The Great Game of National Interest

In the spring of 2009, when British Prime Minister and host of the G20 summit Gordon Brown declared the death of the ‘Washington consensus,’ it seemed that the line under the old paradigm of global economic relations – built around the post-war Bretton Woods institutions, the hegemony of the dollar, and the idea of open markets and free movement of capita – was conclusively drawn.

The depth and scope of the global crisis, the speed at which the ‘infection’ from the US mortgage sector then spread to the global financial system, indeed dramatically intensified the search for an alternative – a new model, departing from principles that reformed their economies upon liberal Western recipes, universal for the entire world. However, beneficiaries of the world economy’s monopolar configuration, namely G7 countries, primarily insist on maintaining their right to set the rules for the world. At the same time, any attempt to challenge it, including the initiative promoting the concept of multipolarity, is perceived as a challenge to US global leadership.

This opposition is growing alongside the increase of more substantive content surrounding the idea of multipolarity, taking a variety of forms – from imposing discriminatory rules in trade to direct economic sanctions against certain BRICS countries. However, it would become truly large-scale and gain a systemic nature with the launch of two American global mega-initiatives in the field of trade and economic integration – the Transatlantic Trade and Investment Partnership (TTIP), whose goal is the creation of a free trade zone between the US and the EU; and the Trans-Pacific Partnership (TPP). The latter will form a joint trade zone, within 12 countries of the Asia-Pacific region. Among them are the US and Japan, as well as Australia, Brunei, Vietnam, Canada, Malaysia, Mexico, New Zealand, Peru, Singapore, and Chile. Moreover, while TTIP negotiations are still ongoing and are scheduled to be completed by the end of 2016, the TPP is already a reality. The relevant agreement was signed on 5 October 2015 in Atlanta, but has yet to be ratified by all countries.

What is TPP? At its core, it is a multinational trade agreement, which will expand the rights of foreign corporations, impose restrictions on intellectual property rights, and unify the legal framework of cooperation in practically all spheres of business activity. This includes the operations of state-owned enterprises and public procurement on the part of national states. At the same time, it is aimed at the actual implementation of existing US laws and regulations, including legal enforcement, in international cooperation – replacing existing international rules, rewriting them, and annihilating current agreements under the WTO or at the level of existing regional integration agreements.

If, given current conditions, we, the BRICS, do not intensify our cooperation, there is a very high risk that the great idea of multipolarity will remain on paper and that the potential of the member-nations and their closest allies will remain unrealized

Analysis of TPP’s ‘policy documents’ allows one to draw conclusions on the goals, which aim to solve ‘global governance’ with its help. Among them are:

• changing the rules of how the global financial system’s functions in order to avoid the risk of losing the dollar’s dominant position in the global economy;
  
• restriction on Internet freedom by monitoring the behavior of the citizens of the countries-participants of the agreement;
  
• the elimination of national programs, stimulating under the slogan ‘Buy local products,’ to instead promote the formation of preferences like ‘Buy goods made in the US’;
  
• limiting the use of cheaper generic drugs produced in developing countries, replacing them with original products from the country of origin;
  
• changing the rules determining the safety of food and tobacco, as well as the labeling of GMOs in accordance with standards accepted in the United States;
  
• avoid the enactment of laws and regulations that restrict the export of oil, liquefied natural gas, coal, and water;
  
• stimulation with the use of the US legal system of establishing such national laws that would allow foreign corporations to bring lawsuits against governments of given countries, suing for lost profits as a result of national laws, acts, and regulations.

Lessons from Mexico

It is easy to conclude from all of the above that TPP is practically a platform for providing US leadership in the APEC region. It aims to create benefits for American business and the accumulation of reserves, as well as to form the undivided domination of the United States’ national economy in the global economy in the near future.

