South Africa will host the fifth summit of the Brazil, Russia, India, China and South Africa (BRICS) grouping on March 26th and 27th in Durban. This will conclude the first cycle of BRICS summits that commenced with the 2009 summit in Yekaterinburg, Russia. Accordingly Tutwa associates recently compiled a confidential briefing about South Africa’s strategy and approach; selected extracts appear below.
South Africa is pursuing five broad strategic objectives for the Durban summit.
Global governance reform, particularly of the United Nations Security Council
South Africa wishes the BRICS heads of state to endorse its own, and its Indian and Brazilian partners’, claims. Specifically, South Africa supports the case for Africa and Latin America to be represented on an expanded UNSC, along with India. It is to be expected that BRICS members would be divided on this issue. China and Russia are already permanent members of the UNSC; the IBSA countries are not. Notwithstanding their rhetoric regarding the need to reform other global governance institutions, neither China nor Russia shows any willingness to dilute their prerogatives in the UNSC. So not surprisingly both downplay South African desires for ‘geographical representivity’ in the UNSC, whilst acknowledging the important role played by the IBSA countries in global affairs. They will also explicitly resist any language deemed to endorse the IBSA countries’ claims to permanent seats on an expanded UNSC.
Geopolitical convergence in relation to international crisis situations
South Africa supports the notion of ‘Responsibility to protect’ as a core principle for UNSC deliberations. However, the authorities have become deeply sceptical of the ways in which this doctrine has been interpreted, particularly with respect to African conflicts and notably the Libyan and Côte d’Ivoire situations. Consequently, suspicion of French motives in particular but western motivations more generally, with respect to African crisis situations, has become heightened and the South African authorities charge those countries with abusing and subverting the principle.
The BRICS support the principle of ‘responsibility to protect’ and South African criticisms of how the principle has been interpreted in the past, particularly regarding the Libyan intervention. Brazil offers a more nuanced critique, noting that peaceful diplomacy needs to be exhausted before recourse to more forceful measures ensues.
Global economic governance reform
Regarding the G20, South African authorities are concerned with the growing recourse of developed country central banks to quantitative easing policies, since these policies have propelled excess liquidity into international financial markets thereby negatively affecting some emerging market currencies. However, this concern is tempered by acknowledgement that such policies may be consistent with those countries domestic monetary policy frameworks, in other words the need to reignite economic growth in the developed world – which would ultimately benefit South Africa. Consequently the G20’s decision to monitor and evaluate the impact of policy spillovers finds support in South Africa. Furthermore, South Africa is supportive of the proposed construction of a BRICS financial ‘safety net’ through pooling foreign exchange reserves, along the lines of the Chiang Mai initiative in East Asia. And South Africa strongly supports the proposed establishment of a third chair for sub-Saharan Africa in the IMF board.
Regarding the WTO, the relevant South African authorities are very critical of the role played by developed countries in the ongoing Doha round impasse, which they regard as negative. They are also critical of what they see as attempts to bypass the round in favour of new approaches such as plurilaterals. They also rhetorically reaffirm opposition to all forms of trade protectionism, even though a number of domestic import tariffs have been increased in recent months.
China and Brazil are particularly keen on supporting the 2010 process of quota and governance reforms of the IMF and World Bank. This is not surprising since their voting gains, particularly China’s, would substantially outweigh India and Russia’s. South Africa potentially stands to lose voting shares owing to its anemic economic growth in recent years and the relatively small size of its economy. Furthermore, China does not wish to officially endorse the South African position on establishing a third chair on the IMF board for sub-Saharan Africa. Similarly, India and Brazil offer qualified support for this proposition since other emerging markets have expressed interest in expanding their participation in the IMF board.
China also wishes to promote reforms to the international reserve currency system, particularly special drawing rights; a goal in congruence with its own process of internationalizing the Renminbi. This issue has received BRICS support in the past, notably at the Yekaterinburg summit in 2009.
Regarding the WTO, China explicitly endorses the G20 position on standstill until 2014 regarding trade and investment protection, and to roll back any new measures. As far as we can establish this position is not present in any of the other BRICS members’ preparations for the summit, even though all endorse the call to combat trade and investment protectionism. Perhaps one reason for this is that the other four countries are all, to varying degrees, instituting protection measures and wish to preserve their ‘policy space’ to continue to do so.
