Strategic & Economic Realignment to BRICS/SCO Continues as China's Lunar Mission Succeeds
November 1, 2014 • 9:27AM

As was pointed out in "New Eurasian Paradigm Replacing Dead Trans-Atlantic System as South America Realigns," the Trans-Atlantic system is now undeniably dead, and a fundamental realignment towards the BRICS and Eurasia is now taking place among those nations which wish to survive. Nowhere can this be seen more vividly than in the counterposition between the victoriously successful completion of China's Chang'e-5T lunar mission yesterday, and the tragic crash of the privatized SpaceShip2 of Virgin Galactic, which followed closely on the heels of the explosion of Orbital's Antares rocket earlier in the week.

Yesterday, we detailed how the process of nations swiftly abandoning the failed trans-Atlantic system in favor of the newly emerging Eurasian system being led by the BRICS, could be seen clearly in the maturing relationships between the nations of South America and China, a process also pointed out explicitly in an article in Argentina's Tiempo Argentino as well as in a report issued by Svimez in Italy. Below are a number of more stores which demonstrate how this process continues to accelerate.

China's Lunar Spacecraft Chang'e-5T Successfully Returns to Earth

China's Lunar spacecraft Chang'e-5T successfully returned to Earth yesterday, after a 114-hour flight around the Moon. The return module landed early Saturday morning, Beijing time, in Inner Mongolia. Xinhua carries a photo of the module, charred by the heat of re-entry, with members of the retrieval team taking photos and peering inside. Zhou Jianliang, chief engineer, says the landing window (the constraints on where and when it can land) is very small, which requires a highly sophisticated telemetry, tracking, and command system.

Mexico President Pena Nieto Plans Trip To China

Mexican President Pena Nieto has not cancelled his trip to China, as was previously speculated, but has instead shortened his Asia trip by one day. First the Presidency withdrew its request for Senate approval for his Asian trip; but then two days later submitted a new request, shortened by only one day. Pena Nieto, as of now, will attend the APEC conference that begins in Beijing on Nov. 9, carry out his state visit Nov. 12-13 in Shanghai, and attend the G-20 summit in Brisbane, Australia, for only one day prior to returning to Mexico on the 15th.

With the U.S. and the EU in "Full Decline," China and the BRICS are Argentina's Best Strategic Allies

Argentina's Central Bank (BCRA) and China's Central Bank have activated the first $814 million tranche of the $11 billion currency swap on which the two entities agreed last July, during Chinese President Xi Jinping's state visit to Argentina.

The $814 mn. will serve to bolster Argentina's foreign reserves and help stabilize the currency markets, which have been under fierce attack by speculators seeking to force a devaluation. An Oct. 30 BCRA communique affirms that the swap's activation "demonstrates the close relationship between the two entities and both nations' commitment to consolidating the comprehensive strategic alliance reaffirmed by Presidents Cristina Fernandez de Kirchner and Xi Jinping during their visit last July." BCRA Governor Alejandro Vanoli stated that the swap agreement also shows that Argentina has the means to access foreign financing and the ability to stabilize its reserves, contrary to wild assertions by the Queen's vulture funds and their local allies.

More broadly, Tiempo Argentino asserts today that this agreement shows it's possible to address financial matters "in a strategic manner under conditions of international insertion, different from the austerity logic of the International Monetary Fund, which led to the collapse of 2001." The daily adds that with China's increasingly important role on the world stage, and the solidity of Argentina's relationship with it, "in a world in which the economic center—the U.S. and the EU—is in full decline, an alternative form of integration with the world is emerging, together with the BRICS...through South-South trade and a joint development strategy based on sustained growth."

Such collaboration was seen in the Oct. 28 meeting of Planning Minister Julio De Vido and officials of Argentina's nuclear energy sector with officials from China's National Nuclear Corporation (CNNC), China's National Energy Administration, and officials from the Chinese embassy in Buenos Aires to discuss construction of Argentina's next nuclear reactor Atucha III, for which China will provide CANDU technology as well as generous financing.

Asian Infrastructure Investment Bank Raises Hope in Asia

Deprived of finance to develop Asia's vast and inadequate infrastructure, due to the anti-development policies practiced by the World bank during the last four decades, Asian countries have widely welcomed the formation of the Asian Infrastructure Investment Bank (AIIB) inaugurated last week by 21 Asian nations, including China and India. AIIB is expected to be operative next year.

Welcoming the formation of the bank, India's Economic Times editorial said on Oct. 30:"It is entirely desirable that new mechanisms be created for mediating Asian savings to investment opportunities in Asia without relying on the traditional intermediaries in the West. The present Asian Infrastructure Investment Bank is one such. We need more of them."

