From Volume 8, Issue 26 of EIR Online, Published June 30, 2009
Asia News Digest

British Push BRIC To Dump the Dollar

June 18 (EIRNS)—John Browne, a former British MP who now works for the Connecticut security firm Euro Pacific Capital, published a piece in the Asia Sentinel titled, "BRIC Threat to US Dollar Reserve Currency." Browne is best known as a frequent guest on CNBC's neocon Kudlow & Co., and as the former editor of the right-wing NewsMax Media's Financial Intelligence Report and

Browne incredibly describes the BRIC nations as "united by healthy economic growth [!] and their concern about unprecedented levels of US debt and the safety of their respective reserves." He gloats: "There can be no doubt that these emerging economic powers are trying to chart an economic path that will free them from dependence on the American financial system. And there is ample evidence that the first coordinated steps are being taken."

Browne claims that the BRIC nations—Brazil, Russia, India, and China—are "flying kites"—first China, and now all of them, putting out calls to dump the dollar, but always tactfully retreating. This, says Browne, has "served to erode confidence in the dollar's role."

Browne concludes by stating the British policy intention, while ascribing it to the BRIC: "The US dollar is clearly coasting on its legacy. The Obama Administration's actions have eroded confidence to the point that the rapidly developing BRIC membership has risked its own substantial stake in dollar investments to publicly call for an alternative. These comments are the tip of the iceberg. Behind the scenes, we can bet that creditor states are preparing for flight. Though the dollar's slide has been stayed by pronouncements of confidence from Russia, Japan, China, and others, there will come a time when the pain is too great and the outcome too certain. Private investors who haven't already left the collapsing dollar ballroom may be crushed when the big players stampede."

As EIR has reported, the BRIC did not adopt an anti-dollar proposal at their summit, while both China and Brazil have stated that there is no replacement for the dollar at this time. Prime Minister Manmohan Singh, on his return to India, told reporters that the idea of an alternative to the dollar was "aired, but no concrete conclusion emerged," but that "further examination by our finance ministers and governors of the central banks."

Pro-Nuclear Campaign Takes Off in Malaysia

June 28 (EIRNS)—Malaysia's semi-official New Straits Times carried two strongly pro-nuclear articles today. Nuclear power was put on the table earlier this month, when Prime Minister Datuk Seri Najib Razak announced in South Korea that Malaysia will develop a reactor.

In the article, titled, "We have expertise to go nuclear," Atomic Energy Licensing Board chairman Prof. Datuk Dr. Noramly Muslim said Malaysia has the expertise to build its own nuclear power plant, and earlier than scheduled. The country has about 80 individuals with Ph.D.s, who have expertise in nuclear engineering technology. This is a key point. Detractors of nuclear power in the Philippines and elsewhere use the argument that their countries are not capable of handling nuclear power.

Prof. Jong Hyun Kim of the Nuclear and Quantum Engineering Department at the Korea Advanced Institute of Science and Technology, who is in Malaysia, said in a second article, that, while it took his country some 20 years to build a nuclear power plant, Malaysia would need only half of that time. According to Kim, Korea had only three nuclear scientists with Ph.D.s when it embarked on building its first nuclear power plant, but Malaysia today has much more expertise, better technology, and newer processes.

Kim said South Korea operates 20 reactors that produce 35% of its electricity needs, but aims to increase its number of reactors to 41 to generate up to 59% of its electricity.

South Korea is playing a crucial role in promoting nuclear power in Southeast Asia and worldwide. Malaysian Prime Minister Najib Tun Razak, upon returning from an ASEAN-Korea summit, declared his intention to promote Malaysia's nuclear development based on the small nuclear facilities developed by South Korea.

Noramly dealt with the question of "nuclear waste," saying the issue was not one of safety. "The issue of nuclear waste is of a political nature." In reality, Noramly said, nuclear waste was not waste at all. "The waste can be recycled. It has more value than the original uranium."

