South Africa in the BRICS Opportunities, Challenges and Prospects1

Home , African Union, BRIC, BRICS, Rob Davies (politician)

This study investigates the participation Introduction of South Africa in the BRICS group from an analytical perspective. It is argued South Africa was granted an invitation to that South Africa’s membership to this join the Brazil, Russia, India and China (BRIC) group entails both opportunities and grouping2 on 23 December 2010 by the Minister challenges for South Africa, the continent of Foreign Affairs of the People’s Republic of and the system of global governance. We China, Yang Jiechi. The announcement was seek to flesh out the potential medium- made by South Africa’s Minister of International and long-term implications as well as Relations and Cooperation, Maite Nkoana- the benefits and risks of South Africa’s Mshabane, after months of lobbying by South membership in the areas pertaining to African President Jacob Zuma, who marketed trade, foreign policy and development. the country as the gateway to Africa. Zuma has maintained that this is an important group to be part of, given that the emerging economies have a significant role to play in restructuring political, economic and financial institutions to become more equitable and balanced.3 Hany Besada, Evren Tok Participation in the group provides, according to and Kristen Winters the South African government, economic benefits such as increased trade and investment op- Hany Besada is Research Specialist, United Nations High portunities as well as political benefits, such as Level Panel Secretariat, Post-2015 Development Agenda & increasing its voice in the international sphere. Theme Leader and Senior Researcher: Governance of Natural

Resources at the North-South Institute (NSI) in Ottawa, Canada. The third BRIC summit, held on 14 and 15 He is currently pursuing a PhD in Politics and International April 2011 and attended by President Zuma, Studies at the University of Warwick in the United Kingdom. heralded the transformation of BRIC to BRICS Dr Evren Tok is Assistant Professor for Public Policy in the Islam Programme at the Hamad Bin Khalifa (Brazil, Russia, India, China and South Africa). University, Faculty of Islamic Studies, Doha/Qatar. The countries called for reforms in international Kristen Winters is a Research Assistant, North South Institute. financial mechanisms, and greater cooperation

in fields ranging from finance and business to ●● Reducing distortion and further regulating science and technology. South African Trade the financial market and Industry Minister, Rob Davies, indicated ●● Expanding and deepening economic, trade that the BRICS countries would benefit from di- and investment cooperation among the rect trade in their own currencies, which would BRICS countries.6 protect them from volatile international con- vertible currencies, for example the US dollar.4 The development banks of the five nations also South Africa’s Contribution signed a framework agreement on cooperation to the BRICS among their national financial development institutions to establish mutual credit lines to There is little consensus not only on the im- be denominated in local currencies. The China plications of South Africa’s admittance to the Development Bank was the first institution to group, but on precisely what the grouping is respond to the new measures, outlining its in- and its potential effect on international affairs. tention to lend 10 billion yuan to Brazil, Russia, The invitation was met with surprise and in- India and South Africa. There is no information comprehension by many analysts puzzled by yet forthcoming on the precise terms of the loan the admittance of such a smaller economy, con- or exactly how the money will be allocated and sidering there were stronger contenders than on which projects, but such loans are likely to South Africa as the newest member; for exam- focus on large oil and natural gas projects.5 ple Mexico, South Korea and Turkey. There has The BRICS meeting concluded with the sign- been widespread speculation about the nature ing of the Sanya Declaration, outlining the major of the association; the motivations for the in- commitments and areas of agreement discussed vitation, be they financial or political; what at the summit, among which were the following: it will mean; and what effect it will have on ●● A broad-based reserve currency system South Africa and the continent as a whole. which provides stability and certainty Some observers contend that it is difficult ●● Discussion about the global role of Special to immediately perceive how South Africa Drawing Rights (SDR), the accounting unit could easily fit into the BRIC group.7 The inclu- of the International Monetary Fund (IMF) sion of South Africa changes the dynamics of a and the SDR’s basket of currencies (now group that has impacted global economic mar- comprising the US dollar, the euro, the yen kets over the last 10 years and estimated by and the pound sterling) Goldman Sachs to have contributed to over a ●● Establishing mutual credit lines denominat- third of global growth in gross domestic prod- ed in their home currencies among the state uct (GDP) over the last decade.8 With a GDP of development banks of the group approximately one-sixteenth of China’s out- ●● Reform of international institutions such put, an annual growth rate of 2,8 per cent in as the IMF, with the UN Security Council re- 2010 (compared to 10,3 per cent for China, 9,7 flecting the interests of emerging and devel- per cent for India and 7,5 per cent for Brazil) oping countries and a population of 50 million (compared to ●● The importance of renewable energy and China’s 1,3 billion and India’s 1,2 billion), atomic energy technologies as a key element South Africa has significantly less economic of development power than the other members.9 South Africa

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has a nominal GDP of US$286 billion, far be- on services, mining and manufacturing, can ri- low that of the other members: Brazil (US$1 val the majority of Organisation for Economic trillion), India (US$2 trillion), Russia (US$1,6 Co-operation and Development (OECD) states. trillion) and China (US$5,5 trillion).10 China As a middle-income country with a per capita and India are ranked as the top two in The gross national income (GNI) of US$6 100,19 its Economist’s ranking of the 10 fastest-growing largely affluent white population have long economies from 2011 to 2015, seven of which reaped the benefits from the control of a com- are located in Sub-Saharan Africa, but South petitive and robust economy, characterised by Africa is not even included.11 The country also an abundant supply of mineral resources; well- has not achieved the improvements in living developed legal, energy, financial, and commu- standards or sustained levels of economic nications and transportation sectors; a modern growth and job growth that is characteristic of infrastructure that supports an efficient distri- the original BRIC countries.12 bution of goods and services to major urban According to the World Bank,13 South Africa’s centres throughout the country; and an active medium-term growth prospects are improving, stock exchange that ranks among the top 20 in with GDP projected at 3,5 per cent in 2011; 4,1 per the world. cent in 2012 and 4,4 per cent in 2013. The chal- At the other level, South Africa is a coun- lenge is to generate higher and more inclusive try plagued with severe inequalities, pervasive growth in the country, raise GDP growth to 6–7 poverty and high unemployment. The OECD’s per cent, and tackle the high unemployment rate. 2010 Economic Survey of South Africa outlined Despite an economic presence far below several concerns about the economy: high lev- that of the other members, South Africa’s per els of continued unemployment,20 growing du- capital income is larger than that of both China alism in labour markets, and low levels of en- and India,14 and it has one of the highest ra- trepreneurialism among the black population.21 tios of market capitalisation in the world.15 In theory, the invitation represents an op- According to Martins,16 South Africa enters the portunity for South Africa to participate in the group not as a middle-income country but as restructuring of global, political, economic and the most powerful economy on a fast-growing financial structures to produce a more equitable continent. South Africa’s participation in the and inclusive system. To some detractors, how- group, to President Zuma, means that the entire ever, South Africa is a lightweight in the global continent of Africa, with a population of over economic arena in comparison to the other mem- one billion, is now represented (Wong, 2010).17 bers, and despite its trading relationship with Trade and Industry Minister Davies explained China, its membership in the group is unlikely to the country’s membership in the grouping like significantly benefit them.22 The next section ex- this: ‘The African continent is the next great amines the strengths and weaknesses of South economic story. We are quite small but, when Africa’s inclusion in the grouping, its potential we look at the African continent as a whole, the for shaping the agenda of the group and the im- numbers start to add up’.18 plications not only for the country but also for South Africa has a two-tiered economy. At the other members. It also speculates to what ex- one level, it is Africa’s economic powerhouse, tent South Africa has or could have the support with a GDP averaging around 25 per cent of that of other African states to represent the interests of the entire continent. The formal sector, based of the entire continent.

