If we are ranging from the Russian economic and financial crisis, the internal political problems and recession in Brazil to the slowdown in the Chinese growth, without forgetting the monetary problems of the South African Rand. What economic and political future do you foresee for this alliance of BRICS?
For the BRICS alliance, a term invented by our advisor Jim O'Neill, I do not think there can be a real geopolitical future for this assembly of these 5 Countries. We have to analyze this point in detail:
Brazil is in a situation of serious difficulty and it is perhaps the worse off among the BRICS, even if it is not yet reflected as such by the media. Investments has been blocked, the government has also started a protectionist operations.
Even many multinationals that were used to record double-digit growth rates begin to undergo an internal market in big crisis and we must also add to this difficult situation an infinite number of very serious scandals of corruption, as in the main Brazilian oil company Petrobras.
As for Russia, where at our annual event "The European House - Ambrosetti Forum", we had the first deputy prime minister and former finance minister of Russia, Arkady Dvorkovich, who was already collaborating with us as a professor of Economics at the University of St. Petersburg, he reported a difficult framework but perhaps with some light in prospect with respect to the dynamics of the relationship with the EU. Russia is a country that wants to go out in a determined manner from the crisis, it has an evident difficult political situation towards the United States, but it is equally clear that the bonds of business and also of energy with Europe, especially Italy, are very significant.
Therefore, I would expect Russia to stabilize the difficult situation and predict for 2016/2017 a recovery that should go hand in hand with political normalization.
India is perhaps the best placed of the group, it has initiated important reforms and has begun a path of significant growth.
China, is one of the BRICS who did the most alarm bells ringing, but perhaps too much. As we know in recent months its stock market has had a very strong contraction, mostly it has worried the intensity and speed of the collapse, but as absolute values we are at the same levels of the beginning of this year that opened with + 160% from 2014.
We are currently experiencing a natural decline that I do not consider worrisome. There is a very clear political vision to reorient domestic consumption and to encourage domestic production. I believe, therefore, that China does not pose a particular source of alarm or at least there may be concerns but they are much lesser than what was recorded in the media.
Finally, South Africa has had a difficult time on the currency, but I am also in this case very optimistic. I see South Africa's interest to sub-Saharan Africa that is very important; there is the most developed financial market across Africa, there are the major banks, such as the Standard Bank, there are excellent airport highway, port and railway infrastructure. There is wealth of raw materials very significant and historical, natural beauty and impressive landscaping and a food and wine chain growing. Therefore, I am positive in prospect, after all six of the ten economies at the highest rate of growth are african and South Africa is a good reference hub.
Africa is a continent with great potential and a great future. What prospects for economic development, particularly for the sub-Saharan area, do you expect?
The African economy is booming. These six rapidly expanding economies of which I spoke earlier are: Angola, Nigeria, Ethiopia, Chad, Mozambique and Rwanda numerically, that is not necessarily a definitive message, since the number itself may also mean that you grow fast but you start with small steps.
In a recent interview, Henry Kissinger, said that Germany is a major economy at a global level and that it could have a role in terms of economic and international order, but not in terms of security. What is your thought about the following statement?
Kissinger is the same who said, if I remember correctly, that if we look in the Yellow Pages the phone number of the European foreign minister is not found and that Europe as a geopolitical entity is one more thing to decipher, but this is the typical American thought, a bit too arrogant.
On the contrary, I think that Germany has played a significant role of engine of Europe both economically and politically. Angela Merkel has performed extremely well in the case of the Greek crisis, at the same time pointing out to everyone that there are rules and that these rules must be respected.
So, I do not share Kissinger’s thought and I think that Germany can and should be the driving force, after all it is mainly the economic engine for obvious practical consideration that determines everything else. There has never been a great power without a huge industrial base behind, this is the history of the United States but also of China.