BRICS Against Washington Consensus

by Pepe Escobar | The headline news is that this Tuesday in Fortaleza, northeast Brazil,
the BRICS group of emerging powers (Brazil, Russia, India, China, South
Africa) fights the (Neoliberal) World (Dis)Order via a new development
bank and a reserve fund set up to offset financial crises.

The devil, of course, is in the details of how they’ll do it.

It’s been a long and winding road since Yekaterinburg in 2009, at their
first summit, up to the BRICS’s long-awaited counterpunch against the
Bretton Woods consensus – the IMF and the World Bank – as well as the
Japan-dominated (but largely responding to US priorities) Asian
Development Bank (ADB).

The BRICS Development Bank – with an initial US$50 billion in capital –
will be not only BRICS-oriented, but invest in infrastructure projects
and sustainable development on a global scale. The model is the Brazilian BNDES, which supports Brazilian
companies investing across Latin America. In a few years, it will reach a
financing capacity of up to $350 billion. With extra funding especially
from Beijing and Moscow, the new institution could leave the World Bank
in the dust. Compare access to real capital savings to US government’s
printed green paper with no collateral. 

And then there’s the agreement establishing a $100 billion pool of
reserve currencies – the Contingent Reserve Arrangement (CRA),
described by Russian Finance Minister Anton Siluanov as “a kind of
mini-IMF”. That’s a non-Washington consensus mechanism to counterpunch
capital flight. For the pool, China will contribute with $41 billion,
Brazil, India and Russia with $18 billion each, and South Africa with $5

The development bank should be headquartered in Shanghai – although
Mumbai has forcefully tried to make its case (for an Indian take on the
BRICS strategy, see here )

Way beyond economy and finance, this is essentially about geopolitics –
as in emerging powers offering an alternative to the failed Washington
consensus. Or, as consensus apologists say, the BRICS may be able to
“alleviate challenges” they face from the “international financial
system”. The strategy also happens to be one of the key nodes of the
progressively solidified China-Russia alliance, recently featured via
the gas “deal of the century” and at the St. Petersburg economic forum.

Let’s play geopolitical ball
Just as Brazil managed, against plenty of odds, to stage an
unforgettable World Cup – the melting of the national team
notwithstanding – Vladimir Putin and Xi Xinping now come to the
neighborhood to play top class geopolitical ball.

The Kremlin views the bilateral relation with Brasilia as highly
strategic. Putin not only watched the World Cup final in Rio; apart from
Brazilian President Dilma Rousseff, he also met German chancellor
Angela Merkel (they discussed Ukraine in detail). Yet arguably the key
member of Putin’s traveling party is Elvira Nabiulin, president of
Russia’s Central Bank; she is pressing in South America the concept that
all negotiations with the BRICS should bypass the US dollar.

Putin’s extremely powerful, symbolic meeting with Fidel Castro in
Havana, as well as writing off $36 billion in Cuban debt could not have
had a more meaningful impact all across Latin America. Compare it with
the perennial embargo imposed by a vengeful Empire of Chaos.

In South America, Putin is meeting not only with Uruguay’s President
Pepe Mujica – discussing, among other items, the construction of a
deepwater port – but also with Venezuela’s Nicolas Maduro and Bolivia’s
Evo Morales.

Xi Jinping is also on tour, visiting, apart from Brazil, Argentina, Cuba
and Venezuela. What Beijing is saying (and doing) complements Moscow;
Latin America is viewed as highly strategic. That should translate
into more Chinese investment and increased South-South integration.

This Russia-China commercial/diplomatic offensive fits the concerted
push towards a multipolar world – side by side with political/economic
South American leaders. Argentina is a sterling example. While Buenos
Aires, already mired in recession, fights American vulture funds – the
epitome of financial speculation – in New York courthouses, Putin and Xi
come offering investment in everything from railways to the energy

Russia’s energy industry of course needs investment and technology from
private Western multinationals, just as Made in China developed out of
Western investment profiting from a cheap workforce. What the BRICS are
trying to present to the Global South now is a choice; on one side,
financial speculation, vulture funds and the hegemony of the Masters of
the Universe; on the other side, productive capitalism – an alternative
strategy of capitalist development compared to the Triad (US, EU,

Still, it will be a long way for the BRICS to project a productive model
independent of the casino capitalism speculation “model”, by the way
still recovering from the massive 2007/2008 crisis (the financial bubble
has not burst for good.)

One might view the BRICS’s strategy as a sort of running, constructive
critique of capitalism; how to purge the system from perennially
financing the US fiscal deficit as well as a global militarization
syndrome – related to the Orwellian/Panopticon complex – subordinated
to Washington. As Argentine economist Julio Gambina put it, the key
question is not being emergent, but independent.

In this piece,
La Stampa’s Claudio Gallo introduces what could be the defining issue
of the times: how neoliberalism – ruling directly or indirectly most of
the world – is producing a disastrous anthropological mutation that is
plunging us all into global totalitarianism (while everyone swears by
their “freedoms”).

It’s always instructive to come back to Argentina. Argentina is
imprisoned by a chronic foreign debt crisis essentially unleashed by the
IMF over 40 years ago – and now perpetuated by vulture funds. The
BRICS bank and the reserve pool as an alternative to the IMF and World
Bank offer the possibility for dozens of other nations to escape the
Argentine plight. Not to mention the possibility that other emerging
nations such as Indonesia, Malaysia, Iran and Turkey may soon contribute
to both institutions.

No wonder the hegemonic Masters of the Universe gang is uneasy in their leather chairs. This Financial Times piece neatly summarizes the view from the City of London – a notorious casino capitalism paradise.

These are heady days in South America in more ways than one.
Atlanticist hegemony will remain part of the picture, of course, but
it’s the BRICS’s strategy that is pointing the way further on down the
road. And still the multipolar wheel keeps rolling along.


Pepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007), Red Zone Blues: a snapshot of Baghdad during the surge (Nimble Books, 2007), and Obama does Globalistan (Nimble Books, 2009).

He may be reached at

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