Implications of South Africa’s Economic implications Membership of the BRICS Group With South–South trade expected to account for a growing share of global trade, South Benefits and risks of South Africa’s inclusion Africa’s new status within the BRICS group Much has been made of the potential economic could provide new trade and investment op- benefits for South Africa in the BRICS group, or portunities, not only for South Africa but also conversely, the benefits of the introduction of an for other African nations. Brazil, Russia, India African member to the original four members. and China have increased capacity to bring Some view South Africa’s participation in a major expertise and technologies to Africa that can international forum as inherently positive – an aid infrastructural development. The origi- opportunity to influence policymaking and align- nal BRIC nations account for more than 50 ment among developing countries to make the per cent of overall emerging-market IT spend- international economic system more inclusive.23 ing, and therefore could provide opportunities Membership in the group is projected to for technology transfer.28 With higher levels allow the country to promote economic devel- of technological innovation in the BRIC na- opment through enhanced trade and invest- tions, it is expected that membership will pro- ment, and expand sectors in which the country vide technology sharing, joint manufacturing, holds a comparative advantage24 and provide marketing and research projects, and exchange overseas investment opportunities for South programmes for skills and training for South African enterprises.25 In terms of African devel- Africa.29 Most analysts are unclear as to wheth- opment, many consider the BRICS agreement to er South Africa will be an African representa- be beneficial for the expansion of sub-Saharan tive and at the same time ‘leverage’ itself as African markets and infrastructural develop- a major player in the group.30 Currently, Asia ment, and trilateral cooperation on the conti- accounts for the majority of South–South com- nent.26 For the other BRIC members, the empha- merce, figures indicating that China alone com- sis has largely been on greater representation prises 40 per cent. A key challenge for South among the developing nations and increased Africa will therefore be to ensure that other re- access to African markets. Chinese Foreign gions of the world can generate a larger portion Minister Yang stated that the inclusion of South of this investment. Africa in the group would promote development According to the South African government, among the members, and further cooperation South Africa’s trade and investment is poised among emerging market economies.27 to expand with its membership in the BRICS While it is not yet clear whether entrance group through joint ventures and cooperation. into the forum will help South Africa achieve The South African government is looking at this objective, it is evident that a number of leveraging its membership to seek opportuni- risks are associated with its entrance in the ties for joint ventures, mergers and cooperation group – both economic and political. Questions with other BRIC countries currently investing have arisen over the wisdom of South Africa on the continent. joining such an exclusive ‘club’ that could In recent years a number of joint ventures potentially entrench the differences in eco- have developed, particularly between Chinese nomic size and power between it and the other and South African firms.31 Standard Bank, the members. largest bank in South Africa, sold 20 per cent

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of the bank to the International Commercial are not regarded by all as beneficial for South Bank of China (ICBC) three years ago.32 In a Africans, as many perceive this could allow joint statement, the ICBC indicated that it views BRIC investors to exploit the region.36 South Africa as a lucrative market for investment, and as such an alliance with Standard South African bilateral trade with Bank would open up opportunities across the countries in the BRICS group continent. For Standard Bank, the deal allows China is set to make the largest impact on the the South African bank increased access to the South African landscape, as the partnership be- largest and fastest-growing economy in the tween China and South Africa has been steadily world, and better able to facilitate and finance growing over the last few years. Bilateral trade trade flows between Asia and Africa.33 Since between the countries has been gradually ex- the acquisition, ICBC and Standard Bank have panding since diplomatic relations were estab- launched cooperative projects, including major lished in 1998, with total trade amounting to infrastructure projects. US$16 billion in 2010, growing 2 per cent from It is not yet clear if trade between South 2008.37 Trade with China tripled as a share of the Africa and the original BRIC group will ex- country’s total trade from less than 5 per cent in pand on a long-term basis, providing tangible 2000 to approximately 15 per cent in 2010.38 benefits for South Africa and the continent as Major Chinese companies such as ZTE a whole. It is also difficult to determine if in- and Huawei are investing and establishing vestments are occurring as a result of participa- their African headquarters in the country, tion in the BRICS group or would have occurred and Beijing has located the African headquar- regardless, considering that infrastructural de- ters of the China-Africa Development Fund in velopment had been increasing prior to South Johannesburg. In August 2010, China signed Africa’s admittance to the group. It does ap- a ‘comprehensive strategic partnership’ with pear, however, that there has been consider- South Africa in recognition of the growth in able interest in forging new investments. After bilateral trade between the two countries. The South Africa formally joined the BRICS group, declaration outlined 38 cooperation agree- an immigration official reported that in a pe- ments39 between the two countries focusing riod of just over a week, there was a 38 per cent on trade, investment, mineral exploration and increase in enquiries from corporate clients and agriculture, as well as national and global po- individuals requesting visas and information litical dialogues.40 The state visit also produced on obtaining work permits in BRICS nations.34 a plan to build a high-speed rail link between The South African government has also encour- Durban and Johannesburg.41 aged private investment in the BRICS countries There is a fear that South Africa will, through trade expos. In November 2011, the through its membership in the BRICS group, government invited South African companies lose out to increased market competition from in targeted sectors to participate in events in the more industrialised members – and China in Beijing and Shanghai.35 particular. Through helping to fulfil its role as South Africa’s participation in the BRICS an economic and political link to Africa, South group does provide strategic partnerships for Africa will be encouraging competition for its investors from the other members, particu- own markets on the continent, the only region of larly China. Mergers with BRIC firms, however, the world where it currently has a trade surplus

