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”.
In addition to political incongruous political developments in member countries, divergent economic trajectories has increased doubts as to whether BRICS is a workable project. Indian and Chinese economies are growing at more than 6% 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. 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.
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 cutsomers: international financiers who now have Pretoria under the thumb of foreign debt.
South Africa’s debt load recently hit a historic record of 44% 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.
Losing the plot
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 the Americans on the other.
But here the BRICS are at their most self-destructive. They had the chance to change the Bretton Woods Institutions in two ways. They could contest for leadership positions and raise their voting power with more contributions. The past months are revealing on both counts.
It is not difficult to argue that both World Bank President Jim Kim and IMF Managing Director Christine Lagarde need to be replaced. They won’t be, though, because the BRICS failed to put up a fight. In 2011 Lagarde was contested by a Mexican and in 2012 Kim fought a Colombian and Nigerian – but with divergent BRICS’ country backing, so neither stood a chance.
In 2016, both were allowed to retain their posts. This despite the fact that the former French Finance Minister, Lagarde, is subject to an upcoming corruption trial. She allegedly allowed the state to give €400 million to a generous political party donor, Adidas founder Bernard Tapie.
Kim’s position is also secure for another term, despite being branded as “among the worst presidents in World Bank history” and attracting strong opposition from former feminist and environmental supporters.
Abstaining from leadership elections
If ever there was a case for the BRICS making a stand against the imperialist multilateral banking tradition – that a European leads the IMF and a US citizen leads the World Bank – this was the year. But as University of Pennsylvania political scientist Devesh Kapur remarked, the “World Bank’s recipe for irrelevance” was partly cooked up within the BRICS kitchen. This, he says, is because:
In the World Bank Group’s official leadership, the first three people listed after the president – hailing from Brazil, China, and India, respectively – are carefully distributed by nationality.
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%, Brazil 23%, India 11%, and Russia 8%. This is seen to have come at the expense of Nigeria which lost 41% of voting power, Libya (39%), Morocco (27%), Gabon (26%), Algeria (26%), Namibia (26%) and even South Africa (21%).
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.