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G20: Cementing a Southern Alliance

Sanjay Suri

JOHANNESBURG, Sep 19 2009 (IPS) - Major developing countries are again preparing to stand together on critical issues at the G20 heads of government meeting in Pittsburgh Sep 24-25.

Mergers such as the one proposed between telecom giants Bharti of India and MTN of South Africa and others will give substance to IBSA.  Credit:  IPS

Mergers such as the one proposed between telecom giants Bharti of India and MTN of South Africa and others will give substance to IBSA. Credit: IPS

But Southern solidarity may need to move beyond the strategic common front presented at such summits to include a strengthening of continuing ties.

A big test case could be IBSA – a grouping of India, Brazil and South Africa, which brings together major developing democracies across three continents.

Many believe IBSA holds greater possibilities than does BRIC, the grouping of Brazil, Russia, India and China, which is seen more as a strategic negotiating coalition than as a solid bloc of rapidly emerging economies.

“I think IBSA is an association of countries which is built on a very solid reality,” Ron Davies, South African trade and industries minister tells IPS.

“That we are the bigger developing countries on different continents, and that we have a series of cooperation agreements which at least for South Africa have some real meaning.”

But amidst his enthusiasm for new South-South links, Davies acknowledges it’s early days yet. “I think there is work ahead to consolidate and deepen IBSA. And that’s one of our very significant priorities here in South Africa.”

For the moment, the immediate sense of presenting a single negotiating face is clearer than the future dimensions of the trilateral initiative.  

“To some extent I think IBSA is a bit of a romantic idea in the sense that linking up the three countries through common air links or shipping links is a long way into the future,” says Prof. Stephen Gelb, executive director of The Edge Institute, an independent economic policy centre in Johannesburg.

“I think there is a lot of scope for political alliances in multilateral fora like the WTO or the United Nations but actual links between the three countries lie somewhere in the future.”

And that push will come, Gelb says, not at political gatherings but in company boardrooms.

“Business links that happen, or would have happened, would help to build the IBSA idea rather than the other way round,” he says.

“Businesses find each other when they need (to), they find markets that help to create linkages that then take on a political expression.”

What the three countries need is more trade with each other, and joint activities in third markets, Gelb says. “What I think is very important to make it a reality is that links between each pair of countries becomes much more substantial,” he says.

One instance could be the merger deal being negotiated between two major telecom companies, Bharti in India and South Africa-based MTN, looking to create a merged entity worth 23 billion dollars with more than 200 million subscribers.

The merged company would service markets in Africa, the Arab world and in Asia. Several managers are already speaking of looking further afield to Latin America, where Brazil, the third pillar of IBSA, has the potential to be a big market.

There are several other agreements being worked out between companies from the three countries, and trade among the three is picking up rapidly.

Visiting Brazil in early September in preparation for October’s IBSA Business Summit, Indian external affairs minister S. M. Krishna underlined common opportunities, and also common threats arising from the financial crisis.

The crisis will push millions in developing countries back into poverty for another generation, he said ahead of the summit in Brasilia. IBSA, he said, “can be a game-changer in today’s circumstances.”

IBSA is now considering ways of opening up opportunities beyond the three-nation base. Officials are exploring increased trade links now between India and MERCOSUR (the South American group comprising Brazil, Paraguay, Uruguay and Argentina), and between India and the South African Customs Union.

The three IBSA countries have a population of close to 1.5 billion (mostly in India), and a combined GDP of about 3.2 trillion dollars, officials say. One way of beating the crisis arising in developed countries, they say, is for IBSA nations to sell far more to one another.

Foreign ministers Celso Amorin of Brazil, Krishna of India and Maite Nkoana-Mashabane of South Africa have set a target more than doubling trade among the three countries to 25 billion dollars by 2015. The total trade among the three last year was 10 billion dollars.

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