in manufacturing.42 Trade minister Rob Davies mobile phones.49 Indian investors have demon- admits that while increasing trade between the strated interest in investing in coal, iron ore and two countries has been positive, most of South manganese mines in the country. JSW Energy Africa’s exports to China are entirely comprised of India acquired a majority stake in the South of natural resources, while imports from China African Coal Mining Holdings in April 2010. have been manufactured goods.43 The govern- Indian enterprises are also looking to procure ment wants to encourage more value-added uranium and nuclear technologies from South trade and investment, and move from resource African companies.50 South African companies exports to partnerships in infrastructure and are interested in pursuing investments in agro green industries. Further, the country is looking processing and cold chains, tourism, hotels, the to persuade more Chinese companies to estab- retail sector, iron and steel, organic and inor- lish manufacturing in the country.44 ganic chemicals, fertilisers, gold and diamonds. South Africa is currently India’s second- South African banks, and insurance and finan- largest trading partner in Africa. Bilateral trade cial services companies also have expressed in- between the two countries rose to US$10,6 terest in increasing their presence in India.51 billion in 2010–11, with the aim to boost it to Brazil, meanwhile, has also invested in the US$15 billion by 2014 .45 Although not receiving continent in recent years, most notably in min- the same degree of attention, India is expanding, infrastructural development and large-scale ing its role on the continent, and has generated agriculture.52 From 2000 to 2008, Brazil’s trade competition for South African companies, par- with Africa increased more than six-fold from ticularly in the service sector. Several Indian US$4,2 billion to US$25,9 billion. It currently multinationals have begun to make inroads in ranks as Africa’s third-largest trading partner South African markets. Tata (a rapidly growing behind Indian and China, and ahead of Russia, business group), as of 2011, had made plans to at fourth at US$3,5billion.53 Minerals and oil and begin construction on a vehicle assembly plant gas comprise more than 80 per cent of Brazil’s outside Pretoria.46 Other enterprises doing busi- imports from the continent, while Africa imports ness in the country include Bharti (a telecom- a diversified array of products including agricul- munications company operating in a growing tural products, vehicles and parts, nuclear reac- number of countries), Reliance and Mahindra.47 tors and machinery, ores and ash. India views South Africa as key to countering Brazil’s largest trading partners in Africa China’s strategic expansion in Africa.48 are Nigeria (32%), Angola (16%), Algeria (12%), South African investment in India has so South Africa (10%), and Libya (7%). Trading re- far been limited, with investments estimated lations, however, with the former Portuguese at around US$250 million, spearheaded by the colonies have been most significant because brewer SABMiller, First Rand (the first African of cultural and historical ties. Angola and bank to get an operating licence in India) and Mozambique have so far attracted the most in- Airports Company South Africa (ACSA), which terest from Brazilian firms.54 won a lucrative contract to rehabilitate the Total trade between the Russian Federation Mumbai airport. South Africa still largely exports and South Africa is limited but increased by 6,42 primary or scrap products like coals and wood per cent from US$484,02 million to US$517,21 pulp, while India exports value-added products million in 2009 (BuaNews, 15 February, 2011). such as petroleum oil, cars, pharmaceuticals and With the collapse of the Soviet Union, Russia’s

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relations with Africa declined. In recent years, and textiles, steel and the automotive sector.58 however, the country has been refocusing its China, and to some extent India, could threat- attention on the African continent. Russian en South African manufactured exports to investment in Africa has not yet been signifi- the rest of the continent if greater market ac- cant, but according to that country’s officials, cess were to be granted to Chinese and Indian Russian companies are expanding their activi- goods. China’s rapidly expanding export base ties throughout the continent. The government has been difficult to compete with, exacerbat- also extended a US$500 million development ed by China’s policy of allowing the yuan to assistance package to the region in 2008, rep- rise slowly and thereby undervaluing the cur- resenting a marked increase in interest in the rency.59 With China clearly at an advantage, it region. As a resource-rich country, Russia does is difficult to imagine a sustainable trade rela- not have the same impetus to expand its invest- tionship with South Africa. ment efforts to the same extent that resource- If the planned free-trade agreements with poor China has. However, Russia shares China’s India,60 Brazil61 and China62 come to fruition, geopolitical and economic expansionist objec- South Africa could be faced with increased tives in the region.55 In a visit to South Africa in BRIC-manufactured exports. Chinese exports 2009, the Russian president and his trade del- have already ‘decimated’ the textile sector in egation expressed interest in investing through- South Africa63 and the shoe industry in Brazil,64 out the continent and cooperating in areas such while India has resorted to applying anti- as energy and nuclear power.56 dumping duties on various Chinese goods.65 66 In contrast, South African investment has ex- South Africa faces the formidable task of panded rapidly throughout the continent. Driven identifying how its membership in the BRICS by liberalisation and the lowering of barriers in group will influence its role in Africa.67 A key many countries in Africa restricted their invest- test will be the extent to which the forum will ment to traditional sectors such as petroleum, promote inter-regional trade and the nature of mining and construction like many European the trading relationship. Qobo and Soko68 cau- and American enterprises, but have in fact pene- tion against focusing excessively on strength- trated many other sectors of Africa’s economies. ening economic ties with the BRIC group. Trade to Sub-Saharan Africa (SSA) has risen Diversifying export markets is essential for steadily in the past few years. Only 4 per cent South Africa but should include other areas of South Africa’s total trade was conducted of Africa, the Middle East, and other Latin with SSA in 1990, compared to 12 per cent in American and Asian countries. 2010. This is in contrast with figures showing To further economic integration on the con- that SSA accounts for only 2–5 per cent of to- tinent, African leaders signed an agreement in tal trade in China and Brazil, and only 0,2 per June 2011 to launch discussion on the conti- cent of total Russian trade. In absolute terms, nent’s largest free-trade bloc, encompassing 26 however, bilateral SSA trade with China is four countries from Cape Town to Cairo. The so-called times that of trade with South Africa.57 African Grand Free Trade Area would join three trade blocs – the East African Community (EAC), Trade and competition the Southern African Development Community South Africa faces market competition from the (SADC) and the Common Market for Eastern BRIC group in major sectors such as clothing and Southern Africa (COMESA) are projected

