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BRICS: Towards Creating New Space for Global Peace Development Potentialities

Dr. Nafees Ahmad

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The BRICS (Brazil, Russia, India, China and South Africa) has emerged as the new destination for the global peace and development (GPDP) and bound to create a new space wedded to the idea of global sovereign equality (GSE) enshrined in Article 4 of the UN Charter.

BRICS constitutes the 50% of the worldwide population and nearly takes 1/3 of the global GDP (Gross Domestic Products) that makes it a catalyst to transform and propel the present world economy to higher growth in an unprecedented fashion. BRICS has the propensity to make it independent from the clutches of Bretton Woods’s institutions of 1944 and establish itself a viable alternative away from US Dollars propelled monetary system. Presently, this optimism remains shrouded in a theoretical construct owing to the existing political architecture of the BRICS that lacks politico-eco-geostrategic cohesion for Brazil, India and South Africa but makes the stay of Russia and China economically comfortable in the grouping. Though, BRICS got its identity and nomenclature from its antagonist in the western world called Goldman Sachs.

Historically, South Africa was not the part of this alliance initially but in 2001 immediately in the post-9/11 world scenario, Jim O’Neill (The Chief Economist of Goldman Sachs) coined the term “BRIC” (Brazil, Russia, India, and China) founded on his economic prognosis of the new emerging economies ready to dominate the financial canvass of the entire world by 2041 against the economic supremacy of the western countries. Subsequently, this prognosis has been revised and recast all the way to 2032, but in the present circumstances, it could materialize by 2025 or even before as the new Oil-For-Yuan and Gold Exchange markets are likely to be inaugurated in Shanghai soon. Predictably, these developments are being perceived as an end of Petro-Dollar and Dollar monopoly in the international market. Thus, the four BRIC nations realized their economic potentialities and power to shift the financial dynamics of the world and took over the reins of their control. Even Jim O’Neill did not have an inkling that BRIC would emerge as an economic adversary to the Bretton Woods institutions. The first formal BRIC Conference was organized in Russia in June 2009 to establish the BRICS as a new economic entity. In 2011, four countries; Brazil, Russia, India, and China along with the fifth one South Africa were recognized as the internationally fastest growing economies, and in 2013 South Africa was included in the grouping, and it has formally become BRICS.     

BRICS & Bretton Woods Economy

Presently, BRICS is confronted with many challenges including establishing itself as an alternative to the Bretton Woods’s economy or western economy. BRICS has to evolve itself as an integrated politico-diplomatic force having a global voice and vision that would drive the Asian century. Thus, BRICS must subscribe to a combined economic development approach (CEDA) that distinguishes the BRICS from the Bretton Woods Economy based on the nexus of Dollar and Euro convergence.  Therefore, CEDA must be a reality in near future if it is not possible now. Currently, Indian and Brazilian economies are being controlled by the Bretton Woods institutions which are the traditional system for monetary and exchange rate management established in 1944 to help reconstruct the devastated Post World War-II economy and to promote international economic cooperation. The Bretton Woods Institutions are the World Bank, and the International Monetary Fund (IMF) under the Bretton Woods Agreement at a meeting of 43 countries organized by the UN Monetary and Financial Conference in Bretton Woods, New Hampshire, the USA on July 01-22, 1944. In the last fall, India had witnessed disastrous economic debacle in the wake of demonetization that put 80% of the cash currency in circulation out of legal use and got it replaced with new bills with the twin objective of flushing out black money and digitizing the economy. But it is still unclear how many poor perished due to this reckless exercise. People without bank accounts suffered a lot as they were able to make digital or online payments as an alternative to cash currency. Indian economy sustained another jolt that failed a myriad of small businesses leaving the Indian economy in adversity of crisis ramifications.

There is a neo-liberal political leadership in Brazil confronted with corruption allegations which have been succumbing to the hawks of Wall Street and maneuvers of Bretton Woods’s systems. The BRICS 9th Conference at Xiamen on September 04-05, 2017 presented itself “BRICS: Stronger Partnership for a Brighter Future” but the partnership was not stronger, and future did not seem brighter rather it behaved like a private club where every member state was with a different agenda. Therefore, BRICS has to prove itself true to its name regarding economic accomplishments positively and constructively. Russian President Vladimir Putin ahead of the BRICS Xiamen Conference rightly opined that “it is important that our group’s (BRICS) activities are based on the principles of (sovereign) equality, respect for one another’s thoughts and consensus. Within BRICS, nothing is ever imposed on anyone, and the approaches of its members do not coincide, we work patiently and cautiously to coordinate them. This open and trust-based atmosphere is conducive to the successful implementation of our tasks.”   Therefore, these high averments jell well with the purposes and principles of the BRICS and UN Charter.

