BRICS, a boondoggle of dictators, homophobes & outright misogynists.

LAST MONTH Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the UAE were invited to join a grouping of ‘top emerging economies’ known as BRICS dreamt up by Goldman Sachs economist Jim O’Neill. The only thing linking the bloc previously was their economic status. Nowadays, the addition of six new members, appears to add weight to the notion that the club is less an economic convenience than a means for these nations to escape pressure from Western values which emphasise elections and human rights.

While Argentina is a democracy, the other new additions are not. Ethiopia’s authoritarian one-party system has largely excluded the public from genuine political participation, while the UAE has been described as a “tribal autocracy” where the ‘seven constituent monarchies are led by tribal rulers in an autocratic fashion’. There are no democratically elected institutions, and there is no formal commitment to free speech.

Saudi Arabia on the other hand is an absolute monarchy. According to the Basic Law of Saudi Arabia, the country’s de facto constitution adopted by royal decree in 1992, the king must comply with Sharia law and the Qur’an. With neighbouring Iran competing as an oppressive theocracy called the “Islamic Republic,” with a religious “Supreme Leader” overseeing all aspects of Iranian life.

This month marks one year since Mahsa Amini died in the custody of the Iranian morality police, setting off mass protests. Authorities continue to quell any new unrest. UN experts in March expressed outrage at the deliberate poisoning of more than 1200 schoolgirls in Iran’s major cities by a regime intent on maintaining religious strictures against women who are forced to wear the Hijab.

Despite the threat of arrest, millions of Iranian women actively oppose the hijab, wearing it loosely around their heads or on their shoulders.

Lesbian, gay, bisexual, and transgender (LGBT) people in Saudi Arabia face severe repression and legal challenges not experienced by non-LGBT residents. LGBT rights are not recognized by the government of Saudi Arabia. Both male and female same-sex sexual activity is illegal. In Iran, LGBT face the death penalty. In Ethopia homosexuality is criminalized under the country’s penal code,

The newcomers for the most part lack universal rights for minority groups. In Saudi Arabia, Jews are restricted from practising their religion in public and the country bans non-Muslims from entering the city of Mecca.

In contrast, Iran’s Jewish community is officially recognized as a religious minority group by the government, and, like Zoroastrians and Christians, are allocated one seat in the Iranian Parliament.

BRICS neo-colonialism demonstrated by Putin’s threat of war against South Africa

REVELATIONS of Russian dictator Vladimir Putin’s temper tantrums, with a threat of armed aggression against the Republic, including a possible declaration of war, have come to light, after a judge ordered that President Ramaphosa’s affidavit on an ICC arrest warrant be made public this week.

The Gauteng High Court ordered that President Cyril Ramaphosa’s confidential affidavit related to an arrest warrant for Russian President Vladimir Putin be made public by 2pm on Tuesday.

Constitutional and international law expert André Thomashausen was reported as saying President Cyril Ramaphosa‘s confidential affidavit is of a “very high quality” and speaks of the seriousness of the Russia/Ukraine conflict which is the biggest crisis since World War II.

The saucy affidavit, which was made public on Tuesday, claimed arresting President Vladimir Putin if he travelled to South Africa for the Brics summit in August would be a ‘declaration of war with Russia’. Putin has previously threatened to attack any nation which resists his efforts to crush Ukraine, with nuclear weapons, a threat already discounted by the West.

The president told the Pretoria High Court in Gauteng that South Africa ‘does not have the capacity nor appetite to wage war with Russia and Putin’, which begs the question as to who exactly our partners in BRICS are?

BRICS is the fanciful result of an acronym invented by an economist at Goldman Sachs, Jim O’Neill in his report, ‘Building Better Global Economic BRIC’.

Rock, paper, BRICS?

The informal group, much like the now defunct FAANG, is dominated by China, but added South Africa in 2010, with the resulting politicking and economic intrigues, tending to distract attention and energy from another more important, tangible bloc, the African Union.

