Finance, power, integration: The SCO welcomes a new ‘Global Globe’

Pepe Escobar, The Cradle, July 6, 2023 —

Discussions at the recent SCO Summit in New Delhi now point to the inevitable: The merging of new multipolar organizations and their collective reorganization of global finance.

The 23rd summit of the heads of state of the Shanghai Cooperation Organization (SCO), held virtually in New Delhi, represented History in the making: three BRICS (Russia, India, China), plus Pakistan and four Central Asian “stans” (Kazakhstan, Kyrgyzstan, Uzbekistan, and Tajikistan), finally and formally, welcomed the Islamic Republic of Iran as a permanent member.

And next year will be Belarus’ turn, as confirmed by India’s First Deputy Foreign Minister Vinay Kvatra. Belarus and Mongolia took part in the 2023 summit as observers, and fiercely independent Turkmenistan, as a guest.

After years of US “maximum pressure,” Tehran may now finally get rid of the sanctions dementia and solidify its leading role in the ongoing process of Eurasia integration.

Arguably, the star of the show in New Delhi was Belarusian President Alexander Lukashenko, who has led his country since 1994.

Old Man Luka, unbeatable in the headline-stealing department, especially after his mediator role in the Prighozin saga, may have coined the definitive slogan of multipolarity.  Forget the western-termed “golden billion” which in fact barely reaches 100 million; embrace now the “Global Globe” – with a firm focus on the Global South.

As the clincher, Lukashenko proposed total integration of the SCO and BRICS – which in their upcoming summit in South Africa will be heading the BRICS+ way. And it goes without saying, this integration also applies to the Eurasia Economic Union (EAEU).

The next step for the “Global Globe” – what the collective west dismissively qualifies as “the rest” – is to work on the complex coordination of several development banks and then the process to issue bonds linked to a new trading currency.

The main ideas and the basic template already exist. The new bonds will be a real safe heaven compared to the US dollar and US Treasuries, and will imply accelerated de-dollarization. Capital used to purchase those bonds should be used to finance trade and sustainable development, in what will be a certified, Chinese-style “win-win.”

A converging geoeconomic focus

The SCO declaration made it clear that the expanding multilateral body is “not directed against other states and international organizations.” On the contrary, it is “open to broad cooperation with them in accordance with the purposes and principles of the UN Charter, the SCO Charter and international law, based on consideration of mutual interests.”

The heart of the matter is of course the drive towards a fair multipolar world order – the polar opposite of the Hegemon-imposed “rules-based international order.” And the three key nodes are mutual security; trade in local currencies, and eventually, de-dollarization.

It’s quite enlightening to outline the converging focus, expressed by most leaders, during the New Delhi summit.

India’s Prime Minister Modi stated in his keynote address that the SCO will be as important as the UN. Translation: a toothless UN controlled by the Hegemon may end up being sidelined by a real “Global Globe” organization.

In parallel to Modi praising the key role of Iran in the development of the International North South Transportation Corridor (INSTC), Iranian President Ebrahim Raisi firmly supported SCO trade in national currencies to decisively break the US dollar’s hegemony.

Chinese President Xi Jinping, for his part, was adamant: China is all in favor to sideline the US dollar, stand firm against all forms of color revolutions, and fight against unilateral economic sanctions.

Russian President Vladimir Putin once again stressed how “external forces have put Russia’s security at threat by unleashing hybrid war against Russia and Russians in Ukraine.”

Pragmatically, Putin expects trade within the SCO, using national currencies, to grow – 80 percent of Russia’s trade is now in rubles and yuan – plus a renewed cooperation drive in banking, digitalization, high-tech, and agriculture.

Kyrgyz President Sadyr Japarov also stressed mutual settlements in national currencies, plus a crucial move: the setting up of a SCO development bank and development fund, quite similar to the BRICS’s New Development Bank (NDB).

President Kassym-Jomart Tokayev of Kazakhstan, which will exercise the SCO presidency in 2024, also supported a common investment fund, plus the configuration of a network of partners of major strategic ports connected to China’s BRI as well as the Astana-based Trans-Caspian International Transport Route, linking Southeast Asia, China, Kazakhstan, the Caspian Sea, Azerbaijan, Georgia, and Europe.

