Information Bulletin of the BRICS Trade Union Forum
Issue 43.2019
2019.10.21 — 2019.10.27
International relations
Foreign policy in the context of BRICS
What does Bolsonaro's China visit mean for environmental cooperation? (Что означает визит Болсонаро в Китай для сотрудничества в области охраны окружающей среды?) / Brazil, October, 2019
Keywords: ecology, expert_opinion, cooperation
Author: Manuela Andreoni

Brazilian president Jair Bolsonaro begins his first visit to president Xi Jinping's China today, after a year of tension between the two countries.

Though Bolsonaro has expressed a preference for tighter relations with the US and concern over what he sees as China's 'predatory' approach to the Brazilian economy, the Asian country is still Brazil's biggest trading partner.

Yet in recent decades, the China-Brazil partnership has extended way beyond doing business. The two countries signed a number of treaties and cooperation agreements that lent more political weight to the developing world, both bilaterally and in fora such as the BRICS group, which also contains with Russia, India and South Africa, and in international climate negotiations.

Cooperation on the environment has become an important element of diplomatic relations. As the home of the largest part of the Amazon, Brazil was a natural leader on environmental issues. And China, in its struggle to respond to the human, social and economic costs of its environmental crisis, began to prioritise the issue.

Now, with Bolsonaro's Brazil dismantling environmental protections and the multilateral order fragmenting, we look at the history of cooperation on environment and its hope for the future.

Important agreements

Brazil and China began cooperating on space research in 1988. Ten years later, the China-Brazil Earth Resources Satellite, or CBERs, launched its first satellite.

Since its creation, the programme allowed Brazil to make great strides in monitoring deforestation — especially in the Amazon — via five satellites. The sixth will be launched by the end of the year.


the year the BASIC group of emerging economies formed within climate negotiations Twenty years later, in 2009, Brazil and China — along with South Africa and India — aligned in international climate negotiations and formed the BASIC group, which became an important forum to coordinate emerging economies' position in the global struggle to fight climate change.

Former environment minister Izabella Teixeira told Diálogo Chino that China and Brazil became more closely aligned in 2015, when the two countries signed a bilateral statement on climate change.

The New Development Bank, created by the BRICS group, also pledged to support sustainable development in member countries.

Have they worked?

CBERs satellites helped Brazilian environmental protection agencies curb deforestation and bring it to record-low levels in the early 2010's. However, today environmental agencies are reeling from budget cuts and the federal government is promoting an economic development model led by profit-seeking enterprises that is not consistent with environmental protection.

All the same, satellite data on deforestation has helped inform the public about the level of deforestation and it has responded with outrage to government inaction in enforcing environmental laws and regulations.

Brazil and China accepted they have responsibility too. This was an important change for the Paris Agreement to go forward

As for the BASIC group, it helped create consensus among developing nations that was crucial for getting the Paris Agreement on climate change over the line in 2015.

"The classic position by Brazil and China, developing countries, was that global warming was rich countries' fault," said Maurício Santoro, an international relations professor at the State University of Rio de Janeiro."Then Brazil and China accepted they have responsibility too. This was an important change for the Paris Agreement to go forward."

Meanwhile, the NDB has proven slow to act as a driver of 'green' growth and has yet to prove it's following its mission since the bank has refused to rule out investing in fossil fuels.

What can we expect from Bolsonaro's China visit?

While countries often use state visits to sign important agreements, it is unclear whether Bolsonaro and Xi have any on the table. Brazil's environmental minister Ricardo Salles will not travel to China, which makes it unlikely that the history of environmental cooperation will be strengthened.

"There is a lot of potential for cooperation," said former environmental minister Izabella Teixeira, who worked closely with China during her tenure, which ended in 2016. "But the Brazilian government's intentions and propositions in straightening bilateral relations on environmental issues aren't clear."

According to Teixeira, one of the main issues is the creation of a group to discuss environmental issues at the High-Level China–Brazil Cooperation and Concertation Commission, or Cosban, as it's known in Portuguese.

Cosban is the highest-level permanent mechanism between the Governments of Brazil and China and has sub-committees on environmentally sensitive sectors including agriculture, energy and mining. But there are no indications that it will meet on this occasion.

Teixeira says this doesn't mean certain sectors can't collaborate. For example, there are demands on China that it take a stronger stance on the impacts of its soy and beef supply chains in Brazil. Both have been tied to deforestation. China's largest food trading company Cofco has already shown willingness to cooperate on this issue.

However, as Bolsonaro's grip on power has strengthened and international indignation at the Amazon fires raged, China has officially retained a quiet stance of non-interference towards the country, downplaying links between cattle ranching and deforestation and declaring support for Brazil's efforts in tackling the blazes.

BRICS : Partnership for Peace and Prosperity (БРИКС: Партнерство во имя мира и процветания) / Russia, October, 2019
Keywords: expert_opinion, cooperation
Author: Nivedita Das Kundu

BRICS is an acronym that refers to five emerging economies: Brazil, Russia, India, China and South Africa, which all seem to be at a similar stage of development. The BRICS group demonstrates how geographically distant countries which face different social and economic challenges can become partners and convergence diplomatically in a way that changes the axis of international politics. BRICS' aim is to take this cooperation forward on the basis of openness, solidarity, mutual understanding and trust, and seeks to promote peace, security and development in a multi-polar, inter-dependent and increasingly complex globalising world. The BRICS group aims to remain engaged with the world community as the issues at BRICS summits address the challenges affecting people's well-being and in ensuring stability in a responsible and constructive manner.

Driven by their strong economic performance, two UN Security Council members and three vibrant democracies came together, to offer an alternative to the Western model of global governance. The economic rise of BRICS countries, particularly that of China and India, has made the world take notice of the group. BRICS members contend that their geo-economic rise is not reflected in geopolitics, as global governance is still dominated by the West. Hence, BRICS countries favour a reform of the UN Security Council and Bretton Wood institutions (World Bank and International Monetary Fund) to reflect the true potential of rising economies. These institutions, the countries contend, have become outdated and need to focus on an inclusive approach. Their reform process has been too slow, a sign of reluctance on the part of developed countries to deal with emerging economies on an equal footing.

Brazil will host the 11th BRICS summit as its chair on November 13-14 in the city of Brasilia. The leaders of the BRICS countries will meet in Itamaraty Palace. This will be the second such summit to occur in the Brazilian capital; the leaders of Brazil, Russia, India and China met there in 2010 before South Africa was included in the group officially in 2011, during a summit in the city of Sanya, China. The upcoming BRICS summit in Brazil offers a vital opportunity to assess the journey BRICS has taken in its first decade. The major themes are the better governance of the global economy and sustainable development or green economy issues. During the summit meetings, the leaders discuss collective measures to boost cooperation among themselves and take steps to jointly respond to common challenges. BRICS is considered as a serious transnational group that can play a key role in reforming the world management system and can contribute towards maintaining economic growth, peace and security. The main theme of the 11th BRICS Summit in Brasilia is "Economic Growth for an Innovative Future".

The leaders of the top five emerging economies are expected to discuss collective measures to boost cooperation amongst themselves and take steps to jointly respond to common challenges. BRICS has established its own bank, The New Development Bank (NDB) with initial authorised capital of $100 billion. In 2017-2019, NDB's operational strategy, the development of sustainable infrastructure, is central to its philosophy. BRICS has also established the BRICS Contingent Reserve Arrangement (CRA) to respond to any short term balance of payment crisis among the member economies. Unlike the World Bank and IMF (The International Monetary Fund), the NDB does not attach strings to the financial assistance it provides to countries which need it. All the members have an equal share and there is no veto power. The bank is not averse to working with other international organisations, which shows that it is not trying to rival the likes of the World Bank or IMF but intends to work together with them. All it wants is to reshape the norms on which global financial governance is based. It is an alternative to the Atlantic system of global financial architecture.

The five countries hope to double the volume of intra-BRICS trade to $500bn by 2020. The world needs better economic structures, and BRICS has become a symbol of the shift in global economic power away from the developed economies toward the developing world. It is expected that the economic potential of Brazil, Russia, India, China and South Africa is such that they could become among the five most dominant economies by the year 2050. South Africa aside, they are the largest economies outside the OECD (Organisation for Economic Co-operation and Development). Although BRICS is still a young group, the size, power and growing global influence of its members have made it more attractive. Although coordinating policy at the level of BRICS will not be easy, given that the political interests of the BRICS members clash at various levels, this group could be a channel for resolving many pressing global political and economic concerns. One of the biggest obstacles standing in the way of BRICS development and growth is environmental degradation. Another significant cause of concern for BRICS is that a substantial number of poor people live in these countries, so along with economic growth, anti-poverty programmes are also needed, because poverty prevents rapid growth.

The global order is in flux, as Western liberal free-market ideas are now being challenged amid a rising tide of nationalism and protectionism. In such uncertain times, a vacuum could develop in the global order, where BRICS would become a critical venue for addressing international concerns. New ideas that reflect demands for equality and a just global order need a new lease on life. In the new global order, ideas from the global south should find a reasonable forum for expression, and BRICS would serve that purpose. The BRICS group tries to work closely to ensure regional peace and stability and create favourable conditions for regional development. BRICS countries try to promote cooperation and bring more benefits to the people. BRICS does not include any Western countries , so within the BRICS framework, discussions about the problems and prospects that commonly face the developing world can take place without Western influence or interference. The views discussed during the BRICS summits are more non-West than anti-West. BRICS summits determine the areas of future cooperation and try to develop a joint position on political and economic issues and concerns, to coordinate accordingly their positions in order to prepare themselves for further discussions. The BRICS countries have great prospects for cooperation in various fields, including education, natural resources, technology, and agriculture, and can draft plans for work in spheres.

Africa: The Sochi Summit and the Pride of Africa (Африка: саммит в Сочи и гордость Африки) / South Africa, October, 2019
Keywords: top_level_meeting, expert_opinion, political_issues
South Africa

After nearly three decades of extremely low political, economic and cultural engagement, Russia is indeed returning to Africa. For obvious reasons, Russia's relations with Africa turned extremely worse as some diplomatic representations were unexpectedly cut, all cultural centers closed, and many projects were suspended. Of course, relations with many foreign countries have faded into the background compared with the challenges the country had to deal with in order to preserve its statehood.

Understandably, Russia has had to struggle with its post-Soviet internal and external problems especially during the first decade, from 1991 till 2000, which has been described by policy experts as the "Lost Decade on Africa".

Still the second decade, 2000 to 2010, saw the reawakening with decades among the Kremlin, Government officials and academic researchers debated consistently whether "Russia needs Africa or Africa needs Russia" while African leaders were already turned towards Asian and the Gulf regions especially China and often asked why wake up the "Sleeping Giant Bear". China became the best development suitor in Africa.

During this period, Russia seems to have attained relative political and economic stability. "As we regained our statehood and control over the country, and the economy and the social sphere began to develop, Russian businesses began to look at promising projects abroad, and we began to return to Africa," noted Foreign Minister Sergey Lavrov early September when he addressed students and staff of Moscow State Institute for International Relations.

This process has been ongoing for the past 15 years. The return is now taking the form of resuming a very close political dialogue, which has always been at a strategic and friendly level, and now moving to a vigorous economic cooperation.

To reflect and consolidate these trends and in order to draw up plans for expanding consolidated partnerships with the African countries, President Putin initiated the Russia-Africa Summit last year during the BRICS summit in Johannesburg. The initiative was strongly supported. This October, it will be implemented under the co-chairmanship of the heads of Russia and Egypt, since this year Egypt is heading the African Union.

Further, from my research and monitoring, it is interesting to recall here that during the BRICS summit in Durban, on March 26-27, 2013, BRICS countries (Brazil, Russia, India, China and South Africa) discussed, among other topics, "BRICS and Africa: Partnership for Development, Integration and Industrialization."

The BRICS membership gives an additional competitive advantage. Firstly, none of the members of this association is tainted with a colonial past on the African continent, and second, the BRICS member countries as a matter of principle do not interfere in the internal affairs of African countries. None of the BRICS member countries spread democracy in Africa by force or impose their values with the help of expeditionary corps and air strikes.

The U.S. and the European Union (EU) monopoly in African countries is steadily coming to an end, as new players have come to the African continent, namely the BRICS countries. Russia is now the new force. Russia's renewed interest in Africa is due to a desire to restore its previous influence and to build allies as it experiences growing criticism by Western countries.

During my long years of research has shown me that Africa is a huge continent that still requires economic development. Its active demographic growth and abundance of natural resources are creating conditions for the emergence of probably the world's biggest market in the next few decades.

Today, Africa moves towards raising its social, economic, scientific and technological development, and is playing a significant role in international affairs. African states are strengthening mutually beneficial integration processes within the African Union (AU) and other regional and sub regional organizations across the continent.

Furthermore, African leaders keep in mind other key questions such as rising unemployment, healthcare problems and poor infrastructure development. That is, they now focus on measures toward realizing the Sustainable Development Goals (SDGs).

So, in the contemporary period, Russia and Africa have to, both at a bilateral level and in various multilateral formats, take significant new steps forward in new joint projects in extractive industries, agriculture, healthcare, and education. Besides, there are aspects of the diplomacy that really need focus, for example cultural and social spheres as well as the use of soft power. Indeed, the forthcoming Russia-Africa summit in Sochi on October 23-24 should lay the necessary foundation for improving all these for a stronger partnership.

Quite recently, Foreign Affairs Minister Lavrov assertively acknowledged "Africa is one of our priorities. Our political ties in particular are developing dynamically. But economic cooperation is not as far advanced as our political ties. We believe that we should promote joint activity in order to make broader use of the huge potential of Russian-African trade and investment cooperation."

Political dialogue: Russia has intensified promoting political dialogue, including the exchange of visits at the top levels. Interaction between foreign ministries is expanding. Last year, 12 African foreign ministers visited Russia. According to my calculation, Sergey Lavrov and his deputy Minister, Mikhail Bogdanov, have held talks with nearly 100 African politicians including ministers, deputies between January and September 2019. Bogdanov has interacted with all African ambassadors in Moscow.

Lavrov conducted bilateral dialogue with African countries at the UN in New York, between September 24 and 30, 2019. Lavrov held talks with Foreign Minister of Algeria SabriBoukadoum, Foreign Minister of Morocco Nasser Bourita and Prime Minister of Sudan AbdallahHamdouk among others.

During their conversation on the sidelines of the 74th Session of the UN General Assembly, all the sides discussed matters concerning the further expansion of multifaceted partnership, foreign policy collaboration in regional and international affairs.

With other questions such as the practice of democracy, Russia does support whatever regime is in power. While this makes its policy predictable, it does not encourage good governance and democratic practices in those countries that are severely challenged in these areas. Many other countries follow this practice and even countries like the United States, which often do speak out forcefully on behalf of good governance, are not always consistent.

Economic and investment cooperation: Africa truly is a continent of new opportunities and there is huge potential here for developing economic ties. Many see Africa's growth primarily not because of aid, it is because of businesses and entrepreneurship, consistent efforts at creating wealth and employment. Africa in the 21st century does not need charity but wants to be an economic partner. African countries are not lacking the resources to boost the relationship, but the will power has always been put on hold or totally ignored.

Russia has shown strength in Africa in niche sectors such as nuclear power development, launching African satellites, and constructing energy and mining projects. It has been seeking to exploit conventional gas and oil fields in Africa; part of its long-term energy strategy is to use Russian companies to create new streams of energy supply. With regard to other economic areas, it may have to identify more sectors like this rather than compete head-to-head in a wide range of sectors with European Union countries, China, the United States, India, and others.

