1 August 2018

South Africa: The BRICS Summit - Important Small Steps, but Little to Show On Big Issues

analysis

Trying to evaluate a meeting like the BRICS summit that recently took place in Johannesburg is challenging. On the one hand, a summit is an exercise in political theatre. In this sense, success means that the leaders put on a good show of international camaraderie and issue a communique expressing their firm commitment to solving the common challenges facing their countries and the world.

On the other hand, an annual summit is the culmination of a year-long process of meetings of officials, politicians and non-state actors from the participating countries. They spend the year trying to reach agreement on specific deliverables that they hope their leaders will endorse in their communique, which is the summit's primary output.

This means that understanding the real meaning of the communique is essential to assessing the success of the summit. This requires paying close attention to what the communique does - and doesn't - say as well as to the things that it promises.

The Johannesburg BRICS summit delivered a mixed bag when judged on these two criteria. The communique makes clear that some solid work was done and that the participants have agreed to undertake some useful initiatives. But it's also clear that on some issues the leaders resorted to vague statements that hide their real differences. This suggests that, despite their accomplishments, there are differences in their overall commitment to the BRICS. In addition, key countries view it as merely one option for advancing their grand international relations strategy.

The positive notes

The leaders issued a communique that suggested that they had a productive meeting and agreed on a range of issues.

They announced the formation of a new vaccines research centre in South Africa and their intentions to collaborate more in tourism and customs, technology, energy, the environment and agriculture.

On trade, the leaders followed the Chinese lead. They expressed their support for a rules based multilateral international trading system and called on all countries to comply with their World Trade Organisation (WTO) commitments. They also stated their support for the newly signed African Continental Free Trade Agreement and for the African Union's Agenda 2063.

They agreed on the importance of promoting a more inclusive and sustainable international society, stressing the importance of the Sustainable Development Goals. And the leaders commended the BRICS' New Development Bank's for discussing innovative approaches to development finance.

They also praised officials for the progress that's been made in establishing a BRICS local currency bond fund. This will help the countries raise funds for development projects from each other and further develop their local capital markets. Progress also has been made in operationalising the Contingent Reserve Arrangement which is designed to provide central bank support to a member state facing balance of payments problems.

They also announced more people-to-people exchanges in sports, culture and research collaborations.

The leaders called for South Africa, Brazil and India to play a larger role in the United Nations and for a larger voice for Africa in the governance of the International Monetary Fund (IMF).

The gaps

The summit communique had some noteworthy gaps.

First, while the leaders expressed support for IMF governance reform, they failed to explicitly support South Africa's lobbying for a third chair for Africa on the IMF board of directors. They also didn't propose any other specific measures to improve African participation in IMF governance.

Second, the communique failed to specifically support Brazil, India and South Africa's efforts to win permanent seats on the UN Security Council.

The leaders highlighted their concerns about the challenges in the international trading system and called for it to become more inclusive and development oriented. But they didn't set out how the system should be reformed to achieve these objectives. This is particularly striking because their meeting came soon after the US and the European Union announced that they could begin working together to reform the WTO.

Similarly, their expression of support for the AU's free trade agreement and Agenda 2063 was devoid of any specific commitments. This is particularly noteworthy because both the Chinese and the Indian leaders combined their participation in the summit with visits to various African countries to whom they they made specific offers of support.

This suggests that India and China see the BRICS as only one channel for developing economic relations in Africa. It also means that South Africa's position as the BRICS' gateway to Africa is not assured.

Financial intervention

While the communique highlighted the progress made in operationalising the Contingent Reserve Arrangement, it gave no indication that the BRICS are planning to de-link the Contingent Reserve Arrangement from the IMF. This means that about 70% of the financing available through this initiative will be linked to reaching agreement with the IMF. This should be seen in the context of the BRICS lukewarm support for increased African representation in IMF governance

In addition, while the communique commends the BRICS Bank for considering innovative approaches to development finance, it makes no mention of its poor record when it comes to transparency, participation and accountability. In fact, the bank is less transparent, less open to consultation and less accountable than any of the other multilateral development banks.

Without improvement in these areas it is hard to see how the New Development Bank can become an environmentally and socially responsible funder of sustainable and inclusive infrastructure. The bank's lack of progress in the transparency scale exposes it to significant reputational risk.

Hedging bets

The BRICS have agreed some impressive initiatives and have taken some steps to strengthen their ties. But they have also failed to demonstrate that they will live up to their promise to be an effective advocate for global governance reform.

Key leaders have also shown that they are hedging their bets on the BRICS. They are using other vehicles to develop their international relations in Africa and at the global level.

The key takeaway therefore is that South Africa should be proud of its participation in the BRICS but should retain a healthy scepticism in its approach to the group. It should continue to diversity its international economic and political relations, should attach appropriate value to the BRICS and all the other regional and international forums and groupings in which it participates and South Africa should avoid over-investing in the BRICS.

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