Tuesday, January 11, 2011

Creating more walls than Brics


 JOHANNESBURG - South Africa has finally edged closer to becoming a member of the ""elite"" grouping of the Bric nations (Brazil, Russia, India and China), following the recent expression of support by China and Russia for Pretoria's bid. It is expected that South Africa will be accepted formally as a new Bric member at these emerging powers' next summit in April.

The Bric states wield significant diplomatic and economic clout and have become crucial powerbrokers in the evolving, albeit volatile, multi-polar world order.

They are the four biggest economies in the developing world and Goldman Sachs has predicted that, thanks to their rapid growth rates, the combined economies of the Brics could overtake those of the current wealthiest countries in the next four decades. They account for 40% of the world's total foreign exchange reserves. They represent more than 40% of the world's population and more than a quarter of the world's land area.

Unlike most Western countries, the Brics (with the exception of Russia) weathered the global economic recession relatively well. This was partly as a result of their pursuit of unorthodox economic policies, which have eschewed the neoliberal nostrums embodied in the now discredited so-called Washington Consensus. The Brics, notably China, have played a pivotal role in cushioning global growth during the recession and have actively championed the reform of the international financial system within the G20.

It is not surprising, therefore, that South Africa finds close association with the Brics alluring. Yet amid South Africa's apparent diplomatic triumph a number of questions remain unanswered about the purpose and benefit of positioning the country within the Bric grouping. It is not clear what South Africa's motivation for joining the group is and what it seeks to gain from its membership. It is not evident what South Africa's strategy to the Brics is and how this fits into the country's wider global strategy.

This is all the more important given that Brics are not a formal political club or economic bloc, with clearly defined and coherent objectives and programs. It is a construct of Jim O'Neill, a former chief economist at Goldman Sachs, that is based on certain assumptions and projections, which may or may not materialize. In any case, the notion of Bric as an analytical category is problematic and has outlived its usefulness. How, for example, does one justify the inclusion of the failing Russian state in the group and the exclusion of Turkey, a resurgent geopolitical powerhouse and a fast-growing economy -- the sixth largest in Europe?

--Ibsa and Brics

How cohesive the Brics will be is another matter of concern, not least because its agenda runs the risk of being burdened by contentious issues, such as competition between China and India, China's historical alliance with Pakistan, Beijing's campaign against India's (and Japan's) bid for United Nation Security Council permanent membership and unresolved border disputes between Beijing and Delhi. Moreover, it bears stating that while India, Brazil and South Africa rank among the world's leading democracies, Russia and China are not known for their democratic practices.

What South African policymakers need to explain is how our country's imminent membership of the Brics will affect its role in the Ibsa (India, Brazil and South Africa) Dialogue Forum, which was set up in 2003 in terms of the Brasilia Declaration. The declaration set out a broad agenda for cooperation among the three countries, which included an ambition to alter the balance of power between rich and poor countries by democratizing global decision-making bodies, such as the UN, and international financial institutions, such as the World Bank and the International Monetary Fund, developing alternatives to the current model of globalization and giving shape to the ideal of promoting the economic and social interests of the South.

Does South Africa's elevation to Bric membership imply that this transformative policy agenda will now be promoted within the confines of the Brics and does it signal the beginning of the end of the Ibsa forum?

Given the extensive financial and human resources required to drive and maintain effective club diplomacy, our policymakers will have to accept that the Brics and Ibsa are essentially competing entities and that it will not be possible in the long run for South Africa to sustain both of them.

Membership of the Brics has been touted by some government officials and business commentators as providing a big opportunity for South Africa to leverage trade and investment relations with these countries. This is not a convincing argument. South Africa does not need to become a Bric member to maximize economic cooperation with these countries; it can do so at a bilateral level.

Since 1994 South Africa has developed strong bilateral economic relations with all the Brics and has signed strategic partnership frameworks with some of them. China, the bedrock of the group and the only credible contender for global superpower status, has become South Africa's single biggest trade partner.

But this steady economic progress has masked inescapable facts: despite the vast commercial opportunities the Brics offer, access to its markets has been constrained by a range of tariff barriers as well as complex and restrictive domestic regulations.

--Brics relations

As World Bank studies have shown, it is far easier to do business in South Africa than it is in the Brics. Compounding these market access challenges has been the reality that the Brics are our competitors in sectors such as steel, clothing and textiles and the automotive industry. Also, despite sanguine public pronouncements, South Africa has yet to upgrade its limited trade pact with Brazil to a comprehensive agreement and its negotiations on a preferential trading arrangement with India has been proceeding at an excruciatingly slow pace.

As such, the Brics are barren ground for yielding significant trade and investment opportunities. Against this backdrop, it is not clear how Brics membership will make up for the failure to extract meaningful economic benefits at the bilateral level.

Cultivating strong relations with the Brics is not only important, it is also in South Africa's interest. The global financial crisis has underscored the importance of diversifying South Africa's export markets away from Europe -- which currently absorbs 40% of our exports -- and of exploring new markets, particularly those in the fast-growing developing economies. The Brics should be an integral part of this diversification strategy, but strengthening links with them should not be the country's all-consuming foreign economic policy goal. South Africa's evolving South-South strategy should include Africa, the Middle East and other Asian and Latin American countries.

South Africa's engagement with the Brics must be guided not by ideological whims, but by a strategic paradigm that is grounded in our country's domestic needs and fundamental interests.

South Africa has in the past earned international recognition on the basis of its own intellectual and normative weight. It has always championed multilateralism, offered innovative ideas on vital global governance issues and demonstrated leadership in conflict resolution, peace-building and post-conflict reconstruction in several parts of Africa. Moreover, the country has over the years developed a fluent narrative of global development, especially on the imperative of bridging the North-South chasm. What happened to all that conceptual clarity, diplomatic finesse and self-assurance?

The carefully cultivated image of South Africa as an assertive regional power sits uneasily with that of a country begging for acceptance into the Brics' informal deliberations. The specter of South Africa rejoicing at being invited to join an amorphous entity such as the Brics is plainly degrading and it is an affront to our national pride. South Africa needs to ponder its foreign policy identity and strategic posture in a changing and complex global environment.

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