BRICS member states include members with an autocracy, and even a one-party state where trade unions are banned, have increasingly sort to formalise their political and economic ties to compete with groups such as the G7 and western nations, despite major secular differences in approach to issues such as Gay marriage, minority rights and women.

As part of this neocolonial, brutal one-upmanship, dedollarisation alongside the introduction of a much-vaunted new BRICS currency backed by gold, has been mooted by Putin supporters, eager to escape Western sanctions.

Lavrov promotes ‘dedollarisation’ as if not having access to Western markets (which account for over 50% of South African trade), is somehow a positive move, and all that is required for Russia to succeed, is to avoid post-Bretton Woods financial institutions, while engaging currency unification talks with China?

Return of the Gold Standard?

Exactly where all the required gold lucre would come from to pay for the war, and who would pay for the storage of the hard asset in a system long-since abandoned, is unclear. The gold standard was abandoned in 1971 due to its ‘propensity for volatility, as well as the constraints it imposed on governments: by retaining a fixed exchange rate, ‘governments were hamstrung in engaging in expansionary policies to, for example, reduce unemployment during economic recessions’.

In a speech filled with sketchy ideological keynotes, Dr Nkosazana Dlamini Zuma speaking in Durban, attacked South Africa’s financial institutions whilst promoting the BRICS bank (and by implication, gold standard) as some kind of panacea for development financing.

The problem with this rhetoric is that gold itself is in reality, a non-productive asset, since it does not produce interest nor even dividends as such. Gold as a metal is historically favoured for its being inert, but in an era of bitcoin and crypto-currency, it is not entirely certain what role such an asset should play in our future?

Dlamini-Zuma claims without any proven research, “we need an alternative public banking and finance system beyond the dominant one, and we need it urgently. The New Development Bank is thus a step in the right direction, but we need to domesticate alternative banking as a matter of urgency.

Banks are a mirage, what is Dlamini-Zuma talking about?

While banking institutions have certainly opened up in South Africa over the past years, with several new online banks, some with zero-fees, being given licenses, the so-called BRICS bank is already hobbled by the fact that it exists, like most banks, as a patron and client of the global financial system, which begs the question, in which world, would the new system reside?

The mirage of a separate banking reality, is seen by the fact that China itself, has had a policy of yuan devaluation for decades in order to promote exports and would find it extremely difficult to move towards a system in which it provided a physical asset such as gold for every yuan or Renmimbi printed.

Brazil on the other hand is heavily in debt to its eyeballs, and would certainly benefit from offloading its debt and banana economy onto poorer nations such as South Africa.

India is the only shining light so far as real economics is concerned, but most of this is the result of the ICT service sector, in which the West and Western markets play an enormous role. Apple Computer for example, just posted outstanding results for its India division, with the kind of numbers that political appointees such as Dlamini-Zuma tend to ignore.

South Africa which is blessed with a modern and open financial system, after decades of exchange controls, could do better than empty rhetoric, by focusing on the key element that has driven India’s surging economy, a digital growth strategy that presents a vastly different picture to that of China’s state corporations, many of whom, like China Rail, are running at a loss.

Admittedly, Chinese policy-driven expansion, where the party pulls the strings, has delivered remarkable engineering achievements, but it is also leading to gross dislocations of capital, as seen by the recent Evergreen property boom and bust.

Jim O’Neill’s unproven theory seemed like a good idea at the time.

BRICS may seem like a good idea, but its political impact as shown by Putin’s threats of war, and fallout from the West, shows it also has a lot of shortcomings. Indeed the ‘BRICS Bank’ has already demonstrated its unwillingness to fund member states such as Russia. And thus a lot of the takeaway points being thrown around by cuckold politicos on the left, are really meatless bones provided to the masses to gnaw on.