But U.S. President Donald Trump's administration said recently that "Russia has bolstered its influence with increased military cooperation including donations of arms, with which it has gained access to markets and mineral extraction rights. With minimal investment, Russia leverages private military contracts, such as the Wagner Group, and in return receives political and economic influence beneficial to them."

While Russians are aware of the equal competitive conditions in the continent, Africans on the other hand view Russia as another fairly large trading partner and, probably a stabilizing and balancing factor to other foreign players. In terms of stringency of strategic outlook and activeness on economic engagement, the country is seriously lagging behind China, U.S., EU, the Gulf States, India and Brazil.

Trade: Russian aid, trade, and investment in Africa, especially Sub-Saharan Africa, are modest. Russian exports to Africa have been growing modestly and reached $18.5 billion in 2017. Russian imports from Africa have been flat and totaled only $2.1 billion in 2017. This was well below Turkey's trade with Africa in 2017.

Russian trade is heavily concentrated in North Africa, especially with Egypt. Noticeably, Russia's relationship with North Africa is more significant. Nevertheless, Russia apparently wants to maximize the business relationship rather than the aid relationship. The problem is that Africa has little that Russia wants to buy.

It is, however, necessary to raise trade and economic ties to a high level of political cooperation. Russia and Africa have to show not only an exceptional commitment to long-term cooperation but also readiness for large-scale investments in the African markets taking into account possible risks and high competition.

Equally important are African businesspeople who are looking to work on the Russian market. Definitely, time is needed to solve all these issues including identifying and removing obstacles to mutual bilateral trade and investment.

Weapons and arms diplomacy: After the collapse of the Soviet era, Africa owed US$20 billion, later written off. This debt was due to weapon and arms delivery to Soviet allies including Ethiopia, Angola, Zimbabwe, Mozambique and a few other African countries. Now, Russia is the largest seller of arms to Africa and is willing to sell to any country. This gives it a certain advantage as many Western countries prohibit arms sales to a few countries.

More recently, Russia has made significant arms deals with Angola and Algeria. Egypt, Tanzania, Somalia, Mali, Sudan and Libya have also bought arms from Russia. The Russians also provide military training and support.

In Africa, Russia seeks to guarantee security. In the classical sense, security guarantees imply something different. Russia has very warm, historically developed relations since their decolonization. This forms the theme for the Sochi summit: "For Peace, Security, and Development" which organizers explained would serve as the foundation of the final joint declaration.

Soft power interplay: Experts and members of the Valdai Discussion Club noted that soft power has never been a strong side of Russian policy in the post-Soviet era. Federation Council and State Duma, both houses of legislators, enacted a law that banned foreign NGOs from operating in the Russian Federation. As a result, African NGOs that could promote people-to-people diplomacy and support cultural initiatives as well to push for good image, is non-existent.

On education and culture. Simply cultural cooperation could be described as catastrophic. With education, Russia now offers a few state scholarships. Official figures from the Ministry of Foreign Affairs pegged it at 15,000 students, only one-third of this receives Russian grants. The remaining two-thirds are fee-paying clients. The Ministry of Higher Education told me last month during interview discussions that there are nearly 21,000 African students while some in the far regions are still undocumented. This also means that African elite and the middle class pay approximately US$75 million annually to Russian educational institutions. Average tuition is US$5,000 per year.

Over the years, one of the key challenges and problems facing Russian companies and investors has been insufficient knowledge of the economic potential, on the part of Russian entrepreneurs, the needs and business opportunities of the African region. Africa needs broader coverage in Russian media. Leading Russian media agencies should release more topical news items and quality analytical articles about the continent in order to adequately collaborate with African partners and attract Russian business to Africa. The media can, and indeed must be a decisive factor in building effective ties.

After several years of consistently constructive criticisms, Russian authorities have ignored media cooperation. Russia could use its media resources available to support its foreign policy, promote its positive image, disseminate useful information about its current achievements and emerging economic opportunities especially for the African public.

Russian media resources here, which are largely not prominent in Africa, include RossiyaSevogdnya (RIA Novosti, Voice of Russia, Sputnik News and Russia Today), Itar-Tass News Agency and Interfax Information Service. Besides, the Ministry of Foreign Affairs could use its accreditation opportunities to allow African media to work in Russia. While the Foreign Ministry has accredited foreign media from Latin America, the United States, Europe and Asian countries, none came from sub-Saharan Africa. Instead of prioritizing media cooperation with Africa, high-ranking Russian officials most often talk about the spread of anti-Russian propaganda by western and European media in Africa.

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Professor Vladimir Shubin, Deputy Director of the Institute for African Studies under the Russian Academy of Sciences, reiterated: "Russia is not doing enough to communicate to the broad public, particularly in Africa, true information about its domestic and foreign policies as well as the accomplishments about Russian culture, the economy, science and technology in order to form a positive perception of Russia abroad and a friendly attitude towards it as stated by the new Concept of the Foreign Policy."

Russia-Africa Summit: Russia holds its first summit in October. Through this, Russia and Africa aim jointly at advancing relations to a fundamentally new level and a wider dimension. Of course, Africa is not fully satisfied with Russia due to its "diplomatic niceties" and largely unfulfilled pledges and promises. Russia already has a plethora of post-Soviet bilateral agreements that it is now implementing, with some degree of limitations, in various African countries. It's clear that Russia might not make any public financial commitment as many foreign countries have done over the years. But Russia needs to demonstrate that it has a plan to engage Africa in a significantly greater way than it has in recent years.

According to my investigations, Russia would sign 23 new bilateral agreements with a number of African countries and issue a joint declaration that would lay down a comprehensive strategic roadmap for future Russia-African relations.

Prime Minister Dmitry Medvedev, while addressing the Russia-Africa Economic forum in July also added his voice for strengthening cooperation in all fronts. "We must take advantage of all things without fail. It is also important that we implement as many projects as possible, that encompass new venues and, of course, new countries," he said.

Medvedev stressed: "It is important to have a sincere desire. Russia and African countries now have this sincere desire. We simply need to know each other better and be more open to one another. I am sure all of us will succeed if we work this way. Even if some things seem impossible, this situation persists only until it has been accomplished. It was Nelson Mandela who made this absolutely true statement."

In July, President Vladimir Putin took part on third day of the International Parliamentarian Forum that also brought African legislators, emphasized that "the modern world needs an open and free exchange of views, confidence building and search for mutual understanding".

Indeed, judging from the above discussions about the changing geopolitical relations, after the first Russia-Africa Summit, there has to be a well-functioning system and mutual willingness in the spirit of reciprocity to achieve a more practical and comprehensive results from the new relations between Russia and Africa.

*KesterKennKlomegah is an independent researcher and policy consultant on African affairs and Brics. He is the author of the Geopolitical Handbook titled "Putin's African Dream and The New Dawn: Challenges and Emerging Opportunities" devoted to the first Russia-Africa Summit 2019.
Africa must avoid being recolonised (Африка должна избегать реколонизации) / South Africa, October, 2019
Keywords: expert_opinion, political_issues
South Africa

Could we as Africans, if we have any self-respect, stop questioning the motive of China, the US, London, the EU; yes, and Russia! The same goes for those warning Africans against the colonial designs of BRICS countries; just when did they realise that colonialism was so wrong? The always-down-for-a-party African politicians took their aimless foreign relations to the next level this week: Russian Roulette! Did they not read about what the Russians possibly did to Hillary Clinton's presidential ambitions?

Whenever a foreign power invites African politicians to a summit (about Africa) they are guaranteed a full house. Our "wabenzi" are forever eager to mingle with fellow Africans - to others - at a venue far from the realities of their own countries. It does not matter if their doctors or teachers are on strike for better pay; or if their electorate cannot trust the water coming out of their taps. The inaugural Russia-Africa Summit in Sochi was opened by President Vladimir Putin.

"We currently export to Africa $25 billion worth of food - which is more than we export in arms, at $15bn. In the next four to five years I think we should be able to double this trade," Putin was quoted to have said.

China was the first BRICS country in 2000 to set up the Forum for China-Africa Co-operation.

Japan had already in 1993 launched the Tokyo International Conference of African Development to promote "Africa's development, peace and security, through the strengthening of relations in multilateral co-operation".

In the same year, a membership-based Corporate Council on Africa, to boost business and investment between the US and the nations of Africa, came into being. Then the World Economic Forum Africa was born in 2006, followed by the inauguration of the India-Africa Forum Summit in 2008. Of course, the Commonwealth (since 1931) and La Francophonie (1970) were in place already to keep the bond with Africa in check.

The real deal which sliced Africa's fortune among everyone else other than Africans, however, had been clinched in Germany between November 1884 and February 1885. The occasion was the Berlin Conference where colonial powers helped themselves to their respective coveted piece of Africa by drawing the borders that keep Africans divided to date. Therefore, let us please not be surprised that every other nationality in the world has a plan for and about Africa, except Africa itself.

Granted, we have the AU and its Agenda 2063; but there is no doubt its share of the diary entries of an average African head of state or minister remains far less than what goes to the goings-on beyond the shores of Africa.

Putin was bound to reassure the 40-plus African presidents that his planned co-operation framework with Africa was not based on conditionalities or the intent to influence the continent's politics. What else can a suitor say, especially one that arrives so late on the scene?

Instead of asking what Russia or China is looking for in Africa, we ought to promise our children that no one will colonise us again because we are implementing a pro-Africa plan to turn our fortunes around; otherwise, at this rate Syria will soon colonise us.

* Victor Kgomoeswana is author of Africa is Open for Business, media commentator and public speaker on African business affairs.

** The views expressed here are not necessarily those of Independent Media.
Russia, South Africa to jointly create weapons, military equipment (Россия и ЮАР совместно создают оружие, военную технику) / Russia, October, 2019
Keywords: cooperation, top_level_meeting

MOSCOW, October 24. /TASS/. Russia and South Africa plan to work together to develop and manufacture weapons and military equipment, Director of the Russian Federal Service for Military-Technical Cooperation Dmitry Shugayev said on Thursday.

"There are some promising cooperation projects related to the joint development and manufacture of weapons and military equipment both for our countries' national armed forces and in the interests of third countries," he told reporters.

Shugayev added that South Africa had the most developed military-industrial complex in Africa, and Russia was interested in cooperating with it, taking into account the level of bilateral relations and cooperation within the BRICS group.

Head of the Russian state arms dealer Rosoboronexport Alexander Mikheev earlier said that Russia's African partners accounted for about one-third of the company's order portfolio - over $14 bln (the total order portfolio is $55 bln).

On October 23-24, the resort city of Sochi is hosting the Russia-Africa Summit, co-chaired by Russian President Vladimir Putin and Egypt's head of state Abdel Fattah al-Sisi. The leaders of all 54 African countries have been invited to come. Eight major African integration associations and organizations are also involved in the event. On the summit's sidelines, an economic forum is being held, which is attended by the continent's heads of state, representatives of the business community and government agencies. TASS is the official photo host agency of the summit and economic forum.
President Ramaphosa concludes Visit to First Russia-Africa Summit (Президент Рамафоса завершил визит на первый российско-африканский саммит) / South Africa, October, 2019
Keywords: top_level_meeting, cyril_ramaphosa
South Africa

President Cyril Ramaphosa concluded his working visit to the Russian Federation where he attended the inaugural Russia-Africa Summit and characterised it as a meaningful engagement that exceeded his expectation.

The Summit, that was attended by more than forty African leaders, from 23 – 24 October 2019 in Sochi, aimed to intensify and enhance Russia's cooperation with African countries at bilateral and multilateral levels.

The forum also aimed to forge closer collaboration on regional and international issues of common interest, raise strategic dialogue between Russia and African countries to a qualitatively higher level, and contribute to peace, security and sustainable development on the African continent.

President Ramaphosa commended Russia for the support it provided to African countries during the struggle against colonialism and apartheid and likened the Russia-Africa forum to a second wave of support by Russia towards the economic developmental agenda of Africa.

In this regard President Ramaphosa said that he was encouraged by engagement with Russia which is based on mutual respect and that countries will engage as equals in dealing with their challenges and developmental issues.

"This has been a successful Summit. It started off with the business sector from various countries in Africa interacting with the Russian business sector in an exchange that was most productive", said President Ramaphosa.

"The businesses that came from South Africa spanned a number of sectors of the economy, and their engagement with Russian businesses in mining and Information Communication Technology (ICT) and Oil extraction amongst others were quite meaningful", continued President Ramaphosa.

The Summit was framed around three thematic pillars: "Forging Economic Ties", "Creating Joint Projects", and "Collaborating in the Humanitarian and Social Sector".

On the margins of the Summit, President Ramaphosa held bilateral meetings with Presidents Vladimir Putin of the Russian Federation, HE Paul Kagame of the Republic of Rwanda, HE Filipe Nyusi of the Republic of Mozambique, and HE Teodoro Obiang Nguema Mbasogo of the Republic of Equatorial Guinea.

President Ramaphosa also met with His Majesty King Mswati III of the Kingdom of eSwatini and President Emmerson Mnangagwa of the Republic of Zimbabwe, President Mohamed Ould Ghazouani of the Islamic Republic of Mauritania and the Prime Minister of the United Republic of Tanzania HE Kassim Majaliwa.

President Ramaphosa was accompanied by the Ministers of International Relations and Cooperation, Dr Naledi Pandor, Public Enterprise Mr Pravin Gordhan, State Security, Ms Ayanda Dlodlo and Communications and Digital Technologies, Ms Stella Ndabeni-Abrahams.
Friends in Need: Whither the Russia-India Strategic Partnership? (Друзья в беде: куда идет российско-индийское стратегическое партнерство?) / Russia, October, 2019
Keywords: cooperation, vladimir_putin, narendra_modi, expert_opinion

This paper explores the latest developments in key spheres of the Russia-India relationship in order to identify the state of bilateral ties at a time when South Asia has turned into an area of geopolitical contest of both global and regional powers.

While preserving some elements of "old friendship", current Russia-India cooperation lacks any significant engagement in trade and economy, scientific and cultural exchanges, while their political outlook toward the regional processes in South Asia is not in full congruence. The strategic partnership between the two countries boils down to their collaboration in two major spheres: defense and energy. Yet, despite resembling a purely sectoral cooperation, the bilateral ties have been quite resistant to an array of internal and external challenges: from the instability of the 1990s to the US sanctions against Russia that emerged as a problem for both Moscow and New Delhi in 2018.

Dr. Aleksei Zakharov is a Research Fellow at the Institute of Oriental Studies of the Russian Academy of Sciences.
Bolsonaro's visit to strengthen ties (Визит Болсонаро для укрепления связей) / China, October, 2019
Keywords: top_level_meeting, cooperation, jair_bolsonaro, xi_jinping

Jair Bolsonaro's remarks during his presidential campaign last year raised some eyebrows in China. But once he was sworn in as Brazil's President, the Brazilian government began signalling that it was keen to improve relations with China.

These signals came thanks to the revitalization of the Sino-Brazilian High-Level Commission (Cosban). After Brazilian Vice-President Hamilton Mourão met with Chinese President Xi Jinping in Beijing in May, the message of a renewed interest in strengthening bilateral relations became clearer. And Cosban, observers say, will play an important role in deepening bilateral ties in a number of areas.

Now, Bolsonaro himself is on a three-day visit to China from Thursday as part of a series of visits to countries in Asia and the Middle East. The underlying message is, of course, one of renewing the Brazilian diplomatic tradition as a "global trader", and welcoming more foreign investment.

Bolsonaro's visit to China comes at a moment of peculiar relationship between China and the United States. This has caused global concerns about the consequences of an increasing rise in bilateral trade (and other) barriers. In fact, a number of economies are suffering the negative consequences of the global economic uncertainty stemming from the present situation.

