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Posted on on March 27th, 2013
by Pincas Jawetz (

 We posted recently the Kishore Mahbubani view of the world that points at   US, CHINA, RUSSIA, INDIA, The EU, BRAZIL, and NIGERIA as the Seven Front-line leading powers of the World. Of these the US and a United Europe are the powers of the democratic west – something of the past – with China, Russia, India, Brazil, and Nigeria the rising powers of the future. Interesting – here a deviation from what the UN’s BRICS that has South Africa and not Nigeria, as representatives of the black African continent.

Both – Nigeria and South Africa are not typical of the rest of Africa – the one ruled by a Muslim majority and based on Petro-money, the other ruled by a Western oriented government that has no clear independent economic policy but was seen for years as the bridge for Africa’s development. Mahbubani, who has clear leaning towards the Islamic world, likes to believe that eventually it will be Nigeria that will emerge as Africa’s main power. Whatever – Africa is the weakest BRIC and in many fora represented well by Brazil. I pick on this as a side issue to today’s interesting news of a Putin backed attempt at placing Russia, via South Africa, at the center of an effort to create a non-Western hub for the World economy and wrestle away the Western economic hegemony from a shriveling North Atlantic alliance anchored at Washington. The New York Times article that brought these latest news to our attention is obviously a US inspired reporting exercise.

Whatever – the facts are that the money is now mainly with China and the two big Western blocks, the United States of America, and the “not-yet-united” States of Europe, depend on China money, and as these last few weeks – the Greek tragedy in Greece and Cyprus – showed that eventually the Europeans might yet ask for hand-outs in Moscow. This was not wasted on the established BRICS and Mr. Putin moved on. The International Monetary system built after WWII – The World Bank and the International Monetary Fund – can be pushed aside in major parts of the Developing World.

It is not ingenious to point at the five BRICS that they are very different States – surely they are different among themselves – China, India, Russia, and Brazil have different political systems but are united in their interest to nudge aside the US from the position of manager of the world – and they see now their chance to do so.



Group of Emerging Nations Plans to Form Development Bank.

Agence France-Presse — Getty Images

President Vladimir V. Putin of Russia on Tuesday in Durban, South Africa,  just ahead of Nosiviwe Mapisa-Nqakula, South Africa’s defense minister.

Published: March 26, 2013

JOHANNESBURG — A group of five emerging world economic powers met in Africa for the first time Tuesday, gathering in South Africa for a summit meeting at which they plan to announce the creation of a new development bank, a direct challenge to the dominance of the World Bank and the International Monetary Fund.

The leaders of Brazil, Russia, India, China and South Africa, all members of the so-called BRICS Group of developing nations, have agreed to create the bank to focus on infrastructure and development in emerging markets. The countries are also planning to discuss pooling their foreign reserves as a bulwark against currency crises, part of a growing effort by emerging economic powers to build institutions and forums that are alternatives to Western-dominated ones.

“Up until now, it has been a loose arrangement of five countries meeting once a year,” said Abdullah Verachia, director of the Frontier Advisory Group, which focuses on emerging markets. “It is going to be the first real institution we have seen.”

But the alliance faces serious questions about whether the member countries have enough in common and enough shared goals to function effectively as a counterweight to the West.

“Despite the political rhetoric around partnerships, there is a huge amount of competition between the countries,” Mr. Verachia said.

For all the talk of solidarity among emerging giants, the group’s concrete achievements have been few since its first full meeting, in Russia in 2009. This is partly because its members are deeply divided on some basic issues and are in many ways rivals, not allies, in the global economy.

They have widely divergent economies, disparate foreign policy aims and different forms of government. India, Brazil and South Africa have strong democratic traditions, while Russia and China are autocratic.

The bloc even struggles to agree on overhauling international institutions. India, Brazil and South Africa want permanent seats on the United Nations Security Council, for example, but China, which already has one, has shown little interest in shaking up the status quo.

The developing countries in the bloc hardly invest in one another, preferring their neighbors and the developed world’s major economies, according to a report released Monday by the United Nations Conference on Trade and Development.

Just 2.5 percent of foreign investment by BRICS countries goes to other countries in the group, the report said, while more than 40 percent of their foreign investment goes to the developed world’s largest economies, the European Union, the United States and Japan.

Africa, home to several of the world’s fastest-growing economies, drew less than 5 percent of total investment from BRICS nations, the report said. France and the United States still have the highest rate of foreign investment in Africa. Despite China’s reputation for heavy investment in Africa, Malaysia has actually invested $2 billion more in Africa than China has.

Still, 15 African heads of state were invited to the summit meeting in South Africa as observers, a sign of the continent’s increasing importance as an investment destination for all of the BRICS countries.

China is in many ways a major competitor of its fellow BRICS member, South Africa. South African manufacturers, retail chains, cellphone service providers, mining operations and tourism companies have bet heavily on African economic growth and in some ways go head-to-head against Chinese companies on the continent.

South Africa is playing host for the first time since becoming the newest member of what had been known previously as BRIC. Many analysts have questioned South Africa’s inclusion in the group because its economy is tiny compared with the other members, ranking 28th in the world, and its growth rates in recent years have been anemic.

In an interview last year with a South African newspaper, Jim O’Neill, the Goldman Sachs executive who coined the term BRIC, said South Africa did not belong in the group.

“South Africa has too small an economy,” Mr. O’Neill told the newspaper, The Mail & Guardian. “There are not many similarities with the other four countries in terms of the numbers. In fact, South Africa’s inclusion has somewhat weakened the group’s power.”

But South Africa’s sluggish growth has become the rule, not the exception, among the onetime powerhouse nations. India’s hopes of reaching double-digit growth have ebbed. Brazil’s surging economy, credited with pulling millions out of poverty, has cooled drastically. Even China’s growth has slowed.

And once welcome, Chinese investment in Africa is viewed with increasing suspicion.

On a visit to Beijing last year, President Jacob Zuma of South Africa warned that Chinese trade ties in Africa were following a troubling pattern.

“Africa’s commitment to China’s development has been demonstrated by supply of raw materials, other products and technology transfer,” Mr. Zuma said. “This trade pattern is unsustainable in the long term. Africa’s past economic experience with Europe dictates a need to be cautious when entering into partnerships with other economies.”

Mr. Zuma appeared to have a change of heart before the summit meeting, saying Monday that China does not approach Africa with a colonial attitude.

But other African leaders are not so sure. —– Lamido Sanusi, governor of Nigeria’s central bank, wrote in an opinion article published in The Financial Times this month that China’s approach to Africa is in many ways as exploitative as the West’s has been.

“China is no longer a fellow underdeveloped economy — it is the world’s second-biggest, capable of the same forms of exploitation as the West,” he wrote. “It is a significant contributor to Africa’s de-industrialization and under-development.”

This article appeared in print on March 27, 2013, on page A4 of the New York edition with the headline: Group of Emerging Nations Plans to Form Development Bank.
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