BRICS time is now

Trudi Makhaya, Jacko Maree and Phumzile Langeni, who are President Cyril Ramaphosa special envoys on investment, at the session on South African Investment Opportunities during the BRICS Business Council meeting.

“History repeats itself” has become somewhat of a cliché. Yet the full quote, attributed to Karl Marx in his work ‘The Eighteenth Brumaire of Louis Napoleon’, is said to be: “history repeats itself; the first as tragedy, then as farce.” In this respect too, we may understand history as coming in waves with certain events triggering personalities, movements and narratives of thinking.

A decade after the start of the Great Depression our grandparents’ generation witnessed the outbreak of the Second World War. The depression started in the United States in 1929 and would carry on for four years. Worldwide the gross domestic product fell by approximately fifteen percent. It was the first great depression of a globalised economy. Eventually this hardship led to what we call today: ‘economic nationalism’. 

Despite these hardships and the rise of economic nationalism, national socialism in Germany and fascism in Italy and Japan was accompanied by growth and expansion in these economies. During the pre-war years, following the Great Depression, these three economies in particular sought to address the needs of their own people first and soon identified economic targets in their countries. Germany, the most explicit example, attacked Jews who had great influence on the local German economy. Yet even the initial response by some states during the subsequent war was isolationist. 

We are not quite sure when the Great Recession, sparked again in the United States in 2008/9, ended. However, what we do know is that 2018/19 will mark a decade since the beginning of that economic crash, the worst kind seen since the Great Depression.  We are also once again experiencing the emergence of economic nationalism, unilateralism and isolationism. In the aftermath of the Great Recession, we have seen migrants from countries of the south identified as the “other”; as were the Jews, Roma, and communists in the lead up to the Second World War.

Today, across the globe the results of many referenda and elections in the east and west indicate the emergence of similar dangerous trends. Feelings of crude, racist and xenophobic nationalism seem to be re-ignited, based on similar sentiments to “make the Aryan great again”, while a swelling in the wave of right-wing neo-conservative nationalism. And while there is doubt that a conventional world war will commence, the current crisis has inevitably led to unconventional and asymmetrical global wars through terror, including chemical and biological warfare, cyberattacks and trade. Trade is the pulse of the global economy and therefore in order to employ economic warfare it must be done through trade.  

It is within this global context that the Tenth BRICS Summit will take place in Johannesburg. As emerging economies in the global economy, Brazil, Russia, India, China and South Africa seek to address some of these global challenges currently at play. Although, BRICS first emerged as an economic bloc, or at least was touted as such by the Goldman Sachs economist Jim O’Neill who coined the term the ‘BRIC countries’, overtime it has inherently evolved into a cohesive political block as well. The BRICS bloc, South Africa becoming a member in 2011, has once again highlighted, as history has proven, that economics cannot be separated from politics. 

While the upcoming summit, the second hosted by South Africa, will focus on vaccines, the fourth industrial revolution, peace-keeping and issues of gender. It will also no doubt be looking at recent developments, challenges and tectonic shifts within the global economy and geopolitical space, seeking ways to mitigate its negative effects. Already the group is setting up an institutional framework that attempts to diminish any rapid volatile threats to national currencies in the wake of the Great Recession of 2008/9. Examples include piloting trade between these countries and others of the south in their own currencies.  

Second, the establishment of the New Development Bank, better known as the BRICS Bank, was established both to compliment and contest the hegemonic and monopolistic domination of the archaic Bretton Woods Institutions such as the World Bank and International Monetary Fund.  

What does all of this mean for the ‘ordinary’ South African and African?

During the Cold War era, China and India, played a leading role in the non-alignment movement. Apartheid South Africa on the other hand was an ally of the West being propped up by Washington, London and Berlin. In this regard, China and India have a long history in leading emerging economies to ensure their rightful place in geopolitics and the global economy. 

Even in China’s recent history, through the “opening-up” or “reform years” of the late seventies and early eighties they have shown the desire to be open rather than isolationist, multilateral rather than unilateral and seeking at all times, since the establishment of the People’s Republic, to preserve state sovereignty. Hence the principle of non-interference and a “win-win” orientation in relations between countries. These policies of China can be traced back to the famous Bandung Conference held in 1955 which was the first Afro-Asian conference.

Yet,  the US with its increased isolationist and unilateral ‘laager’ mentality has just imposed a 25% trade tariff on $34 billion worth of Chinese goods. Rightfully, China has reciprocated with similar measures. It is expected that this will be increased by a further $16 billion worth of goods over the next two weeks and then a further $200 billion and another $300 billion should China have the audacity to retaliate. 

China’s commerce ministry correctly commented that ‘’the US launched the largest trade war in economic history”.  The developing world it seems bears the brunt of an onslaught from the West through economic nationalism, isolationism, an unfair international trade order and tariff wars. It is therefore more important than ever at this current juncture for emerging economies to strike a balance between contestation and cooperation and work more closely together. 

However, out of every crisis comes opportunity. As Africans we must ‘’seize the moment’’ precipitated  by the crisis of isolationism in the West to create opportunities presented in other markets. It was the Greek philosopher, Plato, who said that necessity is the mother of invention. 

For example, one of the United States products that China has increased its tariffs on, in a reciprocal response to the US increase in trade tariffs on Chinese goods, is soybeans. It is estimated that China imports approximately 1 million tons of US soybeans per annum. In the recent wake of the US trade war with China and other economies, China is looking towards Brazil as an alternative supplier of soybeans. Yet, Brazil alone cannot meet this demand creating the space for the rest of the developing world to also benefit from this opportunity.

According to information supplied by the United States Department of Agriculture through their Global Agricultural Information Network, South Africa’s soybean industry has the capacity to produce a million tons of soybeans by 2020. Yet, according to local based GrainSA, currently only thirty percent of our production is exported and only to other African markets. 

The rest is for domestic consumption and correctly so because feeding our own must be a priority. There is not so much the lack of a market, in this instance for soybeans, albeit a primary industry product, but an extreme lack in capacity for production. South Africa is simply not producing enough soybeans to compete on an international scale. 

Another example is the Chinese market for pork and wine. Although our export in the wine industry has incrementally increased over the past 5 years there is a much bigger market to exploit now.  There is also a myriad of other products and markets affected by the trade and tariff wars between the US and China that we could penetrate. South Africa, Africa and the rest of the South must prepare itself to fill the vacuum and claim this space in supplying the Chinese market. 

Until now it has been mainly the historical few and already well off agricultural community in our country that has benefited from our BRICS relations in this sector. Our challenge however is to urgently create  the capacity for new entrants to benefit from the current conditions. Given our  youth bulge in Africa, we certainly do have the potential to do so by harnessing their energy and opening up the space for younger players. 

As long as South Africa, and by extension Africa, does not expand its economy, increase its productive capacity and innovative energy there will be no ‘’Carpe Diem – seizing the moment’’,  nor benefiting from the opportunities. We must urgently adjust our legislative and policy architecture and build the necessary infrastructure and systems as well as equipping our young people with the requisite resources and skills.  

Our people also require a paradigm shift wherein we realise that our market is no longer just our country and the continent but the world. Our young people must be able to become true “glocal” citizens; global and local at the same time. If not, history will indeed repeat itself and this time it will not be a tragedy but a farce.  

Zahir Amien is a political and social commentator and Wesley Seale is a PhD student in International Relations at Beiwai University, Beijing, China