As delegates arrive in South Africa for the BRICS schmoozefest, attempting to show a unified face while dining on cream puffs, remember that efforts to expand the BRICS group in recent years, to include nations such as Saudi Arabia and Iran, both of whom practice gender apartheid, would lead to a paradox of shrinking influence for smaller states according to Patrick Bond. It has also resulted in the diminution of the AU as a focal point in our own backyard.

The Democratic Alliance (DA) thus went to court on Monday to compel Ramaphosa to share the Putin document” on a ‘mission of clarity regarding the ICC threat of arrest’. Ramaphosa had argued the contents could not be shared because he was prohibited from doing so due to international law that governs the workings of the International Criminal Court (ICC).

Putin presents Pretoria with a not-so-pretty pickle

NO SOONER had Pretoria (Tshwane) shown the world that it cared very little for the UN Charter codifying the major principles of international relations, from sovereign equality of States to the prohibition of the use of force in international relations, it found itself facing a legal problem presented by the International Criminal Court (ICC).

The issue of Putin’s attendance at a BRICS summit  the upcoming 15th BRICS Summit from August 22 to 24, in Durban following the ICC issuing an arrest warrant, comes after the SANDF conducted military exercises with Russia and China on the anniversary of the invasion of Ukraine.

It was an embarrassing show of support for the aggressor, presenting a major predicament. On the one hand foreign minister Naledi Pandor claims South Africa is neutral on the issue of the Ukraine war, supposedly practising a ‘continental tradition of non-alignment’, on the other, the country has aligned itself with an emerging power-bloc that includes Russia.

The embattled Ramaphosa government may just have to decide which side its bread is buttered. It cannot simply pretend the world is not watching, or that ANC civil rights history translates into eternal immunity from world opinion. The fading Mandela Miracle which birthed a Rainbow Nation has rapidly turned into a tragic story of hubris and self-defeating political intrigue.

While many within the ruling party, see the BRICS Development Bank as an all-important counter to ‘Bretton Woods’ financial institutions, the reality is far from the rhetoric — most of the country’s economic activity involves the West, with trade far outweighing business within the BRICS bloc. Though China ranks ahead of the USA $11.69B vs $10.73B, the addition of the EU, UK and Japan make such a comparison seem absurd.

United Kingdom$6.30B2022
Trade with the West far outweighs BRICS trade

The BRICS bank, a hallmark of the political project which begun under Zuma, is by no means independent, and the price of gaining an international banking conceit, one which translates into an essentially unproven claim, a counter-weight to the Washington Consensus, (Putin’s much vaunted “multipolarity”), may yet turn out to be a unsustainable, too expensive and complicated in the long run.

Much like the G20, BRICS (a product of the Left) is merely an artificial acronym invented by Goldman Sachs economist Jim O’Neill , to denote the five biggest emerging economies. It is currently neither a political nor an economic union, and stands awkwardly on the world stage, unlike the more important African Union and SADC, both also teetering on the brink of collapse, the product of ANC neglect.

South Africa’s economy has been unable to post meaningful growth figures over the past five years, despite the launch of the African Continental Free Trade Area (ACFTA). The welcome trade surpluses (a factor under Ramaphosa’s drive for R1 trillion investment) have swung into a deficit of R23.05 billion — a significant decline from January 2022’s R4.64 billion trade balance surplus — amidst signs that multinationals like BP may be quietly withdrawing from the country, sensing sanctions on the horizon?

Foreign Minister Naledi Pandor is thus effectively steering the nation down a rather bleak path, (in step with Iranian Ayatollahs) one that could lead to outright sanctions, trade embargoes and equivalent loss of influence and prestige.

Twenty-six African countries voted in favor of a resolution rejecting Moscow’s controversial 2022 referenda in four Ukrainian regions, with South Africa increasingly isolated and outmanoeuvred on the continent.

