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WORLD-ECONOMY: New Directions or Just New Directors?

CAPE TOWN, Apr 15 2010 (IPS) - The business and political leadership of the world’s strongest emerging economies meet this week in Brazil. Are these gatherings of the champions of a new and fairer global economy, or of new pretenders to the old throne?

On Apr. 15, Brazil hosts summits of the trilateral India-Brazil-South Africa (IBSA) organisation and the Brazil-Russia-India-China (BRIC) group. Both organisations seek to strengthen the role of their members in the world economy.

“A part of the idea behind IBSA is to push for reform, but the reform is not about empowering smaller countries,” says Shawn Hattingh, a researcher at the International Labour Research Information Group in Cape Town.

“It’s about IBSA members getting greater voting rights (within the IMF and World Bank). It’s basically a power play within the existing system.” ? In Hattingh’s view, neither IBSA nor BRIC represent anything new for the majority of people living in the South.

China, he says, is locked in a dependent relationship with its major trading partner, the U.S., that limits its desire to press for deep changes.

Who's meeting?

BRIC is an organisation that arose out of an analysis, a projection of the future - an economic research paper published by Goldman Sachs in 2003 suggested that these four countries would be among the world's most dominant economies by 2050.

These four countries today account for 15 percent of the world economy; the United States alone accounts for 30 percent.

The emerging powers are seeking greater influence. Brazil, Russia, India and China held a first summit in June 2009 to discuss and coordinate their response to the global financial crisis and press for reform to international financial institutions. South Africa is keen to join the association.



South Africa is already a member of IBSA, which was established in 2003 to promote coordination between its three members: each leading economies in their respective continents, and sharing important similarities as multi-ethnic, multi-cultural, elected governments of emerging economies.

IBSA's stated purpose is "to contribute to the construction of a new international architecture", uniting the voices of its members on global issues.

Looking at China’s trade with Africa, Hattingh sees little other than a familiar desire to protect its own interests in oil and other natural resources from the continent: infrastructure projects in the Democratic Republic of Congo are closely tied to lucrative mining contracts; Zimbabwe got electronic jamming equipment in return for mining contracts; in Angola, a new airport was bartered against 10,000 barrels of oil per day; Sudan is purchasing arms and helicopter gunships in exchange for oil.

Assessing trade and investment relations between Brazil, India and Africa, he says these relationships too are predatory – and he would include South Africa’s own transnational corporations in this analysis – offering little benefit to the majority in the countries they operate in.

“To protect the interests of their own corporations, (IBSA members) will clash occasionally with the U.S. or the UK at a regional level, but they would never seriously seek to undermine these powers – rather they by and large serve their interests. As such, they don’t seek to undermine the existing order.”

Is this assessment fair? Rathin Roy, director of the International Policy Centre for Inclusive Growth, would not agree.

“The IBSA countries have, each in their own way, made significant advances in (showing) that inclusive growth is possible, that poverty reduction and human development need not await generations of narrowly focused growth maximization,” he told a forum of academics and policy makers who met in Brasilia on Apr. 12.

Cândido Grzybowski, head of the Brazilian Institute of Social and Economic Analyses (IBASE) and a prominent member of the International Council of the World Social Forum (WSF) says it’s unfortunate that the new associations of emerging economies take the established economic order as their starting point.

But would a global economy dominated by the newly emerging powers be worse?

Grzybowski says “maybe, maybe not.” China’s approach “is better than sending armies, as imperialists have done in the last five centuries,” for instance in Africa, recalling several stages of colonialism in that continent, and the damage caused by British, French and Portuguese forces.

The difference with China, he says, is that it tries to negotiate.

“(China) doesn’t send an army, but it is a new imperialist,” he said, comparing China to another rising power in the BRIC group, Brazil. In South America, “Brazilian companies are buying everything they can lay their hands on.”

Grzybowski referred to the state-owned oil giant, Petrobras, which extracts oil and gas in many parts of Latin America, and multinational companies like the steelmaker Gerdau, Votorantim (mining, metalworking, cement, steel and paper) or the Odebrecht construction group. Odebrecht also has important investments in Algeria and Liberia. Petrobras is active in Angola’s oil sector.

These Brazilian transnational corporations are acquiring other companies and large productive sectors in other countries, following “the old nationalistic vision of ‘going multinational’ and taking over major industries in other countries to build their power.”

For an alternative vision, Hattingh points to ALBA, the Bolivarian Alliance for the Americas, as an example. ALBA seeks to directly address social inequalities and develop alternatives to existing trade relations, including projects such as the Bank of the South, which would give developing economies an alternative to the IMF.

“ALBA is not creating a world of equality or socialism, but at least it’s creating a situation where people can get social services, where jobs are being created around very interesting programmes of food sovereignty for example,” he says.

“There’s no willingness on the part of the players in BRIC or IBSA (to join such initiatives). That would only come if there were major struggles and the state felt itself to be under threat.”

ALBA’s membership is mostly smaller economies – Antigua and Barbuda, Cuba, Dominica, Honduras, Nicaragua, Saint Vincent and the Grenadines, and three oil producers: Venezuela, Bolivia and Ecuador.

South Africa was twice invited to join the Bank of the South, and twice refused.

But the threat to the state that Hattingh mentions – viewed from the opposite perspective as pressure from below – is the factor that will determine the future form and impact of IBSA and BRIC, in Grzybowski’s opinion.

The emerging economies could have an important role in developing a world economy that will serve the interests of the majority, “if they do not aspire to be partners of the global powers-that-be, or their future substitutes, but promotors of a new global architecture.”

However, he stressed, “that will depend less on their governments than on their societies,” which would have to demand changes in the rules of global governance.

*Fabiana Frayssinet in Rio de Janeiro contributed to this report.

 
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