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Are the BRICS an alternative? BoP Brief #6
Comments on the BRICS, Korea's shipping industry, Latin American economies
Can the BRICS build a new international order?
With the announced expansion of the BRICS in their 2023 summit in South Africa, many see them as a potential alternative to the Western-led global order.
From an economic group of emerging economies, the BRICS have evolved into a forum of shared mutual discontent with a Western-led liberal order that favors a multipolar articulation.
Now, they combine a different range of developing economies, from industrial powerhouses to resource exporters. Besides, they are gaining geographical cohesion, especially in Eurasia.
Can they be a political alternative?
Nonetheless, what can the BRICS offer to the world beyond that?
If we want to look at their political agency as a group, we need to focus on their internal cohesion and actual capacity for coordinated actions.
For starters, as someone said on Twitter, the BRICS not only don’t have a board or a mechanism of governance. They don’t even have a functional website.
The new members bring much more disconnection among themselves
Egypt and Ethiopia – with an unresolved internal war – are confronted due to the construction of a dam at the source of the Nile River in Ethiopia.
Saudi Arabia and Iran might have reached a truce but far from total reconciliation.
Argentina has a disastrous economy, depending on IMF funding, with a potential president, Javier Milei, who will take them out of the BRICS and wants to dollarize.
To that, we should add the already existing unresolved tension between India and China – which ranges from trade, geopolitical rivalry, and territorial disputes to water politics.
The reality of the BRICS
The BRICS can reach as many non-western countries as they want, but they will never have the capacity for integration and agency of the US-led Western alliance.
That means we are in a very different setting than with the blocs of limited sovereignty of the Cold War – although many will never see beyond that point.
The BRICS are overall a sign of the pulse of the times.
The BRICS are not a bloc, not even a group of opinion. The BRICS is an expression of discontent.
The BRICS are a symptom of the decaying liberal global order, but not their replacement.
Korea’s largest shipping company, HMM, will remain in Korean hands
In July, the Korea Development Bank (KDB) and Korea Ocean Business Corporation (KOBC) started the sale process for HMM, formerly known as Hyundai Merchant Marine.
HMM is South Korea's largest shipping company, operating a fleet of various vessels, including container ships, bulk carriers, oil tankers, and more.
One of the bidders was the German shipping company Hapag-Lloyd.
However, the Germans have been excluded from the second round of bidding for HMM.
State creditors KDB and KOBC ruled out Hapag-Lloyd due to concerns about the potential leakage of Korea's national maritime assets.
Who is going to take HMM?
There are several options.
Harim Group, controlling the Korean line Pan Ocean, teams up with a local private equity firm for their bid.
LX Holdings and Dongwon Group, Korean firms with logistics interests, also advance to the second bidding round.
Due diligence is to take place, with a preferred bidder announcement expected by early November.
What does this mean?
I find this news interesting because the reasoning of Korean state regulators sounds vital to me.
The reasoning is impeccable.
It not only mentions the material assets that a company in a strategic sector, such as shipping, will be under the control of a foreign company but also highlights the potential leakage of Korea's intergenerational know-how in the maritime logistics sector.
I find it crucial that Korean authorities mention not only the material assets but also the risk of losing the intangible and "priceless" know-how.
This, to me, is the real threat of de-industrialization.
The risk doesn't solely emerge from knowledge transfer. When a company is integrated into a foreign-controlled global operation, in the case of function restructuring, the local population could lose the knowledge of a specific trade, and recovering that is exceedingly difficult.
For example, in Japan fishing industry – a good moment to discuss Japanese fish, isn't it? – Japanese still hold management and captain and officials positions in fishing ships.
However, since the 1980s and 1990s, crew members mostly come from Southeast Asian nations, especially Indonesia.
Japan's fishing industry hasn't experienced physical delocalization, but in terms of national know-how, the accumulated knowledge of generations of Japanese fishermen has been lost in a single generation.
This illustrates what de-industrialization and de-localization mean for a country.
Nonetheless, for countries that may have suffered from the challenges of de-localization, it doesn't signify that everything is lost.
The combined history of a population and its territory always remains. The telluric forces continue to influence the collective psyche of people, even when their ways have been forgotten.
Nevertheless, recovering lost intergenerational industrial know-how is a demanding task that it is better not to have to deal with.
Latin American Economics with Juan Rojas
This week I also want to share this conversation between Juan D. Rojas andabout Latin American economics.
This is a great conversation, and Juan presents a quite nuanced view of what is going on in Latin America going beyond interested hypes and philias.
One of the highlights is when Juan compares Latin American economies with the East Asian experience.
For example, in the case of Mexico, which many are pointing to as one of the main potential benefits of friend-shoring, he defines it as an “assembling economy” more than anything.
As in many other Latin American nations, localization of industries and integration in global supply chains haven’t produced the emergence of local industries as happened in the East Asian experiences, which is a crucial step for the industrialization of a nation.
Long read: The Only Reason to Explore Space
I have always been a fan of space exploration since I was a kid.
For this week, I want to share Marko Jukick's The Only Reason to Explore Space for Palladium Magazin.
Marko’s point is that space exploration shouldn’t be argued on grounds of economic rationality, resource extraction, etc. But to revitalize the purpose of industrial civilization and expand human capacities.
To have a flourishing future as a civilization, we have no choice but to resolve the anthropological problem posed by space: what it means to be human will be ultimately determined by how we respond to the question of space, which will itself determine how we organize our societies. To ignore this question is also to ignore an already integral part of human nature—we are de facto already a space-faring animal, the only such animal on this planet. Moreover, this question cannot be answered through philosophy alone, because space is not abstract, but physical and full of surprises. The only way to answer it is empirical: to explore space ourselves.
To complete our understanding of humanity, there are no alternatives to a spacefaring future to the limits of the known universe. Until that time, our book on what humanity is must continue to have blank pages to write on, with room to revise our ideas in light of the natural revelation of the universe. From where we sit today, space will thus twice transform what it means to be human. First, because of what we find—or do not find—among the stars. Second, because the economic, organizational, and technological challenges required to reach the stars at all will require us to alter our social, political, and moral structures.
Is the conquest of space enough for a neo-industrial civilization, or should the quest for Space Exploration be part of a greater metanarratives?
I am more inclined to the second, although I still don’t have an answer to which great narrative that should be.
Have a nice weekend!
PD: During the next couple of weeks, I am going to be in China, so I don’t know if I’ll be able to send the newsletter, but when I come back, I will share what I’ve seen there!