Notion of cooperation to jointly face the calamities of the recent financial crisis has been replaced by naked rivalry. It is no longer a matter of does cooperation or rivalry best define the G-20 relationships, but to what degree the ruthlessness? “Currency Wars” & Other Confrontations IMF’s What many may have only recently perceived as a largely economic sphere is really jockeying to translate economic vigor into the diplomatic and even military arena, (particularly between the US and China but no limited to just these two super-powers). We should not overlook though the real differences that exist in more purely economic issues: • Currency valuations that have propensity to become part of larger global “currency wars;” (with China and Asian governments facing charges of employing manipulative practices to keep their currencies too low and thus trade advantages dominant – China now is countering with similar charges re US$). • Trade imbalances are not yet being reversed and by some assessments are becoming even greater. • Openness of markets, (financial and products), varies starkly from country to country, (and here countries like India also face accusations of maintaining policies to keep their markets closed to outsiders). • Capital flows controls also vary significantly. • See Film Report from IMF & Managing Director Dominique Strauss-Kahn – “Sowing Seeds of Next Crisis” diplomaticallyincorrect.org/films/movie/sowing-seeds-of-next-crisis/24663 Spiking Food & Commodity Prices Beyond the above points of discourse, there are also areas of more shared concerns. While perhaps some states or economic groups might benefit from the rather unrestrained rise in commodity prices, (particularly food), the volatility is disconcerting across the board and disastrous for the poorest, who do not have direct representation at the G-20, (a club by definition of the more wealthy and powerful): • Continuing rise in food prices is placing the poorest closer to starvation and exhausting the resources of the middle classes as well as working poor. (See recent Film Reports – World Bank Reports “Billion Go to Sleep Hungry”: diplomaticallyincorrect.org/films/movie/billion-to-sleep-hungry/24674 & (“Food Prices Killing Poor/Staggering Middle Classes”) diplomaticallyincorrect.org/films/movie/food-prices-killing-poor-staggering-middle-classes/24574 • Energy prices continue to rise. • Natural disasters appear to have become more frequent, affecting broader populations, (regardless of whether there is consensus that such is being accelerated by climate change). • The risk of bubbles in almost all commodity prices. (It is my view that housing was not so much the leading factor but following the commodity bubbles in the last financial crisis). While generally commodity prices rising may have previously been to the advantage of less developed countries/regions (that were also largely dependent on commodity production and agriculture), that is no longer the reality. Speculation may be a critical factor in how the new revenues proceeding from volatile commodity/agriculture prices are distributed. Further, many farmers, (particularly subsistence), around the globe are facing harsh climatic conditions and fertilizer/seed costs leaving many not only in no position to take advantage but in fact sinking into the class of impoverished. Mercantilist China? & Veneer off China/USA Relationship The China/America growing chasm though may be the most prominent characteristic to become visible from G-20 summits/gatherings. The notion that China’s rise is compatible or even mutually beneficial with western democracies is being replaced by an outlook based upon a “zero-sum” calculation. China does not commit much effort to concealing its “mercantilist” approach to global trade relationships. A couple of years earlier when I asked Chinese government/economic officials at the United Nations whether they were in some manner effecting a similar methodology to western/European mercantilist powers that engaged in China a century earlier, there was some discomfort with the comparison but not the fundamental approach. China is seeking global outposts to secure both commodities needed for its development and markets into which to export. Considerations for establishing such relationships are not based upon any human rights or democratic principles. Even areas that are perceived as “threats to international peace and security” are not avoided. To the contrary, areas that may be shunned for political or human rights considerations by most others are opportunistically addressed by China. Many such outposts, as Mugabe’s Zimbabwe or Chavez’s Venezuela, are resource rich and relationship poor allowing China to fill the void. New Alignments & “Spheres of Influence” The relationship with China for these new developing states is at best turning into a mixed blessing. China has been there to assist in infrastructure and other forms of assistance. However, from smaller