The Effects of Joining BRICS

The mainstream media would like to portray China’s engagement in Africa as imperialistic, but judging from the Ethiopian 11% economic growth which is similar only to China, and comparing it to the persistent push for a treaty that would allow the Corporations to have an absolute grip on governments, we think the mainstream media of the West is either grossly irresponsible or just plain stupid.

Chinese Investment in Ethiopia: Developmental Opportunity or Deepening China’s New Mercantilism?

Asayehgn Desta (Ph.D), Sarlo Distinguished Professor of Business Economics, Dominican University of California

By Asayehgn Desta (Ph.D)
May 21 2009

Abstract

Contrary to Western debt and assistance marked by various forms of economic and political overtones, China, using the South-South Cooperation, is in the process of bestowing a mix of loans with generous terms, debt forgiveness, infrastructure development, and other assistance to African nations so that they could be relieved from Western cultural, political, and economic hegemony. African governments have appreciated and responded enthusiastically to this new source of bottom-up, multiple, bilateral investment, trade, and aid because China has professed a willingness to ignore the political, conditional terms that characterize Western assistance.

China’s deepening involvement across Africa can be viewed from two perspectives. The protagonists of political warfare theory argue that China’s policy in Africa is a nonviolent instrument of grand strategy. It involves coordinated activities that could precipitate in tangible effects on intended targets such as economic aid and development assistance, as well as training, equipping, and arming military and security forces to achieve political and economic influence. The South-South development cooperation school of thought, on the other hand, views China’s increased aid, trade, and investment in Africa as a means to foster Africa’s self-sufficiency and sustainable development in the 21st century.

Therefore, the empirical part of this study will attempt to advance the understanding and rationalization of the various Chinese investments in Ethiopia. More specifically, the central motive of this study was to investigate if the Ethio-Chinese investments indicate a win-win strategy. The South-South cooperative win-win ventures are supposed to bring proportional benefits through trade flows, foreign domestic flows, technology transfer, and integration in global value chains, in addition to aid flows, which otherwise the partners would not have access to before entering into these relations. The four case studies seriously challenge the argument of political warfare theorists that China’s investment in Ethiopia would perpetuate underdevelopment through exploitation, extraction, and destruction of Ethiopia’s resources and industrial capacity. Except for the negative environmental externalities caused by the Sino-Ethiopian investments, the case studies have demonstrated that Ethiopia has substantially benefited from the Chinese cooperative investments. The Chinese investments in Ethiopia are not complementary but appear to be aligned very closely with the South-South cooperative strategies and goals.

Summary and Conclusion

As the Chinese economy booms, Chinese multinational corporations are embarking on an acquisition drive to capture the oil, natural resources, and unexploited markets of Africa to sustain its rapid economic growth. Based on the current Chinese investments and co-development projects existing in Africa, supporters of Chinese investment in Africa argue that the recent increase in Africa’s gross domestic product is because of Chinese investment. The roads, bridges, and dams built by Chinese firms in Africa are low cost, good quality, and completed in a fraction of the time. Unlike the Western investments in Africa, the Chinese state-owned enterprises provide human and capital assistance to Africa without any conditionality.

Critics on the other hand argue that China has shipped entire workforces across to Africa for many of its projects. In addition, China has flooded the African markets with cheap consumer goods and devastated the local textile and other consumer product industries. In addition, some of the Afro-pessimistic intellectuals argue that yet there is little evidence whether China’s renewed, and most probably lasting involvement in Africa will serve the continent better than the decades of aid from Western governments, which have scarcely delivered on their promises. Lumumba-Kasongo argues that under the pretext of the SSC model China has introduced the “Beijing Consensus,” which is to a large extent based on China’s self-representation as Africa’s help-mate rather than the “Washington Consensus,” “which is the dogma of White House, Pentagon, the Bank, International Monetary Fund, and multinationals representing the interest of big private business (2007).”

Contrary to the two diametrically opposed perspectives of the Chinese engagement in Africa as presented above, the point of view of Holstag (2006) is eclectic. According to Holstag, China’s vision on its economic relations with Africa is beckoned with sweet carrots largely tailored to derive goodwill and permit it to do business suavely (2006).