BRICS Bank & Development Twigging

The BRICS Bank that is presently known as New Development Bank (NDB) has oozed out of an idea mooted at BRICS Summit in Durban in March 2013 that formally created the BRICS Bank in 2014 that was formalized into a treaty signed in July 2015. The treaty envisaged a BRICS Development Bank and establishes a “Reserve Currency Pool (RCP)” of US $ 100 Billion which was to be allocated to the five member states with an equal share of the US $ 50 Billion start-up investment to be expanded later to the tune of US $ 100 Billion.  Brazil, Russia, and India were to contribute the US $ 18 Billion each while China and South Africa were to provide US $ 41 Billion and the US $ 5 Billion to the NDB respectively. However, instant fiscal arrangement posed a problem regarding setting-up of initial capital and the Contingency Reserve Arrangement (CRA) in the US Dollars that was pegged at the US $ 100 Billion. Therefore, it would be immensely problematic for the BRICS to maintain its distinct and discreet identity if it does not secede from the Dollar based fiscal arrangements in the long run. While Brazil and South Africa are heavily indebtedness that too in US Dollars and South Africa has a current debt of US $ 153 Billion that is above 50% of its GDP which prevails just below the US $ 300 Billion. Therefore, Brazil and South Africa would have to borrow from Bretton Woods institutions or Wall Street to contribute to the Dollar-denomination propelled CRA. Such a situation is bound to create a Dollar thralldom for these countries, and their strings might be in claws of Bretton Woods’s institutions and the US FED contrary to the independent Asian Economic Order based on CEDA.

In 2016, South Africa’s interest on its foreign debt US $ 153 Billion got increased up to the US $ 5 Billion that is almost 52% of its GDP proximate to the US $ 300 Billion. The US $ 5 Billion foreign debt payments are higher than the South Africa’s expenditures on tertiary education budget gauged at R60 Billion equivalent to the US $ 4.6 Billion. Therefore, it is justifiable for BRICS to detach from a debt-centered monetary architecture. As an alternative, BRICS must strive to emplace its own financial and international payment system modeled on the existing Chinese International Payment System (CIPS) introduced to the world. The establishment of NDB would render industrialization to attain unprecedented heights in the BRICS member states and beyond the grouping in tandem with the proximal growth of trade and development. Presently, the NDB has sanctioned as many as seven investment projects in the BRICS Nations of US $ 1.5 Billion and 2017 NDB has to endorse the second slot of investment projects worth the US $ 2.5 – US $ 3.0 Billion.  Nonetheless, these plans do not precisely provide the objective of the investment, but NDB was contemplated to fund energy and infrastructure projects in the BRICS countries as these countries, presently, grappling with the problem of lack of infrastructure and free energy production that would accelerate the pace of industrial growth and trade in years ahead.

Economic Expansion beyond BRICS

The NDB is pivotal to BRICS collaboration, and it might exert a pull on new investments by invoking NDB influence. It was an understanding reached in Xiamen Conference. However, its contours remain shrouded, but India made a prognosis of anticipated 40% expansion in the next few years. In case of India or other member states of BRICS receives foreign investments, it would be challenging for them to distinguish between foreign direct investments (FDI) based on the new BRICS fortitude and ordinary unilateral or bilateral FDI as articulated at Xiamen summit. The economic expansion beyond the BRICS and investment branching out with connected trade has become more critical than ever before. There are many more countries desperate to become the members of the BRICS such as Argentina, Indonesia and Turkey and two countries from the OECD such as Mexico and South Korea and their membership is under active consideration. Presently, there is incremental trade bonhomie in the emerging developing economies and developing countries’ markets in addition to global average trade regulated under the WTO regime. Therefore, economic expansion and diversification among the BRICS Nations and beyond must be facilitated so that business could get an impetus in consonance with the idea of human rights and peace-oriented economy similar to the globalization with free from all trade barriers. The BRICS economy must visualize an Economic Governance Model based on the well-being of the people away from western war industry, and US Dollar drove elite model of economic governance.

In this context, the BRICS Nations must ponder over to have their currency consistent with the deliberations at Xiamen Conference. There was an understanding among five BRICS member states to “enhance and develop BRICS Local Currency Bond Markets and together institute a BRICS Local Currency Bond Fund, as a means of contributing to the capital sustainability of investing in BRICS countries, boosting the development of BRICS domestic and regional bond markets.”  It is likely to be similar to Euro before its present incarnation as European Currency Unit (ECU) that was subsequently converted into full-fledged virtual Euro in January 2002 and then becoming US Dollar like fiat money in the world market. It is now evident that the US pushed the establishment of Euro as its subservient currency that made the Euro unsustainable and put it on shaky ground as a single currency among the countries devoid of common political interests and the constitution except one common military alliance called NATO that perpetuates permanent war-mongering contrary to the purposes and principles of the UN Charter. Therefore, the BRICS has to guide itself with a strong vision based on economic, political and defense objectives for creating a congenial atmosphere for a common currency away from the occidental priorities. However, the BRICS countries at Xiamen also adopted the CEDA policy for “BRICS Economic Partnership and initiatives related to its priority areas like financial integration, trade and investment, infrastructure connectivity, manufacturing and minerals processing, science and technology, innovation and Information and Communication Technology (ICT) cooperation, among others” for achieving balanced, sustainable, and growth-oriented global order.

