South Africa showcases significant Brics divergence

THE BRICS club came into being more than a decade and a half ago, and has only grown in popularity since, yet its coherence is increasingly questioned.

To be sure, there is no question that the Brics (originally Brazil, Russia, India, China and South Africa) are a major, overall success story in aggregate. Today, these five nations (even before the expansion of the club this year to also include Iran, Egypt, Ethiopia, Saudi Arabia, and the United Arab Emirates) already account for around a quarter of global GDP.

This is up by over 10 percentage points from around a decade ago, and the overall growth of the five is globally systemically important. Indeed, data shows that, beginning in around 2020, the five Brics as a whole contribute more towards global GDP than the G7 industrialised nations (United States, Canada, Germany, Japan, United Kingdom, France and Italy) do, in terms of purchasing power parity.

Yet, scratch below the surface, and it is clear the five nations have had significantly diverging long-term economic trajectories. This has seen – generally – robust economic performance in China and India over the past two decades contrasting with disappointing outcomes in Brazil, Russia, and South Africa.

The result is that the group is unevenly balanced. China’s economic output is around 50 times that of South Africa – which goes to the polls on May 29 in what may prove a landmark election. The ballot is so important because the African National Congress (ANC) is in danger of losing its national majority for the first time since white-minority rule (or apartheid) ended three decades ago with Nelson Mandela coming to power.

According to the World Bank, the South African economy has retrogressed over the past decade and a half with GDP per capita falling from a high in 2011. This has led to a significant fall in living standards with the average South African more than 20 per cent less well off.

Today, it is estimated that around one third of the labour force is unemployed, the highest rate of any country monitored by the World Bank. Income inequality is also exceptionally high with more than double the number of people (over 18 million) on welfare benefits compared to some seven million taxpayers.

Moreover, despite some signs that President Cyril Ramaphosa’s economic reforms may be slowly working, this progress could now be threatened by political uncertainty on the horizon. If the ANC secures under 50 per cent in the polls, it will need to form a coalition government which worries some foreign investors.

To be sure, there is the business-friendly Democratic Alliance as one option here, but also the leftist Economic Freedom Fighters led by firebrand Julius Malema and former President Jacob Zuma’s uMkhonto weSizwe Party. The latter two groups have potential plans to expropriate land without compensation, and nationalise the central bank.

South Africa’s challenges are far from isolated in the Brics as the sorry tales of Brazil and Russia in recent years highlight. Both nations, for different reasons, have also faced major challenges.

In Russia, the country’s economy has been stunted by a variety of factors. This includes Western sanctions imposed in recent years since Russia’s annexation of Crimea a decade ago, and its subsequent invasion of Ukraine in February 2022.

In Brazil, meanwhile, much of the last decade has been a deep disappointment, economically and politically, which culminated in 2018 when former army captain Jair Bolsonaro became president. Bolsonaro’s win came in a context of dented political and economic self-confidence of the Latin American giant with the economy having endured the worst recession for decades with its debt downgraded to junk status by major credit ratings agencies.

In this context, it is perhaps little wonder that the Brics, originally formed for the club’s economic potential, has recently put political cooperation at the fore. This includes enhancing intra-Brics anti-terrorism cooperation, and enabling greater people-to-people interaction.

There is also emphasis on reforming the multilateral order as showcased in broader Brics projects, including creation of the New Development Bank, an alternative fora to the World Bank and International Monetary Fund. This finances infrastructure and other projects in the Brics, and a related special currency reserve fund. One driver for the new bank is the perception that it will allow Brics to better promote their foreign policy interests abroad.

Another recent initiative, perceived to challenge US and wider Western preponderance in information technology, was agreed when the Brics signed a letter of intent to cooperate in the sector. This builds on plans, first mooted more than a decade ago, for a potential optical fibre cable system to carry telecommunications between the Brics countries, partly as a means to try to evade the purview of Western intelligence agencies, including the US National Security Agency.

These examples underline the hunger of the Brics to become even bigger political (not just economic) players raising fears in some quarters that the bloc could, ultimately, become a unified anti-Western alliance. This concerns many given that the five nations encompass around 25 per cent of the world’s land mass, and over 40 per cent of the world’s population.

These concerns have grown significantly since Russia’s invasion of Ukraine. Politically, the Brics (and indeed many of the other developing countries of the Global South) do not perceive the Ukraine conflict in the same stark moral terms as much of the West.

For many countries in Africa, Asia, the Middle East and Latin America, such nonalignment has significant appeal. A wide number depend heavily on trade, aid, investment and/ or weaponry both from Western powers and from China, if not also from Russia.

This showcases that the Brics have some common interests, and indeed wider, shared concerns about key elements of the prevailing global order. However, it is unlikely, for the immediate future at least, that this will mean they will move decisively beyond an increasingly institutionalised forum for emerging market cooperation.

Part of the reason for this is the heterogeneity of the club (even before this year’s expansion) with its diverse interests showcased by Beijing’s periodic tensions with New Delhi, including over border issues, which can adversely impact relations between the two. This has been one driver of the so-called Quad of powers compromising India, the United States, Japan and Australia to act as a regional anchor vis-a-vis China.

Taken together, expansion of the Brics in coming years may only increase the heterogeneity of the grouping. To be sure, the club may maintain its prestige and popularity, but economic divergence may only grow, even if political cooperation deepens in some areas.

The writer is an associate at LSE IDEAS at the London School of Economics