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University Fort McNair Washington, D.C. 19 March 2013 Remarks by David H. Shinn Adjunct Professor, Elliott School of International Affairs George Washington University Introduction Brazil, Russia, India, China and South Africa, the so-called BRICS, will hold their 5th summit in Durban, South Africa, 25-27 March 2013. The theme of the summit is “BRICS and Africa—partnerships for integration and industrialization.” Russian President Vladimir Putin and Chinese President Xi Jinping will join the presidents of Brazil and South Africa and the prime minister of India. This meeting will showcase South Africa and give the other leaders opportunity to learn more about Xi Jinping. The Chinese and Russian presidents will also make separate state visits to South Africa. The BRICS have met annually since 2009, although South Africa only joined the group at the end of 2010. One of the items on the agenda in Durban is the creation of a $240 billion development bank and bailout fund, which could serve as an alternative to the International Monetary Fund. Lack of agreement on the currency for use in the fund may delay a decision. In January 2013, this summit was preceded for the first time by a stand-alone meeting in New Delhi of the national security advisors of the five BRICS. At previous summits, the national security advisors met on the sidelines. According to press reports, terrorism, cyber security, piracy and the situation in Syria dominated this session. Brazil emphasized the security situation at the 2014 World Cup and 2016 Olympics. South Africa focused on extremism in North Africa and the Sahel. The BRICS now account for 43 percent of the world’s population and about onequarter of the world’s GDP. But the 2012 GDPs ranged from South Africa’s $390 billion to China’s $8.3 trillion. Brazil’s GDP is about $2.4 trillion while Russia and India each have a GDP of about $2 trillion. The 2011 GDP growth rate ranged from a high of 9.3 percent in China to a low of 2.7 percent in Brazil. India had a 7.1 percent growth rate, Russia 4.3 percent and South Africa 3.1 percent. Russia and Brazil have the highest per capita GDP at more than $12,000. India has the lowest per capita GDP at $1,600. China is next lowest at $6,100 and South Africa at $7,600. Except that each of the five economies is the largest in its market area, the BRICS are strange bedfellows. China China has four principal interests in Africa. First, it needs access to energy, minerals, timber and agricultural products. China imports about one-third of its total oil
2 imports from Africa. China also imports large quantities of cobalt, manganese, tantalum, bauxite, iron ore, and coal from Africa. These imports of raw materials from Africa and other parts of the world sustain China’s rapidly growing economy. Without strong economic growth, the current leadership of the Chinese Communist Party would be hard pressed to remain in power. China has a long-term strategic interest in African natural resources. Second, China counts on the political support of African countries in international forums. Africa’s fifty-four countries constitute well over one-quarter of the United Nations’ 193 members. While China holds a veto power in the Security Council, Africa has three non-permanent seats on the Council. Africa is also well represented in organizations of interest to China like the UN Human Rights Council and the World Trade Organization. China makes every effort to cultivate the maximum number of African countries on all issues of interest to Beijing that arise in international forums. In some cases, like-minded African governments use the Chinese just as the Chinese use them, for example when contentious issues affecting China or a particular African nation arise in the Human Rights Council. When Tibet became an issue in 2008, China leaned on the Africans to remain silent or even make supportive statements. They did. African countries can depend on China to avoid raising controversial African human rights issues in the Human Rights Council and perhaps even to support them when they are criticized by western countries. Third, China wants all countries to recognize Beijing and not Taipei. Beijing has never retreated from its insistence on the “One China” policy. Equally important, China has never forgotten that African states were instrumental in 1971 in replacing Taiwan with the People’s Republic of China on the United Nations Security Council. Only four African countries—Swaziland, Burkina Faso, Gambia and Säo Tomé and Principe—still have diplomatic relations with Taiwan. Near the end of 2008, following the election of a new president in Taiwan, Taipei and Beijing reached an unofficial truce whereby they agreed not to actively solicit countries that recognize one country to switch to the other. Fourth, China seeks to expand exports to Africa. In 2009, China passed the United States and became Africa’s most important trade partner. It retains that title; in 2011, China-Africa trade totaled $166 billion. Nevertheless, only about 4 percent of China’s global trade is with Africa while 14 percent of Africa’s trade is with China. China-Africa trade has generally been in balance over the past decade. There are, however, large country-by-country disparities. Some fifteen African oil and mineral exporters have large surpluses with China, while more than thirty African countries, including the poorest ones, have significant deficits. Five African oil and mineral exporting nations account for about 78 percent of Africa’s exports to China. China pursues these interests in several ways. While the West still accounts for most of the foreign direct investment in Africa, China has been more aggressive than western countries in recent years. China’s FDI in Africa probably exceeds $40 billion, most of it in oil, banking, services, manufacturing and extractive industries. Historically, this constituted only about 4 percent of China’s global FDI. In 2011, 10 percent of China’s new FDI went to Africa. The main recipients of Chinese investment are South Africa, Nigeria, Zambia, Algeria, DRC and Sudan. Chinese companies are also more willing than western companies to take risks in Africa.
