A Brazilian leader’s faux pas spoke volumes about the state of the Brics alliance, ahead of the 8th Brics summit in India.
The Brazil-Russia-India-China-South Africa formation is slowly being written off as a bloc that can administer coherent political action. There were always questions since the early days of Brics but recent party political changes in some member states have raised the hurdles.
In Brasilia last month, Foreign Minister (and occasional presidential candidate) José Serra told an interviewer that the Brics included Argentina. And as he stumbled while spelling out the acronym, Serra also had to be prompted to recall that South Africa is a member of Brics.
Well-known Brazilian journalist Luis Nassif concluded that Serra – who has a doctorate in economics from Cornell University and was implicated in various corruption scandals, including favours to Western oil companies against Brazil’s own Petrobras – is “neurologically damaged”.
With men like Serra and his corrupt president Michel Temer at the helm, so too is the Brics bloc damaged goods.
In addition to incongruous political developments in member countries, divergent economic trajectories has increased doubts as to whether Brics is a workable project.
The Indian and Chinese economies are growing at more than 6 percent while the other three resource-cursed economies are in crisis. And the unpredictable geopolitical movements add to obstacles that prevent the Brics network from acting as a coherent bloc.
Intra-Brics geopolitical dissonance is growing. Not only has Temer’s all-white-male cabinet in Brasilia embarked upon a mass privatisation strategy to appeal to Western capital, but the far-right Hindi nationalist government of Narendra Modi in New Delhi has been cozying up to the Pentagon.
In contrast, more actively anti-Washington leaders in Beijing and Moscow are sabre-rattling.
The former’s rattling is over a few strategically-placed rocks in the South China Sea. Russian conflicts with the West continue in the eastern Ukraine and Syria, not to mention allegations of Russian-hacked emails repeatedly wounding Hillary Clinton.
In Pretoria, politicians are as usual talking left while walking right. For example, Gwede Mantashe the general secretary of South Africa’s ruling ANC recently pronounced: South Africa will continue to call for the transformation of the Bretton Woods Institutions and oligopolistic credit ratings industry.
Mantashe’s statement reflects the conventional expectation that global credit rating agencies will downgrade South Africa to junk status in December. With this will come a run on the currency.
Calling for “transformation” of the erratic New York rating agencies is absolutely valid. But behind the ratings agencies are their customers: international financiers who now have Pretoria under the thumb of foreign debt.
South Africa’s debt load recently hit a historic record of 44 percent of GDP. To repay interest while permitting massive corporate profit outflows will mean yet more borrowing from Western – or Brics – lenders.
South Africa’s energy parastatal Eskom is in the process of negotiating a $5 billion loan from China.
This is so the country can argue the case for self-financing a nuclear programme, likely to be acquired from Russia or China.
In this context, a new Brics credit rating agency with loose standards may just be another excuse to put future generations of South Africans deeper into debt, while facilitating corrupt dealings.
Hatred of the World Bank and International Monetary Fund (IMF) is as easy to articulate from Brazil as from South Africa. As Brics New Development Bank (NDB) vice-president Paulo Nogueira Batista recently remarked: “The Washington institutions fundamentally reflect the point of the view, the interest, the ideology of the North Atlantic powers, the Europeans on one hand and the Americans on the other.”
At least one consistency is observable from the Brics elites: a stream of anti-imperialist chatter even when the intent is to assimilate into imperialism.
The same kind of sub-imperialist assimilation was on display when the IMF included the Chinese yuan in its basket of currencies in November 2015.
A month later, Brics was a beneficiary when IMF voting power was rearranged. This increased China’s voting power by 37 percent, Brazil 23 percent, India 11 percent, and Russia 8 percent.
This is seen to have come at the expense of Nigeria which lost 41 percent of voting power, Libya (39 percent), Morocco (27 percent), Gabon (26 percent), Algeria (26 percent), Namibia (26 percent) and even South Africa (21 percent).
On top of that, last month the World Bank and Brics New Development Bank officials signed a deal for:
- co-financing of projects
- facilitation of knowledge exchange
- advisory services, and
- facilitating secondments and staff exchanges.
The Brics leaders may regret these growing ties to global power.
