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• Introduction
• Research questions
• Methodology
• Historical cases of successful US military friend-sourcing
• Assessment
• Recommendations
• Acknowledgments
• About the author
• Appendix 1

Introduction

In the United States, the military procurement bureaucracy tends to sponsor development of new technologies to fill requirements. The bureaucracy also largely seeks domestic sources for all new charismatic military megafauna: aircraft, ships, ground vehicles, and missile systems. Security “cooperation” in US policy and practice is largely a one-way process, neglecting the benefit of learning and sourcing from other countries. However, Russia’s invasion of Ukraine, and China’s concomitant threats from India to Korea, point to the need for coordinating the industrial capabilities of allies. As the United States faces simultaneous competition with two revisionist, nuclear-armed, major-power rivals, not to mention a challenging budgetary and fiscal environment, the additional research and development (R&D) costs assumed by the Department of Defense through its disregard of foreign suppliers, while never ideal, are no longer tenable.

Law, regulation, and policy can conspire against good economic thinking, though with clear exemptions. The Department of Defense Authorization Act for 1983 prohibited the construction of naval vessels in foreign shipyards, unless the president first informs Congress of a national security need otherwise (10 U.S.C. §§ 7309–7310). The Buy American Act of 1933 demands preference for domestic manufactures in federal procurement, though this is waived for imports from dozens of allied countries through reciprocal agreements (41 U.S.C. §§ 8301–8305). Note, though, that these laws say nothing of where products are designed, merely where they are manufactured. Further, the Federal Acquisition Streamlining Act of 1994 mandates a “preference for commercial products . . . to the maximum extent practical,” with “market research . . . before developing new specifications for a procurement” (10 U.S.C. § 3453). Official policy periodically reemphasizes this mandate for off-the-shelf procurement.¹

Much of the procurement bureaucracy in the Defense Department seems not to understand the exemptions and the mandates for off-the-shelf procurement of military capabilities. In contrast, the US Special Operations Command, imbued with its own procurement authority, has been far more open to procuring military systems off the shelf, and then heavily customizing them against specific military needs. The US Coast Guard, housed under the Department of Homeland Security, has also long preferred off-the-shelf solutions, often of foreign design and even manufacture—and with much less customization. Indeed, decades of procurement debacles and the economics of international commerce indicate that broad domestic preference is wrongheaded. At least three reasons point to the need for broader sources of supply:

• Quality: With military off-the-shelf solutions, many of the qualities are observable, from performance in testing to actual use in battle. In developmental programs, quality is not so observable ex ante, and may disappoint ex post. Global procurement invites buyers to find the best equipment available anywhere, and often from countries with competitive advantages in particular industries.
• Urgency: Off-the-shelf solutions may be sought as interim solutions to immediate military problems. If not restrained by production capacities or bottlenecks, they will arrive presently. What is purchased immediately may then suffice for anticipated problems, becoming enduring solutions, if the political and technological conditions do not too greatly change in the long run. In contrast, technological development requires greater lead time, delaying fielding.
• Economy: Off-the-shelf solutions may come at lower upfront prices, if the development costs are spread among multiple national customers, or otherwise already amortized. With domestic development, the cost is disproportionately borne by the sponsoring government, and this roughly averages 20 percent of the life-cycle cost of more advanced systems. Spending on R&D competes with spending on procurement, but, in fielding capabilities, the measure of merit is procurement. Simultaneously, when immediate needs are adequately filled by off-the-shelf procurements, monies can be husbanded for developing systems targeted at more challenging, long-range problems. Later, the wider supply base for the off-the-shelf system, which should remain largely interoperable with foreign versions, will contribute to lower sustainment costs.

Because autarky is illusory, greater “friend-sourcing” can provide US forces with quick access to proven, economical solutions, while maintaining the option for domestic production when that is strategically desirable.² Informal consortia of allied buyers could then naturally divide responsibilities for development and production, through an emergent but controlled market process. Allowing US forces more opportunities to acquire military technologies abroad would then restructure security cooperation as a two-way process, with the avid participation of friendly countries. As Ukrainian President Volodymyr Zelenskyy recently described Kyiv’s emerging military-industrial cooperation with the United States, “Ukraine does not want to depend only on partners. Ukraine aims to and really can become a donor of security for all our neighbors once it can guarantee its own safety.”³ Access to that sort of battled-hardened experience is part of the return on US assistance.

Research questions

Historical case studies can provide tangible evidence as to how well friend-sourcing approaches have fared in the recent past. The results can demonstrate whether actual procurements should more closely follow this course of action, already supported by law, policy, and economic theory. This study then poses two important and timely research questions. In the United States, since the end of the Cold War, how has the procurement of off-the-shelf systems developed for allied militaries:

• Affected the quality, availability, and cost of national military capabilities?
• Affected the long-term market for national, military-industrial R&D?

Methodology

To answer these questions, this paper seeks to identify all recent cases of off-the-shelf military procurements in the United States, subject to some boundaries. The set is limited to major end systems—aircraft, ships, ground vehicles, and missile systems—because the international trade in subsystems among friendly countries is already much more liberal. Also, the set includes only those US procurements undertaken since the end of the Cold War because global security dynamics changed radically at that point. Note that this excludes from consideration, for example, the US Army’s procurement of its Austrian-designed Family of Medium Tactical Vehicles, and the US Marine Corps’ procurement of LAV-25 armored vehicles, as these both began in the 1980s.

This paper further restricts the set to systems already in use by US forces, so that a firm decision for adoption, and some record of operation, can be observed. The study includes, however, customizations of off-the-shelf systems, as most countries have needs for subsystems (radios, racks, left- or right-hand drive, etc.) specific to their own military services, and modest customization is common in the international arms trade.

After review of histories and the author’s consultations with a wide set of experts on US military procurement, this paper identifies only nine cases—two missile systems, four aircraft, one ship, and two armored vehicles—in this set (see Appendix 1 for a summary):

• The RGM-184A Naval Strike Missile (NSM)
• The Norwegian Advanced Surface-to-Air Missile System (NASAMS)
• The UH-72A Lakota helicopter
• The MH-139A Grey Wolf helicopter
• The HC-144 Ocean Sentry maritime patrol aircraft
• The C-27J Joint Cargo Aircraft
• The Sentinel-class Fast-Response Cutter
• The RG-31 mine-protected vehicle
• The Stryker LAV III Interim Armored Vehicle

Neither the author nor the Atlantic Council intends to endorse or oppose the specific platforms mentioned or the procurement choices made. Rather, the following section outlines how these systems were procured and what advantages the acquiring service derived from the purchase. The following assessment section gathers lessons from the case studies in aggregate to inform how the Department of Defense should consider friend-sourcing more military procurement.

Historical cases of successful US military friend-sourcing

RGM-184A Naval Strike Missile

The RGM-184A NSM is a 400 kilogram, jet-powered, sea-skimming, anti-ship cruise missile. In September 2014, seeking a lightweight but lethal anti-ship missile for its littoral combat ships (LCSs), the US Navy test-fired Kongsberg’s NSM from the USS Coronado. In 2015, the Navy undertook a competitive procurement to equip its LCSs. Kongsberg and Raytheon announced a teaming arrangement to bring the Norwegian missile to the United States.⁴ Boeing initially offered an extended-range RGM-84 Harpoon, and Lockheed Martin a surface-launched version of its AGM-158C Long-Range Anti-Ship Missile. The latter two firms, however, withdrew their entries in 2017. In May 2018, the Navy selected the NSM for its Independence-class LCSs, its Freedom-class LCSs, and its Constellation-class frigates. The Marine Corps subsequently selected the NSM to equip its new land-based, mobile anti-ship missile batteries, with two NSMs mounted on each robotic Joint Light Tactical Vehicle (see below), deemed the Navy-Marine Expeditionary Ship Interdiction System (NMESIS).

The missiles are mostly built in Norway, as they have been in production there since 2007, and they cost “slightly less than the Raytheon Tomahawk Block IV cruise missile.”⁵ In a press release, Raytheon noted that undertaking final assembly and testing of an already operational missile “saves the United States billions of dollars in development costs and creates new high-tech jobs in this country.”⁶ More labor, at possibly higher cost, would be required in the United States if production were fully domesticated, and Kongsberg and Raytheon have discussed a second production line to deliver yet more missiles.⁷ Navigation is provided by satellite, inertial, and terrain contour matching; terminal guidance relies on imaging infrared and a target-image database. With the latter technologies, the NSM is designed to strike specific, vulnerable points on an enemy ship, and detonate with its void-sensing fuse at the point of maximum damage. A single missile can thus render even a large warship hors de combat.

The NSM was initially developed by and for Norway. Missiles for mobile coastal defense batteries were quickly sold to Poland. Since then, the NSM has been adopted as well by Australia, Belgium, Canada, Indonesia, Latvia, the Netherlands, Malaysia, Romania, Spain, and the United Kingdom. In summary, with the NSM, the Navy and Marine Corps obtained one of the best anti-ship missiles in the world, from a running production line, and at a cost below that of its best alternative in inventory. The US Navy and Air Force have continued to fund development of other, longer-range cruise missiles.

Norwegian Advanced Surface-to-Air Missile System

The NASAMS (pronounced NAY-sams) is a ground-based, anti-aircraft missile system. NASAMS was developed in the 1990s by Kongsberg and Hughes Aircraft to replace the Nike Hercules batteries of the Royal Norwegian Air Force. (Raytheon acquired Hughes Aircraft in 1997.) NASAMS integrates Raytheon’s MPQ-36A Sentinel trailer-mounted radar and AIM-120 Advanced Medium-Range Air-to-Air Missile (AMRAAM) with Kongsberg’s launcher and battle-management system. In an apparently sole-source deal, the US Army procured several launchers for the medium-range air defense of Washington, DC, in 2005, and they have served in that role ever since, at a variety of locations in Virginia, the District of Columbia, and Maryland.⁸ The NASAMS case is remarkable in that the Norwegian-US team integrated two off-the-shelf components from a US manufacturer into its system before providing that system as an off-the-shelf product back to the US military.

The United States was the third user of NASAMS, after Norway and Spain. NASAMS is now in service with thirteen countries, including Australia, Chile, Finland, Hungary, Indonesia, Lithuania, the Netherlands, and Oman.“⁹ In 2022 and 2023, the United States, Norway, Lithuania, and Canada all provided NASAMS units to Ukraine.¹⁰ The Canadian purchase is notable because Canada itself had no ground-based air defenses; the Canadian federal government simply identified a cost-effective and already-available system to send.¹¹

In summary, with the NASAMS, the US Army obtained a medium-range air defense system that remains at the forefront of air defense against the most challenging (Russian) threats, from a running production line, and at a cost that global customers still willingly pay. The US Army and Navy have continued to fund several other families of medium- and long-range air defense missiles.

UH-72A (EC145) Lakota utility helicopter

The EC145 is a twin-turboshaft, utility helicopter capable of carrying nine passengers. In its Light Utility Helicopter program of 2005, the US Army sought a proven helicopter for logistical and medical missions within the United States. In its request for proposals (RFP), the Army specifically sought only off-the-shelf aircraft, and received such offers from Bell, AgustaWestland (now Leonardo), and Eurocopter (now Airbus Helicopters). In June 2006, the Army selected a version of Eurocopter’s EC145, and designated it the UH-72A Lakota. The EC145 first flew in 1999 and was itself developed from the MBB/Kawasaki BK 117, which had first flown in 1979.

All UH-72s have been assembled at Airbus’s factory in Columbus, Mississippi. The program has experienced no significant delays. The UH-72 was competitively sourced, and the Army has been sufficiently satisfied with its performance and cost-effectiveness that the service has purchased 481 of the aircraft. Along the way, the Army awarded Airbus further orders under the original contract to fully recapitalize its fleet of training helicopters.¹² The Army’s Lakota was subsequently upgraded into the UH-72B, as Airbus continued to develop its EC145 into the H145M.¹³

Military versions of the EC145 have also been in service with the military forces of thirteen other countries: Albania, Belgium, Bolivia, Cyprus, Ecuador, France, Germany, Hungary, Kazakhstan, Luxembourg, Serbia, Thailand, and the Cayman Islands. The US Army has several times rebuffed suggestions that the domestic-service helicopters could be deployed overseas, asserting that adding armor and decoys would be uneconomical. However, in December 2023, Airbus and the German Defense Ministry announced a deal for at least sixty-two H145Ms, configured as either commando transports or missile-firing anti-tank helicopters.¹⁴ In this way, the case provides an example of a US military service overestimating its need for technological development when an off-the-shelf product would suffice.

In summary, with the EC145, the US Army obtained a proven helicopter in wide military service around the world, relatively quickly, and at a price that won a competitive tender. The US Army continued to fund rotorcraft development, though more notably of tilt-rotor aircraft through its Future Long-Range Assault Aircraft program.

MH-139A (AW139) Grey Wolf helicopter

The AW139 is a twin-turboshaft, utility helicopter capable of carrying up to fifteen passengers.

In the late 1960s, Bell Helicopter developed its UH-1 Huey helicopter, a workhorse of the Vietnam War, into the twin-engine UH-1N Twin Huey, to meet a requirement of the Royal Canadian Air Force.¹⁵ The US Air Force began buying Twin Hueys in 1970, for a variety of utility functions. About forty-five years later, the USAF was ready to replace them, seeking up to eighty-four aircraft for passenger transport and other utility functions. The aircraft had two particularly important roles: flying commandos to any missile silos in Wyoming, Montana, and North Dakota that might come under attack, and evacuating government officials from Washington, DC should the capital city again come under attack.¹⁶ The USAF initially planned a sole-source award to Lockheed Martin’s Sikorsky for UH-60s. Under the Economy Act of 1932 (31 U.S.C. § 1535), an agency can select a system already in service with another branch of government in lieu of a competitive procurement. Congressional objections soon scuttled that idea, whether to provide others an opportunity to bid or simply because the UH-60 might not have been the best-value solution.¹⁷ In September 2016, the USAF released a request for information (RFI) from industry, and in December, a draft RFP.¹⁸

The Air Force asked for a proven helicopter, and in response, five companies or teams offered four types of aircraft. Sikorsky offered its HH-60U Pave Hawk, already in service with the USAF. Sierra Nevada offered to rebuild existing, out-of-service US Army UH-60As to a -60U configuration. Airbus offered its UH-72A, already (see above) in service with the US Army. Textron’s Bell Aircraft offered its UH-1Y, already in service with the US Marine Corps, which was developed in the 1990s under a perhaps questionable sole-source contract.¹⁹ Leonardo teamed with Boeing to offer a military version of the Italian company’s AW139. That aircraft had been developed initially by Agusta (later AgustaWestland, now Leonardo) and Bell in the late 1990s, though Agusta bought Bell’s interest in the program in 2005.

The Air Force rejected the Airbus and Bell offerings outright as too small and short-ranged for the missile security mission. In September 2018, the service chose the AW139. At the announcement, Air Force Secretary Heather Wilson told the assembled that “strong competition drove down costs for the program, resulting in $1.7 billion in savings to the taxpayer.”²⁰ In this instance, the Federal Acquisition Streamlining Act beat the Economy Act at economy. At first delivery, in December 2019, the service named it the MH-139A Grey Wolf.²¹ Flight testing started in 2020, but did not conclude for several years. Leonardo and Boeing agreed to some requested modifications, and the aircraft had some unexpected difficulties with FAA certification.²² Low-rate production started in Philadelphia in March 2023.“²³ The Grey Wolves are today built on the north side of Philadelphia, where Leonardo has been building AW139s since 2007, and they are then customized on the south side of Philadelphia, by Boeing.

Prior to the Air Force’s purchase, AW139s were flying with at least three air services in the United States: the New Jersey State Police (since 2012), the Maryland State Police (2012), and the Los Angeles City Fire Department (2013). Miami-Dade Fire Rescue joined that group in 2020. Air forces or other public flying services in twenty-four other countries also operate AW139s.

In summary, with the AW139, the US Air Force obtained a proven helicopter in wide military service around the world, with a two-year delay, though at a price that won a competitive tender. The Air Force had not spent significant sums previously on rotorcraft development, and, with relatively few requirements for rotary-wing aircraft, the service has not since.

HC-144 (CN-235) Ocean Sentry maritime patrol aircraft

The CN-235 is a twin-turboprop, fixed-wing cargo aircraft capable of carrying fifty-one passengers or thirty-five paratroopers. In May 2003, the US Coast Guard selected the CN-235-300M maritime patrol aircraft from the European Aeronautic Defence and Space Company (EADS) as part of its “Deepwater” program to recapitalize much of its aircraft and ship fleets.“²⁴ In February 2004, Deepwater contractor Lockheed Martin ordered the first two aircraft from EADS on the Coast Guard’s behalf.²⁵ The service had specifically requested a proven, off-the-shelf aircraft to replace its HU-25 Guardian jets, Dassault Falcon 20s similarly purchased off the shelf in the early 1980s and originally developed in the early 1960s. The CN-235 was developed, starting in 1980, by a joint venture of Spain’s Construcciones Aeronáuticas SA (CASA, then part of EADS, now Airbus) and Industri Pesawat Terbang Nusantara (IPTN, now Indonesian Aerospace). The first flight was in 1983, and production began in 1986.

Deliveries to the USCG proceeded slowly, with the availability of funding. The first unit arrived in December 2006, and the eighteenth in October 2014, at which point the Coast Guard retired its last HU-25. The aircraft were largely built in Spain but fitted out with equipment specific to the Coast Guard at EADS’s facility in Mobile, Alabama. The USCG had initially intended to procure thirty-six, but the availability of surplus C-27Js (see the next case study) led the service to reduce its plan by half. By September 2017, the Coast Guard’s HC-144 fleet had flown for one hundred thousand hours—more than that of any country with CN235s besides France and South Korea. At that point, more than two hundred CN-235s were flying in more than twenty-four countries.²⁶

The US Air Force also flies a few CN-235s within its Special Operations Command.²⁷ Notably, Air Force Special Operations also flies twenty Dornier 328 twin-engine turboprops, termed C-146A Wolfhounds; and a few CN212 Aviocars from CASA, termed C-41As.²⁸

In summary, with the CN-235, the US Coast Guard obtained a proven turboprop aircraft in wide military service around the world, at the pace it desired, and at an ongoing total cost that the service continues to support. The Coast Guard has generally not spent significant sums on aircraft development, and specifically not multiengine, fixed-wing aircraft development, preferring off-the-shelf purchases.

C-27J Joint Cargo Aircraft

The C-27J Spartan is a twin-turboprop, fixed-wing cargo aircraft capable of carrying sixty passengers or forty-six paratroopers.

In the early 2000s, the US Army and the US Air Force individually were seeking ideas for twin-engine turboprop transport aircraft. The Army sought to replace its C-23 Sherpas, C-12 Hurons, and C-26 Metroliners with a common fleet. The USAF sought to supplement its C-130s with a smaller aircraft capable of flying from shorter fields, particularly in Iraq and Afghanistan. In March 2006, Under Secretary of Defense Ken Krieg instructed the two services to combine all these requirements into plans for a single airplane, the JCA.²⁹

Lockheed Martin offered a shortened version of its four-engine C-130. In August 2006, the Army (which was managing the program for the Air Force as well) eliminated that aircraft from the program. CASA, teamed with Raytheon, offered its C-295 aircraft, a larger derivative of the CN-235, developed in the 1990s. Alenia, teamed with L3 Communications, offered its C-27J Spartan. The latter had begun development in 1996 as an improvement of the Aeritalia (later Alenia, later Leonardo) G.222. The USAF had purchased ten G.222s in 1990, designating them C-27As. The C-27J would feature more powerful engines and the glass cockpit of the C-130J, which explains the choice of modifying letter. The first flight was in September 1999, and the Italian air force ordered twelve that November.“³⁰

In June 2007, the US Army and US Air Force jointly chose the C-27J as the JCA.³¹ The Army planned to buy seventy-five for the National Guard, and the Air Force seventy for both the Air National Guard and its component of Special Operations Command. The Army soon found the aircraft very useful for relieving the workload of its Chinook heavy helicopter fleet.³² The Air Force, however, was never enthused about splitting the mission with the Army, and questions of the economy of the arrangement persisted.³³ In 2009, Defense Secretary Robert Gates decided to transfer all the aircraft to the Air Force. In 2012, Defense Secretary Leon Panetta decided just to retire the entire fleet, as the United States reefed back its enthusiasm for counterinsurgency. Over the next two years, fourteen of the surplus aircraft were provided to the US Coast Guard, and another seven went back to the Army for its Special Operations Aviation branch.³⁴

Prior to the US order, the C-27J had been ordered by Italy, Greece, Bulgaria, and Lithuania. Australia, Chad, Kenya, Mexico, Peru, Romania, Slovakia, Slovenia, and Zambia ordered aircraft subsequently.³⁵

In summary, with the C-27J, the US Army and Air Force initially obtained a proven turboprop aircraft in wide military service around the world, relatively quickly, and at a competitive price that they were willing to pay. Those aircraft continue to fly for the United States, just with different services or branches than initially intended. That is more a matter of changing requirements than the quality, availability, or cost of the aircraft. Regarding development funding, the US Air Force has only once spent a large sum on new multiengine fixed-wing aircraft since the C-17 Globemaster III program in the 1990s. Its recent orders for KC-46 Pegasus aerial refueling aircraft included development funds, but under the fixed-price deal, Boeing (the contractor) would eventually come to assume most of that cost through repeated overruns.

Sentinel-class (Damen Stan 4708) fast response cutter

The Damen Stan 4708 is a 42 meter patrol ship designed for a variety of naval and maritime constabulary missions.

In March 2007, the US Coast Guard terminated its contract with Lockheed Martin and Northrop Grumman to modify its 110-foot Island-class cutters with a 13 foot midship hull extension, intended to produce a more capable ship with an extended service life. The Island-class ships had been built in the 1980s by Bollinger Shipyards of Louisiana to an off-the-shelf design of the 1960s by Britain’s Vosper Thornycroft, which had been sold to several other naval forces, including those of Qatar, Abu Dhabi, and Singapore.³⁶ The concept was reasonable in principle, as hull plugs are not uncommon in naval architecture and shipbuilding. The problem was that the Island-class ships were already proving susceptible to late-in-life hull cracking, but neither the service nor the contractors were fully forthcoming with one another about the difficulties. After taking delivery of eight of the rebuilt ships, the Coast Guard terminated the program, and indeed withdrew the eight from service.³⁷

In September 2008, the USCG awarded a contract, after an open competition, to Bollinger to build a replacement class of “fast response cutters.” The Coast Guard had expressly requested an off-the-shelf solution, with at least two vessels from the parent design in patrol boat service for one year, or one vessel in patrol boat service for at least six years. Bollinger brought a design based on the Damen Stan (“Standard”) 4708 patrol vessel, by Damen Shipyards of the Netherlands. With options, the fixed-price contract called for twenty-four to thirty-six cutters. The first, USCGC Bernard C. Webber was launched in April 2011 and commissioned in April 2012. The Coast Guard was sufficiently pleased with the cost and quality that the service now has fifty-four in service, and another eleven in sea trials, under construction, or planned. Bollinger’s work has been noticed, bringing forth suggestions that the US Navy could also purchase 4708s to replace its Cyclone-class patrol boats, and perhaps for other uses.³⁸

Three ships of the design had entered service in 2004 and 2005 in South Africa as the Lilian Ngoyi class of environmental inshore patrol vessels. In its explanation of the decision, the Coast Guard described Damen as an “internationally recognized ship designer with more than 30 shipyards and related companies worldwide [and] 4,000 vessels in service since [it was] founded in 1929.”³⁹ The 4708 was itself a development of the Damen Stan 4207, which has served in the navies, coast guards, or maritime constabularies of Albania, the Bahamas, Barbados, Bulgaria, Canada, Honduras, Jamaica, Mexico, the Netherlands, Nicaragua, the United Kingdom, Venezuela, and Vietnam.

