The global market is starting to behave as if secondary sanctions are going to be imposed on South Africa, Reserve Bank governor Lesetja Kganyago warned this week. In a briefing to parliament, he also said South Africa’s stance on the war in Ukraine was manifesting in the sale of bonds and shares by foreign investors.
“South Africa’s political neutrality is misunderstood and increasingly questioned,” Kganyago said.
If we have learnt anything from the saga of the Lady R it is that, in times such as these, geopolitics is a minefield, and that development and growth are ever more dependent on thoughtful and proactive foreign policy.
South Africa has been put on the spot by the fallout from an alleged shipment of weapons for Russia on the Lady R and a possible trip to South Africa by Russian President Vladimir Putin for the Brics summit in August.
This has fuelled the debate about a new phase of the Cold War, a notion that underlies much of the sometimes acrimonious discourse around South Africa’s policy of non-alignment.
But what does non-alignment really mean? Is it synonymous with being neutral? Are we not really talking about multi-alignment? Or is the era of globalisation ending, forcing us to take sides between two competing world systems?
Talk of a resurgence of the Cold War really reflects the search for a framework to make sense of the way global geopolitics is being rapidly reshaped — in ways we could not have imagined. But it is a flawed and outdated concept.
What sets Russia’s invasion of Ukraine apart from the other recent conflicts, including those in Africa, is that it is seen as a fundamental assault on the global order that prevailed since the collapse of the Soviet Union.
The invasion came three decades after the publication in 1992 of Francis Fukayama’s aptly titled book, The End of History and the Last Man, which declared there was to be no more history.
Western democracy had triumphed. Global economics was all about a flat world, free trade and neoliberalism. Geopolitics was about constructing a rules-based order that could seemingly only be violated by the one dominant power, the US.
It was also a time marked by a certain optimism that the world was moving in a better direction. China and India emerged from centuries of stagnation to pull hundreds of millions out of poverty and become leaders in adding growth to the global economy.
Other middle-income economies such as Poland, Mexico, Turkey, Brazil and Indonesia surged. Some analysts called it a “great divergence” as those parts of the world outside Western Europe, North America, Japan and a few other wealthy nations began to close the global income gap.
The key difference is that South Africa’s avowed position on non-alignment is actively undermined by flawed reasoning and a perplexing allure in some quarters for a deep-seated alliance with Vladimir Putin’s Russian Federation
In Africa, countries such as Nigeria, Ethiopia and Kenya experienced phenomenal growth while health indicators such as infant mortality and adult deaths from infectious diseases declined and literacy and education improved. Extreme poverty saw its biggest decline in human history.
But even before the shocks to the system from Covid, the Ukraine war and inflation, this world was already unravelling. In developed nations the middle class saw itself stagnating relative to the newly emerging nations; the working class saw manufacturing move to China and Mexico and an influx of immigrants competing for the remaining jobs; and the unrestrained take-off of the ultra-rich, powered by the tech revolution, created stupendous inequality.
All this contributed to Brexit, the 2016 victory of Donald Trump and the rise of populist and neo-fascist movements in Europe.
Meanwhile, the hope that free markets would automatically create more Western-style democracies did not materialise. Authoritarians gained strength in Turkey, Russia and Hungary.
The Arab Spring and democratic revolutions in the Middle East provoked a brutal counter-reaction that degenerated into civil war in Syria, Yemen and Libya — and now Sudan.
The global situation is best understood as a “poly-crisis”, with many moving parts and interests. Capitalist democracy, lurching from one crisis to the next, is in pathosis, partly because its main outcome over the past 30 years has been growing inequality, but also because we are entering a new era built on green technology and the fourth industrial revolution (4IR).
What has become glaringly apparent as the tide recedes is that the boost Africa received was largely driven by the export of raw materials — oil, gas and the commodities used in building giant infrastructure projects in China. Manufacturing, if anything, declined and the continent deindustrialised.
Then came the pandemic and the economic and geopolitical crises that followed, creating a major debt crisis. Borrowing secured during the era of low interest rates and high growth is now hindering the developing world’s access to new capital when it most needs it to return to growth.
The World Bank announced in October 2022 that progress in reducing extreme poverty had ground to a halt, with the prognosis for the next few years uncertain. The events of the past two years, the bank’s president David Malpass said, had conspired to “throw development into crisis”.
Geopolitical change is shaking our continent: competition between the great powers for strategic minerals, the collapse of the French neocolonial empire, the spread of violent conflicts, the proliferation of the Russian mercenary group Wagner, war in Sudan and new brooms in Kenya, Nigeria and Zambia…
African growth is once more being driven by the export of commodities, especially the so-called critical minerals essential to batteries for electric vehicles, and therefore to the challenge of confronting global warming.
One of the fundamental tensions underlying global politics is the question of where the goods of the world will be manufactured.
The US is pushing a “new economic world order”, based not on the free market dogma of the old Washington consensus, but on a more self-interested position of strategic protectionism and state intervention to reshape the economy, shore up and bring back manufacturing jobs and maintain technological dominance — all with a view to maintaining US global economic dominance.
But the big question is not so much Washington’s relationship with Moscow, but with Beijing.
