Washington is welcoming the financial honchos of the world with its cherry trees in full bloom and its gossip machine going at over 150 miles a minute. This year’s talk of the town is the relative reluctance so far shown by the U.S. to continue to lead world financial circles.
Withdrawal signs seem to abound. They include: no reaction to the ascent of China in development finance; the lack of will power to push for a thorough reform of the Bretton Woods edifice; and the conservative assault on the Ex-Im Bank. Put together, they seem to tell us that the U.S. has no appetite for leading international monetary developments.
Meanwhile, China is stepping in to fill the void. The emerging power has seized the opportunity to introduce to the world financial leadership its most coveted project: The Asian Infrastructure Investment Bank (AIIB).
China's AIIB initiative already counts the blessing of 67 countries and is the result of China’s loss of faith with the capacity of the Obama Administration to pass the IMF overhaul that was negotiated five years ago to, among other things, give more authority to China and other emerging economic powers over development finance and structural adjustments.
Speculation runs high in the velvet covered geopolitical foyers of the world on the triggering factors of this apparent American withdrawal. Some consider it to be a transitory disposition that needs to prevail between the end of one administration and the beginning of the next.
Others fret at the notion that behind this behavior is a major shift in world power from the West to the East, entailing a change of guard at the helm of the world economy. This later group shivers at the thought of having to muster a level of international reserves similar to that held by China to succesfully trade with the ascending power. Others are already compounding complements and synergies with the Asian power.
And, as forecasts continue to clutter newsletters and press dispatches, subterranean movements of the world economy continue their course unnoticed -- hiding what truly is in the making. The U.S. economy is the least export-oriented of all the economies in the world, with only about 12% of its GDP generated by exports.
The fountain of U.S. economic vitality therefore is domestic demand. After experiencing a technological Tsunami for the better part of the last decades of the 20th century, the U.S. economy now needs to restructure its economic platform to fully take advantage of the benefits of its own creation.
Restructuring today touches everything from urbanization to energy consumption to credit creation ... and schooling. Yes, education!! We are living in times when the many would benefit more from commanding reading, writing, math, and microsoft programs than going through a senseless curriculum that forces them to memorize instead of enticing them to create knowledge.
And just as in the 1940s -- when technical advances in agriculture propelled the industrial state -- today the Internet is pushing for a new economic platform. Just as in the past, the process is fraught with internecine fighting, up and until political power is seized by the C generation. Meanwhile the country will continue to hotly debate change, thereby making it more difficult.
And while the US navigates the rough waters of change, Latin America seems to be moving back to wealth creation as a region. After so many decades of wealth destruction in the crescent of conflict (Venezuela to Argentina passing through Brazil and Bolivia), the U.S. withdrawal seems to have shown its citizens that their predicament springs from wrong public policies and not from a U.S. led imperial conspiracy. Civic society organizations are beginning to gain more ground and to keep their authorities in close check. In the process, stronger less porous institutions will emerge south of the Rio Grande. And we shall witness another withdrawal: that of militancy in real socialism!!
Also by Beatrice Rangel in her Latin America from 35,000 Feet series
Beatrice Rangel is President & CEO of the AMLA Consulting Group, which provides growth and partnership opportunities in US and Hispanic markets. AMLA identifies the best potential partner for businesses which are eager to exploit the growing buying power of the US Hispanic market and for US Corporations seeking to find investment partners in Latin America. Previously, she was Chief of Staff for Venezuela President Carlos Andres Perez as well as Chief Strategist for the Cisneros Group of Companies.
For her work throughout Latin America, Rangel has been honored with the Order of Merit of May from Argentina, the Condor of the Andes Order from Bolivia, the Bernardo O'Higgins Order by Chile, the Order of Boyaca from Colombia, and the National Order of Jose Matías Delgado from El Salvador.
You can follow her on twitter @BEPA2009 or contact her directly at BRangel@amlaconsulting.com.