/ 15 July 2022

Russians to hold trade talks in South Africa

Aggression: A resident walks past a destroyed building after a Russian strike in Kharkiv in Ukraine. A planned Russian business meeting in Johannesburg has angered Ukrainians in South Africa. Photo: Sergey Bobok/AFP

While their compatriots back home are engaged in mortal combat with Russians, Ukrainians in South Africa will have to settle for keeping a beady eye on their enemies when a Russian delegation arrives in Johannesburg next week on a two-day business mission.

The Russian Export Centre (REC) group, which describes itself as a state-owned development institute for non-energy sector exports, is hosting the meeting on Wednesday and Thursday at the Sandton Holiday Inn. According to the invitation, REC expects to bring in representatives from 10 sizeable Russian companies as part of its bid to offer financial and non-financial support to the foreign partners of Russian exporters.

The focus will be on “engineering and agricultural mechanisation”.

While the South African government’s cosy stance towards Russia might see state involvement in the event, growing antipathy to what is being regarded by many as a rogue state is likely to prompt protest.

This week, the United Nations High Commissioner for Human Rights said there had been 11 544 civilian casualties in Ukraine since the Russian invasion started in February. Of this number, 5 024 had been killed (including 300 children) and 6 520 injured. Seven million people had been displaced by the war.

The REC has invited Business Unity SA (Busa) to participate in meetings with the visiting Russian companies to discuss cooperation. The staff of Busa’s Bonang Mohale said he would be travelling next week and would be unable to attend. They could not say whether other Busa representatives had accepted the Russian invitation.

Ukrainian ambassador to South Africa Liubov Abravitova told Mail & Guardian she and her staff were “analysing” the event. She hoped South African businesses that attended would hold Russian representatives to task for their government’s aggression.

“The Russian invasion and damage of Ukraine has affected Africa’s food security. South Africans are feeling the consequences of this. Oil prices are up 75% and maize by 40%. Russia is to blame. Russia’s naval blockade of Ukrainian ports and the placing of mines in the Black Sea means 20-million tons of agricultural goods and fertiliser cannot get out of the country.

“We cannot rely on diplomacy alone to end this war. Economic pressure will stop Russian aggression in Ukraine. It is in the interests of South African business to stop this invasion because it has raised prices and interrupted supply chains. Business speaks the language of money and companies don’t want losses. They will put pressure on Russia.”

Abravitova said Russia was not a stable trading partner and the reputation of its firms had been adversely affected by the war, which made it more important for companies doing business with them to grill them on their ability to deliver.

“It also is an opportunity for Russians to hear how bad the war is and what its effects are. They don’t get that information at home. They are subject to state propaganda. 

“We will be watching this meeting closely and analysing the outcome.”

She described trade between South Africa and Russia as modest.

According to a recent report in Business Insider, last year, South African exports to Russia were more than R6-billion and imports were R9.2-billion. In the same period South Africa’s trade with Nato countries was worth R1-trillion.

In February, the 30 member countries of Nato labelled the Russian invasion of Ukraine “unprovoked, unjustified and barbaric”. They unleashed sanctions against Russia and have targeted rich Russians, the country’s banks, businesses and state-owned enterprises by seizing their assets and refusing to do business with them. One of the most significant moves was the removal of Russia from the international financial messaging system Swift, which facilitates money transfers.

While the South African government has been roasted for its cosiness with Russia, many of its citizens support the Ukrainians.

The Russian meeting planned for next week is but one of a host of engagements that have infuriated Ukranians in South Africa and the opposition Democratic Alliance.

A Ukranian in South Africa who asked not to be named said anyone doing business with Russia was “financing terrorism”.

Dzvinka Kachur, from the Ukrainian Association of South Africa, said her organisation had contacted Holiday Inn global management to alert them to the fact that the meeting was planned for their Sandton hotel. She expected the company to consider cancelling the event.

Holiday Inn, owned by the Intercontinental Hotel Group, had taken a clear stand against the Russian invasion of Ukraine.

