Jun 29

BRICS – Building a New House on Shaky Foundations?

An article by Ian Kilbride

It must be unique in history that a businessman gives birth to an entire international economic, political and trading bloc, but that’s exactly what Goldman Sachs banker, Jim O’Neill achieved in 2001 by coining the term BRICs. More than two decades ago, O’Neill recognised what now seems obvious, that a quartet of emerging economies (Brazil, Russia, India and China) was growing at such a pace that they would catch up with and overtake developed economies over the coming thirty years or so. Demonstrably, his forecasts for China and India were prescient, while Brazil has flattered to deceive, and Russia has not followed the script. 

South Africa joined the BRICs club in December 2010, but was and remains somewhat of anomaly with by far the smallest economy and population when compared to its peer group. It was always understood that South Africa’s invitation to join the exclusive club served as a proxy for Africa’s 54 countries and one billion population.  Indeed, BRICS provides a unique platform for Pretoria to continue to punch above its weight on the international stage. 

In the aggregate, the BRICS constitute an impressive grouping. In terms of population, the five account for 42% of humankind and jointly represent some 27% of global GDP and enjoying some US$5 trillion in reserves. Politically, the grouping meets annually at head of state level, with the next summit currently pencilled in for August in South Africa. In addition to political dialogue, BRICS is slowly building a degree of institutional capacity, such as the launching of the BRICS New Development Bank, with plans to establish a BRICS payment system and reserve currency. 

You don’t have to be a Henry Kissinger to see how these developments favour China and its long-term ambitions of challenging the dominance of the United States on the global stage. While this unfolding, the role of world’s most populous country and democracy India, remains moot and an area of lavish seduction between East and West.  

But like all affiliations, relationships and marriages, there are costs (sometimes hidden) along with the benefits. In this case, one of the BRICS very own, Russia, has gone rogue, launched an illegal war, is a sanctioned state and the International Criminal Court has issued a warrant of arrest for its leader, Vladimir Vladimirovich Putin.  While the closing of the energy taps by the West has self-harmed, BRICS big brother, China, has stepped in to mop up Russia’s spare energy exports at knock down prices and thus, perversely unexpectedly benefited from the war. By contrast, the biggest loser of the BRICS club is South Africa, by virtue of being naively straddling its non-aligned position, while being embarrassed by claims of providing weaponry to Russia. Wags dismiss such claims as implausible given South Africa’s declining military capabilities and ailing arms industry, compared to that of Russia, which remains the world’s second biggest arms exporter. 

South Africa is also hooked on the horns of a dilemma as a signatory to the Rome Statute which obliges member states to execute warrants of arrest issued by the International Criminal Court. The prospect of South Africa attempting to arrest President Putin on arrival at Waterkloof Airforce Base is about the same as it was for the Gupta’s landing there for the Sun City wedding a decade ago.  

But back to reality. Justifiable scepticism about the true purpose and value of BRICS membership appears to have been assuaged by the desire of up to ten other emerging economies to get on board. These include Saudi Arabia, Iran, Argentina, the United Arab Emirates and Indonesia. More puzzling is Cuba, DRC, Comoros, Gabon, Egypt and Kazakhstan standing in the same queue. And this raises questions about the basic economic rationale for the BRICS. Frankly, both the existing and potentially expanded grouping have less in common than that which they share. In key respects they are in fact competitors, if not strategically then economically and in trade terms. It was just a few short years ago that deadly clashes broke out between Chinese and Indian troops on their long, shared border and the two operate in a state of cautious détente, rather than natural affinity. In the case of Brazil and South Africa, apart from international prestige and recognition, it is difficult to identify any material benefit to their BRICS membership. The Brazilian economy has been the lame man of South America for many years and South Africa’s own economic performance has been dire for over a decade. 

So perhaps BRICS should rather be viewed in terms of an effort to loosen the global economic dominance of the West and to push back against the perceived US strategic hegemony. Whatever the case, BRICS is a work in progress that we would be foolish not to take seriously. But whichever way Pretoria handles its looming diplomatic dilemma, a word of caution to the wise, BRICS will require the right mortar to bind it together and should not be built at the expense of South Africa’s national and international interests.