Global Watch

South Africa, BRICS and a new global order

BRICS.jpg

As the BRICS grouping of countries is coming into full form, it is set to lend much – even game-changing – momentum to a developing new global order of changed power relations.

BRICS (Brazil, Russia, India, China and South Africa) is already impacting on the global diplomatic and strategic balance of power and its New Development Bank (NDB), going operational next year, is predicted to be a ‘game-changer’ in terms of international finance – presently dominated by the Bretton Woods institutions, the International Monetary Fund and the World Bank.

In the process South Africa’s position on the global geopolitical stage is also dramatically shifting away from where it has traditionally been within the orbit of what is generally described as the Western block. Contrary to the general belief, it was Russia, rather than China, which lobbied for the inclusion of South Africa in the grouping.

That should not come as a big surprise, considering the relationship between the governing ANC and the erstwhile Soviet Union, dating back to the 1960s. Not only did the Russians give material support to the ANC, but large numbers of its leaders received training in that country over the years.

President Jacob Zuma himself, at the age of 36 in 1978, completed a three-month leadership and military training course in the Soviet Union.

Weight of BRICS

Jointly representing roughly 26% of the globe’s geographical area and 42% of its population, by pulling together, the BRICS countries have already made their influence felt on international forums.

In March last year all the members of BRICS abstained from a vote in the United Nations General Assembly on a resolution condemning Russia’s annexation of Crimea. It also came to Russia’s defence when Australia suggested it should be kicked from the G20 group of developed countries.

Positioning itself as champion of emerging nations and their economies, BRICS has mobilised considerable influence on global developments.

At the same time, and especially within the BRICS context, Russia and China have grown considerably closer since the long-lasting disputes over their 4 380 km communal border, which brought them to the brink of war in 1969, were settled with the signing of an agreement in 2008.

The crisis that developed between the Western block, as represented by NATO, and Russia in November 2013, which led to the introduction of sanctions against Russia, dramatically impacted on the post-Cold War world. A multipolar geopolitical environment started emerging.

As far as BRICS is concerned, Marco Vieira of the University of Birmingham, in September last year in an article on The Conversation website, wrote: “While Western nations beef up economic sanctions and Nato discusses what stance to take toward Russia, the BRICS are maintaining tacit support for Moscow despite the Ukraine crisis.

“This is not entirely unexpected. Yet, it suggests that the BRICS (Brazil, Russia, India, China and South Africa) grouping’s commitment to the reform of the international system is to be taken seriously. And the Ukraine crisis has provided the group with a powerful opportunity to voice its shared opposition to Western powers’ self-assigned role as the custodians of the international community.”

The impact of what is happening is reflected in the deal, almost a surprise after many years of failed attempts, over Iran’s status as nuclear power.

It opened the door for the lifting of sanctions against the oil-rich Middle Eastern country amid German and wider European anxiety about the supply of fossil fuel from Russia and the Balkan region.

There is little doubt the attempts to isolate Russia have given momentum to a developing East-West divide in international politics.

Financial system and economy

There are signs that BRICS and its New Development Bank can have an even bigger impact on the international financial system, trading patterns and economic development.

The NDB, with an initial $50 billion starting capital and a foreign-exchange fund of $100 billion, will at face value mimic the Bretton Woods construct, giving it the appearance of an alternative structure. It only formally opens its doors next year, but in the long run has the potential to become a game-changer in development financing.

“In fact, if its evolution even remotely parallels that of the World Bank, it might end up having a formative impact on economic policy-making and overall development strategy in the Global South,” wrote Vieira.

To this, two other factors should be added:

  • In a declaration at the end of the Ufa conference it was stated: “We acknowledge the potential for expanding the use of our national currencies in transactions between the BRICS countries,” and “We ask the relevant authorities of the BRICS countries to continue discussion on the feasibility of a wider use of national currencies in mutual trade;” and
  • A Strategy of Economic Partnership was launched which identified priority areas of BRICS cooperation - in such sectors as power, manufacturing, mining, agribusiness, and innovative technologies and many others, according to the summit documents. It is aimed at expanding multilateral business cooperation with the goal of stepping up social and economic development, and increasing the competitiveness of BRICS countries in the global economy.

On the currency front it is widely interpreted as an attempt to break the ‘monopoly’ of the Bretton Woods construct and of the dollar as the effective global currency.

“The rise of the BRICS is a story of regional economic powers becoming increasingly important global political actors. With the promise of new global financial institutions to rival the Bretton Woods institutions, we stand on the cusp of a new era of multilateral economic and development politics.

“This global political ascendancy has generally reinforced the standing of BRICS countries as both economic and political leaders in their regions. It was precisely on the political grounds of regional leadership that South Africa was included in BRICS in the first place,” wrote Professor Laurence Piper of the University of the Western Cape last week.

South Africa’s opportunities

South Africa’s success as part of Brics will be strongly influenced by the role it can develop for itself on the continent – and in that sense the way the Al-Bashir incident was handled had bigger implications than many commentators realised. Those in the private sector that take hands with government in this endeavour and position themselves as part of the “gateway to Africa” have a chance to benefit greatly in future.

China has also been South Africa’s biggest trading partner since 2010. The Asian giant has embarked on a programme to move its economy from one driven by industrial investment to one driven by more diverse factors like consumption, services, technological innovation and exports of value-added goods.

In this regard it is important that South African enterprises position themselves as valuable partners in the expanding African market. During his visit to China last week

Deputy President Cyril Ramaphosa highlighted the extent to which China is already involved in the improving intra-Africa trade.

by Piet Coetzer

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