Source: Capital News    Published: 2023-10-24

Recently, China-United States relations appears to show some signs of détente.Among others, U.S. Senate Majority Leader Chuck Schumer led a congressional delegation to China and was accorded a high level of courtesy in China. Earlier, China and the United States launched a pair of economic and financial working groups in an effort to deepen economic communication between the two countries.

On the other hand, on October 17th, theU.S. released three final rules to update the semiconductor export controls issued on October 7, 2022 for further tightening export restrictions on chips that support artificial intelligence and semiconductor manufacturing equipment to China, and add a number of Chinese entities to the “Entity List”.

People may wonder why the U.S. insists on wielding the stick of sanctions, though sanctions have proved to be of very limited effect. How about the current U.S. strategy toward China? Which words from the U.S. side is trust-worthy and which is not?

In collaboration with RDCY, Capital News has launched the “Global Governance Forum” section. Benjamin Norton, founder and editor-in-chief of Geopolitical Economy Report, foreign policy expert, shared with us on China-US relations and the Belt and Road Initiative.

Fruitless sanctions make for a trust bankrupted U.S.

Capital News: How was your visit to Beijing this time? The reason why I ask such a question is that, lately, we've been seeing some really bewildering reports in serious  Western media. You know, stuff like 'China's economy is on the brink of collapse' or 'Shanghai is like a ghost town' and whatnot. But if you dig a bit deeper, you'll find all sorts of holes in these stories. Given your background as a journalist with years, why do you think Western media keeps getting China so wrong?

Benjamin Norton: It's incredible to see the level of development in China. The Western media has consistently asserted, for decades, that China is on the verge of collapse. However, it's always proven to be false. Even the claim that China’s economy is not experiencing growth is equally ridiculous. China’s GDP is estimated to grow by around 5 % this year, a robust figure when compared to many Western economies which are either stagnant or even in recession. In Europe, multiple economies are slipping into recession, and the situation looks like it could get even worse in the near future. This highlights a phenomenon known as psychological projection, wherein one attributes their own problems to their adversary.

What we're witnessing in China is not an economic collapse, but rather a transition.  China has experienced rapid economic development and has built infrastructure at an incredible rate. Presently, the government and many economists recognize the need to shift towards more advanced forms of production, emphasizing high-value-added production of cutting-edge technologies. This is a strategic shift from China's earlier focus on lower value-added products in the industrial production chain. Now, China has undeniably emerged as one of the world's foremost technological powers. Despite explicit statements from U.S. Commerce Secretary Gina Raimondo about Washington's aim to hinder China's innovation, we have witnessed the opposite unfold. China has made significant strides, particularly in semiconductor technology, producing chips as small as 7 nanometers. Despite the U.S.  sanctions, which are illegal according to international law, what we’re seeing is an economic transition away from a focus on physical infrastructure production to a focus on technological production and the development of human capital. While any economy undergoing such a transition may encounter challenges, China is unequivocally progressing. Its economy continues to grow, propelling it confidently into the future.

It is crucial to reiterate that this appears to be a case of Western economies, which have been mired in stagnation under a new liberal model for decades, experiencing minimal growth. These economies have witnessed an increase in poverty and inequality, along with escalating political dysfunction. It seems to me that the western countries are projecting their own insecurities on China.

The unfortunate reality is that in the United States, there is a growing number of people who hold a negative view of China, but this sentiment is not organic. It is largely a result of media propaganda. The level of propaganda in the U.S. media is extreme. Every week China is accused of outlandish and ridiculous things.

Almost invariably, there is little to no evidence to support these claims. This is reminiscent of the propaganda leading up to the invasion of Iraq. I vividly recall when the United States government incessantly asserted that the Iraqi government possessed weapons of mass destruction and posed a threat to the entire planet. The media unquestioningly echoed these unsubstantiated claims from the U.S. government without demanding any evidence. We saw a similar scenario with Libya in the lead-up to the 2011 war. U.S. media propagated false claims about Muammar Gaddafi and the Libyan government, which were used to justify the NATO intervention that led to the destruction of the Libyan state.