Misreading the current geopolitics will not only take us backwards in the short term but could render the country unreformable
Coming out of its Covid-induced slowdown, China is relying on the private sector and manufacturing sectors, rather than the large infrastructure projects of the past, to promote growth.
The US and China, which appeared to be heading towards the brink only a few months ago, are slowly re-engaging, though relations remain fragile and are to some extent at the mercy of anti-Chinese sentiment in the US and hardliners in Beijing.
Washington Post analyst Fareed Zakaria has warned that if the two most dominant economies in the world seal themselves off hermetically, “that will lead to a collapse of the globalisation that’s taken place over the last 30 years — and that would lead to unthinkable conflict”.
Whatever the outcome, the new superpower competition looks very different to the globalisation we have been used to, but it is still being shaped in ways we cannot yet fully comprehend. Speaking at the G7 summit in Japan, German Chancellor Olaf Scholz used the new buzz term “derisking” rather than “decoupling” to describe the West’s decision to try to ease its dependence on China.
What remains to be settled between the two major economic powers is a new mutually agreed framework for global engagement — new rules of the road for the techno-economic era built on green technology and 4IR.
Not coincidentally, the testy relations between the US and China are coming at the same time as the Ukraine war has created new geopolitical realities. It has united the West under US leadership. China might have overestimated the strength of Russia — and the unity of the West has surprised both China and Russia.
Though China shares with Russia an antipathy towards the US-led global order, it has never supported Russia in the war in the way that Europe and the US have stood by and armed Ukraine.
This nuance in the concept of two global blocs is further underlined by the fact that when it comes to China, European countries and the US have greater differences in approach than they have over Russia.
Similarly, there are substantial contradictions within Brics, most notably between India and China. While India does not yet aspire to being a big power, it is moving up the ladder very quickly. It is aspiring to replace China as the world’s next manufacturing hub, and by 2030, is likely to be the third largest economy globally.
At the end of April, India’s population surpassed China’s for the first time in recorded history.
India is moving much closer to the West, especially the US, which is its largest trading partner. It recently signed technology and defence agreements with the US, but at the same time ignored Western sanctions and boosted its oil imports from Russia.
India is a model of what Goldman Sachs call “geopolitical swing states” — countries with a competitive advantage that are critical to the balance of power but not powerful enough to drive the global agenda.
When we consider the debate in South Africa around the meaning of non-alignment, India provides an intriguing model that we should be prepared to learn from and emulate.
The key difference is that South Africa’s avowed position on non-alignment is actively undermined by flawed reasoning and a perplexing allure in some quarters for a deep-seated alliance with Putin’s Russian Federation.
Some of this is a revival of old history that leans on distortion and a quasi-militant defiance of the global order supposedly to “assert our sovereignty”.
The current global situation is best understood as a 'poly-crisis', with many moving parts and interests
We certainly need to do better in showing, in word and deed, that we are indeed non-aligned, and that this stance springs from the duality of our nature as a democracy with an open, free-market economy and a developing nation with immense poverty and inequality.
South Africa is a prime candidate to be a “swing state”, given our Brics membership; our strategic position on the continent; our resources of critical minerals; and our historical roots in all camps.
But to play the multi-alignment card requires greater dexterity than we have displayed to date. We need to understand the macro-developments and proceed not on the basis of sentiment or old loyalties, but with a clear sense of our interests and our values as South Africans, as Africans and as citizens of the planet.
We need the international community for capital, for technology, for trade, for support in a number of areas. More than anything, we — and much of Africa — need to grow manufacturing jobs and to position ourselves as hubs for new technologies.
Mutli-alignment — or non-alignment — that is intended to conceal the reality of relations with pariah regimes is easily seen through and, as Kganyago warned, manifestly costly.
Our own-goals, including state capture, load-shedding and the like, also damage our international credibility. We cannot escape the fact that the withdrawal of the African Growth & Opportunity Act benefits would hurt us badly, especially the automotive and food & beverage sectors — our two productive economic success stories after 1994.
We should be asking: how can we best make foreign policy that serves our national interest and draws a more constructive link between our national agenda and the global agenda?
This is not to say we should kowtow to any foreign power’s wishes.
However, we must be cautious of handicapping ourselves by viewing the shifting geopolitics of 2023 through the lens of an obsolete past. Misreading the current geopolitics will not only take us backwards in the short term but could render the country unreformable.
The latest IMF report on South Africa sounds a warning about the dire consequences of backsliding on economic reforms.
How then can we become more like China in ensuring that the economic national interest — trade and positioning in global value chains — plays a central role in our geopolitical positions?
Making this case won’t always be easy because, unlike in China, there is a divergence of thinking between our economic and political elites and a glaring absence of a shared national vision.
It is ironic that as we stare into the abyss, the government, labour and business are probably closer than they have been for a long time on key aspects of the reform agenda, such as what must be done to tackle crime and the energy and logistics crises. This is undermined by the poor track record of execution to date.
This is a moment for a properly defined foreign policy based on national interest and the noncontestable universal principles that our constitution upholds, to entrench South Africa as a respected and prospering sovereign nation.
We can only assert our place in the world when we can explain it to ourselves.
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