The three perspectives of the Chinese engagement in Africa are very instructive. But in order to have a clear picture, the three points of view need to be rigorously analyzed from the point of view of an actual African country. For example, for the last five years, Ethiopia has achieved a high and sustained rate of growth. The presence and conduct of China’s foreign direct investment in Ethiopia since 2000 is fast becoming one of the fronts in reshaping Ethiopia’s economic architecture. Given the fact that Ethiopia has been the major beneficiary of Chinese investment and cooperative development projects, the question that needs to be pondered is: can some of Ethiopia’s spectacular growth rate be attributed to the Chinese investments? More specifically, have the Chinese cooperative investment footprints enabled the Ethiopian economy to master highly valued technology and generate productive employment or have the various Chinese investments destined Ethiopia’s economy to be dependent on the Beijing Consensus model?

The Chinese investors seem to have carefully engineered their entry strategy into Ethiopia. With considerable oscillation and no discernible trend before 1991, China devised trade and biddings on government sponsored contractual projects, mainly infrastructural landscape, to gain access and expand into Ethiopia’s downstream resources. With a wave of privatization and structural reforms that gained momentum in Ethiopia spurred a flurry of various types of foreign direct investments that originated from the Southern Countries (i.e., China, India, South Africa, etc.). For example, from 1992 to 2005, Chinese investments in Ethiopia got organized under the wholly owned type of organizational structure (i.e., 86 percent wholly-owned compared to 12 percent in joint-ventures) in order for Chinese companies to acquire upstream assets (See Table 3). In recent years, the presence and conduct of China’s foreign direct investment in Ethiopia is fast becoming one of the prominent features of the Ethiopian economic landscape either by infrastructure in exchange for access to natural resources or by denoting Chinese development assistance or providing favorable lending and capital contribution.

However, though Ethiopia intends to use Chinese cooperative investment as means of enhancing its regional development, the inflow of Chinese investment has not been equally shared. Geographically, most of the Chinese Cooperative investments are located within the Addis Ababa and Oromia Regional State. While 78 of the wholly owned Chinese companies are located in the Addis Ababa Regional Zone and about 9 percent are situated in the Oromia Regional State, without any significant catching up by the other regional zones. In addition, of the 103 joint-venture companies, 53 percent are situated within the Addis Ababa region while 30 percent are reside within the Oromia Regional State. In addition, 22 percent of the small- and medium-size state-owned Chinese Enterprises operating in Ethiopia are fully operational while the remaining 78 percent (647/828) are partially or yet to be fully implemented. To fully implement the various investments, the Chinese investors have employed 44 percent (52,714/119,670) as full-time workers and 56 percent (66,956/119,670) as temporary workers.

Ethiopia’s main objectives for allowing Chinese investment to operate in country are to have access to high technology, to increase employment, to acquire know-how, to increase foreign exchange through export, and to benefit from both backward and forward linkages. Thus, the four Sino-Ethiopian Cooperative Investment case studies given above are analyzed in terms of their effects on 1) Ownership and Human Capital 2) Production Management and Operations, 3) Export effects 4)Technological Transfers 5) Efficiency 6) Foreign Exchange effects7) Local Content requirements and spillover effects, and 8) Environmental effects of the Sino-Ethiopian investments. However, since the analysis is based on four case studies, it needs to be underlined that the results of these case studies are anecdotally based and are not sufficient to generalize about characteristics of the entire Sino-Ethiopia Cooperative investments. Also, it needs to underlined that host countries will not be able to capture the full benefits associated with foreign direct investment until they reach a certain threshold level in terms of educational attainment, provision of infrastructure services, local technological capabilities, and development of local financial markets, thus the analytical outcome of this study needs to considered tentative.

