Peter Fabricius says South Africa took for granted that it would house the new Brics bank, but other members are equally keen on the honour.
Pretoria - South Africa seems to have been shanghaied. Before the country hosted its first summit of the Brazil, Russia, India, China and South Africa (Brics) Forum in Durban during March last year, the government was convinced that the proposed Brics development bank, the New Development Bank – as it is likely to be called – would be based in South Africa.
Pretoria seemingly believing that the four other members had happily deferred to South Africa’s wish to host the bank, as much of its development funding would be funnelled through this country to Africa.
Wrong.
At the Durban summit it soon became clear that other Brics member states did want the bank to be based on their soil.
At a press conference earlier this week International Relations and Co-operation Minister Maite Nkoana-Mashabane said the key decisions of where the bank would be based and who would head it would be decided by the five Brics leaders – including of course President Jacob Zuma – at their summit in Fortaleza, Brazil, next week.
But Russian presidential aide Yuri Ushakov said in Moscow yesterday that it had been decided the bank would be based in Shanghai.
The Russian news agency Itar-Tass had already quoted Russian Finance Minister Anton Siluanov on Wednesday as saying the leaders would decide between just Shanghai and New Delhi as the headquarters.
South Africa was apparently not even on the shortlist.
A rude awakening to the new kid on the block from the four big boys in the club.
As some sort of consolation prize, perhaps, Siluanov said South Africa would get the presidency of the bank for five years at a time in rotation with the other member countries.
The bank would also be open for new participants that were members of the UN, Siluanov added.
One key question not answered is where the bank will invest its capital. Nkoana-Mashabane said this week that the leaders had decided it would focus on infrastructure in the Brics state – “and beyond”.
But Siluanov was quoted as saying the bank would specialise in infrastructure projects “in the member countries”.
That is a key distinction as South Africa has pinned a lot of its ambitions for leadership in Africa on being a conduit for the big money of the four other Brics members into the continent, as Peter Draper and Mzukisi Qobo point out in a report by Tutwa Consulting this week.
They paint a gloomy picture of the Fortaleza summit, which they forecast will be a mere holding operation, largely because they believe Brazilian President Dilma Rousseff will be so “irretrievably distracted” by the World Cup and the real prospect that her team’s humiliating exit from it this week could jeopardise her re-election in October.
They also suggest that the new Indian Prime Minister, Narendra Modi, might be far less interested in Brics than his predecessor, Manmohan Singh, was and could lead India off in a new pro-Western direction, away from the ideological bearing of the other Brics.
Draper and Qobo conclude that, all in all, South Africa might have to re-evaluate the benefits of membership. But that might apply more to the politics than the economics.
Economically, South African officials believe the new bank will be helpful, as a source of cheaper money than it could get otherwise because the other Brics have higher credit ratings.
Likewise, though less tangibly, South Africa’s economic reputation may also have benefited from the reflected glory of being in such illustrious company.
But of course economics cannot be entirely divorced from politics.
Last month Russian President Vladimir Putin’s economic adviser Sergey Glaziev suggested the Brics bank – and the Brics currency swop arrangement – were part of a grand plan to undermine the US dollar to prevent Washington printing money infinitely to finance its military to fund civil wars in Libya, Iraq, Syria and Ukraine.
Possibly another rude awakening in store for South Africa from the big boys in the club?
Pretoria News