Brazil is a long-standing partner of the US given its geographical proximity to the US, the opportunities offered by the huge US market and the sheer convergence of commitments to the multilateral institutional system over 70-odd years.

The incumbent Brazilian government has on several occasions emphasized it is committed to openning up the economy and building a friendly environment for business. It has already initiated a number of initiatives in this direction, which tantamounts to a condemnation of trade protectionism. It would, therefore, be no surprise if Presidents Xi and Bolsonaro issued a joint statement condemning the growing protectionist trend.

Brazil and China are, of course, partners in such a potentially important initiative as BRICS. A number of measures have been taken to promote the five-nation group, but mechanisms should be established to intensify intra-BRICS cooperation in a number of areas.

An increasingly important set of issues has to do with combating climate change. China is a leader when it comes to reducing pollution and generating clean energy-solar and wind energy in particular. Brazil, on its part, has one of the cleanest energy matrix, but of late it has been accused of, among other things, not doing enough to control the fires in the Amazon region.

In this context, China and Brazil have a lot to gain from project financing and sharing experiences and by taking joint initiatives, and/or making joint commitments to BRICS. The BRICS New Development Bank can play a major role in this regard.

In 1823, the US introduced the Monroe Doctrine, which stated further efforts of European powers to colonize land or interfere with countries in North and South America would be viewed as acts of aggression, requiring US intervention. In effect, the doctrine "reserved space" for the US and asserted the US would act against any interference by European powers south of Rio Grande in order to maintain its dominance in the region.

This approach has been recently considered by some analysts given the sharp increase in Chinese trade with and investment in the region. Fortunately, the US administration has not made any such move so far, which is good news.

From the Brazilian perspective, it would be difficult to choose between the US and any other major economy-whether it is on the bilateral level or in multilateral forums-as it would go against Brazil's traditional "global trader" position and prove quite costly in diplomatic terms.

On the other hand, China has become Brazil's most important trading partner and made huge investments in the country.

But Brazil does not want its economy to be "US-dependent" or "China-dependent" in the future. Traditionally, Brazil has sought trade relations with every potential partner, and welcomed investment from any country that meets the basic requirements of the local economy.

Therefore, Bolsonaro's visit to China will help consolidate a relationship that has been gaining importance in recent years and will have no major implications for relations between Brazil and other countries.

The author is undersecretary for foreign investment, Ministry of Economy, Brazil. The views are personal and don't necessarily represent those of the Brazilian Ministry of Economy or China Daily.

Watch Russia's Tu-160 Make Extremely Low Flyby Amid Historic First-Ever Touchdown in Africa (Смотрите, как российский Ту-160 делает чрезвычайно низкий полет на фоне исторического первого в истории приземления в Африке) / Russia, October, 2019
Keywords: investments, trade_relations

Russia deployed a pair of Tu-160 'White Swan' strategic bombers and two support aircraft to South Africa as part of an effort to improve bilateral military cooperation between the two BRICS powers.

A flurry of videos and photos has emerged showing the arrival of Russia's Tu-160 strategic bombers at Air Force Base Waterkloof in South Africa's Pretoria.

The materials included footage of an extremely low flyby of a Tu-160, accompanied by to South African Air Force Hawk Mk120 trainer jets, as it approached to land on Wednesday.

News24, a major South African news hub, posted more footage of the bomber taxiing on the runway after landing.

Later, the Twitter account of South Africa's National Defence Force published photos of the event, showing Russian airmen being greeted by their South African counterparts.

Along with the pair of Tu-160s, the Russian contingent included a Il-62 and an An-124 support plane.

In a statement about the visit earlier this week, Russia's Defence Ministry indicated that the stopover was aimed at improving "combat training of the flight personnel of the two countries."

The Tupolev Tu-160 (NATO designation 'Blackjack') is a supersonic, nuclear-capable strategic bomber developed in the 1970s and introduced in 1987, and is currently the world's largest and heaviest supersonic aircraft in operation.

Before Wednesday's landing, one of the planes was filmed refueling in mid-air on its way to South Africa. They spent a total of over 13 hours in the air, and traveled over 11,000 km during the journey.

The South African mission is the first-ever deployment of a Tu-160 on the African continent. Although Moscow had several allies in southern Africa during the Cold War, including Angola and Mozambique, it did not risk deploying the aircraft there amid tensions with Apartheid South Africa, which was then a Soviet adversary. In the 1990s, after the end of Apartheid, relations between Russia and South Africa gradually improved, with first post-Apartheid President Nelson Mandela expressing his gratitude for the "solidarity of the Russian people in the South African fight against apartheid and for freedom" during the Cold War. Ties between the two nations deepened further as South Africa joined the BRICS group of nations in 2010, with the two countries expanding energy and strategic cooperation since then.

In a separate development, Wednesday saw the start of the first-ever Russia-Africa summit and business forum in Sochi, southern Russia, with as many as 43 leaders from the continent's 54 nations confirming their attendance. The forum is aimed at deepening political, economic and trade cooperation between Moscow and the countries of the continent.
Commentary: Bolsonaro's visit to chart new course in China-Brazil relations (Комментарий: визит Болсонаро наметит новый курс в китайско-бразильских отношениях) / China, October, 2019
Keywords: jair_bolsonaro, cooperation, summit

As the China-Brazil relationship continues to grow, Brazilian President Jair Messias Bolsonaro's visit to China will inject new vitality into bilateral cooperation and advance joint efforts in improving global governance.

The visit comes as the two countries are celebrating the 45th anniversary of the establishment of their diplomatic ties.

"Condition of good friends, condition of old wine," says a Latin American proverb. In retrospect, China and Brazil, though separated by oceans and continents, have never stopped their friendly exchanges.

More than 200 years ago, the first Chinese tea growers traveled to Brazil to plant tea and teach their skills, and some 90 years later, a Chinese pavilion was built in Brazil's Tijuca National Park to mark the sincere friendship between the two countries.

In 1993, Brazil became the first country to establish a strategic partnership with China, and in 2012 that partnership was upgraded to a comprehensive strategic one.

Such a partnership has grown more solid and mature today. This year has witnessed more frequent high-level exchanges between the two countries. In August, Xi and Bolsonaro exchanged congratulatory messages on the 45th anniversary of diplomatic ties.

China has been Brazil's largest trading partner and the main destination country for Brazilian exports for a decade, and has become Brazil's largest source of foreign investment. In 2018, bilateral trade hit a record 100 billion U.S. dollars, official data showed.

The two countries are not only deepening traditional cooperation in such areas as agriculture, electricity, mining and infrastructure, but also fostering new areas of growth in technological innovation and the digital economy.

Cultural and people-to-people exchanges have also been flourishing, for example, in sports, medicine and the arts. Ten Confucius Institutes have been established in Brazil, and the Latin American country has set up a national festival to celebrate every August the arrival of Chinese immigrants to Brazil.

The deepening China-Brazil partnership has transcended the bilateral scope, and serves as a positive force for promoting peace and prosperity in the region and across the world.

The China-Brazil relationship has set a model for the China-Latin America cooperation and South-South cooperation. The two countries have also worked together to uphold multilateralism, defend international norms, and address common global challenges such as climate change.

Looking into the future, in a world where uncertainties prevail, the two major developing countries have every good reason to join forces and work even closer together.

With the 11th BRICS summit to be held next month in Brasilia, the two countries should take the opportunity to push forward BRICS cooperation, especially in areas to be focused at the summit, ranging from science and technology innovation, digital economy, fighting cross-border crimes and funding to boost productivity.

With Bolsonaro's visit to China, the two countries are set to embark on a new journey to further develop their partnership as well as the China-Latin America cooperation, and help render the current global governance system more just and inclusive.

China and Brazil say they want to continue promoting strategic partnership (Китай и Бразилия заявляют, что хотят продолжать продвижение стратегического партнерства) / Macao, October, 2019
Keywords: political_issues, cooperation, quotation

China and Brazil attach great importance to their bilateral relationship and want to continue promoting their comprehensive strategic partnership, according to the conclusion of a meeting held in Brasilia between Yang Jiechi, a member of the Political Bureau of the Communist Party of China Central Committee and Augusto Heleno, Minister of the Office of Institutional Security of Brazil.

Yang, who is also director of the CCP Central Committee's foreign office, said China had always considered and developed relations with Brazil from a strategic and long-term perspective, according to the Xinhua news agency.

The Chinese official gave assurances that China is willing to promote the integration of the Belt and Road initiative with Brazil's development plan and to strengthen exchanges between people, regional interactions and communication, as well as coordination in regional and international affairs with a view to producing new mutual benefits.

He also recalled that Brazilian President Jair Bolsonaro, at the invitation of Chinese President Xi Jinping, will soon begin his first state visit to China, and that the leaders of the BRICS countries (Brazil, Russia, India, China and South Africa) will meet next month in Brazil.

Heleno said that the participants of the 9th Meeting of the BRICS High Representatives for Security Affairs had reached a broad consensus that strengthened unity and cooperation between the five countries.

The minister of the Office of Institutional Security of Brazil noted that his country wants to strengthen pragmatic cooperation with China in trade, infrastructure, agriculture and science and technology, as well as to consolidate and develop the comprehensive strategic partnership between the two sides. (Macauhub)
China, Russia can jointly stabilize region (Китай и Россия могут совместно стабилизировать регион) / China, October, 2019
Keywords: expert_opinion, quotation, national_security

Editor's Note:

How can Asia-Pacific regional members enhance security architecture? Where are China-Russia-US relations headed? Alexander Lukin (Lukin), head of Center for East Asian and Shanghai Cooperation Organization Studies, Moscow State Institute of International Relations and head of Department of International Relations at Higher School of Economics in Moscow, shared his insights with Global Times (GT) reporter Yan Yunming on the sidelines of the ninth Beijing Xiangshan Forum on Sunday.

GT: What do you think are the biggest risks in Asia-Pacific?

Lukin: There are quite a lot of problems in this region. First of all, it does not have any security system like some other parts of the world do, such as Organization for Security and Cooperation in Europe (OSCE). Even in Europe, it does not work very well, but in Asia-Pacific, there is no such system at all.

There are several challenges. For example, international terrorism and Islamic radicalism is growing in some countries. There is also the "block system thinking" of some countries. For example, the system of United States alliances with Japan and South Korea, and some new ideas such as the so-called Indo-Pacific and the Quadrilateral Security Dialogue which are obviously aimed at isolating China and Russia.

There are also some local conflicts and territorial disputes. To solve these problems, a lot of effort is needed.

GT: How should we establish a new security architecture to maintain peace and stability in the region and how can China and Russia cooperate in this regard?

Lukin: I think in future it would be important to create some kind of organizations like the Organization for Security and Cooperation in Europe. There are also organizations in Africa, such as the African Union which are also dealing with security problems. But it is not very easy to do. So most countries, especially larger ones, need dialogue and discussion on creating such a system. And mutual understanding is needed. That's why such forums, like Beijing Xiangshan Forum, is very important. The opinion of China, which is the most influential country in the region, has been presented very clearly.

In terms of security, Russia and China are probably the most influential, apart from the US which is also a part of Asia-Pacific. The cooperative relationship and strategic partnership between Russia and China plays a stabilizing role in this region. It's very clear, because on the basis of this partnership several regional organizations and processes emerged. For example, Shanghai Cooperation Organization basically grew from the Russian-Chinese dialogue, which is an influential regional organization. Also, the BRICS, which is not a regional but a global group that is influential in global governance, also grew mostly from Russian-Chinese dialogue and then the dialogue between Russia, China and India.

So, now close Russian-Chinese military and security cooperation will also play a stabilizing role in this region.

GT: Given that global political dynamics are undergoing dramatic changes, do you think that a new international order is needed? What do you think it should be like?

Lukin: I would say that we don't need to have a revolution, but we need to modify the current international order so that it fits new realities. I think that the current international order is in the phase of transition.

We used to have an international order based on a bipolar world after World War II. There were two main centers of power. Then after the collapse of the Soviet Union, there was a tendency at unipolarity, because only one Western center of power remained powerful. But now many other centers are growing, such as China, Brazil, India and some others. Because these countries - new non-Western centers of power - are becoming more powerful and more important, the international system needs to adjust to this reality - the reality of a multipolar world.

But the Western center of power does not want to accept this, so they have created all kinds of theories to claim that the growth of non-Western centers was not an objective process, but a kind of plot by some "bad leaders" to undermine the so-called "liberal world order." In fact what they call "liberal world order" is an order based on domination by the US.

The usual phrase of US diplomats and scholars used in international relations is that "there should be no spheres of influence in the contemporary world." But what they really mean by that is that the West should have the entire world as their sphere of influence, and that only the US and NATO members are allowed to have their own interests in the so-called liberal order. This position will never be accepted by the rest of the world, especially by growing non-Western centers of power.

The reality is, however, that the liberal world order never existed. It is a utopia that the West wanted to realize after the collapse of the Soviet Union. In reality, the order which was dominated by the US and its allies only existed in a part of the world, even when there was a bipolar structure. It only worked in the part which was controlled by the US and NATO. In the Soviet-dominated part, it did not work.

At that time, the West managed to understand that it had to accept some kind of rules shared with the Soviet Union. For example, it did not question the dominance of the Soviet Union in some regions such as Eastern Europe.

What they mean by liberal world order is not a reality, but their ideal. They want to control the entire world and call it a liberal world order. Other countries - non-Western centers of power - of course cannot accept this ideal. Because they want a world where they also have a say and where they play an appropriate role and have their own interests.

The new world order should be a product of negotiations among all centers of power. They should all accept it, like during the bipolar order it was accepted both by the West and the Soviet Union. A manifestation of that was the Helsinki agreement as well of many other documents: nuclear non-proliferation treaty, nuclear test ban treaty, treaty of conventional armed forces in Europe, among others. All countries agreed to some kind of rule. So now we need an agreement of that type like Helsinki agreement or Helsinki process, but not between two centers, but between all major centers, including China, India and others. They should agree on some common principles, and only such an order will be stable.

But unfortunately, the West does not want to accept it. It insists on its own rules and tries to position its own rules as international rules. This will not be accepted by other countries.

The USA and its allies will have to accept it since their relative economic and political power is relatively declining, just as they did when the Soviet Union reached the level of strategic parity. But before they understand that this is the only way to go ahead and to have an agreement with other centers including China, Russia and India, it will be a very dangerous and turbulent period.

GT: Is the world being split into two independent and rival systems - a Western one and a non-Western one?

Lukin: I don't think the world can be divided into two parts. There are many parts. The tendency is at multipolarity. There is no tendency toward another bipolar world. Because within the non-Western world, there are other centers. For example, China and India cooperate in some areas, but they are not under the same center because they also have their differences.

The tendency in general is toward a multipolar world. Of course, less influential non-Western centers tend to cooperate more closely for geopolitical reasons, because each non-Western center on its own is not strong enough to confront the US and its allies. But in the process of their growth, they will be more and more independent and maybe even have some more differences between themselves.

GT: A US national security strategy plan identifies China and Russia as strategic competitors. How do you see this?
Lukin: Actually, I agree. They are strategic competitors of the US. But it depends on the goals of the US.

If you understand the goals of the US as world domination and creation of the so-called liberal world order, which is in fact an order dominated by the US, from that point of view, Russia and China are not going to accept it. Not only Russia and China, other countries as well. India is not going to accept it. Although India has better relations with the US at the moment, in general it will never accept the so-called liberal world order. Brazil is not going to accept it. So I agree with them.