In terms of ownership and human capital, most of the Chinese investments are wholly owned. When Chinese enter a joint-venture or create a wholly owned subsidiary, they send experienced managers or top specialists from abroad. Based on the four case studies, while the CEOs of the three wholly owned Chinese companies are Chinese, the CEO of the Sino-Ethiopia Associate Africa joint-venture company is an Ethiopian. Given the Chinese investors in Ethiopia are unfamiliar with cultural makeup of the local situation and the Ethiopian labor laws that pertain to wages, holidays, housing and other benefits, in the solely owned Chinese firms and the joint venture firm, Ethiopian employees seemed to be in charge of the human resources management. In view of this, it can be assumed that there exists a smooth cross-cultural communication within the enterprises and between the enterprise and its external suppliers and customers.

The process of inviting foreign investors to developing countries is a means to increase the valued-added exports of the host country. Based on the Sino-Ethiopia Associate Africa pharmaceutical joint venture company, it is possible to argue that both partners handle the international marketing sector. Since the Chinese marketing officers are well versed in some aspects of the international marketing, they might have trained local employees in export management and foreign marketing strategies. Also, it is possible that local firms could have acquired international marketing techniques by hiring some of the Ethiopian workers who might have left the Sino-Ethiopian joint venture to start their own businesses. Nevertheless, since the three wholly owned enterprises mostly produce for the domestic market, it is very likely that they might have facilitated some type of interaction with local suppliers and domestic customers. It is likely that the wholly owned enterprises mostly produce for the Ethiopian domestic market and have done little to integrate Ethiopian products to the global value chain. Thus based on the three cases, it is possible to ascertain that the Chinese wholly owned companies don’t seem to act as a platform for exports and their goal is to seek for themselves efficiency in their production process by taking care of Ethiopia’s factors of endowment. The wholly owned Sino-Africa produces leather products that are designed to compete in the international market—it does not seem to crowd out the low quality local products. The Sino-Ethiopia pharmaceutical joint venture enterprise is of higher quality base and is more efficient; therefore, it is complementary and generates foreign exchanges indispensable for the country. Nonetheless, since the Ethiopian employees do not receive the necessary training in international marketing know-how, the leather products seem to be totally dependent on the Chinese joint venture partners in order to promote and distribute their products in overseas markets. In addition, as argued by GebreEgzibher, “The major types of products exported to China are agricultural products which are unprocessed or semi-processed. These include skins, leather and leather products, oil seeds, pulses, coffee, and tantalum. The bulk of leather, skin, and hides are semi-processed. Ethiopia has huge potential in other products which are allowed to be exported to China. These include coffee, natural gum, bee wax, edible oil, horticultural and textile products, precious stones, and other organic products.” (2006)

Typically, the Chinese PLCs arrive in Africa with their work force. In line with this, the project managers, engineers, and technicians working in Ethiopian government project contracts and wholly owned enterprises are mostly Chinese. Even in the Sino-Ethiopia Associate Africa joint firm, research and product design is forged in the headquarters rather than basing it on an equity ratio to include the Ethiopian partner. In terms of efficiency, since more than 50 percent of input materials executed by the Sino-Ethiopian firms come from China, it is very difficult to ascertain the contribution of efficiency to the new products made by the Sino-Ethiopian investments.

Most of the foreign exchange generally used for the Chinese investments in Ethiopia originates from the China’s EXIM and China’s development banks. For instance, Export-Import Bank of China has been granting long-term and short-term loans to companies investing abroad to purchase Chinese equipment and technology necessary to build factories abroad (Zhaoxi, 2009). Thus, the projects in Ethiopia have enabled it to conserve the foreign exchange, which it could have spent on establishing these projects, and helped it to acquire the necessary foreign exchange by selling some of the Sino-Ethiopian investment products in the overseas market.

While the dependency school theory views foreign investment from developed countries at the core of the world economic system as harmful to the long-term economic growth of developing countries out in the periphery, other studies seem to demonstrate that foreign direct investors can potentially benefit domestic firms through spillover effects. Spillover effects are therefore regarded as a very important conduit through which foreign direct investment promotes economic growth in the host country. Though the spillover effect of FDI on the productivity growth of local firms does not occur automatically (See, JBIC, 2002), based on the incentives given by the Ethiopian Government to Chinese investors, the four case studies utilize local content. Adhering to backward linkages, the Chinese investors purchase their factors of production from local suppliers. In addition, since they mostly sell their outputs in the domestic market, they have contributed to forward linkages. The four case studies act in creating complementary activities rather than “crowding out” domestic firms. In short, the Sino-Ethiopian foreign investments have forced local firms to restructure themselves to be more competitive and adequately fulfill the domestic demand, thereby maintaining their market shares. Thus, the Chinese investments have contributed to positive productivity spillovers to the Ethiopian economy.

