What’s the rationale behind focusing on the West for investment if the West needs the East to solve its social economic development challenges?
◾Observations:
▪️ The traditional global governance system is in a crisis, visible by the repeatedly failed efforts to modernize the WTO and the Bretton Woods Institutions, the World Bank and the IMF. And more importantly, the USA’s weaponization of the US$.
▪️ As a result, there is a widening gap between the actual role of developing countries in the global system and their ability to participate in the decision-making processes of global institutions.
▪️ The BRICS, however, have long been very strong advocates of global governance reforms, and lead by example in global governance.
▪️ In their current form, the BRICS make up around 31.5% of world GDP when adjusted on a purchasing power parity basis. With Iran and Argentina added, this rises to 33% of world GDP. This is a huge potential trade bloc, and 33% of global GDP is certainly enough to justify a reserve currency.
▪️ But beyond this, the potential for synergies between the countries is enormous. Taken together, the expanded BRICS countries currently produce around 26% of global oil output and 50% of iron ore production used to make steel.
▪️ They produce around 40% of global maize production and 46% of global wheat production. If these were all traded in the new reserve currency, it would instantly become a cornerstone of the world economy.
◾Talking Points:
▪️ What’s the rationale behind flying to the West to look for investment if the West needs the East to solve its social economic development challenges?
▪️ A Dutch-Chinese breakthrough has developed a new type of solar cell made of the same material as 95% of all current solar cells but performs much better at 26.81% efficiency. And the Global Electricity Review 2023 has revealed that wind and solar power are now cheaper than fossil fuels. Should this not be our language as we engage China?
▪️ French President Emmanuel Macron was recently with Xi – who has not condemned Vladimir Putin’s war and doubled down on China and Russia’s “no-limits partnership” meaning France knows it needs China. Does Zambia’s GDP come close to France’s GDP?
▪️ In the UK, food and non-alcoholic drink inflation is the highest in 45 years, with prices rising by over 19% in the year to March. British households and businesses “need to accept” they are poorer and stop seeking pay increases and pushing prices higher, the Bank of England’s chief economist, Huw Pill, has said.
▪️ The US dollar is sagging. At the beginning of June, the IMF released a report showing that the US dollar today makes up 59% of global reserves – a far cry from the 70% it made up in 1999.
▪️ Meanwhile China’s yuan is emerging as a strong challenger to the dollar’s dominance with 5 countries having recently turned to the yuan instead of the USD for trade.
▪️ Russia, Iran, Brazil, Argentina, and Bangladesh are lining up backup currencies – such as the Chinese yuan – for trade and transactions. Sanctions against Russia sound a cautionary tale over the power Washington and the US$ wields.
Also Read: Zambia can only be developed by Zambians!
◾Conclusion: The rise of the BRICS countries, which Zambia must align itself with, is not the cause of the decline of the West. The decline of the West is causing or, at least, creating the opportunity for the rise of the BRICS countries. The future of the West as the world seeks equity is bleak.
As long as the West continues to externalize the threats and ignore how it has completely abandoned the formula of its own success, it will have no hope of stabilizing or reversing these trends.
What’s really changing now is that the rest of the world no longer seeks to emulate the West – and this is indeed the tipping point. So we see no point why Zambia should think its development solutions lie in the West. It’s a myth.
Zambia’s development lies in Zambia opening up equitable trade links with the BRICS nations, understanding that we should no longer be suppliers of raw materials to the West. Foreign Direct Investment should bring technology to industrialise our local market.
Also Read: This is a wrong time to align Zambia to the US with a changing geopolitical landscape.
If you are a patriot who shares our beliefs and principles that democracy and development must be driven by Zambians, remember to follow Woodpecker’s Digest where we share why we need a radical change of mindset to develop Zambia. We can’t continue being servants in our own country!
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