Laying the BRICs for a better future

The ACP’s position in the world

Mirjam van Reisen | June 23, 2011

The African, Caribbean and Pacific Group of States (ACP) is exploring new relationships in order to claim its rightful position in global institutions and act as a spokesperson for the world’s poor and less powerful nations.

Global governance is needed more than ever now that the world’s problems – higher food prices, climate change, the financial crisis and ensuing economic recession – are increasingly travelling across borders. The real problem, however, is an unrepresentative global governance system. It means that small, vulnerable and marginalized countries affected by these problems are effectively excluded from governing. The ACP, which represents almost half of the world’s states, should by default speak for the world’s poor, less powerful nations. Yet the group barely has a say in global governance. The question is, what can the ACP do to claim a stronger voice in global governance?

The ACP is under-represented in global institutions. Global governance through the Group of Twenty (G-20), the International Monetary Fund (IMF) and the United Nations (UN) Security Council is driven by the major industrialized powers. Some regional representative groups function in the World Bank, for instance, but even there the interests of smaller economies are represented by the bigger states.

The G-20 has taken on board some emerging countries since it was announced in 2009 that it would replace the G-8 as the world’s main economic council. But marginalized countries, such as the group of Least Developed Countries (LDCs), small island states or countries without ports, have no place in it. Most of these are members of the ACP, which has huge potential in trade and investment. But as it stands, the ACP’s share in global trade and investment does not do justice to its potential.

The ACP discovers the BRICs

One of the ways for the ACP Group to gain more independence is by exploring cooperation outside the traditional scope of partners, of which the European Union (EU) is one. Here, too, the group has potential. It is highly diverse and counts several larger, emerging members that could take the lead in establishing new partnerships. Indeed, the South African ambassador to the EU, Anil Sooklal, has suggested that South Africa should be a channel for ACP concerns in the G-20. In the new global balance of power, by contrast, China and other emerging countries in the G-20 could in fact benefit from giving ACP states a stronger say in global institutions.

But the most significant recent development is the ACP’s exploration of potential partnerships with China, other Asian Tigers and the BRIC countries (Brazil, Russia, India and China). The BRICs should be taken as an example of what ACP countries can achieve, according to Lord Meghnad Desai, emeritus professor at the London School of Economics and Political Science. 'Look at the last five years. The centre of gravity in the world has shifted sharply to the east, and if you like – to the south. The so-called developing countries were capable of rapid growth. The G-8 is now the G-20, not because of the good heart of the G-8, but because of the achievements of the emerging countries.'

ACP countries have already begun forging economic alliances with the new players on the global economic stage, and this at a time when the relationship between the ACP and its traditional partner, the EU, has become strained. The ACP stands to benefit a great deal from partnerships with BRIC countries, but it also needs to protect its own interests. Africa has been particularly active in cooperative ventures with China.

China in Africa

Chinese companies seem to be everywhere in Africa these day, no matter where you go. Chinese purchasing managers buy considerable volumes of oil from Sudan and Angola. They import a great deal of cacao from Côte D'Ivoire (US$39.7 million in 2001 rising to $113.5 million in 2005) 1,  have bought a US$5.5-billion stake in South Africa's Standard Bank and made a US$14 million investment in a mobile phone company in Somalia. 2

There are an estimated 800 Chinese corporations doing business in Africa, most of which are private companies investing in the infrastructure, energy and banking sectors. About half a million Chinese workers are active in African countries. 3 To give an impression: when fighting broke out in Libya, China evacuated 33,000 of its workers (mostly road workers) from the country, more than any EU member state. China is now the leading trading partner in Africa, having surpassed former colonial powers such as France and the United Kingdom. Sino-African trade hit the US$90 billion mark in 2009, more than the US$86 billion trade with the United States. 4

The BRIC countries have intensified their relationship with African countries, investing in mining, infrastructure, telecommunications and agriculture. China’s African Policy for 2006 aimed to step up diplomatic relations with the African continent, and it was followed by the establishment of the China-Africa Development Fund to support and provide capital for investments in Africa by Chinese companies.