BRICS & SCO Trade Integration

Now, there is an emerging tendency in the BRICS and SCO (Shanghai Cooperation Organization) Nations to have their integration as few countries are common in both the organizations. China and Russia are in SCO, and recently India has also joined the SCO, and it has many countries from central Asia, the nations of the Commonwealth of Independent States (CIS) led by Russia, and new member states like Pakistan and Iran. Moreover, the SCO has devised a geostrategic defense vision in advance based on common long-term objectives of CEDA orientation.  Recently, Presidents Putin and Xi advocated the idea of BRICS and SCO integration at the EEF (Eastern Economic Forum) Meeting on September 06-07, 2017 at Vladivostok. They were of the view that fusion between EUAU (Eurasian Economic Union) and the new Silk Road popularly known as OBOR or OBI (One Belt, One Road or One Belt Initiative respectively) must be translated into action with immediate effect. Primarily, the China drives OBOR and Russia propels the SCO and EEU countries are part of the SCO, therefore, if these nations take an economically well-integrated and politically united stand, Western hegemony destined to be decimated and buried in the ground for once and all.

This would usher the world in new global trade environment free from Dollar domination, Bretton Woods Organizations, and occidental economic blockade of countries who do not subscribe to outrageous western oppressions, preposterous predilections, and illegal economic sanctions in violation of sovereign equality as enunciated in the UN Charter and international law. Now, there is a multitude of global scholarship well-grounded on unity, unanimity, and ubiquity of economic thought that 21st century belongs to Asia. It is, unfortunate that Eastern countries always paid Western countries’ avarice, greed, and domination and subjugation of Asian people to the hilt. Therefore, Western world must realize the fact that they are no more in a position to dictate the developing world and if they stick to their archaic and obsolete policies, they are destined to doom in the quagmire of ill-conceived nostalgia of a reflected glory. They must engage themselves with the Asian world on equal terms while abdicating their supremacist tendencies and exploitative agenda.

Conclusion

It is axiomatic from the ongoing discussion that the BRICS NDB has the propensity to match with the Bretton Woods Organizations. There is a requirement to have a delicate balance between economic austerity measures and neo-liberal economic policies that demand fiscal discipline for economic development and people-oriented development directed at equitable wealth distribution and just income. The fundamental problem has been the initial capital and the CRA installation in US Dollars. The BRICS member states’ debts as adumbrated hereinabove are another irritant that must also be repaid and removed within a well-stipulated time frame before switching over to new BRICS arrangements on its potential currency. On the other hand, Chinese AIIB (Asian Infrastructure and Investment Bank) establishment with an initial capital of US $ 100 was also set-up in a Western hegemonic currency called Dollars. Therefore, NDB and AIIB would have to work collectively to dismantle the well-entrenched Bretton Woods financial wherewithal in the world that has been designed to usurp the Asian economies. Although, the BRICS and AIIB have already taken a step ahead in this direction with enacting the Chinese Petrol Exchange in Shanghai at which trading would be in gold-convertible Yuan and discarded the trading in US Dollars. Thus, the BRICS and SCO fusion is the potential solution that may be analogous to the IMF’s SDR (Special Drawing Rights). The SDR presently comprises five world currencies such as US Dollars, British Pound, Euro, Yen, and since 2016 Chinese Yuan and same must be commenced and pressed into international trade as a viable alternative while maintaining the sanctity of their national monetary systems for a bidding and enterprising future.

Ph. D., LL.M, Faculty of Legal Studies, South Asian University (SAARC)-New Delhi, Nafees Ahmad is an Indian national who holds a Doctorate (Ph.D.) in International Refugee Law and Human Rights. Author teaches and writes on International Forced Migrations, Climate Change Refugees & Human Displacement Refugee, Policy, Asylum, Durable Solutions and Extradition Issus. He conducted research on Internally Displaced Persons (IDPs) from Jammu & Kashmir and North-East Region in India and has worked with several research scholars from US, UK and India and consulted with several research institutions and NGO’s in the area of human displacement and forced migration. He has introduced a new Program called Comparative Constitutional Law of SAARC Nations for LLM along with International Human Rights, International Humanitarian Law and International Refugee Law & Forced Migration Studies. He has been serving since 2010 as Senior Visiting Faculty to World Learning (WL)-India under the India-Health and Human Rights Program organized by the World Learning, 1 Kipling Road, Brattleboro VT-05302, USA for Fall & Spring Semesters Batches of US Students by its School for International Training (SIT Study Abroad) in New Delhi-INDIA nafeestarana[at]gmail.com,drnafeesahmad[at]sau.ac.in

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Agriculture Is Creating Higher Income Jobs in Half of EU Member States but Others Are Struggling

MD Staff

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Half of EU member states have leveraged the Common Agricultural Policy (CAP) to significantly reduce poverty and drive higher incomes in farming, while other countries are still lagging, according to the latest World Bank study.

The ‘Thinking CAP’ report details how new investments and services in farming, reinforced by the EU’s flagship agriculture policy, can drive down poverty and transform agriculture into a sector which can provide higher paying jobs for those who farm.

