Hussein Askary Keynotes High-Level Pakistan Event on Belt and Road Initiative
16 December 2020
EIRNS—On Monday, Dec. 14, Hussein Askary gave the keynote presentation to an event in Pakistan, “The Belt and Road Initiative in the Post-COVID World,” which was organized by the Sustainable Development Policy Institute in Pakistan (SDPI). Although high-level Chinese and Pakistani diplomats were in the panel, Askary was chosen to give the keynote speech to open the event. Askary was invited as representative of the Belt and Road Institute in Sweden (BRIX).
He discussed Lyndon LaRouche’s definition of economic value in relationship to the idea of credit. The thrust of his presentation was “learning from the way the Transatlantic region and China dealt with the 2008 crisis,” and he warned in his conclusion about the dangerous “green-finance” ploy in the West.
Most of the questions were directed to Askary, giving him the opportunity to discuss LaRouche’s definition of “increasing the powers of labor.” He also answered questions on the possibility of nations working together in spite of cultural and political system disagreements, EU WTO-Plus and the double-standards of “free trade.”
Concluding remarks were made by Mr. Muhammad Mudassir Tipu, Director General of the China section in the Pakistani Foreign Ministry. He endorsed both points raised by Askary on making the BRI a global model in terms of both credit policy and the types of investments in infrastructure necessary, especially in Africa, Middle East and South America.
In addition to the chief guest — Lt. Gen. Asim Saleem Bajwa (ret.), Chairman of the China-Pakistan Economic Corridor (CPEC) — who presented a prerecorded statement, other panelists included Muhammad Mudassir Tipu; Mr. Xie Guoxian, Minister Counsellor for Economy and Commerce, Chinese Embassy in Pakistan; and Ms. Xie Yuhong, Vice Chairman and Secretary General All China Environment Federation (ACEF), Beijing.[hus]
Hussein Askary’s Speech to Pakistan Event
“The Belt and Road Initiative in Times of and Post-COVID-19 Pandemic: The lessons that need to be learned from the 2008 global financial crisis”
By Hussein Askary
Board member of the Belt and Road Institute in Sweden (BRIX)
Your excellencies, ladies and gentlemen,
I am extremely honored to address this wonderful conference, and I thank the friends in the Sustainable Development Policy Institute for inviting me.
The theme of this meeting “The Future of the Belt and Road Initiative in the Post-COVID World” is the most appropriate and timely one. Large parts of the world are still reeling from the impact of this pandemic, and the world economy, outside of China and some of its partners and neighbors, is still in a state of shock. Hopefully, with the advancement of the research, production, and application of the many vaccines, some of that effect can be mitigated.
But be forewarned, we will and should not go back to the previous economic and financial practices in the transatlantic area. And I will explain why. We should instead learn from the way China dealt not only with the COVID-19 crisis, but most emphatically with previous crises like the 2008 global financial crisis, which is the case study of my presentation.
Failing to learn from the lessons of past crises will doom the world to repeating the same mistakes that made us vulnerable to the Coronavirus. Leaders in the U.S. and Europe are waiting for the time when “things can go back to normal.” But there is no normal to go back to, because the Western financial and banking systems were already heading into a new phase of collapse before the COVID-19 outbreak. Besides, hunger, poverty, and lack of basic services like health care were rampant across large parts of the globe before COVID-19. So, that is not a pleasant “normal” to go back to.
In response to the 2008 financial crisis, the “big four” central banks of the United States, the European Union, Britain, and Japan created or “printed,” between $13-14 trillion from 2008 to 2018 (by “quantitative easing” programs), and have issued temporary liquidity loans to banks in the many trillions of dollars in addition. But none of that money has been created for an economic purpose, nor for a trade purpose. It has all been created for a strictly financial purpose: providing the largest banks in these countries with enough capital and liquid reserves to survive massive losses and bad debts.
Even under the Corona Pandemic, there are still today no signs that the failed quantitative easing is going to be abandoned. When the Corona pandemic struck the global economy in early March, the financial markets were already ripe for a collapse, and historic crashes of the stock markets were recorded. The usual knee-jerk response by the U.S. and European central banks was to open the flood gates of money again. Coming on top of the quantitative easing practiced by the Western central banks reaching $20 trillion in printed money from 2008 to 2020, additional $5 trillion were “printed” in 2020 alone. Once again, none of that money is used for real physical economic purposes. The shocking factor is that this money is being created and dispersed to financial markets and banks at incredible ease and swiftness, with the decisions made by the central bankers bypassing the elected parliaments and governments. In contrast, allocating financial resources to real economic projects take months and sometimes years of discussions.
Productive Credit vs Debt
Now we come to the way China dealt with the crisis, which illustrates the difference between “Credit and Debt.” According to the late American economist Lyndon H. LaRouche, true economic value lies not in money or in natural resources, but rather in the creative, productive powers of labor, and in increasing this power through scientific and technological advancements.
