Libmonster ID: UK-1250
Author(s) of the publication: Yu. A. Voinov

Russia Keywords:, South Africatrade and economic cooperation

Our magazine's questions are answered by Yu. A. Voinov, Adviser on Trade and Economic Issues at the Russian Embassy in the Republic of South Africa

What is the current state of trade and economic relations between the two countries?

- The volume of trade turnover between Russia and South Africa, according to Russian customs statistics, reached $ 484.1 million in 2008. Russian exports totaled $ 40.3 million, while imports totaled $ 443.8 million. These figures are a record. For example, in 2007, the volume of trade turnover between the two countries was $ 284.4 million.

It is noteworthy that in 2008 alone, the volume of Russian-South African trade almost doubled.

Despite the global financial crisis, the volume of trade continued to be at a high level last year.

The structure of mutual supplies has not changed significantly. The main commodity position of Russian exports in 2008 was ferrous metals. Aluminum and its products, wood, and fertilizers were also supplied. Tools, equipment and mechanical devices, optical and medical devices, etc. were also supplied.

The main position of Russian imports remains fresh fruit. Ores and ferrous metals, inorganic chemical products, fruit and vegetable processing products, alcoholic and non-alcoholic beverages, and a whole range of other goods occupy a significant place in imports.

The growth of mutual trade in recent years is certainly a positive trend, but

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these figures do not reflect the full potential available. In addition, there are certain difficulties, which is a consequence of the intense competition unfolding in the markets of African countries.

- How did Russian-South African trade relations begin and develop?

- After the Second World War, the USSR and the Union of South Africa (UAC) enjoyed stable, albeit limited, trade relations. In the 1950s, South Asia consistently ranked as the leading trade partner of the USSR on the African continent after Egypt. When the United Nations imposed international economic sanctions (lifted in 1993) on the racist "Pretoria regime" in 1986, official business contacts between the two countries were cut off.

Diplomatic relations between Russia and South Africa were established on February 28, 1992. In the same year, South African President F. de Klerk paid an official visit to Russia. Immediately after the establishment of diplomatic relations, work began to actively develop trade and economic ties, identify specific areas of cooperation, and create an appropriate legal framework.

A milestone event was Vladimir Putin's official visit to South Africa in September 2006, the first ever visit to sub-Saharan Africa by a Russian head of state. During the visit, a treaty of friendship and partnership between Russia and South Africa and a number of intergovernmental agreements were signed.

Mikhail Fradkov, then Prime Minister of the Russian Federation, visited South Africa in March 2007, and Sergey Ivanov, First Deputy Prime Minister, visited South Africa in March 2008.

Currently, trade and economic relations between the two states are regulated by the intergovernmental Agreement on Trade and Economic Cooperation of October 22, 1993.In 2000, the Agreement on the Promotion and Mutual Protection of Investments and the Agreement on the Avoidance of Double Taxation and a number of others entered into force. Work on improving the legal framework for cooperation continues.

- What are the specific examples of cooperation between the two countries?

- Bilateral investment cooperation is becoming more and more active. Renova Group of Companies, together with its South African partners, is participating in a project for the exploration, production and processing of manganese ores in the Kalahari basin.

Evraz Holding Company with Russian capital has acquired shares of the Highveld Steel and Vanadium Corporation, the world's largest producer of vanadium.

The Russian company Norilsk Nickel is implementing an investment project for the development of the Nkomati nickel mine in cooperation with Afriken Rainbow Mineral. The total investment may amount to several hundred million dollars.

The Russian company Mechel, together with the South African engineering company Bateman, has developed a plan to modernize the production of ferroalloy enterprises of the Mechel Group.

There are stable long-term ties between ALROSA and De Beers.

South African companies operate in Russia: "SUB-Miller" (beer production in the Kaluga region), " Anglo-American "(participation in pulp and paper production in Syktyvkar), " Bateman "(participation in the development of a diamond deposit in Mirny) and some others.

Despite the crisis phenomena in the two countries ' economies, cooperation in the banking and financial sphere is also gaining momentum. A number of cooperation agreements have been signed between the Bank of Russia and the Reserve Bank of South Africa, Vnesheconombank and a major commercial non-bank of South Africa.

In addition, a representative office of Vnesheconombank operates in Johannesburg, and a commercial Standard Bank operates in Moscow.

- How did the global financial crisis affect the development of the South African economy?

- The global financial crisis, as well as the energy crisis that broke out in South Africa in early 2008, had a significant impact on the economy. In 2008 - 2009, the country's socio-economic development was characterized by a decline in all key indicators. The volume of GDP in 2009 decreased by 1.8%. The manufacturing sector, mining industry, and retail trade experienced the greatest difficulties. At the same time, the agricultural sector and the construction sector had positive indicators. Only at their expense did the South African economy manage to avoid a more significant drop in GDP volumes.

Last April, elections were held in South Africa. The country's leader was replaced. In the course of his election campaign, the new President-

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President Zuma stated that he sees the goals of the ANC (the ruling party-the African National Congress) in developing the public sector of the economy, in combating crime, with unemployment affecting more than a quarter of black citizens, as well as in accelerating land reform in the interests of the black majority. On election day, black voters said they "have a historic chance to change the country's life for the better." We will see the consequences of the elections for the development of this country in the near future.

In the fourth quarter of last year, there were some signs of improvement in the South African economy. Gradually, the rand rate began to strengthen, the stock prices of leading South African banks on the Johannesburg Stock Exchange increased, etc. Some improvement in the situation allowed the government to put forward a propaganda thesis that its macroeconomic policy is flexible enough to respond adequately to the prolonged economic crisis.

