Alexander Nazarov: The shift in global economy explains why Saudi Arabia is moving from the US to the Chinese camp

There are many factors that affect a state’s ability to survive, but the main thing is the ability of the people to resist pressures, and the ability of the elite to avoid these pressures.

By stress in the current environment, I mean the sharp decline in living standards.

The expected collapse of the global debt pyramid will reshape all flows of goods and capital, and all imbalances, including imbalances in foreign trade, will be equalized.

Countries that currently consume more than they earn, and that import more than they export, will reduce their imports to values ​​equal to their exports, while the next stage will be hyperinflation due to shortages of goods, which means political destabilization with unpredictable consequences.

In short, to know how difficult it is for a country during a crisis, you need to look not even at the debt-to-GDP ratio (the smartest and bravest will refuse to pay off debts), but at indicators of foreign trade or the current account balance (trade + balance of payments).

The danger threatens countries with a negative current account balance.

Among the Arab countries, the following countries have seen more negative current account balances than positive years from 2000 to the present: Egypt, Morocco, Syria.

Statistics are incomplete; Before the 2008 crisis, the balance was positive, Sudan, Tunisia, Jordan, Lebanon, Yemen, Palestine, Mauritania.

The blacklist also includes large economies such as India, France, Italy, Türkiye, Mexico, Canada, Australia, Spain, South Africa, Brazil and Pakistan.

The United States and Britain are also included in this list, in addition to being the worst of all.

Since 2000, like Lebanon, they haven’t witnessed a single year with a positive balance.

Despite all the talk that we see in the West the next most advanced technological system, where services have replaced manufacturing and dominate production, this step is, in fact, a step down, not up.

The service economy is inward-looking, and the more a country’s economy is a services economy, the more likely it’s that the country will have a negative current account balance and will need external donors.

While an economy based on commodity production, industry and partly agriculture tends to export, the current account balance is, more often than not, positive.

Allow me to emphasize once again that these indicators don’t reflect the standard of living, as much as they reflect the ability of the economy and the country to survive during the crisis.

This is taking into account that this isn’t the only indicator necessary to go through the crisis, and with weak economic diversification and food shortages, the positive balance may also not save.

To clarify my idea, I will mention Russia, which is by no means the richest country, but its current account balance has been positive in all years without exception, from 2000 until today.

Therefore, I wasn’t personally surprised by its enormous staying power and resistance to Western economic sanctions.

In the vast majority of cases, the gap in the balance of payments is caused by the import of raw materials, first and foremost, energy resources.

And here, by the way, let us take a fresh look at “green energy” in the West, as an attempt to radically improve the West’s ability to survive by abandoning energy imports and improving its trade balance.

Now let us return to the G20 and BRICS.

In the following table we find on the right the G20 member countries whose current account balance has remained negative for more than half the years since 2000.

On the right are the countries with a positive long-term balance.

The G20 group of countries without Russia and China, and in parentheses are the current account indicators for 2022 ($ billion).

I don’t take into account here the balance of the European Union and the African Union as collective members of the group.

If the remnants of the G20 turn into a bloc led by the United States, the chances of the collective survival of these countries will be less than zero.

Now let’s take BRICS; The total positive current account balance of the BRICS group for 2022 amounts to $690.5 billion.

The difference between the G20 and the BRICS group is clear.

First, the G20 has many more negative “commercial vampires” than donors, meaning the organization isn’t self-sufficient.

Therefore, it’s financially unable to support its members in the event of a global economic collapse, and there will be insufficient resources even if donors are exhausted.

Secondly, and most importantly, the biggest bloodsuckers in the G20 are the leaders, the Anglo-Saxons, who are still sucking resources from small donor partners, while their blood is not enough even for the leaders themselves, let alone other small partners such as Brazil or Argentina.

As for the BRICS countries, the situation is the opposite.

China (+401.9) and Russia (+233) are donor countries, and the total resources of member states will be sufficient for a much larger number of countries currently included in the organization.

Of course, donors must have a political interest in supporting other members, which implies, at a minimum, important common interests or even alliances.

It’s no coincidence that India is the largest buyer of Russian oil, and in recent months exports of Russian oil products to Brazil have witnessed rapid growth.

This isn’t a political position as much as it’s an economic interest, as Russia sells goods at a discounted price, as it’s the donor of aid to these countries, which in return ignores the Western sanctions imposed on Russia.

Mutual benefit is the most reliable basis for cooperation.

And now, with regard to Saudi Arabia, which for many years was the cash cow of the Anglo-Saxons, according to the scheme described above, it supported the US and British current account deficits with its surplus.

This doesn’t mean that she didn’t receive anything in return.

However, as I showed in the table, the appetite of the Anglo-Saxons, or rather their hunger, has reached astronomical proportions, and the United States needs more and more, and the Kingdom of Saudi Arabia is no longer able to give up much without serious internal political consequences.

Indeed, even if the Kingdom provides everything to the United States, it won’t cover its deficit, because America is doomed to deteriorating living standards and political destabilization, and Saudi sacrifices won’t be justified.

All slogans such as “Make America Great Again” and the cold civil war in the United States are symptoms of a deadly disease, a dead end.

The last straw that broke the camel’s back was high inflation in the dollar, which began to evaporate Saudi investments in the United States.

Then, the Saudis began withdrawing money from US bonds.

That’s why it’s best to escape the crisis with a self-sufficient partner, or better yet, with someone who can help you.

This is the secret behind the desire of a large number of countries to join BRICS, even though no one yet understands the type of organization this is.

However, the main thing is that everyone sees that the G20 includes vampires, and that the BRICS group includes donors.