to be worth US$1 trillion by 2013. The agree- lowering of trade barriers for African countries. ment could cut tariffs in the COMESA and the However, at the same time, critics contend that EAC, now with tariffs almost twice that of the South Africa does not and cannot represent the SADC.69 African leaders speaking at the sum- continent’s interests, certainly not all the time, mit ambitiously declared that the free-trade area especially if they have a detrimental impact on would be in place in three years.70 Proponents its own foreign policy objectives, and economic of the plan argue that it would reduce tariffs in and security concerns. the region, and allow small nations access to a While South Africa has been branded as a regional market. Further, they argue, it will al- representative of the continent in the group, low Africa to benefit from the BRICS agreement, other countries in the region do not view it as and will increase South African cooperation and such. Some analysts maintain that the benefits links with the rest of the continent.71 to the region will only be marginal. It could Entrance into the BRICS group represents provide diversity in investments and increased a shift from former president Thabo Mbeki’s markets for African industry, as well as a rise concern that the country’s relationship with in tourism from countries other than the UK China should come to resemble the colonial re- and western Europe, but not the widespread in- lationship of the past. In response to concerns frastructural growth and economic investment about China’s expanding role in Africa, South that many project73 by continuing to reinforce a African officials have responded that increased pattern of resource extraction by the wealthier competition between developed and emerging BRIC nations. There is a concern that partner- economies is positive (Financial Times, 2010). ing with BRIC investors could prove detrimen- However, emerging relations between China tal to African countries as it facilitates further and Africa have raised concerns, particularly in capital encroachment by South Africa’s corpo- regard to China’s underwriting of investments rations in the region.74 and trade with the Sudanese government, which South Africa’s move to join the group could has been accused of serious human rights viola- impose a new threat of neo-colonialism on the tions. Critics of Chinese enterprise on the conti- continent, according to some critics. Increased nent has been widespread – in countries such market access for the BRIC nations to Africa as Algeria, Angola, Zambia and the Democratic could have even more detrimental consequenc- Republic of the Congo, Chinese companies and es for the rest of the region, which has yet to workers have been targets of violence and ani- develop its industrial base. It could run the risk mosity, while international analysts criticise of entrenching asymmetrical patterns of trade, the Chinese government’s willingness to ignore keeping economies in the region dependent on human rights, governance concerns and the en- commodity exports.75 vironment in pursuit of resources.72 South Africa has promoted liberalised trade and lowering capital controls, which could Economic implications for the continent have a detrimental effect on African countries, The argument that South Africa represents the many of which are one-resource economies continent and its interests are, on one hand, with small industrial bases. To expect smaller supported by South Africa’s recent policies African economies to promote liberal economic and statements in various forums, such as policies in order to stimulate economic growth the World Trade Organisation calling for the is unfair, considering that BRIC countries have

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themselves developed by not always adopting promoted. According to the body’s 15-year plan, principles of liberalised trade, but have in fact it has not made significant progress – it was to promoted protectionist policies.76 reach a free-trade area in 2008, Customs Union in 2010, Common Market in 2015, Monetary Strategic geopolitical implications Union in 2016 and regional currency in 2018.81 The proliferation of regional integration ini- South Africa is by far the most dominant tiatives and geopolitical forums and blocs are economy in the group, holding the success for changing the economic and political landscape. SADC at both an economic and political level.82 South Africa is currently a member of UN, G-20, Many argue that regional integration has at the IBSA Dialogue Forum and the G-77, and a times conflicted with South Africa’s national in- non-permanent member of the Security Council. terests, with the country choosing to integrate Within Africa, it is a member of the Southern into the world economy at the expense of re- African Customs Union (SACU), SADC, the gional partners. The EU/SA Trade Development African Union (AU) and the New Partnership and Cooperation Agreement (TDCA) agreement for African Development (NEPAD). To some on developing a free-trade area between the analysts, entrance into the BRIC group will al- two partners is, according to Amos 83 an exam- low South Africa to positively contribute to key ple of this.84 global governance and democracy issues, and The grouping offers political leverage for to demonstrate its leadership on issues such as South Africa, with some advocating that it conflict resolution, security, and reconstruction should pursue alliances in key sectors. One of and development.77 Purportedly, South Africa’s the key sectors in which South Africa can influ- membership also generates geographic rep- ence the agenda of the BRICS group is that of resentations for Africa both within the BRICS renewable energy. Helping to negotiate agree- group and in international forums representing ments focusing on a trade-off between envi- the interests of the African continent and BRIC ronment and development, South Africa could countries, allowing the group to speak more help to develop its own renewable energy and widely on behalf of emerging economies and technology sectors. South Africa has indicated arguably on behalf of the developing world.78 it will use its membership in the group to inten- Some contend that to get the most out of sify its global campaign on climate change. the new BRICS arrangement, South Africa must The cohesiveness of the BRICS group is also push for continued regional integration, through cause for concern – their economic goals and regional bodies such as SADC.79 Many analysts objectives, and past and future political alli- within South Africa argue that economic growth ances85 could potentially conflict, and there are on the continent has been constrained due to clearly prospects of friction when it comes to low levels of regional and continental econom- foreign policy objectives. Many argue that there ic integration. While SADC has made progress is little in terms of political and economic objec- in integrating its member economies relative tives that bind these countries together in the to the other regional bodies on the continent, first place. Furthermore, only three of the five increasing the flow of minerals in the region members are democracies, which may create (Angolan oil, Tanzanian gold, Zambian copper, future conflict or controversy in terms of politi- Zimbabwean diamonds, gold and chrome),80 it cal priorities. South Africa’s ability to fully par- has not attained the level of integration it has ticipate in the BRICS forum could potentially be