Hungary, Slovakia, Estonia, Denmark and the Netherlands are all examples of member states that have successfully modernized their agricultural sectors by providing advisory services, roads, secure property rights and access to education and health services in rural areas. Others, such as Bulgaria, Portugal, Romania, Slovenia and Greece, still have some way to go in reducing poverty and ensuring that agricultural work pays. They can do so by improving the basic conditions for a successful agricultural sector, which would improve the results of the financial investments available under the CAP. Other remaining member states fall in between these two categories – achieving a successful transformation or lagging behind.

“Agriculture and poverty in half of the member states of the EU no longer go hand-in-hand. It’s clear that the income gap between agriculture and other sectors is narrowing and in some countries, such as the Netherlands, agricultural work can pay more than jobs in other sectors,” says Arup Banerji, Regional Director for the European Union Countries at the World Bank. “Today, about half of EU member states recognize that farming can boost shared prosperity, while the other half still has some work to do to provide the basic conditions to bring about necessary structural changes.”

The World Bank report shows that the EU CAP is associated with improving employment conditions in farming. Decoupled payments – annual payments based on how much land a farmer uses – and the co-financing of on-farm investments do show clear links with improvements in agriculture. For instance, in the newer member states agricultural labor productivity growth increases from 3.1 percent to 4.7 percent per year with a 10 percent increase in this type of CAP spending. However, there are certain categories of subsidy – known as coupled payments, which reward farmers for producing a particular crop or livestock— for which the report could find no such association. In the past, these coupled payments also led to extreme overproduction and price distortion on global markets.

“Some countries are running before they can walk by issuing payments to farmers who don’t have the necessary infrastructure to effectively bring their products to market or to make the best use of their investment,” said Rogier van den Brink, Lead Economist at the World Bank. “However, the processes the CAP has put in place are impressive. The CAP casts a very wide net and reaches farmers in every far-flung corner of the EU. Because of this, improvements in the CAP along the lines of the recommendations outlined in our report will further strengthen its role as a powerful instrument of structural transformation.”

Going forward, the report says the monitoring of CAP funds should focus on delivering tangible results rather than confusing bureaucratic processes. This would also encourage the co-financing of private investment into CAP-supported projects which are in the public interest such as environmentally sound practices, organic farming and animal welfare.

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Economic Warfare and Cognitive Warfare

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Until not long ago, the Western world lived in the conviction that Liberalism was an end in itself, however, the new context of globalization suggests that political economics once again makes more sense, given that power relations in the economic sphere can no longer be ignored and  the idea that world trade is structured on supply and demand appears obsolete.

The world is changing. Situations change, and events and the ways of understanding politics change with them. Instruments change as well: if the aphorism of Clausewitz that war is politics conducted by other means once seemed valid, today we might say that politics (and economics) is war conducted by the means of information.

The threat is no longer limited to what we once thought and conceived in the geographical terms of one superpower attacking another. The threat today is asymmetrical, different, and changes continuously. It travels through the Internet, it is immediate, and above all, it threatens the entire system. It is not aimed at military or political targets but commercial, industrial, scientific, technological, and financial interests instead. This requires intelligence to structure itself around new duties: protect not only the entire system but also the weakest links in the chain of production.

All this requires changes in mentality and in operational processes, as well as continuous updating, especially at a business culture level. Most of all, it requires close interaction between intelligence and the private sector, despite the difficulties this entails.

The crisis we are currently undergoing, together with the industrial and commercial physiognomy characteristic of our era, requires us to consider the idea of “economic warfare” very closely.

It is essentially since the end of the Cold War that the balance of powers has been developed around economic issues: most governments today are no longer interested in occupying territory or dominating other peoples but rather building up technological, industrial and commercial power capable of bringing money and jobs to their own land.

Globalization has transformed competition from “gentle” and “limited” into authentic “economic warfare”.

Although this economic challenge reduces the areas available for military warfare, its ultimate goal of accumulating power and well-being is the same.

The national economic intelligence strategies recently adopted by numerous governments assign their private operatives central roles in maintaining security by providing them with information technology infrastructure and the primary asset in the digital age: data.

The step between protecting private economic activities and protecting national economic interests is a short one indeed.

Economic intelligence consists in coordinating a series of activities: collecting and processing information, monitoring competitors, keeping strategic information secret, and capitalizing knowledge for the purpose of controlling and influencing world economic environment. All this makes it a powerful weapon at the nation’s disposal.

The main players in economic warfare are:

First and foremost, the world’s nations, which remain the most influential regulators on the economic chessboard despite their relative decline in the life of nations and the various restrictions placed over them, such as those imposed by international organizations like the European Union. One important recent change is that now nations must take numerous stakeholders (NGO, international bodies, companies, mass media) into account. At any rate, they uphold the role of arbiter that all the other players only continue to emphasize by regularly imploring their intervention.

The world’s companies, which address the new hyper-competitive geo-economic scenario by using strategic information control as a weapon of competitiveness and economic security.

Civil society: the expansion of discussions on social issues regarding company activities (nutrition and well-being, technological progress and risks to public health industry, and the environment, transport and passenger safety, information technology and individual freedom), the mass use and democratization of Internet, and the growing involvement of the legal system in monitoring business operations, all increase the risks of hacking attacks against companies by hackers from civil society.  Including in the public discussion topics such as risks to the environment, sustainable development, socially responsible investment, and corporate social responsibility brings greater importance to the legitimacy of social questions.