In summary, with the Sentinel class, the US Coast Guard obtained a proven patrol ship whose preceding designs were in wide military service around the world, and at a price that led to procurement of scores more. The first ship was not available for forty-three months after contract signing, which is neither particularly fast nor slow by historical US standards. By avoiding much development spending with the Damen Stan 4708, the USCG saved those funds for its next-larger class of cutters in the Deepwater recapitalization program, of a wholly new design: the Heritage-class offshore patrol cutter.

RG-31 Charger (Nyala) mine-resistant armored vehicle

The RG-31 Nyala is a four-wheeled, all-wheel-drive, armored troop carrier, specifically designed for resistance to land mines. In 1996, the US Army purchased a few RG-31 mine-protected vehicles to equip its land-mine disposal squads on peacekeeping duty in Bosnia. Later described as a “rolling bank vault” of a troop carrier, the RG-31 had been developed in South Africa from the Mamba, an earlier mine-protected troop carrier that was built on a Unimog truck chassis and powered by a Mercedes-Benz six-cylinder diesel.⁴⁰ The “Bush Wars” of the 1970s and 1980s had culminated by the 1994 election that marked the end of apartheid, but part of the legacy was a remarkable industrial capability for developing armored vehicles. However, through a series of licensing arrangements and corporate mergers, the marketing rights for the RG-series vehicles in North America resided with GDLS-Canada. The vehicles were thus built in South Africa, but fitted out in Ontario, at the same plant that produced Strykers (see below).⁴¹

By the middle of 2003, the US-led coalition’s occupation of Iraq had elicited attacks by insurgents with leftover land mines and more improvised explosive devices (IEDs). Eager to get into the market of supplying the bomb squads, General Dynamics Land Systems looked globally in 2003 for an off-the-shelf solution and remembered its license for the RG series of vehicles.⁴² The US Army then ordered a small number of additional RG-31s. Service on the ground in Iraq created impressions of quality. In an urgent request to Quantico in 2003, the 1st Marine Brigade in Anbar Province requested one thousand mine-protected armored vehicles “similar to the South African RG-31, Casspir, or Mamba.”⁴³

In June 2004, General John Abizaid, the commander of US Central Command, which oversaw all military operations in both Iraq and Afghanistan, sent a message to the Joint Chiefs of Staff explaining his situation and requesting help. His most poignant statement was that “IEDs are my No. 1 threat. I want a full court press on IEDs . . . a Manhattan-like Project.” In November 2004, the Army ordered a further fifteen RG-31s. The vehicles were priced well below $1 million each—far below the price of a Stryker or Bradley troop carrier. The Army’s enthusiasm grew in February 2005, when the service entered into a $78 million contract for another 148 RG-31s from Canadian Commercial Corporation, the national armaments marketing firm, on behalf of GDLS. In that contract, the armored trucks were oddly termed “ground effect vehicles,” and the Army’s official nickname would be Charger. Deliveries took some time, as the supply line stretched almost the length of the Atlantic Ocean. Deliveries were scheduled to continue, however, through December 2006.⁴⁴

The first fatality in an RG-31 did not occur until May 2006. Early on, the US armed forces also ordered vehicles from Force Protection Industries of South Carolina. These were not off the shelf, but rather, had been developed domestically with technology licensed from the South African government. Eventually, the Army and the Marine Corps ordered over one thousand RG-31s, and thousands of other vehicles termed MRAPs—Mine-Resistant, Ambush-Protected vehicles—from multiple domestic producers.

In 2005, the Army and the Marines began work on an ambitious project for the Joint Light Tactical Vehicle (JTLV)—a vehicle only slightly larger than a Humvee, but with the protection of an MRAP. Developing the JLTV would ultimately require ten years, and full-rate production would not begin until 2019. During this time, US troops were protected from land mines by MRAPs, including RG-31s, and the origins of all that work reside in South Africa.

In summary, with the RG-31, the US Army obtained an armored vehicle long proven against land mines, relatively quickly, and at a price far below that of its other troop-carrying armored vehicles. While procuring the RG-31, and afterward, the US Army and Marine Corps would spend large sums developing the JLTV.

Stryker Light Armored Vehicle III

The LAV III is an eight-wheeled, all-wheel-drive, armored troop carrier, designed for higher road speeds and lighter weight than comparable tracked vehicles.

In June 1999, less than a week after assuming office, US Army Chief of Staff General Eric Shinseki signaled his intention to restructure much of the service.⁴⁵ The immediate impetus came from the Army’s difficulty over the preceding several months with deploying its Task Force Hawk, of attack helicopters and accompanying ground troops, from Germany to Albania for the Kosovo War. As analysts at RAND later described the problem, the Army needed to “expand ground force options to improve joint synergies.”⁴⁶ As Shinseki would more clearly say, its light forces were too light for fighting opponents with heavy weaponry, and its heavy forces too heavy for strategic mobility.⁴⁷ Neither bookend of capability had properly contributed to the overall war-fighting effort.

In October 1999, Shinseki described a plan to rebuild the Army around motorized formations equipped with wheeled armored vehicles small enough to fit on C-130 Hercules transport aircraft.⁴⁸ In February 2000, General Motors (GM) Canada and GDLS announced that they would together enter the pending competition with a version of the Canadian LAV III, itself a development of the Piranha series of armored vehicles, first developed in the early 1970s by the Swiss firm MOWAG (Motorwagenfabrik AG). Back in 1983, the US Marine Corps had procured a version of the Piranha I, armed with a 25 millimeter (mm) cannon, for reconnaissance and screening duties.

GM Canada held the license from MOWAG to build the vehicles in London, Ontario. The Army would later also receive offers from United Defense LP (UDLP) for a combination of remanufactured M113A2 tracked troop carriers and M8 medium tanks, from ST Engineering for Bionix tracked troop carriers, and another from GD for six-wheeled, Austrian-designed Pandur armored vehicles. Neither UDLP nor ST Engineering seem to have taken account of Shinseki’s strong and openly stated preference for wheels, though UDLP did suggest that a split purchase could include its tracked tank.

In March 2000, the Army reequipped the 3rd Infantry Brigade of the 2nd Infantry Division—a heavy brigade with Abrams tanks and Bradley fighting vehicles—at Fort Lewis, Washington, with LAV IIIs borrowed from the Canadian Army, and a variety of other vehicles under consideration.⁴⁹ In April 2000, the Army released an RFP for the Interim Armored Vehicle (IAV). The program was so named because almost simultaneously, the Army launched its Future Combat Systems (FCS) program to reequip all its heavy brigades (and eventually the “interim” brigades as well) with a common fleet of medium-weight vehicles of entirely new design. In March 2002, the Army selected a team of Boeing and SAIC to oversee development of the fourteen different vehicular and aerial systems, manned and unmanned, within the FCS.⁵⁰

In November 2000, after reviewing the four more-of-less off-the-shelf proposals, the Army awarded GM and GD a contract for 2,131 vehicles, in a variety of variants of the LAV III, to equip six brigades by 2008. Shinseki had wanted the first vehicles by the end of 2001, but at contract award, that schedule was clearly infeasible.⁵¹ The US Army’s order was far larger than any yet received, and the US vehicle required a significant redesign from the Canadian standard, with more armor (resistant to 14.5 mm armor-penetrating rounds) but less firepower (a remote 12.7 mm machine gun rather than a manned 25 mm turret). Thus, the first new-production Strykers to equip further brigades would not arrive until 2003. In those numbers, the price was considered reasonable, at roughly $1.42 million each. This considerably exceeded the procurement price of the M113 alternative, but the Stryker’s life-cycle costs were expected to be lower.⁵²

In November 2003, the 3rd Brigade from Fort Lewis deployed to Iraq with Strykers. Also that year, GD consolidated the design-and-production arrangement by buying both GM Defense Canada and MOWAG. The next year, Shinseki’s successor as chief of staff, General Peter Schoomaker, became similarly enthused about the Stryker. In seeking what he called an “infantry-centric army,” in which troops were not defined by their means of conveyance to the battlefield, he specifically noted that Stryker brigades brought twice as many dismounts to the field as brigades equipped with Abrams and Bradleys.⁵³ The Strykers were also performing well in combat. Through early 2004 in Iraq, they had survived attacks from at least fifty-five IEDs, twenty-four RPGs, and a 500 pound car bomb without a single fatality.

On the other hand, the Army’s effort to field a version of the Stryker with a 105 mm assault gun did not fare as well. The service purchased enough to equip each of eventually eight Stryker brigades with twelve guns, but retired all the vehicles in 2022. Then again, the Army’s goal of “Future Combat Systems” as survivable as Abrams tanks but somehow fitting on C-130 aircraft did not survive past 2005.⁵⁴ Development continued for several years, but without tangible progress. In April 2009, Defense Secretary Robert Gates canceled most of the FCS program, which had not produced any operational vehicles, despite $19 billion in spending and six years of effort.⁵⁵

Because the vehicles were considered an interim solution, the Army initially chose to forego developing its own maintenance depot for Strykers, and to instead rely substantially on GDLS through an arrangement the US military calls contractor logistics support (CLS). The Army’s reliance on CLS was, in retrospect, a costly one, but it did subsequently facilitate modifying the vehicles for greater survivability, after battlefield lessons in Iraq and Afghanistan.⁵⁶ After the FCS program was clearly terminated, the Army began assuming more of the maintenance burden organically.

While only the US Army employs its customized Stryker series, LAV IIIs have been procured to equip land forces in Canada, Chile, Colombia, New Zealand, and Saudi Arabia. Piranha IIIs have been procured to equip land forces in Belgium, Botswana, Brazil, Denmark, Moldova, Ireland, Romania, Spain, Sweden, and Switzerland. In 2011, GDLS began producing an upgraded version, the LAV 6, for the Canadian Army and the Saudi National Guard. In 2019, GDLS began building a development of the LAV 6, the Armoured Combat Support Vehicle (ACSV), to replace the Canadian Army’s M113s and LAV IIs. In 2022 and 2023, the United States sent surplus Strykers to Ukraine, and Canada sent new ACSVs.⁵⁷ In November 2023, the United States offered a coproduction deal to build Strykers, including air-defense variants, in India for the Indian Army.⁵⁸

In summary, with the LAV III, the US Army obtained an armored vehicle in wide service around the world, though somewhat more slowly than hoped, and at a price and life-cycle cost deemed acceptable. The Army’s heavy reliance on contractor logistics support was, in retrospect, a costly decision, but one which centralized management of upgrades at an important juncture. The Army spent a modest sum on development of the LAV IIIs, which required customization for its particular preferences. However, this was a small fraction of the funds spent developing the Future Combat Systems, the later and then-cancelled Ground Combat Vehicle, and the current effort with the Optionally Manned Fighting Vehicle. None of these programs have delivered vehicles to the field, but Strykers continue to serve.

Assessment

systems were procured starting between 2003 and 2008, during the comparatively free-trading George W. Bush administration, for which military-industrial cooperation with allies was a priority. Two of the systems were adopted in 2018, during the comparatively protectionist Trump administration. Plans for accepting off-the-shelf concepts for those two requirements, however, got their start during the preceding Obama administration. While the US Air Force’s twenty-year drama of aerial tanker procurements from Boeing—and not Airbus—does provide a counterpoint, all the military services but the Space Force have smoothly adopted at least one major system of foreign design. The summary record of these procurements has been largely positive.

Buying foreign military hardware off the shelf has generally brought the US military proven systems of lasting quality.

In the first seven cases described, the US Army, Navy, Marine Corps, Air Force, and Coast Guard bought off-the-shelf systems to provide enduring capabilities, in lieu of developing new systems, and all seven are still in US service. The Army bought the RG-31 to provide a present capability, while also funding (with the Marine Corps) the development of enduring capabilities, culminating in that of the Joint Light Tactical Vehicle. For years along the way, the RG-31 provided very valuable protection to US troops against land mines. The Army similarly bought the Stryker LAV III to provide an interim capability, but it never succeeded in developing an enduring replacement. The Stryker thus continues in the Army’s force structure and inventory more than twenty years on. As the Army’s first program manager for Stryker recently put it, “The Army likes the vehicle, and still likes the vehicle”—for if it did not, it would not persist in service.⁵⁹

Note also that the Defense Department would not have entrusted the air defense of the federal capital to NASAMS for eighteen years if it had meaningful questions about its capabilities.

This finding in evidence comports with the logic of the market. Off-the-shelf products generally feature observable quality. Indeed, if one is trying to sell an important system to the Americans, it is wise to bring a quality product. Any US military service is an important customer to whom a sale conveys great reputation.

Buying foreign military hardware off the shelf has mostly fulfilled US military needs comparatively quickly.

The RG-31 was procured in an emergency and was available in small quantities within months. The NASAMS was not quite procured in an emergency, but its immediate availability was appreciated, with fresh memories of the aerial attack on the Pentagon in 2001. The NSM was sought urgently, in that the rising threat from the Chinese navy could not be adequately opposed with the US Navy’s existing anti-ship missiles. The Stryker (or any interim armored vehicle) was sought quickly, because the Army chief of staff was embarrassed by his service’s failure to contribute during the Kosovo War. Its service in Iraq was impressive, but only because it was available three years after contract award. That proved adequate under the circumstances, but General Shinseki initially had much quicker delivery in mind.

In all the other cases, the driving motivation for an off-the-shelf procurement was either economy or assured quality. This does not mean that speed was wholly unimportant. The MH-139A arrived after a flight-testing delay of a few years, and the Sentinel-class cutters also did not arrive quickly. In none of those cases, however, did the procuring service experience operationally damaging delays.

This finding also comports with the logic of the market. Off-the-shelf products generally can be provided more quickly, sometimes because the production process is running, and always because significant product development lead time is not required.

Buying foreign military hardware off the shelf has generally brought the US military cost-competitive matériel.

Three of the cases were not fully competitive procurements. The NSM was chosen as the Navy’s next anti-ship missile after Boeing and Lockheed Martin withdrew from the competition, apparently because neither could quite offer the combination of capabilities the Navy sought in a ship-killing missile for a small ship. The case of the NASAMS seems to have been a sole-source procurement, without a record of a competition. The case of the RG-31 was similarly a sole-source emergency purchase.

The remaining six cases were all competitive procurements, which indicates that foreign-designed systems have repeatedly delivered value for money to the US armed forces.

This finding further comports to the logic of the market. Any US military service is a customer with great buying power. As noted above, concluding the sale reinforces the seller’s reputation, which can be leveraged for many years in pursuing other sales. For these two reasons, offerers have strong incentives to bring good deals to American buyers.

Buying foreign military hardware off the shelf has had no strong effect on US capacity for military-industrial R&D.

The nine off-the-shelf procurements neatly fall into five industries. None have seen a strong effect from this pattern of spending.

• In the two cases of missile manufacturing, the United States purchased two different missile systems, the NSM and NASAMS, from the same original designer, Kongsberg of Norway. On both projects, Kongsberg has cooperated with one of the US national champions in guided missiles, Raytheon Technologies. Over that time of the ongoing procurement, the US Defense Department has spent many more billions on missile development, for both offensive and defensive missions.
• In two cases of rotorcraft manufacturing, the Army bought hundreds of EC145s, and the Air Force is planning to buy scores of AW139s. The Army could have paid a contractor to design a wholly new aircraft for utility and training purposes, but the marginal advantage in an industry with a slow cycle of technological development could not be cost effective. The Air Force’s requirements may have been somewhat more demanding, but a new design for a fleet of less than one hundred helicopters would be similarly foolish.
• In two cases of fixed-wing transport aircraft manufacturing, the Coast Guard, the Army, and the Air Force took delivery of just eighteen CN-235s and twenty-one C-27Js. Developing new aircraft for small fleets would be a very bad use of money. The special operations commands of the US services understand this well, and thus sources most of their aircraft from existing designs.
• In the one case of shipbuilding, the Coast Guard’s off-the-shelf purchase of the 300 ton Sentinel-class cutter freed up money for the development of the 3000 ton Heritage-class cutter—a much larger project. Additionally, none of this spending by the Coast Guard seems to have affected the Navy’s spending on ship design and development.
• In two cases of armored vehicle manufacturing—those of the RG-31 and the Stryker—the Army did continue to spend large sums on follow-on systems: the JLTV and the FCS.

Recommendations

Since the end of the Cold War, the US armed forces have quite successfully taken into service nine major, off-the-shelf systems of foreign design. Again, this is good because a preference for the already available for federal procurement is federal law. Most of these products have been manufactured in the United States, and all have been serviced there. This is reasonable because the United States has huge industrial capacity and some strategic interest in domestic servicing. More pointedly, this technology transfer has effectively constituted security assistance from allies—a valuable concept too often overlooked by military policymakers.

Formulating a strategic framework

The federal government can better avail itself of the advantages in quality, speed, and economy offered by allies’ proven solutions, by adopting a two-part analytical framework for considering their procurement.

Consider the global extent of the market

Seven of the nine systems in this study were widely adopted by military forces around the world before a US military service purchased them. In all other cases, the procuring services had long lists of satisfied customers to consult for insights into the equipment. For future procurements, if the needs of the service do not genuinely exceed the global state-of-the art, the best design should be sought from any friendly source. As several of these cases demonstrate, for large production runs, production can be brought to the United States, if desired.

Measure the technological speed of the industry

Seven of the systems in this study represented modest technological developments. Only the naval strike missile constituted a great advancement over preceding options on the market. In all other cases, the procuring services were purchasing systems from industries with modest cycle speeds of technological development. Four of the procurements were from industries with substantially commercial underlying technologies and observably slow paces of change: helicopters and multiengine fixed-wing aircraft. If firms around the world are investing over the long-term for gradual technological progress, then a program to develop a wholly new system is duplicative.

Educating the procurement bureaucracy

Despite the logic, the procurement bureaucracy—outside US Special Operations Command and the Coast Guard—may remain disinclined to seek proven solutions, and especially those of foreign provenance. In the short run, this puts the onus of securing best value on the political leadership of the military departments and defense agencies. For better quality, speed, and economy, these leaders must meet military desires for novel equipment with demands for frank justification and global market research. This approach fits within the civil-military model of military innovation, which holds that beneficial change most often comes when “statesmen intervene in military service doctrinal development, preferably with the assistance of maverick officers from within the service.”⁶⁰

This last point addresses a longer-term approach. In the apparatus of any administrative state, career bureaucrats greatly outnumber appointees.⁶¹ Even if they are economically minded, the politicians cannot oversee everything. The “positive arbitrariness” of their occasional intervention can produce useful results, but it is also no way to build enduring institutional capacity.⁶² Officials beyond the mavericks need further schooling in the mandate for and economy of buying military systems off the shelf. This means education in the market research techniques of routinely surveying global markets for military off-the-shelf solutions that can inform processes for developing requirements for new procurements. In theory, educational opportunities exist through the Defense Acquisition University, the Eisenhower School of the National Defense University, and the military acquisition elective courses at the various other war colleges.

The benefits could be far-reaching. Procuring what others have already developed can permit the military to focus its R&D funds on its most challenging problems. Then, when war comes, procuring agencies and industrial enterprises will better understand, as organizations, how to put others’ designs into production here to meet the immediate needs of mobilization.

Acknowledgments

The Atlantic Council is grateful to Airbus for its generous sponsorship of this paper.

About the author

James Hasik is a political economist studying innovation, industry, and international security. Since September 2001, Hasik has been advising industries and ministries on their issues of strategy, planning, and policy. His work aims to inform investors, industrialists, technologists, and policymakers on how to effect, economically, a secure future.

Appendix 1

Forward Defense, housed within the Scowcroft Center for Strategy and Security, generates ideas and connects stakeholders in the defense ecosystem to promote an enduring military advantage for the United States, its allies, and partners. Our work identifies the defense strategies, capabilities, and resources the United States needs to deter and, if necessary, prevail in future conflict.

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On April 27, 1994, nearly twenty million South Africans voted in the country’s first-ever democratic election, electing Nelson Mandela of the African National Congress (ANC) as the country’s president. Propelled into a new era, South Africa ushered in a new constitution, formed a multiparty National Assembly, and officially ended the policy of racial apartheid that had plagued the country for much of the twentieth century.

Thirty years later, up to twenty-eight million South Africans will cast ballots in the country’s seventh national election, one that could be the most consequential since the 1994 vote. The ANC, the party that pushed for the end of apartheid and has led South Africa’s government since 1994, has undoubtedly been responsible for many of the country’s accomplishments. But with growing concern among South Africans about issues such as corruption and inequality, the ANC risks losing its majority.

With South Africa’s political landscape poised to shift once again, it provides a perfect opportunity to examine how the country has fared in the thirty years since overcoming apartheid and becoming a democratic state. Data from the Freedom and Prosperity Indexes, two separate indexes measuring 164 countries around the world according to nineteen different indicators of freedom and prosperity, provide a snapshot into the progress made, the progress lost, and the ongoing challenges and opportunities facing the rainbow nation.

Women’s economic freedom, one of the thirteen indicators in the Freedom Index, stands out as one of South Africa’s most successful accomplishments. Between 1995 and 2022, women’s economic freedom in the country rose from 63.9 to 94.4 out of one hundred, jumping eighteen points between 1995 and 1999 and improving incrementally since. South Africa outpaces its neighbors Botswana and Namibia, two other countries that achieved independence from colonial rule and have since maintained democracy, scoring eighteen points above Namibia and forty-seven above Botswana in 2022.

Notably, women’s economic freedom in South Africa surpassed the average of the world’s freest countries in 1999. Today, South Africa scores just as highly as Switzerland and the United Kingdom, and higher than the United States and Singapore. While disparities in legislation still exist, South Africa has made impressive strides in strengthening women’s economic freedom through numerous reforms. These include the Employment Equity Act of 1998, which prohibits gender-based discrimination in the workplace, the increase of paid maternity leave to fourteen weeks in 2003, and legislation protecting women from sexual harassment in the workplace in 2013. Transitioning from an apartheid state that heavily discriminated on the basis of both race and gender to a democratic country with one of the highest women’s economic freedom scores on the globe, South Africa can serve as an example of progress in this metric.

At the opposite end of the spectrum is inequality, one of the six indicators in the Prosperity Index. In the Index, inequality is measured through the share of a country’s pretax income accrued to the top ten percent of earners. With ten percent of the population owning more than 80 percent of wealth, South Africa suffers from significant income inequality, with wide disparities owing to one’s race, education level, and land ownership. With a score of just 13.3 in 2022, South Africa ranks last worldwide in inequality. As the graph below shows, both Botswana and Namibia struggle with inequality as well. In fact, all three countries ranked in the bottom eight in 2022 and are more than forty-five points behind the free country average. Yet South Africa stands alone in that inequality has worsened rather than improved. In 1995, South Africa’s inequality score stood at 50, twenty-six points below the score of free countries and over forty-five points above Botswana and Namibia. By 2022, South Africa’s score had plummeted by nearly 37 points, while Botswana and Namibia saw improvements and the free country average remained relatively the same.

While the nature of the apartheid system actively fostered inequality with a minority of the population controlling the country’s government and wealth, South Africa’s democratic era exacerbated rather than remedied the issue. The country may be more equal politically, but from an income standpoint, power is more concentrated and unequal than ever.

In the middle lies education. Another of the Prosperity Index’s six indicators, education is measured through both expected and mean years of schooling. South Africa’s education score has improved in the past thirty years, increasing from 37.2 in 1995 to 54.5 in 2022. Additionally, the country scores higher than its neighbors; however, its score remains well below that of free countries.

As the data show, South African education has undoubtedly come a long way since the country became a democracy. South Africa has achieved universal enrollment for primary school students, now has fully integrated schools after decades of segregation, and has established a unified department of education. But numerous challenges persist that keep South Africa’s education from reaching the level of the freest countries; while nearly all South Africans enroll in primary school, just 54 percent pass matric (the equivalent of graduating high school). In addition, many schools suffer from a lack of adequate building and sanitation facilities, and transportation to and from school for students is nonexistent in a number of both rural and urban areas. South Africa’s education trajectory is particularly important as about a third of the population is under the age of eighteen.