But you can understand American interests differently. If the US is interested in living peacefully in a stable world without trying to dominate it, it will still be a great power, probably the most powerful country in the world. Instead of dominating others, it can cooperate with them. If you see American interests like this, from this point of view, China and Russia are not its strategic rivals.

So it depends on how you understand the goals of the US.

GT: Is the US launching a new Cold War? How should China and Russia respond?

Lukin: Yes, but it is a unilateral cold war. The Cold War between the US and Soviet Union was bilateral. The goal of the US was to dominate the world and impose its development model on everybody, and the goal of Soviet Union was the same.

But now it is different. The US is trying to dominate the world and impose its model on others. But Russia and China are not trying to do that. They are busy with improving their own economies and achieving more security for themselves. They are not imposing anything on other countries.

So I would call it a unilateral cold war. The US is waging a war against Russia and China, but Russia and China are not waging a war against the US. They are just trying to defend themselves.

This is the kind of the last attempt of a weakening center of power to try to maintain its leading position in the world. When you kill a lion, the king of animals, its last movements could be the most dangerous.

Russia, China and other countries should defend themselves and explain to the Western center of power to leave them alone and accept the idea that other countries should have a right to their own model of development.

We need an understanding of the world of real equality. The Western center of power does not understand and accept the idea of real equality. Equality means that one center of power does not have to accept another model and does not have to say that another model is better or more effective. You have to accept its right to exist.

For example, I don't like many things in the US, and I also like many things in the US. But I will not go to the US and tell them that you must do this and that and you must change your system. This is ridiculous. This is for the American people to decide.

Every country must mind its own business. That's what we should explain to the US because Americans always go everywhere and tell them what to do: "You should change your political system;" "You should change your economic system;" "You don't understand yourselves and what you are doing, so we are going to tell you what you must do."

Even in American academic writings and policy papers, you can read this very often. "China must change its policies, and China must do this and that." But this is not for them to decide.

This is the real equality: You do not have to like other models, but you should give them the right to exist. We should explain to them that other countries and other ways of development should have a right to exist. If they are not effective or if they are bad, they are going to change, but not by the US. Their own people are going to change it.

GT: The US is a major source of uncertainty on the globe. How should China and Russia cope with the uncertainty created by the US?
Lukin: Russia and China are already cooperating in many areas, including in military and economic areas. But the main area I would say is still political and security cooperation. Russia sells military equipment to China, the most advanced one, and helps China develop its own military system. China invests quite a lot in Russia. And the trade between the two countries is growing. So they are already cooperating and will continue to do it.

GT: Some US strategists believe that China-Russia partnership won't last. For example, US strategist Mearsheimer recently said in China that "most of China's neighbors, including Russia, will join hands with the US to contain China's power." Do you agree?

Lukin: I know Mearsheimer quite well. He is basically a realist. That is why he thinks China is the strongest challenge to the US and everybody should unite against China. But this theory does not look very practical, because at the moment, China and Russia are coming closer and closer to each other.

For example, President Putin mentioned in early October at the Valdai Forum Russia is going to help China create its own early warning missile defense system, which at the moment only Russia and the US have. This very close military cooperation is moving to a real alliance.

As a scholar, I can say that I don't see any reason why Russia and China should be hostile to each other. Reality shows that they are becoming closer and closer to each other. The US is pursuing a hostile policy against both countries and this policy is moving them together.

GT: Where is Russia-US relationship headed?

Lukin: It is very bad at the moment. I don't remember such a bad relationship even when I lived in the Soviet Union about half of my life. Even at that time, relations were better. We considered ourselves as rivals, but at the same time the diplomatic relations were normal. But now we have all these diplomatic conflicts and spying scandals. It is very unstable, much more unstable than during Soviet times. It is of course regrettable. And I do not think this is going to change in the near future.

GT: Do you think that the US is weakening its influence in the Middle East? How do you see Middle East situation in the future?
Lukin: The Middle East is a big region. It's hard to say this in such simplistic terms. But in general, the influence of the US is much weaker now than before. The US is quite influential in Saudi Arabia and the UAE for example. They can be called its allies. But at the same time, Russia's influence is growing, and China's influence is also growing because it invests quite a lot in these countries.

In other parts of the Middle East, there is a mixed picture. I think that a big blow to the influence and image of the US there was operations in Libya, the assistance of the US to the anti-governmental rebels in Syria, and before that, the American operations in Iraq. People in this region now understand very well that the involvement of the US brings disasters and chaos to most countries.

The US declared that they were fighting for democracy in Iraq. But now Iraq has a permanent civil war and the country is divided. It is basically a less stable country than before even after a long period of turbulence.

Libya is in a total mess. Syria could have been in a total mess. But now with the help of Russia and Iran, it is becoming a little more stable. But it is still pretty messy.

So now people in many countries in this part of world, actually not only in this part of the world, understand that the unrealistic ideas of the US and the ideology of regime change bring chaos and disasters to many countries. That's why US influence is much weaker.

Trump said he wanted to withdraw troops from Syria and other parts of the world. I think we should agree with that, because this will bring peace and stability to this region.

I like China's idea that all countries should decide their future for themselves without outside interferences, unless a legitimate government asks somebody to help. For example, the Syrian government asked Russia for help. So I think the situation could be more stable. There is some positive development in Syria now. There is some positive development in Libya as well. It is becoming more stable.

I think after the defeat on the Islamic State in Iraq and Syria, the tendency is generally positive in this region.

GT: According to some points of view, the US and Russia are competing for influence in the Middle East. Is that so?
Lukin: There is no such competition. Russia does not need any influence in this part of the world because it is far away from Russia. What Russia is doing is not fighting for influence. It is trying to fight terrorism and help the legitimate government maintain its control against terrorist organizations.

I'm quite sure that if stability is installed in Syria, Russia will withdraw its troops from Syria very quickly because there is no need of station of troops there.

This "competition for influence" is also a Western concept. Russia, and China of course, are not struggling for influence. China's interest is mostly in the economic arena because China buys a lot of oil from the region and needs political stability. Whoever rules a country, it should be stable. And the best way would be to have secular governments. That is why China and Russia may help legitimate governments to fight against terrorism, but they are not going to create their areas of control and keep their troops for a long period. So I don't think there is a struggle for influence.
Bretton Woods Institutions' Neoliberal Over-Reach Leaves Global Governance in the Gutter (Неолиберальный переизбыток бреттон-вудских учреждений оставляет глобальное управление в канаве) / USA, October, 2019
Keywords: expert_opinion, global_governance
Author: Patrick Bond

Last week's annual meeting of the World Bank and International Monetary Fund was held in Washington, DC, with back-slapping now that the Bretton Woods twins have reached age 75 (they were founded at a New Hampshire hotel in 1944). But no amount of back-slapping can disguise the way these institutions have led the world into a governance cul de sac.

Multilateralism has surfed the up-swells and down the troughs of globalisation. In the latter case, the League of Nations faded away during the 1930s as a relevant force for peace, once the waves of Great Depression ripped Western economic interests apart. Today, multilateralism also seems to have entered the final, life-support stage of its 21st-century crisis, in part because of the overwhelming power of multinational corporations, and in part because of fast-rising reactionary nationalisms.

As the 2019 G7 summit confirmed, the world cannot contend with the bully-boy ascendance of Donald Trump and other right-wing critics of 'globalism' (an anti-Semitic smear), who spew ever more toxic nativist-populist hatred while ignoring their countries' historic responsibilities to solve problems that their corporations mainly created. As a result, concluded the founder of world-systems theory, the late Immanuel Wallerstein, the 2018 G7 meeting was simply farcical: "Trump may have done us all the favour of destroying this last major remnant of the era of Western domination of the world-system."

Even at the G20, which is the economic grouping responsible for three quarters of global greenhouse gas emissions and hence the site where addressing climate catastrophe is most urgent, the 2017-19 hosts in Hamburg, Buenos Aires and Osaka were cowed by Trump.

As a result, the world's most important climate, trade and financial arrangements are increasingly ineffectual and discredited. Notwithstanding a decade-old network of five 'middle powers' (better termed 'subimperialists'), the Brazil-Russia-India-China-South Africa (BRICS) bloc, the South is much less capable of giving the world's oppressed a chance to make inputs and win long-overdue concessions.

Those expecting progressive change through the BRICS' collective financial and trade statecraft are disappointed, especially as the world spins out of control economically. "BRICS should be much stronger by now," one of its founders, former Brazilian president Lula da Silva told Asia Times recently. "I imagined a more aggressive BRICS, more proactive and more creative."

Instead, global-scale neoliberalism remains dominant. The ill-conceived United Nations (UN) collaboration deal with the plutocratic Davos World Economic Forum in June 2019 followed persistent 'bluewashing' concerns about the UN's discredited Global Compact with some of the world's least ethical firms, growing corporate manipulation of the 2030 Sustainable Development Goals, and sabotage of multilateral environmental and human rights governance.

Another sign of ever-worsening degeneracy is personal. Thanks to unashamed cronyism, all the major multilateral economic organisations with the exception of the near-impotent World Trade Organisation (WTO) are run by Westerners: the World Bank and International Monetary Fund (IMF), the Bank for International Settlements and the United Nations itself.

The only exception, Brazilian WTO leader Roberto Carvalho de Azevêdo, has notoriously pandered to the West, although to be fair, he is now openly expressing frustration as Trump ratchets up protectionism and as US trade representative Robert Lighthizer obstructs appointments to his crucial Appellate Body. "The dispute resolution mechanism is in crisis," according to neoliberal Peterson Institute scholars, a paralysis which "runs the risk of returning the world trading system to a power-based free-for-all, allowing big players to act unilaterally and use retaliation to get their way." That is exactly how Trump and Xi Jinping are handling their trade dispute.

Meanwhile, Bolsonaro is following Trump's anti-multilateral lead, quickly renouncing 'special and differential treatment' provisions for poor and middle-income countries at the WTO – although it is sacred to other BRICS members, especially India. But Brasilia's divorce began much earlier, complains Third World Network's Ravi Kanth, because although the developing-country bloc inside the WTO now "exists on paper, it remains paralysed after Azevêdo became director-general in September 2013."

Bolsonaro also cancelled Brazil's hosting of the UN Framework Convention on Climate Change (UNFCCC) summit later this year, forcing its move to Chile. Deploying bogus anti-colonial rhetoric, he turned his nose up at the G20's tokenistic $20 million grant to control the Amazon's conflagration. Moreover, Bolsonaro could well wreck the BRICS when he hosts the other four leaders in November.

In any case, the BRICS have already failed miserably when attempting to reform global finance, for example by complaining about – but failing to contest – the IMF and Bank leaders, chosen by Europeans and the US in the 2011, 2012, 2015, 2016 and 2019 'elections.' At the same time, four of the BRICS bought expensive voting-power increases in the IMF (e.g. China rising 37 per cent), but at the expense of countries like Nigeria and Venezuela (which in 2015 both lost 41 per cent of their votes, while even South Africa's IMF 'voice' softened by 21 per cent).

The BRICS' supposed alternative to the IMF, the Contingent Reserve Arrangement, was founded in 2014 with a notional $100 billion. It actually gives Washington even more power, by leveraging most of its loans on the condition that the borrower accept an IMF structural adjustment program. The BRICS New Development Bank's first five years of lending confirm that it is as rife with corruption, non-consultation, climate damage and inappropriate currency denominations as the World Bank, and even more unfriendly to gender equity.

Likewise, there is no BRICS alternative to Western domination in trade or climate multilateralism. At the WTO, the BRICS were fatally divided, leading to the 2015 destruction of food sovereignty options during the Nairobi summit. And as for climate, the Brazil-South Africa-India-China (BASIC) leaders' close alignment with Barack Obama at the Copenhagen UNFCCC summit in 2009 held firm through the 2015 Paris Climate Agreement.

But that won't solve our existential crisis, for the BASIC countries are absolute CO2 emitters at levels even higher than the West (and in South Africa's case higher per capita than any country in Western Europe). So Paris' fatal weaknesses suit them fine.

More recently, new causes of global governance illegitimacy appear similar to the centrifugal forces tearing Europe apart. The political commitments of climate-denialist, 'paleo-conservative' xenophobes like Trump are different to other Washington philosophies imposed on the world, including the 1980s-90s' Reagan-Bush-Clinton era of neoliberalism (stretching with Thatcher and Blair into Britain and Kohl and Schroeder into Europe), George W. Bush's 2000s neoconservatism and Obama's 2010s fusion of these two US-centric ideologies.

With just a couple of exceptions (discussed below), an earlier generation of global-scale social-democratic hopes – fostered by serious multilateralists from 1970s traditions, e.g. Willy Brandt and Gro Harlem Brundtland – were dashed by the early 1980s, thanks to the role the Bretton Woods Institutions played in fracturing the world's progressive potentials on behalf of international financiers. The poorest countries went through a 'lost' decade or more of austerity. The 1995-2002 middle-income countries' rolling crises meant local elites allowed the same inappropriate neoliberal regime to be imposed by Washington even more deeply and dangerously in Mexico, East Asia, Russia, South Africa, Brazil, Argentina and Turkey.

Then it was the turn of the West's 'labour aristocracy,' a core group of working-class people dethroned, for they lost their once-solid manufacturing jobs to machines and overseas outsourcing, and were reduced to taking underpaid and under-valued service-based jobs and relying upon fast-degenerating public services. In 2008-09 they too witnessed a replay of brutal 1980s-90s Bretton Woods power plays, once their elites agreed upon a multilateral 'solution' to the world financial meltdown: a coordinated central bank bailout for the largest Western financial institutions.

This generosity was confirmed by the 2010s' official prioritisation – by the IMF, European Central Bank and European Union (EU) – of the Frankfurt, New York, London, Paris and Rome bankers' interests, which were near-fatally exposed to Greece and other peripheral European borrowers. By 2016, neo-fascist political parties were thriving there, while the most resentful within the British and U.S. working classes chose xenophobic backlash in the form of Brexit and Trump.

Self-destructive IMF and World Bank ideology and financing

The crucial break point for multilateral potential was the 1980s world debt crisis, during which neoliberal ideology stretched the Third World so far that the likes of Tanzania's Julius Nyerere and Cuba's Fidel Castro even proposed a 'debtors' cartel' – but could not find a sufficient critical mass of other brave leaders even in a Latin America suffering sustained IMF rioting, to the relief of international elites.

At one point in 1983, World Bank president William Clausen quite bluntly explained the balance of forces: "We must ask ourselves: How much pressure can these nations be expected to bear? How far can the poorest peoples be pushed into further reducing their meagre standards of living? How resilient are the political systems and institutions in these countries in the face of steadily worsening conditions?"

Clausen's power came from the 1979-80 'Volcker Shock': soaring interest rates catalysed by US Federal Reserve chair Paul Volcker's decision to restore the Dollar's power, in turn causing the Third World Debt Crisis. Clausen and all his successors abused that power to impose the Washington Consensus's ten policy commandments. The term came from John Williamson of that city's Institute of International Finance, representing the world's major banks:

1. Budget deficits … should be small enough to be financed without recourse to the inflation tax.

2. Public expenditure should be redirected from politically sensitive areas that receive more resources than their economic return can justify…

3. Tax reform… so as to broaden the tax base and cut marginal tax rates.

4. Financial liberalisation, involving an ultimate objective of market-determined interest rates.

5. A unified exchange rate at a level sufficiently competitive to induce a rapid growth in non-traditional exports.

6. Quantitative trade restrictions to be rapidly replaced by tariffs, which would be progressively reduced until a uniform low rate of 10 to 20 per cent was achieved.

