After the Bell: SA’s decision to back Russia over Ukraine is objectively bonkers

25 Jan 2023

It is worth asking: What are SA’s interests in relation to the Russia/US divide so poignantly highlighted by the successive visits of the Russian foreign minister, Sergey Lavrov, and US Treasury Secretary Janet Yellen? What, objectively, should SA do in the pursuit of its best interests?

The defenders of the SA government’s decision to remain “independent” over sanctioning Russia’s invasion of Ukraine argue that it is SA’s right to pursue its sovereign interests. As the adage goes, nations have no permanent friends and no permanent enemies, only permanent interests.

This famous old quote is actually an abbreviation of a comment made by UK Prime Minister Lord Palmerston who said in the British Parliament in 1848: “We have no eternal allies, and we have no perpetual enemies. Our interests are eternal and perpetual, and those interests it is our duty to follow.”

Anyway, it is worth asking: What are SA’s interests in relation to the Russia/US divide so poignantly highlighted by the successive visits of the Russian foreign minister, Sergey Lavrov, and US Treasury Secretary Janet Yellen? What, objectively, should SA do in the pursuit of its best interests?

One way to look at this is to do a quick cost/benefit analysis of what SA gets out of its relationships with the two countries. In so doing, it might just be possible to discern where SA’s best interests actually lie. (Alert readers will notice at this point the irony being laid on with a trowel, but bear with me, it is worth looking at the numbers.)

First, which country, the US or Russia, has invested more in SA? At the moment, according to the American Chamber of Commerce, there are about 700 US companies operating in SA. They employ about 220,000 people; they range in size from colossal to medium-sized. They are, generally speaking, excellent employers, and the products they provide to the SA public are admirable in quality and range.

How would SA function without such crucial items as Ford bakkies and Lays chips, I just don’t know. US companies invested just under R10-billion in SA companies in 2021 alone, the highest level of foreign direct investment in SA’s modern history.

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Now let’s look at Russia. As far as I can discern, there is precisely one important investment by a Russian company in SA and that is Russian oligarch Viktor Vekselberg’s investment in United Manganese, SA’s fourth-largest manganese mine, through his vehicle Rusal. According to Wikipedia, Russia’s total investments in SA amount to about $1.5-billion, while before the invasion SA’s investment in Russia amounted to about $5-billion.

Or, to put it another way, SA has been a fairly substantial investor in Russia. But Russia, four times the economic size of SA, has invested diddly-squat locally. The total quantity of Russian investment is equivalent to the additional investment made by US companies over the past two years. Chalk one up for the Americans.

Let’s look at trade: According to the World Bank, SA’s imports from Russia in 2020 amounted to about $530-million, while its exports amounted to $382-million. (Bloomberg puts these numbers much higher, but the proportions are about the same.) In other words, SA has, or had, a pretty big trade deficit with Russia. But, in the larger scheme of things, it’s negligible, because the total trade is trivial; it’s about half of SA’s trade with Swaziland.

SA’s trade with the US is, by contrast, flying. Total trade in 2020 was about $11-billion, heavily weighted in SA’s favour; exports were about $7-billion and imports were about $4-billion. This makes sense because the US instituted a hugely generous trade deal, which allows enormous quantities of SA’s exports (and those from Africa) to enter the US tariff-free. The US African Growth and Opportunity Act has been operational since the year 2000 and will last at least another three years. Russia has exactly nyet trade deals with SA.

So, the US is at least 10 times more important in trade terms than Russia, and infinitely more important when it comes to the trade balance since SA’s trade with the US is positive and with Russia, it’s negative. Chalk another one up for the US.

What about cultural factors? This is more complicated. One measure is the total number of students who study at a country’s institutions because it suggests intellectual advancement.

According to the education website Eruda, the total number of international students in Russia is pretty high, about 350,000; or at least it was before the war. On the other hand, this number pales in comparison to the number of foreign students at US universities, which is more than a million.

And this is even though the most popular university in Russia with international students is the ominous-sounding Siberian State Automobile and Road Academy, where annual tuition fees are $247. If, on the other hand, you were to attend the most popular US university (that would be Stanford) and pursue an MBA, that would cost you just over $1-million. Per year.

This tallies with a recent poll. Just before the visit of Lavrov this week, a survey was conducted among a representative sample of South Africans who were asked where they would choose to work and raise their families outside of SA itself. A third chose the US, while only 1.4% chose Russia and 0.8% China. I think, on a close call (not), I’m giving this one to the Americans.

What about international diplomacy? For that, SA has to consider its membership of the BRICS grouping, no slight factor. There is also a good argument that for medium-sized countries, having a single, dominant global leader can be oppressive. Having competing superpowers can work to the advantage of smaller countries, as it did, to a certain extent, during the Cold War.

The only problem with this argument is that having competing superpowers increases global risks and dangers and forces countries to make a choice, which may turn out wrong, as it did for so many African countries after the Cold War ended. In some ways, this is what we are seeing now, and it’s not ideal. On the whole, a more stable, balanced world is probably, in the long run, the most ideal situation for smaller countries. Hence, I would chalk up an even tally here between the US and Russia.

So, by my count, that’s 3½ vs ½ in favour of the US. The pro-Russia faction of South Africans on Twitter point to the fact that the US has also invaded countries around the world without a specific invitation to do so, which is of course true. However, the logic is circular; that the US has done it does not justify Russia doing it. Two wrongs, as they say, do not make a right, after all.

So, objectively, leaving aside the moral issues involved, which personally I think are substantial, it is not in SA’s interest to cosy up (and I can’t believe I’m actually seriously writing this) to an unstable, megalomaniacal, authoritarian regime with a propensity for war.

But hey, that’s just me — and the facts. DM/BM

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