Contrary to rumour, the Brics (Brazil, Russia, India, China and South Africa) alliance meeting in Fortaleza in Brazil confirmed it would avoid a transformative repair of the unfair, chaotic world financial system. The Brics “are actually meeting Western demands” China Daily reported, “to stabilise the global financial market”.
But a New York Times editorial claimed the alliance “aimed at challenging the American-led global economic order” and the Mail & Guardian pronounced: “South Africa is the nation that stands to benefit the most.” Pleasing rhetoric, sure, but nonsense. If the two overarching problems of our time are climate change and systemic financial instability, the Brics countries suffer what in psychology is termed “co-dependency” with the most malevolent Western forces.
The term, according to Lennard Davis in his 2008 book Obsession, “comes directly out of Alcoholics Anonymous, part of a dawning realisation that the problem was not solely the addict, but also the family and friends who constitute a network for the alcoholic”.
Suffering the neurological impairment of a junkie, Western finance officials continue the helter-skelter pumping of dollars, euros and yen into the world economy. This money pushing is a hopeless drug addict’s fix in which economic liberalisation policies (“reforms”) mainly generate new asset bubbles.
Another fatal Western obsession facilitated by the alliance is the emission of greenhouse gases at whatever level maximises corporate profits and to hell with future generations.
The Brics countries have enabled the West’s most self-destructive, hedonistic habits during times of most acute ecofinancial crisis:
? The 2009 G20 bailout of Western banks via consensus on a $750-billion International Monetary Fund (IMF) global liquidity infusion;
? The 2009 Copenhagen Accord in which four of the five Brics agreed to continue emitting unabated. (They “wrecked the UN”, according to Bill McKibben of 350.org);
? The 2011-2012 acquiescence to the (s)election of new European and United States chief executives for the Bretton Woods institutions – despite whinging, the Brics couldn’t even decide on joint candidates; and
? The 2012 agreement to give another $75-billion to the IMF, even though it was apparent Washington wouldn’t change its undemocratic ways.
To their credit, last September at the G20 summit, the Brics nations pulled away US President Barack Obama’s itchy trigger finger after the Syrian regime apparently used chemical warfare against civilians, gaining disarmament instead of conflagration.
And, thank goodness, US whistle-blower, spy Edward Snowden is safe in Russia, though it’s likely that the grouping will break earlier promises to establish new internet connectivity safe from the US National Security Agency data thieves.
But the greatest heartbreak is Brics banking. Before the Fortaleza summit, we expected them to weaken dollar hegemony. Instead, both the New Development Bank (NDB) and Contingent Reserve Arrangement (CRA) will operate with the US dollar as its currency. This signifies retox, not detox.
According to the University of London political economist, John Weeks: “The purpose of the Brics bank, as a project funding bank, is to link finance offered to the construction firms and materials suppliers located in the Brics themselves.” (A $5-billion loan from the China Development Bank to Transnet announced at Durban’s 2013 Brics summit resulted in $4.8-billion worth of locomotive orders from Chinese joint ventures.)
Weeks observes: “The voting proposal for the Brics bank follows the IMF and World Bank model: money votes with shares. The largest voting share goes to China, whose record on investments in Africa is nothing short of appalling.”
Tellingly, he continues, “the warm endorsement of the NDB by the World Bank president suggests enthusiasm rather than tension”.
But isn’t the CRA a $100-billion “replacement” for the IMF, as is widely advertised? No, it amplifies IMF power. If a borrower wants access to the final 70% of its credit quota, that is contingent on “evidence of the existence of an on-track arrangement between the IMF and the requesting party based on conditionality”.
Emergency CRA bailouts may be necessary sooner than later. In South Africa, foreign indebtedness is high: $140-billion, up from $25-billion when Nelson Mandela inherited apartheid debt. Measured in terms of gross domestic product, that debt has now risen to 39%. Even the Reserve Bank’s latest quarterly bulletin warns that we are fast approaching “the high of 41% registered at the time of the 1985 debt standstill”.
More recently, foreign debt skyrocketed, in part because of irrational 2010 World Cup imports and in part because of the largest single World Bank project loan ($3.75-billion) to fund the biggest coal-fired power plant in the world under construction. Medupi will emit more greenhouse gases (35-million tonnes a year) than 115 individual countries.
That’s potentially the NDB’s gap – filthy financing when Brics entities borrow for indefensible mega-projects and can’t find Western lenders.
Even in the backward US, a growing activist movement led by 350.org is forcing disinvestment from oil and coal firms and projects. (In Durban, Transnet’s proposed eight-fold port-petrochemical complex expansion is a divestment target for activists.)
Of course, we need a genuinely inclusive and sustainable financial alternative, like the early vision of the Bank of the South catalysed by late Venezuelan president Hugo Chavez. Launched in 2013 with $7-billion in capital, it has an entirely different mandate and may still be manoeuvred not to “stabilise” world finance but instead to offer a just alternative.
Because the Brics nations remain co-dependent sub-imperialists serving ecofinancial imperialism, the need for civil society to contest this space is pressing. But, just as in Durban last year, Fortaleza’s summit allowed access only to Brics-associated corporates, whose record of looting Africa is as formidable as Western capital’s.
So ask yourself, should taxpayers pay the Brics’ fast-growing banking bill with tens of billions of rands we should rather spend on solving our social crises?
Patrick Bond directs the University of KwaZulu-Natal’s Centre for Civil Society