Now, there is propaganda about Russia, alleging interference in U.S. elections through means on Facebook and Twitter, and even suggesting that Russia manipulated the 2016 elections. These are baseless allegations. There is never any concrete evidence presented. And now, China is subjected to a constant barrage of propaganda on TV and social media, filled with, frankly, falsehoods about China. This explains why, unfortunately, there are people who now hold a negative view of China. However, polls show that 20 years ago, many people in the U.S. held a very positive view of China. So, this negativity is not organic; it's not because ordinary people in the U.S. simply harbor ill feelings toward China.

Unfortunately, this negativity stems from manipulation. Noted scholars in the United States, Noam Chomsky and the late Edward Herman, authored a book titled 'Manufacturing Consent.' It delves into the political economy of mass media in the U.S., illustrating how media institutions, in collaboration with the U.S. government, particularly with intelligence agencies such as the CIA, and the Pentagon, disseminate propaganda through the media to further Washington's foreign policy interests. This was evident in the Korean War, the Vietnam War, and the Iraq War, where constant lies were spread to justify U.S. policy.

For example, during the onset of the Vietnam War, a false narrative was constructed around the Gulf of Tonkin incident, portraying Vietnamese forces as aggressors against the United States. In reality, it was the United States that initiated the conflict, but Vietnam was unfairly blamed in the media, with these falsehoods originating from the U.S. government. This pattern repeats in history.

The U.S. has a long history of manipulating the media. In fact, a former CIA official, one of the co-founders of the U.S. spy agency, likened the media to a 'Mighty Wurlitzer,' a type of musical instrument. He was emphasizing how the CIA deftly uses the media to shape public opinion, essentially orchestrating support for aggressive U.S. policies.

Regrettably, today we witness a stark example of this manipulation, with U.S. government agencies, especially intelligence bodies like the CIA, and the military, along with other government entities, leveraging the media to sway public opinion and legitimize these highly aggressive policies.

Capital News: You just talk about the semiconductor restriction, actually, the U.S. has a history of restricting China in the field, so this isn't entirely new. Yet, even with these chip restrictions in the U.S., Huawei, for instance, still managed to roll out new phones this year with chips they developed themselves. Could this means a failure of U.S. tech war against China?

Benjamin Norton: We have to ask what Washington’s goal is in this tech war. Gina Raimondo, the U.S.  commerce secretary, said clearly that Washington’s goal is to prevent China from innovating. In that sense, it is a complete failure. But now the United States actually acknowledges its inability to entirely impede China's technological progress. Instead, its goal is to maintain a lead, keeping China a few years behind.

The hypocrisy of the U.S. is evident here. While it frequently emphasizes competition and the necessity of having diverse competitors, its corporations are resistant to competition from their Chinese counterparts. Many of these firms are subsidized by Washington and maintain close ties with it. The underlying objective of these sanctions is to prevent Chinese companies from effectively competing with these American corporations. Essentially, the U.S. is rigging the rules of the game, preventing fair competition, despite all the rhetoric on the importance of competition.

However, China continues its development unabated. Now the more the U.S. relies on sanctions, the weaker the sanctions as a weapon gets. The U.S. is addicted to sanctions, regardless of breaching international laws. In fact, this approach is inadvertently fostering a sense of independence in the sanctioned countries. Over time, not only do the sanctions lose their bite, but they also veer towards irrelevance. By imposing sanctions on nations like China, Russia, and Iran, the U.S. not only compels these countries to bolster their own industries and make a pitch for independence but also encourages them to forge closer ties with one another.

Capital News: But why, when the evidence shows that sanctions have limited effectiveness and might even spur China to be more self-reliant, does the Biden administration still insist on this path?