7. Abolition of barriers impeding the entry of foreign direct investment.

8. Privatisation of state enterprises.

9. Abolition of regulations that impede the entry of new firms or restrict competition.

10. The provision of secure property rights…

Needless to say, the victims were mainly women, youth, the elderly and people of colour. The IMF's flows of annual loans that, thanks to conditionality, locked these policies into place, were initially less than $15 billion before the Volcker Shock, then soared to $40 billion by the late 1980s, jumped as high as $100 billion by the early 2000s, and exceeded $140 billion by the early 2010s (see Fig 1). The World Bank had similar bursts.

Fig 1. IMF loans, 1970-2015

Source: Reinhart and Trebesch, 2015, p.24.

Added to the neoliberal agenda were trillions worth of 'illicit financial flows' manoeuvred into offshore financial centres, leaving governments with rising budget deficits and their social sectors experiencing permanent cost-cutting pressures. IMF economists Jonathan Ostry, Prakash Loungani, and Davide Furceri admitted in 2016 that as a result, "The increase in inequality engendered by financial openness and austerity might itself undercut growth, the very thing that the neoliberal agenda is intent on boosting. There is now strong evidence that inequality can significantly lower both the level and the durability of growth." But notwithstanding that admission, most subsequent Article IV consultations offered advice that amplified inequality, Oxfam researchers discovered.

The IMF also made a similar confession about its role in patriarchy, namely that "some policies recommended by staff… may… exacerbate gender inequality" – but again, when it came to a correction, the IMF "missed the forest for the policy trees," explains Emma Bürgisser of the Bretton Woods Project. "Almost every macroeconomic policy the IMF regularly prescribes carries harmful gendered impacts, including labour flexibilisation, privatisation, regressive taxation, trade liberalisation and targeting social protection and pensions."

Activists try to undo destruction

In turn the predatory debt, precarious work and privatisation of so many aspects of life experienced by the world's citizenries calls forth two kinds of responses: appeals to global governance to sort out problems national states have shied away from, and popular revolt. There are both good and bad versions of these top-down and bottom-up responses, as we have seen, with cases such as the Montreal Protocol and Global Fund for AIDS, TB and Malaria as top-down successes, but the latter owes more to bottom-up pressures.

Since the urgency of the situation required a global response, the 1987 Montreal Protocol was supported by even the reactionary Ronald Reagan administration. It committed national states to ensure their corporations (e.g. Dow Chemical and General Electric) stop producing and emitting CFCs within nine years. The ban worked and the problem is receding (aside from recent Chinese corporate cheating on hydro-CFCs).

At present, a Montreal Protocol-type ban on Greenhouse Gas (GHG) emissions is presumed unthinkable, notwithstanding the impending eco-social catastrophe. A solution as forceful as the Montreal Protocol is needed for GHGs, but the weakness of multilateralism and the pro-corporate balance of forces makes it unlikely within the UNFCCC – unless the world's rising youth and other climate activists ramp up the civil disobedience and divestment advocacy that is now beginning to worry fossil fuel financiers.

In that spirit, there was one other more recent multilateral solution to a world crisis, AIDS, which shows how to shift the balance of forces not through elites' top-down meetings of minds (although within the World Health Organisation and UN AIDS, there were a few bureaucratic allies) – but instead, bottom-up, through militant activism.

Because of groups like South Africa's Treatment Action Campaign (led by visionaries Zackie Achmat and Vuyiseka Dubula), the US AIDS Coalition to Unleash Power ('ActUp') and the health NGO Medicins sans Frontiers, a persuasive case emerged in the 1990s – and gained confirmation in 2001 – to exempt copyrighted AIDS medicines within the WTO's Trade Related Intellectual Property System. Generics were permitted, not made in the US and Germany, but instead in many Southern countries. This resulted in more than a decade's rise in life expectancy, in South and North alike.

Anti-neoliberal protests help shift the balance of forces, including many millions in the Third World who objected to structural adjustment, or "IMF Riots." In the main study of these protests, David Seddon and John Walton in 1994 remarked on how not just poor and working-class people, but larger coalitions of society rose up: "Once mass discontent is made evident by these coalitions, political parties may take up the anti-austerity cause in successful bids for national office (e.g. Peru, Dominican Republic). In several countries, austerity protests initiated political crises that sooner (e.g. Sudan, Turkey) or later (e.g. Philippines, Haiti, Poland) toppled the national government."

Since then, there have been scores more countries – especially in Africa – whose unpatriotic leaders were tossed out of power or drew sustained dissent as they imposed the BWIs' logic.

Solidarity activism in the North is vital, such as demonstrations at IMF and Bank official events. Major protests included the 1988 Berlin Annual Meetings (which attracted tens of thousands of protestors), the 2000 Spring Meetings in Washington (30,000) and 2000 Prague Annual Meetings (50,000), as well as even the Oslo 2002 Bank research conference on development economics (10,000). One of the main activist challenges to Bretton Woods power was the early 2000s "World Bank bonds boycott" which – at the peak of the global justice movement's mobilisations – compelled cities as large and financially potent as San Francisco to divest from Bank securities. (Trevor Ngwane and another South African, the poet Dennis Brutus, joined then-U.S. Representative Bernie Sanders to launch the boycott in 2000.)

This led to a 'fix it or nix it' debate, in which reforms of the Bank and IMF were so slow that TransNational Institute scholar Susan George fumed in 2000, "These institutions have had their chance. Anytime anyone asks, 'And what would you put in its place?' I am tempted to respond, 'And what would you put in the place of cancer?'" Added Kenyan activist Njoki Njehu, the leading Washington protest organiser at the Bank/Fund Spring Meetings that year, "The IMF and the World Bank increase poverty. The consensus is that the IMF and World Bank cannot be reformed. They have to be abolished."

It's a debate that needs kick-starting once again. The 75th anniversary is a good time to ask whether such out-dated ideologies and their enforcers deserve to be retired, not (as the right-wing populist protectionists argue) so as to close the door on global governance, but to open it much wider in a way that serves people and planet, not multinational corporate profits. At the same time, by posing the question of abolition, we should also recall instances where impressive reforms were won at the multilateral scale.

Investment and Finance
Investment and finance in BRICS
Does BRICS Banking offer an Alternative to the IMF and World Bank? Pessimistic Signals from South Africa (БРИКС предлагает банковскую альтернативу МВФ и Всемирному банку? Пессимистичные сигналы из Южной Африки) / South Africa, October, 2019
Keywords: expert_opinion, economic_challenges
South Africa
Author: Patrick Bond

1. Introduction

After their 1944 birth at a New Hampshire hotel, the International Monetary Fund (IMF) and World Bank turned 75 years old this year, long past a reasonable retirement age. For the sake of global financial management, most reformers' hopes rest in changing the character of the Bretton Woods Institutions, including leadership nationality, loan conditionality, the character of bailouts and Third World countries' 'voice' and voting power.

As part of that process, the Brazil-Russia-India-China-South Africa (BRICS) network was expected to support a more balanced, 'polyarchic' division of international financial power and responsibility, thanks to the large emerging-market surpluses and what some see as a developmental ideology. To that end, in 2014, the New Development Bank and Contingent Reserve Arrangement were born at the BRICS' Fortaleza summit. Frustrations had mounted with the Bretton Woods and related multilateral institutions responsible for both balance-of-payments support and project finance. The hopes of what Brazilian theorists termed the era's 'New Developmentalism' included the supply of credit for both macro- and micro-economic strategies similar to the strategy adopted by Brasilia's Workers Party.

However, five years later, as Brazil again hosts the BRICS leaders (in Brasilia on November 13-14), these hopes have been dashed. BRICS' efforts to reform the Bretton Woods Institutions are, in retrospect, not only fruitless but dangerous. Instead, a different, more ambitious approach consistent with an older approach, the dependencia strategy (which operates more in the spirit of John Maynard Keynes than typical banker logic), is now much more appropriate, although the balance of forces within the BRICS, given Jair Bolsonaro's rule, makes this extremely unlikely in the foreseeable future.

2. Will BRICS and the West struggle, or snuggle?

Two supposedly 'alternative' institutions were launched five years ago in Fortaleza, Brazil, by the Brazil-Russia-India-China-South Africa (BRICS) bloc, hosted by the Workers Party government of Dilma Rousseff. The leaders raised expectations about the potential for a new philosophy and new strategies, in which BRICS' contributions to world finance would operate in a manner completely different to the World Bank, IMF and other multilateral development banks.

By the time of the Fortaleza summit, there was also the potential for a "New Developmentalism" identified by former Brazilian finance minister Luiz Carlos Bresser-Pereira and advanced mainly from the Getulio Vargas Foundation. This philosophy, entailing more active management of international economic relations, including financial and monetary matters, was drawn in part from Brazil's successful strategy during the late 1990s and 2000s, leading up to the 2011 peak of the commodity super-cycle.

One additional aspect was the sense of not only BRICS' ascendance, but the decline of Western power and legitimacy, which in turn reflected in how the Bretton Woods Institutions imposed conditionality-heavy credits and reproduced leadership unfairly: always a U.S. citizen leading the Bank, and a European heading the IMF. Partly for that reason, and because of a gap in the sustainability financing marketplace, the BRICS' prospects for global financial reform was identified with two former World Bank chief economists – Joseph Stigltiz and Nicolas Stern – who wrote the original concept paper for what became the BRICS New Development Bank (NDB) in 2011.

This was possible, Bresser-Pereira (2018) explained, because the World Bank fell "into an identity crisis when, in the early 1980s, the American government constrained it to change from a developmental multilateral bank whose policies were oriented by development economics to be the agency charged of making the neoliberal reforms to advance in the developing countries – to change their economic policy regimes from developmental to liberal."

This dual narrative – drawing attention to the West's neoliberalism, illegitimacy and decay on the one hand, and the rise of the BRICS as an alternative power bloc on the other hand – is worth considering in detail, using as a case study global financial governance. As Christopher Tapscott, Jose Puppim de Oliveira, Yijia Jing, Alexey Barabashev and Navdeep Mathur (2017, 1) argue, "relatively little comparative research has been undertaken on the respective state building and governance regimes of its member states and on how these might influence the closer integration of their activities in the future."

The same is true internationally, in a context of a division-prone BRICS where different agendas now proliferate. When driving the BRICS agenda forward, China's capacity to serve its own national interests may be dominant in the long term, but the governments of Donald J. Trump and Jair Bolsonaro have already caused problems for Beijing's global strategy, as shown below. In 2019, both enjoyed the power to choose presiding officers of the World Bank and NDB, respectively.

Prior to whatever orientation Bolsonaro chooses as host of the BRICS in 2019, what is the nature of the challenge to the World Bank and IMF posed by the BRICS' most advanced institutional innovations – the NDB and Contingent Reserve Arrangement (CRA) – as well as by the BRICS' foreign economic policy-makers? The ideas of New Developmentalism and "sustainable development financing" have been rhetorically important. But service to BRICS borrowers – national states and State Owned Enterprises – appears to be of overarching importance, regardless of ideology and sustainability.

Reflecting power relations within the BRICS, both new institutions have vital Chinese influences, not least in Shanghai's headquarters role for the former, and Beijing's outsized 41 percent financial contribution to the latter. [1] If the analytical dilemma discussed below is whether the new BRICS financial institutions are operating against, or within, existing global financial governance, the ability of China to guide the BRICS reflects its leaders' "pragmatism and incremental adaptation," as Yijai Jing (2016, 37) shows in relation to domestic governance.

Yet seen from South Africa, such incrementalism is not satisfying, at a time the West's self-interested financial agenda parallels its chaotic roles in global climate governance, geopolitics and macro-economic management (Garcia and Bond 2018). These will only intensify with Donald Trump's uncontested appointment of David Malpass as Bank president in 2019, reflecting the West's durable power to not only manage multilateral finance and its institutions (including leadership), but also set the agenda for an era of increased West-BRICS conflict, given Malpass' hostility to China.

On the other hand, according to the Bank's former China director Yukon Huang, "China is doing the World Bank a favor by borrowing, because people realize it's not going to default on those loans." He does not expect Malpass to make major changes in relation to China during an era of economic turmoil, because "America always goes for a solution which strengthens the global financial system, because that's America's strength. The global financial system is essentially America's financial system" (Igoe 2019).

The power and arrogance of the Malpass appointment is not surprising. As another example of Western malevolence within global financial management, former World Bank chief economist Nicholas Stern (2013) bragged to a 2013 London conference that he was the co-instigator of the very idea of a BRICS Bank, for reasons that had nothing to do with alleged sustainability and climate financing (as claimed by Stern and Stiglitz, 2011). Instead, he desired an institutional lock-in between business deal-makers and a dependable cohort of national officials who would respect their states' contracts with such corporations.

Stern specifically sought ways to avoid policies that adversely affected those corporations: "If you have a development bank that is part of a [major business] deal then it makes it more difficult for governments to be unreliable... What you had was the presence of the European Bank for Reconstruction and Development (EBRD) reducing the potential for government-induced policy risk, and the presence of the EBRD in the deal making the government of the host country more confident about accepting that investment. And that is why Meles Zenawi, Joe Stiglitz and myself, nearly three years ago now, started the idea. And are there any press here, by the way? Ok, so this bit's off the record. We started to move the idea of a BRICS-led development bank for those two reasons" (emphasis added) (Stern 2013).

In a "world turned upside down" (Panitch and Albo 2018) where nothing is as it seems, the critical approach adopted below includes political-economic observations about power within multilateral financial politics. This is achieved partly through an assessment of the Pretoria government's own contributions during the two relevant regimes: Zuma from mid-2009 through early 2018 and Ramaphosa since. During the former's reign, the NDB prepared work on several loans, gaining cabinet approval in late 2015 (Malcolmsen 2016).

One loan was advanced in 2016, but then was not activated by the borrower, the state national electricity firm Eskom. The $180 million was earmarked for renewable energy transmission lines, which the new chief executive (Brian Molefe) did not want to implement, given the utility's financial crisis and his desire to instead contract for Russian-supplied nuclear energy.

After Molefe's departure in 2017, a sudden threat of a default on Eskom's $3.75 billion loan to the World Bank in early 2018 – which was resolved at an emergency Davos World Economic Forum meeting (Paton 2018) – and Ramaphosa's ascendance, the renewable energy programme was reinstated, and was one of three loans codified to South Africa's parastatal agencies in 2018. The other two were to the shipping parastatal Transnet ($200 million for Durban port expansion) and the Development Bank of Southern Africa ($300 million for unspecified municipal infrastructure).

In 2019, two additional loans were made by the NDB: $480 million to Eskom to enhance the largest coal-fired power plant under construction on earth, Medupi (specifically for its long-overdue desulpherisation); and $220 million (in local Rand currency) for another dam within the Lesotho Highlands Water Project, which provides cross-catchment water supply to Johannesburg.

But both projects have been so bribery-riddled in past phases, that the World Bank debarred several international construction companies due to Lesotho corruption (Bond 2002), and the U.S. Securities and Exchange Commission fined the main Eskom power-plant builder, Hitachi, $19 million due to its relationship with a fronting company (with no related experience) which also served as the South African ruling party's main fund-raising arm (Bond 2014a, 2014b).

These loans contrast the BRICS NDB rhetoric of sustainability with the realities of corrupt, carbon-centric, crony-based accumulation, with no intention of community consultation (i.e., a bank indistinguishable from the World Bank). From 2016-18, the three South African loans were authorized from the NDB Shanghai headquarters, but the Africa Regional Centre in Johannesburg deserves most blame for shortcomings, such as non-existent governance safeguards and a refusal to engage in stakeholder participation. [2]

As for the $100 billion CRA fund, it may one day become relevant in the event of financial meltdowns and contagion similar to 1998 and 2008, especially in South Africa. But at that stage, the IMF is likely to be even more important, if repayment of the country's now-unprecedented $180 billion foreign debt is in question.