The infosphere, which is not a category of physical persons or legal entities but instead a dynamic, that is the aggregate of interventions and messages spread through media and the worldwide web. The infosphere is a particularly insidious instrument similar to an amplifier that continuously jumbles and blends ideas, emotions, and impulses emitted by an infinite number of people without any real dominant subject and exerts a determinant influence – positive or negative as occurs – on individuals and organizations. When launched in the infosphere, a simple statement has the power to trigger ferocious argument, harsh political reaction, media crises, and damage to company reputations. The infosphere can become a particularly effective weapon of destabilization. We must never forget that a brand’s image and reputation are strategic components of the capital of a company that can affect its commercial and financial activities.

Which forms does economic warfare take?

Economic warfare is often confused with economic espionage, which despite being used as one of economic warfare’s weapons is hard to define both because the companies victimized are reluctant to publicize its incursion and because it is hard to circumscribe in juridical terms and therefore difficult to report.

A more commonly practiced form of economic warfare is the purchasing of companies. This may lead to authentic forms of surrounding the industries in any given territory through operations that reflect motivations of financial, economic and technological nature all at the same time.

Yet another form of economic warfare, which is both particularly widespread and insidious, is lobbying; in other words, an influencing strategy aimed directly at public decision-makers assigned to the drafting of regulations. Our nations are particularly plagued by the proliferation of regulations and one strategically important aspect of lobbying is attending and altering the process of creating, interpreting and/or applying regulations and legislative measures and directly or indirectly influencing public powers in every intervention or decision. International trade is largely based on influence, and therefore gaining closer access to decision-making centers has become an obligatory part of commercial competition.

All the practices above are included in influence strategy: influential communication is also the hardest to identify and oppose because it is perfectly legal. “Information war” is based on the following few simple principles that can wreck havoc when marshaled together:

  • moral argument, that is the possibility to induce a crisis on the basis of an ethical reasoning;
  • offending political correctness by disrupting the day’s cultural and psychological patterns;
  • choosing targets, in the sense that the weaker the legitimacy of the adversary’s capital, the more the information attack will provoke escalation in the media;
  • the degree of celebrity of the players;
  • the criterion of appropriateness or resonance of the environment.

The upheaval of the Western economies’ competitive system is not just a passing thing. A growing number of powers (China, India, Brazil, Turkey, Iran, Russia) is conditioning the rapid shift in international competition. More often than not, the choice of winning dominance in foreign markets prevails over restructuring the nation’s own domestic markets. This demonstrates the extent to which a power strategy can make a decisive difference in the context of economic competition. These new players in international competition hold a different view of the dialectic between power and market, the latter being seen as the primary means to the increment of power. This vision revives the basic principles of political economics, according to which the market is the only path to power and not the other way around that has been demonstrated in numerous cases (such as Russia’s Vladimir Putin’s use of energy resources for coercive bargaining and blackmail in 2009) and illustrates the limits  of the interpretative models of liberal economists whose analyses were focused on the effects of deregulation, mergers, or financial speculation involving gas prices, but fell short of the possible use of gas trade as a weapon.

The process of globalization is irreversible and fairly independent of what governments do.  Globalization is one thing, but the ideology of a global free market that may produce a higher growth rate than any other system but gives no importance to how such growth is distributed is another. The argument that the highest capitalistic growth distributes resources in the best possible way, in fact, was never very convincing. Even Adam Smith thought that there were certain things the market could not do and should not do.

Historically speaking, the balanced evolution of world industry was created not by liberalism but by its opposite. The United States and Germany both became industrial powers in the 19th century because they protected their industries until they were able to compete against the dominant economy of the day: Great Britain. Neo-classical economic theories are now in disfavor because the system has come to be disrupted by scarce control over international financial flows and investment procedures.

Now more than ever, we are witnessing a struggle between the forces of capitalism, which tend to overcome every obstacle, and political forces that operate through nation states and are obliged to regulate these procedures. The laws of capitalist development are simple: maximize expansion, profit, and increase in capital. Governments by nature have different priorities instead, and this generates conflict. Furthermore, the dynamic of the global economy is one that does not ensure the stability of its protagonists.

The nation-state system and the economy system coexist in constant tension and must adapt, but if there were no relative stability among states, the instability of a world organized along the lines of transnational economy would only increase. The real problem is not whether governments can control the international corporations operating inside their borders, but whether they are able to exert global control: when companies and governments clash, the latter must negotiate as if there were another nation seated before them.

Like religions and cultures, globalization is only a simplified answer to today’s conflicts and the challenges to security. Globalization has most certainly reduced the importance of military power since the end of the 20th century, whereas security – internal security in particular – has become a global public asset. In the age of information technology, interdependence, and ”smart goods over heavy goods”, the military force offers less and costs more. Economic, technological, and especially communicative competition is more important and determinant than military strength.

The globalization of information has contributed to changing the nature of warfare by making public opinion decisive. In the short term, geo-information has become more important than geo-economy because its effects are immediate and not always governable. This is also a post-Cold War phenomenon.

