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by Francis A. Kornegay, Jr.


Categories: [in] focus

by Francis A. Kornegay, Jr.


IMF succession blues

Thus, there are two areas of concentration in deciphering a clearer reading of the emerging powers geopolitical-geoeconomic terrain: the strategic ‘big picture’ on the one hand interacting with the African ‘battleground’ of contesting external forces on the other. In the end, there may also begin to emerge more clearly some bottom-lines and ‘red lines’ for informing a more proactive African strategy in navigating emerging power dynamics and their North-South dimensions. Emerging powers straddle North and South alike.

The suddenness with which the BRICS were confronted out of the clear ‘blue’ with the IMF having to choose a successor to MD Dominique Strauss-Khan clearly was untimely for their image. A classic case of being caught out by raised expectations that come with hype, the BRICS being touted as the vanguard elite among emerging powers challenging the preeminence of the West in setting the global governance agenda. So much for taking Wall Street marketing too seriously. But then that’s where the hype began. All it took was for Moscow, Beijing, Delhi and Brasilia to take the bait.

The need for changing western prerogatives on Bretton Woods institutions being headed by an American at the World Bank and a European at the IMF had already become the consensus that would inform the next rounds of leadership recruitment. The expectation was that DSK, once having served out his term or entered the political sweepstakes in France, would be succeeded by a non-European. In the meantime, Strauss-Khan was proving to be a very timely IMF interlocutor for directing the partnership between the Fund and the European Central Bank in crisis managing the threat of Eurozone debt contagion.

The BRICS were totally unprepared for the sudden DSK exit and Paris’ quick turnaround in nominating French finance minister Christine Lagarde as his replacement. Given that reforming global economic governance is the leitmotif of BRICS agenda-setting, the suddenness of it all and the lack of a coordinated coherent counter nomination by the BRICS has called into question the fledgling forum’s credibility.A ‘paper tiger’?

Perhaps not. Perhaps, the BRICS individually and collectively played into the normal international media and political hype that likes a good ‘clash of titans’ among anyone, big powers especially. Thus, they unwittingly indulged this impulse without approaching institutional reform within the Bretton Woods as strategically as they might have, and without putting their collective and individual economic houses in order. The decline of the West has become such a certainty that the rise of the rest is taken as a done deal without looking at the fine print. Size of the economy without a comparable level of western development and quality of life could be likened to a pyrrhic victory (and Barack Obama’s London speech was the first major counter-declinist salvo countering such presumptions.) China is a case in point.

According to Antoaneta Becker writing in Asia Times Online, the domestic consensus in China seems to be that “the current IMF is not the IMF that a Chinese would like to head. Moreover, experts hold, Beijing is not ready to launch a bid for the top job yet, not the least because China’s financial system is not fully fledged.” China would prefer seeing changes in the way the IMF is run and the policies it supports although it is obligatory that it support an emerging powers consensus that the top IMF and World Bank executives no longer serve as European and American preserves.

Furthermore, it is estimated it will take until between 2020-25 before China has its financial house in order – a fully convertible currency and a liberalized financial industry – before it is ready to assume more visible leadership roles. If however, China and other BRICS are not able to step up to the plate due to their own shortfalls, perhaps they should have pursued a more carefully calibrated ‘reform from within’ strategy. This is what no doubt will happen. 

They might have charted a more realistic reform path that wouldn’t put them in the put-up or shut-up situation they are now. It also means that the BRICS may have to devise a more structured consultative and coordinating mechanism, perhaps an empowered secretariat for facilitating a more coherent approach to economic governance contingencies like the sudden IMF succession. 

In reference to the politics of disarray among the BRICS, another Asia Times Online commentator suggested: “With Russia having ‘defected’ without even bothering to consult any of its BRICS partners; with Russia, China, India and Brazil not even bothering to take note that South Africa, another BRICS partner, indeed has put forth a candidate; and, now, with Brazil having hosted a lunch for Lagarde, BRICS increasingly looks like a joker in the pack in the international system.” In truth of fact, former South African finance minister Trevor Manuel was never formally put forth as a candidate, perhaps due to a certain dismissiveness was alluding to in the forgoing commentary.

Look for a new phase of western ‘co-optive dominance’ at Bretton Woods as the BRICS bring themselves up to steam. Reform usually pre-empt revolution.

The challenge facing BRICS is that it is a hybrid alignment reflecting different strategic centers of gravity and priorities amongst emerging powers: on the hand, a Sino-Russian Eurasian agenda centered in the Shanghai Cooperation Organisation (SCO) with India having observer status; on the other, the India-Brazil-South Africa (IBSA) Trilateral Dialogue Forum with its global South strategic logic networking the South Atlantic and Indian Oceans.  But IBSA so far has downplayed strategic pretensions in spite of IBSAMAR naval exercises. Yet these could portend a coordinated trilateral maritime security agenda, especially between Pretoria and New Delhi in the Indian Ocean.

