BRICS Confusion is Rather Evident

Well, though still in the weekend, I must admit this Post is a bit late, though still available, I hope, for an enjoyable weekend read.

So, I was not planning to target the BRICS South Africa gathering a second time in this Alan’s Newsletter Post, at least not quite this soon. However,  the decisions taken, or not taken in some cases at this most recent BRICS Summit in Johannesburg South Africa was too ‘juicy’ to ignore.  As pointed out by Rajiv Bhatia of India’s Gateway House now, more than ever the diplomatic balancing act for the new and enlarged BRICS presents an even more dramatic challenge for this Leaders’ Summit:

As BRICS heads into its 18th year, [the South Africa Leaders’ Summit is the 15th] its success and way forward will depend on the members’ ability to tackle the principal challenge of retaining its internal solidarity while balancing expansion and its impact and influence in the world.

And that central point – retaining its internal solidarity while balancing expansion – is hard to foresee. There is confusion over who was chosen to add and indeed whether they have agreed to join, and what conditions; there is confusion over the choices themselves; and there is confusion over what the enlargement is likely to mean for this Leaders’ Summit.

It is evident that the enlargement has added heft to an already significant leaders’ group. As Bhatia points out:

As a grouping of five nations, BRICS represents 27% of the world’s land area, 42% of the population, 16% of international trade, 27% of global GDP in nominal terms, and 32.5% in PPP terms.

Now the group, according to, Bhaso Ndzendze in The Conversation , is:

The enlarged grouping will account for 46.5% of the world population. Using IMF GDP data, we can deduce that it will account for about 30% of global GDP.

On a PPP basis apparently, it will represent 37 percent of global GDP according to James Kynge in the FT.

So, six countries were identified as joining the BRICS come January 2024: Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and Iran. JIm O’Neill, formerly of Goldman Sachs,  who has been tagged for creating the BRICS acronym suggested this about the enlargement:

… I have questioned the organization’s purpose, beyond serving as a symbolic gesture. Now that the BRICS has announced that it will add six more countries – Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates – I pose the question again. The decision, after all, does not appear to have been decided on any clear objective, much less economic, criteria. Why, for example, was Indonesia not asked? Why Argentina and not Mexico, or Ethiopia and not Nigeria?

All good questions. Now the list, I would suggest, seems to reveal that China and Russia prevailed in the choices agreed to. Why, I suspect that is, is the BRICS enlargement includes Iran. As the NYTimes pointed out in its article on BRICS expansion:

The inclusion of Tehran — which has antagonistic relations with China’s chief rival, the United States — suggests that Chinese and Russian pressure had succeeded over the qualms of members like India, Brazil and South Africa, which maintain friendly ties with the West.

It is not unreasonable to suggest that adding Iran can only heighten the geopolitical tensions between the BRICS and others – most notably the G7, and most particularly the US with its many Iran sanctions.

Nevertheless, the hosts and commentators as quoted in the NYTimes again, tried to put the best face on it:

… South Africa, sought to put a hopeful spin on the enlargement decision in any case.

Anil Sooklal, South Africa’s representative in the BRICS negotiations, told reporters that the group needs to change with the times. “This is what BRICS is saying, let’s be more inclusive. BRICS is not anti-West,” he said.

And then of course there is the boosterism from the South Africa President, Cyril Ramaphosa as well (FP):

BRICS has embarked on a new chapter in its effort to build a world that is fair, a world that is just, a world that is also inclusive and prosperous,

As for Indonesia, an obvious choice for the BRICS to draw closer to ASEAN and Southeast Asia more  broadly. Why was it not part of the enlargement group? It would seem that Indonesia has not yet decided whether it wants membership. It has not submitted, apparently, a letter of intent. Also, it appears, notwithstanding the announcement that the UAE, in fact, has not decided whether to accept the BRICS invitation, though I suppose in the end it will.

And then there is – Argentina.  Argentina remains mired in a dreadful economic crisis. If in the end new members will be asked to contribute capital to the most important BRICS creation, in my opinion, the New Development Bank (NDB), Argentina is far more likely to ask for support than to be able to contribute support. In the end, I suspect it was Brazil and its current president, Lula that pressed for membership to be extended to Argentina.

As just noted, the most notable significant BRICS achievement, in my opinion, has been the creation of the NDB. There  was some indication that the expanded members would all be required to contribute to the NDB.  And that still may occur.  Still, it is disappointing that not more was mentioned of the NDB by the current announcements.