As South Africans prepare to cast their ballots on May 29, they will not only decide on who will best represent their interests in the future but have the chance to reflect on how their country has changed since transitioning to democracy in 1994. Overall, freedom and prosperity have seen little fluctuation—South Africa’s freedom saw a slight decrease from 72.5 in 1995 to 70 in 2022, and prosperity remained essentially the same, changing from 60.1 to 60. But this data also points to several important areas that the next administration will likely need to address, especially education and inequality.

James Storen is the program assistant at the Freedom and Prosperity Center.

Nina Dannaoui is the associate director at the Freedom and Prosperity Center.

The post Thirty years of South African democracy, visualized appeared first on Atlantic Council.

Table of contents

Evolution of freedom

The gradual deterioration of freedom in South Africa, which started in the early 2000s and is reflected in the Freedom Index, encapsulates the evolution of the country. Regarding economic freedom, the severe drop in investment freedom is very likely due to the introduction of legislation requiring foreign investors to have local partners, and to give away equity on a large scale. The application of such requirements to more and more sectors explains the continuing erosion of investment freedom up until today.

The ability to move capital in and out of the country has been static or has slightly improved. Similarly, trade freedom has not suffered big changes during the period of analysis, and that is well captured by the flat trend of this indicator. The short-run fluctuations are probably due to the changing trade agreements with the European Union (EU), but these are modest. The slide in property rights protection that started around 2012 is explained by the introduction of efforts to amend the constitution to allow for “expropriation without compensation” of agricultural land. While a strong majority favored the amendment, parties could not agree on the specific way such a policy would be carried out, and it was finally left aside. Nonetheless, it obviously continues to be a major threat in the near future, as the African National Congress (ANC) is likely to lose its majority and may revert to a populist alliance that would raise the issue again.

The significant increase in women’s economic rights, up to an almost perfect score, may be correct at a legislative level. Nonetheless, the real situation may be worse for at least two reasons: First, the levels of criminality, and particularly gender-based violence, are today at an all-time high, which clearly reduces women’s actual freedom. Second, even if there are no legal restrictions on women’s participation in economic affairs, social and traditional norms may still severely limit their opportunities in some areas of the country. Consequently, the positive push that this indicator gives to the aggregate economic freedom subindex may be somewhat artificial, implying that the real trend in overall economic freedom is probably worse than currently shown.

The political freedom subindex shows a very flat trend, but with a mild deterioration apparent in the last few years. The evolution of the indicators in this subindex can shed some light on what is going on. Elections and political rights scores are very high in South Africa, and the slight negative trend may be attributed to political polarization, but overall, the electoral process and its guarantees are not severely affected. The “legislative constraints on the executive” indicator has a clear upward bump in the 2013–19 period, which probably reflects the failure of parliament to act on allegations of state capture during the presidency of Jacob Zuma. The publication of the State of Capture report in 2016 resulted in a national scandal, and the rejection of its conclusions by Zuma, who was later chastised by the Constitutional Court, and this may explain the initial increase on this indicator. The establishment of the Zondo Commission in 2018 can account for the additional increase up until 2020. The post-2020 fall can be explained by the failure of the state to take action against the many individuals exposed for corruption before the Commission, and the impunity with which COVID-19 funds were looted by senior officials. Hence, the fall after 2020 is capturing the failure of the government to implement the recommendations of the Commission in any meaningful way. Nonetheless, the very marked upward bump shown in the data, between 2015 and 2019, seems rather unrealistic as no specific legislative changes were introduced on this front.

A second clear fact highlighted in the political freedom data is the significant worsening of civil liberties since 2019. Government actions during the COVID-19 pandemic are surely behind the initial drop. The empowerment of the army to stop and search individuals as a means of restricting the spread of the disease generated many abuses, and even deaths in some encounters. The health restrictions imposed in South Africa—such as the prohibition on buying certain goods, and the severe lockdowns and limitations on free movement—were probably among the strictest in the world. It is not surprising that, even after lifting the COVID-related restrictions, South Africa’s score on civil liberties protection has not rebounded and has actually worsened. This is because, in recent years, there has been a strong move against civil society in proposed legislation. For example, legislation is planned that would require nongovernmental organizations to apply for state security clearance to prove that they are not acting in favor of foreign powers.

The visible deterioration of legal freedom in South Africa since 2008 is notable. In 2009 Jacob Zuma acceded to the presidency and, very early in his mandate, he started to appoint close collaborators to senior positions across the criminal justice system in an effort to protect himself and his cronies against prosecution. The indicator on bureaucracy quality and corruption adequately shows the erosion and capture of the state apparatus. Judicial independence being relatively high and constant throughout the period of analysis may be faithfully reflecting the fact that the High Court and the higher levels of the judicial system have been able to prevent their capture by the executive. But it is also very true that the judicial system in South Africa is not as efficient for the average citizen, and this fact may not be fully captured by this indicator. It could be that the decline in the clarity of the law since 2010 is picking up the overall uncertainty and opacity of the judicial process in regular cases, due to inefficient and very slow courts.

From freedom to prosperity

The Prosperity Index seems to portray a picture that is the complete opposite of my reading of South Africa’s recent development trajectory. The Index shows a fall in prosperity between 1995 and the global financial crisis of 2007–08, followed by a recovery in the last fifteen years. Instead, I believe that the first half of the period of analysis was relatively positive for the country, while the last ten to fifteen years saw a clear deterioration. A closer look at the indicators that make up the Prosperity Index shows that it is mainly the evolution of the health indicator that is shaping overall prosperity. Therefore, it is probably more enlightening to analyze each indicator separately than to rely on the aggregate score.

The evolution of income per capita somewhat vindicates my argument. Gross domestic product (GDP) growth was strong and stable up until 2007, thanks to a substantial reordering of the public sector budget. On the one hand, there was some fiscal tightening and consolidation through reduced overspends. On the other, President Mandela (in power 1994–99) introduced several social programs that had an important redistributive effect. President Mbeki (1999–2008) continued this policy path and South Africa achieved positive GDP growth rates for several years in the early 2000s. Another crucial factor that fueled South Africa’s economic success in this period was a substantial decline in the cost of borrowing. With the election of Nelson Mandela in 1994 and the transition to a fully democratic system, South Africa’s credit rating was upgraded from close to junk to AAA. The increased borrowing capacity of the South African government helped create a quite substantial movement into the middle class, especially among black South Africans, who gained access to public sector jobs with rising wages. The resignation of Mbeki and the accession to power of Jacob Zuma, together with the worsening international environment during the 2007–08 financial crisis, halted abruptly the positive economic growth rates of the previous decade, and started a period of stagnation. The rating of South African debt deteriorated again and made further pay increases for public servants and other redistributive policies unsustainable.

The drastic dynamics of the health indicator are driven by the extremely different approaches to AIDS of Thabo Mbeki and Jacob Zuma. The former was a denialist and refused to deal with AIDS for most of his term, relenting only once the courts ruled against him near the end of his presidency. When Zuma took office, the government finally accepted that AIDS was a major problem, and a comprehensive health policy was instituted to begin fighting the disease. This shift—combined with the United States President’s Emergency Plan for AIDS Relief (PEPFAR), which began in 2003—played an important role as well in the dramatic increase in life expectancy from 2006. The severe impact of COVID-19 in South Africa, clearly greater than the average for Sub-Saharan Africa, does not necessarily imply a worse handling of the pandemic in the country. This is because COVID-19 disproportionately affected individuals with preexisting conditions, who represent a much greater share of South Africa’s population than is the case for the rest of the region. South Africa has a relatively higher cohort with so-called “first-world diseases” like diabetes, heart disease, hypertension, and so on, all of which contributed to higher mortality rates during the pandemic.

South Africa is a very unequal country, and the significant deterioration in terms of inequality during the first half of the period of analysis is very plausible. The main reason for such poor numbers is the dysfunctional labor market, including high levels of unemployment. There is a great divide in South Africa between those with a job and those without one. The expansionary policies of Mandela and Mbeki were intended to reduce inequality; they succeeded in expanding middle-class wealth but failed to deal with the growing number of people “outside” the labor market. Today South Africa has roughly three million civil servants, which represent close to half of the total number of taxpayers in the country. This somewhat artificial middle class that emerged since 1994 pulled away from those with limited job opportunities, worsening inequality. There were also some cases of incredible wealth creation among a very tiny elite, which widened the distribution even further.

The improvement in environmental quality is not impressive, clearly slower than the rest of the region. This is probably due to the fact that fossil fuels and solid fuels are still heavily used, especially among poorer households with no access to cleaner energy sources, as electricity generation has foundered. South Africa still operates a large fleet of coal-fired power stations and a fleet of carbon-intensive diesel generators, as the country has been unable to effectively transition to renewable sources of energy. So, the rise in this indicator may be more attributable to the fall in large industrial operations in the country than to a comprehensive policy focus towards a cleaner environment.

The important increase in the education indicator, of more than 20 points in the last twenty-five years, captures the massive push to increase enrollment rates at all levels of the educational system. Preschool has been an important policy focus, but also there has been a very substantial increase in fee subsidies for university students, so years of schooling are increasing at the intensive and extensive margins. Nonetheless, when we look at the quality of education, the assessment is not so positive. The standards required to pass to the next grade have been dramatically lowered. The deterioration in the quality of the education received by pupils is evidenced by the scores in global benchmarking tests, which paint a very different picture to the steady rise shown when measuring years of schooling.

The future ahead

The near future for South Africa will be determined by the evolution of the political situation. It is all about getting the politics right. The upcoming election in 2024 is going to be crucial for the country. It is very likely that we are going to see a change from a dominant party system to a coalition system. This may lead to some political instability in formal politics and parliament, but it will also lead to greater accountability and more political competitiveness. The direction the country will take is not obvious and will depend on which party or parties enter into coalition with the ANC, which is likely to remain the single largest party. The risk of the radical left party entering government is clear, with its support for arming Russia with South African weaponry, expropriation of whole sectors of the economy, and so on. If the ANC continues looking to the Communist Party and the trade unions for support, and builds a coalition with the populist left, there is a substantial risk of heading towards a downward political spiral, a rise of populism, and a sharp fall into a situation similar to that of Venezuela. Instead, if the political center is able to hold its electoral territory and becomes a suitable partner for the ANC, it would offer a completely different trajectory for South Africa. There is, for the first time, a serious effort to build a pre-­election pact between opposition parties, which may change the overall political calculation in favor of the center. Therefore, the electoral results of 2024, and the coalition outcomes, will be the key determinant of where South Africa will be in ten years.

South Africa’s fiscal situation is also a pressing problem that needs to be addressed if we are to avoid a major crisis. We are now on the verge of a fiscal cliff, with rising debt that will soon further constrain government spending. This will likely lead to a deterioration of the social climate, with worsening outcomes in areas like health and education. Again, a sensible government that can introduce structural reforms in the public sector and stabilize the fiscal situation, is of fundamental importance for South Africa.

Finally, South Africa’s global alignment will play a crucial role in its evolution in terms of freedom and prosperity. The importance given to being part of the BRICS group (Brazil, Russia, India, China, and South Africa) is not helping South Africa as it weakens the country’s standing with other nations with whom it has a more favorable trade balance and to which it exports more finished products. The expansion of the BRICS group to include Iran, Saudi Arabia, the United Arab Emirates, Argentina, and Ethiopia reinforces this negative trend. Moreover, China’s economic slowdown is leading to falling external demand for South African goods, especially minerals, threatening foreign exchange earnings. And being close to Russia and China is negatively impacting South Africa’s relations with other democracies—in the West and elsewhere—and making it more difficult to develop an exporting sector that is not so heavily dependent on China.

Greg Mills heads the Johannesburg-based Brenthurst Foundation, a think tank that seeks to strengthen African economic performance. He has directed numerous reform projects with African heads of state across the length and breadth of Africa. His latest books include Rich State, Poor State (2023), The Ledger: Accounting for Failure in Afghanistan (2022), and Expensive Poverty (2021), as well as a volume on South African scenarios, The Good, the Bad and the Ugly (2023).

Trackers and Data Visualizations

Jun 15, 2023

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The ICJ’s January 26 order dealt exclusively with provisional measures, and so it did not determine if Israel is committing a genocide. However, it did find “that at least some of the rights claimed by South Africa and for which it is seeking protection are plausible.” In addition to the attention this order cast on the case between Israel and South Africa, it also raised anew the question of whether other, so-called “third states” might find themselves drawn into the case.

For example, some third states have already drawn criticism for actions such as supplying military aid to Israel and the suspension of funding to the United Nations Relief and Works Agency for Palestinian Refugees in the Near East (UNRWA). As demonstrated in Judge White’s ruling, the ICJ’s finding could inspire possible proceedings against those third states for complicity in and failure to prevent genocide—both at the ICJ and elsewhere.

Could a case be brought before the ICJ?

Any state that is party to the Genocide Convention has standing to bring a case for an alleged breach, even if that state is not involved in the genocide. The ICJ established this precedent in 2020 in a case The Gambia brought against Myanmar, and it is how South Africa brought the current case against Israel.

The Genocide Convention requires preventing genocide, and prohibits commission of, conspiracy to commit, direct and public incitement to commit, attempt to commit, and complicity in genocide. A third state could, theoretically, be found responsible for any of these violations. In the case of South Africa v. Israel, two violations in particular have been raised: complicity in genocide and failure to prevent genocide. For complicity, the ICJ has explained that it includes “the provision of means to enable or facilitate the commission of the crime,” such as furnishing “aid or assistance.” The state needs at least to have acted knowing that the perpetrator of the genocide had a special intent, or dolus specialis, “to destroy, in whole or in part, a national, ethnical, racial or religious group, as such.” The ICJ left open the possibility that the complicit state would also need to share this special intent. However, courts have not required complicit parties to share the special intent in international criminal cases, suggesting that the ICJ might not require it.

The ICJ distinguished failure to prevent genocide from complicity by noting that failure to prevent genocide does not require that states take action. Instead, it is a matter of a state failing to take action. It does not require specific results—meaning that a failed attempt to prevent genocide does not incur liability. But in analyzing whether a state has fulfilled its obligations under the Genocide Convention, the ICJ does look at “the capacity to influence effectively the action of persons likely to commit, or already committing, genocide.” Unlike complicity, the state need only be “aware, or should normally have been aware of the serious danger that acts of genocide would be committed”—a lower mental threshold.

In its 2007 judgment in a case brought against Serbia and Montenegro, the ICJ confirmed that for it to find either complicity in or failure to prevent genocide, a genocide has to have occurred. However, it is not necessary for the ICJ to determine that a genocide occurred before an application against a third state can be filed. Any state party to the Genocide Convention, therefore, could have standing to file an application, including requesting provisional measures, against a third state for at least complicity in or failure to prevent genocide by Israel.

What acts could merit a case before the ICJ?

In the context of Israel and Gaza, two main possible acts have been raised as constituting complicity in or failure to prevent genocide: the provision of military aid and the suspension of funding to UNRWA.

First, countries such as the United States and Germany supply military equipment and aid to Israel, despite public reports on the risk of genocide. The case in the US District Court for the Northern District of California alleging genocide was filed against US officials on November 13, indicating that the Biden administration was on notice of the risk before the January 26 ICJ order. In December 2023, Biden twice used an emergency determination, avoiding congressional review requirements, to provide more than $250 million in military equipment to Israel.

Such actions might constitute the furnishment of aid or assistance for complicity. Experts have also argued that the United States has sufficient influence over Israel that its actions—and inaction—violate the duty to prevent genocide. However, the United States has a reservation to the Genocide Convention, upheld by the ICJ, that mandates that the United States must give its consent to be brought before the ICJ on any claims under the Convention—and it is unlikely to give such consent.

Second, at least twelve donor countries “temporarily suspended funding” for UNRWA after the January 26 announcement that it had identified several employees who were involved in Hamas’s October 7 attack, and that it was investigating and terminating the contracts of those involved. UNRWA said it will likely be forced to shut down by the end of February given the funding cuts. The UN Emergency Relief Coordinator noted that “[their] humanitarian response for the Occupied Palestinian Territory is completely dependent on UNRWA being adequately funded and operational.”

International law professor Douglas Guilfoyle, among others, has argued that the provisional measures ordered by the ICJ indicate that the provision of humanitarian aid is necessary to prevent genocide, and so the suspension of funds could be considered failure to prevent genocide. Given notice of the influence the funding has on UNRWA—and therefore the provision of humanitarian aid to Palestinians in Gaza overall—suspending that funding while knowing the risk could constitute “deliberately worsening ‘conditions of life’ found plausibly to be ‘calculated to bring about. . . physical destruction.’”

Conversely, Israel has accused UNWRA as an institution—as opposed to individual members—of “working with, or at least turning a blind eye to, Hamas operatives in Gaza.” Should investigations lead to credible findings—for example, a determination comparable to that of the ICJ’s January 26 order or a well-evidenced complaint—then states such as the United States might face potential legal liability for funding UNRWA and would need to pursue alternative methods of using their influence to help supply humanitarian aid to Gaza.

Already, Nicaragua—itself accused of an ongoing genocide of indigenous communities—is reportedly considering filing an application with the ICJ against the governments of the United Kingdom, Germany, the Netherlands, and Canada for the provision of weapons and other assistance to Israel. It has sent a note verbale to each government, which would help establish the “existence of a dispute,” a necessary component for the ICJ’s jurisdiction. South African Minister of International Relations and Cooperation Naledi Pandor has likewise raised the possibility of future ICJ cases against such states.

However, while the January 26 ICJ order does provide notice of a plausible genocide, the mental requirements for complicity in genocide and, to a lesser extent, failure to prevent genocide are high. The ICJ could adopt provisional measures against third states based on the plausibility standard. A final judgment however, would require the ICJ to confirm that Israel is committing genocide—which states such as the United States and United Kingdom continue to deny—and that, for complicity, the third state at least knew of Israel’s special intent—or, in the case of failure to prevent, that the third state was or should have been aware of the serious danger that acts of genocide were being committed.

Third states may also choose to intervene in the proceedings between South Africa and Israel either if they have a legal interest in the result or they are a party to the Genocide Convention and have an interest in the ICJ’s interpretation of it. Nicaragua has applied to do so, requesting that the ICJ find that Israel has violated the Genocide Convention. While Germany offered to intervene in support of Israel in January, it has not yet applied but has called on Israel to comply with the ICJ’s provisional measures.

What cases could be brought elsewhere?

The International Criminal Court—which is legally distinct from the ICJ—has jurisdiction over crimes committed “in the occupied Palestinian territory, including East Jerusalem, since June 13, 2014,” and is not limited by immunities. Under Article 25(3)(c) of the Rome Statute, it can prosecute those who facilitate the commission of crimes, including through the provision of means. However, it has not yet publicly released any arrest warrants related to the situation in Gaza.

Domestic jurisdictions generally criminalize genocide, but immunities and other barriers such as prosecutorial discretion make it unlikely that state officials could be charged with complicity in genocide. After the recent hearing in northern California, Judge White dismissed the case, but for procedural reasons, finding that the specific claims “raise[d] fundamentally non-justiciable political questions.” He noted that: “There are rare cases in which the preferred outcome is inaccessible to the Court. This is one of those cases.” At the same time, this dismissal leaves open the possibility that groups could bring related but distinct claims—for example, against companies continuing to provide and transport military equipment to Israel. For such a case, the January 26 ICJ order could help establish that relevant actions after that date were taken despite knowing the risk of genocide. Indeed, a Japanese company’s aviation unit ended its “strategic cooperation” with an Israeli defense company “[t]aking into consideration” the ICJ’s order.

What does this mean for the US government?

Additional legal actions could further influence US policy. Some US government officials have already voiced their dissent over Biden’s Gaza policy, and more than eight hundred US, UK, and EU officials signed a public letter on February 2 to protest their governments’ position on the war in Gaza. International protests in support of Gaza are still continuing. Domestic US polls indicate disapproval among young voters of Biden’s handling of the conflict, of particular concern given the November 2024 election.

The Biden administration could, then, take actions in response to the January 26 order. For example, in order to fully address the legal risk, the administration could halt military aid to Israel or condition it on Israel’s compliance with the ICJ’s provisional measures, and could resume funding to UNRWA or find a way to fund other humanitarian aid initiatives that could viably fulfill UNRWA’s role in Gaza.

On top of the binding nature of legal judgments—including any ICJ additional orders—such proceedings could serve as additional pressure points on the Biden administration’s policies. The ICJ lacks enforcement power, and while measuring compliance isn’t always straightforward, states sometimes ignore provisional measures and final judgments. The United States, in particular, has a rocky history with ICJ compliance, and as indicated above, has a reservation on the Genocide Convention shielding it from findings of culpability. Legal actions—especially those at the ICJ, either against the United States or its allies—could trigger unintended domestic backlash in the United States against the institutions hosting the claims. For example, former President Donald Trump imposed targeted sanctions on International Criminal Court officials, including then-Prosecutor Fatou Bensouda, over the Office of the Prosecutor’s investigation into US military actions in Afghanistan. The Biden administration has since revoked the executive order authorizing the sanctions. However, US members of Congress have already introduced a bill calling for a “full review” of US-South Africa relations over the ICJ case, to assess whether “South Africa has engaged in activities that undermine United States national security or foreign policy interests.”

While legal actions run the risk of delegitimizing the ICJ for some within the United States, others are likely to view them as strengthening the legitimacy of international law. Genocide “is singled out for special condemnation and opprobrium,” which is why the “gravity of genocide is reflected in the stringent requirements” of criminal convictions and ICJ judgments. Even if the United States avoids an ICJ finding of complicity in or failure to prevent genocide, such a judgment against its peers for acts the United States has also undertaken would influence public perception of the conflict and the United States’ role. While not as unequivocal as a finding of US complicity, it may further push US policy on the issue.

Celeste Kmiotek is a staff lawyer for the Strategic Litigation Project at the Atlantic Council.

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Click to jump to an expert analysis:

Celeste Kmiotek: The ICJ puts the countries supporting Israel on notice

Thomas S. Warrick: A blow to the argument that death and destruction are sufficient to establish genocide

Tuqa Nusairat: The ruling shows how isolated the US is in its support of Israel

Shalom Lipner: The ruling is unlikely to change Israel’s warfighting or narrative

Elise Baker: Israel’s continued failure to ease the humanitarian crisis in Gaza risks genocide

Nathan Sales: The ICJ’s criticism comes against a backdrop of UN hostility toward Israel

Gissou Nia: The ICJ’s decision pushes talk about ‘genocide’ from the rhetorical to the factual and legal

Lisandra Novo: The ICJ’s order to preserve evidence could impact war crimes cases elsewhere

Alexander Tripp: South Africa is putting its ideals on the world stage

Alyssa T. Yamamoto: The ICJ embraces another case brought by a state not directly affected by violations

Akila Radhakrishnan: It didn’t call for a cease-fire, but the ICJ did rule that Israel must drastically curtail its operations

Rayhan Asat: This case could have implications for a future genocide case against China

The ICJ puts the countries supporting Israel on notice

While today’s decision did not—and was not intended to—answer the question of whether Israel is committing genocide, the court held that “at least some of the acts and omissions alleged by South Africa to have been committed by Israel in Gaza appear to be capable of falling within the provisions of the Convention.” Further, “the facts and circumstances mentioned above are sufficient to conclude that at least some of the rights claimed by South Africa and for which it is seeking protection are plausible.” This allows the case to proceed to a decision on the merits. It also puts other states—namely, those offering support to Israel—on notice.

The provisional measures “have binding effect and thus create international legal obligations for any party to whom the provisional measures are addressed,” which in this case is exclusively the state of Israel. However, the measures are based on existing obligations under the Genocide Convention—which mandates punishment for not only acts of genocide but also complicity, and requires the prevention of genocide. South African Minister of International Relations and Cooperation Naledi Pandor stated that should the ICJ find there to have been genocide, the states that have aided and abetted it would be considered a party to the commission of the crime under the Convention.