3 One of the tactics for increasing its influence in Africa is a growing assistance program. China is not transparent with its aid statistics, and it is difficult to equate Chinese assistance with the OECD definition. Chinese OECD-equivalent aid to Africa is estimated to total about $2.5 billion in recent years. One particularly successful program dating back to 1963 is the sending of medical teams to African countries. China has sent more than 18,000 medical personnel to forty-six different countries and treated, it says, 200 million patients. China also started a youth program, which now has more than 300 volunteers in African countries and is similar to the U.S. Peace Corps. While China’s grant aid to Africa is growing modestly, the headline grabbing deals are largely low interest loans tied to infrastructure projects. Chinese companies implement the projects. Except for the concessionary nature of the loans, however, they are commercial transactions rather than aid projects. In recent years, China has provided Angola with about $14.5 billion, the Democratic Republic of the Congo $6.5 billion, Niger $5 billion and Ethiopia $3 billion in low interest loans. Most of these governments pay back the loans as they ship oil or minerals to China. It is not clear how Ethiopia will pay off the loan as it exports to China only sesame seeds, hides and skins and a little coffee. It will take a lot of sesame seeds and goat skins to repay $3 billion. China may eventually write off some of the debt. It has previously cancelled substantial debt in the case of the poorest African countries. The hallmark of China’s relations with African countries is its excellent state-tostate ties. China has an embassy in forty-nine of the fifty countries that recognize Beijing. The only exception is Somalia where security conditions have precluded an embassy. Of the fifty, only the Comoro Islands does not have an embassy in Beijing. China relies heavily on high-level personal contact to consolidate its relations with African leaders. President Hu Jintao made six trips—two as vice president and four as president—to Africa visiting multiple countries. Xi Jinping will make his first overseas visit in March—to the BRICS summit in South Africa following a stop in Moscow. Beginning in 1991, China’s foreign minister has made his first overseas visit every year to Africa, a practice that has been appreciated by African governments. All elements of Chinese leadership are frequent visitors to Africa. In turn, Beijing often invites African leaders to China. Between 2002 and 2005, Chinese Communist Party officials made sixty-four visits to Africa while African political party officials made sixty-nine visits to China. Beginning in 2000, China and Africa formalized their relationship in the Forum on China-Africa Cooperation (FOCAC), which meets at the summit level every three years, alternating between Beijing and an African capital. The last meeting took place in 2012 in Beijing. This is an important mechanism for coordinating China-Africa relations, but while China can speak with one voice, the African countries tend to speak with multiple voices. China also uses a range of soft power techniques for expanding ties with Africa. The official news service, Xinhua, has more than twenty bureaus in Africa. There are twenty-nine Confucius Institutes in twenty-two countries. China is stepping up its radio and television transmission to Africa in various languages, has radio and television transmitting facilities in Kenya and various rebroadcast arrangements. It trains a variety of Africans, including diplomats and journalists, and increased to 5,000 annually the number of scholarships that it offers to African students.