economic nations (in Africa) to larger (as Brazil) there is a fast rising resistance as Chinese enterprises as well as exports from the mainland rapidly erode local business and undersell local products, from manufacturing to agriculture. Environmental concerns have become another source of concern. The lack of more effective agreement on global greenhouse gases and environmental standards has raised numerous suspicions about Chinese methods beyond its borders as well. Of course, many underdeveloped and developing states, particularly in Africa and Asia, have been exploited by western/European countries over last few decades with respect to hazardous waste and similar dangers. Russia Under the Radar The focus on China as now a rival, even potential threat has served to allow Moscow’s relationship with western economic powers to slide largely under the radar, perhaps purposefully or just implicitly. Russia’s record on human rights and democratic transformation has not changed much, certainly not improved, over the last decade. However, from the continuing issues of Georgia’s division to internal treatment of dissent, Russia is largely ignored, for good or bad. Russia’s growing economic interlocking with China also has drawn only minimal public attention. Perhaps it is a “head in the sand” strategy by the western democracies or a calculated tactic not to push the Russian bear and Chinese dragon even closer in what had been over most of last half century perceived as a natural rivalry between the two “Communist poles” in Central and East Asia. New Tigers in the Balance? The role of rising new tigers as India or the even more recent phenomenon as Turkey and oil rich gulf states is also receiving secondary coverage. The oil producers have very diverse interests, (Russia and Iran want to maximize prices for immediate benefit and maybe even political leverage while Gulf states as Saudi Arabia have a desire to avoid “demand destruction” to keep huge reserves rational for decades or centuries. Large investments in western economies also prompt the latter to protect broader economic relationships/investments with western democracy economies by deflecting disruptions and commodity price shocks. India, Turkey and similar rising powers are now in the balance. In many ways they are still the “other” (see Turkey’s treatment for EU membership), but are becoming essential to deliver balance on a global basis to a rapidly rising China. Transformative or Back to Old? The notion that the G-20 would be a venue to confront financial crisis and become part of a transformative wave to change the global economic methodology seems almost quaint in the face of the new realities and emerging rivalries. Actually transformation has occurred at one level, and it appears on another that we have slid back to pre-crisis practices. On the latter, banking sector bonuses and practices have returned to pre-crisis standards. Shortages and predatory practices are only further being exaggerated in perverse boom and bust cycles. (The World Bank has just issued report that an additional 44 million people have been forced into severe poverty by recent food price spikes). The real transformation is perhaps in the relationships between and within the “haves” and “have-nots”. The rise of new economic tigers will help bring millions into valued consumers and producers, but other millions are left in poverty, some being herded on the edge of the cliff of starvation. Shaping a New Broad Polarization? Most notably, the realization, rhetoric and tactics of rough rivalry are quickly replacing the notion of cooperation between the world’s economic powers. It is regressing into a polar world. China is seeking to secure its immediate neighborhood free of old power influence. The notion of spheres of influence though is going beyond traditional geographic or ideological lines. China has deftly deemphasized political ideology, at least on the surface, in favor of economic expediency. A new polarity is likely to take shape but more in dynamic, flowing hues. Those that have resources and/or markets will presumably benefit as they are pulled. Those that are without commodities to sell or capable consumers are likely to be further shoved to the back of the economic/political hierarchy and effectively ignored, (or more accurately discarded as to their fundamental needs and development aspirations). The promises of a new global financial system defined by cooperation are giving way to the realization of rough, ruthless rivalry. More related Film Reports @ www.internationalfinancialcrisis.org Reports include: “India Economy/Chaos-Diversity-Creativity.” internationalfinancialcrisis.org/films/movie/imf-world-economic-forecast2-speedsss/24257 “IMF World Economic Forecast-2 Speedsss” internationalfinancialcrisis.org/films/movie/imf-world-economic-forecast2-speedsss/24257 “Joblessness Persists” internationalfinancialcrisis.org/films/movie/imf-world-economic-forecast2-speedsss/24257