Human rights organizations have already launched domestic legal proceedings against US officials and UK officials over aid to Israel. While legally distinct from the ICJ case, they are rooted in the same law. The former is based on the Genocide Convention as implemented in US law, and the latter is based on the Strategic Licensing Criteria, which prohibits the export of weapons “where there is a clear risk they might be used in violations of international law.” Should the ICJ determine that Israel is committing genocide, the states that have aided Israel could also face cases before the ICJ.

—Celeste Kmiotek is a staff lawyer for the Strategic Litigation Project at the Atlantic Council.

A blow to the argument that death and destruction are sufficient to establish genocide

Today’s ICJ decision can be summarized with this sentence: The court does not have the evidence to decide whether or not Israel has committed genocide in Gaza, but directs Israel to comply with its obligations under the Genocide Convention—to which Israel, as a party to the Genocide Convention since 1950, has long committed itself.

Today’s decision goes only to “provisional measures,” a technical term that recognizes the ICJ’s proceedings usually take years but that gives the court the ability to issue orders in clear-cut cases. As Israel’s defense showed, South Africa’s claims are certainly not clear-cut, especially given Israel’s right to defend itself after Hamas’s October 7 attack on Israel. The court did not try to order Israel to end the war in a way that would leave Hamas in power in Gaza.

Today’s decision is an important blow to the argument advanced by Israel’s critics that death and destruction in Gaza are sufficient to establish a violation of the Genocide Convention. This misunderstands the Convention, which requires the intent to destroy a national, ethnical, racial, or religious group, as such, in whole or in substantial part. By taking this case seriously, Israel presented evidence that its intent was focused on defeating Hamas, which had attacked it on October 7. South Africa will now have to establish an intent to destroy Palestinians in Gaza in whole or in substantial part—not by inference alone, but by proof of actual intent. Though it will take years for the court to render a decision on the merits, South Africa is likely to fail in this.

Two other points of note in today’s order. First, the court makes clear that Israel’s leaders have the responsibility to speak with authority and an understanding of Israel’s international legal obligations. Inflammatory statements only give ammunition to Israel’s adversaries. Second, the requirement that Israel report within one month on the measures taken to comply with the Genocide Convention is an opportunity, not a sanction, to provide more evidence—such as recently declassified cabinet minutes—explaining the intent behind Israel’s war to remove Hamas from power in Gaza.

—Thomas S. Warrick is the director of the Future of DHS project at the Scowcroft Center for Strategy and Security’s Forward Defense practice and a nonresident senior fellow and the Scowcroft Middle East Security Initiative at the Atlantic Council.

The ruling shows how isolated the US is in its support of Israel

The ICJ ruling is a significant step in the direction of reestablishing the credibility of international institutions and the application of international humanitarian law. Multiple earlier efforts to hold Israel accountable for crimes committed against the Palestinian people have been thwarted by its allies in the West, much to the dismay of many in the international community. Beyond the legal implications, the geopolitical implications of South Africa bringing the case to the world court are significant. 

In undertaking the effort to put on public display the extent of damage caused by Israel’s offensive against Gaza, South Africa is leading the Global South in rejecting the notion that international law has selective applicability. The case also rejects the idea that Western leaders can continue to derail efforts to bring about an end to the current suffering of innocent civilians in Gaza and address the Israeli-Palestinian conflict more broadly in venues such as the United Nations Security Council (UNSC). South Africa succeeded in bringing the world’s attention to the utter destruction Israel is inflicting on Gaza, forcing Israel to stand trial for crimes much of the world has been witnessing over the past 110 days.

The court’s initial decision puts to rest the Biden administration claim that the case is “meritless,” and should force the United States to come to terms with the fact that its support for Israel is not only rejected by much of the international community, but it is now subject to possibly defending itself against accusations of supporting a possible genocide in Gaza. The fifteen-to-two vote by the court on almost all the provisions speaks to how united much of the world is in its view of how Israel has conducted its military operations in Gaza. That should make everyone in the US government, which has been overwhelmingly uncritical in its support of Israel’s operations, take seriously any further diplomatic, economic, and military support it intends to provide as Israel continues its onslaught on Gaza. 

The court stopping short of calling for a cessation of hostilities may be more important because it keeps the focus on the urgency of preventing genocidal acts pending further investigation, rather than call for a cease-fire that is unenforceable, in no small part due to US veto power at the UNSC. Indeed, the only power capable of using its significant political leverage to prevent Israel from further implicating itself in the crime of genocide is the United States.

—Tuqa Nusairat is an expert on US policy in the Middle East and the director for strategy, operations, and finance at Atlantic Council’s Rafik Hariri Center & Middle East Programs.

The ruling is unlikely to change Israel’s warfighting or narrative

It’s fair to assume that Israel’s government breathed a sigh of relative relief after reviewing the operational sections of the ICJ’s interim ruling on Friday. Notwithstanding the court’s determination that provisional measures are warranted—in order to prevent “irreparable harm” from occurring while the justices deliberate further on the merits of South Africa’s case against Israel—the practical implications of its decision are unlikely to compel any drastic reconfiguration of Israel’s war deployment or narrative.

The Israel Defense Force’s mission to dismantle the military and governance infrastructure of Hamas in Gaza, and to secure the freedom of Israeli hostages in Hamas captivity, does not inherently clash with the court’s stipulations that Israel must “take all measures within its power” to prevent inflicting death or injury on “the Palestinians in Gaza” per se and must also provide them with “basic services and humanitarian assistance.” Israel has argued consistently, in fact, that it continues to perform in precisely this manner, despite the complex circumstances of fighting a terrorist group embedded among a civilian population. Most critically from Israel’s perspective, the ICJ refrained from issuing any call for an immediate cease-fire.

Meeting the court’s standard for action to “prevent and punish the direct and public incitement to commit genocide” may prove more difficult for Israel, against the backdrop of the October 7 atrocities, in which 1,200 Israelis were murdered and which have elicited the harshest possible characterizations of the perpetrators and their enablers. In this respect, Israel’s leadership would be well-advised to avoid recourse to unhelpful, incendiary rhetoric and to concentrate instead on the security tasks at hand—an approach that could only ameliorate their country’s standing before the court and the international community.

—Shalom Lipner is a nonresident senior fellow at the Scowcroft Middle East Security Initiative of the Atlantic Council’s Middle East Programs.

Israel’s continued failure to ease the humanitarian crisis in Gaza risks genocide

Today, the ICJ ordered that Israel must do everything within its power to prevent genocidal acts against Gazans. Such acts include, among others, deliberately inflicting conditions of life calculated to bring about Gazans’ physical destruction, carried out with the intent to destroy the Gazan people. To further mitigate the risk of genocide, the court also ordered Israel to immediately and effectively enable the provision of humanitarian aid and basic services to Gaza.

The ICJ’s order is legally binding on Israel, as are the Genocide Convention and Geneva Conventions. Accordingly, there is no doubt that Israel must take concrete actions to ease what the court found to be a “catastrophic humanitarian situation” and restore conditions that can support life in Gaza, not risk its destruction. Specifically, Israel must allow food, water, medical aid, fuel, and other humanitarian essentials into Gaza, without delay or arbitrary restrictions on quantities or types of aid. Israel must cease telecommunications blackouts to ensure aid can be delivered to and distributed across Gaza. Israel must stop denying humanitarian aid distribution within Gaza. Israel must limit its military operations in Gaza to ensure that humanitarian aid can be delivered to and distributed across all of Gaza. Israel must not attack civilians waiting for humanitarian aid.

Failure by Israel to take these steps places Gazans at further risk of genocide.

—Elise Baker is a senior staff lawyer for the Strategic Litigation Project.

The ICJ’s criticism comes against a backdrop of UN hostility toward Israel

The ICJ’s ruling is more noteworthy for what it did not say than for what it did. The court did not hold that Israel is violating international law. Nor did it order Israel to end the war against Hamas—which is what South Africa sought and what the court previously ordered with respect to Russia’s war of aggression on Ukraine. Instead, the ICJ simply instructed Israel to comply with the Genocide Convention—which, as a signatory of that convention since 1950, it is already obliged to do. While Pretoria’s allegations against Israel may have been, as the Biden administration put it, “meritless, counterproductive, and completely without any basis in fact whatsoever,” the ICJ’s split-the-baby approach was perhaps the best outcome Jerusalem reasonably could have expected.

Indeed, the ICJ’s criticism of Israel must be understood against the backdrop of the chronic hostility shown by other organs of the United Nations (UN) to the Jewish state. On the very day the court’s ruling was released came the stunning news that the UN’s organization for Palestinian refugees—the United Nations Relief and Works Agency, or UNRWA—fired twelve employees because of their possible involvement in Hamas’s barbaric October 7 terrorist attack. UN Women took weeks to condemn Hamas’s widespread use of rape and sexual violence against Israeli women and girls on October 7, only to delete its statement when parties hostile to Israel objected. (The organization did eventually issue a statement that was not retracted.) And, of course, the UN Human Rights Council for years has singled out Israel for disproportionate criticism. Since its creation in 2006, the council has adopted more than one hundred resolutions about Israel; notorious human rights abusers such as China, Cuba, and Zimbabwe have been the subject of zero resolutions.

—Nathan Sales is a nonresident senior fellow with the Scowcroft Middle East Security Initiative and a former US ambassador-at-large and coordinator for counterterrorism.

The ICJ’s decision pushes talk about ‘genocide’ from the rhetorical to the factual and legal

Today, the world’s top court ruled that South Africa’s claim that Israel is committing genocide in Gaza is indeed plausible. Noting the “catastrophic humanitarian situation” in the Gaza Strip, the Court also found “urgency” and “real imminent risk” that irreparable damage will be done to Palestinians before the case concludes. On this basis, the court found it necessary to order a series of provisional—or “emergency”—measures to protect the population based on South Africa’s pleadings. Those include ordering Israel to refrain from committing acts under Article II of the Genocide Convention, to prevent and punish incitement to genocide, to allow humanitarian assistance, to prevent destruction and preserve evidence of crimes, and to report back to the court in a month on the implementation of these measures. However, the order stops short of calling for a cease-fire.  

So what happens next? Procedurally, the court may hear challenges from Israel on jurisdiction to hear the merits, before any consideration of the merits themselves, which will take years. Politically, the weight of the ruling is in the reception by Israel and its backers in its military operations. Some observers note that implementing these provisional measures is impossible without cessation of kinetic activity—and that the court has thereby essentially ordered a cease-fire without explicitly calling for one. Others take a different view. What is clear is that with Prime Minister Benjamin Netanyahu saying Israel will continue the war until “absolute victory,” the hope will lie with third states to recognize the gravity of the ICJ order and to urge compliance. The US government may use the explicit lack of a cease-fire order as political cover, and claim that it has abided by what the provisional measures order throughout the conflict by undertaking efforts to ensure humanitarian assistance reaches Gazans. Concerned governments and advocates should push back on any such cynical framing. While the early days of the conflict saw the use of the word “genocide” as a rhetorical device, the court’s order—while not addressing the merits at this stage—firmly pushes the debate from the rhetorical to the factual and legal.  

Adding to the weight of the decision is that it was delivered from an impartial bench. ICJ judges are independent and do not officially work under orders from their home governments. However, going into the hearing, members of the broader public speculated that Donoghue’s past service as a legal advisor in the US State Department would compromise the court’s ability to rule objectively. The final breakdown of judges’ nationality in favor of provisional measures reveals this to not be the case. Most provisional measures were ordered by a fifteen-to-two split, with both Donoghue and Judge Georg Nolte of Germany in favor, despite the official policies of their home governments taking a different view. Tellingly, even the ad hoc judge appointed by Israel, Aharon Barak, voted in favor of the provisional measures to order Israel to prevent and punish incitement to genocide and for the provision of humanitarian assistance. In fact, the only dissenting judge on all provisional measures was Judge Julia Sebutinde from Uganda, whose government was quick to distance themselves from her rulings. 

—Gissou Nia is the director of the Strategic Litigation Project at the Atlantic Council.

The ICJ’s order to preserve evidence could impact war crimes cases elsewhere

In its provisional measures decision today, the ICJ ordered Israel to “take effective measures to prevent the destruction and ensure the preservation of evidence related to allegations of” genocidal acts against Palestinians in the Gaza Strip. This is to ensure that relevant evidence will not be destroyed or lost before the merits phase of the case, which could be years away. This relates to acts such as killings, serious bodily or mental harm, conditions of life calculated to destroy the group in whole or in part, measures to prevent births and conspiracy, incitement, attempt, and complicity in committing genocide, among others.

The ICJ is not a criminal court and, as such, it will not find anyone “guilty” of genocide. The court can only assess whether Israel is responsible for violating specific provisions under the Genocide Convention. However, the same evidence that is relevant for that assessment, which Israel now has a binding legal obligation to preserve, would also be relevant before other courts. South Africa, along with other like-minded states, has already referred the situation to the International Criminal Court, which can find individuals criminally responsible so long as it has jurisdiction. Many countries around the world also have extraterritorial jurisdiction over genocide and can initiate cases domestically. Lastly, it is worth noting that the ICJ only has jurisdiction over states, not over acts committed by Hamas and other Palestinian groups. It thus could not have issued orders to preserve evidence related to crimes that may have been committed by these groups in this case. Nor does the ICJ have the power to issue an order relating to evidence of war crimes or crimes against humanity. To ensure future accountability, Israel should seek to preserve evidence relating to all atrocity crimes in this conflict.

—Lisandra Novo is a staff lawyer for the Strategic Litigation Project at the Atlantic Council and was previously a judicial fellow at the ICJ.

South Africa is putting its ideals on the world stage

Legal analysis aside, one of the key aspects of this case is who actually brought it up. An African nation pursuing a case of global importance before the ICJ is itself notable.

South Africa, with the historical backdrop of apartheid, has long supported the Palestinian cause. The country’s long-standing support, and its cultural and historical identification with the Palestinian people, should serve as a counter to anyone who might claim that South Africa only undertook this process for publicity or a desire on the part of the ruling African National Congress (ANC) to look good before the elections later this year. South Africans have taken pride in the fact they are prosecuting this case at the highest level, with South African lawyers welcomed home with patriotic flag waving.

It’s clear that South Africa’s motivation to bring this case before the ICJ comes from a genuine sense of identification and purpose.

In addition, while this case obviously matters most and has the largest implications for those in the Levant, do not overlook the implications for Africa. What is clear from this case, regardless of the result, is that an African nation was willing to put the resources behind advocating its positions and ideals on the world stage toward resolving a global issue—and the world has been forced to pay attention to that view. At the very least, this shows that African nations can engage with and lead on world issues with confidence.

As South Africa’s President Cyril Ramaphosa said today: “Some have told us we should mind our own business and not get involved in the affairs of other countries, and yet it is very much our place as the people who know too well the pain of dispossession, discrimination, state-sponsored violence.”

As African nations continue their economic rise, do not be surprised to see more of them involving themselves and advocating for their beliefs at the highest levels of international politics.

—Alexander Tripp is the assistant director for the Atlantic Council’s Africa Center.

The ICJ embraces another case brought by a state not directly affected by violations

Today’s binding provisional measures order is highly consequential, marking a significant step by the ICJ to mitigate the increasingly urgent and untenable situation in Gaza. It is the latest in a long history of the court weighing in on the situation of Palestine, dating to its inception. Notably, the court affirmed, at least preliminarily, South Africa’s erga omnes partes standing—the ability to bring the case as a fellow party to the Genocide Convention, despite not being directly affected by the allegations—even though Israel didn’t even challenge it. The court appears to be embracing its increasingly prominent role as arbiter for grave international law violations of common interest to us all.

At the same time, it is important not to overstate the order’s import. Any provisional measures request requires an assessment of three criteria: prima facie jurisdiction, plausibility, and risk of irreparable prejudice. Here, the court found (1) prima facie jurisdiction—i.e., at least a possible basis to rule on the merits—because Israel’s alleged genocidal acts and omissions are “capable of falling” under the Genocide Convention; (2) the plausibility of at least some of the asserted rights, including the right of Palestinians in Gaza as a protected group; and (3) a real, imminent risk of irreparable prejudice to these rights, as evidenced by UN reporting on the humanitarian catastrophe. But none of these findings can prejudge the court’s future judgment on jurisdiction and the merits. The court will be obligated to adjudicate the case anew once the full case is presented, and this will take years. 

The court has acted now in the face of an emergency, and only regarding the limited scope of the proceedings before it: a case against Israel alone, under the Genocide Convention alone. In parallel, a panoply of complementary justice avenues will no doubt unfold, recognizing the other bodies of international law that apply—including international humanitarian law and international human rights law—and the urgent need for more comprehensive accountability.  

—Alyssa T. Yamamoto is the senior legal and policy advisor at the Strategic Litigation Project at the Atlantic Council.

It didn’t call for a cease-fire, but the ICJ did rule that Israel must drastically curtail its operations

Even as the ICJ ordered Israel to comply with a range of measures, many of the headlines have focused on what the court didn’t do, namely order a cease-fire. This shouldn’t be read as a rejection by the court of the idea that hostilities need to cease, or at a minimum change in manner and character.

In finding that there is a risk of irreparable prejudice and urgency to the rights of Palestinians in Gaza and South Africa’s own rights under the Genocide Convention, the court recalls a series of dire statements from UN actors on the situation in Gaza, including the UN secretary-general’s letter to the UNSC on the continuation of “devastating levels of death and destruction.” Based on the facts, the court then states that the “civilian population in the Gaza Strip remains extremely vulnerable,” that Israel’s military operations have resulted in “tens of thousands of deaths and injuries and the destruction of homes, schools, medical facilities and other vital infrastructure,” that many Palestinians have “no access to the most basic foodstuffs, potable water, electricity, essential medicines or heating,” and that “maternal and newborn death rates are expected to increase.” The court concludes by stating that “the catastrophic humanitarian situation in the Gaza Strip is at serious risk of deteriorating further.”

This recitation of facts is important in understanding the context for the measures the court then ordered, and what might be required to comply with them. It’s hard to imagine that Israel could comply with orders to prevent the commission of genocidal acts, including by its military forces, and ensure the provision of humanitarian aid, without halting or at least drastically curtailing its military operations. So, the focus should not be on what the court didn’t do, but rather on what is now going to be required to give effect to the court’s orders.

—Akila Radhakrishnan is the strategic legal advisor for gender justice for the Atlantic Council’s Strategic Litigation Project.

This case could have implications for a future genocide case against China

Today’s ruling holds immense significance, with far-reaching implications for addressing atrocities worldwide and sending a resounding message to potential wrongdoers. From the highest court’s bench, the world heard Donoghue citing the disturbing and dangerous rhetoric employed by Israeli leaders when describing the Palestinian people. “It is an entire nation out there that is responsible. It is not true this rhetoric about civilians not being aware, not involved,” said Israeli President Isaac Herzog in October 2023, adding “we will fight until we break their backbone.” These deeply offensive and harmful words have cast a dark shadow over the entire Palestinian population.

Much has transpired since the horrific attack perpetrated by Hamas against innocent civilians. Israel’s collective punishment of Palestinians tarnishes the devastating memory of the October 7 tragedy. As the court noted, the lives of the hostages are still at grave risk, and Hamas must free the innocents. At the same time, it is imperative that Israel and its allies rigorously adhere to the court’s decision to minimize civilian harm.

It will be important to watch as this case goes forward how statements, speeches, or directives issued by senior government officials might serve as legal evidence against them. This could have implications for potential future cases at the ICJ, including if a morally courageous state brings a case against China for what it has said and done to Uyghurs. 

Chinese officials are on record as using calling for “absolutely no mercy” against Uyghurs and using expressions such as “stamping out roots and branches of the Uyghurs.” They have stated an intention to “break their lineage, break their roots, break their connections.” Chinese prison guards have told Uyghurs, “You are not humans,” “There is no such ethnic group as the Uyghurs,” “Being an Uyghur is a crime,” and “You don’t look like a human.”

Given China’s reservation stating that it is not bound by Article 9 of the Genocide Convention, which provides a concerned state party a vehicle to bring a case for violations of community interest protected by ergo omens partes obligations, such an endeavor would necessitate innovative legal arguments to overcome jurisdictional challenges. But if that moment arrives, the world will bear witness to the compelling evidence of genocidal intent, as found in the statements above. These words will be heard worldwide, emphasizing the genocidal intent of the Chinese state.

—Rayhan Asat is a nonresident senior fellow with the Strategic Litigation Project and an international human rights lawyer.

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Private firms around the world are the ultimate decision makers regarding the international use of the dollar and they respond to the incentives facing them, namely access to and costs of dollar financing. And, for the first time in nearly 20 years, it is substantially cheaper to conduct short-term borrowing in renminbi (RMB) rather than dollars. In other words, a portion of the dedollarization trend is driven not only by geopolitics but also by interest rate differentials.

Fluctuations in the dollar’s global dominance is not a recent phenomenon. As a reserve asset, for example, the dollar composed nearly 80% of global reserves in 1970. By 1980, that number fell below 58 percent. It then plummeted to 47 percent in 1990. The dollar recovered to around 71 percent of global reserves in 1999, though it has since declined gradually to 59 percent in 2020—not in favor of any replacing currency, but a number of smaller currencies including the RMB.  Current trends in dedollarization in global payment must be seen with this historic context. While this is an important trend for policy makers to watch, given its underlying drivers, they should be careful not to attribute all the motivation to geopolitical tension, possibly leading to wrong policy conclusions.

The dedollarization story so far

The reluctance to use the dollar has not been driven by the rise of a competing currency such as the RMB, but more importantly by the growing trend of using local currencies in bilateral cross-border payments. However, because of China’s large footprint in international trade and investment, the RMB’s usage in international transactions has captured increasing attention as the primary challenger to the dollar, following a rapidly growing number of bilateral cross-border payment arrangements. 

Analysts, including our Dollar Dominance Monitor, have pointed to a range of signs indicating a growing risk to the dollar. Last year, global payments settlements using RMB nearly doubled, albeit from a low base of 1.91 percent at the start of 2023 to 4.61 percent in November 2023. The SWIFT data may underestimate the RMB’s true international usage because it may fail to reflect uses of RMB in bilateral cross-border payments facilitated by central banks’ currency swap arrangements. On the other hand, about 80 percent of the use of RMB outside of China takes place in Hong Kong—without Hong Kong, the international use of the RMB remains quite small. More importantly for China, about half of its bilateral cross-border trade and investment transactions are now settled in RMB, reducing its vulnerability to US financial sanctions.

Some of this shift is in response to G7 sanctions imposed following Russia’s illegal invasion of Ukraine in early 2022. Those measures reanimated concerns across global capitals around the risks of overreliance on Western financial infrastructure and the US dollar and generated urgent demand for alternatives to the US-led financial system. But this is not the only explanation and too much focus on it can lead analysts to overestimate the costs of those sanctions. In fact, the dollar was also facing macroeconomic headwinds and its use in cross-border payments likely would have declined to some extent even without the Russia sanctions.

Macroeconomic headwinds for the dollar 

Countries at risk of sanctions, like China and Russia, are the largest individual contributors to dedollarization but they are not alone. As Bloomberg’s Gerard DiPippo points out, Russia-China trade accounts for only 27 percent of the increase in trade settlement in RMB. The remaining 70 percent is likely RMB-denominated trade with Beijing’s neighbors primarily in Asia, but also abroad such as Argentina, Brazil, and the Gulf countries. Without the imminent threat of US sanctions on Beijing, this shift to RMB trade is likely motivated more by lending costs and availability. 

