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Political Investments: BRIC Nations, Oil & Gold

Brazil, Russia, India and China, a.k.a. the BRIC nations, have Anders Aslund over at FP Magazine wondering what Russia's doing in the group. His questionable premise: that Russia's value to BRIC is about its economic performance. Not necessarily.

BRIC heads of state have been meeting, not just their foreign ministries or top business players. One would expect geopolitics to come up, if nothing else, to save valuable time on forwarding mutual agendas. This was China and Russia's goal in forming the Shanghai Cooperation Organization which is more than economic. Both are key members of BRIC whose political clout benefits their economics.

Russia offers a trained, massive human information gathering and security network converted to enterprise use after the fall of the USSR. Other BRIC nations besides China do not have the scale of industrial espionage capability that Russia has and uses. It is an asset for hire.

Russia also has immense natural resources to benefit BRIC partners with price limits on oil and gas in exchange for loans as done with China to raise cash during the credit crisis.

Aslund questions why Russia has not been investing in its infrastructure, and criticizes the inefficiency of nationalized corporations such as Gazprom and Rosneft, whose inefficiencies he says are worsening. There is less incentive to upgrade oil and gas infrastructure where the country is locked into less profitable supply contracts.

Where economies on the rise benefit from central command coordination and subsidy by their governments, it is rational to look for possible collusion among regimes with the capability to coerce both nationalized and private companies within their jurisdictions to undertake specific actions. There are no reliable auditing rights from outside.

The Chinese Politburo has clearly shared its policy and purpose to build a centrally directed global resource and market control. It is to counterbalance if not supplant the Western nations' super and great powers status.