LaRouche associate Mohd Peter Davis in Malaysia has helped spark the new assertiveness by his friends in the nuclear community. Davis will be a speaker at the International Nuclear Conference 2009 to be held in Kuala Lumpur June 29-July 2.

Chinese Fight Over Dollar Reserve Policy

June 29 (EIRNS)—People's Bank of China governor Zhou Xiaochuan asserted that China's "foreign reserve policy is always quite stable. There are not any sudden changes," in a statement to the press yesterday at a meeting of world central bank heads in Basel, Switzerland. "China's reserve policy is aimed at liquidity, safety and, returns. You should realize it's very stable."

The greater part of China's $1.95 billion in foreign exchange reserves, the largest in the world, are held in U.S. dollar assets, and China is the United States' biggest creditor.

Zhou's clarification demonstrates the policy fight going on in China on its vital relations to the United States and the dollar. It was Zhou himself who had made the dangerous and insane British-inspired proposal in March, to set up a new "super sovereign" reserve currency; and, just two days ago, the PBOC posted its annual financial stability report, which reiterated the criticism of using any "sovereign" or "national" currency as the world's reserve currency. The PBOC report said that "we need to create an international reserve currency that is divorced from sovereign states and can maintain a stable value over the long term."

Chinese sources in touch with EIR have indicated that a decision made subsequent to Zhou's comments, and after assurances had been given by U.S. Treasury Secretary Tim Geithner and others, that the Chinese investments in U.S. Treasury bills would be secure, put a damper on the SDR proposal.

While there is concern over where U.S. policy will go with respect to the dollar, the general attitude in Beijing, the source says, is that China's future well-being is intimately connected to that of the U.S. And, as former Chinese ambassador to Germany, Mei Zhaorong, said last week at a meeting in Washington, it would be extremely difficult for China to divest itself of its U.S. holdings.

Nevertheless, the source indicated, there is growing concern among the Chinese populace that these Treasury bond holdings are precarious; if anything would ever happen to the dollar which would lead to a significant deterioration of the holdings, the population would hold the Chinese government responsible.

A continuation of the presently insane Treasury policy could provide the breaking point, however.

Making Britain Uncomfortable, India and Pakistan Talk

June 26 (EIRNS) — In the second high-level meeting between the two countries, External Affairs Minister S.M. Krishna met his Pakistani counterpart Shah Mehmood Qureshi on the sidelines of the G-8 Foreign ministers meeting at Trieste, and reviewed the current status of Indo-Pak relations. The meeting comes close on the heels of the one held during the SCO summit in Yekaternburg, where Prime Minister Manmohan Singh and President Asif Ali Zardari met. That was the first high-level contact, after the December 2008 Mumbai terror attacks. In between, the Indian foreign secretary had met with the Pakistani Ambassador in New Delhi to start a dialogue to ease tensions between the two nations.

On June 12, U.S. Under Secretary of State, William Burns, while in New Delhi, gave a press conference where he said that he has handed a personal letter from President Obama to Prime Minister Manmohan Singh. He told the press corps that "it was up to India and Pakistan to decide on the pace and scope and character ... of that dialogue,... the timing ... is something for India and Pakistan to decide." Insiders point out that the message he carried to India was to start talks with Pakistan in which U.S. will "neither be a mediator, nor a moderator, but a facilitator." U.S. National Security Council Chief, Gen. James Jones is now in Delhi. His talks with Prime Minister Manmohan Singh also included Pakistan and terrorism, reports indicate.

In addition, on June 25, the President's envoy to Afghanistan and Pakistan, Richard Holbrooke, testifying before the U.S. House committee, said Pakistan's three power factors — President Zardari, Pakistani Army and the main opposition leader, Nawaz Sharif—are now working in tandem. Unifying all three power factors in Pakistan has also helped in starting the India-Pakistan talks.

All rights reserved © 2009 EIRNS