Since the 1992 Earth Summit in Rio de Janeiro, the environmental and social dimensions of foreign investment have become a matter of intense controversy between certain home and host countries. For example in Ethiopia, to attract the Chinese investors, the Ethiopian government seems to covertly relax the enforcement of the environmental standards. The Chinese contractual-based projects, wholly owned, and the joint venture cases analyzed in this paper are by and large operating in ecologically sensitive regions. They are facing serious environmental problems because the Ethiopian Government seems to have prioritized its short-term economic growth over the achievement of environmentally sustainable economic growth in the long run. Ethiopian environmental protection officers at each level of the political system do not seem to fine Chinese investors for their transgressions or for negatively imprinting their environmental footprints on the country, or they fail to encourage the Chinese investors to adopt production techniques that are less harmful to the Ethiopian environment. Unlike other international financial institutions, the Chinese investors and financiers (such as the Export-Import Bank of China) fail to undertake their environmental guidelines when lending the concessional loans as part of the country’s official development assistance program (See, Bosshard, 2008). Undoubtedly, Chinese investments in Ethiopia are an indispensable part of the economic system (they have contributed to infrastructural development, provide capital, new technologies, modern management know- how, and enhanced demonstration effects). Nonetheless, little or no attention is paid by the Ethiopian Government to check the environmental implications of most of the undertaken Sino-Ethiopian investment case studies.

It needs to be underlined here that host countries will not be able to capture the full benefits associated with foreign direct investment until they reach a certain threshold level in terms of educational attainment, provision of infrastructure services, local technological capabilities and development of local financial markets. As an essential element of avoiding economic and social disparities among the different regions, the Ethiopian government needs to enhance the attractiveness of Ethiopia’s hinterland and other relatively neglected regions by 1) undertaking fundamental infrastructural development (i.e., electricity, water, good transport, and telecommunications), 2) improving and encouraging labor mobility to the undeveloped regions by creating schools, hospitals, parks, etc., 3) create local development agencies to promote FDI in each region. In short, further work is necessary to untangle the effects of social responsibility, to enforce environmental safeguards, to train local labor, and to transfer the technology of the Chinese cooperative investments into the Ethiopian economy.

Though anecdotally focused, the modest contributions upon which we hope other researchers will build is that more case studies need to be collected to analyze if Chinese investments in Ethiopia are politically motivated or are meant to fulfill the ideals of the SSC investments. Nonetheless, based on Lummumba-Kasongo’s argument that according to the win-win approach theory, the SSC ventures are supposed to induce “…liberal economic cooperation through trade flows (export and import relations), foreign domestic flows, technology transfer and integration in global value chains, and aid flows, should bring proportional benefits, which otherwise the partners would not have access to before entering into these relations” (2007); it is possible to ascertain that in the short term Ethiopia has substantially benefited from the Chinese cooperative investments. Thus, the argument of the proponents of political warfare theory—that China’s investment in Ethiopia would perpetuate underdevelopment through exploitation, extraction, and destruction of Ethiopia’s resources and industrial capacity—needs to be challenged at this juncture. As outlined by China’s politico-diplomatic “African Strategy,” it is quite obvious that China has shown its strategic interest in Africa and has particularly mapped out its interest in Ethiopia. Except for their significant negative environmental effects it is perpetuating on the Ethiopian soil at this juncture, it possible to assert that China’s investment in Ethiopia is closely aligning with the SSCs stated goals. In assessing the environmental impact, it should be noted that some of the negative externalities could have been easily corrected if the Ethiopian authorities had proactively asked the Chinese enterprises to adhere to the Chinese domestic environmental policy (See, Bosshard, 2008). Thus, the tentative conclusion we can arrive at from the four case studies is that by using its new standards of economic diplomacy China is slowly gaining ground in Ethiopia. Nevertheless, it looks farfetched to make assertions like the proponents of “New Mercantilism” school of thought—that “China’s rise confirms the current position of African countries: that of a commodity supplier and a modest consumer’s market” (Holslang, 2006).