All policies in society, including the issuance of money and credit should be directed to improving the productive powers of labor, which includes financing and building a platform of basic economic infrastructure (transport, power generation, water management, healthcare, and education, including science-driver programs such as nuclear technology and space exploration programs).
President Xi Jinping has expressed a clear understanding of this concept, and he frequently reminds his Communist Party comrades of the importance of this principle in defining China’s development strategy. In a speech he delivered at a 2014 seminar commemorating Deng Xiaoping, President Xi said: “The chief criterion he [Deng Xiaoping] put forward for judging any action is ‘whether it promotes the growth of the productive forces in a socialist society, increases the overall strength of the socialist state, and raises living standards.’”
The correlation between the development of advanced infrastructure and the increase in the productivity of the economy is thoroughly proven from studies conducted on the U.S. economy itself especially in the period of President Franklin Roosevelt Administrations and President John F. Kennedy’s Administration.
China’s reaction to the 2008 crisis was shaped by this “intention,” not simply to save the “markets.” The “big four” public commercial banks of China (Export-Import Bank, China Construction Bank, China Development Bank, and China National Agricultural Bank), issued nearly as much new currency—“money”—in the form of loans, as have the U.S., EU, U.K. and Japanese central banks in the same period between 2008 and 2018 (equivalent of $14 trillion). However, the lending of the Chinese banks has fostered extraordinary new platforms of transportation, navigation, water management, power production, agricultural production, and scientific research in the Chinese economy. This process enabled China to reach the goal of lifting hundreds of millions of Chinese citizens out of poverty, and by last month China lifted the remaining few millions of its citizens out of extreme poverty. Beyond China, these Chinese banks have now extended roughly $300 billion since 2014 in additional credit for infrastructure projects outside China through the Belt and Road Initiative.
China’s High-Speed Rail Miracle, For Example
The correlation between productive credit policy and high-quality growth can be illustrated by one of the brightest examples: that is the sudden appearance in one decade of more high-speed rail mileage in China than the rest of the world combined. This has produced very high rates of multifactor productivity growth and general economic growth and progress.
According to a World Bank report published in 2019, China has made fantastic progress in developing its transport infrastructure. Since 2008 China has put into operation over 25,000 kilometers of dedicated HSR lines, far more than the total high-speed lines operating in the rest of the world.
Ironically, the first HSR line was inaugurated right at the point when the financial collapse on Wall Street started to snowball. In early August 2008, the first fully HSR line in China was opened, between Beijing and Tianjin.
Here I come to the concluding part of my presentation.
China’s policymaking with respect to its internal development, carries over into its relationships with other nations through the Belt and Road Initiative.
Given the economic impact of the Corona lockdown in China and globally, we can imagine that this whole process will be further accelerated. What these policies of investment have achieved besides recovering from the 2008 crisis, is that it made China the world champion in construction of the most efficient infrastructure with the highest construction speed and lowest costs. This means that China’s competitive edge has increased in the global construction market.
Many nations in the world are hungry for this kind of rapid development, but the global financial and economic system has been ill suited for it. The “monetary” system and “credit” system can no longer exist in the same universe to insure sustained economic development for all nations. Therefore, a new global system of credit is badly needed for the “global” recovery from the COVID-19 pandemic. We cannot go back to the pre-pandemic “normal,” because that normal implied a collapsing financial and banking system in addition to social and economic degeneration in the West, and it implies massive poverty in Africa, South America and large parts of Asia. The weakened global physical economy was glaringly exposed by the coronavirus, which showed a world (both in the advanced and developing sectors) that was physically unprepared to tackle it.
To deal with this pandemic and deal with the coming ones, the global health system has to be physically built from the ground up, starting with massive construction of infrastructure. Then
The making of the Belt and Road Initiative a global practice with the industrial nations in the West and East participating in it for their own benefit and for that of their partners around the world would be possible. This should be based on the best practice of China in handling the 2008 and 2020 crisis.
This will require a new financing mechanism on a global scale, or a new Bretton Woods system. We need a new international credit mechanism to finance modern infrastructure along the lines of the BRI.
I have two warnings to issue, although they could be the subject of separate conference, but I have to mention them here in conclusion:
3.a. There are attempts in the Transatlantic region to impose so-called green and climate-change criteria and restrictions on financing infrastructure. These will soon include, not only coal power and other fossil fuels, but even hydropower and nuclear power. This is a suicidal path that should not be followed.
3.b. There are attempts to force China to open its financial markets to hot money rather than long-term investments. This should be resisted for the reasons I mentioned above. Finance and credit should be strictly connected to improving the productivity and living standards of nations, not make quick profits.
I thank you for your patience and wish you all a great and fruitful discussion. [hus]