Forbes Logo2.jpg South Africa in BRICS: A Brave New World Steven Kuo, in Johannesburg, for Forbes Magazine, USA, 3 July 2015 Will the BRICS group and its New Development Bank (NDB), founded in 2014, challenge the West-led international order enforced by the financial institutions of the World Bank and the IMF? Will African countries be looking to Johannesburg, where the NDB African regional office is based, rather than Washington DC for loans and development packages? Given these developments, how will South Africa's relationship with the West change as it stands in alliance with other major developing economies, especially Brazil, Russia, India and China? Led by the United States, the victors of the Second World War created the World Bank and the International Monetary Fund in 1944 to bring order to the international financial system. Over decades, the two institutions have prescribed fiscal policies and shaped government priorities of developing countries from Asia to Africa. By attaching conditions to loan agreements, the West has been able to apply pressure to governments and shape their development policies. For some years, large emerging countries such as China have called for greater voting powers for developing countries in the World Bank and the IMF and for greater autonomy by developing countries to choose their own development paths. These pleas have largely fallen on deaf ears. The NDB was agreed to by BRICS leaders in Durban, South Africa in 2013; it is based in Shanghai, with the African regional center in Johannesburg. The NDB will give the BRICS group an instrument with which to exercise geopolitical power in the same way that the IMF and the World Bank is used by the US and Europe. African countries, for example, will now have the option of ignoring the IMF and the World Bank and applying directly to the NDB for much needed infrastructure funding. Russia, India and Brazil will also be able to access loans to complete their own domestic infrastructure projects without fearing perceived Western intervention. There is an estimated $900 billion infrastructure deficit in Africa. Without power, potable water, all-weather roads and other basic infrastructure, economic growth will be impossible. The NDB is set up primarily to fund infrastructure projects to the tune of $34 billion annually. This injection of capital will provide the basic infrastructure upon which Africa and other emerging economies can grow and in which further business and investment opportunities for BRICS-based businesses can flourish. South Africa's membership in the BRICS group and its status as the founding member of the NDB means that it will have larger power over the NDB's African loans, and with this, a great deal of geopolitical leverage on the continent. South Africa will continue to pursue a leadership role on the African continent and coordinate with Brazil, Russia, India and China on global issues: on control of greenhouse gas emissions, UN Security Council reform, trade negotiations and others South Africa will do its best to continue these relationships, as it is looking to large emerging economies to supply the trade volumes, technological exchanges and foreign direct investments it needs. >From a South African perspective, its membership in the BRICS and establishment of the NDP will change the power relations between South Africa and the West. Less beholden to Western interests, South Africa will try to take the role of the continental spokesperson. It will focus on building better relationships within the continent and use the NDB as leverage. As its current nuclear power procurement program has shown, South Africa will look to cement its relationship with Russia and China through large infrastructure purchases and continued technological exchanges. And the impact of large investments - particularly from China - is essential to the economic growth of South Africa and so many other African countries. . Steven Kuo is a South Africa Analyst at Control Risks, the global risk consultancy. From: <http://www.forbes.com/sites/riskmap/2015/07/02/south-africa-in-brics-a-brav e-new-world/> http://www.forbes.com/sites/riskmap/2015/07/02/south-africa-in-brics-a-brave -new-world/ -- -- You are subscribed. This footer can help you. Please POST your comments to [email protected] or reply to this message. You can visit the group WEB SITE at http://groups.google.com/group/yclsa-eom-forum for different delivery options, pages, files and membership. To UNSUBSCRIBE, please email [email protected] . 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