According to former Finance Minister T. Manuel (now head of the National Planning Commission), "compared to most countries, the banking sector was virtually unaffected by the global financial crisis, which forced the United States and Europe to spend trillions of dollars to rescue the banking system. During the crisis, none of the South African banks applied to the government for emergency financial assistance."

All this enabled President J. R. R. Tolkien to Zuma said from the rostrum of the World Economic Forum in Davos at the end of January this year: "We have built a sustainable economy that was able to survive the global economic crisis and which has actually begun to show signs of recovery." The President also said that it was the "sound management" of the country's finances that allowed South Africa to survive during the global financial and economic crisis.

We must not forget that in June 2010, South Africa will host the FIFA World Cup. The Government of the country is making every effort to assure world political and business leaders that the biggest football competition will be held at a high level. Thanks to this event, the country's leadership is striving to ensure the inflow of new investment revenues. South African political and business circles agree that the World Cup is not only a sporting event, but also an opportunity to make a leap in the country's development.

- In this regard, the question arises, what are the approaches of the South African government to topical issues of international economic relations?

"Given the global nature of the current financial and economic crisis, the South African Government is aware of the need for multilateral cooperation in finding solutions to overcome it. The Group of 20 summits, which include South Africa, in Washington (November 2008), London (April 2009) and Pittsburgh (September 2009) discussed possible solutions to these problems.

Great hopes in South Africa are pinned on the implementation of the decisions of the Group of 20 summits. They are called a new stage in the way of coordinating the efforts of the international community in overcoming the crisis.

Pretoria believes that the actions outlined in the final declaration of the Pittsburgh summit will help minimize losses from the crisis.

- Returning to the issues of bilateral cooperation, what is the most significant thing to note in the past year?

- The most important event was the launch of the South African satellite Sumbandilasat, which is a remote sensing satellite designed to monitor the surface of southern Africa, on September 17 last year by a Russian Soyuz-2 launch vehicle from the Baikonur cosmodrome.

It is no exaggeration to say that this significant event will contribute to the further development of fruitful cooperation in the field of outer space.

- Recently, a meeting of the Joint Intergovernmental Committee on Trade and Economic Cooperation between Russia and South Africa was held. What can we say about its results?

- In October 2009, a regular, 8th meeting was held in Cape Town, which was attended by representatives of federal executive authorities and various commercial organizations.

The meeting was chaired by Minister of Natural Resources and Ecology Yu. P. Trutnev from the Russian side, and Minister of International Relations and Cooperation M. Nkoana-Mashabane from the South African side.

During the meeting, the parties discussed the state of mutual trade, noting the significant potential for its further development, and expressed satisfaction

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development of cooperation in such areas as mineral resources, energy, science and technology, space, peaceful use of nuclear energy, transport, water and forestry, health and education, and agriculture.

The parties stressed that the implementation of the national programs of Russia and South Africa is a serious example of dynamic partnership in the North-South format.

The Ministers noted the importance of holding a meeting of the Council of Ministers of South Africa on the eve of the planned visit of South African President George Zuma to Russia this year. During this visit, a number of new intergovernmental agreements are expected to be concluded. Discussing the results of cooperation in the field of trade and investment, the meeting participants noted that despite the global economic crisis, the volume of mutual trade continued to grow.

An important issue of the meeting was the development of relations between the two countries in the field of natural resources. In particular, they confirmed their mutual interest in implementing projects for the extraction and processing of platinum group metals in South Africa through the creation of joint ventures.

Production of electricity in South Africa using solar photovoltaic systems and other renewable energy sources based on high-tech solutions is also considered as one of the priority areas of cooperation. Successful cooperation in the field of peaceful use of nuclear energy was noted at the meeting. The South African side expressed its desire to preserve Russia's status as a leading supplier of competitive goods and services in the nuclear fuel cycle for the needs of the nuclear energy sector, including within the framework of the national energy program.

- We know that Russian business cooperates with representatives of a number of countries, including African ones, through Business Councils. Is there a similar interaction between Russia and South Africa?

"Yes, of course. The Russia-South Africa Business Council has been operating for several years. The parties agreed to hold meetings of the Business Council at least once a year and to coincide with important events in Russian-South African relations that could contribute to the development of business cooperation.

The Russian side hopes that the activities of this structure can become an effective support to state efforts to establish mutually beneficial trade and economic cooperation between Russia and South Africa.

The South African side was asked at the meeting of the Business Council in Cape Town to activate the work of the South African part of the Business Council to fulfill the main task - the development of direct ties between the business structures of the two countries.

- Traditional question. What are the prospects for developing Russian-South African trade and economic cooperation?

- Despite all the differences between Russia and South Africa, they are united by the fact that they are one of the few remaining countries in the world that have not yet exhausted their natural resources. This largely determines their current position in the global economy.

As for the prospects of economic relations between the two countries, I must say that South Africa is becoming one of the most attractive markets for our business, a springboard for developing Africa, which will allow us to promote Russian initiatives in neighboring countries. Expanding Russia's business presence in Africa in general and in South Africa in particular is in line with Russia's strategic interests and contributes to strengthening our country's positive image in the region.

Russian business is determined to consolidate the positive dynamics of trade and economic relations. It seems that achieving the volume of trade turnover to a level that significantly exceeds the current level is a real goal.

"One last question. Your book "Economy and Foreign Economic Relations of South Africa"was recently published. A few words about it for our readers.

"Thanks for the question. This book (Moscow, 2009, 143 pages, 200 copies) examines a set of issues related to the development of the economy and foreign economic relations of the Republic of South Africa in the period after 1990 (after the fall of the apartheid regime). The focus is on the specific features of the South African economy, the country's role in global and African regional integration processes, as well as the problems of socio-economic development in the new conditions. The paper uses materials from the South African press and official statistics.

The book is intended for international specialists, economists, journalists, students of economic universities, and a wide range of readers.


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