Claims to Western Superiority

Steering Committee for Global Policy

Preceding the Elmau summit, German think tanks have been discussing today's G7 significance for German policy. Due to the "economic and political clout of their member countries," the G7 and - from 1998 to 2014 - the G8, have been a sort of "steering committee" for global policy, "setting the global agenda," according to a brief analysis published by the German Council on Foreign Relations (DGAP).[1] This changed "abruptly in the fall of 2008." "At the height of the financial crisis," the G8 could no longer avoid including the G20 - the forum of the most influential industrial and emerging countries - into the "discussion and coordination of a global answer to the financial crisis." The role the G7 seeks to play today, has been described by the British Finance Minister George Osborne in 2013: "The world’s most advanced economies should show leadership - and ensure it is on the agenda of the G20 this year and next." Basically, according to the DGAP, the format of the G7 is suited to achieve viable agreements among the western powers. "The G7 ... has remained faithful to its old idea of 'fireside chats.' Its meetings are held in a very personal atmosphere, conducive to a candid exchange of views on a number of issues."

Russia's Exclusion

Russia's exclusion is seen quite ambivalently. Officially, Berlin justifies it. "Russia's participation is at present inconceivable," as the German Chancellor was quoted in the yellow press immediately prior to the Elmau summit.[2] On the other hand transatlantic oriented circles have, over the past few days, clearly taken a position favoring re-inclusion of Moscow - in the long run. Green Party vice Chair, Simone Peter, for example, declared that, "after Crimea's annexation, ... it is comprehensible" that the Russian president "not participate" at this summit. However, this solution cannot be satisfactory in the end. "It would be expedient to have Putin at the table."[3] This must be seen in the context of Moscow's growing engagement in an alternative global policy - since Putin's exclusion.

Challenger

Russia has more than ever turned its focus toward expanding BRICS. This alliance consisting of Brazil, Russia, India, and China, meeting since 2006 - with South Africa joining in 2010 - is systematically expanding its activities. Three of its members are nuclear powers, two have permanent seats on the UN Security Council, and all are influential regional powers. Observers regularly point out that the BRICS members adhere to different economic models and pursue quite different foreign policy objectives. Still, experts are also noting "the BRICS nations' efforts to present BRICS as a political platform on the world stage." The BRICS countries are striving to "pit their collective political clout against the North's claims of its superiority."[4] In October 2010, US Ambassador to France, Craig R. Stapleton, described the western powers' headaches concerning BRICS, particularly its members China and India, "we need a vehicle, where we can find solutions for these challenges together - so when these monsters arrive in 10 years, we will be able to deal with them."[5]

The "New Development Bank"

The BRICS countries announced next month's launching of a New Development Bank and the Contingent Reserve Arrangement. The BRICS Summit July 8 - 9 in the Russian city of Ufa, will decide on operative details for the full launch of the "New Development Bank" by the end of the year. Its headquarters will be based in Shanghai's Lujiazui's financial district and a subsidiary in Johannesburg, South Africa. The Indian banker, K. V. Kamath, has been appointed to be the first chief executive. The position will be shared among the BRICS countries on a rotating basis. The New Development Bank and the Contingent Reserve Arrangement will rival the World Bank and the IMF. Their establishment is a "political signal in favor of more economic multilateralism and in opposition to the western dominated international financial institutions," concluded last year the German Institute for International and Security Affairs (SWP).[6] Shi Yaobin, the Chinese Vice-Finance Minister, recently confirmed that the Bank will not be an exclusive project, but open, in principle, to all members of the United Nations.

An Alternative to Swift

As the SWP reports, not least among the serious long-term consequences, is the fact that the New Development Bank's future trade and credit transactions, "may be carried out in the currencies of the member countries" [7] - a practice China and Russia have already initiated in bilateral transactions with third party countries. This "will impose a policy of diversification of currency reserves, reducing the US dollar's predominance, in regards to the participating countries," writes SWP. Following its exclusion from the G7, Moscow is going a step further by proposing the development of an alternative to the SWIFT system for global financial transactions - a measure, for the time being, limited to the BRICS nations. Last year the EU discussed whether to expel Russia from the SWIFT system, which, de facto, would have been tantamount to a declaration of economic war. Moscow is now campaigning among BRICS nations to take appropriate action.

A Strategic Block

With growing frankness, the BRICS nations are discussing the current planning's point of impact on global policy. "The BRICS bank represents the unified force of the emerging economies," declared Fan Yongming, director of the Center for BRICS Studies at Fudan University, in Shanghai. It will be a challenge to the established organizations - referring to the World Bank and the IMF. According to Fan, the BRICS alliance, in which, Russia has become even more active, particularly since its exclusion from the G7, is no marginal phenomenon, "it is a global, strategic bloc."[8]

[1] Claudia Schmucker, Kseniya Dziatlouskaya: Die deutsche G7-Präsidentschaft. DGAPkompakt Nr. 6, Mai 2015.
[2] Merkel: "Eine Teilnahme Russlands ist zurzeit nicht vorstellbar". www.welt.de 05.06.2015.
[3] Claudia Kade, Karsten Kammholz: Die deutsche Wirtschaft hat Sehnsucht nach Putin. www.welt.de 31.05.2015.
[4], [5] Vijay Prashad: Neoliberalismus mit südlichem Antlitz. Der Aufstieg des BRICS-Blocks. Rosa-Luxemburg-Stiftung, Büro New York, Mai 2013.
[6], [7] Günther Maihold: Die BRICS-Bank - der Einstieg in eine neue Weltfinanzordnung. SWP-Aktuell 53, August 2014.
[8] Zheng Yangpeng: BRICS bank may open by year end. www.chinadaily.com.cn 16.05.2015.