In 1992, I had a meeting with an European Commissaire at the Boalt Library in the University of California at Berkeley and I conducted an interview about the creation of the European Economic Community and its monetary policies. This interaction was made given that as Adjunct Associate Professor, I introduced from the first time in the History of Golden Gate University a course on the European Economic Community formation and integration. Here is an extract of my research that was published at Golden Gate University. My research on the EEC was in fact a research on the market integration and the related free trade agreement that were taken place such as the NAFTA as the U.S. reaction to the expansion of the European Market and the rise of the Asian economies.
Extract of the second part of my research addressed effectively the construction of NAFTA and its implications for the international trade and the trade relations of Mexico, the U.S. and Canada not only among them but the rest of the countries in Latin America and the rest of the world. One of the most controversial aspect of NAFTA remained the situation and the rights of the workers, including the labor cost, the benefits and the compensatory rights for the Mexican workers in comparison to their colleagues in the rest of North America.
Said El Mansour Cherkaoui 10/9/2023
Liberalism has only made developing countries more obedient and following what Western Societies needed to respond to and to be. Is the continual increase of external deficit, the rise of unemployment, the increase of poverty, and the expansion of violence in Africa and other countries that have adopted Liberalism, is all this worthed to be accepted and just be happy with Liberalism that has facilitated the expanding of free trade, the increase of capital mobility and other benefits, like human rights while the population is in dire economic, financial, social conditions and existence?
Are the BRICS Challenging the Dollar and Euro?
Are BRICS Trying to Increase the Shaking of Dollar and Euro?
Or the BRICS are just learning from the acts and moves made by the West to correct their own version of Liberalism that is not fitting well all the diverse economies and cultures that have become tired trying plans, recommendations and accepting conditionality from international banking and financing as well as consulting firms for the sake to reach a level and rate of growth dictated by external market conditions and implement welcoming fiscal policies for just to attract foreign investors and credits. Countries were using even harsh social measures double with tight-belt policy to reduce public deficit while imposing more privatization of the national sectors in hope to balance the external accounts which in turn have provoked a social havoc doubled with a strata made of technocrats and courtesans of the central power who benefited and were first served by such largess of the public sector trying to be a good fellow of Liberalism version modern time and fashioned according the needs of the central economic power.
The BRIC countries – Brazil, Russia, India, China – were founded to challenge and correct the excess of the world market order dominated by the United States and its Western allies.
BRIC was formed in 2009 with Brazil, Russia, India and China, first expanded to admit South Africa in 2010. The BRICS (Brazil, Russia, India, China, and South Africa) alliance has emerged as a significant force challenging the dominance of the “Global Westernized Establishment.” The BRICS group formed by the major emerging economies represents nearly half of the world’s population and accounts for a substantial share of global economic output.
The BRICS group aims to:
- Create new economic and trade systems separate from the U.S.-led Western systems
- Reduce reliance on the U.S. dollar and promote the use of national currencies in international trade
- Improve global financial institutions
- Advance a multipolar world order that more accurately represents the objectives and ambitions of developing nations
- Establish deeper ties between their nations and cooperate on economic expansion, including trade
- Promote peace, security, development, and cooperation
- Support a system of global governance that is more inclusive and egalitarian
BRICS is an important source of foreign direct investment in key areas such as:
Mining, Automotive, Transportation, Clean energy, Financial services, IT.
The BRICS (Brazil, Russia, India, China, South Africa) bloc has emerged as a significant force in the international economic landscape by challenging the dominance of the dollar and euro. As these five fast-growing and influential economies continue to strengthen their collaboration, they are actively exploring alternatives to the traditional reserve currencies.
One of the main challenges they pose to the dollar and euro is the establishment of the New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA). These institutions provide financial support to member countries and reduce their dependency’s on external sources, reducing the need to rely on the dollar or euro for loans.
Moreover, the BRICS countries have been expanding their bilateral trade, bypassing the need for using the dollar or euro as the medium of exchange. They are increasingly conducting transactions in their national currencies, promoting greater economic autonomy and reducing exposure to external economic shocks.
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Additionally, efforts are being made to explore the potential of digital currencies as an alternative to the traditional fiat currencies. China, for instance, has been developing its own digital currency, the digital yuan, which could potentially challenge the global dominance of the dollar in the future.
While it is too early to predict a complete shift away from the dollar and euro, the BRICS countries’ collective determination to diversify their reserve currencies signals a growing desire for a more multipolar and balanced global financial system. This trend reflects the increasing influence and economic power of emerging markets and may have long-term implications for the dominance of the dollar and euro in the international economy.
