BRICS are our true link to genuine global trade
Maite NkoanaMashabane and Meokgo Matuba
INTERNATIONAL news reporters have certainly had much material to work from in recent weeks. In particular, the election of South Africa as a non-permanent member of the UN Security Council for 2019 and 2020 as well as the much anticipated US-Korean Summit in Singapore serve but as two examples of these events that will hopefully shape our history as an international community.
One of the events that President Cyril Ramaphosa had the opportunity of attending was the G7 Outreach Summit, held in Quebec, Canada.
While President Ramaphosa rightfully used the occasion to showcase South Africa as an investment destination, the meeting itself and aftermath was characterised by the deep divisions between the US administration and the rest of the G7.
The group comprises the US, the UK, Germany, France, Japan, Italy and Canada.
In the days preceding the meeting, the US president held firm on imposing trade tariffs on his country’s allies in the EU and Canada in particular.
This caused great consternation among G7 leaders as they had to face the leader of the world’s largest economy succumbing to isolationism and economic nationalism.
Summit ends uncertainly If anything, the G7 summit ended as uncertain as it began.
For example, it is difficult to understand how there could have been cohesion among the leaders when the theme for the summit was “working together on climate change, oceans and clean energy”.
Many of us know by now that the US president is not keen on concerns of climate change, and eventually did not agree with the final statement put out by the rest of the group.
Yet the US is not alone in promoting this economic nationalism.
As we have seen in recent history through Brexit, the elections in Austria and the recent stand-off in Italy all point to an orientation of unilateralism, isolation and protectionism.
Literally on the other side of the globe, while the G7 was happening, the Shanghai Co-operation Organisation (SCO) was also meeting in the Chinese city of Qingdao.
Here, the founder and host country, China, the world’s second-largest economy, was welcoming the group, whose members include China, Russia, Uzbekistan, Kazakhstan, Tajikistan, India, Pakistan and Kyrgyzstan.
While a political, economic and security group, the SCO is the world’s largest regional organisation in terms of geographical size and population and is thus a very influential bloc.
In pointing out the newfound elements of economic nationalism, which include among others unilateralism, trade protectionism and the backlash against globalisation, Chinese President Xi Jinping suggested that what was needed was a more vigorous pursuit of co-operation in order to ensure mutual benefit, because individual countries’ interests and futures were interconnected.
President Xi also went on to encourage member states to engage the International Monetary Fund, the UN and the World Bank in order to intensify partnerships in these multilateral forums.
We may therefore suggest that judging by these two summits and their very different orientation and outlook that we are indeed living in a bipolar world.
It is in the context of this bipolar world, between isolation and economic nationalism on the one hand, and multilateralism and co-operation on the other, that South Africa will have the opportunity to host the 10th BRICS Summit in Johannesburg. It will be the second time, after the Durban Summit in 2013, that South Africa will play host to the leaders of the emerging economies of Brazil, Russia, India and China.
South Africa was admitted to the group in 2011.
The combined populations of both countries total more than 3 billion people, roughly 40 percent of the global population, while, according to the International Monetary Fund’s “World Economic Outlook”, their combined nominal gross domestic product was about $18.6 trillion (R252trln). In other words, nearly a quarter of the gross world product.
According to government information, in 2015 trade between the BRICS countries amounted to more than R3trln while South Africa’s exports to BRICS countries, in 2016, totalled more than R138 billion and imports were at R230bn.
As we can see, the trade still favours our partners and South Africa must work hard to ensure that we are producing more goods and services to better balance trade.
In recent times one of the most explicit examples of the multilateralism and co-operation, especially between the south, as espoused by President Xi, has been the establishment of the New Development Bank (NDB), formerly known as the BRICS Bank, as well as the BRICS Contingent Reserve Arrangement (CRA). Both these institutions are set up in order to strengthen the global fiscal and financial infrastructure especially for emerging economies.
The NDB grants loans for infrastructure development while the CRA seeks to protect currencies against the volatility of the international financial markets.
In short this means that mechanisms would be put in place to bring stability to the rand.
With South Africa’s chairing of the BRICS group this year, a number of events and activities have already taken place.
At these occasions, the people-topeople, co-operation of governments and the exploration of business opportunities, among others, are engaged, so that BRICS does not simply become a meeting of the heads of government.
Rather what is envisaged is that in all spheres of society, the opportunity is given to citizens from these countries to interact.
For example, the BRICS Think Tank held a BRICS Academic Forum in May this year in Johannesburg.
This was an opportunity for academics in the five countries to come together, share experiences and research and hopefully endeavour to engage in further undertakings.
Guiding all these activities are the themes set out for the year. These are:
Creating a virtual vaccine platform for collaboration in vaccine innovation and development partners.
Establishment of a BRICS Gender and Women’s desk.
Establishment of a working group on peacekeeping.
Garnering an economic strategy for BRICS as we enter the Fourth Industrial Revolution.
As a result, organisations and institutions working in these and other areas related should be getting involved and meeting up with their BRICS counterparts. It is only through this kind of collaboration that we will be able to defeat isolationism, protectionism and nationalism.
Before leaving for the now infamous G7 Summit, the US president had suggested that the Russian president, Vladimir Putin, be re-invited to the G7, as it was the G8 before.
However, the Russians were diplomatic yet emphatic enough to indicate that they would rather concentrate on broader and representative groups such as the G20 than focus on G8.
As with SCO, we see that the Chinese, Indian and Russian commitment to multilateralism, and even Russia’s response to the G7 invite, is in line with South Africa’s foreign policy.
In a globalised world there are opportunities for South Africa, but there are also threats.
We could either deal with the threats as the US administration is doing at the moment, but this will yield no positive results.
The only way to beat the threats is to partner up with others, as with BRICS, so that we can build relationships that are mutually beneficial to all our peoples.
We may therefore suggest that judging on these two summits and their very different orientation and outlook, that we are indeed living in a bipolar world.