4 Compared to countries on its periphery, Europe and North America, Africa occupies a low security priority for China. Nevertheless, Africa is increasing in importance because of China’s growing reliance on the import of raw materials from the continent. China has a policy of no military bases in Africa but has some security interaction, however modest, with all fifty African countries that recognize Beijing. China’s share of the conventional arms market in Sub-Saharan Africa is about 20 percent. The percentage is higher for small arms and light weapons. High level exchange military visits are an important part of the security relationship. Twenty-eight African countries have defense attachés in Beijing while sixteen Chinese defense attaché offices in Africa are accredited to some thirty African countries. China is playing a growing and constructive role in UN peacekeeping operations in Africa. It currently has more UN peacekeepers in Africa than any other permanent member of the UN Security Council—about 1,500 compared to about thirty for the United States. China continues to send two frigates and a supply ship to support the international naval force that is combating Somali piracy in the Gulf of Aden. As China expands its presence into African conflict zones like the Niger Delta, Sudan’s South Kordofan and Ethiopia’s Ogaden, it experiences the same kinds of attacks on its nationals that western countries encounter. Early in 2011, the Chinese military helped to oversee the evacuation of about 36,000 Chinese workers from Libya. China also faces some challenges in Africa. Although it has developed excellent relations with governments and done well with most of the business community, it has been less successful with civil society, opposition political parties and labor unions. Areas where China’s engagement in Africa draws criticism include: Democracy and good governance. Human rights practices. Transparency and corruption. Questionable environmental practices. Purchase of illegally harvested African timber, ivory and endangered species. Poor worker safety and fair labor practices. Export to Africa of harmful and counterfeit products. Chinese small traders and business persons who compete with their African counterparts. Inadequate control over arms sales to Africa. India India, the world’s largest democracy, is more of a direct challenge to China in Africa than is the United States. There is a long history of Indian communities in parts of Africa. The eastern side of the continent borders the Indian Ocean, which India perceives within its sphere of influence. India has a common colonial experience with many African countries and has long ties with those that are members of the British Commonwealth. Like China, India was a strong advocate for the struggle against colonialism and a leader of the non-aligned movement. India’s primary interest in Africa today, like China, is access to energy and minerals. Its most important trade relationship is with Nigeria and South Africa. India imports about 20 percent of its oil from Africa and its trade with Africa constitutes about
5 20 percent of total Indian trade with imports significantly higher than exports. It exports cheap manufactured goods to Africa, resulting in some of the same criticism that China experiences. India’s annual trade with Africa is about $64 billion, but remains well behind the level of China’s trade with Africa. India’s economy is much smaller than that of China, and it does not have the financial resources to compete effectively with China. India has some advantages over China. It is physically closer to Africa. Its form of government is more appealing to aspiring democracies on the continent. Indians speak a common language with English-speaking African countries. Indian culture, especially movies, is popular in much of Africa. India’s important private sector, which accounts for about 70 percent of its GDP, is an attractive feature in some African countries. India has an impressive GDP growth rate—about 7 percent—that is viewed with envy by many Africans. Indian communities in Africa are well-established, but have not always been well-received and are often accused by Africans of isolating themselves. India has a long-standing policy of engaging people of Indian origin in Africa; China’s policy towards people of Chinese origin is more ambivalent. India has begun to formalize its collaboration with Africa, although not to the extent that China has done. The first India-Africa summit took place in New Delhi in 2008 and India’s prime minister led the second one in 2011 in Addis Ababa. Attended by fifteen African leaders, this was well under the number that attends the China-Africa summit meetings. India has twenty-six embassies in Africa versus forty-nine for China. India also seeks African support in international forums. In 2011, Indian conglomerate Essar announced it will spend up to $4 billion over the next five years to construct an iron ore processing plant in Zimbabwe. In 2012, India signed a $300 million loan agreement for construction of the Ethiopia-Djibouti railway. India does not attach conditions to its aid but does not highlight the policy as China does. Both countries have instituted a duty-free tariff preference scheme for exports from poorer African countries. In 2011, India announced a $5 billion line of credit to African countries over the next three years. The Export-Import Bank of India has offices in Dakar, Durban and Addis Ababa to monitor its projects throughout the continent. Indian investment in Africa targets Indian businessmen and joint ventures rather than tying the loans to large, state-owned companies as with China. Indian firms integrate into African domestic markets and tend to draw on local resources while Chinese firms tend to source imports from China. Some Africans have expressed concern with plans by India to obtain long-term land leases to grow food for India. The Indian government is investing heavily in the Pan-African e-Network project in an effort to break into the African telecommunications market. India plans to provide $500 million in aid to Africa over the next five years. Indian aid emphasizes training for 1,000 Africans annually. It agreed in 2012 to fund 22,000 new scholarships. Some 15,000 African students attend colleges and technical schools in India each year. India sends hundreds of teachers to Africa and has plans to establish educational institutes around Africa with the first ones designated for Burundi and Ghana. India has also become an important location where African elites obtain medical care. Indian banks are beginning to expand their presence in Africa. Safeguarding Indian Ocean sea lanes is a vital national interest for India. It has developed close security relationships with Africa’s Indian Ocean islands and several countries bordering the Indian Ocean. India is sensitive to Chinese naval
