On becoming a disfavoured nation

South Africa’s government may be gambling that it won’t pay a big economic price for antagonising major trading partners.

South Africa’s foreign policy is deplorable. Instead of firmly siding with the torchbearers of economic freedom, liberal democracy and human rights, the government sucks up to autocracies, theocracies and rogue states.

The explanation is not complicated. The ruling party is, at root, a Marxist-Leninist organisation.

The modern expression of Marxism, developed by the intellectual left as critical theory and often derided as ‘wokism’, merely generalises Marx’s original class struggle to a struggle between the powerful and the powerless, the rich and the poor, the lighter races and the darker races, the capitalists and the socialists, the oppressors and the oppressed.

It clings to outdated perceptions about colonialism and imperialism to sustain these crude binary categories, and essentially continues to view the world as if it were still locked in a Cold War, but now between the Global North and the Global South.

Foreign policy template

South Africa’s foreign policy is guided by this template. If a dispute arises between two entities in the same ‘class’, South Africa doesn’t care. If a dispute arises between two opposing entities, South Africa always chooses the side of the Global South, no matter how deplorable the behaviour it must implicitly condone to do so.

This is why it is ‘neutral’ on Russia’s invasion of Ukraine.

This is why President Cyril Ramaphosa can glad-hand the head of Sudan’s Rapid Support Forces, general Mohamed Hamdan Dagalo, even as his organisation stands accused of genocide in Darfur.

This is why it can abstain from UN votes condemning the persecution of the Rohingya in Myanmar, and why it blatantly ignores the brutal oppression of the Uyghurs in China.

These are all foreign policy tensions between parties of the same class.

This is also why it so eagerly supported the supposedly ‘oppressed’ Palestinians against their Israeli ‘oppressors’, glossing over the aggression and genocidal war crimes of the former, and fabricating genocide charges against the latter.

Trading relations

South Africa appears to make these foreign policy decisions without any reference to its own economic interests.

It not only seeks to hedge its bets by joining a trade alliance between Brazil, Russia, India and China, but views that alliance as standing in hostile opposition to the supposed ‘dollar hegemony’ of the West.

This is why despite Russia’s hostile and illegal invasion of Ukraine, South Africa happily hosted the Mosi-2 joint trilateral naval exercise between itself, Russia and China in early 2023.

Relations with the US in particular worsened over the Lady R incident, involving unexplained cargo on a secretive and sanctioned Russian warship moored at the naval base in Simon’s Town.

A surprisingly alacritous inquiry produced a secret report, of which only an executive summary was released that appeared to clear the South African government of supplying arms to Russia.

Trade balance

The United States is the third largest trading partner of South Africa, after China and the EU. If you disaggregate the EU, then the US comes second, almost level with China.

Moreover, South Africa has a positive trade balance with the EU, the UK and the US, but not with the BRICS countries as a group, or with China in particular. This means South Africa exports more to these countries than it imports from them, earning it precious foreign currency reserves to fund its very substantive trade deficit with China.

Russia, and other friends of South Africa like Venezuela, Cuba and Iran, don’t even make it onto the list of South Africa’s 25 largest trading partners.

South Africa’s very vocal friendships with fiends, dictators, communists and terrorists, and its increasingly activist foreign policy in this regard, have raised concerns about its continued membership of various trade pacts with its major trading partners.

AGOA

The most prominent among these is its participation in the US’s Africa Growth and Opportunity Act (AGOA). It is due for renewal in 2025, and four African countries have just been kicked out for being generally awful.

It is likely, however, that the ANC government simply doesn’t feel particularly threatened by this. As it turns out, AGOA doesn’t matter all that much to the South African economy.

A report from the Brookings Institution makes clear that while AGOA has very significantly benefited South Africa since its introduction in 2000, its benefits have dwindled. Were it to be ended today, it would curtail a mere 2.7% of South Africa’s exports to the United States, and reduce GDP by a mere 0.06%.

That isn’t to say certain sectors wouldn’t feel it. Food and beverages will be hard-hit, losing 16% of their exports, followed by the transport equipment, fruit and vegetables, and leather and clothing sectors.

Yet for the most part, tariffs on South African exports to the US are mostly low in any case, and many of its exports don’t fall under AGOA at all.

Conversely, the US is heavily dependent on South Africa for a range of minerals and ores, most notably chromium ores – of which South Africa supplies a massive 98% of US imports – as well as halogen elements, arsenic slag and ash, platinum, manganese and titanium.

Reputational harm

The report cautions that it did not assess the reputational impact the loss of AGOA might have for South Africa, especially if it was lost on political grounds. (It might also lose it on the basis that it is now an upper-middle-income country, and hence ought not to qualify for preferential access to the US market.)

The authors speculate that losing AGOA benefits could substantially harm the already very poor investment climate and market confidence in South Africa.

It is far less likely that the EU will exclude South Africa from any trade agreements over its foreign policy positions, so it may well be that the ANC government has discounted the threat altogether.

Sanctions

That means the only real economic threat from South Africa’s large trading partners other than China would materialise only if they go as far as instituting economic sanctions.

The affront with which the government faced down the accusation by the US Ambassador that it was giving military aid to Russia, and the alacrity with which it concocted an exculpatory report, probably has a lot to do with the fear of sanctions being imposed against South Africa.

As long as South Africa’s foul dalliances with the world’s rogues, outcasts and blackguards doesn’t cross red lines that would trigger economic sanctions (so the government probably reasons) trade with the liberal democracies of the West simply doesn’t enter into the foreign policy equation.

source:On becoming a disfavoured nation – Daily Friend