There was, also, a fair bit of reporting, and loud statements prior to the conclusion of the Summit, that suggested the BRICS might well take steps to create some form of common currency, or steps at de-dollarization by the BRICS. But as was pointed out by Henry Poenisch in OMFIF:

declaration released at the gathering in Johannesburg on 24 August made no mention of a common currency and instead focused on bilateral clearing – the second-best option. It stressed the importance of ‘encouraging the use of local currencies in international trade and financial transactions between Brics as well as between their trading partners.’

Yet, it seems to me the enhanced use of local currencies, except possibly the Chinese renminbi, is a rather questionable proposition. Using some of the local currencies available, and then holding the surplus for future use doesn’t seem a rather appealing course of action.

Finally, what most commentators failed to point to in their descriptions of the enlargement of the BRICS is that two of the six new members – Argentina and Saudi Arabia – are already members of the G20, as of course are all of the original BRICS. Rather than contemplating the consequence of the enlarged BRICS for global policy progress, it strikes me targeting the efforts, and today’s evident hardships in advancing global governance in the face of rising geopolitics by focusing attention on the G20 might well be a more fruitful avenue of inquiry if one was examining global summitry and the efforts to advance global governance. Looking again, at Jim O’Neill he turns, not reasonably, in this direction:

What the world really needs is a resurrected G20, which already includes all the same key players, plus others. It remains the best forum for addressing truly global issues such as economic growth, international trade, climate change, pandemic prevention, and so on. Though it now faces significant challenges, it still can reclaim the spirit of 2008-10, when it coordinated the international response to the global financial crisis. At some point, the US and China will have to overcome their differences and allow the G20 to return to its central position.

This was originally posted at my Substack ‘Alan’s Newsletter’ You can view there and you are free to subscribe as well.
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Image Credit: France 24

South Africa’s Place in an Economic Global Order

South Africa Pretoria

Without question South Africa remains a vibrant, complicated and seemingly a growing troubled land.  My colleagues from the South African Institute of International Affairs (SAIIA) one of the premiere think tanks in South Africa and the University of Pretoria, particularly the Department of Political Science there brought together some of their South African colleagues with experts from a number of countries for a conference (December 4th-5th) titled “Alliances Beyond BRICS: South Africa’s Role in Global Economic Governance”.  Hats off to both Elizabeth Sidiropoulos, President of SAIIA and Maxi Schoeman Head of Political Science at the University of Pretoria and all their colleagues for a job well done.

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From Shanghai to Pretoria – From Where You Stand: Part II

University of PretoriaSIIS Logo

 

 

 

 

 

Shanghai was the first conference stop; but it wasn’t the last.  For the first time the partners – the Munk School of Global Affairs and the Stanley Foundation – held a conference in Pretoria partnering with our friends at the Department of Political Science at the University of Pretoria.  We were very fortunate to welcome friends from most of the key countries – Brazil, India, China and obviously South Africa.  Unfortunately, our colleague from Russia was ultimately unable to make it.

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A Turbulent and Yet Vital Country

 

It is very hard to capture the essence of a place in a short visit to a far away land. I am still trying to digest all that I saw and heard while in South Africa over the last couple of weeks.  Although this trip was not my first visit, it was for me the most sustained time that I spent there.  And I had the good fortune to spend time at the University of Pretoria with good colleagues and also with: a variety of folks from the diplomatic community; as well as officials from the government of South Africa.

For those of us interested in global summitry, South Africa is a significant new player in the global governance game.  It is the first, and to this point only African state that participates consistently at the “high table” of G20 leaders.  Moreover, and I’d say most critically, South Africa is a turbulent yet vibrant member of the democratic community in global summitry.

Today South Africa remains the largest national economy in Africa, though growth has been increasingly a question mark for this most southern nation in Africa.  South Africa may be taken over by Nigeria in the not too distant future.   While I was in Pretoria  the government released two vital pieces of information.  First, and due to its most recent census, South Africa had reached a population of some 50 million people.  Second, as I mentioned in the previous blog post, “An Apparently Potent Flavor of the Month”  South Africa has acknowledged that its official unemployment rate has climbed to 25.5 percent.  Now that is a nasty piece of business but let’s not forget – and I was reminded about this in recent new reports – that Spain, yes Spain, part of the eurozone, has an official unemployment level about the same as South Africa.  Definitely food for thought.