“The company announced it had left the Russian market and closed its office in Moscow. The majority of the world’s most valuable brands are pulling out of Russia, as doing business with the country that invaded its neighbour means supporting the killing of civilians, destroying schools and hospitals and contributing to horrible war crimes that the Russian army is committing in Ukraine.

“The list of companies that have left Russia includes Visa, Mastercard, PayPal, Netflix, Amazon, Uber, Airbnb, Vodafone, Mercedes, BMW, Siemens and many others.

“We will be alerting South African trade associations about the importance of taking a moral stand against violence and in support of human rights. Those that consider such cooperation might face transparency and accountability issues as Russian banks are cut off [from] Swift.”

Kachur said the consumer backlash against any company doing business with Russian firms, the difficulties associated with banking and the practical challenges of interrupted supply chains made it unlikely South African firms would see much value in meeting the Russian delegation.

“We are also considering protesting outside the venue,” she said.

Mikhael Kosarev from the Russian embassy in South Africa was unable to provide information on the meeting, saying it was not organised by the embassy. Attempts to get information from REC representative Andrew Kudryavtsev were unsuccessful.

According to the programme, representatives of Russian agricultural equipment producers, a chemical processor and a manufacturer of freight rolling stock would be visiting.

The Sandton meeting follows a meeting last month of the Russia-South Africa Business Council. A report on the Chamber of Commerce and Industry of the Russian Federation’s site said it was a success.

It said shifts in world trade caused by the tough sanctions against Russia were discussed and South African entrepreneurs were urged to seize “a unique opportunity to significantly intensify trade” with Russia.

Another meeting, hosted by Afrocom, a Russian organisation to promote Russian trade in Africa, is planned for 9 to 15 October in Cape Town and Johannesburg.

South Africans doing business with Russians are going against the grain globally. According to Yale Business School, 1 000 foreign companies have either severed ties with Russia, or have indicated they will do so, since the invasion of Ukraine. The US has threatened to add companies to a trade blacklist if they try to skirt export curbs against Russia.

A Reuters report says the US Department of Commerce is mobilising staff around the globe to halt shipments to Russia to crack down on trade made illegal since the war.

According to a White House statement last month, the US and 30 partners around the world have imposed unprecedented sanctions and export controls “to hold President Vladimir Putin to account for his war against Ukraine, restrict Russia’s access to critical technology it needs to fund its war machine, and turn Russia into a global financial pariah”.

It said the Russian economy was “staggering under the weight of financial and trade sanctions, export controls and the exodus.” 

The DA has grilled the governing ANC for its soft stance on Russia, damning its “shameful veneer of neutrality” as tacit support for Putin.

In May, when German chancellor Olaf Scholz visited South Africa, President Cyril Ramaphosa said “bystander countries” were suffering due to sanctions against Russia.

Leaza Jernberg, an independent international relations researcher in Johannesburg, said South Africa’s position risked alienating key trading partners like the US and most European countries.

“The Brics (Brazil, Russia, India, China and South Africa) position is to remain neutral but this is essentially refusing to condemn human rights abuses and that is morally grey and problematic.”

Jernberg said the Russian invasion was a violation of international law, which the South African Constitution committed to uphold.

“At the heart of SA foreign policy is a contradiction that is historic: we won’t side with America or former colonialists. But rather South Africa separates our diplomacy from our trade reality. The Bretton Woods Institutions of global governance have solidified around power blocs and there is a push for South Africa to embrace the developing world and the Global South. This push for global governance reform makes sense in the context of India, for example, but many would say Russia is both colonialist and imperialist.

“Do China and Russia represent the underdog or just themselves? For South Africa to be shunning its key trading partners and risk alienating them by siding with a human rights abuser is problematic.

“It might be useful, and a political necessity given internal ANC factional struggles, to rally around Russia, given its struggle history with the USSR, but it doesn’t make sense economically. South Africa needs to reassess its national interest, particularly economically, and ensure it truly informs its foreign policy.”