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OpEdNews Op Eds    H3'ed 12/21/15

The IMF Changes its Rules to Isolate China and Russia

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U.S. geostrategists seem to have imagined that if they exclude Russia, China and other SCO and Eurasian countries from the U.S.-based financial and trade system, these countries will find themselves in the same economic box as Cuba, Iran and other countries have been isolated by sanctions. The aim is to make countries choose between impoverishment from such exclusion, or acquiescing in U.S. neoliberal drives to financialize their economies and impose austerity on their government sector and labor.

What is lacking from such calculations is the idea of critical mass. The United States may use the IMF and World Bank as levers to exclude countries not in the U.S. orbit from participating in the global trade and financial system, and it may arm-twist Europe to impose trade and financial sanctions on Russia. But this action produces an equal and opposite reaction. That is the eternal Newtonian law of geopolitics. The indicated countermeasure is simply for other countries to create their own international financial organization as an alternative to the IMF, their own "aid" lending institution to juxtapose to the U.S.-centered World Bank.

All this requires an international court to handle disputes that is free from U.S. arm-twisting to turn international law into a kangaroo court following the dictates of Washington. The Eurasian Economic Union now has its own court to adjudicate disputes. It may provide an alternative Judge Griesa's New York federal court ruling in favor of vulture funds derailing Argentina's debt negotiations and excluding it from foreign financial markets. If the London Court of International Arbitration (under whose rules Russia's bonds issued to Ukraine are registered) permits frivolous legal claims (called barratry in English) such as President Poroshenko has threatened in Ukrainian Parliament, it too will become a victim of geopolitical obsolescence.

The more nakedly self-serving and geopolitical U.S. policy is -- in backing radical Islamic fundamentalist outgrowths of Al Qaeda throughout the Near East, right-wing nationalist governments in Ukraine and the Baltics -- the greater the catalytic pressure is growing for the Shanghai Cooperation Organization, AIIB and related Eurasian institutions to break free of the post-1945 Bretton Woods system run by the U.S. State, Defense and Treasury Departments and NATO superstructure.

The question now is whether Russia and China can hold onto the BRICS and India. So as Paul Craig Roberts recently summarized my ideas along these lines, we are back with George Orwell's 1984 global fracture between Oceanea (the United States, Britain and its northern European NATO allies) vs. Eurasia.

Notes.

[1] Anton Siluanov, "Russia wants fair rules on sovereign debt," Financial Times, December 10, 2015.

[2] "Putin Seeks Alliance to Rival TPP," RT.com (December 04 2015),

https://www.rt.com/business/324747-putin-tpp-bloc-russia/. The Eurasian Economic Union was created in 2014 by Russia, Belarus and Kazakhstan, soon joined by Kyrgyzstan and Armenia. The SCO was created in 2001 in Shanghai by the leaders of China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan. India and Pakistan are scheduled to join, along with Iran, Afghanistan and Belarus as observers, and other east and Central Asian countries as "dialogue partners." ASEAN was formed in 1967, originally by Indonesia, Malaysia the Philippines, Singapore and Thailand. It subsequently has been expanded. China and the AIIB are reaching out to replace World Bank. The U.S. refused to join the AIIB, opposing it from the outset.

[3] Richard Koo, "EU refuses to acknowledge mistakes made in Greek bailout," Nomura, July 14, 2015. Richard Koo, r-koo|AT|nri.coEmail address, jp

[4] Ian Talley, "IMF Tweaks Lending Rules in Boost for Ukraine," Wall Street Journal, December 9, 2015.

[5] Anders Aslund, "The IMF Outfoxes Putin: Policy Change Means Ukraine Can Receive More Loans," Atlantic Council, December 8, 2015. On Johnson's Russia List, December 9, 2015, #13. Aslund was a major defender of neoliberal shock treatment and austerity in Russia, and has held up Latvian austerity as a success story rather than a disaster.

[6] Ian Talley, op. cit.

[7] Anders -...slund, "Ukraine Must Not Pay Russia Back," Atlantic Council, November 2, 2015 (from Johnson's Russia List, November 3, 2015, #50).

[8] Anders Aslund, "The IMF Outfoxes Putin," op. cit.

[9] Quoted in Tamara Zamyantina, "IMF's dilemma: to help or not to help Ukraine, if Kiev defaults," TASS, translated on Johnson's Russia List, December 9, 2015, #9.

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Prof. Hudson has written the introductory chapter in "China in the Next 30 Years" and its sequel. His "Super Imperialism: The Economic Strategy of American Empire," "America's Protectionist Takeoff" and "Trade, Development and Foreign (more...)
 
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