Falling BRICS And New Lessons


About a decade ago, they were shining examples of where emerging countries should be going. There was a consensus that Brazil, Russia, India, China and South Africa – otherwise called BRICS – held the aces.

The economies of these countries were surging at double-digit growth rates, as portfolio investors in their numbers camped out in Beijing, Moscow, Mumbai, Rio de Janeiro and Johannesburg to enjoy the boom.

Like every good thing, however, it appears the boom has run its course. The darlings of global capitalism now look like wayward examples, with Brazil and South Africa leading the race to the bottom.

This was not what Jim O’Neil had in mind when he coined the term BRICS 15 years ago. But who could have guessed that DilmaRousseff and Jacob Zuma would happen?

Rousseff was full of promise when she came to power. The first female president in Brazil, she was charming, tough and invested with the powers of an insider, having served as chief of staff to outgoing President LuizInacio Lula da Silva. She seemed just the right person for the job.

With the economy growing at four percent, Rousseff had the wind at her back. Before she could settle down, however, the storm came. The prices of coffee, sugar and other main commodity exports of Brazil crashed, leaving the economy in turmoil. The favelas, already bursting with the poor, reached new levels of squalor.

Rousseff became desperate for two things – how to secure a second term and where to find money to keep Brazil’s promise of hosting the 2014 World Cup. In her desperation, she raided state-run banks to plug massive budget deficits and still managed to host the World Cup, in defiance of rising inflation and protests for more jobs and better public services. For the soccer-crazy country, it was a double loss: the economy was suffering ahaemorrhage and after the billions of dollars spent, the national team crashed out of the World Cup at the semi-final stage after a humiliating 7-1 defeat at the hands of Germany.

The only winner was FIFA, which reaped revenues of $4.8billion, against the $2.2billion invested. But Rousseff’s woes were only just beginning. The opposition, which felt she had raided her way to a second term, pressed for an independent investigation of the state’s finances, alleging widespread and systemic corruption and abuses going back to da Silva’s government.

Rousseff has not helped matters. She has obstructed attempts to investigate the allegations against her government and as a ridiculous quidproquo, offered former president da Silva the position of chief of staff in her government, to shield him from ongoing investigations.

Her conduct has left members of her cabinet outraged and divided and her coalition government broken. Rousseff is now fighting for her political life with the clear and present danger of impeachment.

How did it come to this? How could a woman who was on the frontlines in the battle against dictatorship in her country in the 1970s fall so disastrously short when she finally got a chance to walk the talk?

Part of the answer lies in a messianic complex that does not distinguish between self and country. DilmaRousseff has refused to see that not all that may be good for her is good for the country. She is famously quoted to have described herself as “a harsh woman surrounded by mild men.”

That implies that she gets to listen to only what she wants to hear, with no time or patience for criticism. At a time when the state oil corporation, Petrobras, needed a competent and professional hand to survive its internal demons and the impact of falling oil prices, Rousseff planted her protégée from the state-controlled bank, with zero experience in the sector, to run the corporation. Her desire to please FIFA hardly showed any sensitivity to the misery of the public, which at the end of the day seems condemned to eat football. It was either her way or the highway.

But this is Rousseff, ‘husband’ of all mild Brazilian men. Her comrade on the other side of the ocean, Jacob Zuma, appears to be doing his utmost to bring South Africa to junk status, too.

As the rand slides and the economy staggers, Zuma appointed three finance ministers in one week, making sure the best man for the job got the rawest deal. Like Comrade Rousseff, Zuma thinks his sacrifice in the ANC’s anti-apartheid struggle entitles him to run the country like his private estate.

But for the ruling of South Africa’s constitutional court, Zuma was determined to get away with using $16million of state money to add a chicken run, a swimming pool and an amphitheatre to his sprawling estate in Nkandla. Zuma, as the world knows, is a harsh man surrounded by a harem of mild women with the support of a discredited party.

From Rio to Pretoria, it seems the world cannot run away from the importance of strong institutions. A common thread in the crisis rocking the BRICS is the ease with which politicians seem to bend state institutions to serve their personal ends. It is compounding a fragile situation.

I won’t be dragged into the futile debate about which one is more important – strong individuals or strong institutions. One should not be so strong that it easily undermines the other.

The Interview Editors

Written by The Interview Editors

The Interview is a niche publication, targeting leaders and aspiring leaders in business, politics, entertainment, sports, arts, the professions and others within society’s upper middle class and high-end segment in Nigeria.