How to Lead a Coalition and Avoid a Global Conflict
Sergei Glaziev is an Advisor to the President of the Russian Federation, Full Member of the Russian Academy of Sciences.
Resume: The world needs a coalition of sound forces advocating stability – a global anti-war coalition with a positive plan for rearranging the international financial and economic architecture on the principles of mutual benefit, fairness, and respect for national sovereignty.
U.S. actions in Ukraine should be classified not only as hostile with regard to Russia, but also as targeting global destabilization. The U.S. is essentially provoking an international conflict to salvage its geopolitical, financial, and economic authority. The response must be systemic and comprehensive, aimed at exposing and ending U.S. political domination, and, most importantly, at undermining U.S. military-political power based on the printing of dollars as a global currency.
The world needs a coalition of sound forces advocating stability —in essence, a global anti-war coalition with a positive plan for rearranging the international financial and economic architecture on the principles of mutual benefit, fairness, and respect for national sovereignty.
CURBING THE ARBITRARINESS OF RESERVE CURRENCY ISSUERS
This coalition could be comprised of large independent states (BRICS); the developing world (most of Asia, Africa, and Latin America), which has been discriminated against in the current global financial and economic system; CIS countries interested in balanced development without conflicts; and those European nations not prepared to obey the disparaging U.S. diktat. The coalition should take measures to eliminate the fundamental causes of the global crisis, including:
- the uncontrolled issuance of global reserve currencies, which allows issuers to abuse their dominant position, thus increasing disproportions and destructive tendencies in the global financial and economic system;
- the inability of existing mechanisms regulating banking and financial institutions to ward off excessive risks and financial bubbles;
- an exhausted potential for growth within the prevailing technology-based economic system and lack of conditions for creating a new one, including insufficient investment for the broad use of basic technological solutions.
Conditions must be created to allow the national fiscal authorities to lend money for building an economy based on new technologies and carrying out economic modernization, and to encourage innovation and business activities in areas of potential growth. The issuers of reserve currencies must guarantee their stability by capping the national debt and payment and trade balance deficits. Also, they will have to use transparent mechanisms for issuing currencies and ensure free exchange for all assets trading in their countries.
Another important requirement issuers of global reserve currencies should meet is compliance with fair rules of competition and non-discriminatory access to financial markets. Other countries observing similar restrictions should be able to use their national currencies as an instrument of foreign trade and currency and financial exchanges, and allow their use as reserve currencies by partner countries. It would be advisable to group national currencies seeking the status of global or regional reserves into several categories depending on the issuers’ compliance with certain standards.
In addition to introducing rules for issuers of global reserve currencies, measures should be taken to strengthen control over capital flows to prevent speculative attacks that destabilize international and national currency and financial systems. Members of the coalition will need to forbid transactions with offshore jurisdictions and make refinancing inaccessible to banks and corporations created with offshore residents. The currencies of countries that fail to follow these rules should not be used in international settlements.
A major overhaul of international financial institutions is necessary to ensure control over the issuers of global reserve currencies. Participating countries must be represented fairly, on objective criteria, such as their share in global production, trade, and finances; their natural resources; and population. The same criteria should be applied to an emerging basket of currencies for new SDRs (Special Drawing Rights) that can be used as a yardstick for determining the value of national currencies, including reserve currencies. Initially, the basket could contain the currencies of those coalition members that agree to observe these rules.
Such ambitious reforms will require proper legal and institutional support. To this end, the coalition’s decisions should be given the status of international commitments; and UN institutions, relevant international organizations, and all countries interested in reforms should be broadly involved.
In order to encourage application of socially important achievements of a new technological mode globally, countries will have to devise an international strategic planning system of socio-economic development. It should provide long-term forecasts for scientific and technological development; define prospects for the global economy, regional associations and leading countries; look for ways to overcome disproportions, including development gaps between industrialized and emerging economies; and set development priorities and indicative targets for international organizations.
The U.S. and other G7 countries will most likely reject the above proposals for reforming the international currency and financial system without discussion out of fear that they could undermine their monopoly, which allows them to issue world currencies uncontrollably. While reaping enormous benefits from this system, leading Western countries limit access to their own assets, technologies, and labor by imposing more and more restrictions.
If the G7 refuses to “make room” in the governing agencies of international financial organizations for the anti-war coalition, the latter should master enough synergy to create alternative global regulators.
- The BRICS could serve as a prototype and take the following measures to maintain economic security:
- create a universal payment system for BRICS countries and issue a common payment card that would incorporate China’s UnionPay, Brazil’s ELO, India’s RuPay, and Russian payment systems;
- build an interbank information exchange system similar to SWIFT and which is independent from the United States and the European Union;
- establish its own rating agencies.
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