April 23, 2015 By Joseph P. Farrell

This important article was shared by Ms. C.Z., and it's worth pondering for its own implications. And quite frankly, there are so many sets of implications here that I don't really know which one to focus on, except that the article itself focuses very conveniently on one of them, so that's the rabbit hole we'll go down. Here's the article:

AIIB, BRICS Development Bank and an Emerging World First appeared:

The first thing that struck me about this article was that it was written by F. William Engdahl, one of my favorite authors in the "alternative" field commenting on issues of current politics and policy. What first struck me (and I wish I had read this article prior to doing last Thursday's News and Views from the Nefarium), was that Engdahl is seeing things more or less as I am seeing them:

"Germany is a founding member as France. So is Luxemburg, even Great Britain. Putin’s Russia and India are also among the founders. To the surprise of many, so is the International Monetary Fund (IMF), an institution that until now has been a pillar of the dollar system. We are talking about China’s Asian Infrastructure Investment Bank or AIIB. The question is whether the AIIB is on its way to become the seed crystal of a new monetary order that could replace the destructive influence of the dollar? Or will it be infected by Trojans like the UK and the IMF? The answer could well shape the architecture of a new world in which the dollar and its bloated debt structures no longer dictate to the entire world what their economic policies shall be.

"In October 2014, China announced it was creating a new international bank to finance major infrastructure projects across Asia. The prime driver for China was to finance their New Silk Road high-speed Eurasian rail and also sea infrastructure projects and the refusal of the United States to agree to major IMF voting reform that would give China and other emerging economic nations more say. Beijing announced they will give $50 billion to start the new bank. At the time, Washington and most of the rest of the world ignored the bank, while the Obama Administration attacked the AIIB for possibly lacking transparency or sufficient concern for environmental risks, patent diversions from the reality, namely, that the AIIB represents a strategic threat to continued American global dollar hegemony."

Note here that Engdahl's concern about the AIIB is the participation of the British, acting as the Trojan Hourse for the IMF and American interests - and hence influence - within the AIIB. Hold on to that thought, for I'll be returning to it. Also to be noted, and held on to, is the founding participation of France and Germany. The final point here is that Engdahl is seeing things more or less similarly to the scenario I outlined in last Thursday's News and Views from the Nefarium, namely, that the AIIB bank is a mechanism being created, as least in part, to be the financing for the projected high speed rail network connecting Beijing to Moscow and western Europe via the "southern route" through Central Asia. And - important to note - the two major European powers, France and Germany, are in on it.

Bottom line? As I've been suggesting for a number of years, the long term prognosis is that Germany is going to bolt from the NATO-Atlantic alliance, and bring the rest of Europe with it. Neither the long term economic, geopolitical, or even military interests of Germany or Europe lie in any sort of confrontation with the East, and Washington's heavy and incomprehensibly incompetent hand in the Ukraine is testament to it. Engdahl sees it more or less the same way:

"The 2010 IMF voting rights reform stipulated that China will become the 3rd largest member country in the IMF, and there will be four emerging economies—Brazil, China, India, and Russia—among the 10 largest shareholders in the Fund. Under present rules, Washington, conveniently holds 16.75%, a veto minority. Close US geopolitical allies—Japan with 6.23%, UK and France each with 4.29% and Germany with 5.81% would typically insure that IMF policies in any area were “friendly” to American defined national interests.

"China, Russia, India, Brazil and other fast-emerging economies find it is manifestly absurd that today IMF voting rights on the Executive Board give France, with a $3 trillion GDP, far more votes than China with a 2014 GDP of more than three times that, at $10 trillion, or gives Belgium (1.86%) with a $500 billion GDP a larger voting share than Brazil (1.72%) with a GDP more than four times as large at $2.2 trillion. According to the IMF bylaws, a member country’s voting shares ought to be roughly proportional to its relative size among the 147 IMF member countries in terms of GDP. When Washington drew up the IMF bylaws in 1944 it stipulated, conveniently, that no major decision of the IMF could come into force unless it had 85% of all member voting shares supporting it.

"Washington is holding on like a pit bull to the old bylaws in which the US retains a blocking veto share of votes. The US Congress refuses to pass the IMF reforms and to break the impasse. This is a major way forced China and the other fast-growing BRICS states to look outside the IMF and World Bank and build an entirely new architecture. The AIIB today is emerging rapidly as a centerpiece in this emerging new global architecture.

