In the wake of Russia’s invasion of Ukraine, South Africa has chosen to maintain a ‘balanced’ or ‘non-aligned’ position, choosing not to side with either of the parties involved.
This at least was its professed position, based on the idea that if any party was singled out as being somehow more responsible than any other, it would compromise the possibility of a mutually beneficial settlement.
There have been any number of criticisms of the validity of this stance and of the South African government’s motivations. It’s pragmatic and peace-focused, says the government; it’s bad, immoral politics, say the critics. Beyond the politics, there is the economics of all this. Or perhaps it might be better described as the political economy. It is at this level that the official stance is likely to be most difficult to justify.
For all the fanfare about BRICS – the Brazil, Russia, India, China and South Africa group that features so strongly in South Africa’s conception of its diplomacy – Russia’s actual economic importance is modest. According to the excellent database of the Observatory for Economic Complexity, in 2020, only around half a percent of South Africa’s exports went to Russia (this was equivalent to $587 million). While not trifling, Russia as an export market is dwarfed by numerous other countries – the UK, for example, accounts for 7.4%, and Germany for 6.8%. Even Czechia, hardly a major market for South African products, ranked ahead of Russia.
Russia is marginally more important as a source of imports, but not by much, Russian imports accounted for 0.7% in 2020 – again, against 9.9% for Germany and 2.2% for the UK. (Czechia had a slight lead over Russia, too.)
It’s not readily clear what the extent of the investment relationship is. The Russian Embassy’s website claims that Russian investments in South Africa amount to some $1.5 billion, with South African investments amounting to something in excess of $5 billion. For comparison, the SA Reserve Bank reports that German direct investment in South Africa sits at some $6.7billion, and indirect investments at a further $4 billion.
South African exports to Ukraine were valued at around $39.3 million, and imports at $78.1 million.
Nothing is dispensable
This is not to say that Russian economic ties are irrelevant. For a stressed economy like South Africa’s, nothing is dispensable. But it’s hard to see much of an economic rationale behind South Africa’s effective protection of Russia – especially while some of our far more significant economic partners, such as Germany, are sitting on the frontlines of the war.
Will there be a price to pay for this? The government has insisted not, at least not in the sense of investors abandoning South Africa or of sanctions. So far, there has been no obvious sign that South Africa has been penalised economically for the position that the government has taken.
Whatever South Africa’s political posturing, possible consequences would be tempered by the fact that any influence it might have over the situation is meagre. It is a peripheral player in the geopolitics of the war – just as its overall global influence is in decline. The latter fact was lamented by the National Development Plan.
A somewhat more current danger is whether its position on the conflict would merely add another black mark to South Africa’s reputation. Enough of these already exist: power shortages, broadband issues, a restive labour force, crime and ‘policy uncertainty’. That its government backed Russia in opposition to most of its major economic partners sends a disconcerting message about government priorities. This may well deepen the alienation between South Africa and countries whose goodwill it needs. The impact may be felt less in retribution for its actions, but in ongoing difficulties in attracting the investment that South Africa needs to escape its low-growth conundrum.
For South Africa, a more immediate problem will manifest itself in how the global turbulence hits already hard-pressed South Africans in their pockets, and how this will ripple across society.
It has been noted in the media that Russia (along with Ukraine) does occupy an important niche in South Africa’s supply system. These countries together have supplied some 30% of South Africa’s wheat imports (wheat imports accounting for about 40% of the country’s wheat). This is a staple foodstuff for much of the population.
Major risk
Since the beginning of the conflict, the government has claimed that South Africa’s food supplies are secure for now, but a major risk exists if the conflict carries on and disrupts supplies over the medium to long term. South Africa could turn to alternative suppliers, though this would come at a cost – constrained supplies globally would likely mean higher prices across the board.
So, even as an actual shortage of wheat can be avoided, South Africans will probably need to brace themselves for food price hikes. These hikes will hit the poorest the hardest.
Add to this the fact that South Africa also sources fertilisers from Russia, and the impact on the costs of domestically produced foodstuffs is unlikely to be positive.
All of this does not bode well for South Africa, and particularly for its poorest people. Think back to July last year when rioting disrupted supplies, and consumers in Johannesburg struggled to find bread.
There is a lesson in this for South Africa. ‘Friends’ can act in ways that harm those who rely on them. South Africa has cast its lot with an unstable ally.
South African policy-makers have failed to understand – or disregarded the consequences – of aligning themselves as they have. Their decision is yet another demonstration of the chaos which fills government, and the lack of clear-headed leadership that our country has: ultimately, foreign policy begins at home.
* I would like to thank project manager Terence Corrigan for his assistance in preparing this piece.
The views of the writer are not necessarily the views of the Daily Friend or the IRR
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