Seen from South Africa, the institutional connections between the Bretton Woods Institutions and the BRICS, not to mention the NDB staff's own backgrounds in Western-oriented banking (whether global banks or Pretoria's Treasury and Reserve Bank) (Bond 2014b, 2016), together suggest a relationship nowhere near as hostile to the Washington Consensus as some leftist politicians and analysts hope for. [3]

The BRICS have retained a certain credibility as 'middle power' accompaniments to multilateralism, to be sure. But in 2019, with Brazilian president Jair Bolsonaro's new rightwing agenda coming into focus (including his appointment of the next BRICS NDB president), the situation remains fluid. His neoliberal finance minister Paulo Guedes was named chair of NDB at the April 2019 Annual General Meeting, at a time Guedes' own role in pension-related corruption was becoming more explicit.

But macroeconomic trends will likely be decisive, and here – just as in the institutional arena that Stern (2013) explained – it again appears that the BRICS are no alternative, but instead an amplifier, of contradictions created within Western-centric capitalism (Bond and Garcia 2015). It is in that context that we begin the discussion of the BRICS and global financial governance, given that New Developmentalism has been suggested as an antidote to these trends, and has failed to materialize.

3. A difficult New Developmentalism

Hopes that BRICS countries will offer new strategies and ideas about development and governance are fading, especially in relation to financial markets. The 2014 Fortaleza founding of the NDB raised expectations that the BRICS could generate an exciting new potential: to break the grip on multilateral financial governance by the neoliberal Bretton Woods Institutions, whose conditionality-riddled credit control grew after the 2008 financial crisis. The Western-backed banks came to rule not just impoverished but also emerging economies (e.g., Argentina recently) – just as in the 1980s – and even a few wealthier countries (Portugal, Ireland, Greece and Spain) that recently fell into crisis.

Brazil's New Developmentalism, in contrast, consisted of rising levels of social inclusion and lower inequality, coinciding with successful export orientation. The New Developmentalism's promotion of manufactured exports is closely associated with four macro-economic, monetary and fiscal policy factors:

  • falling exchange rates, given the bias is to undervalue the local currency and thus keep relative wage rates low;
  • a shrinking state deficit on current (not capital) spending so as to avoid crowding out financing for private sector investment;
  • a commitment to establishing new infrastructure; and
  • a relatively low real interest rate.
Brazil has many lessons. In the second Lula administration, as Bresser-Pereira (2011) explained, "God was Brazilian," because thanks to the commodity super-cycle and his New-Developmentalist Programa de Aceleração do Crescimento, Lula "did not bring inflation nor adversely affect growth." The PT "did not fear to displease the rich," but nevertheless "was fiscally responsible" and "reacted well to the 2008 global financial crisis," in part by "lowering the real interest rate by nearly half" and imposing "controls over capital inflow."

Lula, said Bresser-Pereira, "remembered that there is such a thing as the entrepreneur and the national enterprise, or, in other words, that there is a nation, whose strength and ability to compete with the other nations will depend on the clarity and cohesiveness of the political coalition between entrepreneurs, public bureaucracy and workers" (Bresser-Pereira 2011).

In South Africa and a few other emerging-market countries, these ideals motivated debates over needed policy shifts, especially where the early 2000s boom provided sufficient macro-economic space to attempt aspects of New Developmentalism. In Johannesburg phraseology, during the height of Worker Party power, the desire for a 'Lula Moment' was expressed by leading centre-left policy academics and trade unionists from South Africa and Brazil alike (Netshitenzhe 2013, Braga 2014, Coleman 2014, Schutte 2014), led by the Communist Party's Chris Hani Institute (Webster and Hurt 2014). Of South Africans, however, it was only Neil Coleman (2014) from the main trade union federation who took the trouble to sketch out concrete comparisons.

To be sure, Lula Moment advocacy also attracted criticism, especially insofar as it was a strategy encumbered by unsustainable 'corporatist' philosophical underpinnings (Morais and Saad-Filho 2013). Comparing with South Africa's potential, Ben Fogel (2015) complained, Lula "failed to build a new political culture through constitutional and political reforms or by tackling an institutionally hostile media" and instead, made "alliances with corrupt and reactionary regional power brokers, embracing Brazil's traditional patronage political culture to gain institutional power at the expense of trade union and social movement allies."

The South African debate coincided with the expulsion of the largest trade union – the 350,000-member National Union of Metalworkers of South Africa (Numsa) – from the country's main union federation because it was too leftwing. So the contrast was with a potential 'Numsa moment' that would have much more radically changed ownership of the economy's commanding heights. [4]

However, regardless of whether South Africa should have pursued this approach, especially in macro-economic terms, by the mid-2010s there was little left to hope for, in either country. South Africa suffered a kleptocracy from 2009-18 under Zuma's leadership, combining talk-left populist-developmentalist rhetoric with walk-right neoliberalism and extreme corruption.

In Brazil, the 2013 turn to neoliberalism by Lula's successor, Rousseff, meant the domestic bourgeoisie's support for the PT evaporated after widespread 2013-16 protests. These were originally catalysed by leftists dissatisfied by public transport price rises, but were soon taken over by wealthy right-wing elements which by 2016 resulted in a parliamentary coup against Rousseff. So while in the 1998-2004 period, mostly under Fernando Henrique Cardoso's centrist rule, Brazil drove its trade/GDP ratio from 15 up to 30 percent, this measure of integration subsequently fell to 24 percent by 2017 (Figure 1).

Figure 1: Trade/GDP ratios decline at world scale, driven by the BRICS

Source: World Bank database Indeed the rest of the BRICS trade/GDP ratios also dropped markedly after peaking during the 2000-08 period, even further than the world's drop, from 61 to 56 percent. Matters are now deteriorating further what with Donald Trump's U.S. protectionism, for the World Trade Organization (2019) recorded dramatic declines in the 2018 WTO Index of trade, including a fall in that index of 6.3 percent (year-on-year from December 2017), as well as -7.9 percent on export orders, and double digit crashes in demand for automobiles (-10.3 percent) and electronics (-12.9 percent).

The era of Workers Party rule, resulting in Brazil's relatively more inclusive growth and (briefly) rising export-led growth route, followed Bresser-Pereira's framing. But this was not the only Latin American country offering lessons for development. In addition, there were successful – and far more radical – approaches to global-national-local interfaces especially in relation to finance. These included default on Odious Debts (e.g. by Ecuador in 2009) and tighter exchange controls to halt illicit financial flows (e.g. Venezuela in 2003), as well as (stillborn) proposals for a Bank of the South by Hugo Chavez that would have injected a strong developmental and environmental agenda into South-South cooperation.

All these radical strategies emerged with one overarching concern: acute consciousness of how foreign indebtedness would derail developmental ambitions, as Latin Americans and all other Third World countries recalled from the 1980s-90s era.

Bresser-Pereira (2018, 3) remarked on one of the most crucial features of new, alternative financing strategies, which is to match assets to liabilities when it comes to the currency in which lending occurs: "The NDB, the bank governed by BRICS countries, spelt out the proposal to follow this line of action. Some multilateral banks, particularly the Asian Development Bank, the International Finance Corporation and even the World Bank are already lending in local currency. Why? Would it be the new concern with currency mismatches and the development of local capital markets?... the Multilateral Banks are turning to domestic currencies because their customers are most of the time private companies that resist to take loans in hard currency to avoid foreign exchange risks."

He continued, "Second, because after the Asian 1997 financial crisis, many countries, particularly the Asian countries, realized the financial crisis risk involved in getting indebted into foreign money and began to accumulate large international reserves. Third, because, after the disastrous attempt to grow with foreign indebtedness (foreign savings) that the Washington Consensus proposed from the early 1990s (just after the major 1980s' foreign debt crisis was overcome), the governments of the developing countries went back to the policy of keeping the current account balanced or with a surplus, as China has been doing for long" (Bresser-Pereira 2018, 3).

Unfortunately, again in South Africa, the New Developmentalism's valid insights were not followed by policy-makers. First, they allowed the NDB to issue the loans discussed below in US dollars, not South African rands. Only in March 2019 was the first announcement of a proposed rand bond issued by the NDB.

Second, they ran up consistently large current account deficits, for reasons worth remarking upon. The main international economic imbalance in South Africa is not – as is commonly assumed – the trade deficit with China (although that remains large). Indeed, mainly because of the export of raw materials (minerals and cash crops), semi-processed metals (steel, aluminium and manganese) and (highly-subsidized) automobiles to mainly Western markets, the trade account often reached mild surpluses in the 2010s, including in 2016-18.

Instead, the cause of the current account deficit was the outflow of profits, dividends and interest (the current account's 'balance on income'), mainly to London and other overseas financial headquarters (Table 1). [5] Although the current account deficit was 7 percent of GDP in 2009, it recovered thanks to the commodity crash of 2015, which temporarily lessened the pressure on profit repatriation. Indeed the currency dropped to as low as R17.9/$ in January 2016, which compelled cuts in imports and assisted South Africa's export recovery.

But the current account deficit has still been negative, even in years of trade surplus, in the range of 2-5 percent of GDP from 2016-18. In those years, trading surpluses of $8.5 billion were registered, yet South Africa suffered $28.8 billion in net profit and transfer outflow. [6]

Profit inflows should actually be much higher than outflows, because the net foreign investment position of South African capital has been positive since 2015 (Figure 2), largely because of one major investment made by the largest firm on the Johannesburg Stock Exchange – Naspers – in Chinese firm tech company Tencent.

That stake, of nearly a third ownership in what soon became the highest-capitalized firm in Asia, grew from $35 million to $150 billion in value over the period 2005-18. It increased the country's net international investment by 40 percent of GDP from 2010-15 (although income receipts suggest Tencent's dividends are not flowing back into Naspers at anywhere near the rate profits are flowing out of South Africa). In any case, the offshore listing of Tencent to Amsterdam in September 2019 – as Naspers' new Prosus subsidiary – further amplifies the long-term dilemma of inadequate inflows of foreign currency.

Figure 2: South Africa's international investment position, 2014-18 (billions of SA Rands)

Source: South African Reserve Bank Quarterly Bulletin, December 2018. Given the extreme volatility of the Rand caused in part by this income vulnerability, daily Over-the-Counter Foreign Exchange (OTC FX) market activity is far greater in South Africa than elsewhere, rising to 17 percent of GDP by 2017 (IMF 2018). The wild swings in the currency's value are evident, and make relations with the world economy that much more volatile.

In addition to egregious mistakes in international financial relations, South African policy-makers made other errors. Their early-2000s 'developmental state' debate in South Africa did not stress crucial New Developmentalism features, so compared to Brazil, there was far less economic sovereignty.

One reason was South Africa's massive deindustrialization during the 1990s, as East Asian imports decisively outcompeted local clothing, textiles, appliances, electronics and other local manufactured goods once South Africa liberalized trade. Thus in the early 2000s, the developmental debate largely revolved around how to best link up the so-called 'two economies' (the advanced capitalist sector and informal sector) and how to advance minerals beneficiation (Mbeki 2004, Masondo 2007).

The country's $2.5 trillion natural resource base was seen as the basis for downstream investment, at least prior to the commodity super-cycle fizzling out in 2011. But the crash in world commodity prices (including metals), and in South Africa, electricity black-outs and soaring electricity prices starting in 2008, together hampered further investment in smelting.

As institutional economists have pointed out, South Africa's structural bias remains located within the 'Minerals Energy Complex,' which combines large multinational-corporate mining houses, the state electricity firm Eskom, and associated downstream industries including petrochemicals, metals processing and other sectors that comprise about 20 percent of GDP (Fine and Rustomjee 1996, Padayachee 2010).

The bias within the state transport firm, Transnet, is, likewise, to emphasize export of raw ores – especially coal – through expanded port capacity (while closing down or neglecting maintenance for both long-distance and intra-urban passenger services). The fossil intensity of these energy-generation and transport biases has become even worse within Eskom and Transnet.

The inability of Eskom to reduce its reliance on coal-fired power plants and replace generation capacity with renewable sources, and the intensity of Transnet's reliance upon coal exports, are together reflected in the two largest mega-project investments in the 2012-30 National Development Plan (NDP).

First, the state – led by Transnet and major mining houses – made a $60 billion commitment to the export of 18 billion tons of coal (mostly to China and India) along new rail lines, using imported locomotives that can carry 3 kilometer-long ore-carrying trains. Eskom relies on coal from the same areas (Limpopo and Mpumalanga provinces) for 90 percent of its generation capacity, so the expansion of high-volume coal transport benefits its two massive new coal-fired plants (Medupi and Kusile).

The second largest mega-project is a $20 billion expansion of the port-petrochemical complex in Durban, again led by Transnet. These two are the first two priority projects within the Presidential Infrastructure Coordinating Commission's Strategic Integrated Projects (PICC SIPs), developed as part of the National Infrastructure Plan (Bond 2014a).

It is therefore no surprise that the first two BRICS New Development Bank loans to South Africa also reflect these biases. The 2016 and 2018 credits of $180 million to Eskom and $200 million to Transnet quickly fell into controversy, and in both cases, projects went into immediate hibernation in part due to the borrowers' systemic corruption, and in part to the failure of both to properly make their projects sustainable. In short, New Developmentalism was still-born, missing a critical mass of patriotic business elites committed to the four components usually considered crucial ingredients.

The vision of Bresser-Pereira (2011) was never realized through the NDB. One leading Asian advocate of the developmental state, Jomo KS (2019), was wistful when asked about the NDB: "I wish the new multilateral development banks would be bolder, but thus far, they have largely chosen to work within the dominant framework shaped by the Washington Consensus, probably to secure market confidence."

To help understand this failure of nerve in South Africa, we next contemplate how the NDB handled macro-economic context, currency exposure, corruption and climate change within its first three loans.

4. NDB risks: Macro-economic context, currency exposure, corruption and climate change

The problem, we observe next, is not just BRICS elites' impotence at the scale of global institutional reform, even at peak when Lula's accomplishments were well recognised. Other risks within the BRICS development finance agenda come from the deteriorating macro-economic environment since the early 2010s, a point at which "deglobalization" tendencies (Garcia and Bond 2018) and structural fragility associated with financialization (e.g. $250 trillion in outstanding world debt) were amplified by US dollar exposure and rampant corruption within BRICS banking.

The core economic problem facing three of the BRICS was the collapse of commodity prices after the 2002-11 super-cycle upturn and 2011-15 plateau. This led to junk credit ratings suffered by three borrower countries: Russia from 2015, Brazil from 2015 and South Africa from 2017, as the commodity super-cycle's demise was accompanied by political problems in each. Russia was punished with sanctions due its 2014 invasion (or some say 'liberation') of Ukraine's Crimea. Corruption delegitimized key functions of the state in Brazil and South Africa.

Indeed those were also three countries which had defaulted on foreign debt within the bankers' living memory: Russia in 1998, Brazil in 1987 and South Africa in 1985. The exchange rates of their three currencies crashed in 2015, to levels between 32 and 38 percent lower than in 2000 (India had by then risen by 20 percent and China by 30) (Figure 3).

Figure 3. Relative currency values of the BRICS against the US dollar, 2010-19

Source: On the one hand, this adverse macro-economic situation would logically suggest that poorer countries should no longer attempt to seek a piece of a vanishing pie, namely the prior expanding rate of world trade, which since 2017 went into reverse. Instead, they should seek more balanced, inward-oriented growth, such as was recommended by dependencia scholars since the 1950s, including Raúl Prebisch (1950) in Latin America and Samir Amin (1990) in Africa.

