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The Wages of Sub-Imperial Assimilation: BRICS Fantasies and Unintended Revelations

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Goa, India.

A Brazilian leader’s faux pas spoke volumes about the Brazil-Russia-India-China-South Africa (BRICS) heads of state summit underway in Goa this weekend. The country’s foreign minister (and occasional presidential candidate) José Serra told an interviewer last month that the BRICS included Argentina. And as he stumbled while spelling out the acronym, Serra also had to be prompted to recall that South Africa is a member (because in English it is the “S” in BRICS, but in Portuguese the country is “Africa do Sul”).

Well-known journalist Luis Nassif disgustedly concluded that the coup-plotter politician – who has a doctorate in neoliberal economics from Cornell University and was implicated in various corruption scandals, including favours for western oil companies against Brazil’s own Petrobras – is “neurologically damaged.”

With men at the BRICS helm like Serra and his president Michel Temer (who is also corrupt and widely despised), so too has the bloc become damaged goods. Former Goldman Sachs investment strategist Jim O’Neill recently offered embarrassed faint praise: “some of the BRICS are kind of doing basically what I thought they would do” though he conceded that Brazil, Russia and South Africa suffer from “commodities curse.”

The country most responsible for that curse is China, which drove up minerals and petroleum prices in a speculative building orgy from 2002-11. But it then crashed prices by more than half, when its globally-unprecedented infrastructure and industrial expansion derailed under its own curse of capitalist overproduction. The world is now left, for example, with a half billion tonnes of unneeded Chinese steel to consume annually, which when dumped in other BRICS countries (as well as the West) spreads devastating bankruptcies.

Because of these divergent, incoherent economic interests and also unpredictable geopolitical circumstances, BRICS as a project is now being written off, unfairly I think (given its sub-imperial facilitation of imperialist finance, trade and climate deals last December).

Tough questions about the bloc’s coherence are being asked; e.g. in South Africa, Creamer Media editor Megan van Wyngaardt recently enquired, “With each BRICS country facing challenges, could it disband?” Institute for Global Dialogue researcher Francis Kornegay replied, “BRICS is increasingly taking the form of RICs” due to the Brazilian and South African crises.

The geopolitical inconsistencies start with anti-Washington regimes in Beijing (with sabre-rattling over a few rocks in the South China Sea) and Moscow (whose sabres are sticking out of victims in eastern Ukraine and Syria, not to mention allegations of Russian-hacked emails repeatedly wounding Hillary Clinton). These defensive gestures are justified by BRICS supporters in opposition to the prolific destruction meted out by Washington especially since the Bush-Obama regime began in 2001, with worse anticipated next January when Clinton becomes US President.

Yet not only does BRICS also happily welcome Temer’s right-wing Brasilia coup ‘government’ with its strong pro-imperial bias, including reversing his coup victim Dilma Rousseff’s opposition to US-driven free-trade agreements. As Russia’s Deputy Foreign Minister Sergey Ryabkov argued last week, “I do not see any reasons for such conclusions that Michel Temer’s coming to power would damage deepening of cooperation in the BRICS format that we have seen in the recent years.”

Worse, the bloc’s summit is hosted this year by New Delhi’s Hindi-nationalist government, which is politically and militarily locked to Washington (as well as Tel Aviv). Brazilian commentator Pepe Escobar recently explained to Russia Today, “The cozying up to the Pentagon happens just a few months after Prime Minister Narendra Modi – who had been denied a US visa for nearly a decade – addressed a joint meeting of Congress in a blaze of glory, declaring that India and the US are natural allies.”

Meanwhile in between, Pretoria politicians, as usual, are talking left while walking right. Indeed after the dust of ideological confusion settles, at least one consistency is observable from all the BRICS elites: a stream of anti-imperialist chatter even when the intent is to assimilate into imperialism.

Last week, for example, African National Congress general secretary Gwede Mantashe pronounced, “South Africa will continue to call for the transformation of the Bretton Woods Institutions [World Bank and International Monetary Fund] and oligopolistic credit ratings industry.”

Mantashe is rightly worried because in December, it is widely understood that Moody’s, Fitch and Standard&Poors will deliver Pretoria a junk-bond rating and with it a run on the currency. Indeed the run just restarted following this week’s surreal accusations by the national prosecutor that finance minister Pravin Gordhan committed fraud by helping a friend secure a $75 000 early pension. This gambit is generally understood as a crude excuse for the crony capitalist faction of the ANC to insist Jacob Zuma fire Gordhan, who is mainly backed by neoliberals and big business but also by democrats worried about the slide into a corrupt dictatorship.

But both ANC factions have allowed a situation to emerge – as a Treasury official confessed last week – in which of every cent the state spends on procuring goods and services (more than $40 billion worth annually), nearly 40% goes to fraudulent overcharging by the state’s crony capitalists. Gordhan himself had explained Zuma’s modus operandi, which as finance minister he countenanced for more than six years: “Every time I want to do something, I say it is part of transformation. But in the meantime, it means giving contracts to my pals in closets.”

So calling for ‘transformation’ of the erratic New York rating agencies is absolutely valid, but the real problem is what lies behind them: international financiers who now have Pretoria under the thumb of foreign debt.

