William F. Engdahl — Russia and China: Watch Out Moody’s, Here We Come!

Over the past approximate quarter century of so-called economic globalization, Wall Street’s ability to be the home of the only dominant “global” rating agencies to bestow ratings on the credit-worthiness of the world has been one of the most effective weapons of financial warfare in the Wall Street arsenal. They rate nations as well as private corporations. Now an answer to the Moody’s-Standard & Poors-Fitch US rating monopoly is coming. Not from the EU, where it is long overdue. It is coming from Russia and China, as so many bold and challenging initiatives of late.…

Unlike the politically impotent EU, however, Russia today is not the Russia of the corrupt Yeltsin era of the late 1990’s. Vladimir Putin and China’s Xi have agreed to create their own international credit rating agency and it plans to open for business this year, 2015. 

The Universal Credit Rating Group (UCRG) plans to begin official independent ratigs in 2015 to challenge the Moody’s, S&P and Fitch ratings monopoly, according to RusRating Managing Director, Aleksandr Ovchinnikov. 

The new agency will be based in Hong Kong. Interestingly, there is a third equal partner to Russia and China in UCRG. In addition to China’s Dagon Credit Rating Agency, Russia’s RusRating the US-based independent Egan-Jones Ratings is partner in the new UCRG. Each member will hold an equal share in the venture, with an initial investment of $9 million. In effect, three already well-established national independent rating agencies form the new UCRG joint venture. It is a serious challenge to the New York Big Three monopoly. 

Egan-Jones Ratings Company, also known as EJR, founded in 1995 is a very interesting artner for Russia and China raters. It is unique among US nationally recognized statistical rating organizations (NRSROs) for being wholly investor-supported, not client-financed, eliminating the gross conflict of interest of the Big Three. On April 5, 2012, Egan-Jones was the first rater to downgrade the credit ranking of the United States. In addition Egan-Jones was also the first to downgrade WorldCom and Enron. 

The UCRG was officially created in June 2013 and has since been finalizing its business structure. Ovchinnikov added that, “When the issue of creating an agency alternative to the ‘Big Three’ was raised, we in fact offered a project that was ready to be launched and was supported by the governments of Russia and China.” He explicitly pointed to the bias of the US Big Three raters to be overly “generous” to US and EU clients while being biased against developing or emerging countries such as the BRICS—Brazil, Russia, India, China, South Africa. 

Now with an independent credit rating agency, a $100 billion BRICS Infrastructure Bank and strategic local currency agreements in place, Russia and China, Brics for Brics, are establishing the architecture to a genuine alternative to the destructive neo-colonial IMF and World Bank and the tyranny of the Wall Street dollar system. The year 2015 will indeed by interesting. Poor Mr. Soros might have to look for another job.

New Eastern Outlook
Russia and China: Watch Out Moody’s, Here We Come!
William F. Engdahl

See also, The Great Ratings Game: How Countries Become Creditworthy by David James Gill and Michael John Gill at Foreign Affairs (CFR).