constrained by its dearth of diplomatic resource, strategic economic partnerships with Asian en- compared to those of the other members.86 terprise and expand South African multination- There has been speculation as to how the als into key Asian centres such as China and admission of South Africa into the BRICS group India. South Africa has remained silent in regard will affect IBSA – the policy forum between to China’s role in Africa, even in controversial India, Brazil and South Africa established to land deals,91 choosing instead to help attract in- reach consensus on a variety of political, eco- creasing investment to the continent. nomic and social issues. Some argue that the IBSA partnership will continue to operate with- South Africa’s role in land grabs on the continent in the BRICS group, or be absorbed by China South Africa’s stint as a non-permanent mem- and Russia, particularly if BRICS adopts a ber on the Security Council from October 2006– more political agenda and is able to speak as a 2008 garnered criticism for controversial voting: united group on issues of international impor- from its support for normalisation of nuclear tance.87 This notion is dismissed by those who trade with India,92 its opposition to sanctions argue that there is no evidence to suggest that against Iran,93 its help in blocking a sanctions IBSA will be rendered obsolete but contend that resolution against Zimbabwe’s rulers (by voting it will help strengthen BRICS88 and reinforce the against imposed sanctions),94 to voting against work of the forum through collaboration on in- condemning the UN human rights violations vestment initiatives and calls for reform of the in by the military junta in Myanmar.95 Its deci- international monetary system. With both fo- sions, which outraged the international commu- rums still early in their formation, it is difficult nity, were, according to South Africa, motivated to predict how they will interact. by European and US violations of existing rules in the US system ‘by tabling issues in inappro- Implications for foreign policy priate structures’, or the targeting of countries Many experts and analysts argue that integra- to which they were hostile.96 tion into BRICS causes concern for its foreign In its current stint in the Security Council, policy, given that it may be difficult for the South Africa has again generated controversy country to justify its foreign policy positions from the international community. The country among the other, much wealthier countries in voted to pass a UN resolution authorising the the forum89– and difficult for all members to use of force in implementing a no-fly zone over reach a consensus, considering their differing Libya while Brazil, China, India and Russia all national, regional and strategic interests. abstained. This has generated concerns about The South African government asserts that South Africa’s foreign policies and its impli- its foreign policy priorities are focused on Africa, cations for the BRICS group. The most recent and economic priorities lie in forging greater divergence in foreign policy came from South trade with China and India.90 South African di- Africa’s August 2011 opposition to the unfreez- plomacy has been focused on conflict resolution ing of assets belonging to the fallen govern- and peacekeeping in countries like the DRC and ment of Libya and offering them to the rebels, Zimbabwe. The country has done little to pro- and its refusal to recognise them as the legiti- mote consensus on key development concerns, mate government of the country. South Africa particularly in relation to Asia’s growing eco- agreed to support a US$500 million package for nomic involvement in Africa as it seeks to gain humanitarian assistance but would not release

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the funds until the UN had recognised the fell in 2009, while China-Africa trade fell by National Transitional Council itself.97 only 15 per cent.105 President Zuma, however, In its 2011 White Paper on South Africa’s cautioned that South Africa’s membership in Foreign Policy, the government emphasises the the BRICS group does not mean that countries role that resource-rich African countries can in the North are less important.106 play in providing markets, while recognising that other countries on the continent will provide challenges in terms of competition for new Key Challenges for the BRICS markets and political influence. It therefore calls for the need to develop partnerships with Given current patterns of economic growth, the countries in the continent for ‘mutual advance- BRICS forum could become a global political ment’.98 It rather directly indicates how African force and influence international policymaking, policy on the continent is influenced by South but only if the members are able to generate African economic and political interests, large- consensus on key global issues. Commentators ly without emphasising how its policies will argue that the BRICS group could become an be shaped by the needs of the greater region.99 alternative force that could help shape global Therefore, although South Africa has often security and governance architectures, and been labelled as ‘representative’ of the African present an alternative to NATO. Peace and se- continent in the BRICS group, its economic and curity matters, particularly in developing coun- political interests are not always aligned with tries, could better be addressed in forums such those of its neighbours.100 The country’s eco- as the BRICS. For this to occur, the BRICS na- nomic dominance in the region has made it a de tions would have to display more evidence of facto leader, but due to its obvious differences cooperation and coordination beyond signing from the other countries in the region, it is not economic and political cooperation agreements. in the best position to act on behalf of them. Some analysts contend that the forum is a political rather than an economic one, and is not Implications for northern countries expected to significantly impact African coun- Some caution is given that the importance tries in the short- to medium-term.107 It is clear, of South–South relations to the detriment of however, that BRICS is not a formal alliance of a North–South ties should not be overempha- bloc of like-minded countries but that the mem- sised. Cornelissen argues that North–South ties bers are in fact rivals in international markets, are still essential to the reconstitution of the attempting to meet their own national interests. global economy.101 They do, however, have the similar objective of Despite emerging relations with the BRIC economic growth and a desire to reform inter- group and that Sino-African trade expanded 10- national institutions to better represent emerg- fold between 2001 and 2008,102 the EU is still ing economies.108 Many South African analysts South Africa’s topmost regional export destina- assert that the BRICS group can play a political tion103 104 and the US remains Africa’s largest role in counteracting Western countries, giving export market. Chinese trade with Africa has developing countries a greater voice in interna- proven steady in recent years, while US trade tional institutions through allowing leaders to with the continent has been unstable – it was be chosen outside of Western countries, trading almost reduced by half when commodity prices in currency other than the US dollar, increasing

financial regulation, and establishing a stable, global realties and the rising importance of the reliable and broad-based international reserve emerging economies more accurately.109 currency system. However when faced with the opportunity In reality, though, with such divergent na- to unite behind one candidate from the South tional interests and objectives, politics could ob- for the position of managing director of the scure the ability of the group to become a real IMF, the BRICS group failed to reach consensus. force in global decision making. As recently as With the resignation of Dominique Strauss- August 2010, the BRICS countries failed to unite Kahn, southern candidates such as the South to work toward their objective of changing the African National Planning Minister Trevor leadership of global institutions. In the first Manuel were publicly endorsed as contenders, BRICS meeting in April 2011, the BRICS declared but the original BRIC members were content that the next chair of the IMF should not be se- to support and endorse the French nominee, lected based on region. It should rather be picked Christine Lagarde, over any candidate from the according to competence, marking the first time south. This lack of cohesion does not bode well that a group of developing countries has pres- for the ability of the five countries to provide a sured a leading international organisation to united front against developed-country control select a chief executive who reflects emerging of global institutions.110