Endnotes:
Bosshad, P. (2008). “China’s Environmental Footprints in Africa.” China in Africa Policy. China in Africa Project of the SA Institute of International Affairs (SAIIA), No. 3, April 2008.

GebreEgziabher, T. “The Developmental Impact of China and India on Ethiopia with Emphasis on Small Scale Footwear Producers.” Development Policy Research Unit, Johannesburg, South Africa (October 18-20, 2006).

Holslag, J. (2006). “China’s New Mercantilism in Central Africa.” African and Asian Studies, Vol. 5, No. 2, 15-16.

Lumumba-Kasongo, T. (2007). “China-Africa Relations in the Post-Cold War Era: Dialectics of Rethinking South-South Dialogue.” CODESRIA Bulletin, No. 1 & 2, 8-16.

Zhaoxi, L. (2009). “China’s Outward Foreign Direct Investment.” Chinese Multinationals, Jean-Paul Larcon [ed], Singapore: World Scientific Publishing, Co. Pte. Ltd., 49.

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Sometimes, the mainstream media could not ignore Ethiopia’s meteoric rise, and will from time to time feature it in their site but will never mention China.

But the images of the Ethiopian economic “miracle” could not lie about Chinese contribution…

Understand that this is what China had exactly done in the early days of the Republic of the United States of America, when Chinese workers were also helping the Americans build their bridges and railways, only to be labeled as slave workers later on.

Not to mention that Asian gold were also used to finance such megaprojects.

‘Silk Road Lady’ Intensifies Campaign To Make U.S. and Europe Join the BRICS

[PDF version of this article]

In a webcast and three major conferences in European cities during the last week in April, Schiller Institute founder Helga Zepp-LaRouche spoke along with leading representatives of the BRICS nations, insisting the United States and Europe must join the BRICS in a new system for war-avoidance and credit for infrastructure.

Zepp-LaRouche welcomed the recent mass decisions by nearly all European nations to join the China-initiated Asian Infrastructure Investment Bank (AIIB), defying the Obama Administration in doing so. They demonstrate the potential to break Europe out of the grip of economic stagnation, deadly austerity policies, and NATO’s war confrontation with Russia.

“I think that there is a fundamental shift,” she reported, “because people realize that Europe, without Russia and China, as part of Eurasia, is simply not going to survive, and people really see that the future is in these countries.”

But the realization demands that European nations reject the war policy, create new credit institutions and join China and the BRICS in building “land-bridge” development corridors across Eurasia, linking East Asia and Europe by land and sea and developing the landlocked nations between them.

Zepp-LaRouche became known in China as “the Silk Road Lady” for her 30-year campaign for this. She told an audience including many diplomats in Copenhagen Apr. 27, that she “jumped that high” for joy when President Xi Jinping announced it, as China’s “Economic Belt and Road” infrastructure investment policy in October 2013.

Since that time she has waged an intensifying campaign in Europe for the new system of mutual economic and scientific development of nations which this offers, as the alternative to war and potential thermonuclear war confrontation.

“There is an increase in curiosity, because the effort to force Europe to impose sanctions against Russia, has led to a tremendous backfire in Germany, in France, in Italy, and other countries, in Austria,” Zepp-LaRouche said. “Because people realize that these sanctions hurt themselves, their industries, much more than even Russia, because Russia is turning to Asia.

“So people also, step by step, perceive that China has done an economic miracle, which is really almost as spectacular, if not more, than the German economic miracle in the post-War period. And also India is taking off, and these perspectives have become extremely active, especially the idea that there will be, in the next immediate period, an eight trillion euro investment potential in the BRICS countries. And despite the block by the media, it is penetrating, and it creates an enormous optimism.”

