IBSA challenges the world

India, Brazil and South Africa embark together on forging an economic interchange that could alter the face of globalisation as it is today

By Suvrokamal Dutta

In the face of challenging pressures to develop an reliable alternative option to globalisation—one that emerges from a developing world to put to an end to global marginalisation of the poor nations—there has been a new push to redefine political and economic arrangements in recent times. One such component is South-South cooperation.

The emergence of transatlantic links between India, South Africa and Latin America began when the leaders of three countries—India’s Atal Behari Vajpayee, Brazil’s Luiz Inacio Lula da Silva, and South Africa’s Thabo Mbeki—spearheaded a new approach to South-South cooperation at the 2003 UN General Assembly, resulting in a India-Brazil-South Africa (IBSA) agreement.

According to the South African Institute of International Affairs, IBSA encompasses a population of 1.3 billion people and an economy of $1.26 trillion. The first meeting of the foreign ministers of the IBSA Dialogue Forum was held in New Delhi on March 4–5, 2004. The issues addressed included social development, disarmament, infrastructure, healthcare, sustainable economic development and poverty alleviation.

After successes at the Doha and Cancun rounds of the World Trade Organisation summits, the heads of IBSA met for the first-ever trilateral summit recently at Brasilia, just before the Non-Aligned Movement summit. “As emerging economic giants in the developing world, India, Brazil and South Africa account for a combined gross domestic product (GDP) of over one trillion US dollars and it seems set to push the number in an unexploited trilateral market,” reported the South African Broadcasting Corporation.

“We have a common understanding about what needs to be done, especially in areas like ICT (Information and Communications Technology) and telecommunication,” said Dupree Vilakazi, president of South Africa’s National Black Business Council.

Said South African foreign ministry spokesperson Ronnie Mamoepa, “Since its establishment in 2003, the IBSA had become instrumental in promoting closer coordination on global issues between South Africa, India and Brazil. The three have become frequent guests of the annual gathering of the Group of Eight [G8] industrialised countries.”

South Africa’s deputy president Phumzile Mlambo-Ngcuka, who was in India recently, said, “India was a key strategic partner of South Africa. Both the countries political and economic relations are sound and is based on mutual respect and concerns for each other’s development.”

Given the sound economic bilateral ties with South Africa, the solidification of the IBSA looks all the brighter. The country has a strong Indian connection: about one million of South Africa’s 47 million people are descendants of Indian labourers and immigrants who went over in the previous century. Many of them are involved in trading.

India’s leading enterprise groups like Tata and Mittal Steel are investing hugely in SA’s automobile, mining, telecommunication and other industries. “India is among the top 10 investing countries in South Africa, with investments estimated to the value of 10 billion rand [$1.4 billion],” said Mlambo-Ngcuka.

Annual trade (2001-2005) of India and the Mercosur (Mercado Común del Sur or the Southern Common Market) trade bloc—Brazil, Argentina, Uruguay, Paraguay and Venezuela—grew from less than $1 billion to $2.3 billion. Around the same period, trade between India and South Africa climbed 133 per cent from $1.3 billion to $3.1 billion. IBSA negotiations aim to raise trilateral trade flows to $10 billion next year.

Said Mbeki, “The adoption of a free trade agreement between these three nations would be an unprecedented step in the world trade system, which means it is essential for it to be taken in an appropriate manner.”

Brazil and South Africa adopted a three-year pilot project for the export and import of cars and automobile spares. Brazil and India also agreed on the sharing of alternative technologies.

Said Rogelio Golfarb, president, National Association of Automotive Vehicle Manufacturers, which was a representative of Brazil’s business community at the summit, “All of this is complementation. South Africa specialises in luxury automobiles, and Mercosur is strong in the production of compact cars. India expressed great interest in the production of ethanol fuel and biodiesel, and Brazil expressed interest in Indian techniques for producing wind and solar energy.”

The summit allowed the three countries to stress their points of view on the resumption of the WTO Doha Round of multilateral trade talks, on UN Security Council reforms to incorporate permanent and rotating members from Latin America, Asia and Africa. Prime Minister Manmohan Singh said, “The usefulness of IBSA in the international community was clear in the leadership role that the three countries played in the Group of 20 [G20] developing nations in the WTO negotiations.”

Brazil and India signed a multimillion dollar trade agreement to improve cooperation. The areas of the deal involved technology and alternative energy sources development. One of the central joint projects signed with Brazil was the developing of ethanol fuel as an alternative to oil. Both nations agreed to create a joint committee on bio-fuels.

Brazil, which taps into its huge sugarcane production to make ethanol, announced that it would help India and South Africa produce it. “Indian companies from both public and private sector have evinced interest in exploring production opportunities in Brazil to meet the anticipated growth in ethanol use in India for both industrial as well as automobile use,” said Manmohan Singh in the joint statement.

In 2005-06, Brazil’s exports to India soared to $1.1 billion, a 75 per cent increase over 2004, according to official Brazilian figures. Imports from India totalled $1.2 billion, a 116 per cent rise. Brazilian President da Silva said, “Since then, we have worked intensely on various fronts to deepen our political and economic alliance, which we have now decided to elevate to strategic partnership status.”

Said Manmohan Singh, “India and Brazil are large, pluralistic democracies. Our economic growth is broad-based and multifaceted. This provides opportunities for expansion of our bilateral trade and economic relations.”

On the issue of a civilian nuclear deal with the US, both Brazil and South Africa assured India of full support. This is, again, a historic achievement. With a strong foundation, a small beginning has been made for the IBSA: if it works out, it can create huge opportunities not only for the nations concerned but can also change the face of global politics.

(The writer is a foreign affairs and economics analyst)