Benjamin Norton: Because in the United States, there exists a tight-knit relationship between the political and economic classes. Large corporations play a pivotal role in financing political campaigns, with studies revealing that over 90% of candidates vying for seats in the House and Senate who secure substantial funding tend to win elections. So, if you want to be a politician in the U.S., you have to get the support from big corporations, particularly those in Silicon Valley and the big banks.

These privately owned firms geared only towards corporate profitability. They prefer to maintain their long-held positions as dominant monopolies in the world. Consequently, the U.S. government is acting in alignment with these corporations’ interests, endeavoring to stifle the competitive potential of Chinese firms such as Huawei and others, despite the fact that in the long term, this is going to backfire.

The crux of the matter in the United States is that all decision-making is predominantly short-term in nature, driven by quarterly dividends for the stockholders of these corporate giants, rather than long-term strategies extending over 5, 10, or even 20 years. Such a myopia has led to the de-industrialization of the U.S. economy and a shift towards financial speculation. So many of Washington policies have made a small handful of wealthy oligarchs in the U.S. even richer at the expense of a weaker and more unstable economy. The group’s great influence in the political system forestalls any significant change.

Capital News: Lately, it seems like there's been a detente in U.S.-China relations.  Some believe this is a sign of the U.S. making concessions to China, suggesting that perhaps the U.S. is finding it tough to hold its ground and has to set aside pride to shake hands with China. However, while the U.S. is showing these friendly gestures, it hasn't stopped its sanctions, containment, and attempts at de-risking with China. It's still applying pressure step by step. So, this could be seen as a bit of a smokescreen from the U.S., potentially to confuse China, making China think that the U.S. is changing its stance towards U.S. . What's your take on the current U.S. strategy towards China? What statements from the U.S. can be trusted, and what should be taken with a grain of salt?

Benjamin Norton: Many countries around the world say you can never trust the U.S.. Iran learned that the hard way. The U.S. was one of the signatories of the Joint Comprehensive Plan of Action, the nuclear deal with Iran. This agreement was backed by the UN Security Council. It was written into international law. What happened? Donald Trump was elected president, and he unilaterally withdrew from the agreement, violating the U.S.’s promises to Iran and violating international law.

You can also ask native peoples in America what happened after the U.S. government signed treaties claiming that it would respect their sovereignty, respect their land rights. So, there’s a long history of the U.S.  claiming that it will do something, and then violating that agreement soon after when it no longer serves its economic interests.

The problem facing the U.S.  lies in its deep economic integration with China and its long-standing de-industrialization in a way where decoupling is impossible, even the notion of de-risking is ridiculous. Notably, the vast majority of U.S. GDP comes from the services sector rather than from actual production.

According to UN data, the U.S. economy currently accounts for approximately 14 % of global manufacturing production, while China takes the lead with a share of 30 %. Wall Street, private banks, investment funds, and vulture funds hold sway in the U.S. economy. These firms now manage trillions of dollars in assets, and their growth rate is at an exponential rate, much faster than actual GDP growth.

They are managers of the wealth of a small handful of rich elites, who are experiencing faster asset growth than the overall economic expansion. Consequently, the country is becoming increasingly unequal.

So how is the U.S.  going to develop new industrial supply chains and re-industrialize amidst such a complex situation? It simply cannot do. And more unfortunately, the reality is that the U.S. is also politically dysfunctional. For instance, a president like Barack Obama may sign an agreement with a country like Iran, only for the next president, as was the case with Trump, to unilaterally withdraw from that very agreement, such as the Iran nuclear deal. You can’t simply entirely trust the U.S., because this is a country that is dysfunctional economically and politically.

Fortunately, the reality is that China, along with Russia and other countries, have recognized that the future lies in economic integration across regions, such as in Asia or through Global South cooperation.

