GRAY MAGUIRE: Brics as China in a sari is no replacement for the Bretton Woods institutions

In the about two weeks that have passed since the Russian arms trading allegations crash-landed in my media feed I have sat amid some of the most fascinating, but polarised, political discussions.

The one camp is of the opinion that risking the ire of the Nato alliance far outweighs any potential benefits that could accrue from support for the Brics alliance. The other camp acknowledges a historical debt towards the East (and Russia in particular) and is of the opinion that the Bretton Woods organisations are long overdue for their comeuppance from national proletariats over their imperialistic, neocolonialist ways.

Ever the pragmatist, my initial position was to eschew ideological camps in favour of hard numbers. The Nato camp’s total export value for SA last year was R715bn (the US was R178bn, while the EU and UK came to R537bn), whereas China was R188bn, India R90.3bn, Brazil R8.2bn and Russia R4.6bn, making a total of R291bn across Brics.

That is not a small difference. And given the trade regulation dynamics arising not only from the Africa Growth & Opportunity Act (Agoa) but also from the rollout of the EU Green Deal, in which we are exceptionally poorly placed, it does appear that we are skating on thin ice. 

Of greater concern, however, is what this choice of partners says about the nature of our democracy. When the Brics bloc was formed, all the member states were rapidly growing economies that were collectively projected by many economists to control most global trade in the future.

It seems the glue that binds this group together is a common penchant for human rights violations, autocracy, climate change inaction and an apparent competition to have the world’s highest inequality rate

With the US firmly positioned as the global reserve currency, Brics’ apologists believe its stated aim of issuing an alternative reserve currency to the dollar gives the alliance strategic merit. Nowadays this could not be further from the truth. Total reserves for all Brics currencies combined account for less than 5% of global volumes. The economies of SA, Brazil and Russia have all hit the skids.

Recent additions to the Brics’ New Development Bank member countries — the United Arab Emirates, Bangladesh and Egypt — did little to help matters. It seems the glue that binds this group is a common penchant for human rights violations, autocracy, climate change inaction and an apparent competition to have the world’s highest inequality rate.    

This raises the question of my left-leaning friends who say we owe a historical debt to the Russians. Do we really think that our growing alignment with Russia is due to a sense of a moral debt owed, or is it not more likely that the ANC would far rather support alliances with countries that engage in opaque deal-making and authoritarian decisions for more nefarious reasons? 

Already we are seeing statements to the effect that mineral resources & energy minister Gwede Mantashe intends to see Karpowerships connected to the grid by hook or by crook. Despite the lack of an extension to Koeberg’s operating licence, work is already under way to replace the facility’s steam generators. If the plan is to bring the nation to its knees until we acquiesce to whatever measures might give us respite from the failure of the state no matter the cost, it appears to be working.

But buyer beware. This alignment of morally dubious countries is little more than China in a sari, and we would do well to compare the Chinese lending track record with that of the Bretton Woods organisations before we start indebting ourselves for new economic “rescue” projects. A recent report led by the World Bank on China as an international lender of last resort reads that having spent almost $1-trillion on Belt & Road Initiative investments, China has needed to bail out 22 debtor countries to the tune of $240bn (up until 2021) at an average interest rate of 5%, as opposed to the IMF’s average of 2%. 

Best we think carefully before clutching at straws proffered from this quarter. 

• Maguire is carbon project manager at Climate Neutral Group SA. He writes in his personal capacity.