Now a quick examination of the pros and cons on the national ledger.  Official statistics reveal that violent crime is on the decline, though what we here in North America at least call b&e is not.  In fact on that front what the South Africans call “smash and grab” is seemingly an ever-present reality. Indeed, one of my colleagues at UP, or as it is affectionately known and called – Tuks – has suffered through three incidents in just a year.  In fact this colleague was on the way to pick me up when an assailant put a brick through the car passenger window and lifted the bag and credit cards of my colleague.  The more than pleasant guest facility that I was temporarily housed in had a high fence surrounding the entire facility where swiping a card was required to gain entry.  Even more sadly the University, which was only about ten minutes walk from this same guest facility was completely surrounded by an equally high fence and there was absolutely no admittance without a card or by way of a thorough check and the guarded entries.  It was to say the least unnerving.

On the wider civil society front there have been stormy and even violent labor strikes recently.  The most notorious was the Marikana strike – mines near Rutenburg – where in August 47 people, mainly miners, where shot and killed by South African Police Services personnel.  Strikes have not ended in the mining sector though they have abated, but there have been recent strikes by agricultural laborers  that have led to hectares and hectares of vineyards being torched.  Not pretty.  The social unrest is real and disconcerting and it has allowed the most populist political elements to seek advantage.  Also not pretty.

But on the positive side, I would suggest that the democratic impulse  is a tangible and ever present sense in the country – among the elites and more importantly in the broader South African society. This is a vibrant democratic society.  In response to the Marikana shootings, for example, the government struck a public commission of inquiry.  Now it could be a “white wash” and possibly a serious effort of political deflection but the instinct and impulse is right – and it is evident that this is what the South African people expect.

On the democratic side, the real impediment to a deep and deepening  democratic entrenchment is the continuing stranglehold on political life, and the national government, of the current ruling Tripartite Alliance – the amalgam of the African National Congress (ANC) the Communist Party of South Africa (SACP)   and the Congress of South Africa Trade Unions (COSATU).  This ruling party, and government, is a consequence of the struggle against apartheid.  But the alliance now impedes – my political science is about to shine through, sorry – the “circulation of elites” and the holding accountable of office holders in particular.  Unfortunately, the stranglehold of the ANC alliance saps the prospect of democratic renewal and accountability.  While the DA or Democratic Alliance opposition has made gains – even holding provincial government – it remains viewed by the black majority as a white party.  The DA requires more change.  Thus, South Africans have to rely on the interplay of factions, including reformist factions, within the ANC to renew democratic accountability and to punish cronyism and graft.  It is not adequate. Extremist elements continue to call for a “second revolution” – threatening private property and in the end the rights of all citizens.  A truly bad business and unlikely to encourage investment in the economy from within or from without.

Storm clouds or not the democratic presence in South African life is palatable and to be nourished.  It was encouraging that colleagues saw the unique South African character. Notwithstanding the current Administration’s fantasies over the BRICS membership – and an unlikely South African leadership in it – colleagues and experts  were alert to the leadership and partnership prospects in the India-Brazil-South Africa partnership – IBSA.  South African leadership needs to see it as more than a development forum.  The democratic values at the core of this alliance gives this organization the critical foundation for these emerging powers and potentially a values driven institution.  And just within the G20 there are immediate partners – Turkey and Indonesia.  This is the way forward for South African leadership in global influence. Let’s encourage it.

 

An Apparently Potent ‘Flavor of the Month’

Well I have been absent – my bad.  But I do have an explanation.  I am currently in South Africa at the invitation of colleagues from the University of Pretoria – Tuks as it was once called – and between preparation for leaving for SA – and indeed arriving here – time ran short.  But I am back now.

This should help to explain my absence.  An hour after arriving I was whisked to Witwatersrand University in Johannesburg and the Jan Smuts House where the South African Institute of International Affairs (SAIIA) is now located.  There experts examined, “Values in Global Economic Governance: Do India, Brazil, and South Africa Share a Common Vision?”

Hardly able to catch my breath, I was requested to join a gathering in the downtown the following day, where a panel was organized to discuss South Africa and its role in the G20.  Entitled, “South Africa and the G20 – Challenges and Opportunities” this panel was put together by SAIIA again and in this event the featured speaker at the panel was the Deputy Governor of the South African Reserve Bank, Daniel Mminele.