Brazil does not seem to share the strongly critical position on new proposals and approaches to the WTO as put forward by South Africa and India in particular. Furthermore, Brazil will be looking to its fellow BRICS to support their candidate in the WTO Director General process, which may account for this more nuanced position since they will need the support of key developed countries. It is not clear where the other BRICS countries stand on which candidate to support, but based on the BRICS’ failure to cohere on any candidates for key global economic governance institutions in the recent past it seems unlikely that a united BRICS position will be forthcoming.
Positioning South Africa as the African economic gateway of choice
South African authorities are supportive of the proposed establishment of the BRICS development bank as a means for mobilising funds to invest in BRICS infrastructure, and potentially other emerging markets. This has obvious resonance with South Africa’s desire to boost investment into Africa, and in the process assert African leadership. It also resonates with those domestic constituencies that are critical of IMF and World Bank engagements in Africa, since in some quarters the proposed bank is regarded as an alternative to those institutions. At a more parochial level South Africa is pitching to host the BRICS development bank, thus cementing the implicit African focus. This ties in with the National Treasury’s policy of elevating South Africa’s status as a regional financial centre.
The SA government will use the summit to initiate a dialogue between the BRICS and heads of African regional economic communities, thus emphasizing the importance of trade and investment in cementing African growth trajectories. A senior government official has confirmed that South Africa received a letter of support for its hosting of the BRICS Summit signed by the Chair of the African Union (AU), Benin; then Chair of the AU Commission, Gabon; and Chair of the New Partnership for Africa’s Development (NEPAD), Ethiopia. South Africa takes this to be expressing a mandate for the country to represent the interests of the continent in the BRICS.
All the BRICs countries are broadly supportive of South Africa’s attempts to use the BRICS summit to highlight African development challenges. However, China’s understanding of ‘Africa’ seems to have broader application than South Africa’s initially, particularly when it comes to specifying the RECs to include in parallel deliberations with BRICS leaders. Whereas South Africa initially seemed more focused on southern and eastern Africa, a purview in keeping with its real ‘gateway status’, China’s purview encompasses the entire continent – as is to be expected given the geographic range of Chinese commercial contacts with Africa. South Africa’s subsequent invitation to the heads of ‘the 8 RECs’ and their Executive Secretaries seems ultimately to have adhered to the Chinese perspective.
Regarding the BRICS development bank there seems to be broad political agreement on the case for it. However, there is debate over whether it should be called a ‘BRICS development bank’ or a ‘BRICS-led development bank’ that also covers emerging markets and developing countries (EMDC). Other related questions concern who will be allowed to borrow from the bank? Will it be on the basis of one country, one vote to depart from the current practice in IFIs? Or, will this be based on some weighting relative to contribution? India is predictably not too happy with the emphasis on Africa in discourse around the BRICS development bank as it has major infrastructural challenges that it would want to direct the resources too. Similarly, Russia sees the bank in the light of its neighbours who also need infrastructure investment, whereas Brazil has its own enormous development bank and infrastructure deficits and consequently does not need this one.
Building and deepening intra-BRICS collaboration
A range of initiatives is on the table in respect of promoting deeper intra-BRICS collaboration. Specific institutional proposals include establishment of:
- A BRICS think-tank consortium, which is supposed to provide strategic advice and forethought for deepening the processes. This will complement the extant BRICS academic forum. South Africa is also likely to establish its own BRICS think-tank, to be housed in the Human Sciences Research Council.
- A BRICS business council, which may be hosted by Russia. This will engage on commercial interests vis a vis intra-BRICS trade and investment opportunities.
- The BRICS (-led) development bank.
In addition a number of government-to-government interactions are proposed. None of these seem to be of particular strategic importance to South Africa, and some presumably predate the Durban summit.
There is a great deal of excitement within the South African government about the country’s involvement in the BRICS Forum. Its involvement has been driven by the International Relations and Cooperation department, suggesting that BRICS is viewed principally from a diplomatic standpoint. Further, president Jacob Zuma sees BRICS very much as his foreign policy legacy. Launching a set of institutions such as the BRICS Development Bank, the BRICS Business Council, and the BRICS Think-Tank Consortium will be regarded as a great success for South Africa’s foreign policy and international diplomatic efforts. It will certainly build foreign policy confidence within the country even if longer term domestic benefits are more difficult to discern. Government officials also believe that the BRICS-Africa outreach will help to enhance South Africa’s diplomatic stature in the African continent, which in turn, it is hoped, will have commercial spin-offs down the line.