India's leading English news daily, The Hindu, in its editorial on Oct 30 said the AIIB, along with the other new China-based institution, the BRICS Bank, represents the first major challenge to the U.S.-led global economic order and the 70-year uncontested reign of the Bretton Woods twins. It also said that the reason the formation of the AIIB became a necessity, is that, according to the Asian Development Bank's (ADB) assessment, Asia needs an average $800 billion of investment in infrastructure annually between now and 2020. Against this, the ADB — dominated by Japan, which is also a founding member — lends no more than $10 billion a year for infrastructure. It added:"With the American-dominated World Bank and the Europe-led IMF also remaining hamstrung, the need for a multilateral body to finance the growth region of the world was real."

A Macau Daily News article on Oct. 30 made the point: "As much as the new bank will complement existing institutions, it will also vie to build power grids in Mongolia, ports in Vietnam, dams in Myanmar and roads in Thailand. For the U.S., which preaches the gospel of free markets, to block competition that could ultimately benefit millions of Asians would be hypocritical." The Economic Times editorial pointed out: "Asian economies need to build lots of infrastructure and this will cost a lot of money, far in excess of what any single source of financing can provide. Creating one more source of financing will augment the availability of funding as well as of expertise in project formulation and vetting. This is only to be welcomed."

Report: BRICS Countries Grow While Southern Italy Plunges into Depression

The 2014 Svimez "Report on the Economy of the Mezzogiorno" opened with a short but clear reference to the BRICS as the only growing sector of the global economy and called for a national strategy centered, among others, on the role of Southern Italy, the Mezzogiorno, in the "Mediterranean perspective." Svimez is the abbreviation for the Association for Development of Industry in the Mezzogiorno. "Again in 2013, emerging countries (China, India, Brazil and Russia) have been the most dynamic economies, whereas GDP in the European Union has stagnated at 0.1%, down to -0.4% in the Eurozone with drops of -3.9% in Greece, -1.9% in Italy and -1.2% in Spain. Between 2008 and 2013, GDP in the Eurozone has lost almost 2 percentage points, although with strong differences among countries: from -5.9% in Spain to -8.5% in Italy, to -23.7% in Greece. The opposite occurred in non-members of the Eurozone, which saw a GDP growth of 7.1%."

Italy's Mezzogiorno has been hit more severely than the national average: in the 2007-2013 period, GDP fell of 13.3%; in 2013 alone, it dropped of 3.5%. GDP per capita is 56.6% of that in Northern Italy. Consumption dropped of 2.4% (-12.7% in 2008-2013). Income has collapsed by 15% in the last eight years of consecutive negative growth.

In the same period, manufactures (not including building construction) have lost 27% of their output and 20% of their employment. Building construction has lost 32.3% of employment. Public investments have collapsed and PPP has grown, accounting now for one-fifth of contracts and 25.6% of funds.

Svimez warns against the social emergency (unemployment) and "the threat of industrial desertification which has characterized the last six years consecutively in the Mezzogiorno. In the Mezzogiorno, the worst economic crisis in the postwar period threatens to be more and more comparable to the Great Depression of 1929."

Even if Northern and Central Italy are relatively better off, "such depressed demand in the South has inevitably negative effects on the Central and Northern regions." After the failure of austerity policies which have helped to increase the gap between strong and weak areas in the EU, according to Svimez:"The time has come to implement a national development strategy centered in the Mezzogiorno, which is able to marry a medium- to long-term structural action based on precise interconnected development drivers, with an 'emergency' plan to start urgently: urban development, development of the hinterland, creation of a logistics network in a Mediterranean perspective, enhancement of the cultural wealth."

Shanghai Cooperation Organization Plans To Deal with Eurasia's Security

What is evident is that almost each individual nation located close to Afghanistan is concerned about its security once the US and NATO troops leave Afghanistan, leaving the country almost as unstable as it was when the foreign troops first arrived in 2002 with the mission to establish law and order and eradicate terrorism. It has been widely accepted that these 12 years of foreign troops' stay did not accomplish the very basic objective, and in addition, Afghanistan has now become the principal source of heroin production, creating profound insecurity throughout the region.

Addressing this untenable situation looming ahead, the Shanghai Cooperation Organization (SCO) member nations during their 14th summit of the SCO, held between last September 11 and 12, in Dushanbe, the capital of Tajikistan, addressed measures to deal with the future. It is to be noted that the primary reasons behind the emergence of the Shanghai Five, the predecessor of the SCO, in 1996, were to provide border security and to fight separatist/extremist groups. The main concern of Beijing is that separatist Uygur groups within China are provided with logistical support from Central Asian countries. At the Dushanbe Summit, the necessity of the SCO to play a more active role in the struggle against terrorism and provision of regional security was once more emphasized.