It’s important to understand the integral role trade finance plays in facilitating global commerce. Payments are not made instantaneously; there is a gap from the time firms receive payments for the goods they ship and when they need to pay suppliers for those same goods. Firms often turn to banks to provide loans to help bridge the gaps. Because of this, firms seeking to minimize financing costs pay close attention to the relative cost of capital and available dollar liquidity. Rate hikes by the US Federal Reserve (Fed), which coincidentally began to take full effect in the months after Russia’s invasion of Ukraine, have caused borrowing in dollars to become more expensive and scarcer, encouraging emerging market firms to seek dollar alternatives—namely the RMB. 

Relative costs of capital 

For the first time in nearly 20 years it is substantially cheaper to conduct short-term borrowing in RMB rather than dollars. Borrowing costs, as measured by the proxy of a one-year government bill, imply short-term borrowing in RMB is around two percentage points cheaper than analogous borrowing in dollars. This is pushing firms, particularly those engaging with Chinese individuals and firms on either end of the transaction, towards RMB-denominated debt for trade financing to take advantage of efficiency gains.

This surge in dollar borrowing costs reflects the US Federal Reserve’s rapid rate hike campaign to rein in US inflation, which had hit 8.5 percent. China has not experienced the same sort of surging inflation, so was able to leave its short-term rates largely constant. Notably, this flip in relative financing costs happened in close proximity to Russia’s invasion of Ukraine. This may have caused some commentators to solely attribute firms shifting their trade finance arrangements from dollars to RMB to the overuse of US sanctions. 

Dollar liquidity squeezes

A second, related, macrotrend disincentivizing dollar use in international trade is the appreciation of the dollar and its impact on dollar liquidity in emerging markets. In early 2022 the value of a dollar against a basket of global currencies jumped 19.8 percent from right before the start of the invasion to its peak in October 2022. While its value has dropped in the year since, the dollar’s value still remains elevated by around 10 percent compared to its pre-invasion average. This was also caused by Fed rate hikes; higher rates increased the value of dollar-denominated assets, which created strong incentives for global investors to buy dollars to buy those assets. The war amplified this. Investors also increased their dollar holdings as they view the dollar as a “safe haven asset” and expect the currency to retain, or even gain value during periods of global instability and economic downturn.

An appreciating dollar severely restricts dollar funding availability, particularly for emerging market firms who are more reliant on dollar-denominated credit. This is because a stronger dollar comes with incentives for lenders with large dollar liabilities to curb their willingness to provide new short-term dollar loans (such as the borrowing required for firms seeking to finance trade) and raise the rates they are willing to lend at—further amplifying the relative cost of capital effects discussed earlier. 

The Bank for International Settlements (BIS) finds that after the dollar appreciates, “banks with high reliance on dollar short-term funding reduce supply of credit more to the same Firm relative to banks with low short term dollar funding exposures.” The BIS continues, pointing out, “firms that borrowed from short-term dollar-funded banks will suffer a greater decline in credit following dollar strengthening.” 

Without abundant dollar financing alternatives, such as during the 2008 financial crisis, the impact of this would have subdued global trade. However, following concerted efforts by Beijing to promote RMB-denominated lending, firms seeking short-term finance can now turn to RMB lenders or RMB-denominated debt markets. Indeed, in the past year overseas units of Chinese firms, as well as Western companies like BMW and Crédit Agricole, have raised a record 125.5 billion RMB ($17.33 billion) selling RMB-denominated bonds during the January-October 2023, a 61 percent increase from the same period last year.

As rising dollar borrowing costs and decreasing dollar liquidity push firms to adopt the RMB for their trade financing needs, they are also more willing to engage with the alternative global financing infrastructure China is developing. In 2015, Beijing launched the Cross-Border Interbank Payment System (CIPS) to connect and control its own plumbing in the global financial system. The intention was to construct a new financial architecture to clear and settle transactions in RMB and facilitate the use of the currency in international business. Since 2015 CIPs has rapidly grown, settling just over 480B RMB ($75 billion) in Q4 2015 to 33.4T RMB ($4.6 trillion) in Q3 2023. While CIPS’ utilization growth has been largely steady since its inception, it does seem to experience substantial spikes following contractions in dollar lending availability. And though geopolitical trends may be integral in informing the strategic thinking around firms’ actions, outside of firms engaging with Russia, availability of liquid debt and efficient markets are a more likely proximate explanation for recent trends among emerging-market dedollarization.  

Importantly, geopolitics and macroeconomic trends can work together to support dedollarization efforts. One example is China’s push to denominate more of its Belt and Road Initiative (BRI) lending in RMB. Since its inception in 2013, China has hoped to use the BRI as a tool to promote the international use of its currency. In its first five years Beijing had mixed success at best, with the majority of BRI debt denominated in dollars. This can be explained in part by discrepancies in borrowing costs over the same period. Similar to the large difference in short term lending which provided a cost advantage to US denominated debt throughout most of the 2010s, longer term borrowing was also skewed in the dollar’s favor. A $5 billion loan Beijing offered to Indonesia in 2017 demonstrates this. The loan is split between RMB and dollars with 60 percent denominated in US dollars, carrying a 2 percent interest rate, and 40 percent in RMB, carrying a 3.4 percent rate. 

However, as rates converged in 2018 and onward, China had more success encouraging RMB-denominated debt. By 2020 loans in the Chinese currency overtook dollar denominated debt. While a convergence in interest is not the sole explanation for Beijing’s success, it’s undoubtedly easier to encourage countries to adopt debt in RMB if they cannot point to high opportunity costs by not borrowing in dollars. 

The future of dedollorization 

There are important structural limitations to the international use of the RMB. Prime among them is that the RMB is not freely convertible. Foreign firms that hold RMB or RMB-denominated assets are operating under the direct oversight of the Chinese government, whose interests may not always align with their own. This will give pause, particularly to firms based in advanced economies. China’s legal system also gives firms pause. As Chinese President Xi Jinping has centralized authority, the Chinese system has become increasingly opaque and volatile, offering little protection or recourse for firms who are harmed by central government actions. Finally, China’s financial markets remain less well developed and supervised than their Western counterparts. In particular, China’s bond markets are still far less developed and less liquid than US treasury markets. Though they have been valued at around $8 trillion in recent years, they pale in comparison to the US which is pushing $30 trillion.

Even so, in the coming year macroeconomic trends will likely continue to push emerging market firms towards RMB-denominated debt for trade financing in particular, amplifying the use of the RMB in international trade. While the Fed will likely begin to cut key rates later this year, decreasing the cost of US capital and borrowing, it’s unlikely Washington returns to the near-zero target rates that supercharged cost advantages for borrowing in dollars. 

It will be key for policy makers to disaggregate these macro effects from the very real geopolitical backlash against sanctions and similar tools that are also pushing countries to explore dollar alternatives. Without understanding the relative importance of both trends, US and allied policy makers risk overestimating global sanctions backlash, possibly imperiling the G7 economic response to Russia’s illegal invasion of Ukraine. 

Niels Graham is an associate director for the Atlantic Council GeoEconomics Center where he supports the center’s work on China’s economy and US economic policy.

Hung Tran is a nonresident senior fellow at the Atlantic Council’s GeoEconomics Center, a former executive managing director at the Institute of International Finance and former deputy director at the International Monetary Fund.

At the intersection of economics, finance, and foreign policy, the GeoEconomics Center is a translation hub with the goal of helping shape a better global economic future.

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1. Why is South Africa bringing this case at the ICJ?

First, the ICJ was created in 1945 by the United Nations Charter after World War II. It is the main judicial body of the United Nations (UN) and all member states can bring cases before it under treaties, by agreement, or another form of consent. Certain organizations can also ask the court to issue a nonbinding advisory opinion on a legal question. The ICJ rules on questions of state responsibility—that is, on when a state has violated a rule of international law or an international legal obligation. It is not a criminal court. It does not decide, for example, on individual criminal responsibility. A different, unrelated court in The Hague, the International Criminal Court, serves this function, and South Africa, with other like-minded states, has already referred the situation in Gaza to it for investigation.

South Africa brought this case at the ICJ against Israel under the Convention on the Prevention and Punishment of the Crime of Genocide, also known as the Genocide Convention, of which both states are parties. But what does South Africa have to do with what is happening in Gaza? The Genocide Convention allows any state party to bring a case against another state party to the ICJ on issues including responsibility for genocide, conspiracy to commit genocide, or attempt to commit genocide. The ICJ recently confirmed this in a case brought by The Gambia, which accused Myanmar of committing genocide against the Rohingya population. Furthermore, South Africa’s ruling African National Congress has long shown its support for Palestinians and backed their right to self-determination, considering them to be subject to a long-standing regime of apartheid, like South Africa was.

2. How are the judges chosen?

The ICJ has fifteen judges, who are elected by the UN General Assembly and the Security Council to serve nine-year terms. Judges are nominated by UN member states through a special group, not through the state’s government. There cannot be more than one judge from any specific country at a time, and the intention is to have the judges represent different legal systems and cultures around the world. It is important to understand that even though judges are nominated by UN member states, they do not act as representatives of their country. They must perform their duties in an independent and impartial manner. 

The current elected judges are from the following countries: Australia, Brazil, China, France, Germany, India, Jamaica, Japan, Lebanon, Morocco, Russia, Slovakia, Somalia, Uganda, and the United States. In February 2024, four judges (from Jamaica, Morocco, Russia, and the United States) will finish their terms and be replaced by incoming judges from Mexico, Romania, South Africa, and the United States. This marks the first time that nationals from Romania and South Africa have been elected as judges and that a national from Russia has not. 

When the parties to a specific case do not have a judge of the same nationality on the bench of elected judges, they are allowed to choose someone to sit as a judge ad hoc. That means a person who will serve as an ICJ judge for that specific case only. The person the state chooses as its judge ad hoc does not need to have the nationality of that state. In this case, however, both Israel and South Africa appointed judges ad hoc who hold their respective nationalities: Dikgang Ernest Moseneke, former South African Constitutional Court deputy chief justice, and Aharon Barak, former Israeli Supreme Court president. 

3. What are the allegations and what will the court rule on?

The Genocide Convention defines genocide as specific “acts committed with intent to destroy, in whole or in part, a national, ethnical, racial or religious group.” Some of the acts against members of the targeted group include killings, serious physical or mental harm, measures designed to prevent future births, or conditions purposefully designed to physically destroy the group or part of the group. For a situation to constitute genocide, therefore, both the specific acts and the specific intent to destroy a group must be proven. It is not enough to show that atrocities have been committed—the intention by the responsible actors to destroy a group, completely or in part, must be demonstrated. 

After clearly condemning the attacks carried out by Hamas on October 7 and recognizing the significance of bringing a case on genocide against Israel, South Africa states in its application to institute proceedings that “[n]o armed attack on a State’s territory no matter how serious—even an attack involving atrocity crimes—can, however, provide any possible justification for” violations of the Genocide Convention. It claims that Israel has committed and failed to prevent genocidal acts, including killings, serious bodily and mental harm, and imposing conditions “intended to bring about the destruction of a substantial part of the Palestinian national, racial and ethnical group, that being the part of the Palestinian group in the Gaza Strip.” South Africa also claims that Israel has failed to “prevent or punish the direct and public incitement to genocide by senior Israeli officials and others.” In its oral argument, it recounted that 23,000 Palestinians have died thus far, described the destruction of homes and infrastructure in Gaza, and lamented the lack of humanitarian assistance reaching a besieged civilian population. 

South Africa has asked the court to rule that Israel has violated its obligations under the Genocide Convention; that it must stop any genocidal acts; ensure that people committing or inciting genocide are punished; collect and preserve (or allow for the collection and preservation of) evidence of genocidal acts against Palestinians in Gaza; and issue reparations, including allowing displaced Palestinians to return to their homes, reconstruct what it destroyed in Gaza, and ensure respect for the human rights of Palestinians in Gaza, among others. More for the public than for the court, which understands this point well, South Africa’s legal team explained that they are not bringing a case against Hamas because it is not a state and thus cannot be a party to the Genocide Convention, nor can it be brought before the ICJ (where only states can be parties to cases, not groups or individuals).

During its oral argument on January 12, Israel recalled that it was the Holocaust that pushed the international community to create the Genocide Convention and observed that the Hamas October 7 attacks are the worst violence committed against the Jewish people since the Holocaust. It vehemently denied all allegations that it was responsible for genocide and said South Africa’s account of the facts was partial and decontextualized.

Israel framed its actions under the right of self-defense in the conflict against Hamas and said the proper legal framework is the law of armed conflict but acknowledged that Hamas’s atrocities do not absolve Israel of its legal obligations. It provided numerous quotes from officials saying the fight was not against the Palestinian people to dispute arguments regarding genocidal intent. Speaking to South Africa’s request that the ICJ rule on the obligations of state parties to the Genocide Convention to prevent genocide, Israel argued that the failure to prevent genocide is indeed in question, but with respect to states that have supported and praised what Israel has qualified as genocidal attacks carried out by Hamas. It said the request for a provisional measures order for Israel to end its military operations would render it helpless against ongoing attacks. Finally, Israel urged the court to deny all provisional measures requested and dismiss the case.

4. How long will the case take?

The case itself will likely take many years to conclude. Prior cases under the Genocide Convention at the ICJ against Serbia, for example, took more than a decade before a final decision was issued. Right now, however, the court is addressing South Africa’s request for provisional measures. That is what the January 11-12 hearings in The Hague are about. Provisional measures are emergency measures the court can order the parties to take to prevent irreversible damage to a right directly linked to the case at issue. 

Importantly, the court will not be ruling on whether Israel has committed genocide at this phase—it will only rule on provisional measures. The party requesting the provisional measures only needs to convince the court that its allegations are plausible. South Africa has requested the court to order Israel, among other things, to suspend its military operations, take all measures necessary to prevent genocide, and to refrain from killing, injuring, or committing other acts constituting genocide against Palestinians. Orders from the court, including on provisional measures, are binding on the parties but the court does not have its own enforcement mechanism. The ICJ, for example, has previously ordered Russia to cease its military operations in Ukraine in its provisional measures decision in the case brought by Ukraine, but thus far Russia has ignored it.

Due to the urgency of provisional measures and the risk of irreparable harm, this phase takes priority over all others and is typically resolved in a matter of weeks. In the case Ukraine brought against Russia, the hearing on provisional measures was held on March 7, 2022, and the court issued its decision on March 16, 2022. In the case brought by The Gambia against Myanmar, the hearing began on December 10, 2019, and the court issued its decision on January 23, 2020.

Given Israel’s comments during its January 12 arguments on the existence of a dispute between the parties, a requirement for jurisdiction, it seems likely it will raise preliminary objections on jurisdiction or admissibility, claiming the court cannot hear the case on procedural grounds. If so, the court would first turn to those issues. Myanmar, for example, raised preliminary objections on jurisdiction and admissibility on January 20, 2021, after which The Gambia presented its brief in April 2021 and then oral hearings were held at the end of February 2022. The court issued its decision on preliminary objections on July 22, 2022. Now in the merits phase, written pleadings are still expected as late as December 2024, after which the court will announce the next steps.

If Israel does not raise preliminary objections, or the court dismisses them, the case will proceed to the merits phase, that is, whether Israel has violated its obligations under the Genocide Convention. During that final phase, South Africa will present its case on why Israel has committed or failed to prevent genocide in Gaza, and Israel will present its defense on why it has not. The court will then analyze all the pleadings submitted to it as well as evidence or any testimony presented during hearings and make a final decision.

5. What are other states saying?

Unsurprisingly, the response from other states to this case has been divided. On the same day South Africa filed its application, the Palestinian Authority’s foreign ministry welcomed the case and called for the international community to support the proceedings. The Organization of Islamic Cooperation was similarly supportive, calling on the court to “take urgent measures to stop this mass genocide.” UN human rights experts also welcomed the case and praised South Africa “for bringing this case to the ICJ at a time when the rights of Palestinians in Gaza are being violated with impunity.” Other states that support South Africa’s application include Malaysia, Turkey, Jordan, Pakistan, Bolivia, Colombia, and Brazil.

Israel, of course, also has its strong supporters. Germany, one of Israel’s closest European allies, has called the claim that Israel is committing genocide false and said it is not covered by the Genocide Convention. Hungary has also expressed its opposition to the case. The United States, for its part, has said the allegations against Israel “are unfounded” and called the submission at the ICJ “meritless, counterproductive, and completely without any basis in fact whatsoever.” It has been reported that UK Foreign Secretary David Cameron said that he did not think the case at the ICJ was helpful and that the United Kingdom’s view is that “Israel has a right to defend itself.” In Latin America, Guatemala and Paraguay have also backed Israel and affirmed its right to self-defense.

So far, no state has filed a formal declaration to intervene in the case. However, on Tuesday, Belgian Deputy Prime Minister Petra De Sutter said she would encourage Belgium to officially support South Africa in the case. Conversely, Ireland and Austria have said they do not intend to intervene. In the case brought by Ukraine against Russia under the Genocide Convention, for example, a record-breaking thirty-two states have intervened in the case as non-parties. It is too soon to tell whether any of those same thirty-two states, all parties to the Genocide Convention, will intervene in the case brought by South Africa.

Lisandra Novo is a staff lawyer for the Strategic Litigation Project at the Atlantic Council. She was previously a judicial fellow at the ICJ, a Fulbright scholar in Spain researching post-conflict transitional justice, and a visiting professional at the Inter-American Court of Human Rights.

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This month’s topline events

Ukraine’s Continued Counteroffensive. The Ukrainian army continues to make incremental advances in its counteroffensive against Russia in key regions and has ramped up longer-range attacks on Russian targets in Crimea and elsewhere. NATO’s Secretary General Stoltenberg, speaking at a joint press conference with Ukraine’s President Volodymyr Zelensky, confirmed that Ukrainian forces are “gradually gaining ground” against Russia. Faced with Ukrainian military gains and dwindling munition stores, Moscow has pursued various means to strengthen its military posture, including engaging North Korea to procure artillery shells and planning to increase its 2024 defense budget by nearly 70%, which the Russian Ministry of Finance said is a “significant strain on our budget” but “our priority.” Domestically, Zelensky has taken steps to root out corruption that might hinder Western support including, most recently, ousting Deputy Defense Minister Hana Maliar. US and allied support to Ukraine continued, despite opposition among some in Congress and a Polish-Ukrainian dispute over Ukrainian grain sold in Poland. Despite inconsistent signals, the Biden administration is reportedly prepared to provide Ukraine with long-range ATACMS missiles, which will boost Ukraine’s offensive capabilities. US Secretary of State Antony Blinken traveled to Ukraine and pledged over $1 billion in additional aid. The aid package includes provisions for equipment to clear Russia-laid mines, which have impeded Ukraine’s counteroffensive, as well as $203 million in funding to address corruption and elite capture within Ukrainian institutions.

• Shaping the order. Ukrainian’s counteroffensive could shift the strategic balance of the war if its forces can advance enough to put Russian supply lines in southern Ukraine and to Crimea at risk. Intensified US and allied support could make an important difference as the battle hangs in the balance. Ukraine’s success, even a relative success, would strengthen advocates of a rules-based order and mark a major defeat for the most virulently aggressive great power challenger to that order.
• Hitting home. The counteroffensive’s outcome, fairly or not, may shape US and allied confidence in Ukraine’s ability to succeed in its fight for national survival and could inform the sustainability of allied and even US support for Ukraine. As the United States heads into a contentious presidential election season, US aid to Ukraine is already an issue.
• What to do. The United States and its allies, regardless of the changing tide of politics brought by elections, must remain resolute in their support of Ukraine and resist short-term thinking. US military support for Ukraine has been impressive but marred by slow decision-making about supplying advanced weapons systems to Ukraine. Given the military balance, the US should be forward-leaning.

Azerbaijan dismantles Nagorno-Karabakh. Almost 20 years after losing control of its mostly-ethnic Armenian territory of Nagorno-Karabakh to Armenian forces, Azerbaijan launched a military attack in Nagorno-Karabakh that decisively defeated forces of the breakaway province. The small enclave had been the subject of extensive and fruitless negotiations including the US, France, and Russia, which had generally been regarded as Armenia’s protector; Azerbaijani and Armenian leaders had also participated in efforts to settle the conflict. Azerbaijan retook much of Nagorno-Karabakh in 2020. With Russia preoccupied by its war in Ukraine, Azerbaijan, generally supported by Turkey, felt able to finish the job of reclaiming the territory. It began blockading Nagorno-Karabakh by closing the Lachin Corridor, which serves as the sole lifeline road connecting the enclave to Armenia. Azerbaijan further isolated Nagorno-Karabakh by shutting off energy supplies and internet access and finally launched an assault in September. In its aftermath, Azerbaijani leader Ilham Aliyev promised that the ethnically Armenian Nagorno-Karabakh population will be safe, as Azerbaijan citizens. But many and perhaps most ethnic-Armenians are fleeing to Armenia under terrible humanitarian conditions, including reports of ethnic cleansing, mass murders, and other atrocities. It is unclear if Azerbaijani forces have ended their assault; they could extend attacks to include incursions into Armenian territory.

• Shaping the order. The long conflict in Nagorno-Karabakh has defied US and other Western-led efforts, persistent but usually second-order, to broker a settlement. It additionally demonstrated the limits of outside powers to ameliorate, much less settle, regional disputes with limited resources and leverage. While the latest turn in Nagorno-Karabakh is a blow to US efforts, Russia has not necessarily benefited from the current situation. Long viewed as Armenia’s protector, Russia appears to have lost credibility in Armenia.
• Hitting home. Azerbaijani attacks on Armenia could trigger a humanitarian catastrophe even beyond what appears to be unfolding, as ethnic-Armenians flee Nagorno-Karabakh. Azerbaijan is a major oil and gas producer and transit corridor for Central Asian energy flowing West and the US has tried to balance its concerns about Aliyev’s dictatorial rule with its economic interests. Intensified war would make this harder.
• What to do. The United States and its European allies and partners must push Azerbaijan and Turkey to work to prevent a humanitarian catastrophe. This may require limited cooperation with Russia, which has long invested in this conflict, for the sake of saving lives and promoting regional stability. In the long term, the US should support Armenia in the post-Nagorno-Karabakh period. If Azerbaijan feels it has restored its territorial integrity, it and Turkey may be willing to ease pressure on Armenia and, in the best case, lift Turkey’s long isolation of Armenia.

Frayed Canada-India Relations. Canadian President Justin Trudeau accused the Indian government of murdering Hardeep Singh Nijjar, a Sikh activist, on Canadian soil. Prior to his murder, Nijjar was a member of a Sikh separatist group that was deemed a terrorist organization by the Indian government following civil unrest in the 1980s. The news sent shockwaves throughout the international community, instigating ire and denial from India, and relative silence and inaction from other Western allies. India-Canada relations quickly deteriorated. India stopped issuing new visas for Canadians, and both countries expelled each other’s high-level diplomats. While allies, like the UK and the US, have expressed concerns over the allegations and urged India to cooperate with the Canadian investigation, they are so far opting to keep a low profile at least until the investigation draws to a close.

• Shaping the order. This situation poses a difficult dilemma for the United States. Just months ago, the Biden administration hosted Indian Prime Minister Narendra Modi and reinforced its bilateral commitment to cooperation across several key sectors, including security. Much of the West considers India an ally in continued efforts to combat the regional and international influence of China. As a democracy, albeit with flaws, India seemed a natural partner in seeking to uphold a rules-based order that favors democracy. An India that murders those it considers enemies would be a more problematic partner. The tension between values and more immediate strategic calculations has risen in the case of India.
• Hitting home. This dilemma is similar to the one between the United States and Saudi Arabia following the violent murder of journalist Jamal Khashoggi. Ultimately, after much international turmoil and contention, the United States effectively gave the Saudi government a pass in order to protect bilateral relations that prioritize security cooperation and access to energy stores.
• What to do. The Indian government’s democratic backsliding, potential human rights abuses, and domestic disputes may sully the fragile and still-blossoming relationship between India and several Western powers. The Biden administration must gauge how it will draw moral and ethical lines with India while leveraging its position to continue deterrence efforts against China. The Biden administration will need to develop a policy, and find public language, to integrate, albeit imperfectly, the conflicting objectives of strategic cooperation and values-based relations.

