Until a year ago, our diplomatic relations with the world were not particularly relevant to the business environment. But that changed dramatically when the Lady R, a sanctioned Russian ship, docked in Simon’s Town, having turned off its transponders before doing so. The news caused the rand to fall and has increased the cost of doing business.

I can understand why those allied with Ukraine in the war with Russia were alarmed. The circumstances of the docking were highly suspicious, and the lack of immediate explanation from the SA National Defence Force compounded the uncertainty. Nato-aligned countries are major buyers of our manufactured goods and raw materials and suppliers of significant amounts of investment. Since the incident, South Africa has been questionable as a counterpart to Western trading partners, yet another risk that must be priced in when considering investment in our country. The incident also increased risks that our trade access to the United States would be curtailed when that country reviews eligibility in terms of its African Growth and Opportunity Act.

When President Cyril Ramaphosa announced a panel led by a retired judge to investigate, we called for its work to be done quickly to limit the damage. The inquiry had the potential to help correct the risk premium we are now subject to. It would need to be thorough and credible and resolve fears that South Africa was involved in the Russia/Ukraine conflict.

Last week, we saw the release of only an executive summary of the report on the grounds that the full report contained sensitive and classified information that would threaten the country’s security. The summary, unfortunately, does not provide a definitive account of what happened. It gives limited information regarding the goods that were delivered. For example, it does not cite which licences under the National Conventional Arms Control Committee covered the imports.

Some suggest that the ship’s docking in Simon’s Town conflicted with SA Revenue Service port of entry rules, but the report does little else to suggest wrongdoing. Confusingly, the fact that the ship was offloaded at night is explained as necessary, given the classified nature of the goods. Yet the report also said the original plan was to offload the ship at Ngqura or Port Elizabeth, which are normal commercial ports where presumably such protocols couldn’t apply. The ship apparently ended up at Simon’s Town only because Ngqura/Port Elizabeth refused it, given its sanctioned status.

SOURCE:‘Geopolitical concerns around Lady R have not been eliminated’ – Moneyweb