As the Brics-bloc coherence comes into question, a progressive Brics-from-below network will offer a far more attractive version of South-South collaboration. – The Conversation
Patrick Bond is a professor of political economy, University of the Witwatersrand
Brics’ cohesiveness still intact
The alliance of Brazil, Russia, India, China and South Africa (Brics) is having its eighth summit in India this weekend with much at stake. While the bloc is still cohesive, its individual member countries are experiencing a range of internal tensions.
The Conversation Africa business and economy editor Sibonelo Radebe asked Sanusha Naidu what it means for Brics.
What in your view is the state of Brics?
The bloc’s cohesiveness is still intact as a grouping. But at the individual country level, there are varying degrees of political and economic fragmentation. Brazil and South Africa are showing deep signs of legitimacy crises in terms of tensions within their governance structures, which is spilling over into violent protests around socio-economic inequality and political frustrations.
China is re-calibrating its economy by shifting towards a more embedded domestic-driven consumption pattern, while Russia is trying to re-balance its geo-strategic position outside Europe in the Eurasian region. India seems to be on a better domestic economic footing, despite its tensions with Pakistan, which appears to be intensifying with Moscow and Beijing seeking to strengthen ties with Islamabad.
What are the key issues that are likely to dominate proceedings?
The big ticket issue for the summit will be enhancing economic co-operation. This follows logically from the creation and institutionalisation of the Brics Development Bank.
India, as the incoming chair of Brics, has shown clear emphasis that under its presidency, economic co-operation is the primary priority. So far, the Narendra Modi administration has hosted the first trade fair, sought to push for a commercial arbitration centre for Brics corporates, talks of initiating an intra-Brics free trade area, and the prospects of creating a Brics rating agency.
It is likely that most of the key priorities areas in the 8th Brics Action Plan and Declaration will be focused on consolidating economic co-operation within the group. This will be aimed at enhancing the structural conditions Brics seeks to shape as the global financial architecture and complementing the New Development Bank.
There has been a shift in the political character of some member countries (India and Brazil). Is this a significant factor in the life of Brics?
Domestic political shifts cannot be separated from how these will impact on a country’s engagements and relationship in global fora or intergovernmental agencies. In the case of Brazil, it will be useful to keep a watch on how the new government of Michel Temer will approach its engagement in the Brics alliance. Will it be a continuation from the Dilma Rousseff government? Or will Temer seek to put a different stamp of engagement on Brics?
It was clear under Rousseff that Brics was favoured over IBSA. Indications are that the Temer presidency will remain committed to Brics as it relates to resource mobilisation, and broader attempts for reforming the global multilateral system.
But it could also be that of all the Brics countries, Temer will also be looking to strengthen bilateral partnerships with countries like China and India aimed at firming up economic opportunities for domestic growth priorities.
Of the Brics countries, India seems to be the one that has remained relatively stable on both the political and economic fronts. The Modi government has shown direction in wanting to be more than just a member of the Brics, but also a knowledge producer of ideas and initiator of frameworks.
In the run-up to and under its presidency of the 8th Brics Summit, New Delhi has demonstrated how active it is in pushing for strategic global governance structures (like those mentioned above) under the Brics identity.
What lies ahead for Brics?
In a broader sense, the future of Brics will continue to be managed as being the platform to push for more global governance structures that enables for a levelling of the playing field at the international system. It would be focused on what has been set up and improving such structures with complementary institutions.
The challenge as the Brics seeks to continue providing an alternative set of global governance institutions, is trying to ensure that such institutions can compete on the global scale. There is also the risk of having to contend with institutions that exist within member states of Brics, such as a proposed commercial arbitration centre versus Brics’ dispute resolution centre based in Shanghai.
As long as the top three Brics members (Russia, India and China) remain solid and committed, Brics will continue. India for its own strategic interests would not want to see an emboldened Russia or China become too dominant in Brics.
Is the current Brics membership sufficient to secure the future of this bloc?
For now, the Brics membership is manageable. While there has been talk of expansion, bringing in more members may pose certain complications to how the alliance would seek to develop the criteria of the governance institutions it has initiated or is proposing.
There have been indications from Russia that expansion of Brics is a possibility at a later stage.
But expanding membership also comes with its own potential risks especially if it is seen as trying to stack the Brics with actors who may show disproportionate support for one member over another. This is something a country like India will guard against if Pakistan is supported to join Brics. – The Conversation
Sanusha Naidu is a senior researcher, University of South Africa