U.S.’s crumbling infrastructure goes against its lip service

Capital News: In September, a new high-speed train route opened between Miami and Orlando in Florida. It runs at a speed of just 200 kilometers per hour. The total length of this route is 378 kilometers, and a one-way trip takes even 3 hours, only 30 minutes faster than driving. It's worth noting that, on its very first day of operation, there was an unfortunate incident where a pedestrian was accidentally hit while crossing the tracks. This year, the U.S. has experienced no less than 3 incidents of trains carrying hazardous materials derailing. President Biden mentioned that the U.S. U.S. ed to have the world's top-notch infrastructure. So, why is America's infrastructure falling behind nowadays?

Benjamin Norton: The U.S. infrastructure is falling apart, quite literally. Everywhere we look, bridges are collapsing, and trains are constantly derailing. This is due to the neoliberal policies of financialization that the U.S. government has been implementing for decades. These policies have diverted funds away from infrastructure and production investments, with capital predominantly directed towards financial speculation, inflating large bubbles of speculative assets. This doesn't actually lead to an improvement in the lives of the people. It primarily benefits a small group of wealthy individuals.

Railway industry is not very profitable, and it is actually the infrastructure of other industries. But all infrastructure in the U.S. is privatized. Not only am I talking about railroads, which are all privatized, but even roads, water systems, power grid, telecommunications grids are increasingly privatized. Large corporations, big auto companies in particular, lobby the government to prevent the construction of public transportation like railways. As a result of that, the U.S.’s railway trains are slow in terms of both its building and speed, as compared to China, or even other East Asian countries.

Whenever the U.S. wants to build big infrastructures, it comes to the two questions again that where is the funding and who is the beneficiary on earth. This is the predicament in the U.S.. To establish advanced railroads, one must not only contend with the powerful car lobbies but also find a way to make it financially viable. If a project isn't profitable in the U.S., it often doesn't come to fruition.

Capital News: The U.S. is struggling with its own domestic infrastructure, why has it been putting forth initiatives every year for the past 3 years claiming to support developing countries in their infrastructure development? We’ve also noticed that American media often compared its infrastructure initiatives like B3W and IMEC to China’s BRI. What is your opinion on that?

Benjamin Norton: The U.S. loves to create new phrases and say, 'We have this new program; we’re going to develop all these projects,' but actually very, very few projects are developed and some are never realized. Or if they are, the infrastructure is built many years past the date they claimed it would be, and it’s much more expensive than they claimed it would be. The U.S. is simply responding to China’s massive success in infrastructure development.

That’s why so many countries, especially developing countries in the Global South, are looking to China for help in developing infrastructure because China has actually, as we say in English, 'put its money where its mouth is.' It has actually accomplished what it says it’s going to do. The U.S. is the master of lip service, saying something but not actually doing it.

The BRI is absolutely incredible, and I think it really is changing the world in many profound ways. First of all, many countries in the Global South have desperately needed investment in infrastructure for many years. The United States and the European powers have constantly claimed to these countries that they’re their allies. They’re going to help them. However, the case runs the other way around.

India, for example, had a larger manufacturing sector before British colonialism than it did after the end of British colonialism with independence in 1947. In the colonial era, British firms take India as the dumping field of their goods, and thus destroyed its then advanced textile industry. And after the collapse of colonial system, the U.S. and European countries have maintained neo-colonial policies, claiming that they’re going to help these countries develop. Many countries in West Africa are long controlled by France, including their currencies, which is called the CFA franc. Yet, what has happened in these countries? Have they developed economically? Have they developed infrastructure? Of course not.

This is why many African leaders have joked that every time a Western official visits an African nation, they get a lecture. Every time China visits, they get a bridge, they get a hospital, they get a port.

So, China’s BRI has actually shown that it’s going to help these countries in the Global South develop infrastructure. In that sense, the BRI is revolutionary and is providing a lot of opportunities for the Global South. Furthermore, I think another important aspect of the BRI that is not discussed much but I believe is critical, is that by implementing this ambitious international project, China is showing how capital can be used to advance production and help develop the global economy, rather than simply investing in financial speculation.