Finance Minister Enoch Godongwana is already battling grey-listing by the Financial Action Task Force (FATF) for falling short of international standards for the combating of money laundering and other serious financial crimes, and Pandor appears to be working hard to essentially sabotage his efforts. It is no coincidence the FATF action also occurred on the anniversary of the Ukraine invasion.

More worrying is the manner in which the country, (more so under its previous President Zuma), appears to be importing organised crime — adopting Putin’s kleptocratic system of state capture and oligarchy to some extant, a system benefiting economic elites at the expense of ordinary citizens.

The findings of the Zondo Commission into corruption and state capture have yet to translate into meaningful prosecution and jail-time for the culprits.

South Africa may yet return to the period in which it was viewed as the polecat of the world.

SEE: Pandor’s prevarication over Ukraine, Lavrov parallels Pik Botha statements on special military operation against SWAPO

BRICS war criminals seek to impose ‘reserve currency’ from above

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.”

BRICS dilemma, folly or curse?

Master of Junk

IT WAS never meant to be anything more than a political union, similar in status to the non-aligned states. Economically, only two of the five BRICS nations, China and India are doing well, the rest are all currently in junk status. Russia was junked in 2015, followed by Brazil in 2016 and South Africa in 2017. In many respect it is Russia which has tilted BRICS in favour of junk, and has lead the pack in this regard, with the result, there is now a Good BRICS and a Bad BRICS story.

Goodness BRICS

Let’s take a look at what is good here. So far as the China is concerned, the need to create markets for its overproduction of goods has meant that it is forced to continue investing in overseas markets, and the result is largely of benefit to us.

South Africa, an outlier so far as size is concerned, has seen several deals involving, variously, the creation of an entire city in Modderfontein, the relocation of a Hisense television factory to our shores, and the latest investment of 11Bn Rand towards a new car factory in PE. So in addition to our ample resources and export market, there is now significant beneficiation of goods within the country, in an evolving relationship, all producing goods which in turn end up in the West.

India, another global leader, has taken a slightly different tack. The past decade has seen successive major investments by Asian-based entrepreneurs in the South African economy. Beginning with Lakshmi Mittal, who bought former state-owned ISCOR shortly after democracy, to create ArcelorMittal. More recently the Indian billionaire Anil Agarwal bought a substantial stake in Anglo American, a traditional dual-listed South African business, which has relocated its headquarters to London. The pattern is thus one of picking up bargains, arguably to the benefit of stakeholders. Though trade between the two countries is booming, this is often however at the cost of local clothing and textile workers.

Badness BRICS

Where trade with the two Asian economic giants of BRICS has tended to benefit South Africa. The reverse is true when it comes to Russia. Instead of buying out state-owned enterprises (SOEs) as in Mittel, relieving taxpayers of an unnecessary drain on the treasury, or simply just investing money, the Russian strategy has been instead to hijack the remaining SOEs whilst foisting projects upon us of dubious merit. In effect it is Russia which has engaged in what can only be called a form of state capture, and nuclear colonialism.

The proposed Rosatom nuclear deal along with its many intrigues under Malusi Gigaba is very bad for South Africa, both economically and politically. Apart from the fact that the deal will result in an unnecessary 1Trn Rand expenditure from the treasury on nuclear technology already past its sell-by-date, — bringing to a halt and seriously compromising a highly successively renewable energy programme — it will not only relieve the country of taxpayers money, but will also remove scarce foreign exchange.

If implemented the Rosatum deal would commit South Africa to paying forward for its electricity in Dollars for the next 60 years — a currency that Russia desperately needs in order to balance its own books. In effect no money is being invested by Russia as such. Instead, the country would borrow money on the open market against its forward production, in order to buy moribund technology from Russia in a similar deal already concluded with Saudi Arabia. The ‘sukuk deal’ financed Medupi and Kusile in this way, and albeit local technology which benefitted, the resulting finance model is no doubt to the ultimate detriment of the economy and climate. See how Saudi money dried up.