Quote of the Month

“Democracy is under threat. Authoritarianism is on the march. Inequalities are growing… Our world needs statesmanship, not gamesmanship and gridlock… It is time for a global compromise. Politics is compromise. Diplomacy is compromise. Effective leadership is compromise. Leaders have a [special] responsibility to achieve compromise in building a common future of peace and prosperity for our common good.”
– UN Secretary General’s Address to the UNGA, September 19, 2023

State of the Order this month: Unchanged

Assessing the five core pillars of the democratic world order    

Democracy ()

• In an attempt to create the allusion of democracy, Russia is staging “elections” in occupied Ukrainian territories. Kremlim-approved United Russia candidates, the Russian ruling party that backs President Vladimir Putin, are expected to dominate the rigged elections in the Russian-controlled Ukrainian regions of Kherson, Zapirizhzia, Donestk, and Luhansk.
• A Chinese court sentenced Rahile Dawut, a leading scholar of Uyghur traditional culture who disappeared in late 2017, to life in prison for “splittism”, or endangering China’s state security. State documents reveal that Dr. Rahile made attempts to appeal her case in 2018, but was rejected.
• Burkina Faso’s intelligence and security services said they thwarted a coup attempt against Ibrahim Traoré, the country’s president, who himself obtained power through a coup just the year prior.
• South Korean opposition leader Lee Jae-Myung was arrested and charged with breach of trust, bribery, and other similar crimes. The charges follow a 149-136 National Assembly vote that lifted his immunity, where dozens of members of Lee’s party likely voted against him. Jae-Myung, who was recently hospitalized following a hunger strike in protest of President Yoon Suk Yeol’s government, denies any wrongdoing.
• As a result of increasing instability in the Sahel, African leaders across the continent are acting to “coup-proof” their governments and militaries. Some leaders, such as Cameroonian President Paul Biya—who has been in power for four decades—appointed several security advisers to their Ministries of Defense. Others, like Rwandan President Paul Kagame—who has maintained power for over two decades—forcibly retired dozens of generals and hundreds of senior officers.
• In exchange for the release of $6 billion in frozen funds and five Iranians in US custody, Tehran freed five Americans who had been imprisoned in Iran on trumped-up charges. While Tehran alleges that it has the flexibility to use the $6 billion backing the prisoner exchange on whatever it pleases, the Biden administration emphasizes that the purpose of the funds is limited to non-sanctionable purchases, such as food and medicine, and will be subject to strict oversight by the US.
• On balance, the democracy pillar was unchanged.

Security ()

• US National Security Adviser Jake Sullivan met with his Chinese counterpart, Wang Yi, and other top diplomats in Malta as part of continued bilateral efforts to “thaw” tumultuous relations between the two powers. Much like other recent US-China talks, the two sides committed to “additional high-level engagement and consultation” in key strategic areas. Officials in attendance noted that while there were discussions of re-establishing military-to-military dialogue, Chinese officials offered “limited indications” of receptiveness.
• Chinese Defense Minister Li Shangfu, who had not made a public appearance since August, was detained by authorities for questioning. China’s Ministry of Defense has not commented on the detainment, and the Foreign Ministry claims to be unaware of the situation. Meanwhile, US officials claim that Li was removed from his post. In July, the former Foreign Minister, Qin Gang, was similarly removed from his post after a month-long disappearance.
• The Dominican Republic closed all its shared land, sea, and air borders with Haiti. This move follows continued disputes between the Dominican Republic and Haiti over the construction of a canal on Haitian soil that would tap water from a shared river between the two states.
• The Biden administration announced that it plans to redirect $85 million in military aid from Egypt to Taiwan. The decision comes as a result of heightened concerns about human rights abuses by Egypt, including the treatment of political prisoners.
• In his first international trip in nearly five years, North Korean leader Kim Jong Un traveled to Russia to meet with President Vladimir Putin. The pair met to discuss arms negotiations, including Russia’s bid for much-needed artillery ammunition. In turn, North Korea seeks assistance in modernizing its weapons technologies, as well as food and energy shipments.
• Japan’s Ministry of Defense asked for $53 billion (7.7 trillion yen) in spending for the upcoming 2024 fiscal year, marking a record-breaking 13% increase in defense spending. This is part of Prime Minister Fumio Kishida’s aim to boost the country’s military spending by 43 trillion yen by 2027 as it faces increased aggression from China and North Korea.
• French President Emmanuel Macron announced that France will withdraw its remaining troops in Niger, effectively ending its military presence in the West African state. Niger’s junta responded that the withdrawal is a “new step towards the sovereignty” of the country, but international concerns mount over the governance gap that will ensue and the potential for terrorism and insurgency to rise.
• On balance, the security pillar was unchanged.

Trade (↑)

• China’s National Development and Reform Commission announced that it would establish a governing body to support the country’s private sector. This is widely viewed as an attempt for the nation to energize its slowing economic prospects and shore up confidence among international investors concerned.
• The US State and Treasury Departments announced sanctions on over 150 foreign entities accused of circumventing international sanctions and providing support to Russia. The entities sanctioned are primarily involved in the construction, oil, gas, and financial sectors. This is a continuation of the US-led push to cut off the flows of goods Russia needs to sustain its assault on Ukraine. Sanctions evasion by Russia and sanctions enforcement will continue.
• The United States and China created two bilateral working groups to tackle economic and financial issues. The first, dubbed the “commercial issues working group” tackles conflicts surrounding trade and technology, while the second, titled the “financial working group” tackles regulatory and financial stability concerns.
• On balance, the trade pillar was strengthened.

Commons (↓)

• Devastating flooding in eastern Libya left over 11,000 dead and tens of thousands more missing or displaced. The collapse of two dams sent 20-foot waves crashing through several towns. Reports indicate the dam collapses resulted from neglect and mismanagement.
• Morocco was rocked by a 6.8 magnitude earthquake, the strongest to hit the nation since 1960. Damage left 3,000 dead, with thousands more displaced or missing. Nearly half of the fatalities originated from the province of Al Haouz, a string of remote villages and settlements located south of the earthquake’s epicenter.
• In a first-of-its-kind case, six young Portuguese citizens ranging from ages 11 to 24 filed a lawsuit against 32 governments for their inaction in combatting the climate crisis, including failure to reach the Paris Agreement target of containing global warming to 1.5 celcius. Countries listed in the lawsuit include the entirety of the EU, the UK, Norway, Russia, Switzerland, and Turkey. None of the plaintiffs seek financial compensation.
• A study in the journal Nature concludes that the recent string of wildfires significantly reduced—and, in some US states, effectively reversed—decades of improvements in US air quality since the 1970 passage of the Clean Air Act.
• On the sidelines of the UNGA, the United States and 31 other Atlantic Countries—including several across the Global South—adopted the Declaration on Atlantic Cooperation to launch the new Partnership for Atlantic Cooperation. The Partnership is a foundation for increased US engagement with the Global South around noncontroversial transnational issues, such as climate and oceanic sustainability.
• On balance, the global commons pillar was weakened.

Alliances ()

• World leaders convened in New York for the 78th session of the United Nations General Assembly. President Joe Biden was the only UN Security Council leader in attendance, with the rest—Xi Jinping, Vladimir Putin, Rishi Sunak, and Emmanuel Macron—choosing to skip the event.
• Leaders from around the world convened for the annual G20 Summit in New Delhi. Unsurprisingly, Presidents Xi Jinping and Vladimir Putin were absent. This marks the first G20 Summit that Xi has not participated in since assuming the Chinese Presidency in 2013. The Summit ended with the welcoming of the African Union, representing over 1 billion people, into the group. The G20 statement included language that was generally on Ukraine’s side in Russia’s war of aggression against it but weaker than the 2022 G-20 statement on the same topic.
• At the G20, the US, India, Saudi Arabia, and other powers announced plans to establish a transit corridor to connect Europe, the Middle East, and Asia. This initiative is part of the US-led Western push to create attractive alternatives to China’s Belt and Road Initiative.
• President Joe Biden traveled to Vietnam as part of his administration’s efforts to increase engagement with other Asian powers to combat regional Chinese influence. While no formal alliances were announced, the US pledged initiatives to expand Vietnam’s semiconductor production base, as well as various other investments in trade.
• On balance, the alliance pillar was unchanged. 

Strengthened (↑)________Unchanged ()________Weakened (↓)

What is the democratic world order? Also known as the liberal order, the rules-based order, or simply the free world, the democratic world order encompasses the rules, norms, alliances, and institutions created and supported by leading democracies over the past seven decades to foster security, democracy, prosperity, and a healthy planet.

This month’s top reads

Three must-read commentaries on the democratic order     

• Ash Jain, in Foreign Policy, assesses the six schools of thought US leaders and practitioners fall into in their pursuit of foreign policy strategies: unilateral internationalists, democratic internationalists, realist internationalists, multilateral internationalists, retractors, and restrainers.
• Howard French, in Foreign Policy, argues that the Biden administration’s lack of strong response to the allegations of the Indian government’s involvement in the assassination of a Sikh leader on Canadian soil weakens Washington’s global credibility.
• Dominic Tierney, in Foreign Affairs, asserts that transatlantic disagreements are helpful guardrails in restraining Washington’s more dangerous impulses, deterring China from fully allying itself with Russia, and guarding Europe’s position as a capable power and partner to Washington.

Action and analysis by the Atlantic Council

Our experts weigh in on this month’s events

• Fred Kempe, in Inflection Points, contends that, regardless of China’s actions, the United States must act with greater purpose and consistency in supporting Ukraine, shorting up its alliances, advancing its critical technologies, and fixing its democracy.
• Dan Fried and Brian O’Toole, in the New Atlanticist, posit five ways that Western democracies can increase pressure on Russia’s already weak and strained economy: increasing export control enforcement, tighten the oil price cap, use immobilized Russian foreign exchange reserves for Ukrainian reconstruction, target Russian oligarchs, and impose a full financial embargo with specific carve-outs.
• Matthew Kroenig and Emma Ashford, in Foreign Policy, debate the utility of the G-20 amidst increased global contention, great power rivalries, and disputes.
• Andrew Michta, in the Wall Street Journal, opines that Warsaw and other NATO eastern flank allies—such as Poland—are vital to the Alliance’s ongoing deterrence efforts against Russian aggression.
• Aleksandra Gadzala Tirziu, in The New York Sun, makes the case that the newly established Partnership for Atlantic Cooperation does not do enough to combat China’s rising influence in the Global South.

__________________________________________________

The Democratic Order Initiative is an Atlantic Council initiative aimed at reenergizing American global leadership and strengthening cooperation among the world’s democracies in support of a rules-based democratic order. Sign on to the Council’s Declaration of Principles for Freedom, Prosperity, and Peace by clicking here.

Patrick Quirk – Nonresident Senior Fellow
Dan Fried – Distinguished Fellow
Soda Lo – Project Assistant

If you would like to be added to our email list for future publications and events, or to learn more about the Democratic Order Initiative, please email pquirk@atlanticcouncil.org.

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This month’s topline events

US, Japan, and South Korea Trilateral Commitments. President Joe Biden’s first Camp David Summit brought together Japanese Prime Minister Fumio Kishida and South Korean President Yoon Suk Yeol to discuss trilateral security cooperation in the face of an increasingly aggressive China and assertive North Korea. The first high-level convening between Washington, Seoul, and Tokyo came on the heels of a rapprochement between Japan and South Korea. The trio of leaders committed to new areas of cooperation across security, technology, and the economy including establishing security-related information-sharing networks, collaborating on ballistic-missile defense, and conducting annual joint military exercises. They agreed to hold annual summits and reaffirmed a commitment to maintaining stability in the Taiwan Strait as well as addressing China’s economic coercion. The White House clarified that, although the three countries have not agreed to a formal mutual defense agreement, they have agreed to a “three-way hotline” for government administrations to more effectively communicate and “engage in critical circumstances.”

• Shaping the order. The trilateral should, if realized, advance Japanese, South Korean, and American interests and security in the region. The three-way partnership adds to others that the US has forged in the region (e.g., the Quad) to shore up the international order and counter Beijing. The Camp David summit signals that the free world can organize and coalesce in the face of authoritarian threats.
• Hitting home. Trilateral U.S.-South Korean-Japanese cooperation can be another means to constrain Chinese efforts to impose hegemony, both security and economic, in East Asia. It may strengthen US efforts to reach a sustainable set of norms with Beijing, including on trade, hopefully avoiding both confrontation and a weak position.
• What to do. The Biden administration should maintain momentum coming out of the Summit by executing agreed immediate next steps. Chief among these will be scheduling and planning for the first of what are promised to be regular, named, multi-domain trilateral exercises to enhance coordinated military capabilities and cooperation.

Expanding BRICS. At its summit in Johannesburg, BRICS leaders from Brazil, Russia (Putin only remotely), India, China, and South Africa announced they would expand the group by inviting Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates to join in January 2024. This comes as Russia and China push to establish the partnership as a counterweight to Western groups such as the G7, and emphasize the group’s geopolitical ambitions, as a champion for the Global South. Unsurprisingly, Russia and China used the meeting to push for anti-Western moves, including calling for increased intra-BRICS coordination to decouple members’ economies from the dollar. Saudi Arabia pursued BRICS membership despite efforts by the US and other Western nations to convince them not to join the grouping.

• Shaping the order. The potential BRICS expansion signals that Russia and China continue to push for a counterweight to Western alliances like the G7. But it is not yet clear whether an expanded BRICS that includes both archrivals Saudi Arabia and Iran would be functional.
• Hitting home. The expanded BRICS would collectively represent 43% of global crude oil production and control a combined 29% of global GDP as well as large portions of global critical mineral supplies, including 75 percent of manganese and 28 percent of nickel. Increased energy trading among the BRICS members could further bifurcate the oil market. BRICS nations, which have used individual critical mineral export restrictions over the last decade, could adopt a more coordinated response and thereby reduce American access to these raw materials.
• What to do. While an expanded BRICS has potential power, previous efforts to develop counterweights to Western-oriented groups, like the G-77, have generally fallen short. The Biden administration should continue to deepen its relationships with India and Brazil. Doing so advances American trade and security interests and, as a secondary byproduct, can undermine collective action with the BRICS. US engagement with Saudi Arabia should include steps to prevent Riyadh from more closely aligning with Moscow.

Ukraine’s Southern Push. Ukraine continued its counteroffensive against Russia, with the Zelensky government committing significant troops across the South and, as a result, slowly pushing back Russian forces, like in liberating the Southeastern settlement of Robotyne. Ukraine achieved this progress despite not having the ability to provide air cover to its advancing troops. Leaked intelligence reports indicated that the US and others are frustrated with how Ukraine has executed the counter-offensive, including its approach to allocating forces. Despite purported Western misgivings about Ukraine’s strategy, however, the counteroffensive resulted in several military setbacks for Russia. Reports continue of frustration among elite Russian circles that the war is headed in the wrong direction; the apparent assassination of Evgeniy Prigozhin, head of the Wagner military group, two months after his mutiny, also suggests a brittleness within the Putinist system.

• Shaping the order. The Ukrainian counteroffensive appears to be working, albeit slowly and at significant cost. It has helped the Zelensky government reclaim key territories, dealt military losses to Moscow, and seemingly is feeding discontent across elite circles in Russia. A successful offensive could change the balance of the war.
• Hitting home. A successful Ukrainian counter-offensive would boost US policymakers and public confidence in support for Ukraine. A failed or only marginally successful counter-offensive would sharpen the US debate as the Presidential election campaign intensifies.
• What to do. The US and allies must remain united in their support for Ukraine’s strategy, keep misgivings and questions behind closed doors, and focus on giving Kyiv the weapons it needs to win. The US was smart to greenlight F-16 fighter aircraft transfers from the Netherlands and Denmark and needs to make sure pilots have the training needed to operate the equipment when they arrive in 2024.

Quote of the Month

“Today’s world is increasingly complicated and condensed, and one in which humanity faces both peril and promise. We are in a transformative era marked by strategic competition, rapid technological change, and increasingly worrisome transnational threats.”
– CIA Director Bill Burns, reacting to the release of the 2023 National Intelligence Strategy for the Intelligence Community. August 10, 2023

State of the Order this month: Unchanged

Assessing the five core pillars of the democratic world order    

Democracy ()

• In Thailand, Srettha Thavisin, real estate tycoon and populist Pheu Thai Party candidate, won the backing of parliament to become the country’s 30th Prime Minister. The eleven-party government formed to rule the country and end a months-long political deadlock, however, noticeably excluded the progressive Move Forward Party, which won the most votes in the national election.
• Fernando Villavicienco, an Ecuadorian presidential candidate who vocally denounced gangs and corruption, was assassinated weeks before the country’s elections. The elections head to a run-off in October, featuring leftist Luisa González—who secured 33% of votes—and center-right Álvaro Noboa—who secured 24% of the votes.
• Bernardo Arévalo, son of a former president of Guatemala, won Guatemala’s presidential election, defeating former first lady Sandra Torres. However, hours before Arévalo’s victory, Guatemala’s electoral registry suspended his Seed Movement party, a move that could hinder the transition to an Arévalo government.
• Zimbabwe’s President Emmerson Mnangagwa, who deposed President Robert Mugabe in a 2017 coup, won a second term in office. The opposition, however, claimed the presidential election was beset by “gigantic fraud.” International observers, civil society groups, and even the African Union cast doubt on the validity of the election.
• Military officers seized power in Gabon and placed President Ali Bongo Ondimba under house arrest. The president, whose family has been in power for half a century, recently won a third term in a heavily disputed election.
• Vladimir Putin extended the prison sentence of democracy activist and opposition leader Alexei Navalny by nineteen years. This follows the Putin government introducing trumped-up charges that Navalny was guilty of founding and funding an extremist organization.
• On balance, the democracy pillar was unchanged.

Security ()

• Niger remains at an impasse following last month’s military coup. ECOWAS threatened military intervention to restore democratic order but has not followed through. Mali and Burkina Faso pledged their support to Niger’s coup leaders.
• The Netherlands and Denmark, in a move approved by the United States, announced they will deliver F-16 fighter jets to Ukraine, likely in early 2024.
• Yevgeny Prigozhin, Wagner paramilitary group chief, reportedly died in a mysterious plane crash in the northwest region of Moscow. US intelligence officials report that preliminary findings indicate that, although the plane was not shot down by a surface-to-air missile, it did crash as a result of an assassination plot.
• The Ukrainian navy announced a “humanitarian corridor” in the Black Sea to allow safe passage to cargo and civilian ships trapped in ports since the outbreak of the war. Ukrainian officials stressed that the corridor is a voluntary “humanitarian mission and has no military purpose.”
• Eleven Russian and Chinese naval ships conducted joint patrols near the Alaskan coast. The Chinese and Russian ships did not enter US territorial waters but were flanked by US destroyers and aircraft until their departure.
• President Biden issued an executive order restricting American investment in specific Chinese companies involved in the development of emerging technologies.
• For the second time, North Korea failed to successfully launch its Malligyong-1 spy satellite into orbit. The regime is committed to trying again, however, as the spy satellite program is a critical part of Kim Jong Un’s five-year weapons strategy initiative.
• On balance, the security pillar was unchanged.

Trade ()

• US Secretary of Commerce Gina Raimondo visited Beijing to discuss US-China commercial ties and address challenges faced by US businesses in China. While the US and China did not announce any major breakthroughs, reports indicate Raimondo and her counterpart agreed in principle for Washington and Beijing to exchange export control information and establish a bilateral forum for dialogue on other economic and commercial issues.
• The American credit rating agency Fitch downgraded the US rating from the highest rating, AAA, to AA+, based on the growing US debt burden, recession concerns, and erosion of governance relative to other top economies in recent decades.
• Negotiations surrounding the Indo-Pacific Economic Framework—a fourteen-country trade deal—were jeopardized by US pressure to have Japan accept anti-commercial whaling provisions. While both governments refused to comment on the issue, one senior Japanese official said the subject was a “non-starter” and “issue of contention” for Tokyo.
• On balance, the trade pillar was unchanged.

Commons ()

• Recent wildfires ravaged parts of Hawaii, Greece, and Canada. The Maui wildfires claimed over a hundred lives—with over 1,000 still unaccounted for—and displaced thousands more. The fire in Greece is the biggest in Europe this century.
• India is the first country to successfully land a spacecraft on the moon’s south pole, days after Russia’s attempt ended in an unsuccessful crash on the lunar surface.
• Record high temperatures and environmental catastrophes induced by the climate crisis are pushing up food prices and exacerbating global inflation. Olive oil, certain grains, and soybeans are only some of the commodities already being impacted.
• On balance, the global commons pillar was unchanged.

Alliances (↑)

• President Joe Biden’s first Camp David Summit brought together Japanese Prime Minister Fumio Kishida and South Korean President Yoon Suk Yeol to discuss trilateral security cooperation in the face of an increasingly aggressive China and assertive North Korea. The leaders agreed to cooperate on a range of issues across the security, economy, and technology spheres.
• Mongolian Prime Minister Oyun-Erdene Luvsannamsrai visited Washington in an attempt to strengthen the country’s economic ties with the United States and diversify away from its autocratic neighbors, China and Russia. While in Washington, Prime Minister Luvsannamsrai and US Secretary of State Antony Blinken committed to a new Economic Cooperation Roadmap, as well as signed an Open Skies Agreement.
• Finland’s defense ministry announced that it would spend 2.3% of its GDP on defense in 2024. This followed all NATO members, in July, re-committing to spending a minimum of 2% of their GDP on defense. Prior to the July re-commitment, only seven NATO members had met this target.
• Vladimir Putin confirmed to Indian Prime Minister Narendra Modi that he will not be attending the G20 Summit in Delhi in September due to a “busy schedule”. Xi Jinping also confirmed he would not be attending the Summit.
• Ahead of the upcoming G20 Summit in Delhi, Indian Prime Minister Narendra Modi proposed inviting the African Union to join the group. This is part of the Prime Minister’s vision to enhance the “inclusiveness” of the bloc.
• Saudi Arabia convened senior officials from nearly 40 countries to discuss potential avenues to reach a peaceful end to the war in Ukraine. Notably, Russian representatives did not make an appearance, but counterparts from the four other BRICS countries attended. While the meeting produced no significant breakthroughs, it does showcase Saudi Arabia’s rising prominence on the global stage.
• On balance, the alliance pillar was strengthened. 

Strengthened (↑)________Unchanged ()________Weakened (↓)

What is the democratic world order? Also known as the liberal order, the rules-based order, or simply the free world, the democratic world order encompasses the rules, norms, alliances, and institutions created and supported by leading democracies over the past seven decades to foster security, democracy, prosperity, and a healthy planet.

This month’s top reads

Three must-read commentaries on the democratic order     

• C. Raja Mohan, in Foreign Policy, argues that the expansion of the BRICS alliance will likely galvanize increased Western engagement in the Global South, threatening China’s largely uncontested influence in key strategic regions.
• Kelly Sims Gallagher, in Foreign Policy, contends that, despite their respective differences, the United States and China can pragmatically collaborate to advance green financing and development in the Global South.
• Hannah Rae Armstrong, in Foreign Affairs, argues that the United States, unlike its European allies, must preserve the relatively positive reputation it has in the Sahel by pushing for peaceful mediation, rather than military intervention, in the aftermath of the coup in Niger.

