Irish Government ignores new challenge to old global economic order

» Eoin Ó Murchú

It will be economic treason if the Government (with Fianna Fáil support) allows TTIP to become enshrined as one of Ireland’s international obligations

THE BLIND – and indeed ignorant – subservience of the Irish Government and the main opinion-formers to all things European (including the ill-fated euro currency and its strong nexus with the US dollar) risks leaving our country outside the new dynamic focus of global economics as the major developing nations create a challenge to the domination of the dollar in world affairs.

It is noteworthy that the Irish media have ignored – or are blissfully unaware of the major development over the summer – the coming together of the ‘BRICS states’ (Brazil, Russia, India, China and South Africa) to take the first steps towards creating a new reserve currency to replace the dollar.

Ireland will be seriously affected by this because our policy-makers have doggedly clung to the European and US connections even though these economies will potentially see, at best, limited growth and more likely repeated bouts of recession as the new system takes hold.

Already the positive growth rates predicted by the Government are totally dependent on restored consistent growth in both the Eurozone and the US.

But the US has been in decline for some time. At one time, the US dollar was the reserve currency for over 90% of world trade (outside the then existing Soviet and communist blocs). This figure is now down to 60%, and the creation of a new reserve currency, if successful, will accelerate this decline.

The US has for several decades been living on borrowed time and borrowed money. Its citizens still enjoy a standard of living far higher than it earns in actual production but its debt has now reached the unsustainable level of over $US18trillion, the highest ever.

The US has been able to do this because it used its political and military might in the 1970s to force OPEC (Organisation of the Petroleum Exporting Countries) to agree that oil would be priced in dollars on the international markets.

This meant that the oil-rich states became awash with dollars and ensured that US banks remained the main conduit for international exchange and investment.

Last July’s decision by the BRICS challenges all of this. And it’s worth noting that the major energy deal just signed between Russia and China (worth $400billion) has been denominated in yuan and rubles.

The synergy here is frightening for the old order:  Russia is a major producer of energy; China is a major consumer of energy. Their coming together, in tandem with new technological powerhouses like India and Brazil, shows too that the anti-Russian card played by the US (with EU support) in Ukraine has backfired.

It is to the credit of Irish civil servants that, despite the ideological prejudices of the politicians, they have kept the door to China open but joining in sanctions against Russia cuts us off from the option of being a gateway link between East and West, between Asia and Europe, and between the old imperialism and the former colonies.

Of course, the US is fighting this economic war very dirtily. The pressure placed on Bulgaria to abandon the Southern Stream oil pipeline is a case in point. By building this pipeline under the sea, Russia was ensuring that Southern Europe would have secure energy supply that could not be interfered with by events in Ukraine.

Russia, of course, has just switched course. A new deal has been agreed with Turkey (now moving closer to Asia and away from Europe in the wake of its failure to secure EU membership) and the pipeline will be built through Turkey right up to the Greek border.

Greece, Serbia, Croatia, Hungary and Austria can add to this new route to ensure their own supplies, something that Hungary in particular is very keen to see.

Meanwhile, our political and economic leaders can see nothing outside the existing EU/US frameworks, even though the world is changing all around us.

The US, of course, has seen off the challenge of the euro to replace the US as a currency of last resort and has created the crisis in Ukraine to try and drive a wedge between Russia and Europe before Germany is strong enough to ignore the US completely.

This strategy keeps Europe weak but Russia has dramatically shown that it has other options.

The second wing of US strategy is to push through the Transatlantic Trade and Investment Partnership (TTIP). This will subordinate national governments to (effectively US) judicial oversight in the interests of global corporations in which the US remains dominant.

It will be economic treason of a rank order if the Government (with Fianna Fáil support, for that party has not condemned TTIP) goes ahead and allows TTIP to become enshrined as one of Ireland’s international obligations.

This is the background to the developing new world economic order but, the China visit notwithstanding, it seems that our political leaders remain determined to bury their heads in the sand and condemn the Irish people to economic insecurity.