BRICS establish new international bank

http://rt.com/business/173008-brics-bank-currency-pool/


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BRICS establish $100bn bank and currency reserves to cut out Western dominance



L to R) Russia's President Vladimir Putin, India's Prime Minister Narendra Modi, Brazilian President Dilma Rousseff, China's President Xi Jinping and South Africa's President Jacob Zuma join their hands during the official photograph of the 6th BRICS summit in Fortaleza, Brazil, on July 15, 2014 (AFP Photo)

The group of emerging economies signed the long-anticipated document to create the $100 bn BRICS Development Bank and a reserve currency pool worth over another $100 bn. Both will counter the influence of Western-based lending institutions and the dollar.

The new bank will provide money for infrastructure and development projects in BRICS countries, and unlike the IMF or World Bank, each nation has equal say, regardless of GDP size.

The countries’ finance ministers signed the memorandum of understanding in Fortaleza, Brazil on Tuesday, the first day of the BRICS 6th summit. Documents on cooperation between BRICS export credit agencies and an agreement of cooperation on innovation were also inked.

Each BRICS member is expected to put an equal share into establishing the startup capital of $50 billion with a goal to reach $100 billion. The BRICS bank will be headquartered in Shanghai, India will preside as president the first year, and Russia will be the chairman of the representatives. Each country will send either their finance minister or Central Bank chair to the bank’s representative board.

Leaders from the five nations - Russia’s Vladimir Putin, Brazil’s Dilma Rousseff, China’s Xi Jinping, India’s Narenda Modi, and South Africa’s Jacob Zuma, were all in attendance.

The $100 billion crisis lending fund, called the Contingent Reserve Arrangement (CRA), was also established. China will contribute the lion’s share, about $41 billion, Russia, Brazil and India will chip in $18 billion, and South Africa, the newest member of the economic bloc, will contribute $5 billion.

“This mechanism creates the foundation for an effective protection of our national economies from a crisis in financial markets," Russian President Vladimir Putin said.

The big launch of the BRICS bank is seen as a first step to break the dominance of the US dollar in global trade, as well as dollar-backed institutions such as the International Monetary Fund (IMF) and the World Bank, both US-based institutions BRICS countries have little influence within.

Membership may not just be limited to just BRICS nations, either. Future members could include countries in other emerging markets blocs, such as Mexico, Indonesia, or Argentina, once it sorts out its debt burden.

The group has already created the BRICS Stock Alliance an initiative to cross list derivatives to smooth the path for international investors interested in emerging markets.

BRICS represents 42 percent of the world’s population and roughly 20 percent of the world’s economy based on GDP, and 30 percent of the world’s GDP based on PPP, a more accurate reading of the real economy. Total trade between the countries is $6.14 trillion, or nearly 17 percent of the world’s total.

Russia has proposed the countries come together under an energy alliance that will include a fuel reserve, as well as an institute for energy policy

"We propose the establishment of the Energy Association of BRICS. Under this ‘umbrella’, a Fuel Reserve Bank and BRICS Energy Policy Institute could be set up,” Putin said.



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That's going to cause rather a lot of upsets - no wonder they all look as if they're chortling evilly.

The only thing that surprises me is that they didn't do it sooner.

It's likely to have very far-reaching consequences, Sabot, for all of us, but it's barely being reported in western media, presumably to avoid panic. Though no doubt there are howls of rage going on behind closed doors.

Look at it this way; if a small nation needs a loan to get through a bad, temporary patch, where is it best to go? The EU or IMF, which causes austerity, asset-stripping and social damage, or BRICS, which will lend money while investing in improving infrastructure?

It's a no-brainer. And I love the irony of communist/former communist nations redesigning banking.

The Western World have for sure cocked up Banking. Surely no one else could be any worse.

I think we may be seeing shifts in alliances globally, Sabot - Washington has p*ssed off a truly stunning number of nations.