Notes and References

1 The authors would like thank Rachael Available at http://uk.reuters.com/ 10 Van den Bosch, S., 2011. African LDCs won’t Calleja for her able research assistance article/2011/04/14/uk-china-economy- benefit much from BRICS arrival. IBSA News, and feedback. bank-idUKTRE73D1AD20110414 [online] 31 January. Available at http:// 2 The avowed objective of the BRIC [Accessed on 22 October 2012]. www.ibsanews.com/development-african- grouping is to strengthen South–South 6 Xinhua News Agency. 2011. Full text of ldcs-wont-benefit-much-from-brics- relations, create a platform for dialogue Sanya Declaration of the BRICS Leaders arrival/ [Accessed on 22 October 2012]. and cooperation, and advance restructur- Meeting. Xinhua News Agency, [online] 11 The Economist. 2011. The lion kings? The ing of global governance institutions to 14 April. Available at http://news. Economist, [online] 6 January. Available at represent the need of emerging economies xinhuanet.com/english2010/china/2011- http://www.economist.com [Accessed on more fairly and equitably. The grouping 04/14/c_13829453_7.htm [Accessed on 22 October 2012]. is still in its infancy, and has as yet not 22 October 2012]. 12 Andreasson, S., 2011. Africa’s prospects formalised laws or policies or established a 7 Wooldridge, M., 2011. Will BRICS and South Africa’s leadership potential in secretariat. strengthen South Africa’s economic foun- the emerging markets century. Third World 3 Yanshuo, N., 2011. Adding South Africa dations? BBC News, [online] 5 January. Quarterly, 32(6), pp. 1165–1181. to the BRICS mix. Beijing Review, [online] Available at http://www.bbc.co.uk/news/ 13 World Bank. 2011. South Africa economic 28 April. Available at http://www. world-africa-12113830 [Accessed on 22 update: Focus on savings, investment bjreview.com.cn/quotes/txt/2011-04/25/ October 2012]. and inclusive growth. [Online]. Available content_352726.htm [Accessed on 8 Wilson, D., Kelston, A. and Ahmed, S., at http://siteresources.worldbank.org/ 22 October 2012]. 2010. Is this the ‘BRICS decade’? [Online]. INTSOUTHAFRICA/Resources/SAEU- 4 SouthAfrica.info. 2011. Zuma to BRICS: Available at http://www2.goldmansachs. July_2011_Full_Report.pdf [Accessed on Invest in Africa’s growth. South Africa com/our-thinking/brics/brics-reports- 22 October 2012]. Info, [online] 15 April. Available at http:// pdfs/brics-decade-pdf [Accessed on 22 14 South Africa’s gross national income per www.southafrica.info/global/brics/ October 2012]. capita in international dollars (purchasing brics-150411.htm#ixzz1Yzqst0YK 9 World Bank, n.d. Gross national income power parity) is 10 280 compared to the [Accessed on 22 October 2012]. per capita 2010, Atlas method and PPP. other BRICS: China 7 570; India: 3 560; 5 Xin, Z. and Blanchard, B., 2011. China [Online] Available at http://siteresources. Russia: 19 190; and Brazil: 10 920 (World Dev Bank ready to pump 10 billion yuan worldbank.org/DATASTATISTICS/ Development Indicators database, World to BRICS. Reuters, [online] 14 April. Resources/GNIPC.pdf. Bank, 1 July 2011).