Zuma’s Afrochinistan Affair

IF LOCAL economic fall-out and the prospect of capital flight ultimately put paid to President Zuma’s short term economic plans, take a look at what happened to the country’s macro-economic outlook.

After meeting with Chinese President Xi Jinping earlier this month, Zuma announced that he was replacing South Africa’s finance minister with a relative unknown, David van Rooyen, effectively downgrading the status and prestige of the portfolio, which all ended in a massive flipflop, see here.

As to why the President thought he could do this, was not immediately self-evident to the media. Granted, there were many reasons offered by pundits as to why the President would want to remove Nene — the alleged friction around the SAA and Nuclear deals, the inconvenient problem of fiscal prudence and fund raising and so on.

But then Zuma announced that he was redeploying Min. Nene to the BRICS bank. Arguably outsourcing the treasury, and moving Nene to a position in which the Minister had apparently not even been short-listed, never mind appointed. Was this global real-politiek playing itself out at the expense of the country, or simply another expedient marriage?

If you see the BRICS New Development Bank (NDB) as just another bank, all fine, it is easy to forget that NDB aims to counterbalance Bretton Woods structures such as the World Bank, a central bank of central banks, but at what price? Will participation entail domestic interference? Changes in foreign policy? The Nene saga does not bode well.

The covert power-game, surrounding the emergence of a supranational, global cabal — an economic elite focused around the NDB,  is really what has been revealed over the course of the month.

Unaccountable, autocratic and without any particular national loyalty, save for the amorphous arrangement which is BRICS, NDB and its cronies, (along with its capacity for intrigue), has been seen by the Zuma administration as the quick fix solution to all manner of national, regional and personal troubles. In other words, a veritable license to print money or issue bonds outside the local economy, that exists as some form of debt birthed out of the peculiar position which its one anchor tenant, China holds within the world economy.

A positive spin, would see it as a safety net, courtesy of the Chinese (PRC), but such conclusions are not necessarily foregone. China itself, experienced a major stock market meltdown, requiring drastic intervention by the PRC party. Turning South Africa into a client-state is thus not necessarily conducive to long-term economic growth and stability. The Johannesburg Stock Exchange (JSE) for example, is a lot older than the Shanghai Stock Exchange (SSE), 1887 versus 1990, a difference of 103 years.

China recently announced that it was issuing Rand-denominated bonds to pay for infrastructure in South Africa, a duty usually the preserve of the Reserve Bank and the treasury.

The events of the past weeks thus beg the question: Does Jacob Zuma see himself as the President-elect of a new country called Afrochinistan? A nation-less, global politician, who recently made the startling statement that his party came before his own country, a leader of a political movement, which now sees itself as the equivalent of the PRC ruling party, in which party congresses are held in what is effectively a one-party state that has no state, except the currency markets.

Clearly Zuma, until the events of yesterday, which saw Pravin Gordhan reappointed, had ceased being accountable to the people of his own country, never mind his own party.

With so many bilaterals, trilaterals and Paris Conference of the Parties, the Zuma administration has really began looking as if it has permanently relocated itself outside of the country. Then, along came a major upset, an open rebellion within the ranks, the reality of Rands and Cents.

Following upon the heels of the Gupta controversy (merely a sad attempt to marry Indian and South African politics), the Xi Jinping meeting has resulted in ANC apparatchiks announcing parallel policies that could take South Africa in the direction of the Chinese political system, with the tragic consequence of an erosion in civil liberties, individual rights and freedoms.

If it isn’t the controversial Cybercime Bill, which could see a National Firewall censoring the Internet, then it is the clampdown on Press Freedom, (or as some might see it, a general purchase of the press), the embrace of radical terrorist groups such as Hamas, and the Dalai Lama debacle, all of which speak to a failure to protect the nation’s secular legacy of peace and human rights, and especially the rights of religious, ethnic and cultural minorities.