does Globalistan (Nimble Books, 2009).
The views expressed in this article are the author's own and do not necessarily reflect Al Jazeera's editorial policy.