The SCO as an emerging powers coalition

It is in the SCO, where the real potential may reside for a countervailing emerging powers alignment to balance declining western hegemony. The outcome of the June 15th 10th anniversary summit in Astana, Kazakhstan will be focused on in the next IGD update.  Suffice for now to point out that following Astana, both India and Pakistan are on route to becoming full SCO members. This should/could enhance regional stability. 

In the process, the SCO could relegate BRICS, with its yet to be consolidated coherence on global economic governance, to something of a ‘second string’ alignment. The more consequential battle for position in reorganizing the global strategic landscape may play out between the SCO and the North Atlantic Treaty Organisation (NATO) within the Eurasian heartland.

NATO, despite pretensions, as well as the SCO, are essentially regional in their power projection capacities though their respective regionalisms have global balancing resonance. Regionally, how their ‘Great game’ in Eurasia unfolds may depend on whether the proponents of ‘reset’ in Washington and Moscow are able sufficiently contain their respective neo-cold warriors in moving toward an enduring east-west accommodation. NATO-SCO rivalry is not inevitable though some are already billing their relationship as a ‘new Cold War.

’The SCO calculus within the emerging powers equation may render BRICS inherently unstable as Russia, depending on how the geopolitics of ‘reset’pans out (including WTO membership along with it already being a member of the G8), may ultimately prefer aligning with the West if it can integrate into a pan-European framework sufficiently on its own terms. This means overcoming resistance informed by the cold war reflexes in America in so-called ‘new’ Europe.

Hence, the importance of Moscow’s bid to tie up the European energy market in pipeline networks emanating out of its Eurasian domain on the one hand and from links to North Africa from the ‘southern Mediterranean’ end on the other. Which is why Russia (and lets not forget China) is none too happy about the NATO campaign in Libya alongside the ‘Arab awakening’ generally.

Pending ‘reset’ prospects, the emergence of a Sino-Russian led SCO linked to BRICS as their global economic governance outlet, suggests two centres of power in the ‘global North’: The US-EU-NATO transatlantic alliance seeking to go global balanced by a Moscow-Beijing led Eurasian alignment in the SCO. A beefed up SCO with additional full members like India could reinforce this trend as well as link the SCO to the global South. Call this a soft northern bipolarity within a fluidly uni-multipolar global terrain. But what about the global South dimension?

This is where BRICS re-enters the equation with more prominence outside of treading the reform waters of Bretton Woods. Africa emerges very much at the centre of this global South calculus, all the more so with South Africa now in the club. China’s drive into the continent has become a veritable ‘cottage industry’ of analyses and critiques. 

India’s accelerating engagement may, however, prove at least as consequential if not more so on the basis of the outcome of the recently concluded 2nd Africa-India Forum summit in Ethiopia. Indicative of Delhi’s increasingly focused Africa interest were tours by Indian media teams of several countries (South Africa included) in the run-up to Addis.1 

India’s African Agenda

Without reverting to such boilerplate nostrums as ‘non-interference,’ given the interdependencies of a fragmented inter-African system in need of consolidating, the thrust of Addis was profoundly integrationist; integrationist in the sense of Indo-Africa joint institution-building:
* An India-Africa Virtual University
* The India-Africa University for Life and Earth Sciences
* The India-Africa Institute of Agriculture and Rural Development
* The India-Africa Centre for Medium Range Weather Forecasting

These joint institutional initiatives are joined by two programmes: an India-Africa Food Processing Cluster as a complement to the envisioned institute of agriculture and rural development and a regional trade and export market initiative involving an India-Africa Integrated Textiles programme. 

Given the common plight of both India and Africa in confronting rural poverty and the need for accelerated development in agriculture and food production, there is a clear synergy in these joint initiatives and their factoring in environmental dimensions. In addition, there is India’s private sector dimension which can carve out a niche that China cannot fill.

As an expansion of the South-South cooperation agenda beyond IBSA, the joint initiatives emerging out of Addis should provide an opportunity for SA-India cooperation within the scope of both BRICS and IBSA. India is reportedly to commit $700 million to this joint institution-building agenda. 

This is accompanied by a major transport-communications infrastructural initiative in which Delhi is committing $300 million for the construction of an Ethiopia-Djibouti rail link. This will enhance land-locked Ethiopia’s access to the Indian Ocean.

With equal Indian Ocean security significance, India is committing $2 million to the AU’s AMISOM peacekeeping mission in Somalia. India alongside China and Russia are among a several trading nations dependent on securing the shipping lanes connecting to the Suez Canal from the Indian Ocean via the Gulf of Aden. 

Somali piracy as an extension of Somalia’s onshore instability has become a major maritime security challenge over the past year. To the extent that the piracy threat is linked to the continuing intra-Somali war over the future of southern Somalia, New Delhi’s support for Amisom serves an Indian Ocean security interests that increasingly converges with that of South Africa.