A third day and ‘lo and behold’ – a third panel.  Fortunately, this panel was organized by colleagues here at the Department of Political Sciences at Pretoria.  Here again the organizers put together a panel on the G20 and the featured speaker on this occasion – Alan Hirsch the Director General of Policy Coordination and overseas economic policy implementation in the South African Presidency, in other words – South Africa’s Sherpa.  The session entitled “The G20: Looking to the Future” included a number of officials from the diplomatic community including officials from the Russian and Mexican embassies as well as representative from the Open Society Foundation representing civil society.

So quite an opportunity to learn about the G20 and other global summitry institutions and how the informed and informing public here and select officials view current global summitry So what do I glean from all this conference activity?

Well South Africa continues to take its leading role in Africa seriously.  But there are signs of concern.  South Africa is struggling to raise economic growth.  And there are projections that Nigeria will overtake South Africa in the size of its economy.  Statistics from the government in the last few days reveal that unemployment has risen to 25.5 percent.  And who knows what the real number is.  Strikes are seemingly an ever-present phenomenon, especially in the mining sector.  Though wage increases have been accepted, employers have begun a series of public announcements identifying plans to down size to cope with the wage increases.  There are a series of government scandals over government provision of services from the delivery of textbooks to the public schools to the provision and tolling of new roads, and on.  And there are growing doubts over the Zuma presidency.  Where is the drive?  The goals?

In the midst of this, there is excitement – in the global summitry community – over South Africa’s hosting of the BRICS Summit in March.  This enthusiasm appears to have spread beyond officialdom to the media and public intellectuals and even beyond to the broader public.  Why?  It is not clear?  Part of it appears to be that the Zuma presidency seems to view BRICS membership and hosting as a part of the Zuma legacy.  While his predecessor highlighted South Africa’s involvement in the IBSA Summit – India, Brazil and South Africa – Zuma and his officials have turned their sites on the BRICS.  Indeed The SAIIA conference at Jan Smuts House explored the future prospects for South Africa in IBSA – tied together by the commitment to democratic governance – as opposed to the BRICS – tied together by – well no one is quite sure.  For the moment the public has been excited by the proposal to inaugurate a BRICS bank.  There has been much discussion of exactly how to put together such an institution and to what end would such a bank be created for at least in concept as early as the next summit.  South Africa has publicly announced that it would be willing to host the bank in South Africa – especially if the bank’s purpose was to fund infrastructure in Africa.  There is much loose talk that the bank could represent an alternative to the “old” institutions of the World Bank.  But that seems far-fetched and South African officials have been quick to tamp down such talk.

As many have suggested though the fascination here in South Africa with the BRICS appears to be that it represents an alternative club – without the traditional powers.  No UK, France or United States.  And including China.  It appears to resonate with the anti-colonial rhetoric of many in global south.  Interesting – but it is such an odd collection.

And the love affair with China is tempered here in South Africa by China’s actions.  In Pretoria there is much frustration.  China is completing a new and very large embassy here – in fact near the US embassy.  Workers were transported in from abroad and apparently 80 percent of material procurement occurred from China.  Reality beyond the rhetoric.

So there it is – enthusiasm for an alternative – but the hard reality of policy practices that may not secure favor.  Let’s keep looking.

Africa’s Champion?

South Africa is a central player in the O5. But is it a BRIC or the extension – B(R)ICSAM/BRICSAM? This a more difficult question. In CIGI Distinguished Fellow Andy Cooper’s Heiligendamm Process Project, we have been fortunate to have Brendan Vickers join us and prepare a chapter on South Africa (SA) entitled, “South Africa: Global Reformism, Global Apartheid and the Heiligendamm Process.” Brendan, by the way, is currently a senior researcher in the multilateral programme at the Institute for Global Dialogue in South Africa (IDG). Before his appointment to IDG, Brendan was Deputy Director responsible for International and Trade in the Office of the President of South Africa.

On economic leverage, it would appear that SA is simply too small to be part of BRICSAM. Currently, SA has a GDP (PPP) of only USD$467 billion which places it as the 25th largest economy in the world. As Brendan suggest, “… there is little objective economic rationale for the country’s inclusion into the O5, let alone an expanded G13.” Brendan characterizes SA as a middle-income developing country with many of the development problems that this brings. Indeed, as he points Continue reading