I earlier submitted a post regarding the loss of US influence in Latin America and the growing commercial clout of China in that region. This has recently been highlighted by the US conflict with Argentina over their bond default. Little wonder the US with its heavy-handed approach has lost friends in Latin America. At a recent court hearing in the US, in an attack on US demands the legal counsel for Argentina, Blackman, said, “No state has ever before been asked to turn over the keys to its defense establishment, its national security establishment, its military establishment, the personal property of its president, and state officials”.
US aid is tied to a country’s willingness to support US foreign policy and financial policy dictates, a stark contrast to China’s policy and China is taking more aggressive steps to assert itself throughout.
China, together with the other members of BRICS, (Brasil, Russia, India and South Africa, has formed the NDB, New Development Bank which will challenge the IMF and its harsh demands as condition for financial aid. This will open the door for smaller and emerging nations to access to capital markets. The IMF, where the US holds veto power, has become another weapon the US uses to force political compliance in return for financial assistance from the IMF.
China is also using currency swaps to weaken the role of the US dollar and its status as a reserve currency. In addition to a recent currency swap agreement with Argentina; China has signed currency swap agreements with 27 other countries, Belarus, Brasil, Canada, ECB, Hong Kong, Iceland, Indonesia, Malaysia, Singapore, South Korea, Thailand, the UK and Uzbekistan.
This could make the Yuan an alternative to the US dollar for trade and finance, positioning the Yuan for convertibility and as a replacement of the US dollar as a reserve currency, something the BRICS members have long wanted.
I wrote in a previous post about the symbiotic alliance of Russia and China and the benefit the natural gas agreement would bring to Russia. Now, China as stepped forward with a public commitment to bolster the Ruble and Russian economy. On that news, the ruble jumped 4.9%. China’s commerce minister went on to say they would expand the currency swap with Russia.
India, a longtime ally of Russia, and member of BRICS, gave tacit agreement to private Indian business group to invest in Crimea, a slap in the face to the US, which is trying to enlist India as a regional counterbalance to China.
US foreign policy seems to be creating an ever-widening gap between an Anglo-American-Euro zone and the rest of the world and this will, in the longterm, benefit China.