To join BRICS, a country must meet the following requirements:
- Be a developing or newly industrialized country
- Have a large population
- Have a growing economy
- Be committed to democracy and free markets
- Be willing to cooperate with the other BRICS countries
Several countries can and hope to join BRICS because it can help establish an international power system that matches their economic size. The BRICS nations have been actively working towards strengthening their cooperation and influence on the global stage. The aim is to create a more inclusive and multipolar world order that reflects the growing economic and geopolitical power of non-Western nations.
More than 40 countries have expressed interest in joining BRICS, including:
- Iran, Saudi Arabia, United Arab Emirates, Argentina, Algeria, Bolivia, Indonesia, Egypt, Ethiopia, Cuba, Democratic Republic of Congo, Comoros, Gabon, Kazakhstan.
- 14 countries have formally applied to join BRICS, including:
- Algeria, Bahrain, Bangladesh, Belarus, Bolivia, Cuba, Honduras, Kazakhstan.
Six countries will join BRICS on January 1, 2024:
Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, United Arab Emirates.
BRICS New Forces Challenging the Westernized System of Control and Transfers of Values Around the World
One of the key areas where the BRICS alliance has focused its efforts is in reforming global financial institutions. They have called for a more equitable and representative international financial system, seeking to reduce the dependence on Western-dominated institutions such as the International Monetary Fund (IMF) and the World Bank. Through initiatives like the New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA), the BRICS countries are working towards providing alternative sources of financing for infrastructure development and emergency funding.
For such importance on World scale, the BRICS group has established the BRICS Business Council and the BRICS Expos to enhance business cooperation and promote trade diversification. This has led to increased flows of goods, services, capital, and technology between member countries, contributing to their economic growth and development.
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In addition to economic cooperation, the BRICS group has been strengthening diplomatic ties and pursuing shared positions on various global issues. They have been actively engaging in multilateral forums such as the United Nations and the G20, advocating for a fairer and more balanced global governance system.
In fact, the BRICS alliance demonstrates an alternative power center to the “Global Westernized Establishment,” and in reality of business engagements and economic dispositions, the BRICS group also faces its fair share of challenges. These challenges include economic disparities among member nations, geopolitical rivalries, and the need to address social and environmental concerns as well as human rights and political institutionalization.
Despite these huge and massive weaknesses, the BRICS alliances represent a formidable force that poses a challenge to the traditional dominance of the “Global Westernized Establishment.” Through their collective efforts, the BRICS nations seek to reshape the global economic and geopolitical landscape in a way that reflects the changing dynamics of the 21st century and beyond.
Upon another past and period and for the same objective to establish what BRICS is actually aiming to neutralize: John Maynard Keynes has in his reply to the American Representatives during the Negotiations of Bretton-Woods Act, he formulated his famous sentence: “in the long run, we will be all dead”.
Permissive and Detrimental Banking and Financial Conditions in USA and Europe
In recent years, there has been a growing concern over the permissive and detrimental banking and financial conditions in both the United States and Europe. These conditions have raised questions about the stability and integrity of the global financial system, and have highlighted the need for stricter regulations and oversight.
In the United States, the 2008 financial crisis served as a wake-up call to the dangers of loose lending practices and the lack of effective regulatory mechanisms. The crisis, which was triggered by the collapse of Lehman Brothers, exposed the vulnerabilities of the banking sector and led to a severe recession with long-lasting consequences. As a result, the government established several regulatory bodies, such as the Dodd-Frank Act, aimed at preventing a similar crisis in the future.
However, some critics argue that the regulatory response in the US has been excessive and has stifled the growth of the financial industry. They claim that the increased burden of compliance has hindered banks’ ability to provide loans to businesses and individuals, thereby slowing down economic growth. On the other hand, proponents of stricter regulations believe that they are necessary to protect consumers and prevent another financial meltdown.
In Europe, the permissive banking conditions have also been a cause for concern. The European Union faced its own financial crisis in the late 2000s, with countries such as Greece, Portugal, and Ireland on the brink of bankruptcy. The crisis exposed the weaknesses of eurozone economies and forced governments to implement austerity measures and structural reforms.
Interest Rate, Return on Investment, and Stagflation in the U.S. and Europe
The impact on revenue and growth of liquidities in the U.S. Economy is linked directly to the intervention of the Federal Reserve Bank decisions and actions made in regulating the pace of inflation and tackling the threat of the recession.
The instillation and distillery of regular hikes of the interest rates caused the local U.S. banking system to have a hangover that made the European banks be wiped out of the growth scene and imposed tougher regulations and controls of their assets. Absorption and dilution of non-productive and non-working assets were put under the table and mergers and absorptions were put on the top of the tables.