The Western neo-liberal countries are dealing with the surplus that is produced (although the U.S.  has chronically had a current account deficit). For instance, Norway has a massive sovereign wealth fund. Where is that capital invested? It’s invested in stocks of Western corporations, which helps to strengthen Western corporations. It’s invested in bonds like U.S. Treasury bonds, which helps fund the massive U.S. current account deficit. It is invested in real estate, which helps further inflate a bubble of asset price speculation in the real estate market.

China is asserting that instead of merely speculating with that capital and surplus, they are investing it in tangible infrastructure - in things that enhance people’s lives. So we've witnessed the People’s Bank of China gradually de-dollarizing, meaning it's reducing its holdings of U.S. Treasury securities.

China is now declaring that they'll utilize this excess capital and surplus to foster global economic development, to construct infrastructure, and establish new trade routes. Therefore, China must cultivate fresh markets and establish new trade partners.

Capital News: Can you imagine that one day can the America participate in the Belt and Road Initiative? Did you think there has a such kind of opportunity?

Benjamin Norton: For the U.S. to engage in the BRI, it would need a revolution. The problem in the United States is that the political system is completely controlled by a small handful of corporate interests, by financial interests. It is not a democratic system. It is a system in which politicians who have more funding from large corporations and large financial firms win elections. So essentially, it’s a democracy in which money buys votes. We see through things like, for instance, the Supreme Court ruling Citizens United, which declared that donations in politics are a form of democracy and that corporations have the same legal rights as people. That is to say, in the elections, in the United States, large corporate firms, that’s to say, oligarchic interests, can buy the elections. That is legal in the United States. In many countries, that would be called bribery. In the United States, that is legal.

In order for the United States to engage in win-win cooperation with China, it needs a fundamental change in its political system. Unfortunately, we see this paralysis in the political system. We have two political parties that are, in many ways, very similar. They share many of the same Neo-liberal economic policies. They share much of the same hawkish war-mongering foreign policy. We need a fundamental break from the system. We need a new system. I think there’s a lot we can learn from China. So that’s why I’m here in China to learn about the economic system and the political system. That’s why so many students, scholars and journalists from around the world are here in China. That’s why for much of the low population in the Global South, which is where over 80% of the world population lives, they’re not looking to the West as the future of economic development. They are looking toward China.

I think the U.S., if it were more humble, and if there were a fundamental change to its political system, it could engage in win-win cooperation with China, and it could be part of the Belt and Road Initiative, which could be truly international, that all countries could participate in it.

An increasingly multi-polar world calls for new institutions

Capital News: This month, representatives from over 130 countries gathered in the Cuban capital for the 'Group of 77 + China' summit. The Group of 77 was founded in 1964 initially to counter the unfair economic order led by Western countries, especially the U.S., and to safeguard the interests of developing nations. Over the course of more than half a century, its membership has grown to 134 countries today. Given the long-standing U.S. containment and pressure on China, many developing nations can relate. Article 8 of the declaration strongly opposes unilateral sanctions on developing countries, while Article 10 explicitly condemns unfair practices like technological monopolies that hinder technological development in developing countries. How do you think the U.S. views the voices of these developing countries?

Benjamin Norton: We should keep in mind that 1/4 of the global population lives in countries that have been sanctioned by the United States, and also by the European Union. These countries represent roughly 1/3 of global GDP, so these sanctions imposed by the Western powers are not only against a small handful of countries.

The number of sanctions increases every year. We can see on a graph that with each different presidential administration in the U.S., the number has increased rapidly. So, these sanctions violate international law. They go against international law and the UN Charter, which clearly states that for sanctions to be imposed, they must have the approval of the UN Security Council. According to the top United Nations expert on sanctions, the Special Rapporteur Alena Douhan, 98% of the sanctions imposed in the world are illegal. These are the sanctions that the U.S. and the Western powers have imposed on Russia, Iran, Venezuela, Cuba, Nicaragua, Syria, Zimbabwe, and the DPRK. There are so many countries suffering under the weight of these unilateral sanctions.