Around that time, Brazil and the four main Africa cotton-producing countries (Mali, Benin, Chad and Burkina Faso) started to fight in the World Trade Organization (WTO) about farm subsidies provided by the EU and the United States. At the same time, Brazil vexed some ACP countries that were exporting sugar to Europe. Brazil lodged a successful complaint to the WTO against the EU's highly protective sugar market. The EU was forced to open up the market, which significantly reduced sugar prices. Some ACP countries saw their revenues from the European market drop. The EU, incidentally, to soften the effects, helped ACP countries invest in their sugar industry.

In more recent years, the Brazilian mining giant, Vale, now the largest mining company in the world, expanded operations in five African countries, armed with a strong financial base, which has allowed it to ride out the international financial crisis.

India’s investment in Africa has focused on information technology – one of India's leading sectors – and on higher education to build ICT capacities in Africa. The historical and cultural ties between BRIC and African countries appear to be playing a significant role in terms of investment as well. Brazil is investing in Portuguese-speaking countries in sSouthern Africa, and India is targeting Mauritius and Ethiopia.

Fair play

More than China, the governments and companies of India and Brazil are investing actively in their public image. Capacity building and poverty eradication programmes are raising their profile. In line with this spirit of South-South cooperation, former Brazilian president Lula da Silva visited the World Social Forum in Senegal, an international forum focusing on social issues that parallels the World Economic Forum.

India has also put the relationship between trade-for-profit and social responsibility on its agenda. Globalization is affecting the service sector, which is struggling to find a balance between fairness in the labour market and maintaining India’s competitiveness. In June 2011, a seminar in Brussels discussed how achieving ‘a better balance between both would strengthen the poorer sections of the economy, distributing the purchasing power also to workers and families in the now lower income strata’. 5

New investments by BRIC countries in Africa, however, are also being heavily criticized for the land-grabbing from indigenous communities that is occurring for mining, food production and biofuel production. China is also being criticized for causing environmental damage and for extremely poor work and safety conditions, as well as bad trade union practices, which have caused tensions in Southern Africa.

The main difference between trade with BRIC countries and trade with Western countries is that states such as China do not ask questions about politics and human rights. The Chinese simply strike a business deal: no charity, no conditions.

The ACP is opening up more options for South-South cooperation through trade, investment and social policy with the BRICs. The ACP could further expand its influence at the international level by demanding a political voice in the G-20, where the BRICs have secured a privileged position of decision making on finance and economic policy with the G-8, which also affects the poorest countries. The ACP provides a potential channel for smaller countries to have a voice in these meetings. This would be a more inclusive policy in the new forums of global governance, such as the G-20, which at present exclude the poorest and smallest countries.

G-20 legitimacy questioned
The G-20 has incorporated emerging economies, and is therefore more reflective of the new world order; however, as the poorest countries have no voice in the organization, it is not representative and therefore lacks legitimacy. Andrew Cooper and Eric Helleiner of the Canadian Centre for International Governance Innovation note that 'The 21st century is marked by a new multilateralism, with a growing number of global actors increasingly influencing the global economy. The G-20 is assuming the role of the G-8 but it is still not clear what it can actually achieve.'

This is all the more worrying because the decisions the G-20 takes concerning international financial issues and the world economy affect small countries just as much as they do the countries that participate in the G-20.

Cooper and Helleiner have also commented on the increasing distrust of the G-20 among smaller countries: ‘Another main source of opposition to the G-20 from outside the forum has been animated by concerns that the G-20 is a “concert” of big countries that can dictate the new rules to all the others ... This attitude was vehemently expressed in the UN General Assembly by Venezuela, Bolivia, Cuba and Nicaragua during the June 2009 G-192 Summit on the financial crisis and international development.'

Henning Melber of the Dag Hammerskjold Foundation warns that 'If the G-20 seeks to be a kind of global economic government, it will soon discover its limitations. Its legitimacy derives solely from its economic power, which is no basis for efficiently regulating global affairs – certainly no more efficiently than the 193 members of the United Nations.'

Photo credit main picture: Reuters / Jason Lee