Public financing and tax money were used to support the transition period and maintain the withdrawal of liquidity / cash by big investors and depositors that continued under the shadow of the financial blessing of the State Agencies. No indictments were announced while the smooth operators continued to benefit from the shields of high customer service served with golden parachutes and the employees were put in ejectable seats and only God know where they have landed.
While the economies of the South, including primary-based economies in Africa will notice higher expenses to cover the servicing of all their external debts and the covering of all their external accounts imbalances. The same increase in costs will be also reflected in the trade balance deficit for the convertibility of their money into foreign currencies to resolve the expenses for the logistics of their exports and for the payment of their imports.
This last bitter pill of U.S. rate hikes approach was also used by Ms. Christine Lagarde the Presidente of the European Central Bank and the results went all to the South and developed an anti-dote for the inflation to persist given the direct impact of the sanctions on Russia on the European Economy thirsty for the cheap energy Russian drinks and given the disparity existing between the Members of the European Union and of the European Central Bank.
For analysis on all the imbrications of the aforementioned summary of events resulting from the hikes of the interest rates by the financial and monetary administrations in the U.S. and in the European Union, check and read the content of the analysis listed as publications here in the following lines and texts and are presenting other case-studies and developments on the financial policies that have led to the actual persistence of inflation and the continual waltz dance between stagflation and recession that the U.S. and European Monetary and Financial Authorities keep trying to control and cure with the therapy of hike drops on the interest rates
The use of the interest rate as the main and only corrective instrument as monetary and financial policies has not developed better results. The U.S. Federal Reserve Bank and the European Central Bank are not defining strategic moves and remedies able to control an inflation that has been created and stimulated by Political aim and geo-strategic interested decisions defining relationship with Russia and its allies as well as the continuous tensions subsisting and growing from the rise of China in the World Trade Stage and its ambitions to define new forms of international and regional supervision of the modern state to state vassality.
However, despite the efforts to strengthen the European banking sector, there are ongoing challenges to address. Non-performing loans and weak capital buffers remain a concern in some countries, making them vulnerable to financial shocks. Additionally, the lack of a unified regulatory framework across eurozone countries has raised questions about the consistency and effectiveness of oversight.
Both the United States and Europe need to strike a balance between maintaining a healthy and thriving financial industry while ensuring stability and protecting consumers. Industry leaders and experts are continuously seeking innovative solutions to address the issues at hand. Technologies such as blockchain and digital currencies are being explored as potential avenues for more secure and transparent financial transactions. Collaborative efforts between governments, financial institutions, and technology companies are being made to modernize and future-proof the financial sector.
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The declining state of the banking and financial sectors in the United States and Europe has facilitated the strengthening of economic and financial ties between Russia and China, thereby enhancing the global standing of the BRICS nations. In fact, the banking industry in the United States is currently facing significant challenges due to automation and the increasing adoption of digital payment methods, resulting in widespread job cuts, branch closures, and a shrinking customer base, as well as limited opportunities for expansion.
The deteriorating banking and financial conditions in the USA and Europe have been a cause for concern in recent years. These challenging circumstances have been further compounded by a series of scams and scandals that have rocked major startups and crypto companies, leaving a lasting impact on the financial system as a whole.
One of the primary factors contributing to these challenges is the inflationary pressure that has been building up over time. Inflation erodes the purchasing power of currencies, making it more expensive for individuals and businesses to meet their financial obligations. This, coupled with the reduction in the supply chain caused by the widespread disruption brought about by the Covid-19 pandemic, has created a perfect storm for the financial industry.
The banking sector, in particular, has been grappling with these issues. The trust and confidence of customers have been shaken by the unscrupulous behaviors of some prominent financial institutions. Instances of money laundering, market manipulation, and insider trading have not only had severe repercussions for those directly involved but have also cast a shadow of doubt on the industry as a whole.
BRICs Facing Euro Business and Dollar Diplomacy Sanctions on Trade, Finance and Tech
In today’s interconnected global economy, the real risks are only identified in emerging economies and the Western-based analysts consider these risks as fueled by their growing population. These risks are also identified in the expanding middle classes, and the ambitious government policies that are increasingly demanding their fair share of the value and value-added of the products, services, and primary resources that are exchanged around the world.
These emerging economies are not content with being mere suppliers of raw materials or cheap labor. They are actively seeking to participate in the global value chains, aiming to add value to their own industries and capture a larger portion of the economic benefits. This shift is undoubtedly challenging the established economic order and raising concerns for some traditional economic powers. Embracing the rise of emerging economies by empowering these nations to fulfill their economic potential to reduce economic disparities, address social inequalities, and create new avenues for independent national orientation and sovereign use of local, regional and national resources.