Frequently, we hear from the United States that there are targeted sanctions against individuals or sectors. But that's not how sanctions work because sanctions, by their very nature, are a blunt instrument of collective punishment. What they do is they prevent foreign firms from working with sanctioned countries. So, I have spent quite a bit of time in Venezuela. I’ve been to Venezuela several times. I’ve talked to Venezuelan officials. They have frequently said that the U.S. claims there are humanitarian exemptions for its sanctions. But in reality, Venezuela cannot buy certain medicines, medical equipment and certain machine parts that it needs to repair its public transportation sector because foreign companies are afraid of doing business with Venezuela. Even if they’re not directly sanctioned, they’re afraid of secondary sanctions.

And also, furthermore, many insurance companies simply refuse to sell insurance to companies that are trading with sanctioned countries. What we see is an over-compliance with sanctions. Sanctions have resulted in economic crisis and humanitarian crises, leading to many preventable deaths. Now, this is why the statement at the G77 plus  China summit in Cuba is so important, because it shows that the G77 plus  China, which represents over 80 % of the world population. This is why the statement at the summit is so crucial. It demonstrates that the 80% of the world's population opposes these illegal unilateral sanctions imposed by the Western powers. This statement also underscores the significance of technological transfer and technological monopolies, which are closely related issues.

The sanctions is intricately connected to technological monopolies because sanctions are utilized not only to further foreign policy interests but also to advance the economic interests of these firms that are averse to foreign competition.

Finally, the matter of technology transfer is highly significant because many countries in the Global South aspire to industrialize and grow their economies. They do not want to be solely dependent on exporting raw materials and low-value-added commodities to the advanced, affluent imperialist countries that were their former colonizers. To achieve this, many of these formerly colonized countries in the Global South need access to technology to establish new industries.

But because of sanctions, and due to patents and intellectual property laws, the U.S. has often prevented countries in the Global South from having access to technology transfer. This is something that China recognized the importance of. Many countries could learn from China’s economic model. When China, under Deng Xiaoping, embarked on the process of opening up and implementing reforms, China also understood that not all forms of foreign direct investment are necessarily beneficial. Not all forms of investment lead to productive, sustainable growth in the economy and the creation of jobs for people. China understood the importance of requiring technology transfer from foreign firms that invest in the country. So, if foreign firms were going to invest, they should also share some of the technology they’re helping to produce. Furthermore, China recognized the significance of forming joint partnerships with local firms. This way, China could develop its own nascent industries and not solely rely on foreign companies.

The United States and the European powers do not want countries in the Global South to foster their own industries and become competitors because then they would challenge the monopolies held by Silicon Valley.

Capital News: We've got some new members joining the BRICS club this year, like Saudi Arabia, Egypt, UAE, Argentina, Iran, and Ethiopia. Also, thanks to China's push, the African Union hopped on board with the G20 this year. As we know, the U.S. has been the big player in international affairs for a long time, is it losing long-held position?

Benjamin Norton:  I think the role of the United States has played on the international stage has long been misrepresented. The U.S. constantly claims to be a leader in the world, or the leader of the world. But in reality, if we look at international institutions like the United Nations, it is frequently Washington that goes against the will of the international community.

A good example of this is the sanctions, the illegal U.S. embargo on Cuba. Every single year at the United Nations General Assembly for three decades, almost all countries on Earth vote against the embargo. The only countries that support the embargo are the U.S. and Israel. Every year, at the United Nations, we can see that Washington’s claim to be a leader on the international stage to defend international law is preposterous. In fact, if we also look at the United Nations Security Council, the U.S. constantly uses its veto to go against the will of other members of the Security Council. The U.S. is constantly violating international law. This is not a country that is actually truly committed to international law, which is why we see increasingly, politicians in Washington and also Brussels are trying to rewrite international law with the idea of the so-called rules-based international order.

