Rewind about five years, and you couldn't escape the proclamations that a new financial and political order was about to be set by a group of promising emerging economies, popularly acronymised to the BRICS. The initial philosophy behind the Brazilian, Russian, Indian, Chinese and South African grouping was based on ideals of multi-lateral cooperation, a desire to reduce historical dependency on western economies and reassurance from the democratic clout that comes from representing about 40% of the global population.
As an organisation, therefore, the BRICS group is underpinned by a strong political and economic logic: political, in the form of championing a form of South-South cooperation that sits apart from European-American political dominance; economic, in the form of strongly performing export and commodity-based economies with increasing global significance.
But what of the hopes for the BRICS for 2016 and beyond? China's economic slowdown in 2015 crowned by crisis in the country's stock market in the first week of January has cast doubt on once positive future prospects. Brazil and Russia also face serious financial issues stemming from their reliance on commodity exports such as oil and gas, whose prices remain sluggish. Only India, it seems, holds the most promise as the most diversified economy with real prospect of economic reform. But for the most part it seems as if the group has hit some kind of a wall.
Reasons to doubt the rise and rise of the BRICS are also tied to political factors. A recent piece from the Financial Times suggests that problems of corruption and autocratic governance were always bound to hinder the progress of countries like China and Russia in a game of economic catch-up with the west. A stand-out example of how often it's politics rather than pure economics that determines the international influence of a country is happening as we speak in South Africa.
Despite the progress made since 1994, South Africa faces huge challenges from a number of social, political and economic issues ranging from preserving the delicate balance of race relations to keeping the lights on. President Jacob Zuma, the head of Nelson Mandela's African National Congress party (ANC), has been losing popularity for years as South Africans become increasingly intolerant of his record of patronage and self-enrichment, combined with poor governance and persistently high social inequality in the country.
In late 2015, at the end of a fairly listless year for South Africa's economy, Zuma took a decision to sack the popular Finance Minister Nhlanhla Nene, purportedly in reaction to Nene's insistence on following procurement procedures for a national nuclear programme. In the space of a week, Zuma was pressurised to reconsider his appointment of an unknown politician to the post, eventually settling on former Finance Minister Pravin Gordhan. The most interesting aspect of the political debacle was the financial crisis it precipitated; within days of Nene's departure the rand (South Africa's currency) fell to a record low against the dollar.
In interviews about the impact of getting rid of Nene, Zuma responded typically by putting both hands in the air. The president dismissed claims that his decision had caused damage to South Africa's position in global capital markets by insisting that commentators had overstated Nene's significance, adding that the rand had started declining during his time as Finance Minister.
Appealing to global economic trends in this way was not a total dodge; speculation about the negative impact of China's declining demand for natural resources for South Africa's economy (of which a large portion is comprised of resource trade with the Chinese) has been around for a while. But Zuma is sorely mistaken if he thinks his financial woes aren't connected to his own political conduct. A major reason for the sharp currency decline relates to investor confidence in South Africa's ability to sustain a stable and predictable economic system. A much cited gauge is provided by credit ratings agencies, which look increasingly likely to give the country a sub-investment 'junk' rating. But the sacking of Nene in possibly connection with concerns over the legitimacy of public spending also increases the likelihood of state interference in the economy which leaves a sour taste for many investors.
It's probably no accident that the popular response to the Nene's sacking (#ZumaMustFall) makes explicit reference to the Rhodes Must Fall decolonisation protest campaign. For a great number of South Africans, Zuma's political system is one concerned with enriching the few and marginalising the many. The problem for the president, whether he realises it or not, is that this kind of political crisis stretches beyond the domestic in to the realms of global capital. And global influence, as some of the BRICS nations may now be coming to realise, relies on both a strong economic foundation and strong political governance if it is to be maintained.Suggest a correction