In this context, the economy is no longer the mechanism of security as it was during Cold War, but on the contrary, security now serves the economy in creating better conditions for the expansion and protection of globalization. The nature of security depends on the situation prevailing in each nation and varies from one region to another, according to the respective level of globalization.

Consequently, it is the process of globalization that has restored political economics to importance and re-sparked a discussion formerly considered closed, according to which the market is the path to power and not the other way around, as it becomes an instrument of power politics in the globalization of exchange. The accumulation of power through economic expansion is the driving force behind the new emerging nations.

Yet today’s economic context must come to terms with new offensive strategies that undermine the industrial basis of the market economy and draw attention to the predatory policies of what may be defined as authentic economic warfare.

It is in this context that all companies, regardless of size, can be said to suffer damage from the absence of an economic security culture that only the use of intelligence, as a tool in analyzing predatory completion, can provide.

Interpreting the notion of national security including also the safeguarding of national interests requires information and security services to be ready to protect big companies or those of strategic significance, which the French refer to as “companies of national strategic importance” or “national champions”. These companies often – but not always – have their own information or security organizations that help them survive fiercer and fiercer competition.

In any case, in the field of economic intelligence the rules between the services of the various nations are more flexible, and it is easier to refer to others merely as competitors, neither friend nor enemy. This field is currently in the process of development, and European economic intelligence is still in embryonic phase.

The evolution of the information society has profoundly modified the frame of conflict. In the opinion of American analysts like John Arquilla and David Runfeldt, experts in netwar at Rand Corporation, the nation that wins tomorrow’s conflicts will not be the one with the biggest bomb, but the one that tells the best story.

In this sense, Americans have been referring to the key concept of information dominance since 1997. Defined as the control of anything that may be deemed information, this doctrine aspires at the moulding of the world by standardizing international practices and regulations to the American model, with the objective of placing decision-making bodies under control.

These experts note that it is sufficient to observe how American public opinion was mobilized during the invasion of Kuwait by a disinformation process planned at military level, or more precisely, at the level of psychological warfare. Information manipulation processes allow certain facts to be marginalized, and for this reason the domination of information has become a top priority in defining American strategy.

We may consider how the war in Iraq demonstrated the importance that manipulating information has assumed in international relations. The accusations made by G. W. Bush against Saddam Hussein regarding the existence of weapons of mass destruction represent a textbook case in the history of disinformation.

On the other hand, we must be careful of jumping to conclusions about how cognitive warfare is waged: disinformation, or even worse, the manipulation and authentic distortion of information for the purpose of deceiving your adversary or ally is often mistakenly confused with the production of knowledge conceived to orient the rules of conduct.

In this regard, Harbulot emphasized the profoundly innovative role of information war in terms of strategy and its implications for companies.

It was naturally Harbulot’s intention to use cognitive warfare to protect the economic interests of French companies against their American competitors. If, in fact, conflicts ranging from the Gulf War to the War in Kosovo have demonstrated the overwhelming superiority of American military intelligence overseas, what room for maneuver remains open today for the managers of the intelligence service in Western Europe, who are responsible for defending the geo-economic interests of their nations against American interests? Harbulot’s answer is clear: this room for maneuver is constantly eroding, and a situation of near total paralysis has been reached in certain cases.

Closing this gap means modernizing the thought of Sun-Tzu, the Comintern, and Mao Zedong, and especially that of Winston Churchill, the first Western statesman to have orchestrated a plan for information warfare against Nazi Germany (Plan Jaël). In terms of disinformation, he represents British genius in deceiving the enemy on the dates and locations of invasion landings.

Naturally, the lack of legal provisions regarding the manipulation of knowledge raises serious concern for the economic security of European companies, which must consequently arm themselves with techniques capable of strategically managing economic information.

It is precisely in light of American political-military choices that French strategy discerned the need to define just what information war really is in the strictest terms. The expression used in French strategic context is “cognitive warfare”, which is defined as the capacity to utilize knowledge in circumstances of conflict.

In particular, the French School of Economic Warfare acknowledges in cognitive warfare the conflict between different capacities of obtaining, producing, and/or obstructing determined types of knowledge implicit in power relations that can be defined “weak against weak” or inversely, “weak against strong”.

Numerous examples that come from the world of industry testify that innovation in this field is not always necessarily made by the strongest. Naturally, the United States is the primary artifice of “strong against weak” cognitive thinking, such as, for example, in defense of its position as superpower at both military and informational level. This nation’s way of orienting its own and the other nation’s conduct implies its complete acquisition of the importance of cognitive warfare as the ability to have the images of single powers perceived by the world public opinion, a strong argument in the search for legitimacy that every democracy must acquire in national and international context. The United States has always – but especially after September 11 – stoked the legitimacy of its policies by emphasizing the defense of democracy and the need for global security as reasons to combat anti-democratic forces.

In today’s context of intense competition, destabilization plays a fundamental role. Harbulot suggests considering the example, that has become common practice in economic warfare, of a multinational company that decides to stop a competitor from developing a project in an emerging nation.