Of course all SCO members agreed that no Eurasia integration is possible without stabilizing Afghanistan – in fact linking Kabul geoeconomically with both BRI and the INSTC. But that’s another long, twisting story entirely.

Strategic connectivity rules

Now compare all that action in New Delhi with what happened in Tianjin a few days before, in late June: the World Economic Forum (WEF) event known as the “summer Davos”, held for the first time after the Covid-19 pandemic.

Chinese Premier Li Qiang’s critique of the new US/EU “de-risking” slogan may have been predictably sharp. What was way more intriguing was a BRI panel discussion titled “The Future of the Belt and Road Initiative.”

In a nutshell, that was some sort of “green” apotheosis. Liang Linchong, from the National Development and Reform Commission’s (NDRC) Department of Regional Opening-Up, which is essential to promote BRI, detailed several clean energy projects, for instance, in key BRI nodes Kazakhstan and Pakistan.

Africa was also prominently featured. Sekai Nzenza, Zimbabwe’s Minister of Industry and Commerce, is very much in favor of BRI projects increasing trade “and bringing the latest technology” within Africa and globally.

Beijing will revive the Belt and Road Forum later this year. There are huge expectations across the “Global Globe.”

Liang Linchong did go for a breakdown of what lies ahead: “Hard connectivity” (that means infrastructure building), “soft connectivity” (emphasis on skills, technologies and standards), and “connection of hearts,” which translates into the notorious Chinese concept of “people to people exchanges.”

So what the “Global Globe” should expect, according to Liang, is a surge of “small is beautiful” projects, very pragmatic. That ties up with the new focus by both Chinese banks and companies: Very large infrastructure projects around the world may be problematic for the time being, as China concentrates on the internal market and regimenting every front to fight the Hegemon’s multiple Hybrid Wars.

Strategic connectivity though won’t be affected.

Here is a prime example. Two crucial China industrial nodes – the Guangdong-Hong Kong-Macau Greater Bay Area, and the Beijing-Tianjin-Hebei cluster – launched their first China-Kyrgyzstan-Uzbekistan (CKU) international multimodal freight trains on the same day of the SCO summit in New Delhi.

This is classic BRI: Top connectivity, using the containerized “railway-road” multimodal system. The INSTC will be using the same system for trade between Russia, the Caspian, Iran and then by sea to India.

On the CKU, cargo reaches Xinjiang by railway, then goes on the road via the Irkeshtam border, passes through Kyrgyzstan and arrives in Uzbekistan. The whole journey saves nearly five days in transit time. The next step is to build the China-Kyrgyzstan-Uzbekistan railway: construction starts in late 2023.

BRI is making proverbial inroads in Africa. For instance, last month the China Aerospace Science and Technology Corporation (CASC) handed over a prototype satellite co-developed with Egypt to Cairo’s Space City. Egypt is now the first African nation capable of satellite assembling, integration, and testing. Cairo hails it as a prime example of sustainable development.

That’s also the first time Beijing assembles and tests a satellite overseas. Once again, classic BRI: “Consultation, Cooperation and Shared Benefits,” as defined by CASC.

And don’t forget the new Egyptian capital: An ultra-modern satellite of Cairo built literally from scratch in the desert for $50 billion, financed by bonds and – what else – Chinese capital.

The long and winding de-dollarization road

All this frantic activity correlates with the key dossier to be treated by BRICS+: De-dollarization.

India’s External Affairs Minister Jaishankar has confirmed there will be no new BRICS currency – for now. The emphasis is on increasing trade in national currencies.

When it comes to BRICS heavyweight Russia, the emphasis for now is to drive commodity prices higher for the benefit of the Russian ruble.

Diplomatic sources confirm that the unspoken agreement among BRICS sherpas – who this week are preparing the guidelines for BRICS+ to be discussed at the South Africa summit next month – is to hasten the fiat dollar’s meltdown: The Financing of US trade and budget deficits would become impossible at current interest rates.

The question is how to hasten it imperceptibly.

Putin’s trademark strategy is to always let the collective west embark in all sorts of strategic mistakes without direct Russian intervention. So what happens next in the battlefield in Donbass – NATO’s larger than life humiliation – will be a crucial factor in the de-dollarization front. The Chinese, for their part, worry about a collapsed dollar rebound on China’s manufacturing base.

