NICHOLAS WOODE-SMITH: SA’s prosperity depends on smart diplomacy

SA is at dire risk of sabotaging its own economy as we approach the renewal date for the African Growth and Opportunity Act (Agoa) in 2025. The act has provided SA with preferential access to the US market, producing a tremendous $15.7bn in exports from SA to the US in 2021 alone.

But SA’s membership of Agoa is in jeopardy because the ANC and SA government continually align themselves with the US’s enemies. For example, despite professing neutrality in the war between Russia and Ukraine, SA still invited Russia to participate in military exercises in February. This move not only makes a clear diplomatic statement, it puts the SA government in direct conflict with its own people, who overwhelmingly support Ukraine.

Already there is discussion in the US of cutting ties with SA over this repeated snubbing, its Cold War-esque rhetoric of East versus West, and growing ties to Russia and China. If SA doesn’t improve its relations with the US it will not only undermine its own economy but also isolate itself from the global community.

This is not a new development. SA has been aligning with dictators and states responsible for rampant human rights abuses for decades. Its voting record at the UN speaks for itself, as it refuses to condemn human rights abuses by its allies and continually acts in the interests of China and Russia. SA was identified by former US ambassador to the UN Nikki Haley as among the top 10 most aggressively anti-American countries in the world.

SA also continues to maintain hostility towards Israel, even opposing Israel’s observer status in the AU. This is a blatant signal to Israel, the US and the world that SA is an extremist state that is unwilling to divorce itself from Cold War ideology. Unfortunately, these ideological games not only threaten SA’s membership of Agoa, but the prosperity of the country and its people.

Importance of Agoa

Agoa was established in May 2000 to help improve commercial ties between the US and select countries in Sub-Saharan Africa. In practice, it grants preferential access to the US market for its member states. Being a member of Agoa has allowed SA duty-free trade for many goods. The $15.7bn in exports to the US in 2021 was up from just $4.2bn in exports in 2000. This tremendous post Covid-19 recovery would not have been possible without Agoa.

Agoa has contributed substantially to job creation in a myriad sectors. Most notably, SA has benefited from growth in automobiles ($553m in exports) and agriculture ($364m). This has helped the local wine and citrus industries create jobs in a labour intensive sector. It is estimated that if SA were to lose its Agoa status the country would sacrifice about $8.1m in exports by the wine industry alone. This would have a severe negative effect on hundreds of thousands of workers.

SA's exports to the US far outweigh imports from that country. The balance of trade is firmly in SA's favour, meaning we benefit far more from trading with the US than it does from us. Access to the lucrative US market has equipped SA exporters to gain wealth that contributes not just to tax revenue but also to growing industries and more jobs.

Even critics of Agoa have had to acknowledge that it has been a net positive for the region, helping produce greater trade volume and more diverse and resilient markets in member states. So it is clear that SA benefits from Agoa, but US policymakers are growing despondent about the reality that Agoa hasn’t attained its goals.

Agoa was meant to encourage beneficiary countries to adhere to the rule of law and develop market economies while eliminating barriers to trade and investment from the US and ensuring that human rights were protected and corruption curtailed. But many Agoa states, including SA, have not been adhering to these policies. Corruption is on the rise, SA repeatedly aligns itself with human rights abusers, and its threats to property rights continue to erode the market economy.

Choosing the wrong side of history

Most of all, SA’s allegiance with China and Russia has led to the US doubting the wisdom of its generosity. As tensions rise, SA will eventually be forced to make clear which side it is on. A bill was recently introduced in the US Congress denouncing SA's repeated votes at the UN aligning the country with China, Russia and dictatorships such as Cuba, North Korea, Iran, Venezuela and even terrorist organisations such as Hamas.

SA’s foreign policy is not only unethical, it isn’t pragmatic or reasonable. Russia is losing its war against Ukraine, and will face demographic collapse due to emigration as it keeps sending it youngest and brightest men into the meat grinder. China’s one-child policy of the past has also resulted in an inevitable demographic collapse.

Russia and China are not the future. They are tyrannies that are already facing decline. The ANC must abandon its Cold War ideology of East versus West, its antagonism towards Israel and the US, and its allegiance to dictators the world over.

What does SA need to do?

To reverse this trend SA should extend a hand of friendship to both Ukraine and Israel. It should apologise for its military exercises with Russia, and simultaneously demand that Russia remove its troops from Ukrainian soil, while also offering medical and food aid to afflicted Ukrainian civilians.

SA must also proactively improve relations with Israel, which has a track record of helping African states. It led the way in the crusade against Ebola, being recognised as the greatest contributor to ending the pandemic in 2014. More recently, Israel sent humanitarian aid groups to Eswatini to help with the Covid-19 vaccination programme.

Even with hostile relations, SA already benefits from Israeli trade. We gain crucial access to machinery, including machinery needed to solve the load-shedding crisis, from Israel. We also profit from trade with Israel, exporting $357.46m worth of goods in 2022 alone.

Israeli experts helped address SA’s water crisis in 2022, with Israeli technology responsible for providing about 500,000 people with critical water infrastructure. In an arid, water scarce country such as SA we could benefit more from a country that turned a desert into an oasis by improving relations.

Importantly, improving relations with Israel will also help improve relations with the US and encourage the superpower to maintain SA’s Agoa status. SA already suffers the consequences of bad policies domestically and abroad. To finally reach some semblance of prosperity we need to fix both.

Fixing our foreign policy begins with choosing the right side of history — the side that has benefited us so much already without asking for anything unreasonable in return.

• Woode-Smith, a political analyst and economic historian, is author of the Kat Drummond Series.