Action and analysis by the Atlantic Council

Our experts weigh in on this month’s events

• Dan Fried, in The Ripon Forum, makes the case for Ukraine’s inclusion into the NATO Alliance, citing its shared interests in the West in defeating Russia and Putin.
• Matthew Kroenig and Emma Ashford, in Foreign Policy, debate the impetus of coups in fragile states, using the 2023 Niger coup as an emblematic case study.
• Andrew Michta, in the New Atlanticist, opines that the United States must reassess its strategy towards Europe to be more future-oriented and reflective of US interests on the continent.
• Imran Bayoumi, in the Globe and Mail, argues for the need to update Canada’s National Security Strategy to accompany the country’s newly created National Security Council.
• Aleksandra Gadzala Tirziu, in a Geopolitical Intelligence Service (GIS) report, details how India and China’s infrastructure-building competition along their disputed border region is heightening risks of conflict between the two nuclear-armed powers.

__________________________________________________

The Democratic Order Initiative is an Atlantic Council initiative aimed at reenergizing American global leadership and strengthening cooperation among the world’s democracies in support of a rules-based democratic order. Sign on to the Council’s Declaration of Principles for Freedom, Prosperity, and Peace by clicking here.

Patrick Quirk – Nonresident Senior Fellow
Dan Fried – Distinguished Fellow
Soda Lo – Project Assistant

If you would like to be added to our email list for future publications and events, or to learn more about the Democratic Order Initiative, please email pquirk@atlanticcouncil.org.

The post State of the Order: Assessing August 2023 appeared first on Atlantic Council.

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On August 26, Transatlantic Security Initiative nonresident senior fellow Stefano Stefanini wrote in Formiche arguing that the West should keep a close eye on the enlargement of the BRICS bloc (text in Italian).  

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Stefano Stefanini

Nonresident Senior Fellow

Scowcroft Center for Strategy and Security Transatlantic Security Initiative

English Europe & Eurasia

The Transatlantic Security Initiative, in the Scowcroft Center for Strategy and Security, shapes and influences the debate on the greatest security challenges facing the North Atlantic Alliance and its key partners.

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Click to jump to an expert analysis:

Hung Tran: With six new members, BRICS is tilting toward China

Jonathan Panikoff: New Middle Eastern BRICS members highlight shifting geopolitical winds

Rama Yade: BRICS has big ambitions, but it also faces new challenges

Colleen Cottle: Beijing’s vision for the bloc is driving BRICS expansion

Michael Bociurkiw: On the ground in Johannesburg, Putin’s absence stuck out

Valentina Sader: The summit may have pushed US and Brazil further apart

Kapil Sharma: For the BRICS to be effective in the long term, India and China must resolve their disputes

Holly Dagres: With BRICS membership, Iran is furthering its ‘Look to the East’ strategy

Mrugank Bhusari: Expansion is a double-edged sword for BRICS’ ambitions

With six new members, BRICS is tilting toward China

At the BRICS Summit, the group has just agreed to admit six new members: Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the UAE; and to consider other prospective countries. Strongly supported by China and Russia, the inclusion of Iran has strengthened the anti-US axis in the BRICS—probably making it more antagonistic and more challenging for the United States and the West to deal with it as an organization which contains two internationally sanctioned members. This decision reflects the sway of China together with Russia in the group and could not be very comfortable for moderate members like India and Brazil.

Saudi Arabia and the UAE would add important economic heft to the group, which now includes several important Organization of Petroleum Exporting Countries members as well as Russia—giving it a relevancy in the geopolitics of the global oil market. Saudi Arabia and Argentina, both members of the Group of Twenty (G20), could enable the BRICS to help coordinate the views of most of the emerging market G20 members. In this sense, the group could serve as an informal counterpart to the G7, which coordinates developed countries’ positions in advance of G20 meetings. However, with a strong China-Russia-Iran axis, the group may end up pushing for anti-Western positions, making compromises in the G20 more difficult to reach.

The fact that Saudi Arabia, Iran, and the UAE will be members would have been unthinkable until recently and shows another facet of the diplomatic reconciliation among the three countries—with intermediation by China.

The BRICS also agreed at the summit to accelerate the use of their local currencies to settle trade and investment transactions among themselves—continuing to reduce their reliance on the US dollar-based global payment and financial system.

Given these outcomes, it is understandable for Chinese leader Xi Jinping to say that “this is a historic occasion . . . that brings new rigor to the bloc.”

—Hung Tran is a nonresident senior fellow with the Atlantic Council’s GeoEconomics Center.

New Middle Eastern BRICS members highlight shifting geopolitical winds

The decision by the BRICS nations to invite four Middle East countries to join their ranks—Saudi Arabia, the UAE, Egypt, and Iran—highlights shifting geopolitical winds as much as it reflects an opportunity for closer economic integration with those states.

For Saudi Arabia and the UAE, inclusion in the group is potentially symbiotic, as both are looking to engage and deepen cooperation with non-Western countries and diversify their economic partnerships as an additional hedge against the United States. Riyadh and Abu Dhabi would probably view a decision to join as furthering their goal to be viewed as not just important regional leaders, but global ones. For the BRICS states, the inclusion of Saudi Arabia and the UAE would bring new investment and trade opportunities as the former seeks to quickly diversify and scale up its economy across a range of new, non-fossil fuel industries and the latter is home to the region’s leading financial hub in Dubai.

Egypt, which currently faces a massive financial and economic crisis, would not appear to be a prime candidate for inclusion on paper, but Moscow and Beijing probably view inviting Cairo as akin to taking a flier—enhancing relations now in hopes of being able to strategically leverage Egyptian assets in the coming decades. Cairo’s key strategic location, control of the Suez Canal, and newly discovered gas fields are all probably viewed by the BRICS group as potentially lucrative, both economically and politically, over the coming decades.

The decision to include Iran was almost certainly driven by Russia and China, as the country’s massive gas and oil reserves were likely a selling point for Beijing in convincing Brasilia, Pretoria, and New Delhi to go along with the invitation, knowing it will further fuel tensions with Washington. Inclusion in the BRICS won’t transform Iran’s economy overnight. Iran views relations with China as providing an economic lifeline, given the poor state of the economy, which continues to reel from a bevy of US sanctions. But over time, groupings such as the BRICS have the potential to undermine Washington’s power when it comes to punishing or isolating countries pursuing policies that contradict US interests, especially if they seek alternative systems and methods for trade and payment over which Washington lacks the same leverage that it has today over SWIFT, for example. 

In the view of the BRICS states, including the newly invited members, reducing global US economic and financial leverage would create a more level playing field, while countries such as Iran would view it as a way to further reduce the impact of sanctions. For Washington, it should be a warning: the need to strengthen and renew relationships with allies has never been more important. The emerging world might be multipolar, but some poles will be closer than others.

—Jonathan Panikoff is the director of the Scowcroft Middle East Security Initiative at the Atlantic Council’s Middle East Program.

BRICS has big ambitions, but it also faces new challenges

They will be eleven now. Six new countries, including two African countries, Egypt and Ethiopia, will be added to the five BRICS members on January 1, 2024. It was a priority of this fifteenth BRICS Summit in Johannesburg. “The BRICS are starting a new chapter,” said South African President Cyril Ramaphosa, who hosted the summit.

The current five-member BRICS group represents a quarter of the world’s wealth and brings together 42 percent of the world’s population. But now, the BRICS will face new challenges. First, this group is very diverse, with unequal growth and rivaling interests. The importance of China, which represents 70 percent of the group’s gross domestic product, is a problem for India. Some of the BRICS countries, including South Africa, want to save its trade relations with the United States and don’t want to be dragged into the Cold War strategy pursued by Russia. Meanwhile, Putin decided not to join the summit in person, most likely due to an international arrest warrant for alleged war crimes committed in his brutal invasion of Ukraine. And with the new membership of authoritarian regimes such as Iran, the question arises: Do Africans really need the Middle East’s problems brought into this group? If they want to do business with Israel, what will Iran say?

Beyond this membership issue, the BRICS group should be taken seriously. The high-level attendance, from Xi to Modi, reveals a lot of the bloc’s big ambitions to build an alternative multilateralism, starting with challenging the dollar and strengthening the New Development Bank without conditionality. Washington is monitoring the situation closely: at the opening of the  summit, the Biden administration announced its willingness to strengthen the financing capacities of the International Monetary Fund and the World Bank on the occasion of the next G20 summit in India on September 9 and 10. US National Security Advisor Jake Sullivan explained on Tuesday: “Our IMF and World Bank proposals will generate nearly $50 billion in lending for middle income and poor countries from the United States alone. And because our expectation is that our allies and partners will also contribute, we see these proposals ultimately leveraging over $200 billion.” The emergency will probably require much more.

 —Rama Yade is senior director of the Atlantic Council’s Africa Center and senior fellow for the Europe Center.

Beijing’s vision for the bloc is driving BRICS expansion

With the addition of six new members and a ninety-four-paragraph leaders’ statement teeming with coverage of priority issues for emerging and developing countries, the BRICS grouping is trying to cement its position as a platform for and champion of the Global South. This aligns particularly closely with Beijing’s vision for the grouping, and the six new members—Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the UAE—probably also accommodate Chinese preferences. Representation from the economic heavyweight region of Southeast Asia is notably missing, potentially reflecting Beijing’s strained ties in the region. Indonesia would have been a logical choice, having attended the “Friends of BRICS” event in June. Instead, four of the six new members hail from the Middle East, a region into which Beijing has steadily expanded its economic, military, and political ties in the past few years.  

Ironically, the expanded BRICS group will make it harder to operationalize its mission of advancing Global South interests. The BRICS has always been a grouping heavier on symbolism than on substance. Even its tangible outputs, such as the painstakingly negotiated and coordinated New Development Bank, have not notably shifted the global governance landscape in the ways the group hoped. Adding more diverging voices to the BRICS will only increase the challenge of reaching agreement on key areas the group hopes to make progress on, such as reducing the use of local currencies in trade and expanding their correspondent banking ties. 

Nonetheless, the group is clearly gaining traction across the Global South, with more than forty countries interested in joining the BRICS, according to this year’s chair, South Africa, and with BRICS leaders leaving open the possibility for further expansion in their joint statement. Perhaps simply offering developing countries the chance for a seat at the table—regardless of whether that seat comes with tangible benefits—will be enough for the group to continue appealing to and garnering support from the Global South.

—Colleen Cottle is the deputy director of the Atlantic Council’s Global China Hub and previously spent over a dozen years at the Central Intelligence Agency serving in a variety of roles covering East and South Asia.

On the ground in Johannesburg, Putin’s absence stuck out

Wednesday had delegates at the BRICS Summit—the first to be held in person since the outbreak of the COVID-19 pandemic—here in Johannesburg looking up and down. With a proud Indian Prime Minister Narendra Modi present, they applauded the landing of the Chandrayaan-3 spacecraft on the moon. And hours later, news broke of the crash of a private jet in Russia said to be carrying Wagner Group boss Yevgeniy Progozhin and his deputy.

While Russian President Vladimir Putin’s absence stuck out like a sore thumb, not to be outdone by the India lunar fest and Xi showering host country South Africa with money, he managed to steal the news cycle by neutralizing a main opponent just as leaders were sitting down to dinner yesterday. One wonders if any of them had food tasters present.

Fireworks aside, the summit managed to generate headlines on Thursday with an expansion that would more than double the group’s membership. Saudi Arabia and the UAE will be appreciated for their financial heft and ability to inject cash into the New Development Bank, the bloc’s lending facility. The expansion also furthers Saudi leaders’ efforts to become a global heavyweight and powerwash their image after the ghastly 2018 murder of journalist Jamal Khashoggi. The admittance of Argentina, Egypt, and Ethiopia gives South America and Africa more representation. Iran’s membership helps burnish BRICS’s image as an all-inclusive club—one that lets in countries no matter how appalling their human rights record. Indonesia was expected to join, but is said to have asked for more time to prepare.

Over the longer term, BRICS leaders have pledged to sort out intra-African trade. Trade among African countries makes up only 14.4 percent of African exports, and there’s a push to get that to increase by facilitating trade between countries in their own respective currencies. For instance, if Kenya wants to trade with Djibouti, why does a third currency like the US dollar have to be involved? If BRICS can sort that out in a continent that uses more than forty different currencies, it will be a major achievement. 

Finally, with the G7, G20, and Asia-Pacific Economic Cooperation degenerating into boxing rings for tantrum diplomacy, where final communiques either get watered down or not issued at all, perhaps it is worth giving BRICS a chance to reinvent multilateral cooperation. This reinvention cannot come soon enough—especially for poorer countries who need help the most.

—Michael Bociurkiw is a nonresident senior fellow at the Atlantic Council’s Eurasia Center. He is in Johannesburg, South Africa, for the BRICS Summit.

The summit may have pushed US and Brazil further apart

Brazilian President Luiz Inácio Lula da Silva has been walking a fine line in his foreign policy. The BRICS Summit might have just pushed Brasília and Washington further apart.

Lula’s foreign policy approach is consistent with priorities from his past two terms in office. These include the need for a more democratic global order in which countries such as Brazil, India, and South Africa have equal footing. But the current geopolitical dynamics have shifted significantly.

Lula and Finance Minister Fernando Haddad publicly defended the role of the BRICS not as a counterpoint to the United States or the hegemony of the G7, but as a contributor to a more diplomatic and inclusive global order. However, given current geopolitical sensitivities, to what extent aren’t alliances—as indirect as they may be—with countries such as Russia and Iran not harming Brazil’s credibility abroad further?

The expansion of the BRICS to include countries like Iran is challenging. Earlier this year, Brazil allowed Iranian warships to dock in its coast, which caused discomfort in Washington. And that is heightened by Brazil’s position with regard to Russia’s war on Ukraine, seen as not strong enough for Washington, and its friendly relationship vis-à-vis China.

Lula’s positions are consistent with Brazil’s long-term nonalignment and noninterventionist principles. Brazil was the only country of the BRICS to condemn Russia’s invasion of Ukraine at the United Nations last year; China is Brazil’s main trading partner and former President Dilma Rousseff is the new president of the BRICS’ New Development Bank. On the other hand, Brazil pursues stronger ties on trade, investment, climate, and other mutual priorities with the United States, which Lula visited within his first month in office. Brazil has also been pursuing stronger ties with Europe, with continued negotiations of the Mercosur-EU trade agreement.

As Brazil pushes for a reshaped UN Security Council, Lula’s possible upcoming meeting with US President Joe Biden in New York becomes even more significant. What’s on Washington’s agenda?

—Valentina Sader is a deputy director at the Atlantic Council’s Adrienne Arsht Latin America Center, where she leads the Center’s work on Brazil, gender equality, and diversity, and manages the Center’s Advisory Council.

For the BRICS to be effective in the long term, India and China must resolve their disputes

In the run-up to the BRICS Summit, Indian leaders had continually expressed their intentions for the platform, including issues like the response to the COVID-19 pandemic, the supply chain and energy crisis, the impact of the invasion of Ukraine, and the inability of Western-led multilateral platforms to manage global crises. For countries like India, the BRICS represent an important bloc that reflects 40 percent of the global population and $27.7 trillion of the global economy. However, with the concentration of economic power in Western-led institutions since World War II, India and other members of the Global South felt largely overlooked. Indian leaders believe that the BRICS Summit could be the platform that can bring a new and more equitable perspective to global cooperation and problem solving. Thus, India would position the 2023 BRICS Summit to raise the de facto voice of the Global South.

The timing of the BRICS Summit could not have been better for Modi. Nestled between his state visit to the United States and India’s G20 presidency, Modi has used the global stage to declare and reinforce India as the “voice of the Global South” and the new growth engine of the world.

Before this year, generally speaking, the BRICS was a grouping in name only. There was some headline overlap between the countries, but they diverged to different degrees in their long-term strategic and economic interests. The expansion of BRICS from five countries to eleven may result in India and the group gaining leverage (at least optically), as the expanded bloc includes a greater concentration of energy-producing countries, as well as potential collaboration on shifting trade transactions away from the dollar. The members will try to use the expansion to push for changes at the United Nations and other global institutions. However, for the BRICS to be effective over the long term, India and China will need to resolve their border challenges and collaborate on tough global issues as well as the deployment of capital for developing economies. If India is truly to take on the role of the “voice of the Global South,” managing these disparate interests with one voice may prove to be a greater task than what it bargained for.

—Kapil Sharma is the senior director and a senior fellow at the Atlantic Council’s South Asia Center.

With BRICS membership, Iran is furthering its ‘Look to the East’ strategy

“Neither West nor East” was an ethos adopted by the founder of the Islamic Republic of Iran, Ayatollah Ruhollah Khomeini. However, Tehran leaned West after signing the 2015 multilateral deal known as the Joint Comprehensive Plan of Action (JCPOA). When the Donald Trump administration withdrew from the JCPOA in 2018—despite Tehran not violating the deal at the time—it quickly became apparent that Iran could not rely on the West—that is, on European countries—to help circumvent reimposed US sanctions.

Tehran has since adopted a “Look to the East” strategy, which incorporates increased economic, political, and defense ties with China and Russia. Just this July, Iran joined the Shanghai Cooperation Organization (an Eurasian political, security, and economic organization founded by China and Russia) after obtaining observer status in 2005. It’s not surprising that a BRICS membership would follow suit. 

—Holly Dagres is a nonresident senior fellow with the Atlantic Council’s Middle East Programs.

Expansion is a double-edged sword for BRICS’ ambitions

Expansion will alter the fabric of the BRICS institution in two major ways. First, it could change the structure of negotiations internally. The new members vary tremendously in economic size, macroeconomic context, and their ties with non-BRICS economies. BRICS makes decisions through consensus, and achieving consensus among eleven countries with diverse economies, geographies, and interests is far more difficult that achieving it among five. The members may all agree on principles, such as increasing trade in non-dollar currencies. But the addition of new members will significantly slow down some of their more ambitious aspirations once they begin negotiating the nitty-gritty of those projects, for instance, that of a shared currency. To ensure utility and coherence of the institution over the longer term, BRICS may instead choose to stick with low-hanging fruit.

Second, the addition of new members could move the institution away from its geoeconomic origins of five countries on similar growth trajectories to a more geopolitically charged organization made up of different kinds of economies. Russia and China led the calls for accelerated expansion, and attempts to position BRICS as a counterweight to the G7 will make countries such as India and Brazil, which are already walking a delicate balance with the West, uncomfortable.  

The addition of six new full members will nevertheless make BRICS the premier convening for emerging markets, at least in the short term, when the disadvantages of scale will not yet be apparent. More than twenty countries had already formally applied to join BRICS prior to this year’s summit, and more will likely be interested for fear of missing out.

—Mrugank Bhusari is an assistant director at the Atlantic Council GeoEconomics Center.

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Together, the BRICS countries have already overtaken the Group of Seven (G7) advanced economies in terms of their contribution to global gross domestic product, with the group now accounting for almost a third of worldwide economic activity measured by purchasing power parity. The consequences of this economic rise have reverberated through a number of areas, including trade. While trade between Russia and the G7 has fallen by more than 36 percent since 2014 under the weight of economic and financial sanctions, trade between it and the other BRICS nations has soared, increasing by more than 121 percent over the same period. China and India have become the largest importers of Russian oil following bans imposed by the European Union. China’s trade with Russia hit a record of $188.5 billion dollars last year, a 97 percent increase from 2014 and around 30 percent greater than in 2021. The surge occurred as Russia more than doubled its rail exports of liquefied petroleum gas as part of a drive to diversify its exports under the harsh sanctions regime.

By opting not to comply with western-led economic and financial sanctions, the solidarity of BRICS has been a balm for Russia. The bloc has offered trade diversion and other relief to one of its founding members and, in the process, weakened the effectiveness of US-led sanctions as a tool for advancing economic and geopolitical interests.

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A multipolar magnet

Thwarting the sanctions regime has had consequences that reach far beyond the impact of the crisis in Ukraine. Bolstered by their success on the economic and geopolitical fronts, the BRICS group is increasingly viewed by a growing number of countries in the Global South as an attractive agent of multilateralism. More than forty nations—including Algeria, Egypt, Thailand, and the United Arab Emirates, but also key Group of Twenty (G20) countries such as Argentina, Indonesia, Mexico, and Saudi Arabia—have formally expressed their interest in joining the BRICS in the lead-up to this week’s summit.

If the effectiveness of trade diversion by BRICS nations in weakening the impact of western sanctions against Russia is any indication, sanctions could become less effective as a tool for advancing the economic and geopolitical interests of the G7 after the admission of new BRICS members. In a zero-sum global trading environment, the bloc’s expansion would also accelerate the diversification of demand away from G7 countries and reduce members’ exposure to future geopolitical risks.

The focus in Johannesburg will certainly be on the admission of new members, as well as trade and investment facilitation in a challenging global environment where the escalation of trade and tech wars—along with the “friendshoring” of supply chains—has increased the risk of global growth deceleration and a hard landing in China. BRICS members are likely to discuss sustainable development in the climate change era, global governance reform, and an orderly process of increasing trade in local currencies. On the latter point, more and more emerging economies are exploring ways to conduct trade in non-dollar currencies following the imposition of sanctions against Russia.

The dollar remains the global reserve currency, and the pace at which other currencies have chipped away at its dominance has been incremental. But a growing number of experts, including senior US government officials, recognize that the aggressive use of economic and financial sanctions to advance US foreign policy could threaten the dollar’s hegemony in the years ahead. US Treasury Secretary Janet Yellen recently emphasized this point: “There is a risk when we use financial sanctions that are linked to the role of the dollar that over time it could undermine the hegemony of the dollar.”

A new reserve currency?

The significance of dedollarization takes on greater importance in light of rumors that the bloc might attempt to develop a BRICS-issued reserve currency to be used by members in cross-border trade. While the BRICS nations—which collectively enjoy a comfortable balance of payment surplus—have the financial wherewithal to establish such a currency or unit of account, they lack the institutional architecture and the scale to sustainably achieve this end.

Even assuming that its members are fully aligned geopolitically and more inclined to co-operate than to compete, adopting a common currency presents several challenges. As the creation of the euro, now the world’s second largest reserve currency, illustrated, hurdles will include: achieving macroeconomic convergence, agreeing on an exchange rate mechanism, establishing an efficient payment and multilateral clearing system, and creating regulated, stable, and liquid financial markets.

The United States was able to persuade other countries to use the dollar owing to its hegemonic position as the world’s industrial powerhouse and single-largest trading nation following the end of World War II, reinforced in the decades since by the size of the market for US treasuries, which are often considered to be the world’s leading reserve asset. If they wish to provide a competitive alternative, the BRICS countries would need to agree upon a state-of-the-art bond market. It would need to be big enough to absorb global savings and provide assets with low risk of default where surplus funds could be parked when not used for trade.

Reflecting on these challenges, Anil Sooklal, South Africa’s ambassador-at-large to BRICS, reiterated in July that a BRICS currency will not be on the agenda during the summit, though expanding trade and settlement in local currencies will be. In fact, BRICS countries are already making strides in the use of local currencies in cross-border transactions. Their use is helping to sustain and boost cross-border trade between members, even amid a challenging operating environment of heightened geopolitical risks. It is also loosening the balance of payments constraints associated with dollar funding, bolstering local economies.

Although China and India may have diverging security interests, they each stand to benefit from the increased use of local currencies. BRICS nations are already using their own currencies for some bilateral trade payment settlement, and Saudi Arabia is considering signing a deal with China to settle oil transactions in renminbi. Meanwhile India is expanding the use of local currencies for bilateral trade payment and settlement beyond the BRICS group, inviting more than twenty countries to open special vostro bank accounts to settle trade in rupees. In a history-making move, India made its first oil payment to the United Arab Emirates in rupees earlier this month.

If the BRICS group expands its membership, then it could increase the risk of a divergence of interests and raise more coordination challenges—but it could also dramatically expand the group’s consumption power, with significant economic and geopolitical implications. Expansion could create scale and enhance the transition from bilateral to multilateral clearing, and perhaps ultimately toward a common BRICS currency. This would address one of the major challenges associated with the use of local currencies for bilateral trade payment settlement: the difficulty of deploying these currencies once imbalances arise. Lately, such challenges led to the suspension of bilateral trade arrangements that had allowed India to settle imports of Russian oil in rupees, with Russia accumulating billions of Indian rupees that it could not use.