Germany is upset about being spied on by their supposed 'ally', and France is none too happy about the US 'fining' French banks for paying no heed to US sanctions on nations it doesn't like...

http://www.reuters.com/article/2014/07/01/us-bnp-paribas-settlement-idUSKBN0F52HA20140701

(Reuters) - French bank BNP Paribas BNPP.PA has pleaded guilty to two criminal charges and agreed to pay almost $9 billion to resolve accusations it violated U.S. sanctions against Sudan, Cuba and Iran, a severe punishment aimed at sending a clear message to other financial institutions around the world.

The guilty plea is the direct consequence of a broader U.S. Justice Department shift in strategy that is expected to try to snare more major banks for possible money laundering or sanctions violations.

In an unprecedented move, regulators banned BNP for a year from conducting certain U.S. dollar transactions, a critical part of the bank's global business, in addition to the fine which was a record for violating American sanctions.

"Through a series of egregious schemes to evade detection and with the knowledge of multiple senior executives, BNP employees concealed more than $190 billion in transactions between 2002 and 2012 for clients subject to U.S. sanctions including Sudan, Iran and Cuba," the New York State regulator said.

U.S. authorities said the severe penalties reflected BNP's drive to put profits first, even after U.S. officials warned the bank of its obligation to crack down on illegal activity

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Yes, it's totally unheard-of for banks to put profits first....  

What's going on in financial matters just now is truly fascinating; I doubt if Obama has noticed, but while he was meddling and making threatening noises, in between rounds of golf, a fair chunk of the rest of the world has been making plans to dump the dollar.

And they also want their gold back from Fort Knox; too many rumours are flying that Fort Knox is empty, and their gold has been used to prop up the dollars being printed without US assets to back them.

Interesting days ahead.

Have thought this day would arrive for quite a while. There will be panic here......

Most of the blame lies entirely in Washington, DC, IMO, Lily. OK, the US government 'fined' a French bank mega-bucks for daring to deal with, amongst other countries, Cuba - a holiday destination for many Europeans.

I don't think the current residents of Washington DC quite grasp that that doesn't mean it's the end of the matter. No, the French bank, and others, will make polite noises in public, sulk and fume in private, then plot ways to get revenge in private.

Does The US Government have the right to do that?

http://www.ibtimes.com/wto-rejects-us-claims-against-china-india-rules-import-tariffs-unfairly-levied-1628290

That's another straw in the wind.

They need all the money they can get by fair means or foul?

IMO, the US is currently trying to keep many spinning plates in the air, and it's just a matter of time before they start falling?

What the current administration are doing are getting more and more transparent. People are starting to notice including the Supreme Court....

In the long run, that can only be good, Lily. I would never have believed it possible that the Obama administration could cause such havoc in the US, and the wider world.

The majority of the House is Republican, so if they can win the majority in the Senate in November, only 6 seats needed, then they can hopefully start putting things right.

Under that scenario, Obama will be a lame duck president so he will have a hard time pushing anything through. Unfortunately, he has rather damaged the Democrat party as they didn't used to be so, well, undemocratic.

Something else no-one in Washington seems to have seen coming:

http://www.foxnews.com/world/2014/07/16/russia-reportedly-strikes-deal-with-cuba-to-reopen-cold-war-era-listening-post/?intcmp=latestnews

Russia has reportedly reached a deal with Cuba to reopen a Cold War-era listening post that was used to intercept U.S. communications and provide information to Russian Navy ships in the region.

Government sources who spoke to Russian newspaper Kommersant said the deal was reached while President Vladimir Putin was visiting Havana Friday.

The sources said Moscow began talks with Cuba years ago to re-open the post in the Havana suburb of Lourdes, but increased negotiations at the beginning of this year. Russia is also agreeing to write off 90 percent of the $32 billion debt Cuba owes Russia, Kommersant reports.

The post, which opened in 1967, is located 150 miles off the coast of Florida.