6 expansion in the region. It signed defense agreements with Kenya, Madagascar and Mozambique and initiated joint training programs with Kenya, Mozambique, Tanzania and South Africa. Madagascar, Mauritius and the Seychelles cooperate on maritime surveillance and intelligence gathering. India provides training for African military personnel in Indian military academies and is expanding arms sales to Africa. It has developed a particularly close alliance with South Africa; naval vessels from India, South Africa and Brazil took part in joint exercises off South Africa in 2010. Indian ships participate in the anti-piracy effort in the Gulf of Aden. India has about 6,500 military and police personnel assigned to four of the seven UN peacekeeping missions in Africa. India, Brazil and South Africa created in 2004 a strategic alliance known as the India-Brazil-South Africa (IBSA) Dialogue Forum. This association of three middle powers seeks to take advantage of existing international rules to promote a more just, representative and equitable distribution of power in the international system. The IBSA chiefs of state held their fifth summit in South Africa in 2011; India will host the summit in 2013. Brazil Brazil is home to at least seventy million people of African descent. Many Brazilians trace their ancestry to Nigeria and Benin; African culture has survived in Brazil and helps strengthen ties to Africa. Nigeria is home to Brazilian communities concentrated in Lagos formed by the descendants of former slaves who returned during the 19th century. Although Brazil has a natural affinity with Africa’s Lusophone countries—Angola, Mozambique, Säo Tomé and Principe, Guinea-Bissau, and Cape Verde—, it has in recent years significantly expanded its involvement in Africa. Brazil maintains embassies in thirty-seven African countries. It is a member of the twenty-four-state South Atlantic Peace and Cooperation Zone established in 1986 to encourage regional cooperation in the areas of development, peace and security. Twentyone countries in west and southern Africa belong to the organization. From the time he took office in 2003 until he left in 2010, former Brazilian President Lula da Silva made twelve trips to Africa, visiting twenty-nine countries. Current President Dilma Rousseff is continuing the visits but at a less frenetic pace. Brazil’s trade with Africa totaled $28 billion in 2011, mostly with Nigeria, Egypt, Algeria, and South Africa. Some 90 percent of Brazil’s imports from Africa consist of oil and natural resources. As Brazil becomes a major oil exporter, imports from Africa will decrease and its long-term goal is not to use Africa as a source of natural resources. Brazil, which has a trade deficit with Africa, seeks African markets for its manufactured goods and investment opportunities for its companies. In addition to the Lusophone countries, Brazil has developed close economic and political ties with Nigeria. The Nigerian Navy even sailed two vessels to Rio de Janeiro in 2007. Brazil has invested an estimated $10 to $20 billion in Africa, primarily in energy, mining and the construction sector; 500 companies operate there. In 2011, Zimbabwe signed a $300 million agricultural loan with Brazil. In 2012, Malawi signed a $1 billion deal with Brazil’s Vale for the construction and rehabilitation of a rail line. Brazilian companies such as Petrobras (oil) and Vale (mining) compete head-to-head with Chinese and Indian companies in Africa. While the Brazilian companies cannot provide as much
7 capital as China’s state-owned companies, they emphasize their “cultural” heritage with Africa. Brazil has also criticized China’s reluctance to create jobs for African workers. Brazil looks to Africa for help in obtaining a permanent UN Security Council seat. Brazil cancelled $1 billion in African debt between 2003 and 2010. In 2012, it said it would disburse more than half of its $400 million in foreign aid in Africa. It has 300 projects in thirty-seven African countries. The Brazilian Agricultural Research Corporation (EMBRAPA), Brazil’s premier agriculture and bio-tech research agency, has opened four offices in Africa and has projects in fifteen African countries. Brazil has also signed fifty-three bilateral agreements concerning health cooperation with twentytwo African governments. Africa is turning increasingly to Brazil for technical and scientific assistance. Brazil is positioning itself as a major partner to help insure Africa’s food security and energy needs. Russia The Cold War witnessed major competition between the Soviet Union and both the United States and China in Africa. The collapse of the Soviet Union and decline of Russia’s economy led to a sharp decline in relations beginning in the late 1980s. At the end of the Cold War, however, Russia kept its diplomatic presence in most African countries and today has embassies in forty-one of them. Moscow only renewed its interest in Africa in recent years following the revival of the Russian economy. President Putin’s 2006 visit to South Africa, the first by a Russian leader, signaled new attention for Africa. Russia’s prime minister followed Putin in 2007 with visits to Angola, Namibia and South Africa. In 2009, President Medvedev traveled to Egypt, Nigeria, Namibia and Angola with a 100-strong business delegation to consummate a series of commercial deals. In 2011, Russia held its first Russia-Africa Business Forum