 Ishac Diwan For their 15th annual meeting in South Africa, the main agenda item for the BRICS is their enlargement to new entrants – they now include five countries – Brazil, Russia, India, China, and South Africa. A popular joke goes by “nice bricks, but where is the mortar?” Perhaps that by growing, the group can get itself a better-defined agenda – in addition to a new name to replace an acronym put together by a British economist working at an American bank.
More than 22 countries small and large have applied to join the group – that will be competing with the G7 and G20 for global influence. The first announcement was about this. The other top agenda item of the Johannesburg meeting of August 22-24 is how to reduce the importance of the dollar as a global reserve currency. The economies of the BRICS are already larger than those of the G7 combined. But an attractive new currency can’t be created overnight, and the demise of the dollar “extravagant privilege” won’t disappear anytime soon. However, bilateral agreements for more trade involving national currencies instead of the dollar are growing fast. The incentives to do so have risen because of the dollar’s all-time strength, and the rise in the dollar-related interest rate. Abusing the dollar’s dominance to impose US unilaterally-led sanctions will speed up its ultimate demise. The BRICS group risks becoming China’s bloc, or worse, the “illiberal bloc” – that competes against the US and EU, and against the world’s democracies. But there are many forces against such clear-cut realignments; India, Argentina, or Brazil do not wish to embrace China’s dictatorial populism. Others – such as Saudi Arabia, the UAE, Turkey, or Egypt – seek a positioning between the two large blocs. In fact, for all these countries, the benefit of belonging to the rising group is to protect themselves from undue pressure to join the US or the China camps, by formalizing their non-alignment into a collective rock to which they can all dock their boat. Most of these countries have already refused to take sides on the Ukraine war, using the “not my war” argument. An enlargement would strengthen non-alignment, even though China is also militating for a larger group, hoping to increase the size of its global supporters. But this comes at a time when the ambition its belt-and-road initiative and its financial involvement abroad have been severely reduced. Its developing economic recession will diminish its global influence further. China retains a mighty global influence, but it is unlikely that its economic or political systems will become attractive enough to allow it to build a large global fan-club of countries willing to offend the US and EU for its sake. In fact, the mere creation of a non-aligned bloc is a victory for China, as it moves the world away from a unilateral US- dominance. As the group become more representative of a “Global South” it will find plenty of causes that unite - the question is what can be done collectively, besides affirming non-alignment. There is a pool of grievances. There is a long list of initiatives that meet joint interests. This includes the non-availability of Covid vaccines when they were urgently needed (“is an African life cheaper than one in rich countries?”), to the rise of food and fuel prices following the Ukraine war, to the current rise of global interest rates to deal with the G7 overspending during Covid, to the failing of the global safety net to help developing countries avoid falling into a developmental and a debt crisis. The rising effect of global warming, to which they have barely contributed, but whose negative impact hits mainly their populations, is turning unhappiness into anger. There are two other sources of rising discontent. De-globalization is making the project of income convergence through an export-led model less feasible. In addition, fast technological change is further eating into the potential comparative advantage of poor countries – their labor force – by pushing for robotization and digitalization, threatening countries with low levels of skills to fall behind hopelessly. This suggests several possible agendas for an enlarged Global South group: fighting together to reform the global development finance system; to work at increasing South-South trade; to bargain their entry into a global deal on the environment for concessions on adaptation finance, the transitory use of gas, support in developing green energy, and faster transfers of technology. Whether the group can hold the line to negotiate with one voice is an open question. Federating interests and voice could start continentally. Africa is poised to have a louder global voice, as the African Union becomes better organized, and a permanent seat on the G20 is already on the horizon. ASEAN has been a rather organized group for a while now, which has been reinforced as Indonesia headed the G20 more recently. Latin America and the Caribbean had a head start with the development of the Bridgetown Initiative, which includes many of the issues and joint causes listed above. By coming together, these disparate countries will also discover that there are many economic forces that divide – even when putting the governance-model and geo-political divisions aside. In particular, the interests of the middle- and low-income countries are not aligned on most of the core issues already mentioned. For example, the issue of how to allocate the additional concessional finance provided by the enlargement of the multilateral development banks - to support poverty reduction in the LICs, or the green agenda in the MICs, is already deeply divisive. Undoubtedly, the August 2023 BRICS meeting will be remembered for being that of its expansion. This will raise expectations for the emergence of an organized group of countries to represent the interests of the Global South on the global stage. In the 1960s, the Soviet Union managed to ultimately kill the non-aligned movement by hugging it too closely. Whether an enlargement of the BRICS will manage to avoid a deadly kiss from China, and its internal division – to make the Global South an effective counterpart to the established blocs of the new multipolar world remains to be seen. The Arabs will be represented in Johannesburg by the ambassadors of MBS and MBZ. Their goal is to be at an equal distance of all blocs to be in the best position to continue to sell oil as long as possible, even as the world decarbonizes. In contrast, the preparatory meeting of the non-aligned was organized by Nasser in Cairo in 1961 – the main topic was to support the decolonization movement. The contrast alone is a sign of how the times are changing… Comments are closed.
|