‘Hint of Spring’

The Twentieth Century was disastrous for Europe. With her Twenty-first Century Silk Road/Eurasian Land-Bridge campaign, Zepp-LaRouche is reigniting Europe’s “American” economic development impetus of the late Nineteenth Century.

Then, the world-changing success of Alexander Hamilton’s ‘American System’ in the United States, led European leaders like Bismarck and Russia’s Count Witte to apply its principles in rail-building, port development, creation of new manufacturing industries, etc., and radiated it into Japan and Korea as well.

Now after a century of the “British System” of monetarism, free trade, depressions, wars, and population reduction, the China-led BRICS new development paradigm offers a new ‘Hamiltonian’ chance.

“I think it reflects itself in a growing recognition that we have been the spark and the idea-givers for many of these things,” Zepp-LaRouche said, “so that the event in Baden-Baden was very important. People appreciated my several interventions very much, and there is a deep recognition in Russia about Lyn’s economic policies, which goes way back. And in Copenhagen, we had eight ambassadors at the event, and eight more embassies, and many thinktanks and industrialists, and Schiller members. So it was an extremely optimistic event, and people really had hint of spring, which lies in all of these ideas.

The ‘Good News’

Following her Apr. 21 European webcast and her speech Apr. 24 to the Cultural-Business Dialogue in Baden-Baden, Germany, Zepp-LaRouche spoke together with a number of Chinese representatives including its ambassador, to a large seminar at the Copenhagen Business Confucius Institute Apr. 27; and then to a major EIR seminar in Frankfurt Apr. 28.

The proceedings in Frankfurt show the impact her campaign is having. As she noted, “We had four developing countries represented through large trade organizations, or consulates, and they all expressed very determined goals as to when they want to be either a fully industrialized country, or when they want to be at least medium-developed; but there is no longer the idea that they can be prevented from their development. A very optimistic spirit was also visible there.”

The speakers representing those four nations were Prof. Shi Ze, Senior Research Fellow at the China Institute of International Studies; former Greek ambassador and diplomat Leonidas Chrysanthopoulos; Malaysian Investment Development Agency director S. Sundara Raja; and the Ethiopian Consul-General in Frankfurt. Other diplomats were in the audience of 75 at the seminar.

All the speakers agreed that they no longer listen to the dubious and destructive advice of the IMF experts, monetarist bankers and “geopoliticians,” but focus on policies that serve the development of their nations’ real economy and the well-being of their citizens. They view the grouping of BRICS-allied nations as a great growth and development potential that will be tapped.

Zepp-LaRouche opened the Frankfurt seminar by offering the “good news” that the BRICS development and the LaRouche movement are providing an alternative to the collapsing Wall Street-London dominated system—which even the IMF now predicts, is facing yet another crash. With bank and government credit dried up in the West, the many new international development banks being created by the BRICS countries are initiating the huge investments for “great projects” of infrastructure which are urgently needed, she said.

Zepp-LaRouche described how her husband, EIR Founding Editor Lyndon LaRouche, had proposed such an International Development Bank and its necessary great projects 40 years ago; and that those projects and development corridors would have been built, had banks done their job of serving the real economy with credit. China now repeatedly invites Europe—and the United States—to join and help capitalize the development banks the BRICS are creating.

The “Silk Road Lady” emphasized that Chinese political thought includes the Confucian principles of collaboration and harmony of nations, underlying both China’s massive development strides, and its offers of collaboration in a new credit system to the West.

Prof. Shi Ze located the “New Silk Road” policy of China within the fact—of crucial importance for the economic future now—that after the 2008 crash of the trans-Atlantic banks, China dramatically increased its involvement (credit and investment), becoming a global economic driver, while some other regions’ contributions collapsed.

The Chinese expert presented a “nested” series of spheres of this credit and development: first, the drive to break down the once-vast differences in living standards between eastern China and its rural, partially desert West; second, the economic development of the landlocked Central Asian republics through the “New Silk Road”; third, the development through the AIIB of all of South Asia from ASEAN to the Middle East, and even Southeast Europe—”giving the America economy new opportunities and markets.” He explained that for China itself, the New Silk Road represents a new responsibility in world politics, for the creation of a new international community around a common principle of mutual economic and scientific progress.

