How the 13 Non-G7 Members of the G20 Are Reshaping the World

Economics, Geopolitical, Premium POM

By JC Collins

Power and influence are never willingly relinquished or surrendered.

Such is the state of mind within the American geopolitical and socioeconomic complex.  This paradigm of power is pronounced in both the reluctance of the US Congress to pass the supporting legislation for the IMF 2010 Quota and Governance Reforms, and the ongoing geopolitical turmoil in Eastern Europe and the Middle East.

As I have profusely written, the international monetary framework is in the process of transitioning to a multilateral construct which will be based not on the unipolar US dollar, but on a multi-currency reserve system, of which the dollar will still play an important role.

China themselves have called for such a system and have been working towards internationalizing the renminbi exactly for this purpose.  The recent inclusion of the RMB into the Special Drawing Right basket of the International Monetary Fund is a huge step towards realizing this goal.  Many have suggested that this move is largely symbolic and the SDR means very little in the larger global framework.

Though that may be so at this time, the addition of the Chinese currency into the SDR has more to do with the Chinese currency and less to do with the SDR.  The SDR will become the reserve asset further down the road, but right now this is all about the renminbi and the liquidity market which will grow out of the internationalization.

The 2010 reforms which have yet to be implemented by the US will make China the 3rd largest shareholder of the International Monetary Fund.  Under these quota and governance restructuring, Brazil, India, and Russia will also move into the top 10 shareholders of the IMF.

When we consider that these reforms will position 4 of the 5 BRICS members as top shareholders within the US dominated IMF, the reluctance of the Congress to support the G20 agreed upon changes becomes more understood.

But to think that the BRICS nations are intending on overthrowing the western dominated IMF and World Bank would be a mistake.  Both China and India understand the importance of integrating into, and transforming, the already existing framework.

While both of those countries are playing softball with the west, it is Russia who has been forced to bat in a game of pro-ball with the United States.  The geopolitical tension over Ukraine and Syria has shifted into a new phase of intensity.  The US, well aware of the fact that they will lose geopolitical and socioeconomic power throughout the multilateral transition, are positioning themselves to retain as much influence as possible.

The vacuum which will be left behind will be filled with something.  America, along with many European allies, are aware of the threat which both Russia and China present as potential stuffing in these geopolitical and socioeconomic holes.  Having failed to subdue Assad in Syria, and after watching the once conquered Iraq make trade and economic agreements with China, a strategy of creating another Islamic Caliphate to fill the vacuum in the Middle East must have appeared like a viable alternative.

This explanation best fits the actions of the western countries, including G20 and NATO members, in funding and supporting the creation of such a caliphate.  Russia, by directly entering the conflict against ISIS, has tilted the balance of power and gutted the western strategy.  This will in turn force the hand of the US and its key European allies to sit down at the negotiating table or accept the inevitable loss of the geopolitical and socioeconomic monopoly which they have enjoyed for so many decades..

It is not a coincidence that this is all taking place in the lead up to the possible announcement by the Federal Reserve on December 16th regarding the first interest rate increases in ten years.  This timeframe also correlates with the deadline for the implementation of the workaround to the 2010 Quota and Governance Reforms as defined by IMF Managing Director Christine Lagarde, which was established as December 15th.

Over the next few weeks the Asian Infrastructure Investment Bank (AIIB) and BRICS New Development Bank (NDB), along with the BRICS Contingent Reserve Arrangement (CRA), will be kicking off.  All of these institutions are not meant to overthrow the western institutions of the IMF and World Bank, but integrate within that existing framework for the purpose of balancing the international monetary system.

The AIIB, NDB, and CRA will help establish and grow the renminbi liquidity market, which will work towards the goals of the multi-currency reserve system, as well as provide the financial assistance which will be required when the Fed begins the process of increasing interest rates.

The Bank for International Settlements has already warned of the negative effects such increases will have on the emerging economies, which also includes the BRICS countries.  We are now entering the phase of the transition where liquidity will begin to shift and increased volatility will spread.  Such matters are intended to be used as the raison d’etre and justification for the larger loss of sovereignty which this multilateral transition will entail.

The inability of the G20 to coordinate on, and implement the needed reforms to the international monetary system will be focused upon the G7 clique within the G20.  NATO, which is being used as a tool of the G7, and in turn American geopolitical and socioeconomic interests, will experience a loss of influence in Europe and the larger Eurasian continent as a whole.

The destructive and unipolar nature of the western strategy will be unveiled, and the G20 will be injected with renewed energy.  The focus will once again shift towards financial regulation, monetary and fiscal policies, expanded central bank swap lines, and the needed increase in IMF resources.

What we will witness in the coming months and years is the complete merging of the IMF, World Bank, AIIB, NDB, CRA, within the G20 construct.  This construct will, from its inception, be subservient to the mandates and policies of the United Nations.

It has always been my contention that the world will not experience a major war over this transition of power and influence.  The players all have too much to lose and the consequences are substantially greater than they were in the lead up to World War One and Two.  This is not to say that a few players will not be thrown to the multilateral wolves, such as Turkey and Saudi Arabia, which are both likely closer to color revolutions of their own than many would like to consider.

Power and influence are never willingly relinquished or surrendered.

But coercion through counter geopolitical and socioeconomic strategies could allow for a somewhat peaceful transition.  – JC