That debt load just hit a historic national record of 44% of GDP. To repay interest while permitting massive corporate profit outflows will require yet more borrowing by Pretoria from the West or from BRICS. For example, South Africa’s energy parastatal Eskom is in the process of negotiating a $5 billion loan from China, so it can better argue the case for self-financing eight nuclear reactors which are likely to be acquired from Russian and/or Chinese suppliers. Will a new BRICS credit rating agency be a solution, or will it be just an excuse to put future generations of South Africans deeper into a debt that must be repaid, not with local rands (which can be printed) but with hard currency ($ or yuan)?

Hatred of the World Bank and International Monetary Fund (IMF) is as lazy-easy to articulate from Brazil as South Africa. As BRICS New Development Bank (NDB) vice president Paulo Nogueira Batista (who was appointed by Dilma) remarked last week, “The Washington institutions fundamentally reflect the point of the view, the interest, the ideology of the North Atlantic powers, the Europeans on one hand the Americans on the other.”

But here the BRICS are at their most self-delusional and self-destructive, for they have had the chance to change the Bretton Woods Institutions in two ways: contesting their leadership and changing their voting power. The past months are revealing on both counts.

First, there’s no doubt that, in a just world, both World Bank President Jim Kim (from the US) and IMF Managing Director Christine Lagarde (from France) would be replaced. They won’t be, though, because the BRICS failed to put up a fight. In 2011 Lagarde was contested by a Mexican central banker, and in 2012 Kim fought a Colombian and Nigerian – but because of divergent BRICS’ country backing, neither challenger stood a chance.

In 2016, both were allowed to retain their posts, even though as Finance Minister before 2011, Lagarde is now subject to an upcoming corruption trial because of her €400 million largesse to a generous political party donor, Adidas founder Bernard Tapie; and even though Kim adopted a management style characterised by University of Pennsylvania political scientist Devesh Kapur as reeking of:

“authoritarianism and capriciousness, and he has forced out senior managers at unprecedented rates, sometimes requiring the Bank to reach quiet settlements with those affected. In four years, the president’s office has had five chiefs-of-staff, and several of the Bank’s senior women have left, hinting at a capricious leadership culture.”

His critics on the political left (from where Kim came to the world’s attention with his co-edited book Dying for Growth) are even more frustrated when it comes to the Bank’s corrupt, ultra-destructive mega-hydro projects and Kim’s disastrous roll-back of Bank social and environmental standards.

If ever there was a case for the BRICS making a stand against the imperialist multilateral banking tradition – namely, that a European leads the IMF and a US citizen runs the World Bank – 2016 was the year. But as Kapur remarked, the “World Bank’s recipe for irrelevance” was partly cooked up within the BRICS kitchen because “in the World Bank Group’s official leadership, the first three people listed after the president – hailing from Brazil, China, and India, respectively – are carefully distributed by nationality.”

The same kind of sub-imperialist assimilation was on display when the IMF included the Chinese yuan in its basket of currencies last November and again a month later when voting power was rearranged, giving China an increase of 37%, Brazil 23%, India 11%, and Russia 8% – but at the expense of Nigeria (which lost 41%), Libya (39%), Morocco (27%), Gabon (26%), Algeria (26%), Namibia (26%) and even South Africa (21%).

On top of that, last month the World Bank and NDB officials signed a deal for

co-financing of projects; facilitation of knowledge exchange… advisory services; and facilitating secondments and staff exchanges… We greatly appreciate timely support offered by the World Bank Group throughout our establishment process, and look forward to advancing and deepening our co-operation.”

So, will the Bretton Woods Institutions save the BRICS NDB and Contingent Reserve Arrangement from irrelevance – especially since the latter BRICS agency explicitly relies upon the IMF for policing structural adjustment loans?

In contrast, a group of several hundred activists from India have gathered for two days prior to the summit in a more optimistic mode. The ‘People’s Forum on BRICS’ aims “to connect local voices and concerns of Goa to the global scenario and critically engage with BRICS in this endeavour… to share analysis, struggle notes and build solidarity in the struggle for a more just and equitable society.” Especially in the wake of a massive national strike day last month by more than 150 million Indian workers opposed to Modi’s neoliberalism, such a society appears nowhere on the BRICS’ leaders radar screen, aside from rhetoric.

BRICS leaders are protected from this rabble by Modi’s proto-fascistic police state. And to top off the Taj Exotica 7-star resort’s aesthetics, sand sculptures have been constructed for the leaders’ delight: India’s Taj Mahal, the Great Wall of China, Russia’s Saint Basil Cathedral, Rio de Janeiro’s Christ the Redeemer statue and, representing South Africa, the Afrikaans Language monument.

What?! Sure, all these memorial structures have dubious origins in patriarchy and religious oppression of the poor. But it was 40 years ago this year that the final leg of the anti-apartheid struggle kicked off in Soweto, as students poured into the street (much as they are this week against the apartheid-economics of high university tuition fees). Their immediate grievance was being forced to learn Afrikaans.

The apartheid-era language monument near the Afrikaner enclave of Stellenbosch contains below an outstretched finger this telling inscription by poet Nicolaas Petrus van Wyk Louw: “Afrikaans stands with one leg in Africa and with the other in the West.” But the same line reflects the agenda of sub-imperialism: the BRICS countries’ five splayed toes joining those of the increasingly flat-footed United States and European Union, firmly astride the throats of the world’s poorest people.

Patrick Bond (pbond@mail.ngo.za) is professor of political economy at the University of the Witwatersrand School of Governance in Johannesburg. He is co-editor (with Ana Garcia) of BRICS: An Anti-Capitalist Critique, published by Pluto (London), Haymarket (Chicago), Jacana (Joburg) and Aakar (Delhi).

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