At its peak use, the post was worked by 3,000 Soviet military and intelligence personnel, who intercepted communications and relayed the information to Russian Navy ships and submarines in the Western hemisphere, according to The Telegraph.

But the post was closed in late 2001 due to a lack of Russian financing and pressure from Washington to improve ties between the two countries.

Vyacheslav Trubnikov, a former director of Russia’s intelligence service, said the post “gave the Soviet Union eyes in the whole of the western hemisphere.”

"For Russia, which is fighting for its lawful rights and place in the international community, it would be no less valuable than for the USSR,” Trubnikov told The Telegraph.

The listening post was the most powerful Soviet electronic intelligence center located outside Russia’s territory, Kommersant reports.

U.S. State Department Spokeswoman Jen Psaki has not commented on reports of the alleged deal due to the lack of an official statement from Russia or Cuba, the newspaper reported, citing Interfax news agency

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I am sure anything Psaki has to say will be, as usual, asinine and irrelevant. I am none too sure why Obama didn't see the likely consequences when he so carelessly poured petrol on the bonfire in Ukraine and elsewhere.

Especially as Putin has spent the last week building alliances and trading partners in South America, and spreading money everywhere.

Money tends to have more positive results than bombing nations that won't do as you want.

Obama is probably more concerned about his vacation which will be coming up soon.......

He is known to be lazy and doesn't like to be troubled with frivolities like politics etc.....so I have heard.   

Interesting to read the comments on Fox. No-one seems greatly outraged or surprised, it's just one more thing to be added to the long list of Obama fkc-ups. And being spied on by Russia instead of their own government will be a pleasant change, a bit like the good old days...

a bit like the good old days...

With a twist.

What, like Russian spies will have absolutely NO interest in what ordinary Americans are doing, and won't be flying drones outside their bedroom windows, etc?

Kinda like that......

I see Obama's made another speech announcing more sanctions on Russia for......something, not giving him the Sevastopol naval base, I think. Someone really should break it to him that the world's changed, while he was playing golf, Putin was playing chess in Obama's own backyard.

"Russian leadership will see once again that its actions in Ukraine has consequences," added Obama. "We live in a complex world and at a challenging time. None of these challenges lend themselves to quick or easy solutions, but all of them require American leadership."

No point anyone expecting Obama to sort it out, then. I think he's lost the plot, if he ever had it.

He's all talk.....that's why he was on the Harvard debate team.

There's a lot of megalomania about at the moment, you know. And I think it's spreading.

Yes, I get the distinct impression that the common reaction to an Obama speech, in the US and the wider world, is, Yeah, OK, whatever.

Because the listener knows it's just meaningless hot air.

I have to ask, is Obama a bit slow on the uptake? From:

The latest U.S. sanctions build on earlier steps by targeting two major Russian banks -- Gazprom Bank and VEB -- and two energy companies -- Novotek and Rosneft.
They will not be able to get new medium- and long-term financing in the United States, senior administration officials told reporters in a conference call.
In addition, the new sanctions freeze any U.S. assets and prohibit American business contacts for eight Russian arms companies that make weapons, including small arms, mortars and surface-to-air missiles. One of the eight is the Kalashnikov Concern, maker of the AK-47 and other arms.
Also on the list: Four Russian government officials, including the minister of Crimean affairs, along with the self-styled Luhansk People's Republic and Donetsk People's Republic leading the separatist campaign in eastern Ukraine, and Aleksandr Borodai, the self-declared "prime minister" of the Donetsk group.
Targeting the separatist groups that simulate government structures prevents them from seeking financing, the senior administration officials noted.


Er, why on earth would any of those groups need financing from the US? Europe seems to have gone, OK, Bambam, we might think about it some time in the future. Or maybe we won't. Whatever.

And doesn't Obama know that HUGE companies like Exxon, etc., have long-term contracts in Russia? Not to mention McDonalds....

Obama's the one that's going to end up isolated at this rate.