Cape to NATO pt. 2: After BRICS

More like go than chess

In my first article on the geopolitics of Cape independence, I pointed out a few things that have already started the ball rolling on the BRICS grand plan. There is a modicum of de-dollarisation that may represent the peak of dollar supremacy (though these things take decades to change), and the inclusion of several rather significant geopolitical choke points.

What has now happened, is the capture of the Cape of Good Hope and Suez as ports to the East, while Argentina has been accepted, taking Cape Horn as well. There are some tense points in the alliance, like the tensions between India and China, Egypt and Ethiopia, but BRICS looks fairly well set to capture a good deal of economic power over the next few decades, including most oil production and essential minerals. Some more serious geopolitical actors, like the Gulf countries, have begun a long-term sell-off of American bonds and increasing oil trade in Yuan.

But the fireworks are still a long way away, and coordination between these big and heterogeneous states is ungainly. Speculation on its survival or stability seems a bit premature, one way or another. Every state in the bloc has some rather extreme problems of a chronic nature, none of which have easy or even apparent solutions.

Nevertheless, the expansion of the bloc is part of a long-planned power shift, in which Western elites are happily participating. Where the rubber hits the road for the Cape, is how this affects domestic politics in Pretoria.

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De-dollarisaiton

Sources close to the president have argued that the point of de-dollarisation is not simply to tip the balance of trade, but to leverage for the reform of the UN Security Council, to give BRICS countries a bigger say in world affairs. While a common currency is off the table for now, the long-term goal is to have a negotiating ratchet to increase pressure for more tangible geopolitical results.

The main mechanism for this is the digital currency model, which will allow coordination for multi-currency exchange in the absence of SWIFT, which has been discredited through political abuse by the US in their financial embargo on Russia.

But I came across another take on this that is somewhat convincing - that these new mechanisms do not only serve the East, but are pushed in the West to grease the skids for a transfer of global capital from the incumbent hegemon to the new. Iain Davis at Geopolitics & Empire writes that this is part of a new international financial system.

This is usually written about in terms of its capacity to micro-manage central planning at a global scale for total central planning by the Central Bank system, but Davis argues the primary aim is to minimise disruption of global trade and senior capital as the East overtakes the West, as well as to contain and downwardly distribute the negative effects of the globalisation bubble, which was kicked down the road by QE 15 years ago, and cushioned by the lockdown money-printing spree during covid.

The “multipolar world” is not just a Russian pipedream, but something which the Central Bank system has been planning for, for decades. These swings of power, demanding stabilisation mechanisms for the transfer of power and trade, create enormous mechanisms for centralisaiton of global economic power, just as they did following the World Wars and the end of the Cold War.

Davis’s article should be read in full, as he touches on other, more dispiriting aspects of the global financial system I will not wax lyrical about here.

Of course, Finance Minister Godongwana is being cautious about how quickly de-dollarisation will happen for SA itself. For an ANC member, he is rather financially risk-averse, but then our finance ministers have always been the voice of reason in most administrations. But I think this just means we are recognised to be a marginal constituency incapable of playing with complex global financial instruments.

What is interesting is that SA wants there to be a return to more binding trade dispute arbitration mechanisms at the WTO, as well as permanent welfare for small retarded countries around the world. They also seem to back the independence of Western Sahara from Morocco, the cessation of the Yemeni civil war (possible now that Saudi and Iran have made a tentative peace).

I’m not sure how much of this is BRICS consensus, but I would suspect it reflects the conference agenda rather closely. The inclusion of a clause asking for a BRICS-led integration of global ICT systems seems rather indicative of this. Chinese dominance over global communications is an impressive and rather scary aim.

There is also an item on the harmonisation of agricultural policy.

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South African Trade

Our trade with other BRICS members has grown somewhat over the past year, largely due to pressure on commodity markets after the Donbas War, but not impressively. Russia was the biggest grower, with a 16% increase from last year, and the arrival of the first direct shipping routes to SA from Russia. But apparently we are missing out on agricultural exports there, including wine.

Our main benefit seems to rather simply be a gateway, being the hegemon in the SADC free-trade region, and as a source of raw minerals. A big talking point was the opening of the African Free Trade Area, and among intellectuals and statesmen, Pan-Africanism has become a big issue lately.

This likely won’t change much - Africa has almost nonexistent border security, and massive corruption, so the ability of trade and tariff policies affecting anything is difficult to predict.

As I noted in the previous article, the Saudis have been working with the mining industry in South Africa to poach talent for diversifying their mining economy away form oil, while injecting significant capital into SA. The recent conference added deals for the agricultural sector.

China has been less piecemeal and more systems-based in its approach to SA. They now have a long-term collaboration with Wits University to monitor and score South Africa on its investment prospects through a new confidence index. Their most significant investment though, is to fund the reform of Eskom:

Enhancing South Africa’s energy security through regulatory reform, infrastructure and technology development, human capital development, and research and development capacity; 

Promoting sustainable energy solutions and diversifying South Africa’s energy mix;

Strengthening bilateral cooperation between South Africa and the Chinese entities in the energy sector to support South Africa’s localisation and industrialisation; 

Facilitating knowledge and technology transfer between the participants; and

Encouraging investment in South Africa’s energy sector

Notably, China asked us to relax the BEE policies, because they are stupid. We said no.

