- Is Putin giving a diplomatic headache to Ramaphosa, or Ramaphosa is deliberately challenging USA? But at what cost?
Harare- South Africa is facing a possible expulsion from the African Growth and Opportunity Act (AGOA) due to its heavy alignment with Russia, which is being condemned by the international community, especially its second largest trading partner, USA.
AGOA is a United States Trade Act, enacted on 18 May 2000. The legislation significantly enhances market access to the US for qualifying Sub-Saharan African countries. Qualification for AGOA preferences is based on a set of conditions including rule of law, respect for human rights and not threatening the US’ foreign interests and national security.
In a circular dated 9 June 2023, four US lawmakers said: “We are seriously concerned that hosting the 2023 AGOA Forum in South Africa would serve as an implicit endorsement of South Africa’s damaging support for Russian invasion of Ukraine and possible violation of US Sanction Law.
“Further, these actions of South Africa call into question its eligibility for trade benefits under AGOA due to the statutory requirement that beneficiary countries not engage in activities that undermine the US security or foreign policy interests.”
The circular further urged the transfer of the 2023 AGOA conference from South Africa to another possible non-aligned venue.
Washington-Pretoria relations got out of hand last month when the US ambassador to South Africa alleged that the latter supplied arms to Russia against its imperialistic war with Ukraine. Although the US later tried to undermine the statements, the damage has already been done.
South Africa was also on record denouncing the arrest of Russian President, Vladimir Putin threatening to exit from the Rome Statute. South Africa further denounced accepting dictations from any country (USA) pertaining to its alignment with Russia, even the USA as the two countries share historical values.
Ramaphosa also blamed the NATO Alliance led by USA after it refused to condemn the Russian invasion. South Africa as a sovereign state is allowed to choose sides, even break away from its non-alignment movement, but the challenge is at what cost? South Africa is currently having an economic headache over the recurrent failing of the national grid and surging inflationary pressures.
South Africa shares deep political ties with Russia as the latter played a crucial role during the fight against Apartheid rule. However, the economic side, which is the cornerstone, a pillar for every country echoes a different sound.
Given that the US successfully removes South Africa from AGOA, it means a reset of relations, from amicable to sour between the world’s largest economy and Southern Africa’s largest economy. This will affect South Africa’s economy as a whole brewing more problems for the ailing ANC party which is struggling to put economic sanity in order and a massive rift with the private sector.
Currently, South Africa is grappling with energy crisis and inflationary crisis. Invoking one of its leading trading partners will bring immense economic damage. Both USA and Russia are not South Africa’s largest trading partners, but the former is the second largest while the latter accounts only for less than 1%.
So, is it worth to have this Political Romance at the expense of the economy? Why would South Africa want to emphasise more on military issues when the whole nation is plunged in darkness and the economy is boiling? Is Putin giving Ramaphosa a diplomatic headache or it is Ramaphosa who want to distance himself from USA and major more on the BRICS treaty for economic growth?
South Africa’s biggest trading partner is China where it sends goods worth US$11.9 billion (9.7% of total South African exports), followed by United States at US$10.9 billion (8.8%), Germany at US$10.1 billion (8.1%), Japan at US$8.6 billion (7%), the United Kingdom at US$6.3 billion (5.1%) and the Netherlands at US$6 billion (4.8%). All the top 5 trading partners for South Africa, except China are the United States’ top allies who are all holding a strong line against Russia’s invasion of Ukraine.
Even China itself, which is the second largest economy and the third strongest military with more than ten-times strong economy and military than South Africa distanced from Russian war to preserve its economic interests, so why South Africa a small economy? Is it about national sovereignty or diplomatic failure?
South Africa is to date AGOA’s largest and most diversified non-oil exporter utilising AGOA preferences. Research data shows that AGOA creates over 62,000 jobs in South Africa and 100 000 jobs in the USA In 2014, 21% of SA’s exports to the US were exported under AGOA, while 16% was under GSP. During the same year, major AGOA or GSP-beneficiary sectors were vehicles at 75%, mineral and metals at 12%, agricultural products at 11% and chemicals at 2.7%.
South Africa’s exports classified as purely under AGOA amounted to US$1.75 billion, exporting over R23 billion worth of vehicles to the US in 2014.
How is Zimbabwe affected
Over 1 million Zimbabweans find economic refugee in South Africa. They then contribute to the macro-economy through remittances. A damaged South African economy means another Zimbabwe situation created in South Africa. The rate of poverty in Zimbabwe will increase, with foreign currency shortages exacerbated as it will be very expensive to send even 50 dollars due to a weakened Rand. The demise of South African economy will even hit hard in Zimbabwe than South Africa itself.
Equity Axis News