BRICS Benefiting from Shifting Economic Positions and Western States’ Financial Sanctions Against Russia
While the Financial Administration and Authorities and Regulatory Bodies in the U.S.A. and Europe are in the search of recovery and trying to tighten oversight and implement stricter policies to maintain stability and restore trust in the financial system. These efforts aim to increase transparency, to enhance regulatory frameworks, and stricter compliance measures for the objective to mitigate risks and prevent future occurrences.
The U.S. and European institutions are trying to keep alive optimism that they identify with collective efforts and a commitment to transparency and accountability. This requires continuous monitoring, robust regulatory frameworks, and a proactive approach to addressing emerging risks. Despite all these good intentions, the reality remains strenuous and hard for working classes and is eroding the economic and financial foundations of the classic and old-fashioned Middle Classes.
Actually, the BRICS Members are reaching a level of legitimacy and acceptance that the main producers of primary goods and those known for their relative political stability are seeking membership. The BRICS in response is presenting itself as the right movement of equitable treatment and the organization that have experienced the fallout and the impasses dealing with major Western-based institutions, entities, organizations and corporations at the level of the public like the private sectors.
Based on such premisses, the BRICS is actually pursuing to Establish a New Alternative and Parallel System of Resolution for International Transactions and Transfer of Value Among Countries not Willing to Be Included in the Conflict of Interests Opposing Western and Metropolitan Powers to Russia Regional and National Interests.
- The BRICS countries have been discussing the possibility of creating a new currency that could rival the US dollar. This took place after the US imposed sanctions on Russia following its invasion of Ukraine.
- The BRICS countries are jointly developing a digital payments platform called BRICS PAY. The introduction of digital sovereign currencies would allow the BRICS countries to exchange financial data and transactions without using the global SWIFT transactional system.
- All BRICS countries except Brazil have established alternatives to the dollar-denominated international payment messaging system, SWIFT. The diversification efforts will likely increase the power of BRICS members’ national currencies. *
* Warning: This is not professional financial advice. Consulting a financial advisor about your particular circumstances is best.
Back to the West of the Russian Sanctions Boomerang
In recent years, the geopolitical landscape has been significantly impacted by the ongoing tensions between Russia and the West. One of the key manifestations of this conflict has been the imposition of sanctions by both sides. These sanctions have had far-reaching implications, affecting not only the economies of the countries involved but also the political and social dynamics within them.
The Russian government has been subjected to a series of sanctions by Western countries as a response to its actions in Ukraine, its annexation of Crimea, and its alleged interference in the internal affairs of other nations. These sanctions have targeted key sectors of the Russian economy, including finance, energy, and defense. The intention behind these measures is to put pressure on the Russian government and force it to change its behavior.
However, the impact of these sanctions has not been one-sided. The West, particularly Europe, has also felt the consequences of the measures it imposed on Russia. European countries, heavily reliant on Russian gas and oil, have experienced disruptions in their energy supply. This has not only affected their economies but also created divisions among European Union member states.
The sanctions have also affected businesses and individuals who have ties to both Russia and the West. Companies that have invested in Russia or have trade relations with the country have faced significant challenges. This has led to job losses, decreased trade, and a general sense of uncertainty within affected industries.
While the primary objective of the sanctions is to exert pressure on the Russian government, they have also had unintended consequences. They have contributed to a sense of ‘us versus them’ mentality, further polarizing the already strained relations between Russia and the West. Additionally, the sanctions have hindered opportunities for dialogue and diplomatic efforts, potentially prolonging the resolution of existing conflicts.
The imposition of sanctions by both Russia and the West has had wide-ranging consequences on multiple fronts. As the tensions persist, it is crucial for all parties involved to consider the long-term implications of these measures and seek alternative paths towards resolving their differences. Ultimately, fostering open communication and finding common ground may prove to be more effective in achieving sustainable peace and stability.
Continual Sliding of the European Monetary System and Banking in Inflation and Recessive Cascades
Dr. Said El Mansour Cherkaoui is based in California where he resided for the last 35 years: he is a published author in French and English languages in France, United Kingdom and the United States. He participated in numerous international conferences and events, acted as Principal Consultant for several governmental agencies and institutions in the United States, Asia, Africa and the Middle East. Dr. Cherkaoui is recognized by his peers as International Analysts, Conference Speaker, Scholar and Editor of several Online Newspapers.
Dr. Said El Mansour Cherkaoui can be contacted at email@example.com
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