As a concrete reflection of such a shift, the BRICS cities should no longer be re-arranged to support export-platform economies, of which Durban and Rio de Janeiro were perhaps most infamous (Bond, Garcia, Moreira and Bai, 2016); instead they should have a greater share of infrastructural funds dedicated to meeting basic needs. Since the mid-1980s, such basic needs have been underserved thanks to the method of arranging neoliberal investments in electricity, water and wastewater, roads, ports and other economic infrastructure enhancements.

The BRICS cities' objective was instead to attract and serve multinational corporations, for the sake of increasing revenues from world trade, as advocated initially in the World Bank's mid-1980s Urban Management Program (Bond 2000). But the ability of poor residents to afford corporatized or privatized services was minimal in most user-pay systems.

On the other hand, even as the Baltic Dry Index – world shipping's main indicator of container transport prices – fell from a level of 12,000 in 2008 to less than 1000 over the subsequent decade, there appears to have been increasing not decreasing pressures from the mercantile circuit of capital to expand port investments. This is especially evident in the BRICS where Beijing's Belt and Road Initiative and the Delhi-Tokyo Asia-Africa Growth Corridor both encourage new harbors or existing port expansion.

At the BRICS 2017 Xiamen summit, reporters observed a failed merger strategy between the two projects, with South Africa squeezed in between (Singupta 2017, Woody 2018). This confirms that instead of collaboration, the current era may instead witness a form of ultra-competitive economic cannibalism, a point vividly illustrated in debates surrounding South Africa's BRICS NDB-financed port expansion (Bond 2014a).

In this context, macro-economic stabilization has been in China's self-interest, what with Beijing's ongoing financing of Washington's massive trade deficit (typically the Chinese state holds more than $1.3 trillion of US Treasury Bills). A trade war with Donald Trump may change this, if it transpires after a brief truce in 2019. But what is ultimately required, to assure durable world economic stability, is a new currency that could be more democratically managed, in contrast to the US Federal Reserve Board's current bias to serving the interests of the West's largest banks.

Indeed in 2013, the Fed's revised monetary policy signaling – known as the "tapering of Quantitative Easing" – adversely affected four of the BRICS' currencies (all except the still-rising yuan), as it drew liquid funding back to the US dollar (Figure 3). Notwithstanding rhetoric about increasing use of BRICS currencies or barter trade, not much more is being done to end the destructive system in which the US dollar has world "seignorage": i.e., it is the world's reserve currency, no matter how badly Washington officials abuse that power.

If China really wants its currency to one day take the place of the dollar, and if Russia wants to find routes out of the current squeeze represented by financial sanctions, the pace at which this is happening is agonizingly slow. (A 2019 "BRICS Pay" strategy of clearing funds on retail purchases without recourse to the dollar is one encouraging sign.)

Can the NDB and CRA contribute to constructive change away from dollar dependency? According to the SA foreign ministry's Dave Malcolmson, there is strong political will to engage in non-dollar lending. Malcolmsen (2016) reported to Parliament about a 2015 presentation by KV Kamath, the NDB President. Amongst the innovative features of the NDB, "The actual challenge in respect of loan payments for developing countries pertain moreover to that of the currency fluctuation which increases the loan repayment terms (usually in USD) rather than agreed interest rates for such loans. He emphasized the importance of raising loans in local currencies to lessen such a burden." [7]

Yet in its first five years, the vast majority of the $8 billion in NDB loans were dollar denominated, even though these were mainly projects characterized by local-currency expenditures. There were minimal import requirements in loans for transportation (29 percent), energy (26 percent), water/sanitation/irrigation (22 percent), social infrastructure (15 percent), and cleaner production (8 percent). The main borrowers were India (40 percent) and China (25 percent), both of which could produce project inputs locally.

In South Africa, it was only in the second half of 2019 that the NDB would raise funds in the local currency, on the most liquid and over-capitalized market in world history, the Johannesburg Stock Exchange, a market whose Buffett Indicator ratio (share capitalization over GDP) by then had peaked at over 350 percent, three times the world average.

Another major factor that will create additional risk to all parties is systematic corporate and state corruption. It pervades all the BRICS, at a level just as high as can be found in the U.S., Europe or Africa. The top four countries in which economic crime occurs, according to PricewaterhouseCoopers (2018), are South Africa, Kenya, France and Russia, with China ranked eighth. Financial Times commentator Gideon Rachman (2018) expressed concern that "In all five countries, popular rage about graft is at the very heart of politics."

Moreover, worried Rachman (2018), the BRICS "may be spreading corrupt practices more widely. The U.S., EU and UK pride themselves on their sound institutions. But western bankers, lawyers, real estate agents, PR firms (and perhaps even presidents) are often all too willing to share in the proceeds of corruption." (In South Africa such firms included Bell Pottinger – which as a result of South African corruption went into bankruptcy – and consultancy and law firms KPMG, McKinsey, Hogan Lovells, SAP and others.)

A degree of corruption-denialism exists within the NDB. Asked about the corruption associated with its loan to Transnet in mid-2018, the institution's Compliance Officer Srinivias Yanamandra (2018) claimed, "At the time of loan appraisal, NDB gives consideration to corruption risks in accordance with internal policies and guidelines, which articulate a zero-tolerance policy against corruption. These policies and guidelines stipulate adequate mechanisms to ensure compliance with highest standards of ethics, accountability and integrity. The Bank further reckons adverse media news, if any about the prospective borrower, taking into account the country system of law enforcement for handling corruption issues. The Bank supplements internal assessment with a co-operative relationship externally with law enforcement as well as other responsible agencies that deal with matters relating to anti-corruption at national / international level" (Yanamamdra 2018).

Such 'zero-tolerance' policy claims cannot be taken seriously given the widespread media and law-enforcement attention to Transnet at the time the loan was granted, in May 2018. Recognizing the contradiction, Yanamandra (2018) further explained, "The appraisal of loan to Transnet went through the above-mentioned procedures of the Bank. While approving the loan in May 2018, the Bank recognized the ongoing efforts by the South African Government to address corruption issues both at the national level and at the level of Transnet as a particular entity (including through the new Special Investigative Unit set up by the President of South Africa). The Bank further took note of internal developments at the Company (viz., forensic investigations under the oversight of Board Audit Committee and ongoing review of procurement processes). The Bank has also noted the ongoing improvements in oversight of the Company by the Ministry of Public Enterprises, including through leadership changes that were implemented in recent times."

Such improvements were not adequate to halt a major episode of corruption in late 2018, one so serious as to halt the Durban port's expansion. Although the notorious Transnet Chief Executive Officer Siyabonga Gama's contract was by October 2018 finally terminated due to corruption, a $500 million component of the Durban port deepening project, commissioned in July 2018, became the source of a controversy over the procurement process.

The project involved not only the Italian-South African CMI Emtateni Joint Venture, but in particular, Durban's best-known procurement fraudster, Shauwn Mpisane (Cowan 2018). Without disclosing details about the malfeasance, which included a lawsuit by a competitor who raised substantive complaints about the process, Transnet stated, "In the interest of good corporate governance, Transnet has decided to issue a stop work instruction on the Main Marine Construction Works contract pending the outcome of the investigation" (Mkentane 2018). (By mid 2019 there was no word on the investigation and the NDB project remained stalled.)

In 2019, a leading BRICS official admitted that the 2016 loan to Eskom – which had been put on hold allegedly by Brian Molefe due to his opposition to solar energy – was actually "saddled with corruption allegations and governance challenges. So that loan was put on ice and never formally concluded" (although it was reaffirmed in mid-2018) (Wright 2019). The character of this particular case of corruption was not revealed.

However, like other BRICS countries, South Africa remains bedeviled by procurement fraud, which has been estimated by a leading Treasury official as costing 35 to 40 percent more on each outsourced contract than is reasonable, on $50 billion in annual corporate procurements (Mkokeli 2016).

In Brazil, Operation Car Wash revealed mensalão bribery in Congress and widespread Petrobras patrimonialism. Russian elites, including several close to Putin, were fingered as having multi-billion dollar offshore accounts in tax havens, in the leaked lawyers' emails known as the Paradise and Panama Papers. In India, the extent of citizens' experience with petty bribery has been measured by Transparency International at more than 60 percent of respondents. And China's highest-profile corruption case – the prosecution of former Chongqing mayor (and Xi competitor) Bo Xilai – was seen as a political hatchet job, although to Beijing's credit, many thousands of corrupt officials have been jailed (Zhao 2012).

A final risk is faced by all financiers in the current period: fossil-intensive investments considered to be "stranded assets," resulting in devaluation of their portfolios. This is not merely an institutional risk, but – due to ongoing species-extinguishing climate change – one that extends deep into the future of global civilization. Ironically, NDB rhetoric leaves the impression that the 2013-14 leaders of the BRICS, prompted by the institution's illustrious designers Nicolas Stern and Joseph Stiglitz (2011), had a strong commitment to earth stewardship.

In reality, all five BRICS are amongst the world's most unsustainable countries in terms of pollution loads, and naturally this will affect the availability of infrastructure investments (e.g. a high emphasis on ports, railroads and roads, such as in the case of Transnet). Indeed the BRICS are amplifying the inherited Western corporate traditions of externalizing environmental costs onto nature and onto the societies surrounding their main industrial districts. Although the NDB's commitment to the vaguely-defined promise of 'sustainability' is a noble sentiment, it has little hope of ever being realized given the broader BRICS project of high-carbon extractive infrastructure.

South Africa alone is engaged in massive new fracking investments, offshore oil and gas exploration (in early 2019 Total discovered a billion oil-equivalent barrels); 18 billion tonnes of coal exports (mainly to India); and coal-fired power generation including two 4800 MW plants now under construction and a 4600 MW plant promised in a Chinese metallurgical complex, as well as several others in the 1000MW range. [8]

South Africa's lack of commitment to cut its historically extremely high carbon addiction was matched by not only U.S. and Canadian failures to cut back emissions, and even Germany's late-2030s' commitment to cut back on coal (which activists and scientists say is far too late). The other BRICS also adopted ecologically-catastrophic policies: Bolsonaro's commitment to unleashing cattle ranchers, soy farmers, mining corporations and timber interests on the Amazon; Putin's unlimited extraction of Siberian fossil fuels; Modi's massive construction of new coal-fired power plants; and Xi's carbon-intensive Belt and Road Initiative.

It this context, it was reasonable to ask whether the BRICS leaders were really serious about challenging the United Nations Framework Convention on Climate Change, Bretton Woods Institutions and other structures of global power.

After all, if revolutionizing development finance was the objective, there was an alternative already in place they could have supported: the Bank of the South. Founded by the late Venezuelan president Hugo Chavez in 2007 and supported by Argentina, Bolivia, Brazil, Ecuador, Paraguay and Uruguay, Banco del Sur had acquired $7 billion in capital by 2013. It offered a more profound challenge to the Washington Consensus, especially after Ecuadoran radical economists led by Pedro Paez (2016) improved the design.

Instead, the BRICS appear to favor the stabilization of the world financial status quo, rather than radically changing the most unfair and intrinsically destabilizing components.

5. Conclusion

In all the respects discussed above, the NDB is a high-risk institution. However, this view is not widely shared among establishment observers, as witnessed in the Standard&Poors Global Ratings review of the bank in mid-2018: "We assess NDB's risk management policies as sound and similar to its highly rated peers'. The bank has established prudent risk management policies, especially in terms of liquidity and capital adequacy, and has set various limits for single obligor, country, and sector concentration… we expect the institution to instill sound governance and risk management principles across its operations… we expect NDB to abide by the same high standard as leading peers in terms of governance, procurement, and social responsibility… we estimate that NDB currently, as well as in the foreseeable future, could survive an extremely stressed scenario without market access for 12 months and without withdrawing any principal resources from borrowing members."

In other words, although macro-economic stress is mentioned in passing, S&P (2019) sees no dangers in the conditions that might lead to borrower default, the rampant corruption and the BRICS infrastructure contributions to climate change discussed above. Instead, S&P (2018) advocates that the NDB expand to include other potential members: "We would raise the rating if NDB is able to increase its public policy profile and importance. In this scenario, we envisage a substantial geographical expansion of NDB's operations through an increase in the number of shareholders with more than token stakes. Also, we expect the loan portfolio to be more evenly balanced, away from the current heavier concentration in loans to India and China."

Perhaps already aware of then-candidate Bolsonaro's antipathy to China, S&P (2018) subtly warned that in the event of "any of the founding members withdrawing their membership, [s]uch a scenario will cast serious doubts on NDB's ability to fulfil its mandate." But in only one other respect was S&P (2018) slightly cautious: "The shareholder structure, with borrowing-eligible members holding all the voting shares, could present a certain degree of agency risk, in our view. This potential conflict of interest and the fact that the shareholders do not rank very high in terms of governance constrains our assessment of NDB's governance and management expertise." [9]

The S&P analysts' neglect of the other major structural risks identified above parallel the failure of credit rating agencies in relation to Enron, Lehman Brothers, AIG insurance and other calamitous episodes of myopia. The general risks should be obvious, but examination of the project borrowers from South Africa funded by the NDB since 2016 reveals systematic concrete deficiencies:

  • the NDB's renewable energy and sustainability rhetoric appears designed to beguile;
  • consultation with affected parties is non-existent;
  • privatized supply of services is common;
  • hard currency loans – all three of South Africa's – will be extremely expensive to repay as the rand continues its long-term decline; and
  • corruption amongst borrowers – including the two leaders at Eskom and Transnet who signed NDB loans and were subsequently fired for graft – are treated flippantly by a Compliance Officer whose due diligence defense at Transnet was subsequently shown to be extremely weak.
In short, the NDB is not an alternative to a system of development finance that, based in Washington, is rife with problems, and that apparently cannot be reformed. Instead, it appears from the South African case that the ingredients exist for the NDB to amplify uneven development through financing some of the country's most notoriously corrupt institutions, for projects which are themselves highly dubious.

For these reasons, the NDB was the subject of a protest of more than 100 environmental activists led by four African Goldman Prize winners in July 2018, just at the start of the BRICS Johannesburg summit. This was the first of what will be many more protests against the NDB, it is safe to say, unless it shifts away from the projects and policies that are doing so much harm to people and planet.

None of these conflicts would have surprised seasoned observers of the divergence between BRICS elites and the needs of their societies and environment. As Indian political economist Prabhat Patnaik predicted in 2014, "The question of the BRICS Bank cannot be analyzed without reference to the big bourgeoisie of the BRICS countries, as the commentators have almost universally done. In other words the class nature of these regimes has a crucial bearing on the direction that the BRICS Bank will take: whether the BRICS Bank and the CRA will become mere replicas of the World Bank and the IMF with some delegation of authority from the "top" to the BRICS powers, or whether they will expand the elbow room of the countries of the South."

Patnaik continued, "Several BRICS countries in short had connived with the US-led imperialist bloc to sabotage a proposal to bring countries of the South to the forefront of "global economic governance", and had even resuscitated a near-defunct IMF for this purpose. To imagine that the same countries are now going to stand with the South, through the BRICS Bank, to loosen the hold of imperialism, is utterly fanciful" (Patnaik 2014).

Assuming the BRICS and global elites can one day be dislodged, is a different philosophical approach possible? John Maynard Keynes (1933), offered one of the most generous of formulas: "I sympathize with those who would minimize, rather than with those who would maximize, economic entanglement among nations. Ideas, knowledge, science, hospitality, travel – these are the things which should of their nature be international. But let goods be homespun whenever it is reasonably and conveniently possible and, above all, let finance be primarily national."