Meanwhile, the particularity of this agreement is its international nature, which does not assume an institutional loss of national sovereignty for the contracting parties. But in reality, the participating countries are losing the potential for self-identity in the world economy. And this loss begins with the loss of national competitiveness. The mechanism of US expansion in the framework of regional integration is already well developed in the framework of NAFTA.

In this regard, a very eloquent example is Mexico, who joined this integration association in 1994, with the hope of gaining momentum in the development of its national economy, which at the time was in no great condition. Last year, Mexican authorities summed up the results of participation in NAFTA. What conclusions did they come to?

One of the evident consequences to participating in the North American free trade area was the actual loss of traditional manufacturing sectors in the country. For example, Mexico, which has historically been considered a major producer of corn, is now forced to almost fully import it from the United States. In addition, due to the transition to growing biologically and genetically modified material, local farmers have to buy seeds from two North America-based TNCs. At the same time, Mexico has dramatically increased the production of pro­ducts atypical for itself – strawberries, purslane, and leeks – which are hardly consumed in the domestic market and are exported to the north. So for some time now, Mexicans have jokingly called themselves the USA’s garden.

Similarly, before entering NAFTA, Mexico had its own industry. Although the sector was not objectively considered advanced by world standards, and was largely based on the use of homemade production, it provided significant employment. The massive increase of TNCs’ exports to the Mexican market after the lifting of customs barriers has led to a mass closure of such businesses, growth in unemployment, and a sharp increase in labor migration. To contain this heavy and uncontrolled flow, the US even had to build a protective wall along its border. In the border regions of Mexico, assembly (mainly screwdriver) production was constructed so that bankrupt local farmers could find employment, without penetrating into the US.

Thus, while NAFTA was created on the principles of international cooperation, transnational companies were used as a tool of suppressing local economy. This expansionist policy of about 600 of the world’s largest companies – TNCs and MNCs, whose headquarters are in most cases located in the United States – is just one of a wide range of tools meant to ensure that the US successfully maintains a leadership role. No less important is the export of the administrative-legal system of claims and liability (case-based, developed throughout centuries), including criminal law.

How does it work? It suffices to recall the case of the Russian pilot Konstantin Yaroshenko. In 2010, he was arrested in Liberia on charges of planning the transportation of large quantities of drugs, then flown to the United States, convicted by a US court a year later, and sentenced to 20 years in prison. With entry of TPP into force, such legal enforecement practices will apply to all of the agreement’s 12 countries.

Another tool primarily responsible for the needs of the US economy is the unlimited dollar issuance and support of the dollar’s status as a major world currency, which now serves for 80% of the exchange rates and currency calculations in foreign economic relations.

It is easy to conclude that TPP is practically a platform for providing US leadership in the APEC region. It aims to create benefits for American business and the accumulation of reserves, as well as to form the undivided domination of the United States’ national economy in the global economy in the near future

Finally, we must not forget about ideological propaganda. On the one hand, the idea is promoted that the US economy is the most advanced form of economic organization in the world, from which it is concluded that the norms, rules, and values of Americans should be implemented by all peoples (the exceptionalism of the nation is on the brink of chauvinism). On the other hand, this idea translates into a growing information war against BRICS countries, who are promoting alternative views on the world order.

Divide and conquer

Today, the number one target in this war is undoubtedly China. Thus, in the process of negotiating the TPP, the US never made any secret of the fact that one of the main objectives of the future association is a containment of the trade and economic expansion of China in the Asia-Pacific region and throughout the world. The same plaintext was announced by Barack Obama on the day the agreement was signed. “When more than 95 percent of our potential customers live outside our borders, we can’t let countries like China write the rules of the global economy,” said the American president.

At the same time, it is possible that the United States will increase efforts to bring China into its orbit of influence by imposing their rules of the game for ‘global governance.’ The ideological basis for this is being supplied. In particular, it is referred to in an article by George Soros, A Partnership with China to Avoid World War, published in The New York Review of Books on the eve of the visit of Xi Jinping to the US July 2015. According to the financier, to preserve global leadership, the US should go for rapprochement with China. On the contrary, increasing confrontation with Washington would strengthen the alliance between Beijing and Moscow, which – by combining their military and economic potential – would challenge the global dominance of the United States and lead to a new round of global confrontation. And this could even cause the start of a new world war.

