EVER since the term was coined by Chief Economist at Goldman Sachs, Jim O’Neill in 2001, as an acronym for countries, which were ‘deemed to be at a similar stage of newly advanced economic development’, the BRICS grouping has been little more than, a disparate think-tank of dictators, oligarchs, and yellow democrats from either extremes of the political spectrum.
That the term arose from a paper written for Goldman Sachs’ “Global Economic Paper” series by a later British life peer and lord and former conservative government minister, should have given us a hint as to what lay in store as BRICS became a metaphor for top-down rule-by-decree and the bypassing of national government checks and balances.
In 2009 the leaders of the first four countries held their first summit and in 2010 BRICS became a formal institution of 5 nations including South Africa. It was the administration of Jacob Zuma which saw BRICS as a sterling opportunity (excuse the pun) to essentially jettison parliamentary oversight in favour of a series of corrupt practices by the executive — in a scheme which became known as ‘state capture’ and whose tragic outcome is all documented by the Zondo Report.
Since its inauguration, the new entity has seen the creation of the so-called New Development Bank (NDB) in 2012, followed by this year’s hasty proposals by Russia’s Putin to create a ‘reserve currency’. “A BRICS currency is unlikely to dislodge dollar any time soon” writes Mihaela Papa, Adjunct Assistant Professor of Sustainable Development and Global Governance at Tufts University.
The proposal however, is worrying when it comes to local interest rates and inflation.
Keith Bradsher of the New York Times details the mounting concerns surrounding the “steep increase in China’s debt, more than doubling compared with the size of its economy since the global financial crisis 15 years ago. The nation’s contribution to debt distress across the African continent has also not gone unnoticed, so too the intractable issue of human rights within China, all noted by Amnesty International.
Russia was recently forced to raise interest rates above 20 percent to stop capital flight following its illegal invasion of Ukraine. The country is subject of an International War Crimes tribunal and has had its foreign reserves blocked by central banks resulting in a sovereign default, which may explain the overall Russian anxiety in wanting to create an instant reserve currency distinct from the Ruble, and bar the consequences for individual nations.
In fact if one reads the scented press releases, the new currency is all but a foregone conclusion, at least in the eyes of BRICS leaders, and this at the same time that our own President Ramaphosa remains at the centre of a currency scandal involving dollars placed under a mattress.
Either the Kremlin and Beijing assumes BRICS has jurisdiction over our Central Bank or believes every BRICS member-state is essentially run by a dictator at the helm of a command economy? One may even argue that Russia’s position in BRICS has emboldened its aggression in Ukraine, instead of acting as a moderating force, much like the African Union which it seeks to surpass.
Whatever happened to Africanism, and the African Renaissance?
If you read the Russian propaganda spewing from news agency Sputnik, BRICS’s individual constituents may just be about to embark on an unprecedented act of printing money to satisfy their own egos, leading South Africans to forego their own sovereign currency, in favour of a parallel version of the Chinese Renminbi, or perhaps an exchange note based upon a basket of currencies such as the Brazilian Real?
In effect a BRICS Ponzi scheme whose immediate beneficiaries will most likely be, already heavily indebted nations struggling to pay off sovereign debt, who may now find themselves unable to control inflation and fiscal policy in the future, leading to further financial distress?
The only way a currency could ever be considered a ‘reserve currency’ is if it were frequently traded like the Euro or Dollar. Such a feat would require all BRICS members to replace their own currencies as legal tender, a costly exercise in and of itself, given the latest expense incurred by our Reserve Bank. Replacing Randelas with new BRICS bank notes or pegging the Rand to the Ruble, could have unintended consequences.
Exactly how all of this effects South Africa’s current Rand status and our Reserve bank’s inflation targeting is anyone’s guess, but as they say, caveat emptor, let the buyer beware.
China for instance has conducted a policy of currency deflation for decades while routinely implementing currency controls, artificially pegging its fiat currency to the dollar. This is quite the opposite of the current Rand regime, based as it is on floating exchange rates and moving away from an apartheid-era siege economy.
There is also chalk talk of expanding BRICS membership to include Iran (a country with a death penalty for homosexuals), in a mad dash to upsize and superscale by increasing both the weight and size of BRICS, to deliver us the much vaunted, ‘multipolar world’.
If this sounds a lot like ADHD, generating in effect a de facto Putin Support Committee, then so much for the effete idea about South Africa being non-aligned and LGBTIQ-friendly?
The BRICS NDB has already accepted countries such as the United Arab Emirates, Uruguay, Bangladesh, and Egypt’s military dictatorship as tentative members.
Iran and Argentina (with 90.2% inflation) have already applied to join.
In short, South Africans can kiss their black majority, democratic-lead constitution and sovereignty goodbye. Get ready for news of our tax-Rands flowing into Russia’s frontline and a country whose war-time cabinet lacks a single person of color. This would come as no surprise, the ruling ANC has already signed our national treasury up, to at least a decades worth of foreign aid for Cuba and other financially distressed dictatorships.
An article in the Telegraph details “How paradise South Africa became the continent’s top terror financing hub.“
Which is perhaps why our foreign policy looks a lot like a badly-thought out campaign of bribery to support anyone opposed to the current UN Charter, rather than a means of furthering the aims and objectives of our own constitution via the exercise of soft power and diplomacy?
As Ray Hartley and Greg Mills so elegantly put it “While democracy is vital to South Africa, it is apparently not necessary in other countries with whom we wish to be friends for opaque reasons.”