A cognitive warfare operation might take the following form:

Identification of the competitor’s weak points in the area in question (weaknesses may vary in nature: bribes paid to authorities, environmental pollution, failures to respect human rights). All the information collected must be verifiable and not give rise to fallacious interpretation.

The choice of the information attack procedure: if the cognitive aspect is considered, the following scenario may be imagined. The director assigned orders funds to be paid into a private foundation supported by the company. A trusted person at such foundation then channels this money to a NGO that has posed itself the objective of protecting the environment. The maneuver consists in then making the NGO aware of this dossier by indirectly providing it with verifiable (and therefore non-manipulated) information on the misdeeds of the competitor multinational. Through its Internet site, the NGO then sends negative messages against the competitor’s project. This is how the chain of knowledge is created. The next step required is knowing how to consciously activate it for the purpose of destabilizing the target.

The chief strength of the information attack lies not in deceiving or misinforming but instead in fomenting a pertinent dispute that has been demonstrated by objective facts. The level of conspiracy is limited to setting up and activating the information chain. The more “grounded” the diatribe is, the harder it will be for the adversary to demonstrate conspiracy, even if only in theory.

It is clear that the spread of new information technologies has brought competition exasperated levels and facilitated cognitive warfare, in such way triggering an unprecedented conflict that, in the opinion of the French analysts, exceeds even that of the Cold War.

Information has become another weapon in the art of war capable of making the difference between winning and losing, regardless of whether the conflict is military or economic.

Changes of such degree impose cultural revolution.

Then there is psychological warfare, one of the principal forms of information war. It is the most sophisticated because it relies essentially on human intelligence, in its capacity to understand possible actions for success by controlling the means of communication.

Little known and scarcely practiced in France, psychological warfare has never received much attention from the military establishment, which has often succumbed to the pressure of events or adversaries, as happened in Indochina and Algeria.

Psychological warfare employs every means available, from disinformation to deceit, from propaganda to interdiction, in clashes of various nature (from the battle against terrorism to conventional warfare and the subsidization of peace) and is moreover directed to public opinion for the purpose of conditioning or manipulating it.

The use of psychological weapons cannot be improvised and is based on an organized operative structure and conducted by specialized personnel and organizations.

Civil communication systems have by now reached levels of performance previously attained only by armed forces and governments. This has led to the accumulation of a critical mass such to enable a lowering of costs. For this reason, even if the conservation of certain autonomous military capacities is foreseen, the development of information systems for defense and intervention depends more and more on civil systems. This creates a vulnerability that might be underestimated in times of crisis or conflict.

The infosphere’s framework has become highly conflictual; information war has become inevitable and is waged with the function of appropriation (intelligence), interdiction (limitation of access to information) and manipulation (intoxication).

Economic intelligence provides a necessary response to a world with no more borders of time or space, where information is immediate and reaction time is zero. A re-organization of structures around the new dimension assumed by the relationship between information and intelligence leads to changes in both the decision-making system and the management of human resources. First and foremost of all, the revolution must be cultural in nature: perceiving information as a weapon to be incorporated into national defense strategy.

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Economy

“Made-in-Russia”: Securing Russia’s economic interests

Kester Kenn Klomegah

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Squeezed between the United States and European Union sanctions, Russia has been exploring effective ways to increase exports of its industrial products under “Made-in-Russia” program to traditional markets in Latin America, Asia and Africa. The primary strategic goal is to secure Russia’s economic interests abroad while at the same time support Russian industries in raising revenue to modernize Soviet-era industries. But increasing exports especially to African markets, Russia has to confront market competition from western players and Asian countries such as China, India and the Gulf states.

In a recent interview, Peter Fradkov, general director of the Russian Export Center (REC), has explained that Russia has been making every effort to avoid the “raw-materials” export model and focus on developing export-oriented industries and the launch of the Russian Export Center was a key step towards the development of a full-fledged national export support system.

The Soviet Union made a significant contribution to the social and economic development of African countries by building large industrial and infrastructure facilities and helping to establish national education and health care systems. However, in the 1990s the Russian-African relations came virtually to a standstill. At present, Russia’s foreign trade turnover with Africa is about 12 billion US dollars, which is a rather modest achievement. Nevertheless, the African continent remains a rather promising market for Russian industrial goods.

Admittedly, the Government authorities, and both Inter-Governmental Commissions and the REC, are primarily concerned with removing barriers for Russian exporters and opening up foreign markets for them in Africa. Reinforcement of positions of Russian exporters in Africa requires creation of certain conditions and the key task is penetration into the global market. For this purpose, the Russian Export Center has launched a program to promote Russian goods and services under a single country brand “Made in Russia” and in this context, Africa is a very important partner for us, though not an easy one.

He underscored the fact that “Russian manufacturers have a number of specific competitive advantages. Let’s take, for example, agricultural machinery. The main advantage of Russian products as compared to the counterparts by major foreign manufacturers is a lower price and almost the same level of capacity, quality and useful life.”

On the other hand, there are some difficulties still inherent in the Russia-African business partnership. According to Fradkov there are still insufficient awareness of the real economic opportunities, market conditions and specific counterparts in African markets by Russian businesses and poor awareness of capabilities of Russian partners for Africans.