That approach implies an older form of developmentalism, one that applies tight exchange controls, that balances an economy's various sectors through import-substitution industrialization, that therefore has a great chance to meet society's basic needs in an environmentally-conscious way, and that welcomes skilled and unskilled labor to its shores.

None of the BRICS are following this strategy at present, but at some stage in future, their countries' progressive politicians will recognize the need to move in a genuinely developmentalist direction. The reactionary, failing characteristics of the BRICS global financial governance reform agenda and institutions will then fade into history, where they belong.

Footnotes [1] The NDB has a notional capitalization of $50 billion, but only $10 billion is, by 2021, required from BRICS taxpayers as paid-in capital, equally divided among the five members. In addition the NDB issues bonds occasionally, such as a 2016 'green bond' in Chinese yuan for the equivalent of $450 million. The CRA's capitalization is $100 billion, consisting of countries' foreign currency reserves which are dedicated to on-lending in the case of a member's balance-of-payments emergency. In addition to China at 41 percent, Brazil, Russia and India have 18 percent shares each, and South Africa 10 percent.

[2] In August 2017, the BRICS Bank's Johannesburg African Regional Centre branch was hurriedly opened just ahead of the September 2017 BRICS summit in China. In December 2015, the Centre's new director general was suddenly announced: Nhlanhla Nene. But the job was a hot potato, and Nene's appointment was a fig-leaf excuse Zuma gave for firing the pro-business finance minister who then spurned the supposed (but non-existent) offer. There is little doubt that instead of 'deploying' him to this important job, Zuma simply wanted Nene out of the way, because of repeated Treasury opposition to a $100 billion nuclear energy deal. It was a project that Zuma, Molefe and others in Eskom were intent on concluding with Rosatom, especially following a July 2015 BRICS summit in Ufa where the deal was confirmed. Nene refused on grounds of state poverty, and so for one weekend, was briefly replaced by an ally of Zuma's most corrupt patronage network, run by the Gupta brothers (three immigrants from India). After pressure was exerted on Zuma especially by the Chinese minority shareholders owners of South Africa's largest bank, Standard (Bruce 2016), Gordhan was then installed as Finance Minister (until he was fired in 2017, also for opposing the Zuma-Gupta agenda). Nene was never offered the job and, under the influence of the Gupta brothers, Zuma became a laughing stock for trying this gambit. The Africa Regional Centre in Sandton was slated by Auditor General Kimi Makwetu on grounds of "fruitless and wasteful expenditure" worth millions of dollars – mainly due to empty office space – in November 2017.

[3] The South African chosen as NDB Vice President, Leslie Maasdorp, previously worked at Goldman Sachs, Barclays and Bank of America – as well as leading Pretoria's internal privatization office. One mega-dam project discussed by Maasdorp as a potential NDB financing target is the Lesotho Highlands Water Project. Dating back two decades, the Project may be the world's most infamous case of construction company bribery in World Bank lending history. More than $2 million flowed from a dozen multinational corporations to the Swiss accounts of the leading dam official, Masupha Sole, who served 9 years in jail but was then, to everyone's astonishment, reinstated thanks to his political influence. Lesotho's dam water flows to South Africa, even in times (such as 2016) when the country faces ruinous drought. Although the World Bank debarred some of the most corrupt companies (in the process catalysing the bankruptcy of Canada's once formidable civil engineering firm Acres International), nothing was done to punish the firms by Pretoria officials. Maasdorp discussed his own role at the helm of the institution responsible: "I served for example as chairman of TransCaledon Tunnel Authority, which is a state-owned enterprise with a mandate to finance and implement bulk raw water infrastructure projects in South Africa, and played an oversight role from a governance perspective for seven years of large infrastructure projects" (Mnyandu, 2015). Several of the same construction firms that were implicated in Lesotho reappeared in notorious collusion cases involving white-elephant World Cup 2010 stadiums and other mega-projects in which billions of dollars were stolen from South African taxpayers. South African firms are obviously not alone; in 2014, the World Bank debarred the China Three Gorges Corporation's subsidiary building dams in Africa after extreme corruption was identified in another African project.

From July 2015 through August 2017, the South African non-executive director serving the NDB was Tito Mboweni of Goldman Sachs, a former Reserve Bank governor (and from October 2018 South Africa's finance minister) best remembered for maintaining extremely high interest rates during his 1999-2009 tenure (Bond 2014c). As soon as he was appointed to the NDB board, Mboweni – then at the BRICS summit in Ufa, Russia – was interviewed by Bloomberg (2015), and argued that a proposed $100 billion South African nuclear deal with Rosatom, already signed on a preliminary basis by Zuma in 2014, "falls squarely within the mandate of the NDB." This was in spite of enormous local controversy surrounding Zuma' s corruption-prone deal-making regarding not only Rosatom but the Gupta family, whose firm Oakbay would have been the main uranium supplier. But then, in his own words, he was "Fired, you might say!!" (Citizen 2017). Instead of a customary roll-over, Mboweni was replaced by the South African Treasury director general, Dondo Mogajane. He had served as a World Bank board member during the institution's controversy over a corrupt $3.75 billion loan – its largest ever – to South Africa for the world's largest new coal-fired power plant, one opposed by everyone from community and climate activists to Business Day newspaper and the centre-right opposition party, in part because of extreme corruption that witnessed Hitachi paying a $19 million fine under the U.S. Foreign Corrupt Practices Act in 2015, for bribing the African National Congress.

[4] In 2014, Alfredo Saad-Filho argued that contextual differences between the two countries require more nuance in analysis: "The attempt to build a 'Numsa moment' in South Africa will face much greater difficulties than those that confronted the Workers Party (PT) and trade unions (CUT) in Brazil, back in the early 1980s. South Africa has already gone through the transitions to democracy and to neoliberalism, while the PT and CUT emerged before these two transitions. Political democracy and neoliberalism have had very adverse implications for the composition, organic unity and capacity of mobilization of the working class almost everywhere. So the challenge is now greater, but the working class movement and the left in South Africa are also much stronger than they ever were in Brazil. The point, then, is to build a political left with working class hegemony, rather than under the intellectual leadership of sections of the middle class, or the economic hegemony of the domestic bourgeoisie, as was the case in the 'Lula Moment' in Brazil" (personal communication, February 21, 2014).

[5] South Africa's debt repayments are becoming increasingly expensive. A major fear expressed periodically is South Africa's potential inability to service foreign loans, especially those borrowed by the main State Owned Enterprises. As reported in 2018 by Business Day's Carol Paton (2018), "If the World Bank issues a default letter… it will trigger a 14-day recall on its $3.75 billion loan, which could trigger a recall on Eskom's $26 billion debt mountain." Eskom has by far the largest component worth of state-backed loans, representing a dangerously high contingent liability whose costs are carried by the general citizenry. Eskom is also repaying the World Bank's largest-ever loan, for the Medupi power plant (the Bank's last such coal-related lending, due to a belated climate-change policy). Medupi's $5 billion worth of boilers were supplied by Hitachi, which in 2015 was fined $20 million by the US government for violating the Foreign Corrupt Practices Act: bribing the ANC's investment arm through a 25 percent ownership in a local affiliate. Medupi cost triple its original estimates, at $15 billion, and was delayed nine years due to numerous design and implementation flaws (including 7,000 welding mistakes on the Hitachi boilers). The high costs – exacerbated by a crashing currency – were passed to poor consumers, whose electricity bills rose far faster than inflation from 2008-17. In mid-2018, Eskom received another $2.5 billion in loans from the China Development Bank to build the $15 billion Kusile power plant, also with Hitachi/ANC boilers. That bank's prior major loan to South Africa was to Transnet ($5 billion), for corruption-riddled locomotive and Durban crane procurement from China South Rail and Shanghai Zenhua Heavy Industries (via the Gupta family empire) (D'Sa and Bond 2018). Such mega-projects mainly benefit well-connected elites, at the cost of the poorest.

[6] The central reason for South Africa's vulnerability to high levels of net income payment outflows and currency speculation against the rand is Pretoria's regular relaxation of exchange controls. As one example, in 2018 Treasury granted permission for an additional $38 billion worth of pension and insurance funds to move abroad. As another example, whereas in 2015 the maximum annual externalization of funds by wealthy South Africans was $300,000, it was raised that year to $750,000. Such loosening weakens the Reserve Bank's ability to defend against currency crashes and financial outflows, given that Pretoria's $50 billion in currency reserves have not increased over the past decade. As the IMF (2018, 35) warned, "Foreign exchange reserves are assessed to be below adequacy… 70 percent of the assessing reserve adequacy metric adjusted for capital flow measures."

[7] The real interest rate on the dollar-denominated loans depends upon currency devaluation: South Africa' s crashed from R6.3/$ in 2011 to R17.9/$ in early 2016 before stabilizing around R14/$ in 2017-18. Kamath (cited in Bond 2017) once conceded to Russia Today, "The effective costs of borrowing in hard currencies, for any of us developing countries, appears low. It appears to be 2 to 2.5 percent. But when you add the exchange loss, the weakening of the currency over time, you end up paying 12, 13, 14 percent. So that' s your true cost." Kamath has committed to future lending in Chinese renminbi, Indian rupees, Brazilian reals, and Russian rubles, and considered including South African rands as a potential currency. The NDB' s Eskom lending would have financed locally-sourced materials such as steel and cables (and local labor) for the electricity grid extension. Any such further NDB dollar loan offers make no sense.

[8] To illustrate the dangers, recall that the Development Bank of Southern Africa (DBSA) was granted a $300 million loan by the NDB in 2018 for municipal on-lending. However, that institution also is committed to financing a portion of two proposed coal-fired power plants costing $2.9 billion (producing 863MW of power), for Japanese, Korean and Saudi Arabian owners. Requested by anti-coal campaigners to halt and reverse these commitments in 2018, the DBSA declined.

[9] S&P (2018) continued, "However, we note that no member holds veto power. A special majority (four out of five members) is required for milestone decisions, including earnings distributions and increases in capital subscriptions… Although NDB's shareholder structure could present agency risks, we believe the institution will manage potential conflicts through governance best practices and prudent risk management."
NDB Board of Directors Approves Two Projects with Loans Aggregating to USD 800 mln (Совет директоров НБР одобрил два проекта на общую сумму 800 млн. долларов США) / China, October, 2019
Keywords: ndb, investments

On October 14, 2019, the Board of Directors of the New Development Bank (NDB) approved two projects worth USD 800 million, bringing the Bank's portfolio to 44 projects with loans aggregating to USD 12.4 billion.

The following projects were approved:

Fundo ClimaBrazil National Climate Fund Project

The Bank will provide a sovereign loan of USD 500 million to the Federative Republic of Brazil for the Fundo Clima – Brazil National Climate Fund Project. The project is aimed at capitalizing Fundo Clima to expand its on-lending operations to sub-projects contributing to climate change mitigation and adaptation. Fundo Clima is a fund established under the Ministry of Environment (MMA) in 2010 to respond to the National Policy on Climate Change.

The loan represents a threefold increase of Fundo Clima operations and the total amount of USD 500 million is expected to be fully committed by 2024. Sectors including urban mobility, waste treatment, renewable energy, energy efficiency are expected to be financed under the project.

Renewable Energy Sector Development Project

The Bank will provide a loan of USD 300 million to REC Limited to support the Government of India's increasing investment in the renewable energy sector. The Project is aimed at improving the energy mix in India by providing funds for the construction and commissioning of renewable energy sub-projects. The Project will create jobs and contribute to the reduction of carbon emissions and environmental pollution.

Background Information

The NDB was established by Brazil, Russia, India, China and South Africa to mobilize resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries, complementing the existing efforts of multilateral and regional financial institutions for global growth and development. To fulfill its purpose, the NDB will support public or private projects through loans, guarantees, equity participation and other financial instruments. According to the NDB's General Strategy, sustainable infrastructure development is at the core of the Bank's operational strategy for 2017-2021. The NDB received AA+ long-term issuer credit ratings from S&P and Fitch and AAA foreign currency long-term issuer rating from Japan Credit Rating Agency (JCR).

World of work
Social policy, trade unions, actions
New Employment Stimuli Need to be Created (Нужно создать новые стимулы занятости) / Russia, October, 2019
Keywords: social_issues, sustainable_development

"Sustainable development goals include ensuring economic growth by means of full productive employment and decent work. In fact, the delivery of this goal represents a basic precondition for delivering many other goals, such as poverty and famine eradication, ensuring healthy lives, quality education, gender equality, the elimination of inequality, infrastructure development, etc," Analytical Center's expert Elena Zotova said at the "Partnerships for the Goals – Conclusions for Russia" seminar.

Ms Zotova notes that the G20 and BRICS pay considerable attention to employment markets development and decent work issues. The G20 labor and employment ministers have already met eight times and the BRICS labor and employment ministers have met five times to deliberate on this agenda. During these meetings, the ministers raise a variety of issues, share problem solutions, devise and adopt recommendations for certain growth areas of labor markets.

Generally speaking, it is safe to say that the G20 employment agenda revolves around three issues proposed by Russia, namely job creation, involvement in the labor market of those who are willing to work but face different barriers, and monitoring of labor market trends and processes.

It is important for all countries to take jobs out of informal economy and formalize employment, Ms Zotova explained. There are new job opportunities in the "silver economy" sectors, especially in long-term old-aged care services. Extensive job opportunities are also associated with the development of digital platforms and remote employment. Solving these issues based on the creation of stimuli and enabling environment for the unimpeded development of businesses is given the highest, if not the only, priority by the G20.

Priority is also given to enhancement of employment opportunities, especially for those who face barriers in the labor market. Involvement of such persons in the labor markets not only has to do with availability of jobs, but depends, in many respects, on the maturity of job seekers' skills and conformity to the market requirements, as well as on creation or lack of special conditions which an employee may need for full-fledged employment, infrastructure and legislation maturity.

For monitoring purposes the countries develop national employment plans. In 2020 Russia plans to add the following issues on the agenda as it will take chair in BRICS: labor protection, measures aimed at poverty reduction and labor development in the digital economy. The plans also include a traditional BRICS seminar on human population, with population ageing being its highest-priority topic.

Elena Zotova draw a conclusion that the recommendations adopted by the G20 and the agreements reached as part of BRICS should be leveraged more vigorously. Employment objectives should be addressed with support from and in close cooperation with businesses and in collaboration with employers and trade unions.
BRICS challenges Netflix: Five-nation club seeks alternative to US film-streaming giant (БРИКС бросает вызов Netflix: клуб из пяти стран ищет альтернативу американскому гиганту) / Russia, October, 2019
Keywords: media, social_issues

RIO DE JANEIRO, October 24. /TASS/. BRICS countries (Brazil, Russia, India, China and South Africa) may create their own streaming service similar to Netflix in order to popularize their movies, Brazilian newspaper O Globo wrote on Thursday.

The idea of launching this online platform was discussed at a meeting of Brazilian Minister of Citizenship Osmar Terra with representatives of China's Culture Ministry and the China Media Group, a major producer of audiovisual content. Each country could get a 20% share of the overall content.

Besides, this streaming service could be used by BRICS filmmakers, who are facing difficulties with searching for sources of financing their works and venues for showing them. According to Brazilian authorities, the New Development Bank could allocate funds for this project.

In October, Head of Gosfilmofond, a state film archive in Russia, Nikolai Malakov, came up with a similar initiative of creating a cloud storage of BRICS cinema achieves.

BRICS is an informal association of five major emerging national economies: Brazil, Russia, India, China and South Africa. The goal of the association is to comprehensive dialogue and cooperation between the member states. It is not a bloc-like organization and its activities are not targeted against third parties.
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