Now, this is a very vague concept, and they never define it clearly because what they’re really saying is we make the rules. International law is something that’s written in stone, and the U.S. can’t change that, but it can create vague rules in a rules-based order.

For many decades, countries in the Global South have been dissatisfied with the United States, but they didn’t have economic alternatives. The U.S. was the world’s largest economy. It had a massive market, and many countries in the Global South, especially those with an export-oriented development model, needed access to the U.S. market. They were apprehensive about U.S. sanctions. They were fearful of the threat of U.S. invasion or military intervention, as we witnessed in Iraq, Libya, Afghanistan, and Syria.

But now the situation has fundamentally changed with the significant economic development of China, and the relative economic stabilization of Russia compared to the situation in the 90s, where there was an economic collapse due to the shock therapy. What we observe is the emergence of alternatives. Countries no longer have to be entirely dependent on the United States. And that grants them more political space to criticize the United States and assert their expectations to establish new institutions that represent their interests.

If we examine the statement from the G77+ China summit in Cuba, it underscored that the existing international financial institutions, such as the International Monetary Fund and the World Bank, are unequal and unjust. They advocate for a new international economic order. Now, that term is significant. The call for a new international economic order was initially made over 50 years ago by many countries in the Global South, but that call was disregarded because there were so few economic alternatives.

Now, what we are witnessing is that China is the world’s largest economy in terms of purchasing power parity. Using nominal figures in U.S. dollars can sometimes obscure more than it clarifies. China is, by this measure, the world’s largest economy. We also witness the ascent of Vietnam and Indonesia, and the development of Brazil. These are new countries and economic blocs that provide alternatives for development and also serve as trade partners.

Now, this explains why we see the emergence of new institutions like BRICS. In Latin America, the U.S.-controlled Organization of American States is going through gradual decline, which is based in Washington and controlled by Washington. Instead, we’re witnessing the emergence of CELAC, the Community of Latin American and Caribbean States. In Southeast Asia, we have ASEAN, and in Eurasia, we have the Shanghai Cooperation Organization. All of these reflect an increasingly multipolar world, which provides new opportunities for countries that were historically colonized by Western powers.

After gaining formal independence from European colonialism, many of these economies were still reliant on Western economies. But now, when we consider the BRICS countries collectively, their economies are larger than the G7 economies. As a percentage of world GDP, the G7 economies are declining whereas the BRICS economies are growing. This explains the direction in which the world is moving economically. Now, many countries in the Global South feel that they can finally have a voice on the international stage and criticize these Western policies that they’ve always opposed.

Capital News: Why can BRICS and G20 expand their membership, while G7 finds it tough to do so？

Benjamin Norton: We should keep in mind that the G7 was created in response to the G77. The G77 was formed by formerly colonized countries as a way to unify politically and economically to advance their shared interests. These are countries that were colonized by the G7 nations. So, the G7 essentially represents the cartel of the colonial powers—the United States, European colonial powers, Canada (which was a British colony), and Japan (which colonized many parts of East Asia).

On the other hand, the G77 has continued to grow over time. Now, there are 134 members representing more than 80% of the world's population. Throughout history, there's only been one instance of the G7 adding a new member, and it was Russia after the Soviet Union was overthrown. Russia’s government was essentially controlled by U.S. neo-liberal economists, who were sent to Moscow to impose shock therapy. According to UNICEF, this resulted in 3 million excess deaths in Russia, an economic collapse, millions of people falling into poverty, with their living standards and life savings destroyed, as well as public health crises. So, in the 1990s, Russia was in a state of collapse, and the United States largely bears responsibility for overseeing this collapse.

Later on, Russia implemented more nationalist economic policies, asserting more state control over elements of the economy which had been completely privatized, and embarked on a path of economic growth. The United States then attempted to recruit Russia into this western-exclusive club while it was still under Boris Yeltsin. Russia was invited to join and it became the G8.