“We are often faced with discriminatory barriers, which are there not because we are from Russia, but because we have just not thought about how to remove these barriers. Our primary task is to gradually change the thinking of Russian entrepreneurs, who are often skceptical about entering foreign markets, including Africa. Secondly, we strive to promote the image of Russia as a producer of diverse and high-quality products,” he underlined in the interview.

With new trends and directions in global business, African countries have to look to the Eurasian region as a huge market for exports as well as make efforts to consolidate and strengthen economic cooperation, says Tatiana Cheremnaya, the president of ANO “Center for Effective Development of Territories” and head of the working group on public-private partnership “Business Union of Eurasia” based in Moscow.

Cheremnaya discussed here three main points and are as follows: The problems of effective cooperation between Russia and Africa are political in nature. Thus, the strengthening of Russia’s position leads to the strengthening of its influence in the world, including in Africa and vice versa, sectional policy has significantly reduced Russian exports.

The second problem for the development of Russian-African business is the lack of competitiveness of Russia which allows working only in the low-budget segment. This is due to structural problems in the Russian economy, the need for modernization, the bulk of the products produced during the Soviet Union.

The third problem is competition from the United States, China and India as more developed countries with more advanced technological solutions, and from the European countries as the former “patrons” of African countries.

Russian President Vladimir Putin, taking part in a congress during the 11th Russian Business Week organized by the Russian Union of Industrialists and Entrepreneurs (RUIE) early February, discussed how innovative technology is reshaping the global business landscape. He, however, encouraged Russian industrialists and businesses participating in the forum to improve their business approaches in order have competitive advantages in the global market.

“This is the most important thing. And fundamentally fresh markets for goods and services will become available, and new leaders will appear as well. Naturally, competition will exacerbate. Clearly, in a situation like that, no one will be playing fair with their competitors, including in the global business environment,” Putin said.

Russia has trade centers established in Africa. But these Russian trade centers must necessarily embark on a “Doing Business in Africa” campaign to encourage Russian businesses to take advantage of growing trade and investment opportunities, to promote trade fairs and business-to-business matchmaking in key spheres in Africa.

Maxim Matusevich, an associate professor and director, Russian and East European Studies Program, at the Seton Hall University, told me in an interview that “in the past decade there was some revival of economic ties between Africa and Russia – mostly limited to arms trade and oil/gas exploration and extraction. Russia’s presence in Africa and within African markets continues to be marginal and I think that Russia has often failed to capitalize on the historical connection between Moscow and those African elites who had been educated in the Soviet Union.”

“It is possible that the ongoing crisis in the relations between Russia and the West will stimulate Russia’s leadership to look for new markets for new sources of agricultural produce. Many African nations possess abundant natural resources and have little interest in Russia’s gas and oil. As it was during the Soviet times, Russia can only offer few manufactured goods that would successfully compete with Western-made products. African nations will probably continue to acquire Russian-made arms, but otherwise, I see only few prospects for a diversification of cooperation in the near future,” added Maxim Matusevich.

Former Ethiopian ambassador extraordinary and plenipotentiary to the Russian Federation, professor Teketel Forssido has also explained that Russian businessmen think that business can be done from government to government levels (at the state levels) but in many countries business at the state levels has been complimented by private participation. Using government as an umbrella could be alright, countries such as India, China and others run businesses without government in Africa. The government, of course, has to clear the way for smooth business transactions.

“Russians are counting on the authorities to do business, but if they always rely on the state, business can be ineffective. That’s why Russians businessmen are slow as we have seen it,” he said.

According to Forssido Russia has to open its market for Africa and there are various ways to this. One surest way is to use the existing rules and regulations. The preferential treatments for agricultural products exist but Africans don’t use them. Then, individual countries have to negotiate with Russian government for their products to enter the market.

Further, the African regional economic blocs can be useful instruments because these blocs are very important and can work with their counterparts to facilitate trade between Africa and Russia. For instance, in COMESA and SADC zones in Africa, goods and services move freely, and now I think these blocs should look into the line of working as regional economic blocs with Russia.

“At the moment, China has done a lot in Africa despite worldwide criticisms. China is not the only player on the continent, but also India, Turkey and other serious players. But, when we talk about Russia, I think it’s not comparable. China has largely involved in Africa, practically in all sectors as we can see. We expect that Russia can do more if they want to, looking at their huge potential capability. They still have their own priorities, anyway,” he pointed out assertively.

As already known, Moscow’s long term goals include developing investment cooperation with African countries, widening the presence of Russian companies in the African markets through increased deliveries of industrial and food products, and enhancing Russian participation in driving the economic development of Africa. At the same time, Russia needs to look at simplifying access to its market for African countries.

In one of his speeches posted to the official website, Russian foreign minister Sergei Lavrov noted frankly in remarks: “it is evident that the significant potential of our economic cooperation is far from being exhausted and much remains to be done so that Russian and African partners know more about each other’s capacities and needs. The creation of a mechanism for the provision of public support to business interaction between Russian companies and the African continent is on the agenda.”

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