Russia–South Africa relations: beyond revival
Johannesburg: The policy brief analyses the main features of Russia–South Africa relations following a revival of bilateral interests in the context of the, so-called, new scramble for Africa and recent 5th BRICS summit in Durban, South Africa, on 26–27 March 2013.
It is important to define the path best suited for the fruitful development of a bilateral partnership between Russia and South Africa. However, in order to do so it is essential to first understand the history and nature of Russia–South Africa relations. This includes identifying the main mechanisms of bilateral relations employed by both countries, and the kind of challenges and opportunities that would help to enhance their bilateral partnership.
At the start of the 1990s both Russia and South Africa were undergoing radical changes that strongly influenced relations between the two countries. During his visit to Pretoria on 28 February 1992, Russian foreign minister, Andrei Kozyrev, signed a joint statement on establishing diplomatic relations. In June 1992 an official visit to Russia by President Frederik Willem de Klerk took place, Nelson Mandela was not received at the time, although a national hero and icon of freedom for the South African people.
A new stage of development in bilateral relations began with a visit to Moscow by Deputy President Thabo Mbeki on November 1998, followed by President Mandela in April 1999. During his visit Mandela signed the Declaration on Principles of Friendly Relations and Partnership between Russia and South Africa. Although the text of the Treaty of Friendship and Partnership, based on the Declaration, was initialled in 2000, the signing only took place six years later, during the visit of President Vladimir Putin to South Africa on 5–6 September 2006, the first visit of the Russian head of state to Africa south of the Sahara. A number of intergovernmental agreements and contractual documents between large companies of both countries were also signed during the visit.
Extracts from the briefing
Trade and investment: A considerable number of agreements have been signed regulating various aspects of trade and development issues. These include agreements on the promotion and reciprocal protection of investment; avoidance of double taxation; co-operation in the peaceful uses of atomic energy; and the intergovernmental agreement on co-operation in exploration, extraction, processing and mineral processing. However, the implementation of these agreements falls short of the potential of the relations.
The development of mineral resources – particularly diamonds, gold, manganese, platinum group metals, and rare earth elements – is one of the most promising areas of bilateral co-operation.
Civil society: Civil-society linkages are far weaker than the ties at governmental level. Attempts to create bilateral friendship societies or to revive those that existed earlier have so far failed. Contact between trade unions, and youth and women’s organisations is weak.
Although ANC leaders and activists still value the support and assistance Moscow provided during the liberation struggle, more important is the current place of Russia in Tshwane’s foreign policy. The policy briefing illustrates an unfortunate imbalance between the political and economic dimensions of Russia–South Africa relations. Close on 20 years of bilateral relations between democratic South Africa and Russia have been characterised by both successes and failures. There is certainly potential for further development in the future, facilitated by the expansion of the BRIC grouping (Brazil, Russia, India and China) into the BRICS, following South Africa’s inclusion in April 2011.
* Introduction and conclusion to: Russia–South Africa relations: beyond revival, by Alexandra Arkhangelskaya, Vladimir Shubin, Policy Briefing 75, Global Powers and Africa programme, SAIIA, October 2013. The report, 4 pages, can be accessed here.
- Related: Russian business investments in developing economies: problems and outlook, by Yury Zaytsev, Visiting Research Fellow for "Rising Powers in International Development Programme", Institute of Development Studies at Sussex University.
Extract: Russian companies are underrepresented in emerging markets; their share of FDI in the poorest countries of Africa, Latin America and Southeast Asia is still quite low. For example, the figure is under eight percent in subtropical Africa and less than one percent in the Middle East and North Africa. In emerging and fast-growing markets, Russian investors are aggressively squeezed out by their U.S., Chinese and Australian rivals. According to UNCTAD, in 2011 ten out of twenty largest FDI recipients were developing economies. The rise in FDI is primarily connected to fast economic growth in Asia, Latin America and Africa.
Russian business has traditionally perceived Latin America as a faraway area with great institutional and commercial risks, which to a great extent explains the quite insignificant Russian assets and projects in the region. However, in the post-crisis period, Russian firms have displayed increased interest in the Brazilian oil and metallurgy sectors, with investments of USD 200 million made by Mechel, USD 49 million from Severstal and USD 1 billion from TNK BP.
In Africa, Russian companies – RUSAL, Renova, LUKOIL, etc. – face operational and institutional difficulties, although Russian businesses are assertively expanding in the local extractive sectors, with the share of Russian capital in Africa reaching 11 percent. In Southeast Asia, Russians have focused on Cambodia and Laos.
The integration of Russia business into the system of global economic relations means its deeper involvement in value chains that, in turn, suggests expanded production in developing markets depending on availability of critical production factors. However, political risks and the inefficient system of state support to capital exporters with a focus on companies with government participation considerably complicate the invasion of foreign markets by Russian businesses. [Read more]