However, with the western sanctions on Russia in 2014 after the crisis in Ukraine, Russia was expelled from the G8 and it gets back to G7. This is in response to the Ukraine crisis, which was triggered by a coup that overthrew Ukraine’s democratically elected president, who was geopolitically neutral, Viktor Yanukovych. A pro-western government was installed, pledging to join NATO. This set off a crisis after the U.S.-backed coup. This is an example of the G7 representing the interests of the western colonial powers.

They colonized much of the world, and even today, they believe they should control the world, as there never truly was a process of decolonization in these countries. In the former colonial powers, the economic system remains the same as it was in the colonial era. That's why they continue to uphold these Neo-colonial policies. The G77 now represents the interests of more than 80% of the world population. It is not an exaggeration to say that the G77 advocates for the interests of the majority of humanity, whereas the G7 represents the interests of the colonial powers.

Capital News: I heard of an opinions saying that, the BRICS and “G77 + China” , such kind of organization, its goal is to make cake. But the members of G7, their goal is to divide cake. Do you agree with that?

Benjamin Norton: Absolutely, the reality is that the G7 countries now represent a declining share of world GDP. It's currently 29% of global GDP measured at purchasing power parity, and this figure is shrinking. Meanwhile, the BRICS economies constitute roughly a third of global GDP measured by the same metric, and this figure is on the rise.

Why is this the case? The BRICS economies are fundamentally centered on production, not on financial speculation. In contrast, the Western economies, in the neoliberal era, have financialized and deindustrialized, relying on countries in the Global South, and their workers, to produce the commodities needed to fuel their economies. This model is unsustainable and exploitative, as the labor of workers in the Global South is super-exploited for the benefit of a small handful of countries in the Northern and Western hemispheres. This system is neither sustainable nor fair, and it's why the majority of humanity has been calling for a new international economic order.

Looking forward, the question arises: Can BRICS provide a viable economic alternative? BRICS has demonstrated the potential to create new institutions, such as the New Development Bank. However, the NDB is still relatively small and is in the process of expanding its loan portfolio to finance infrastructure projects. There's still ample room for growth.

Additionally, the NDB needs to work toward de-dollarization, a process that is underway, albeit at a gradual pace. The new president of the NDB, Dilma Rousseff, former president of Brazil, has pledged to offer financing in the local currencies of member countries, which will account for about a third of their total loan portfolio in the next five years—a significant step forward. Nevertheless, many argue that this process needs to accelerate, given the risks associated with holding U.S. dollar-denominated assets, as seen in the unilateral and illegal seizures of foreign exchange reserves.

The United States has unilaterally and illegally seized the foreign exchange reserves of central banks in countries such as Russia, Venezuela, Iran, and Afghanistan. This sends a clear message to countries worldwide: holding U.S. dollar assets may incur exposure of economic piracy and potential attacks. For instance, Russia's central bank had over $300 billion in assets frozen, essentially stolen by the United States and its European counterparts. To address such issues, there is a pressing need for new institutions.

To this end, China has established its own financial institutions, like the Asian Infrastructure Investment Bank, which have been instrumental. These are vital steps forward. However, many countries in the Global South require more financing and economic opportunities. There's an ongoing debate within BRICS about the creation of a new international currency, and a working group of economists is discussing plans for a new unit of account for international trade, investment, and foreign exchange reserves. These are all significant strides, but they need to be developed swiftly. Politically, there are differences within BRICS, and as it expands, there will be a debate about its future direction.

The most crucial takeaway is that BRICS has demonstrated that alternatives do exist. In the UK, the neoliberal leader Margaret Thatcher famously declared, 'There is no alternative.' BRICS has proven otherwise. With the support of China, Russia, Brazil, and others, countries are forging their own alternatives. Many countries are eager for more alternatives to emerge as quickly as possible.