The main concern of SCO members who are in close geographical proximity to Afghanistan, is that the country could become a hub for armed radical religious groups and that the production of drugs within its borders could increase. In this respect, it was decided at the Summit to both support Afghanistan in its effort to survive as an independent, sovereign state and to contribute to the country's development of strong partnerships with its neighbors.

Another issue discussed at the Summit in respect to security, was the objection to unlimited and unilateral development of missile defense systems without the consultation of relevant parties. Here, the common missile defense systems which are being developed by NATO in cooperation with Eastern European countries, and those which are being developed by the USA in cooperation with Japan and South Korea, were criticized, albeit without explicitly naming the countries involved. In this sense, both Russia and China are disturbed by the above missile defense systems, as they believe that the West is developing these systems with them in mind.

Deputy Prime Minister Rogozin Details Russia's Cooperation with China, Response to Sanctions, and Space and Military Policies

In comprehensive answers to questions by reporters from TASS, published by the wire service today, Russian Deputy Prime Minister Dmitry Rogozin specified key Russian policies.

Questioned about cooperation with China, Rogozin said, "We have rather energetic relations with the People's Republic of China, and Western countries should be thanked a lot for that. I am not even joking." The sanctions policy "broke some psychological barriers, which probably existed in someone's head regarding cooperation with China." In November a delegation of Russian space agency, and rocket and space industry enterprise, representatives "is heading to the International Aviation & Aerospace Exhibition in Zhuai," he said, "where they will discuss specific projects with representatives of the Chinese space industry." We are "considering possible joint projects in space exploration," he explained.

Regarding the U.S. sanctions, Rogozin said that President Putin has approved the first stage of the import substitution plan, and "funds have been allocated." The Defense Ministry is the key customer. On the second stage of the project, he said that it "is connected with the response to the sanctions announced by the West."

Described as "the chairman of the Board for the Military-Industrial Complex," Rogozin was questioned extensively about the construction delays and problems at the Far East Vostochny launch complex. The new facility will allow Russia to launch heavy payloads and manned missions from its own soil, for the first time. Rogozin pointed to technical mistakes, the lack of an adequate workforce, corruption, and poor supervision. Noting the very harsh working conditions, he strassed the need to complete buildings and provide heat, "so we could unpack and assemble the equipment there" before winter sets in. Rogozin said he will be personally visiting the construction site once a month to keep the project on track, and that the Ministry of Construction Industry may be brought in to bolster resources.

Asked about the State Program for Armaments to 2020, and the plan for funding, Rogozin replied:"Considering the situation in the world, we can't allow any sort of cuts in the armaments program now." He added, "that means that if we reschedule separate things beyond 2020, this will be done only due to the inability of the manufacturing sector to accomplish one or another task," not to funding limitations.

China Moves on Afghan Reconstruction with Russia ... And the U.S.?

Afghanistan's new President Ashraf Ghani's four-day visit to China has put reconstruction and security, including counter-narcotics, on the agenda, but without the U.S. According Special Inspector General for Afghanistan Reconstruction (SIGAR) John Sopko's Oct. 30 Quarterly Report to the U.S. Congress: "Yet, despite the threat that the burgeoning opium economy poses to the Afghan state and reconstruction, counternarcotics has largely fallen off the Afghan agenda of both the U.S. government and the international community." The report in fact charged that the existing reconstruction efforts risk actually increasing the opium economy with infrastructure support (irrigation, roads, etc.) unless counternarcotics is combined. The report notes that Ashraf Ghani had already warned in 2003 of Afghanistan becoming "a narco-mafia state."

Although SIGAR has no dramatic suggestions on how to implement its call to prioritize measures against the opium economy, it has announced a SIGAR Money Laundering Task Force to investigate where U.S. and Afghan money-laundering laws were broken in reconstruction efforts. "At the moment, Afghanistan's narcotics economy is the elephant in the room that we ignore at our own peril."

Xinhua reports today that Chinese Ambassador to Russia Li Hui emphasized yesterday the increasing collaboration of Russia and China in Afghan reconstruction. Today in Beijing, China is hosting the "Istanbul Process Conference" on Afghanistan. Ambassador Li Hui also said that the Silk Road Economic Corridor, much welcomed by Afghan President Ghani, could become a major factor for regional cooperation. Reuters reports today that U.S. comments welcoming China's Afghan involvement, made by "a senior State Department official, are rare U.S. praise for Beijing."

However helpful the remarks from the State Department may be, it is long overdue for Dianne Feinstein's Senate Narcotics Caucus, and her allies in the military, to act on the caucus's Jan. 16, 2014, hearings on "Future of U.S. Counternarcotics Efforts in Afghanistan," in the context of the U.S. military draw-down. In her statement, Senator Feinstein strongly called for the U.S. to collaborate with Russia and Iran on counter-narcotics efforts in Afghanistan. That collaboration must urgently get under way and now add China.