Probably not by a mere coincidence, the US position on the issue of China’s participation in TPP has recently visibly softened. Thus, in October, just after the signing of the agreement, the US Congress expressed the desire to make an effort to involve China in the agreement. At the same time, the possibility of Chinese accession to the agreement was not excluded by US Secretary of State John Kerry, either.

In fact, these movements can be easily interpreted as a realization of the well-known principle of ‘divide and conquer.’ This, in itself, is a serious challenge for BRICS countries, who together are not formally an organization, but a forum of states declaring readiness to solve common problems. The current situation makes these countries search for an answer to the more serious threat posed by the expansion of supra organizations like TPP and TTIP. Consolidation of efforts has become a crucial issue for BRICS countries, as well as for SCO and EAEU (Euro-Asian Economic Union) states. Their synergy of interests becomes strategically important.

The policy of rapprochement

Interaction within SCO, EAEU, and coordinating partnership contacts within BRICS is a tool for sustainable development of their own national economies on the basis of complementarity, partnership, and the promotion of the development of endogenous capacities of national economies rather than development of the integration groups themselves. All of these efforts should ultimately be aimed at improving the population’s standard of living while preserving their national identity and identification in the global community. One of the main criteria here is the unconditional preservation of national, state, and economic sovereignty, as well as reliance on international law (and the agreed upon arrangements within the framework of the international law in force), including the settlement of disputes.

To reach these common goals, BRICS, SCO, and EAEU states-participants and observers should develop common policy on several key issues.

Firstly, every effort should be made to create and develop regional value chains, based on international cooperation and specialization in production (ICSP) within these associations. Our research shows that there is great potential already today in direct cooperation and international specialization in a variety of Russian, Indian, and Chinese industries, such as in pharmaceutical products manufacturing. But this requires intergovernmental agreements to work out a system of transnational, inter-state regulation. In addition, it is necessary to seek simplification of custom regulations and procedures for the development of mutual supplies through ICSP, agreed upon by the member states.

Secondly, it is necessary to intensify cooperation in developing common educational space and working out common training standards, leading to mutual complementarity of human potential of these countries. This should include aspects of training technical assistance staff, including the possibility of the complementary migration of human resources.

Thirdly, acceleration of the joint development of technical regulations, standards, and procedures for evaluating the cost and quality of the products traded in the market of the SCO, EAEC, and BRICS countries is needed, on the basis of transparent, non-discriminatory rules and in accordance with international rules and regulations.

Finally, facilitation – in the framework of SCO, EAEU, and BRICS – of the rapid promotion of information security policies is needed, as well as advocating the importance of deepening equal interaction of economic entities that does not allow dominance or ‘parasitic’ use of the partners’ potentials for their own purposes.

Initiatives to develop such cooperation should be ‘packed’ into international programs that are of strategic interest to all members of these associations. Let me mention just one out of the many possibilities – water resources. Today, India, Brazil, China, and South Africa are very interested in improving the quality and availability of water resources. Russia, with its vast experience and excellent training in the field of reclamation, could, by turn, effectively contribute to the solution to this problem. Such cooperation opens a vast area for interaction. And there are a lot of similar spheres.

I would like to emphasize once again that neglecting and underestimating the influence of ‘global governance,’ as well as the strategy of behavior of TPP or TTIP states-participants on the development perspectives of BRICS, SCO, and the EAEU may – under the pressure of an aggressive US leadership – lead to potential reduction of their interaction potential and loss in unity of opinion on common goals. If, given current conditions, we do not intensify our cooperation in the named areas, there is a very high risk that the great idea of multipolarity will remain on paper and that the potential of BRICS countries and their closest allies will remain unrealized.