President Jacob Zuma and his estranged Finance Minister Pravin Gordhan flew in separate aircraft to Hangzhou, China, for the G20 summit last week.

For many, that seemed to symbolise nicely the parlous current state of South Africa’s political economy.

But what happened on the margins of the G20 was more intriguing, at least for South Africa, than the summit itself.

Zuma met Chinese President Xi Jinping, Russian President Vladimir Putin, Indian Prime Minister Narendra Modi and brand-new Brazilian President Michel Temer for a BRICS meeting. 

There, South African banker Leslie Maasdorp, Vice President of the so-called ‘BRICS bank’ (properly called the New Development Bank) disclosed that South African state owned enterprises (SOEs) might approach the bank for funding. This was reported by the state broadcaster, the South African Broadcasting Corporation (SABC), as an answer to its question whether the BRICS bank could compensate the SOEs for the withholding new capital investment into them by South Africa’s Futuregrowth Asset Management and the Danish Jyske Bank – and probably others still to come.

Futuregrowth Chief Investment Officer Andrew Canter had said days earlier that the company would not grant R1.8 billion in new loans to SOEs due to concerns about their governance. This included the cabinet decision to form a new committee, chaired by Zuma, to supervise the SOEs.

His announcement also followed the cabinet’s decision to re-appoint Zuma’s close (some say very close) friend Dudu Myeni as chair of the South African Airways (SAA) board, despite Gordhan’s evident desire to get rid of her for gross mismanagement of the national carrier.

These moves clearly indicated that Zuma – despite the African National Congress’ (ANC’s) major setbacks in the 3 August local government elections, largely blamed on him – was fighting back against Gordhan’s attempts to prevent him and his business cronies, like the Guptas, from getting a death grip on the Treasury and the SOEs.

As did the decision by the special police investigative unit, the Hawks, to renew efforts to prosecute Gordhan for alleged misdemeanours in the establishment of a so-called ‘rogue’ investigative unit in the Treasury some time back. As did the announcement by Mineral Resources Minister Mosebenzi Zwane – a Gupta ally – that the cabinet is appointing a judicial commission to probe the decision by the four major banks to close the Gupta accounts. Zuma immediately denied the cabinet had made this decision, but some believe Zwane had just jumped the gun.

Maasdorp’s disclosure that the SOEs might resort to the BRICS bank for capital has suggested to some analysts that Zuma is now taking his struggle with Gordhan for control of the nation’s purse strings to a new, international, level. Is Zuma trying to recruit his BRICS government allies in his mortal struggle with his finance minister?

That struggle already had implicit global and ideological dimensions, of course. Gordhan has clearly been strategically deploying the threat by international credit rating agencies to downgrade South Africa’s sovereign debt to junk status in his battle with Zuma. 

For this, Zuma’s son (and apparent mouthpiece), Edward, has accused Gordhan of being ‘the darling of white monopoly capital’ and of the international credit rating agencies. The rest of us understand he is only trying to prevent the plundering of the fiscus.

But the fact that even the threat of junk status had evidently not deterred Zuma from going ahead with his alleged plans for ‘state capture,’ apparently prompted Futuregrowth and Jyske Bank to act.

As Canter has indicated, they were perfectly justified – purely on grounds of the proper exercise of their fiduciary responsibilities – not to risk the money of their investors in enterprises which are clearly being run according to political, rather than economic, criteria. SAA, for example, is already teetering on the brink of bankruptcy as Hong Kong Airport threatens to pull the plug on it.

The underlying, strategic intention of Futuregrowth and Jyske also appeared to give Zuma a wake-up call in this widening showdown between domestic and international capital, lined up behind Gordhan in the one corner, and the Guptas and their ilk, lined up behind Zuma, in the other.

Could invoking the aid of BRICS have been the dauntless Zuma’s response to this latest shot from the other side: an attempt to weaken the influence of the markets by mobilising alternative state capital? (Already the Eskom Pension and Provident Fund had declined to invest R100 million in Futuregrowth’s Development Equity Fund III, ostensibly because of inadequate ‘transformation’ in the company, according to the Sunday Times.) One insider in the capital markets firmly dismisses this theory, because ‘Maasdorp is no Machiavelli, he’s a functionary.’ True. But could a functionary not serve the purposes of a Machiavellian master?

Whether the other BRICS would allow themselves to be recruited into a domestic political contest, though, is also uncertain, even if the bloc does see itself – and presumably also its bank – as a counterweight to what it regards as the dominance of the West, including Western capital, in global affairs.

Professor Lyal White, Director at the Centre for Dynamic Markets at the University of Pretoria’s Gordon Institute of Business Science, doubts that the other BRICS would be up to ‘bailing out dysfunctional SOEs.’ He adds: ‘It would take a lot of political wrangling for South Africa to convince them to do so.’

He notes that Temer, unlike his leftist predecessor Dilma Rousseff, is a centre-rightist and so would be unlikely to support such a bailout. He also thinks that a bailout of South African SOEs might open a Pandora’s box as Brazil, Russia and even some Chinese SOE-type entities are themselves in serious financial trouble. 

What is true, though, is that Putin and Russia have a more direct stake in the Zuma-Gordhan fight. One of the projects Gordhan seems to be resisting is the proposal to build a fleet of nuclear power stations where Russia’s Rosatom is apparently the favoured bidder.

There are some indications that Zuma might have made the extraordinary decision to fire Finance Minister Nhlanhla Nene on 9 December last year under the influence of a similar reliance on his new allies. Just days before that fateful decision, at Focac – the Forum for China-Africa Development – in Sandton, Xi had announced a $60 billion aid package for Africa and billions more of Chinese investment in South Africa.

Did the prospect of all this Chinese money lull Zuma into a false sense of immunity from international capital markets? If so, the immediate crash of the rand and the flood of disinvestment should have disillusioned him.

But maybe they didn’t. He himself has certainly disavowed the connection.

Perhaps, like Zimbabwe’s Robert Mugabe, Zuma is still looking east for salvation. If so, he should note that Mugabe has been gazing in that direction for some 15 years.

Peter Fabricius, ISS consultant