By Saliem Fakir · 15 Mar 2013
There is the usual chorus of loud voices, “What is South Africa doing in the BRICS, and does it even belong there?” Such observations are inconsequential to the evolving fate of BRICS and South Africa’s place within it. Whether it belongs in BRICS or not is a wholly irrelevant point by now.
The question that really matters is, “What is South Africa doing with its lofty position in the BRICS?” A feat partly accomplished by the ANC’s historical relations with China, India and Russia – and ever since the Lula government came to power, greater proximity on economic and political issues with Brazil’s recent regimes.
Historical relations offer an explanation for South Africa’s placement within the BRICS. There is within this circle of familiarity, thinking and ways of working that have more in common than being at odds. Moreover, past anti-colonial and anti-imperial politics have helped to shape the BRICS ethos.
This convergence of the ANC portraying the state in its own image as well as its historical ties with states that were its funders and strategic allies - against the backdrop of hostile Western countries that regarded the ANC as a terrorist organization - ensured that the connection between the ANC-led state and other BRICS members would have been a pre-conclusion whether BRICS was formed or not.
There are both material and non-material interests between those within the BRICS. It would be a mistake to pin everything about their evolving development on an economic rationale.
On March 26 and 27, South Africa hosts the fifth BRICS Summit in Durban. This summit is something of a defining moment for the South African state and the ANC.
Firstly, since Marikana there has been an allergic reaction to ‘unruly’ Western capital that has sought to hector and lecture the ANC on how it should run and govern over the country’s mineral resources. There is a trend from within the state and ANC to move to a new axis of relations and finance. Participation in BRICS is crucial for this shift.
The momentum for this is far more decisive than it was before. Relations with western orientated financiers and companies are tense and frayed.
This sentiment was reinforced by Zuma’s comments to the Financial Times a few weeks ago. Zuma told western companies to mend their ways and stop being colonial towards African governments or face the reality that Africa has other options - alluding to a shift towards China and BRICS countries for stronger economic relations.
Growing interests from India, Russia and China in the last five years in mining, infrastructure and services deals is also encouraging the shift and will gain momentum as these countries’ confidence grows that Africa is a home for future growth.
For instance, the Chinese state through its China Development Bank facilitated a Chinese consortium’s acquisition of a 45% stake in Wesizwe Platinum’s Bakubung mine, to start operations in 2018. This was the first of direct Chinese investment in a sector where China provided a R5.75 billion loan.
BRICS not only opens new markets and helps with some of our development backlogs; it also promises fortunes for those who have benefited from past cosy deals and relations with Anglo-Saxon capital, but are now seeking new pastures as old capital becomes either too stingy or sticky with their money.
Intra-BRICS trade is already worth US$300 billon.
Secondly, this also suits the South African government, as China in particular, given that it is the biggest player and a growing trading partner for South Africa, has an explicit policy of political non-interference. It is less likely to put pressure on its corporations’ conduct given the current context of poor governance and accountability that continues to pervade many levels of the South African state – especially within the mining sector. China’s financing mechanisms are entirely expedient.
Thirdly, nothing happens without capital. South Africa’s interest in hosting the mooted BRICS bank enables it to influence the direction of capital flows.
Western-based development finance institutions are less likely to look favourably at the current political situation and governance of key state enterprises that China will easily provide loans to. The South African government is also limited in its ability to underwrite essential infrastructure deals given our shrinking tax-base and the overall state of finances.
As our own debt and deficit burden grows, it has and will continue to have an effect on how much we can borrow and at what cost. There is potential for cheap money to be provided through a BRICS development finance institution or alternative funding mechanism under its auspices.
This is not irrelevant as future infrastructure spend will depend on the availability of sizeable amounts of capital and the cost of this money. As it stands, no private financiers, especially not from Western sources, will fund our nuclear power programme because it is too risky. And even if they did, it would be at a premium.
A nuclear programme reliant on traditional sources of finance would be dead in the water. Hence this keenness from South Africa to tie a deal with China to provide the full package of finance and construction as well as run the nuclear plant. In return, China would ask few questions and be happy to drive hard bargains that are often not financial in nature only.
Thus, the Durban meeting is not only about South Africa wanting to shine on the podium with the BRICS stars, as if it were in a beauty contest.
Neither is this necessarily about the development of the country and the interests of the poor. Economic relations with BRICS – under conditions of rampant cronyism, corruption and poor economic governance – only encourages political entrepreneurs to further their interests first before anybody else.
It is not only old economic allegiances - the traditional bonds with Anglo-Saxon and Afrikaner capital that are being revisited - but also, fundamentally, the future of the ANC. The state would look to enhance its clout by bringing in new players who are credit plush and that have their own rules of engagement.
There is a re-ordering of the deck taking place and playing for high stakes at BRICS is part of the game. Geopolitical reset is being matched by a change of domestic economic interests in South Africa. This time it will be a concerted move away from Western capital. This is all about rebalancing going on behind the scenes, both in the ANC and in the South African state. The championing of BRICS is the new alternative to old Anglo-Saxon capital.
There is an opportunity for a development dividend via BRICS, but as always, those whose interests are being looked after will reveal whether a BRICS deal is about collective economic interests or the interests of a few.