The G20 meeting in Mexico passed off last week seemingly without much progress or incident. At least the Greek crisis did not hijack the meeting. I spent the week in Germany with Tutwa Associate Andreas Freytag, imbibing some of the increasingly gloomy mood in that country regarding Europe’s prospects. I delivered a keynote address at a conference on emerging economies in globalized financial markets. With the developed world in the doldrums for the foreseeable future, interest in the BRICS and dynamic emerging markets is running high; but I argue that things are not necessarily rosy on the BRICS front either.
Back home the major related news concerned South Africa’s $2 billion contribution to the IMF’s ‘firewall’ fund, being built to contain the next phase of the unfolding European crisis. This attracted considerable attention, particularly from the Congress of South African Trade Unions which argued the money would be better spent back home. This seemed to miss the point that the funds allocated are charged against South Africa’s growing foreign exchange reserves, not from the fiscus. And whilst this contribution is relatively small compared to the $45 billion pledged by China, and the $10 billion each pledged by Brazil, Russia, and India, it will nonetheless buy the country some influence in the ongoing process of reforming the IMF.
Related to this the South African Institute of International Affairs (SAIIA), with which a number of Tutwa associates are associated, recently established a global economic governance project, with a core focus on the G20. It’s ultimate purpose is to support the South African government’s negotiating efforts in these forums, with a related objective of building a network of African scholars, think-tanks, and institutions interested in contributing to G20 deliberations. We’ll be running a seminar on the BRICs’ strategy for the G20, and how they perceive South Africa as a partner in that forum, in the first week of August.
Meanwhile the international debate over protectionism continues. In South Africa Business Day ran an editorial decrying the increasing lobbying for export taxes by certain minerals processing industries. Tutwa Associate Razeen Sally also commented on the international dimension of this issue. It forms part of a broader, global trend towards increased protectionism in response to crisis conditions, not least in the very G20 nations that are supposed to be providing global leadership on this and other issues. The WTO Secretariat now calculates that such measures cover 3 percent of global trade; up from 1 percent a year ago. This may not seem like much but the rapid escalation is worrying.
This highlights the critical role of leadership in managing protectionist instincts in society. Unfortunately South Africa’s leadership continues to display protectionist tendencies, with increasing recourse being made to anti-dumping tariffs in particular. So it is no surprise that Brazil has requested official bilateral consultations with the South African government regarding the imposition of prohibitive import tariffs on certain poultry imports from Brazil. If this dispute goes to the dispute settlement panel it could open South Africa up to additional cases, with unpredictable consequences. It would also be a landmark dispute, since South Africa has never been taken to WTO dispute settlement before.
This throws the spotlight onto the nature of leadership in South Africa. In a week in which the ANC will be debating various policy documents in preparation for the leadership contest at Mangaung in September, Mzukisi Qobo continues to pose challenging questions about this issue in his latest Business Day column. He throws down the gauntlet to Trevor Manuel, Kgalema Motlanthe, and Tokyo Sexwale, all regarded as voices of reason when it comes to economic policy. Qobo challenges them to act according to their convictions and not simply to lend their credibility to what he regards as increasing leadership failures on the part of the ANC. There is never a dull week in South Africa…