The road map ahead suggests a new trade settlement currency first designed at the EAEU, supervised by the Eurasia Economic Commission’s head of macroeconomics Sergey Glazyev. That would lead to a wider BRICS and SCO deployment. But first the EAEU needs to get China on board. That was one of the key issues recently discussed by Glazyev, in person, in Beijing.

So the Holy Grail is a new supranational trade currency for BRICS, SCO, and EAEU. And it’s essential that its reserve status does not allow overriding power to one nation, as it happens with the US dollar.

The only practical means of tying the new trade currency to a basket of multiple commodities – not to mention a basket of national interests – would be through gold.

Imagine all that being discussed in depth by that interminable queue for BRICS membership. As it stands, at least 31 nations have entered formal applications or expressed interest in joining an upgraded BRICS+.

The interconnections are fascinating. Apart from Iran and Pakistan, the only full SCO members that are not BRICS members are four Central Asian “stans,” which already happen to be EAEU members. Iran is bound to become a member of BRICS+. No less than nine nations among SCO’s observers or dialogue partners are among BRICS applicants.

Lukashenko called it: The merging of BRICS and SCO seems virtually inevitable.

For the top twin drivers of both organizations – the Russia-China strategic partnership – this merger will represent the ultimate multilateral institution, based on real free and fair trade, capable of dwarfing both the US and the EU and extending well beyond Eurasia to the “Global Globe.”

German industry/business circles already seem to have seen the writing on the wall, as well as some of their French counterparts, which notably include France’s President Emmanuel Macron. The trend is towards an EU schism – and even more Eurasian power.

A BRICS-SCO trade bloc will make western sanctions absolutely meaningless. It will affirm total independence from the US dollar, offer an array of financial alternatives to SWIFT, and encourage close military and intel cooperation against serial black ops by the Five Eyes, part of the ongoing Hybrid Wars.

In terms of peaceful development, West Asia has shown the way. The minute Saudi Arabia sided with China and Russia – and is now a candidate to both BRICS and SCO membership – there was a new game in town.

Golden Ruble 3.0?

As it stands, there’s huge potential for a gold-backed ruble. If and when it hits the road, that will be a revival of the gold-backing in the USSR between 1944 and 1961.

Glazyev has crucially observed that Russia’s trade surplus with SCO members has allowed Russian companies to pay off external debts and replace them with borrowing in rubles.

In parallel, Russia is increasingly using the yuan for international settlements. Further on down the road, key “Global Globe” players – China, Iran, Turkey, UAE – will be interested in payment in non-sanctioned gold instead of local currencies. That will pave the way for a BRICS-SCO trade settlement currency tied to gold.

After all, nothing beats gold when it comes to fighting collective western sanctions, pricing oil, gas, food, fertilizers, metals, minerals. Glazyev already laid down the law: Russia’s got to go for Golden Ruble 3.0.

The time is fast approaching for Russia to create the perfect storm to deliver a massive blow to the US dollar. This is what’s being discussed behind the scenes at the SCO, EAEU, and some BRICS sessions, and this is what’s driving the Atlanticist elites livid.

The “imperceptible” way for Russia to make it happen is to let markets drive up the prices of nearly all Russian commodity exports. Neutrals all across the “Global Globe” will interpret it as a natural “market response” to the collective west’s cognitive dissonant geopolitical imperatives. Soaring energy and commodity prices will end up provoking a steep decline in the purchasing power of the US dollar.

So it’s no wonder that several leaders at the SCO summit were in favor to what amounts, in practice, to an expanded BRICS-SCO Central Bank. When the new BRICS-SCO-EAEU currency is finally adopted – of course it’s a long way away, perhaps in the early 2030s – it will be traded for physical gold by participating banks from SCO, BRICS, and EAU member-nations.

All of the above should be interpreted as the sketch of a possible, realistic path to real multipolarity. It has nothing to do with the yuan as reserve currency, reproducing the existing rent-extracting racket to the profit of a minuscule plutocracy – complete with a massive military apparatus specialized in bullying the “Global Globe.”

A BRICS-SCO-EAEU union will be focused on building – and expanding – the physical, non-speculative economy based on infrastructure development, industrial capability, and tech sharing. Another world-system, now more than ever, is possible.

Leave a Reply

Your email address will not be published. Required fields are marked *