Why South Africa is siding with Russia The ANC can't afford to be virtuous

Jacob Zuma, the disgraced former President currently facing criminal charges over alleged corruption in a 1999 arms deal, commissioned Russia’s Rosatom energy company to build eight nuclear plants in 2014. If completed, at a cost of £50 billion, the plants would have provided 23% of South Africa’s energy — and given the Russians an effective stranglehold over the country’s economy. Karyn Maughan and Kirsten Pearson, in their 2022 book, Nuclear, suggest the deal was clinched after Zuma received medical treatment in Russia for poisoning. The former President alleged a toxin had been administered by one of his wives at the behest of the CIA. No proof of this poisoning has ever been provided, but there is plenty of evidence of a strong bond forged between presidents Zuma and Putin afterwards — the latter reportedly knowing a bit about poisons.

The nuclear deal was eventually scuppered in April 2017, when the Western Cape High Court, in response to two applications from activist environmental groups, declared that any such agreement needed the approval of Parliament. The Treasury, which had opposed the deal as unaffordable and unlawful from the start, breathed a sigh of relief. The decision was, however, catastrophic for the finances of the ruling African National Congress. Even before Zuma’s tenure, many major donors to the party’s coffers came from the legions of shady businesspeople who benefitted from what became grandly known as State Capture — that is, put simply, the embezzlement of public money. The nuclear deal, dwarfing in nefarious intent the infamous 1999 arms deal in terms of potential kickbacks, would have set up the ANC for decades.

Worse was to follow. The new President, Cyril Ramaphosa, launched a laudable if achingly tardy crack-down on corruption four years ago, insisting on transparency in party funding. This instantly deprived the ANC of its steady flow of murky money. And donations have dried up: the big corporations who had generously funded Ramaphosa’s bid to wrest the ANC leadership from Zuma in 2017 have long since given up on him, out of exasperation with his hesitant mismanagement of the country. Attempts to raise funds from within the party have also failed. The ANC and its supporting elites have proved in nearly three decades to be far better takers than givers.

The party is now technically bankrupt. Among other debts, it owes a court-ordered £1.5 million to a poster manufacturer for services rendered in the last elections. Staff are regularly unpaid, and they spontaneously strike and picket their own party conferences — wreaking havoc on efforts to prepare for the crucial Elective Conference later this year, at which an embattled Ramaphosa will go for a second term. Neither can the party’s former Treasurer General help much: he is fighting his own corruption charges relating to the procurement of protective equipment during the free-for-all that was South Africa’s Covid response.

Much conjecture surrounds the origin and purpose of a cache of dollar bills, allegedly worth in the millions, stolen two years ago from inside a sofa in Ramaphosa’s game lodge. The whistleblower was Arthur Fraser, the former head of Zuma’s privatised State Security Agency. Fraser also served as head of the prison services, during which time he unlawfully let Zuma out of prison on health grounds while he was serving a sentence for contempt of a commission into state corruption — a commission which Zuma had himself appointed. Sound bizarre? Not for South Africans. The theft of the dollars is under a typically ponderous investigation by law enforcement authorities, but nobody expects a result before the Elective Conference. If the moola was intended as the ANC’s bailout money, from whence came it?

The only discernible source of legitimate income for the ANC is via Chancellor House, the party’s in-house investment company. Its biggest stake is in the South Africa’s fourth-largest manganese miner, United Manganese of Kalahari. UMK was the sole declared donor to the ANC in the 2021-22 financial year, to the tune of £500,000, as disclosed in the latest Parliamentary filings. And UMK — wait for it — is part-owned by the Russian oligarch Viktor Vekselberg’s conglomerate Renova Group.

Vekselberg ostensibly sold off his interest in UMK after sanctions were imposed on him by the United States in 2018: he ranks near the top of the United States’ Least Favourite Russians list, primarily for his inner-circle place in the Kremlin, and for leading a technology hub that was subsequently deemed by American authorities to be a front to access US intellectual property. But he remains invested in UMK through a new vehicle, a trust of which he owns 25%. And the oligarch may well object to the seizure of yachts: his motor yacht Tango was impounded in April by Spanish authorities.

Still, it is not only these skeins of party and personal interest that inspire South Africa’s position on the Ukrainian invasion. At its heart lies something broader: realpolitik. South Africa is a proud member of the BRICS club, alongside Brazil, Russia, India and China. It is Africa’s token member of a group which is widely seen on the continent as a counterbalance to the historic power and influence of the developed western nations. The BRICS’s New Development Bank, set up in 2014, has a loan book only slightly smaller than the World Bank’s, while not being encumbered by a $160 billion commitment to patch up Western economies after their self-immolation in the pandemic. Neither is 35% of its investment tied to the chimera of climate change mitigation.

South Africa has a $25 billion share of the bank — which has not been sapped, as the IMF has in propping up the euro. The Contingent Reserve Arrangement (CRA) gives unlimited drawing rights to club members that need to stabilise their currencies. China and Russia’s foreign currency reserves are eight times larger than the US and Europe’s combined, give or take a few problems on Russia’s side in accessing its share while sanctions remain. China has the four largest banks in the world and owns 55% of the world’s shipping. Russia, despite having a Third World army, is self-sufficient in energy and food. These nations are, in short, worth keeping on-side.

Russian trade only comprises a minuscule 0.4% of South Africa’s total trade — and Russian investment in South Africa is a puny $1.5 billion compared to South Africa’s $5.13 billion stake in Russia. But South Africa’s dependence on Russia isn’t straightforwardly economic. Rather, it stems from a need to keep the BRICS club happy, particularly China and India — the latter having extensive personal and financial dealings with South Africa’s hugely entrepreneurial Asian minority, much of it through Dubai.

China has been investing heavily if not always ethically in Africa. So far it has sunk $70 billion in the continent, $25 billion in South Africa alone, creating an estimated 400,000 jobs. In February this year, it promised another $300 billion. The problem, a big one, is that its targets remain largely in the extractive industries and its practices are generally rip-and-run. There is little skill transference to the locals and limited social investment. And the increasing number of expatriate Chinese workers-turned-settlers do not easily assimilate wherever they land in the continent.

South Africa still takes money where it can find it: most recently $497 million from the World Bank to bail out its crippled electricity grid, and $4.3 billion from the IMF in emergency post-pandemic support. But the financial and fraternal allure of the BRICS club to South Africa is still overwhelming — and it is more important, Ramaphosa’s government firmly believes, than taking sides in a distant, intra-Slav war over an old border dispute. Besides, the argument goes, why should South Africa trust the US and Europe? A fair question, given America’s friends once included Vietnam, Iran, Afghanistan, Libya and Iraq.

So, while Russia moves to the next stage of total and irreversible war and China uses the pandemic as an excuse to keep its borders shut and reduce its exposure to the global economy, South Africa, like many other non-aligned nations, is manoeuvring. The aim is to be on the winning side of the real conflict behind the one involving tanks: the battle between old Western and new Eastern money. And while that battle is playing out, no fugitive Russian super yacht is ever going to be refused safe harbour in Cape Town.