The future of world economics is not westernized. It is continuing to be led by the eastern nations – communist Russia and China. The Cold war has returned through economic dependence – not just rifles and bombs. The IMF, World Bank, EU, UN and United States have historically used destructive loan interest and default measures that have turned countries to looking for new sources. This is not a new trend but a much stronger one.
According to the February 2015 McKinsey Global Institute study, global debt has risen $57 trillion dollars in the past seven years. That’s not new either. What is new is that countries in debt no longer use the “western” lenders; they are going to Russia and China for assistance. It’s not just economics that are forcing countries to look to the East, it’s a history of excessively injurious loan terms.
Western lenders are now facing reverse hegemony – when the weak control the strong.
Put your patriotism aside to read this article.
Historical Loan Indifference
These are but a few instances of faulty loan terms and projects forced upon nations through IMF loans. Throughout the 20th century, the Western lenders used shock therapy economics in Chile that destroyed the economy and population (Klein, 2007). This shock therapy economy was directed through and by Pinochet – an authoritarian dictator with very little patience for human rights (Klein, 2007). He was in power for generations.
Country leaders can look at this example and ask, “If an authoritarian is installed by the Western lenders then what’s wrong with Russia and China?” In India today, we still see the vast electricity blackouts. India is still paying the IMF for the electrical grid they installed by foreign workers 30 years ago (Perkins, 2004). Once the electrical grid was created, these foreign workers left India, leaving few people with the knowledge of the grid, it’s complicated structure or any know-how of fixing it (Perkins, 2004).
Country leaders again must ask, “Why go to western lenders when they do not hire or train local and national workers?” Why would any country take out a $5 billion dollar loan when they can’t employ their own people? India has seen a mass exodus of their most educated citizens to countries around the world due to lack of meaningful and properly paid work at home ().
These are two small examples of excessive loan economic conditions enforced by the western lenders.
Default Safety In Greece
The Grecian government under Syriza has been invited to meet with Putin to possibly discuss their economic woes. The Grecian people are steadfastly against this move, yet they do not want to pay into any more austerity measures. If the EU is too strict on austerity, this meeting will occur.
A government that is backed into a corner will have no choice. Putin has the ability to insist upon export and import structures. If these become a Russian advantage this will create a domino effect across the EU. This again leaves Germany in a very delicate position. Germany is supporting the EU economy but they need to manufacture and sell their wares as well.
We can quickly see why Merkel is deeply involved with both sides. She doesn’t want to lose the loan investment in Greece or the ability to trade. Merkel will need more public protests against Russian interference but from whom? America and China are too deep in debt to leverage either a Greek default or a Russian capture. I am predicting a strong influence through Merkel may save the Greeks from becoming the next Russian annexation but with a heavy loss due to a Greek default.
Greece has struck gold – they can default and still win EU support to keep Russia out. The default is acceptable to stifle communism’s reach.
Latin America Loses Western Investment
The president of Argentina made a swift move to meet with Chinese leaders for cures to their economic woes. China will now have more control of their rail system and more beef will be traded to China. That creates less beef sales for countries surrounding Argentina. That enables China to export even more of their wares to a new country. The more they ship, the more their wares go on the shelves, less room for American and European products.
A far reaching domino effect but no less harmful as we rebound. China will secure more rights in the Argentinean trade structure. This can impair several Latin American countries. We know Latin America, especially Argentina, has a long history of labor abuses. If China exports their work ethic, even more unions and workers will be dis-empowered. China can demand their factories and outlets to be structured by certain working hours, wages and working conditions.
Argentina will become a new arm of communist working economics. Political rule isn’t far from there.
Yes, the communist arm does not stop in Argentina. Billionaire Wang Jing has begun the first phase of development of the Nicaraguan canal. The canal will give China another country in Latin America controlled by their work ethic and values. The less Nicaraguans will own their country or even their land.
The domino effect will be job loss, land loss and a change in labor ideology. China is already exporting their own workforce for the development of the project leaving Nicaraguan developers out of precious high paying positions. The country will see little direct revenue as the majority of profit will return to China. We have all seen that foreign investment is more apt to destroy abilities rather than create abilities for the home country.
Possession is nine-tenths of the law, the more China possesses the easier to insist upon their ideological political framework.
The Future Is Not Westward
These are just a few New Cold War communist annexations. The economic battlefield will continue to create casualties. The African continent and the MENA region will see a great rise in communist ideology with Russian and Chinese political advancement, namely a lack of human rights agenda. As these countries rise against America and westernization, communist rule can become a norm.
Iran and Syria are just the beginning of a communist controlled region. Even though the MENA region has a futile resource extraction structure, China and Russia are hand in hand with the key players in the political fields. As Boko Haram destroys the peace of Nigeria, the communist investors are quickly gaining ground.
China is already deeply invested in African infrastructure. Politics is next. Political woes have historically made it easier for fascists to rule.
A Final Word On Russia And Putin
Never forget that the failure of the Weimar Republic and excessive debt burden from WWI created Hitler. When Russia broke apart in the 90’s, Americans and the world did not rush in with aid. The Russian government and people have gone through famines, a lack of leadership, human rights injustices and oligarchy rulership. Now, we see after these tumultuous years, Putin has created a firm political governance and control.
Whether we like his rules is not for us to say, but he is standing strong on his ideals. Not just ideals but in the buying game.
Putin now has $49 billion in gold, the fifth largest reserve in the world. Between gold reserves, imperialist ability to take over any bank, company or bank account (as we have seen many times), increased defense budget and a nationalistic fervor for Russian dominance, Putin and Russia are well on their way to world dominance again. He is in a very powerful position as America becomes imperially overstretched chasing terrorists in their own backyards.
We, as Western and European nations, must vigilantly monitor the new creation of communist countries. Reverse hegemony of the great powers may be here.
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Chang, Jack. “China Emerges as Latin America’s Lender of Last Resort.” AP.com 2/5/2015. Retrieved from: http://news.yahoo.com/china-emerges-latin-americas-lender-last-resort-135442106.html;_ylt=A0LEV0W48eBUSgUA2mZXNyoA;_ylu=X3oDMTByOHZyb21tBGNvbG8DYmYxBHBvcwMxBHZ0aWQDBHNlYwNzcg-.
Dahl, Peter. “Will Russia Bail Out Greece?” DW.de. 2/5/2015. Retrieved from: http://www.dw.de/will-russia-bail-out-greece/a-18236395.
Dobbs, Richard, Susan Lund, Jonathan Woetzel, and Mina Mutafchieva.”Debt and (not much) deleveraging.” McKinsey Global Institute. February 2015. Retrieved from: http://www.mckinsey.com/insights/economic_studies/debt_and_not_much_deleveraging.
Klein, Naomi. The Shock Doctrine: The Rise of Disaster Capitalism. New York: Picador, 2004. Print.
Partlow, Joshua. “Can Chinese billionaire Wang Jing overcome fierce opposition to build a canal across Nicaragua?” The Independent.com. 2/4/2015. Retrieved from: http://www.independent.co.uk/news/world/americas/can-chinese-billionaire-wang-jing-overcome-fierce-opposition-to-build-a-canal-across-nicaragua-10022875.html.
Perkins, John. Confessions of an Economic Hitman. New York: Penguin, 2006. Print.