Tempting fate
South Africa’s questionable foreign policy emphases continue to pose a threat to foreign direct investment and trade relations. As the world heads into an uncertain 2024, with more than 70 elections scheduled to take place globally, struggling developing economies such as South Africa could find it even more difficult to attract investment. In this context, meetings between senior members of the governing African National Congress (ANC), including its Secretary General, Fikile Mbalula, and representatives of Hamas, the entity responsible for the 7 October attack on Israel, could spell trouble for South Africa’s relations with advanced democracies.
Mbalula on 5 December wrote on social media platform X, “this afternoon, the ANC delegation and the General-Secretary of SACP, Cde Solly Mapaila, held a bilateral meeting with the HAMAS and FATAH delegations of Palestine at Chief Albert Luthuli House”.
On 30 November, the provincial spokesperson of the ANC in the Western Cape, Khalid Sayed, reported on “a very positive engagement” with a Hamas delegation consisting of Dr Bassem Naim, a Hamas Politburo member, Dr Khaled Qaddoumi, the Hamas representative to Iran, and Emad Saber, its Africa representative.
Mr Qaddoumi’s presence is particularly noteworthy. Currently living in Tehran, he features in a 27 October press release from the United States Department of the Treasury announcing its targeting of additional sources of support and financing to Hamas.
While government itself has not had ‘direct’ meetings with Hamas representatives, that high-level ANC party representatives have done so sends a signal regarding government’s foreign policy priorities, too.
On 30 November minister in the presidency Khumbudzo Ntshavheni indicated government had ‘no plans’ to meet with the Hamas representatives.
With South Africa having been greylisted by the Financial Action Task Force in February for insufficient measures to combat anti-money laundering and counter-terrorist financing, such meetings send the wrong kind of signal. Earlier this year, the South African Reserve Bank sounded a warning that secondary sanctions — such as the blocking of South Africa from the international SWIFT payment system — could follow from unwise foreign policy choices. This possibility, although still remote, now arises once again.
Last week it emerged that Cabinet “endorsed PetroSA’s recommendation to select Gazprombank Africa as the investment partner for the re-instatement of the plant and production [of the Mossel Bay GTL refinery]”. This project will cost at least R3.7 billion. Gazprombank Africa falls under Gazprombank, itself the subject of U.S. sanctions that were imposed following Russia’s 2022 invasion of Ukraine. Sesakho Magadla, PetroSA acting chief operations officer, told Reuters, “These sanctions are not applicable to South Africa.” However, it is unclear why one would want to be exposed to any sanctions risk in the first place.
From the above events (with the PetroSA development also potentially significant for the country’s future energy security as well as renewable energy financing and developments), an even more immediate risk lies in the threat to South Africa’s continuing to benefit from the Africa Growth and Opportunity Act (AGOA).
A draft document, AGOA Renewal Act of 2023 (author: U.S. Senator Chris Coons), proposes “a review of each country at least once every three years. ... The President would retain the authority to conduct an out-of-cycle review of the eligibility of any country at any time, and the bill requires that USTR (Office of the United States Trade Representative) undertake an immediate out-of-cycle review of South Africa.” This bill seeks to extend AGOA from 2025 to 2041.
Along with displaying prowess on the rugby field in France a few months ago, all the way to winning the World Cup, South Africa has become well practised in the art of the own goal. As the world heads into potentially more economic headwinds and political upheaval in 2024 – with developing economies especially exposed should capital and trade seek safe havens – the government risks adding yet more challenges to its growth and job creation prospects; all as a consequence of its own choices.
Chris Hattingh is Executive Director at the Centre for Risk Analysis.
Sections of this comment were first published in the subscriber-only Centre for Risk Analysis Risk Alert.
