In these days of high-frequency trading and gargantuan financial sector bailouts, it is more than feasible to suggest the old adage that life imitates art should be substituted by a saying to the effect that life imitates Goldman Sachs. Yet even the global investment banking behemoth may be surprised that an analytical acronym formed by one of their own – Jim O’Neill, presently the Chairman of Asset Management at Goldmans – has transmogrified into a real-life economic grouping: the BRIC countries of Brazil, Russia, India and China, four of the most lucrative and well-endowed emerging markets on the planet. These states held the first BRIC summit at Yekaterinburg in Asian Russia on 16th June 2009, and the second in much-overlooked Brasilia on 16th April 2010.
However, it is the third such meeting – a 14th April 2011 rendezvous in the Chinese tropical resort of Sanya, previously more famous for its connections with Miss World than economic beauty pageants – which may be the most memorable BRIC summit thus far, and for highly questionable reasons: the BRICs abolished themselves, instituting the BRICS in their stead; the Republic of South Africa lays claim to the ‘S’ in the new abbreviation.
While we at Mediolana have nothing against South Africa per se – a banal 2010 FIFA World Cup aside – it is difficult to see what the Rainbow Nation will bring to the BRICS party. While the other four members possess both an incredible abundance of natural resources and consumer markets of enormous absolute size and potential, with a population of around 50 million South Africa is nothing more than a local power in a region ravaged by poverty and AIDS; in a country containing pockets of unfathomable wealth, nearly 43% of South Africans are attempting to get by on a daily income of less than US$2, a reality which severely undermines the country’s credibility on the world stage.
The admission of South Africa into one of the most exclusive economic groupings in the world is a mystery; Mexico, Turkey or Indonesia to name but three countries would have been much more coherent selections. But as well as being a strange choice, it is also potentially a dangerous one: by giving membership to a state which does not ostensibly measure up to any relevant criteria, the BRIC countries risk profoundly damaging the credibility of their own entity. Jim O’Neill’s latest categorisation – the so-called ‘growth markets‘ – does not include South Africa; whether BRICS will revert to its singular form in the future is anyone’s guess.
If the BRIC countries wanted an African nation for the ‘geopolitical clout’, why not Nigeria?
A real mystery. South Africa does have much better functioning institutions than Nigeria and arguably greater integration into the global economy in fields like financial services, as well as a more gifted technocracy, but Nigeria has much better growth prospects and more oil than most. Egypt or Algeria would also have been good contenders.