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15 White, L., 2011. SA is the stepping stone assets/articles/attachments/34069_sa_ Available at http://www.chinadaily.com. into Africa. [Online]. Available at http:// role_in_bricsreduced.pdf [Accessed on cn/cndy/2011-09/15/content_13689717. www.gibs.co.za/default.aspx?oid= 22 October 2012]. htm [Accessed on 22 October 2012]. 81&stepid=2843&pid=63&ctl00_ 28 Reynolds, J. and Andersen, J., 2011. 35 Ibid. ContentPlaceHolder1_ctrlMainPortletCo BRICS and the IT factor: The $1 trillion 36 Van den Bosch, S., 2011. ntainer=itemid*389339$stepid*2842$id story. [Online]. Available at http://www. def*920$idlangver*919$idlayout*919$i hillandknowlton.com/content/brics- 37 The Times. 2010. SA defends Chinese dmode*2747$languageid*1$previousite and-it-factor-1-trillion-story [Accessed on expansion in Africa. Johannesburg. mid*389339$ignoreloadedcontrols*True 22 October 2012]. 38 World Bank. 2011. From World Develop [Accessed on 22 October 2012]. 29 D’Angelo, A., 2011. BRIC offers technology ment Indicators database. [Online]. 16 Martins, V., 2011. South Africa goes options. [Online]. Available at http://www. Available at http://siteresources.world- BRICS: The importance of ‘ubuntu’ in iol.co.za/business/international/brics- bank.org/DATASTATISTICS/Resources/ foreign policy. IPRIS Viewpoints. offers-technology-options-1.1057498 GNIPC.pdf [Accessed on 22 October 2012]. 17 Wong, G., 2010. South Africa wants [Accessed on 22 October 2012]. to join BRIC nations. Times, [online] 30 Bauer, N., 2011. BRICS preview: What will 39 The two nations committed to cooperating 25 August. Available at http://www. South Africa gain? [Online]. Available at on infrastructure construction projects, timeslive.co.za/local/article621179.ece/ http://www.businessday.co.za/articles/ such as roads, railways, ports, power South-Africa-wants-to-join-BRIC-nations Content.aspx?id=140119 [Accessed on generation, airports and housing. They [Accessed on 22 October 2012]. 22 October 2012]. also agreed to work together in such areas as defence, cultural exchange, educa- 18 Van den Bosch, S., 2011. 31 Matla Innovations, the first diamond- tion, health, aquaculture, agriculture, 19 2010 figure (see World Bank Indicators, cutting and polishing plant opened in the transportation, civil aviation, science and http://siteresources.worldbank.org/ Eastern Cape, a joint venture between a technology, mineral resources, information DATASTATISTICS/Resources/GNIPC.pdf). Chinese and a South African company communications, tourism and personnel (Faurie, 2010). South Africa’s Women 20 Unemployment fell steadily from 2002 exchange sectors (Xinhua, 24 August Investment Portfolio Holdings and through 2007, but never dropped to 20 2010). limestone miner Continental Cement and per cent. By the first quarter of 2010, it the China-Africa Development Fund and 40 Xinhua News Agency. 2010. China, South again surpassed 25 per cent. With low Jidong Development Group entered into Africa upgrade relations to comprehen- rates of labour force participation and a a joint venture to build a R1,65 billion sive strategic partnership. Xinhua News large number of job seekers not formally cement manufacturing plant in Limpopo Agency, [online] 24 August. Available at counted among the unemployed, the province (SA.info, May 24, 2010). Tata http://news.xinhuanet.com/english2010/ unemployment figure is considered to be Motors South Africa, a joint venture be- china/2010-08/24/c_13460144.htm above 30 per cent and is most evident tween India’s Tata Motors and Tata Africa, [Accessed on 22 October 2012]. among black youth who face a rate opened a R100 million truck assembly 41 Gordhan, P., 2010. An emerging new exceeding 50 per cent (OECD, 2010). plant outside Pretoria in July 2011 (China world order. [Online]. Available at http:// 21 OECD. 2010. SA – economic survey of Daily, 15 Sept, 2011b). China’s Ganzhou www.aucegypt.edu/gapp/cairoreview/ South Africa 2010. [Online]. Available Qiandong Rare Earth Group also entered pages/articleDetails.aspx?aid=75 at http://www.oecd.org/docu- into a joint venture in July to build a rare- [Accessed on 22 October 2012]. ment/21/0,3343, en_2649_33733_456 earth processing plant in South Africa’s 42 Qobo, M., 2010. The BRIC pitfalls and 37781_1_1_1_1,00.html [Accessed on 22 Western Cape province with the Great South Africa’s place in the world. [Online]. October 2012]. Western Minerals Group of Canada, Available at http://www.saiia.org.za/ 22 Oxford Analytica. 2011. South Africa: which had bought out its South African great-powers-africa-opinion/the-bric- BRICS membership will not meet ambition. partner a few months earlier (Knowledge pitfalls-and-south-africa-s-place-in- Oxford Analytica Daily Brief Service. @ Wharton Today, 30 August 2011). the-world.html [Accessed on 22 October 23 Martins, V., 2011. 32 Battersby, J. and Lu, Y., 2011. South Africa: 2012]. More than just another BRIC in the wall. All 24 Ibid. 43 In 2009, of South Africa’s $6,57 billion in Africa, [online] 25 July. Available at http:// exports to China, most were comprised of 25 Chun, Z., 2011. South Africa’s ‘distinctive- allafrica.com/stories/201107261717. natural resources while its $9,45bn imports ness’ in BRICS. [Online]. Available at html?page=2 [Accessed on 22 October from China were value-added manufac- http://www.chinausfocus.com/foreign- 2012]. tured goods, according to South African policy/south-africa%E2%80%99s- 33 SouthAfrica.info. 2007. China buys into data (Anderlini, 2010). distinctiveness-in-brics/ [Accessed on 22 Standard Bank. [Online]. Available at October 2012]. 44 Anderlini, J., 2010. Pretoria de http://www.southafrica.info/business/in- fends China’s Africa policy. [Online]. 26 Ibid. vesting/stanbank-261007.htm [Accessed Available at http://www.ft.com/intl/ 27 Dubbelman, B., 2011. South Africa’s role in on 22 October 2012]. cms/s/0/302f88ca-af8a-11df-a172- BRICS: Implications and effects. Available 34 China Daily. 2011. South Africa’s role in 00144feabdc0.html [Accessed on 22 at http://us-cdn.creamermedia.co.za/ BRICS. China Daily, [online] 15 September. October 2012].

