South Africa: The Odd BRIC Out

by Pádraig Carmody on February 13, 2013

South Africa has recently been in the headlines worldwide because of widespread labor unrest. However, the country has also recently acceded to one of the most important new global cooperation mechanisms—the BRICS. South Africa’s rise in the international system and accession to the BRICS belie its underlying instability, which casts into doubt its status as one of the world’s rising powers.

International relations and the international system are undergoing seismic shifts. One symptom of these shifts is the global financial crisis, which in part reflects the hollowing out of (some) Euro-American economies, as the center of global economic gravity shifts to the East. The Organization for Economic Cooperation and Development predicts that China will overtake the U.S. to become the world’s largest economy by 2016) and that by 2025 the economies of China and India combined will be bigger than those of the Group of Seven (G7) industrial countries.

These geo-economic shifts are also reflected institutionally in a new multilateralism, exemplified by the BRICS (Brazil, Russia, India, China, South Africa) cooperation mechanism, which excludes the West. South Africa is the most recent addition to this group, in 2011. However, the relatively small size of its economy and its negative growth trajectory make it an odd inclusion. While the economies of China, India, and Brazil continued to grow during the global financial crisis, South Africa experienced recession, and its national average income fell from twenty-four percent below the world average in 1994 to thirty-three percent below the average in 2010. Its GDP is only one sixteenth that of China.

South Africa, however, is symbolically, strategically, and economically important, as it serves as an entry point to the rest of Africa and is that continent’s largest economy. One Brazilian analyst has referred to South Africa as the catalyst for African development, and many multinationals view the country as a gateway or stepping stone to the rest of Africa. For example, Brazilian mining giant Vale has set up an office in Sandton, Johannesburg, as a base for pursuing mining and mineral exploration and extraction on the continent.

Because of South Africa’s strategic importance, it was Beijing that reportedly pressed for the country’s inclusion in the BRICS. South African companies are heavily invested in the rest of the continent; for example, Tiger Brands, South Africa’s largest food company, took a 63.5 percent stake in Nigeria’s Dangote Flour Mills for $183 million in 2012. Chinese companies are sometimes able to take advantage of the established networks of South African companies, as when China’s largest bank bought a share of South Africa’s Standard Bank in 2007 for more than $5 billion—the largest single foreign investment in the country’s history. South Africa is also politically influential in the rest of the continent, as evidenced by the recent election of a South African to head the African Union. While the United States remains the predominant external power for some African countries, China is building its influence through a “full-spectrum” approach involving trade treaties, aid, and other modalities. China is now South Africa’s largest trading partner.

There are questions, however, about whether South Africa is an emerging or submerging power. Its economic growth performance has been lackluster, and it has one of the highest levels of inequality in the world. These twin problems provide some of the backdrop to the awful Marikana mine massacre in 2012. This incident unleashed a wave of protests and strikes across the mining industry in South Africa, forcing President Jacob Zuma to declare that the country was not at a “tipping point.” Exceptionally high levels of inequality and the ongoing hollowing out of South African light manufacturing as a result of trade with China likely mean that economic and political protest, and perhaps instability, will remain a feature of South Africa’s political economy. But if these issues can be contained, South Africa is likely to become more influential internationally, as evidenced by its role in the BRICS, African Union, and elsewhere.

The South African government often presents itself as “the voice of Africa,” even though, as a semi-industrialized economy with a highly developed financial services sector, its interests diverge from low-income countries in Africa. Its geopolitical strategy is to leverage regional power into global influence so that it can reshape trade and other regimes to its and the continent’s advantage. To date, however, this strategy has paid few dividends and the South African state’s interests are becoming increasingly intertwined with those of China. Unless the South African government can renegotiate its international relations, the current structure of economic growth portends further instability. While some analysts argue that the BRICs have stopped rising, this claim is unsupported, as demonstrated by Brazil overtaking the UK to become the world’s sixth largest economy in 2012. However, the foundations of one of the BRICS—South Africa—are unstable.

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