in Addis Ababa. In terms of current engagement with Africa, Russia is well behind China and probably behind India and Brazil. Since 2000, its trade with the continent grew rapidly from a low base but peaked in 2008 at a disappointing $7 billion, where it remained in 2011. Russian exports to Africa are twice as large as imports from Africa. Russia has a preferential tariff regime for developing countries, which grants duty-free access for African products. This has had little impact on African exports to Russia. Business has become the central focus of Russian interest in Africa. Russia has invested more than $20 billion in Africa’s energy and minerals sector. In 2009, Egypt signed a ten-year strategic cooperation agreement that includes a proposal to build Egypt’s first nuclear power plant. South African President Jacob Zuma visited Moscow in 2010 when he signed an agreement for the supply by Russia of low-enriched uranium. Russia is pursuing cooperative banking arrangements in Angola, Namibia and South Africa. It signed an agreement with South Africa to establish a command and control center for the Russian Space Agency, to train South African space personnel and to build communication satellites. In 2015, Russia will launch Angola’s first communications satellite. Russian aid to Africa remains exceedingly modest although it did increase from $50 million in 2003 to $210 million in 2007. Moscow has cancelled more than $20 billion in African debt. Russia committed during 2010-2011 more than $1 billion to aid
8 the poorest African countries. Russia says it will try to provide $400-500 million of aid annually to Africa, although it has not yet reached that target. Russia has resumed large scale arms sales to African countries, much of it outside official channels, including charges that it is supplying arms to protagonists in the Great Lakes region. Between 2000 and 2007, Russia sold more than $1 billion of arms to African countries. Recent energy deals with Algeria included a $7.5 billion Russian arms sale. Russia is the largest arms supplier to Sudan, including a sale of twelve MiG 29s. Sudan, in turn, publicly supported Russia’s “legitimate” right to defend its citizens in Georgia. Ethiopia relies heavily on Russia for weapons and Moscow lost about $4 billion in arms sales to Libya following the overthrow of Qadhafi. Russia is contributing about 225 peacekeepers to UN missions in Africa and has concentrated its engagement in South Sudan, where it sent a team with four MI-8 helicopters. Russian helicopters supported a peacekeeping mission in Chad to sustain a force along the Chad-Darfur border. Russia is training hundreds of African civilian policemen and law enforcement personnel for peacekeeping operations. Russian naval vessels are part of the anti-piracy campaign in the Gulf of Aden. In 2007, President Putin concluded: “Russia’s cooperation with Africa has taken on a new dynamic in recent times. The level and intensity of contacts is increasing. We are carrying out ongoing work to expand and deepen our mutually beneficial cooperation in trade and the economy, science and technology, humanitarian and other areas.” So far, Russian rhetoric has exceeded its commitments to Africa. Conclusion The fact that an African country, South Africa, is the newest member of the BRICS is important for Africa. While the BRICS underscore relationships with developing nations generally, the organization is not designed specifically to benefit Africa. In fact, at the commercial level, the BRICS are serious competitors in Africa. On naval security issues, China and India are potential competitors in the Western Indian Ocean. BRICS’ summits have more to do with relations with each other than their policies towards Africa. At the same time, the BRICS can be a powerful voice in efforts to change the rules of organizations such as the United Nations, World Bank, International Monetary Fund and World Trade Organization. India, Brazil and South Africa all seek a permanent seat on the UN Security Council. In fact, the Africans seek two permanent seats. The BRICS can challenge western positions in these international organizations, especially when there are disagreements on approaches to international lending, resolving African conflicts and addressing human rights abuses. Among the BRICS, China is the 400 pound gorilla with the largest economy, biggest population and highest GDP growth rate. China accounts for 67 percent of the BRICS’ total trade with the rest of the world. China is the destination for 10 percent of exports from both India and Russia, 20 percent from Brazil and 30 percent from South Africa. But the BRICS sell little but raw materials to China. Taken as a group, the BRICS provide only 3 percent of China’s demand for manufactured and industrial goods. On the other hand, China has become each of the BRICS’ dominant source of goods with the exception of Brazil, where China ranks second behind the United States.
9 The BRICS actually trade more with Africa than they do among themselves. Standard Bank of South Africa estimates in 2012 that total BRICS’ trade with Africa reached $340 billion. China accounted for about 60 percent of this trade, which is broadly commensurate with its economic size among the BRICS. Writing in the November/December 2012 issue of Foreign Affairs, Ruchir Sharma at Morgan Stanley Investment Management argued that the BRICS may be an outdated concept. He doubts they can sustain their economic growth rates and points to their uneven rise, emphasizing the recent decline in Brazil’s and Russia’s GDP. He also believes that China’s authoritarian, state-run capitalism will become a casualty. He concludes that these economic role models will give way to new models or perhaps no models, as growth trajectories splinter off in many directions. While it is premature to write the obituary of the BRICS’ as a meaningful organization and it certainly remains an important forum for sharing ideas, the fault lines of its members are close to the surface. It is difficult to foresee where the BRICS as an organization will have a truly significant impact on international economic and political issues.