The New Development Bank promises R57m for power generation over the next five years, about a quarter of what is needed (considering budget and time overruns typical to SA, it’s probably less than an eighth). This money will go to the Chinese state-owned power company.

But the Chinese are handing us a big chunk of machinery for our power plants - it remains to be seen what state the equipment is in or how much of a difference it will make. The R500m they are loaning directly should have more of an impact, but this looks more like loan restructuring than a bailout.

The NDB has also started selling Rand-denominated bonds now, so that could hypothetically shore up some of our currency’s instability, though the amount sold at the moment is worth just R2.67bn - hardly likely to arrest our decline.

We got a bit of Chinese cash for science and tech investment, part of their big AI research plans, but it seems this is mostly just a token gesture. One of the few significant investments was China getting behind the Lesotho Highlands Water project, which has been struggling somewhat due to our typical performance in infrastructural matters.

We also agreed to a peace plan for the Donbas War, which seems to be essentially everyone stopping where they are, recognising the de facto borders and sending the troops home.

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Back to the Cape

But there have been some funny little developments on the margins. An odd little character by the name of Gunther Fehlinger, an Austrian neocon type from the NGO world, has been rather successful in getting his viral tweets about the breakup of various BRICS countries into the public conversation.

While this usually means nothing, he has done this at a rather auspicious time for Cape independence. Today, the CIAG has launched the results of a new poll, which shows that support for Cape independence has grown to nearly 2/3rds, and that DA voters support the proposition by an absolutely staggering majority.

The poll has a 5% margin of error, but given the previous results, we can observe a clear growth in support, of around 10% points growth in support for both secession and a referendum.

Okay, so far so good. This is stronger support than the UK had for Brexit at any point, and with the weakness of DA leadership, it seems unlikely to me that they will have the balls to directly spit in their voters’ faces.

My biggest concern is that Winde pulls a Puigdemont - when Catalonia had the momentum behind them for secession, at the last moment of the victory speech after the “illegal” referendum results, the premier just announced that he was going to now ask permission from the Spanish Crown. This sort of limpwristed nonsense is important to avoid, because it is precisely that sort of indecision that opens the way to mass violence.

So how does BRICS affect all of this?

My suspicion is that Washington will want to maintain a modicum of foreign support and control over trade, and with BRICS having taken every major sea trade channel into their sphere of influence except Malacca and Panama, including now Cape Horn and Suez, we start to look like we actually matter, particularly to the West.

Also, with SA leaning more heavily into Russia’s side of the Donbas conflict and with a little economic backing from China, they could get a bit cockier, and less likely to see the need for a Western-friendly coalition partner in 2024. That brings the EFF into play (though it doesn’t rule out the IFP).

How big their losing margin will be next year is anybody’s guess, but the recent electoral reforms place a higher onus on the voter for registration. You no longer merely need to be in your province to vote for the provincial legislature, but now have to register at the ward level.

While this is sound electorally, it is bad for the ANC, whose core voters include migrant workers and lazy people. More paperwork and more specific residence requirements mean less for the ANC.

Interesting that the Western NGOs and tech giants have gotten involved in helping to reform the IEC. I suspect that the reforms proposed got in under their noses, and the disinformation monitoring will be interesting to see in action - how will the West try to influence SA elections? I doubt they can make too much of a dent, certainly not enough for an 18 point swing to get the “Moonshot Pact” into power.

But they could well guarantee the loss of the ANC’s majority, or shine a light on ANC shenanigans. Who knows - maybe they want an Eastward pivot themselves - after all, BlackRock and Vanguard have started divesting from the West, and capital is leaning more Eastward.

The key question for South Africa under the ANC is the same as it ever was - what is the balance of forces? I cannot see a situation in which SA gains enough clout in the next 5-10 years to crush an independence movement, and the momentum behind secession is now enough to draw in serious funding and mobilisation.

Unless our trade with BRICS increases exponentially (doubt) or de-dollarisation pivots so hard it upsets global markets (also doubt), then we will still be a majority-Western trade market for the whole available period relating to the secession process, crippling the ANC’s capacity to act.

Where the increased confidence for the AfroNats comes into play, is that they will feel historical momentum is on their side, and that socialist reforms are in bigger favour. This means an acceleration in NDR policies like healthcare nationalisation and property expropriation - we may see a practical testing of those waters by next year already.

This sort of momentum favours the EFF for government, and the acceleration, while gentle, does give extra momentum for secession.

Ultimately it is the centrifugal forces between East and West as power shifts which is driving the wedge down here - and as SA moves leftward, and state finances bleed, capital will need an escape valve from the decay. The Cape Town Stock Exchange will feature big, and the greater the chances of secession, the more companies I predict we will see making the move to the CTSE.

But for all these things, the new poll is a tipping point. We could see a new secessionist party in the coming election, and eyes will now be on us.

Personally, I think we’re going to make it.