45 Daijiworld. 2011. India, South African hi/8113385.stm [Accessed on 22 textiles, footwear, and machinery and countries to ink trade pact soon. October 2012]. equipment (Terra Daily, 2 February 2011, Daijiworld, [online] 22 September. 57 Deutsche Bank. 2011. Is South Africa keep http://www.terradaily.com/reports/ Available at http://www.daijiworld.com/ ing pace with the BRIC’s increasing footprint Brazil_industry_losing_market_share_to_ news/news_disp.asp?n_id=116726 in sub-Saharan Africa? [Online]. Available China_group_999.html). [Accessed on 22 October 2012]. at https://www.dws-investments.com/EN/ 65 Over the last few years, India has imposed 46 Redvers, L., 2011. South Africa looks to docs/ research/SA_BRIC.pdf [Accessed anti-dumping duties on various Chinese crack India. Asia Times, [online] 22 July. on 22 October 2012]. imports such as gasoline, morpholine Available at http://www.atimes.com/ 58 Soko, M. and Qobo, M., 2011. Creating chemical imports, antibiotics, a Chinese atimes/South_Asia/MG22Df03.html more BRICs than walls. Mail and film, yarn, fabric, nylon tyre cord and [Accessed on 22 October 2012]. Guardian, [online] 7 January. Available at thionyl chloride, to name a few 47 Kahn, M. The fall of the wall, the rise of the http://mg.co.za/article/2011-01-07-cre- 66 Wheatley, A., 2011. China’s South– BRICS and the new scramble for Africa. ating-more-walls-than-brics [Accessed South trade dominance handcuffs Foresight, 13(3), pp. 38–49. on 22 October 2012]. BRICS. Reuters, [online] 11 April. Redvers, L., 2011. South Africa looks to 59 Wheatley, A., 2011. China’s South– Available at http://uk.reuters.com/ crack India. Asia Times, [online] 22 July. South trade dominance handcuffs article/2011/04/11/businesspro-us- Available at http://www.atimes.com/ BRICS. Reuters, [online] 11 April. brics-trade-idUKTRE73A3BA20110411 atimes/South_Asia/MG22Df03.html Available at http://uk.reuters.com/ [Accessed on 22 October 2012]. [Accessed on 22 October 2012]. article/2011/04/11/businesspro-us- 67 Martins, V., 2011. 48 Dubbelman, B., 2011. South Africa’s role in brics-trade-idUKTRE73A3BA20110411 68 Soko, M. and Qobo, M., 2011. [Accessed on 22 October 2012]. BRICS: Implications and effects. Available 69 Dubbelman, B., 2011. at http://us-cdn.creamermedia.co.za/ 60 South Africa has promoted signing a 70 Cropley, E., 2011. Cape-to-Cairo ‘Made assets/articles/attachments/34069_sa_ free-trade agreement with India and the in Africa’ bloc to boost trade. Reuters, role_in_bricsreduced.pdf [Accessed on Southern Africa Customs Union (SACU), [online] 16 June. Available at http:// 22 October 2012]. which includes Botswana, Lesotho, af.reuters.com/article/investingNews/id Namibia and Swaziland (Southern African 49 Redvers, L., 2011. AFJOE75F00920110616?pageNumber= Report, 1 September 2011). 50 Jog, S., 2010. British prospects for Indo- 1&virtualBrandChannel=0 [Accessed on South African investment, trade. Business 61 A preferential trade agreement (PTA) is 22 October 2012]. expected to be signed between India Standard, [online] 3 June. Available at 71 Freemantle, S. and Stevens, J., 2011. and South Africa soon according to the http://www.business-standard.com/ Economic strategy BRIC and Africa: Beyond Minister of State for Commerce and article/economy-policy/bright-prospects- the diplomatic applause: threats and op Industry in a bid to lower trade barriers for-indo-south-african-investment- portunities underlying South Africa’s BRIC and boost two-way trade – talks to trade-110060300086_1.html [Accessed invitation. Standard Bank. on 22 October, 2012]. conclude soon (Daijiworld, 22 September 2011). 72 Anderlini, J. 2010. Pretoria defends China’s 51 Ibid. Africa policy. [Online]. Available at http:// 62 Despite widespread speculation about a 52 Kahn, M. The fall of the wall, the rise of the www.ft.com/intl/cms/s/0/302f88ca- formal free-trade agreement, according BRICS and the new scramble for Africa. af8a-11df-a172-00144feabdc0.html to Trade and Industry Minister Rob Davies Foresight, 13(3), pp.38-49. [Accessed on 22 October 2012]. in 2010, South Africa is not pursuing a 53 Ncube, M., Lufumpa, C.L. and conventional free-trade agreement with 73 Van den Bosch, S., 2011. Vencatachellum, D., 2011. Brazil’s China (Langeni, 7 July 2010). 74 Ibid. economic engagement with Africa. [Online] 63 Data from Statistics SA indicate a fall in Available at http://www.afdb.org/ 75 Ibid. employment in the clothing, textile and fileadmin/uploads/afdb/Documents/ 76 Ibid. footwear industries from 206 947 in Publications/Brazil%27s_Economic_ January 2003 to 142 203 in June 2006 77 Makgetlaneng, S., 2011. SA’s BRIC Engagement_with_Africa_rev.pdf (representing a loss of 64 744 jobs). The strategy is politically strategic. Mail and [Accessed on 22 October 2012] decline comes as a result of a surge of Guardian, [online] 15 February. Available 54 Ibid. Chinese imports over the three years at http://mg.co.za/article/2011- 55 Klomegah, K.K., 2008. Chasing China in (Department of Transport n.d.). 02-15-sas-bric-strategy-is-politically- strategic [Accessed on 22 October 2012]. Africa. Inter Press Service News Agency, 64 Half of Brazil’s export firms battle against [online] 18 June. Available at http:// Chinese peers for business, and 67 per 78 Oxford Analytica. 2011. South Africa: ipsnews.net/news.asp?idnews=42851 cent of them lost market share in inter- BRICS membership will not meet ambition. [Accessed on 22 October 2012]. national competition with the Asian pow- Oxford Analytica Daily Brief Service. 56 Eke, S., 2009. Medvedev seeks closer erhouse, according to a Confederation 79 Davies, M., 2011. BRICS can grow to em Africa links. BBC News, [online] 23 June. of Industry (CNI)-conducted survey. The brace SADC region. [Online]. Available at Available at http://news.bbc.co.uk/2/ hardest-hit industries are electronics, http://www.businessday.co.za/articles/

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Content.aspx?id=140187 [Accessed on 91 Oxford Analytica. 2011. 102 China Daily. 2011. South Africa’s role in 22 October 2012]. BRICS. China Daily, [online] 15 September. 92 South Africa’s support for normalised Available at http://www.chinadaily.com. 80 Kahn, M. The fall of the wall, the rise of the nuclear trade with India has attracted cn/cndy/2011-09/15/content_13689717. BRICS and the new scramble for Africa. attention, a policy viewed as contrary to htm [Accessed on 22 October 2012]. Foresight, 13(3), pp. 38–49. the letter and the spirit of the Pelindaba 81 Amos, S. The role of South Africa in Treaty, establishing Africa as a nuclear- 103 The EU accounts for approximately 40 SADC regional integration: The making or weapons-free zone: http://mg.co.za/ per cent of its exports and 70 per cent braking [sic] of the organization. Journal article/2011-03-25-an-armchair-guide- of foreign direct investment (China Daily, of International Commerical Law and to-sas-foreign-policy-challenges. 15 Sept 2011b). Technology, 59(3), pp. 124–131. 93 South Africa tried to weaken the resolution, 104 African Development Bank, OECD 82 Ibid. but it did not understand UN protocol, Development Centre, United Nations Development Programme (UNDP) and 83 Ibid. dictating that if a country intervenes in the drafting of a resolution, it cannot vote United Nations Economic Commission for 84 The agreement was signed in 2004 and against it or abstain from voting. Russia Africa. African Economic Outlook 2011: was signed without consulting BLNS and China voted in favour. Focus on South Africa. (Botswana, Lesotho, Namibia, Swaziland) 105 China Daily. 2011. South Africa’s role in SACU partners – a disregard of the SACU 94 China and Russia also voted against the BRICS. China Daily, [online] 15 September. treaty stipulating that all such agreement resolution. Available at http://www.chinadaily.com. must be approved by SACU members. 95 In this instance, Russia and China vetoed cn/cndy/2011-09/15/content_13689717. It covers approximately 90 per cent of the resolution calling the deteriorating situ- htm [Accessed on 22 October 2012]. bilateral trade between the two partners. ation in Burma a serious risk to regional 85 Qobo, M and Soko, M., 2011 identify peace. 106 China Daily. 2011. South Africa’s role in several conflicting policies and interests BRICS. China Daily, [online] 15 September. 96 Habib, A., 2009. South Africa’s foreign Available at http://www.chinadaily.com. among the BRICS partnerships: economic policy: hegemonic aspirations, neoliberal competition between China and India, cn/cndy/2011-09/15/content_13689717. orientations and global transformation. htm [Accessed on 22 October 2012]. 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