Indo-South African security convergence in the Indian Ocean has recently been underlined by deal signed by the defence ministers of South Africa and Mozambique to set up joint patrols of the Mozambique Channel. This is how far south the piracy threat has extended. 

This threat has come to a point where Pretoria, under pressure to commit to the anti-piracy effort, can no longer opt out on a narrow national interest basis of the country not having an interest in the security challenges linking Indian Ocean maritime traffic to the Suez. 98 percent of South Africa’s maritime trade passes through Mozambique’s 2,470 km-long littoral. 

An Indian Ocean of strategic partnerships?

The sea lanes astride the Indian and South Atlantic oceans falls directly in the maritime security domain. South Africa forms the strategic ‘Gondwana’ junction within IBSA between Brazil and India as well as Brazil’s linkage to the rest of BRICS, a point originally noted by the Delhi-based Observer Research Foundation when they scoped out the original terms of reference of BRIC in the run-up to that launch in 2009. Hence some wonderment over South Africa’s exclusion from what has now become BRICS to start with.

At this point, the geostrategic logic of IBSA over BRICS becomes apparent through the IBSAMAR naval exercises involving the navies of India, Brazil and South Africa. Moreover, with India set to take over as chair of the Indian Ocean Rim-Association for Regional Cooperation (IORARC) over the next two years, both Delhi and Pretoria have, or should have, a bilateral security interest in Indian Ocean cooperation. 

Indeed, Pretoria is showing an increasing interest in the Indian Ocean as an intra-oceanic, inter-continental zone of functional as well as security cooperation. All the more so as Australia, the deputy IORARC chair to India (and set to succeed as chair after India) is showing interest in engaging Africa on an Indian Ocean agenda. Pro-activity has become a watchword in Pretoria. Also implicated here is the New Asia Africa Strategic Partnership (NAASP).

Ever since its launch at the 50th anniversary of Bandung in 2005, the NAASP has never really gained traction as individual Asian powers have beaten their own unilateral paths to the AU and the continent’s capitols to wrap up one or another resource deal. New thinking on how NAASP might be reinvigorated contemplates more a focused linkage between the AU and such Eastern and Southern African regional economic communities as COMESA, SADC and the East African Community with the Association of Southeast Asian Nations (ASEAN). 

The tripartite trade integration initiative between COMESA, SADC and the EAC certainly adds compelling logic to such an Afro-Asian strategic hook-up. It is one that might possibly find synergies with the IORARC as well as with both a bilateral dimension to Pretoria-Delhi relations within IBSA and within BRICS. A major missing piece here is the South Asian Association of Regional Cooperation (SAARC). But that is another story.

Pretoria’s challenge

In the meantime, while IBSA’s strategic logic relates clearly to the Indian Ocean, BRICS is in need of one or two flagship initiatives in order to taken more seriously as more than an umbrella for individual BRICS initiatives like Beijing’s FOCAC and Delhi’s Africa-India forums. This is where the South African imagination in shaping the BRICS agenda becomes urgent.

Two potential flagships with immense African integration potential present themselves: one in completion of the Grand Inga hydropower scheme taping the Congo River Basin; the other, the North-South Corridor ‘Cape to Cairo’ transport communications infrastructural scheme as a corollary to COMESA-SADC-EAC trade integration. 

The Grand Inga scheme, however, would have to have a major environmental and participatory sustainable development component given the ecological risk that dam building poses. China is now finding this out with the Three Gorges Dam. Otherwise, as collective BRICS flagships, these could become pace-setters in an emerging powers statement shaped by Pretoria on advancing the African agenda.

Finally, South African leadership within the BRICS framework could also be a fitting place to start in addressing the increasingly critical ‘land grab’ issue in rentier relationships developing between Africa, Asia and Europe. Here, South Africa’s shaping of a BRICS agenda on Africa could dovetail with the need to address land acquisitions as an Afro-Asian strategic partnership issue within NAASP as well.

The point in this panorama of the emerging powers landscape is that it has become an increasingly pluralistic terrain of multilateral engagements. So much so that it is premature and fool hardy to write off any of the new generation limited multilateral formations arising out the entry onto the scene of so-called emerging powers; so-called because as the political machinations over choosing a new IMF managing director seems to indicate, the agendas of some emerging powers may have as much to do with their national interests as ‘great powers’ engaging other power centres as with a purely emerging powers calculus.

There are also other dynamics at play in addition to contestations over global economic governance. These are geopolitical and geostrategic in nature. They have everything to do with the future balance of forces shaping the global North as well as the global South. There is a lot more to this changing terrain than BRICS and IBSA.

Francis Kornegay

21 June 2011

1 The IGD hosted one such team at its offices on the 7th of April in a meeting with a group of South African academics and foreign policy specialists in a lively exchange on a range of issues touching on South Africa’s foreign policy (i.e. the UN Security Council, climate change talks, nuclear issues, the Indian Ocean). Among Indian media represented: The Hindu, NDTV, The Mint (Wall Street Journal), the Deccan Chronicle and Business Today.  

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