Siren call of Western finance reaches higher pitch to Indians: Prudence needed

As explained in a previous piece in this paper, there is a US financial hegemony. It is a key component supporting, if not pushing US exceptionalism and, in a sense, US geopolitical priorities over much of the world, including trying to do so with India. To be fair, this is not always done politically in […]

As explained in a previous piece in this paper, there is a US financial hegemony. It is a key component supporting, if not pushing US exceptionalism and, in a sense, US geopolitical priorities over much of the world, including trying to do so with India. To be fair, this is not always done politically in a heavy-handed way, but as an outcome of developed country lending and the Global South’s own borrowing policies being in mutual agreement. This is not always the situation to say the least. And this sometimes results with grave effects to the borrower, especially those in the South.

Importantly, there is a major shift developing of money from Wall Street and to some extent European finance moving away from China to India. Beijing is seen as overly authoritarian, excessive as a security threat and having gained too much power over strategic supply chains.Therefore, more democratic India better aligned to the developed world with its Indo-Pacific strategy is western finance’s next large favorite for lending and investing. This is also a given with India being, highly populated, fast growing and a low cost manufacturing centre. While this apparent trend supported by the Narendra Modi led government can provide the nation benefits, there are important lessons to be learned to avoid many pitfalls and damage that should be remembered and learned from bad western financial practices. And they have been.

Interestingly, not long ago, in weeks after a similar piece by this author on this shift was published in this newspaper, the so-called King of Wall Street, Larry Fink who manages BlackRock’s near ten trillion dollars of assets, flew into India to start up a major investment fund. BlackRock along with a handful of other funds already controls or has significant leverage over most companies on the S and P, main US stock index according to major podcaster Patrick bet-David. While this new Indian-based initiative of BlackRock’s involves a partnership with a major Indian firm, to what degree will the Finks take a huge disproportionate influence in directing Indian firms to adopt western standards at the expense of positive national traditions? That is as it grows so quickly as many of BlackRock funds usually do by the billions of US dollars each year. And, to what degree might a few of India’s proud successful giants get a little too awed by those they call in the US, the trillion-dollar men? Remember, Washington has learned some hard lessons from letting it get “bought off” by certain negative foreign influences that President Biden is correcting. India does not want to go there, nor is it.

If India remains prudent, but dynamic on financial matters, including with foreign lenders and investors it may surpass China economically, even well before this century. But alternatively, these Kings of Wall Street can be false royalty talking up dreams but ending up by creating so many nightmares. The 2008 Great Recession, is a highlighted example caused by Wall Street on investment instruments, pioneered by Larry Fink in particular And all the victims of the International Monetary Fund, (IMF) lender of last resort are indeed reminders. Deald offered up by the US- led financial hegemony can crush countries, even sometimes more than war. And wars by the way to which the BlackRocks are nicely positioned to make money from, includes/ the Ukraine war all of which deserves more than a small note by peace-oriented Indians.

Then, there is the question to what degree opposition parties, are pliant or would become highly pliant to letting a small western group of fund managers and bankers eventually control the show in New Delhi. After all ,The Hindustan Times refers to allegations that Rajiv Gandhi hobnobbed with George Soros, a top Wall Street player wanting Prime minister Modi out. Does such an idea of a banker or bankers even taking control of large democracies or important ones, at least one day seem that much possible? Try the case in Europe?

Yet the former Greek finance minister Yanis Faroukakis has well explained that already such a small financial “oligopoly” group essentially decides Europe’s budgets, no doubt well connected to the continent’s top bankers. He states on his website, “Indeed, it is in the Eurogroup where the crucial decisions are reached on which the present and future of Europe depend. Except that the Eurogroup does not exist in European law!.” This is sad when countries have put themselves in place where the voters are marginalized to the bankers or the financial technocrats to their behest in various capitals and even some countries in the Global South. For developing countries this is well documented in John Perkins’ book of “Confessions of an Economic Hitman” showing how aggressive some western-based bankers are in loading up debt on a nation to a degree that they end up “owning” the country they targeted. Financiers like Soros have made billions imperiling countries financially or the case of Wall Street’s Hindenburg that almost financially destroyed a leading Indian industrial champion through short selling.

Beijing with its Belt and Road Initiative is for the most part being accused of a lot of what Perkins identified as destructive practices by the financial hegemonic forces based in the West. The case of Sri Lanka and elsewhere in the Indo-Pacific region, some argue shows how China through financial “engineering” can end up taking control of key national assets they should not have so much foreign ownership of like ports that are strategic.

Indeed, when the mostly western loan schemes fail, the IMF, generally owned and directed by developed countries essentially bails out the big bank western lenders for their greedy or ill-thought-out follies. Then it introduces structural adjustment on the backs of the poor in the country western bankers failed to get their money or interest payments from. Even by that time, it may be too late as the targeted country may have become such a failed state, to an extent creating or furthering conditions for the expansion of violent groups and high crime exacerbated by IMF led reforms.

It is easy for weak political leaders, including in certain parts of the impoverished Global South, where corruption stull reins to give into expedient bankers wanting high commissions for pushing their lending. Some leaders may be tempted into excessive and inappropriate deals that do not even meet reasonable sustainable development goals. That is they are making financial Faustian bargains if you will that years later can “blow up” their people’s future.

While the focus can be on the US, and other western nations having historically committed financial “theft” from colonialism to neocolonialism, certain small highly dominant financial groups today should be looked at as well for undermining the Global South. So far, India looks well positioned not to be run over by financial hegemony. With a Modi government continuing on, India should stay on a good financial course. With others in charge of government who can tell if they get “bought off” or become useful idiots letting their countries become western steered, financial “titanics”.

Peter Dash extensively writes on geopolitics and humanitarian affairs. He has worked as a lecturer in the Middle East. He has also studied the region and world order at Harvard University where he was also a researcher.