Whoever doesn’t understand the New Silk Road in this way, said Prof. Shi, does not understand China.

Greece Offers Its Potential

Greek ambassador Leonidas Chrysanthopoulos presented the seminar with the most sobering possible picture of the economic desolation which must be overcome in Europe—the damage which the EU has done to the Greek economy and Greek people since 2002, causing the “downgrading of human rights of Greeks” as documented by human rights organizations. He stressed that every agency from the IMF to the UN to the ECB, and every government in Europe including the Greek government, allowed economic austerity to remove human rights guaranteed under every European treaty and convention. “What went wrong with the EU?” Chrysanthopoulos asked. “Why is it destroying its member-states and peoples?”

“An answer to this may be the BRICS initiative,” he said. “This is an initiative of Brazil, Russia, India, China and South Africa to pursue a policy of economic development for the benefit of humanity. To that end they have created a Development Bank to invest billions in necessary development projects. China recently initiated the Asian Infrastructure Investment Bank (AIIB), joined by over 20 Asian nations as founding members and has set up a Silk Road Development Fund. China has also proposed within BRICS the creation of a Free Trade Area of Asia and the Pacific (FTAAP).The incorporation of the Shanghai Cooperation Organization into the BRICS initiative could create a formidable power, which if it remains out of the control of the bankers and big companies’ lobbyists, could lead to a point that humanity indeed has a chance to reach global peace and end poverty through common human economic development.”

Noting the “desperate need for the cooperation of the U.S.A. and … Europe with the BRICS countries and their initiatives,” the ambassador added: “Because of Greece’s special relationships with China and Russia, Athens can play an important role within the BRICS initiative.”

Along the same lines, the head of the Malaysian Investment Development Agency’s head, Siva Sundara Raja, explained how Malaysia had learned from recent experience to ignore the instructions of the IMF and the London/Wall Street banking “consensus.”

That painful experience was the 1997-98 so-called “Asian financial crisis,” in which Malaysia’s previous 40 years’ manufaturing and technology development took a sharp backwards blow, because its financial policies had come from the IMF and western banking “experts.” Rejecting this “consensus” under Prime Minister Dr. Mahathir Mohammad, Malaysia imposed capital and currency controls and stopped offshore speculation in its currency. Only then could it resume is economic growth dynamic.

Not accidentally, this policy of capital and currency controls—and Glass-Steagall separation of its banks—has been the policy of China throughout its last 25 years’ astonishing economic, scientific, and technological growth.

Effect of Joining the BRICS

The final and very important seminar contribution was made by Ethiopia’s consul-general in Frankfurt, Mehreteab Mulugeta Haile. Since its 1991 hunger crisis, he explained, Ethiopia has concentrated on strengthening nationally important economic branches—a “Hamiltonian” policy—and has now again reached food self-sufficiency. The country’s economic growth rates have rivalled those of China, recently at the level of 11% with plans to increase this further.

Mulugeta Haile said that his country sees collaboration with the BRICS as crucial to its present and future growth. Russian, Indian, and Brazilian credits are financing railroad projects, and China’s investment credits for Africa are available to fund new Ethiopian infrastructure projects. The African Union, he said, plans a paradigm shift for the next 50 years, based on this assistance in economic development.

The crucial question of China’s overall Africa policy—outside the “Silk Road” belts, but included in China’s “vision and action plan” for Eurasian development—was raised from the seminar audience. Dr. Shi—who had also spoken together with Helga Zepp-LaRouche at the Baden-Baden conference—said that although in Europe’s media, China’s Africa policy is called “imperialist,” in Africa it is seen as partnership for the development of agriculture, modern transport, communications, education and healthcare.

The Frankfurt audience was fully engaged for three and one-half hours in the strategy of reversing Europe’s self-destructive recent policy; and at the conclusion, were anxious to know from Zepp-LaRouche and her colleagues, what the next public steps would be.

This article appears in the May 8, 2015 issue of Executive Intelligence Review.

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