"Rather than trying to influence the new AIIB from within, Washington has chosen a tactic that has delivered it a huge and humiliating geopolitical defeat, and which will likely exclude US corporations from lucrative construction bids."

Even perfide Albion, as Engdahl suggests, is really looking to its own long-term interests, which have nothing whatsoever to do with playing the silly role of a "Trojan horse" for Wall Street or Washington:

"One is reminded of the statement by England’s Prime Minister Lord Palmerston, 'England has no friends, merely her interests.'”

The bottom line? Engdahl sees it as the final unwinding of the Bretton-Woods system of postwar finance, and the erection of a new one:

The very fact that the AIIB has gathered such worldwide support is demonstration of the impotence of the US-dominated Bretton Woods institutions of the World Bank, IMF and Asian Development Bank.

In other words, expect the Chinese, naturally, to give themselves a heavy weight of influence in their own bank, but also expect them to recognize the weight of other large economies as well.

Enter Germany. And, for those paying attention, Japan, and the "trojan horse." Japan, you'll recall, was apparently finally dissuaded by Washington form joining the Chinese bank, and oddly, in spite of the old wounds from World War Two, China was giving no sign of opposition or objection to Tokyo's entry, notwithstanding the hightened tensions between the two nations recently. Tokyo's price tag to Washington may therefore have been very high, including, perhaps, secret protocols for the eventual abandonment or drastic curtailment of American military bases - think Okinawa here - in that nation. Time, of course, will tell, and as I recently suggested, Tokyo would be foolish to slam the door permanently in Beijing's face. The two nations, notwithstanding long and bitter rivalries, could accomplish much in Asia cooperating. The bottom line here then is, as I also suggested, there has to be a back channel of ongoing communications between Beijing and Tokyo, including some sort of Asian version of an entente cordial for Tokyo's eventual participation in the AIIB. That's Trojan horse number one.

Trojan horse number two is a bit more complicated. Following the penetrating suggestion of former HUD Assistant Secretary Catherine Austin Fitts, what is also being erected here is a system of financial redundancy, not only in clearing, but in development finance institutions, one in which, as I have suggested above, the emerging nations, and those under-represented developed nations (think Germany and Japan here folks) are given greater weight than their American-sponsored counterparts. And with such reevaluation of "weight" in the financial sphere, comes the necessary reevaluation of weight in the political sphere. And here, I suspect, we encounter another Trojan horse operation unfolding before our eyes. Germany, since the Wiedervereinigung, has quietly expressed a desire to have a permanent seat on the UN Security Council, with all the rights and privileges that the current five permanent members possess. From the purely geopolitical perspective - notwithstanding their Axis historical past - that Germany and Japan, Europe's largest and Asia's second (or third, depending on which statistics one looks at) largest economies, and both de facto nuclear powers in all but name only, do not have this weight, while Britain and France do, is rather absurd.

So what's the Trojan horse here? Expect, over the long term, the pressures to build for a complete restructuring of the UN Security Council as a stepping stone to transition the institution itself as a political counterpart to the new financial structures. In other words, one may now expect the BRICS bloc, led by China, to start calling for political structures to match the financial ones. And China has the clout to do it, and the key in the lock will be Taiwan: "we support a complete restructuring of the Security Council, including a permanent German seat, in return for European support on the issue of Taiwan." And that will bring pressure on Japan. What will that restructuring possibly look like? If the council, and hence the UN, is to have any real teeth, then it might take the form of a majority of permanent member vetos is required to veto a measure, rather than the current blanket veto given to the current five permanent members. A majority vote of such members could conceivably block, or commit, UN forces anywhere in the world.

Such a measure would require the US's consent, and would therefore likely be vetoed in the Security Council, but in this case, it would mean the near certain and further isolation of the US in that body, and the way would then be open to the erection of a kind of BRICSA counterpart to the UN, in which the Great Power permanent seats were more reflective of geopolitical realities bypassing US intransigence and unipolarism, for let us always remember, the UN was the political counterpart to the IMF-World Bank-Bretton Woods system. So the IMF membership in the AIIB here might be calculation, on China's and Europe's part, as a Trojan horse in the opposite sense to that Mr. Engdahl is suggesting.

In short, we've seen the institutional financial aspects of the BRICSA game plan. Now it's time to get ready for the international political and institutional aspects of it.

See you on the flip side...