Meanwhile, membership expansion could further weaken the effectiveness of US-led economic sanctions and accelerate the multipolarization of the global monetary order. Several members of the Organization of Petroleum Exporting Countries have already said they wish to join the BRICS group, which would increase the shared benefits associated with the use of local currencies for cross-border transactions and could further curtail the volume of global trade conducted in dollars.

To be sure, the stickiness of institutional arrangements, along with the breadth and depth of US financial markets is such that dollar dominance will remain a key feature of the global financial architecture for some time. But following membership expansion, the BRICS group could set in motion its transformation into an even more powerful geopolitical coalition that could accelerate the process of dedollarization and the transition to a multipolar world.

Hippolyte Fofack is the chief economist and director of research at the African Export-Import Bank (Afreximbank).

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On August 22, Transatlantic Security Initiative nonresident senior fellow Stefano Stefanini was interviewed in Adnkronos, discussing the BRICS Summit and the future of the bloc (text in Italian).  

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If the BRICS group follows India’s approach, then it can promote cooperation among developing countries and, on that basis, engage with the G7 to discuss ways to reform the international economic and financial system and deal with global problems such as the impacts of climate change. This would seem to appeal to many developing countries, which want to reform the current international economic and financial system but do not want to explicitly take sides between the United States and China. On the other hand, if China prevails, the BRICS group will likely become another venue for anti-US political activism, probably risking its ability to deliver concrete benefits to many developing countries.

Given this backdrop, it is important for the G7 to develop an effective approach to the evolution of BRICS—finding ways to engage with its constructive proposals to seek common solutions to global problems, while pushing back against its negative tendencies.

The rise of BRICS

The acronym BRIC (Brazil, Russia, India, China) was coined in 2001 by Goldman Sachs economist Jim O’Neill to designate these four countries as attractive investment destinations, riding on a wave of enthusiasm about the prospects of emerging markets. In 2006, the four countries’ foreign ministers met on the sidelines of the United Nations General Assembly in New York to formalize the group known as BRIC. In 2009, the first summit of leaders took place, followed by annual meetings ever since. In 2010, the group was expanded to include South Africa—becoming BRICS.

The BRICS group was organized around the goal of enhancing consultation and coordination between the five major developing countries to change the current Western-led world order into a multipolar system where developing countries have more influence, commensurate with their shares of the global economy. Despite the five members’ divergent economic trajectories in the years since—with China and India having grown impressively while the other three saw weak growth—the BRICS group has made significant progress.

Together, BRICS countries have 3.24 billion inhabitants—or 41 percent of the world population—and a combined gross domestic product (GDP) of $26 trillion, or 60 percent of the G7 countries’ combined GDP. However, on a purchasing power parity basis, BRICS countries’ GDP accounts for 31.5 percent of the global economy, overtaking the G7 share of 30.4 percent. Despite this, BRICS countries get only 15 percent of the voting power at the International Monetary Fund—a source of developing countries’ discontent over the governance of international financial institutions.

Competing visions

The BRICS group has revealed its internal divisions, however, as the rivalry between China and the United States has intensified. India has tried to resist China’s efforts to turn the BRICS group into a support organization for China’s geopolitical agenda, such as promoting Beijing’s Belt and Road Initiative, its Global Development Initiative, and explicit anti-US rhetoric. Instead, India has focused BRICS discussions and activities on South-South economic and financial cooperation projects, initiatives to reduce global reliance on the US dollar-based international financial and payment system, and reforms of international financial institutions to give developing countries more voice and representation. South Africa seems to have followed this approach in formulating the theme for the upcoming summit: “BRICS and Africa: Partnership for Mutually Accelerated Growth, Sustainable Development, and Inclusive Multilateralism.” To reinforce its focus on Africa, South Africa has reportedly invited the leaders of all African countries to attend the summit.

China and India’s disagreement regarding membership expansion will shape the prospects of aspiring BRICS countries and the organization’s future. According to South African authorities, twenty-two countries have formally applied to join the BRICS group, and a similar number of countries have expressed their interest. While this has enhanced the group’s stature, it also poses a difficult problem for the organization: admitting too many new members risks diluting the BRICS group, making it ineffectual if it continues to operate on a consensus basis. China and Russia have wanted to quickly expand the BRICS group to strengthen their influence in important developing countries—many of which also see the organization as an opportunity to get closer to China economically. India, on the other hand, is concerned about losing its own influence if the BRICS group admits too many new members closely aligned with China’s agenda. After all, India has had a persistently bitter border dispute with China, as well as a rivalry with Beijing for regional influence. Against this backdrop, India has proposed to discuss and agree on the criteria for membership—as an item on the August summit agenda—before admitting new members.

An effective G7 approach

Confronted with the efforts of several countries in the Global South to establish a forum—likely to be based on the BRICS format—to coordinate their views and policies to deal with the developed countries, the G7 should find an effective approach to manage its interactions with the BRICS group.  If the BRICS group follows India’s agenda and comes up with concrete ideas to reform the international economic and financial system, the G7 should engage constructively and discuss in earnest those ideas—and not dismiss out of hand the demands for changes. However, if the BRICS group turns out to be a China-driven forum sponsoring anti-US and anti-West rhetoric and initiatives, then the G7 should push back against those criticisms—most effectively by suggesting ways to improve the current economic and financial system to address the shortcomings in meeting the development needs of countries in the Global South.

In any event, the BRICS forum is an idea whose time has come, and the world should be prepared to interact with it.

Hung Tran is a nonresident senior fellow at the Atlantic Council’s GeoEconomics Center, a former executive managing director at the Institute of International Finance and former deputy director at the International Monetary Fund.

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South African officials will likely be relieved by Putin’s decision to skip the summit. For months, they have sought to prevent a potential confrontation with the Kremlin over the issue, with South African President Cyril Ramaphosa even reportedly requesting permission from the International Criminal Court for some form of exemption in order to avoid arresting Putin during the summit. with tensions mounting ahead of the summit, South Africa Deputy President Paul Mashatile admitted in a July 14 interview that the best option would be for Putin to stay away. “The Russians are not happy, though,” he commented. “They want him to come.”

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Moscow’s earlier eagerness for Putin to attend the summit is easy to understand. Following the full-scale invasion of Ukraine in February 2022, Russia’s relationship with the Western world has reached its lowest point since the Cold War. The Kremlin has sought to counter perceptions of mounting international isolation by emphasizing continued engagement with non-Western nations such as the BRICS grouping, which brings together Brazil, Russia, India, China, and South Africa. With this in mind, Putin’s attendance of the August summit was seen as an important signal that Russia could not be isolated and remained a major force in global affairs.

With Russian prestige at stake, Kremlin officials reportedly pressed their South African counterparts hard over the issue. Indeed, in a court affidavit made public earlier this week, President Ramaphosa claimed any attempt to detain Putin could lead to war between Russia and South Africa. “I must highlight, for the sake of transparency, that South Africa has obvious problems with executing a request to arrest and surrender President Putin,” he said. “Russia has made it clear that arresting its sitting president would be a declaration of war.”

Russia’s efforts to pressure South Africa clearly failed, leading to the July 19 announcement that Putin would not be attending. This exercise in damage limitation makes perfect sense. Speculation over Putin’s possible arrest in South Africa was rapidly becoming a PR disaster for the Kremlin, drawing attention to his status as a suspected war criminal and undermining his strongman persona. Meanwhile, headlines claiming Moscow had threatened South Africa with war if the country dared to arrest Putin for war crimes did little to enhance Russia’s reputation as a credible partner. With South African officials unwilling or unable to provide the necessary assurances, the only remaining option was to cancel the visit entirely.

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This forced cancellation is the latest in a series of very public humiliations for Putin, who is struggling to maintain his authority as the full-scale invasion of Ukraine continues to unravel. The March 2023 ICC decision to charge him with war crimes dealt a powerful blow to Putin’s standing at a time when unprecedented sanctions and revelations of Russian atrocities in Ukraine had already made him a toxic figure. Weeks later, he was forced to cancel traditional Victory Day parades in cities across Russia amid rumors of shortages in both troops and tanks due to heavy losses in Ukraine.

Putin’s most humiliating moment came in late June, when units of Russia’s state-funded paramilitary Wagner Group staged a mutiny and briefly threatened to seize control of the country. The Wagner uprising ended as suddenly as it had begun, but not before mutinous troops had captured one of Russia’s largest cities without a fight and marched virtually unopposed to within 200 kilometers of Moscow. The mutiny exposed the fragility of the current regime and the lack of popular support for Putin himself; while crowds of ordinary Russians flocked to cheer Wagner rebels, nobody rallied to defend the country’s current ruler.

The Wagner episode may have played a role in this week’s decision to miss the forthcoming summit in South Africa. With Putin looking weaker than at any point in his 23-year reign, there is widespread speculation that it is only a matter of time before he faces fresh domestic challenges. Coups are often staged when dictators leave the security of their capitals and few in Moscow will have forgotten the failed KGB coup of 1991, which took place in August while Soviet leader Mikhail Gorbachev was in Crimea.

The Kremlin’s inability to find a way for Putin to attend next month’s BRICS summit in South Africa is a clear indication of Russia’s declining influence on the global stage. Ten years ago, Putin was a respected statesman and the leader of a G8 nation. Today, he must plan his international travel based on the likelihood of being arrested for war crimes. Commenting on Putin’s canceled South Africa visit, US State Department Spokesperson Matthew Miller said there was “no better illustration” of Russia’s vastly diminished standing in the world. “President Putin can hardly leave his own borders now,” he noted. “He’s an international pariah who can barely leave his own borders for fear of arrest.”

Peter Dickinson is editor of the Atlantic Council’s UkraineAlert service.

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The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.

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This month’s topline events

Putin in Peril. Russian President Vladimir Putin faced the most serious challenge to his authority since taking office, as the Wagner Group, a Russian paramilitary organization, mounted an insurrection against the Kremlin’s military leadership. With heavily armed mercenaries seizing the city of Rostov and moving within a few hundred miles of Moscow, a looming conflict was averted as Yevgeny Prigozhin, the group’s chief, agreed to stand down and go into exile in Belarus. But Prigozhin’s whereabouts remained in doubt, as Putin sought to reassert control over the Wagner Group and consolidate his grip on power.

• Shaping the order. The sudden rebellion by Prigozhin, a longtime close ally of Putin, suggests that the war in Ukraine is placing serious strains on Russia’s political leadership. Though Putin appears safe for now, the insurrection could open the door to future challenges to his rule, with the potential to shake the global order. Moscow appears to be struggling to gain control over Wagner, which has provided a crucial source of funding for Russia’s operations in Ukraine and helped the Kremlin expand its influence across the Middle East and Africa.
• Hitting home. The fall of Putin could ultimately lead to a more peaceful Russia, but political instability inside the Kremlin could also pose new risks to US security interests.
• What to do. With Putin forced to shift his focus to domestic challenges, Washington should use this opportunity to accelerate weapons support for Kyiv as Ukrainian forces push forward with their critical counteroffensive.

Blinken in Beijing. US Secretary of State Tony Blinken met with Chinese President Xi Jinping and Chinese Foreign Minister Qin Gang in Beijing, on a trip intended to “stabilize” relations between the two nations. While China refused a US request to resume military-to-military contacts, both sides appeared to view the talks as productive. But Chinese officials reacted bitterly to President Joe Biden’s subsequent reference to Xi as a “dictator,” calling the comments “extremely absurd and irresponsible.”

• Shaping the order. While it may temporarily help improve the atmospherics surrounding the US-China relationship, Blinken’s visit is unlikely to lead to a shift in the overall trajectory. Tensions will remain high in light of Beijing’s threats against Taiwan and other attempts to undermine the global order, as the US pursues efforts to shift supply chains in critical industries away from China, as part of a new “derisking” strategy.
• Hitting home. Seeking to maintain stable relations with the world’s second largest economy may be beneficial for the American people, but this will also require sustained efforts to defend against potential threats.
• What to do. The Biden administration should continue to coordinate with allies on strategies to counter Beijing’s assault on the global order, even as it tries to establish guardrails in the US-China relationship.

Modi’s State Visit. President Joe Biden hosted Indian Prime Minister Narendra Modi at the White House, as the administration sought to bolster economic and geopolitical ties with India. Amid media criticism of India’s backsliding on democracy, Modi was given a White House state dinner – only the third of Biden’s presidency – and invited to speak before a joint session of Congress. The two nations agreed to strengthen defense and technology cooperation, including building GE military jet engines in India and launching joint initiatives on semiconductors, artificial intelligence, and other areas.

• Shaping the order. Washington’s warm welcome for Modi reflects a desire to cultivate a stronger relationship with India in the context of strategic competition with China. While joint concerns over China appear to be propelling the relationship forward, it remains unclear whether the two nations can reach a more meaningful strategic partnership, especially given New Delhi’s refusal to condemn Russia’s aggression against Ukraine. In addition, Modi’s targeting of religious minorities and crackdown on political dissent have raised questions about the future of the relationship.
• Hitting home. A stronger US relationship with India could generate new business opportunities for US companies seeking to reduce supply chain dependencies on China.
• What to do. While seeking to build on the positive momentum coming out of Modi’s visit, Washington should also make clear that it sees a shared commitment to democratic norms as the foundation for closer ties between the world’s two largest democracies.

Quote of the Month

“Democracies must now rally together around not just our common interests, but also our shared values. Preserving and protecting the freedoms that are essential to peace and prosperity will require vigorous leadership…”
– US Secretary of Defense Lloyd Austin in New Delhi, India, June 5, 2023

State of the Order this month: Unchanged

Assessing the five core pillars of the democratic world order    

Democracy (↓)

• Guatemala’s ruling government sought to overturn the results of the country’s presidential elections after the results indicated that Bernardo Arévalo, a reformist candidate, gained enough votes to qualify for a run-off. The State Department warned that undermining the election results would constitute a “grave threat to democracy.”
• With the support of Pakistan’s ruling government, the country’s military began implementing a broad crackdown against the media and political opposition, in the wake of national protests following the arrest of former prime minister Imran Khan.
• As Indian Prime Minister Narendra Modi made a high-profile visit to Washington, US concerns over democratic backsliding in India appeared to take a back seat in an effort to cultivate closer relations between the two nations.
• Overall, the democracy pillar was weakened.

Security ()

• Yevgeny Prigozhin, head of the paramilitary Wagner Group, mounted an insurrection against Russia’s military leadership, but agreed to stand down after his heavily armed mercenaries came within a few hundred miles of Moscow.
• China and Cuba reached a secret agreement to allow Beijing to establish a surveillance facility on the island targeting the United States, and are in the process of negotiating a deal to establish a new joint military training facility.
• A contingent of leaders from seven African countries, including South African president Cyril Ramaphosa, met with Ukrainian President Volodymyr Zelensky and President Putin, in a bid to initiate peace talks between Russia and Ukraine, though neither side accepted the African proposal.
• In a further indication of Seoul’s tilt toward a harder line on China, South Korean President Yoon Suk Yeol directly criticized China’s ambassador in Beijing for his comments critical of South Korea’s joining US-led initiatives.
• On balance, the security pillar was unchanged.

Trade (↑)

• The US and Britain issued the Atlantic Declaration, a new economic framework aimed at enhancing cooperation on critical and emerging technology, supply chains, clean energy, and other issues, as a potential counterpart to the US-EU Trade and Technology Council.
• The US and thirteen other members of the Indo-Pacific Economic Framework reached an agreement on supply chains – one of the framework’s four core pillars – that will result in several new bodies focused on advancing supply chain resiliency.
• On balance, the trade pillar was strengthened.

Commons (↑)

• The United Nations adopted the world’s first treaty aimed at protecting the high seas and preserving marine biodiversity in international waters, which constitute over two-thirds of the ocean.
• The US announced plans to rejoin the United Nations Educational, Scientific, and Cultural Organization (UNESCO), in an effort to counter China’s growing sway in multilateral fora. After the Trump administration withdrew the US from the organization in 2017, China became one of its largest donors.
• On balance, the global commons pillar was unchanged.

Alliances ()

• French President Emmanuel Macron expressed opposition to a proposal by NATO Secretary General Jens Stoltenberg to open a NATO liaison office in Japan, suggesting that the alliance should stay focused in the North Atlantic region.
• On his first trip to the White House since taking office, British prime minister Rishi Sunak met with Joe Biden, as the two leaders committed to closer cooperation on a range of political and economic issues.
• US-India relations appeared to enter a new chapter as Prime Minister Narendra Modi joined President Joe Biden for an official state visit in Washington.
• On balance, the alliance pillar was unchanged. 

Strengthened (↑)________Unchanged ()________Weakened (↓)

What is the democratic world order? Also known as the liberal order, the rules-based order, or simply the free world, the democratic world order encompasses the rules, norms, alliances, and institutions created and supported by leading democracies over the past seven decades to foster security, democracy, prosperity, and a healthy planet.

This month’s top reads

Three must-read commentaries on the democratic order     

• Lucan Ahmad Way, in Foreign Affairs, contends that revolutionary autocracies have demonstrated remarkable staying power, even in the face of mounting challenges.
• Hal Brands, in Foreign Policy, suggests that Russia, China, Iran, and to some extent North Korea constitute a bloc of adversaries more cohesive and dangerous than anything the United States has faced in decades.
• Sumit Ganguly and Dinsha Mistree, in Foreign Affairs, argue that in the face of Chinese aggression, a policy of continued non-alignment will not serve India well.

Action and analysis by the Atlantic Council

Our experts weigh in on this month’s events

• Fred Kempe, in Inflection Points, contends that Ukraine deserves NATO membership, as well as more robust weapons support.
• John Herbst and Dan Fried, in the Washington Post, suggest that the key to a Ukrainian victory in its war against Russia may lie in a successful advance to retake Crimea.
• Patrick Quirk and Caitlin Dearing Scott, writing for the Atlantic Council, argue for a fully developed foreign aid strategy to help the US succeed in strategic competition with China and Russia.
• Peter Engelke and Emily Weinstein, writing for the Atlantic Council Strategy Paper series, set forth a comprehensive strategy for the US and its allies to retain its technological advantage over China.

__________________________________________________

The Democratic Order Initiative is an Atlantic Council initiative aimed at reenergizing American global leadership and strengthening cooperation among the world’s democracies in support of a rules-based democratic order. Sign on to the Council’s Declaration of Principles for Freedom, Prosperity, and Peace by clicking here.

Ash Jain – Director for Democratic Order
Dan Fried – Distinguished Fellow
Soda Lo – Project Assistant

If you would like to be added to our email list for future publications and events, or to learn more about the Democratic Order Initiative, please email AJain@atlanticcouncil.org.

The post State of the Order: Assessing June 2023 appeared first on Atlantic Council.

The initiative is rare enough to draw some sarcasm about African presidents who are seeking to stop a European war when they can’t stop wars closer to home. For those critics—who overlook the work done in an effort to end the conflict in Ethiopia last year—it is hard to remember the last time such a delegation of African presidents assembled together to respond to a war on African soil. They point to cases in Khartoum, Sudan, and Goma, the Democratic Republic of the Congo, where any conflict-resolution efforts were ineffectual.

Other observers see this new delegation of African leaders as an attempt by South Africa to distract people from troubles at home. The announcement of the delegation came just days after US Ambassador to South Africa Reuben Brigety’s allegation that a Russian cargo ship stocked up on ammunition and arms at a port in Cape Town in December 2022.

The recent (albeit cautious) support from United Nations Secretary-General António Guterres, Washington, and European capitals—along with the varied geopolitical positions of these African countries—lent enough credit to the initiative to give it a chance. In the United Nations General Assembly’s recent vote to condemn Russia over its invasion of Ukraine—held on February 23 this year, around the one-year mark of the full-scale invasion—thirty African countries voted to condemn Russia, twenty-two countries abstained, and two supported Russia. These African leaders, representing both countries who voted to condemn Russia and countries who abstained, form the optimal group to propose a peace plan, as several of them see this as an opportunity to justify their varied positions—including neutrality—and find a diplomatic end to the war.

What does this peace plan say? Frankly, not much—at the moment. South African President Cyril Ramaphosa spoke of vague preparations and of having separate phone calls, but avoided critical details. Russian Foreign Minister Sergei Lavrov said he was looking forward to seeing the delegation’s “concrete initiatives.”

What African leaders are weighing

Russia’s links to the African continent date back to the Cold War and a desire to support communist regimes (in places such as Guinea, Congo, and Ethiopia) and social-democratic or socialist political movements (in places such as South Africa, Angola, Mozambique, and Zimbabwe). The Soviet Union deployed forty thousand advisers across Africa between 1970 and 1975, and, over the course of the Cold War, received about sixty thousand African students—notably at the Patrice Lumumba Peoples’ Friendship University of Russia, which drew students from developing countries across the world. Some major African infrastructure projects are products of partnerships with the Soviet Union, Russia, or Russian companies. Those include the Aswan Dam in Egypt, the Capanda hydroelectric dam, and power plants planned in Congo and Nigeria. These are all countries that Putin hopes to rely on in order to find the support he lacks in the Global North.

Yet, while the USSR and, later, Russia have supported Africa in these ways, Africans are unlikely to blindly align themselves with Russia. It is impossible to ignore that previous support was more inspired by a desire to compete against the United States than by a love for freedom or Africa. Today, outside observers and African publics alike cannot ignore the humanitarian cost posed by Russia’s Wagner Group militias in the Sahel, Libya, the Central African Republic, or Mozambique. It is also difficult to see African youth seduced by the Russian way of life rather than the American dream, the latter of which has been able to increase its appeal to African youth via Netflix and Silicon Valley.

In fact, even if the West can’t see what Russians could seriously offer to Africans now, it has not been very difficult for Russia to fuel the very real African resentment towards the West. For Russia and the West, Africa is a coveted asset—one that holds 28 percent of the votes at the United Nations. In the post-Cold War period, Ukraine had neither the resources nor the geopolitical interest to engage in Africa like Russia did. That gave Russian views justifying aggression a hearing in Africa that it otherwise would not have received.

The complicated relations between African countries and also between African countries and global competitors such as Russia, the United States, and others leaves African policymakers in a bind. Those policymakers must carefully balance their economic interests and historical ties.

Further complicating the choice for African policymakers is the overwhelming US and Western support for Ukraine, in contrast to the lack of support and attention for African countries facing conflict. African countries, out of national interest, are looking to diversify their partnerships; they will need to balance their specific needs and local contexts in this geopolitical chaos.

A change in the narrative

The delegation of African presidents aiming to bring an end to Russia’s war in Ukraine offers a unique opportunity for these leaders to be a part of the solution to a global problem and no longer rest on the sidelines of geopolitics as collateral victims.

Russia’s full-scale invasion of Ukraine caused a considerable increase in the price of grains, worsening food security particularly in the Horn of Africa; at the same time,it has also allowed Africa to step up as an alternative producer of some critical goods. For example in the energy sector, as Europe diversified away from Russian energy supplies, Africa helped fill the void, with Algeria now among the top four exporters of gas to Europe and with Egypt also bolstering its gas-export capacity, according to its Ministry of Petroleum and Mineral Resources. Recent hydrocarbon discoveries in Senegal and Mozambique are set to come online in the years ahead. These significant actions show that Africa is playing a leadership role and refusing to sit on the sidelines as a victim of geopolitical fallout.  

Africa has the peace and conflict-resolution experience to put forward in ending Eastern Europe’s geopolitical crisis. Even if African efforts have not always been successful, these efforts are valuable; the leaders behind them still have crucial experience in conflict management. Some might argue that the existence of countless conflict resolution tools, demobilization programs, peace-building mechanisms, and strategic frameworks such as the Peace and Security Council of the African Union indicate that African leaders fail to settle the conflicts and wars happening in their own countries; but in reality, the existence of these initiatives shows that African leaders have created dialogue where there were voids, demobilized fighters so they could return home, and, in some cases, helped societies address the horrors of war and build a lasting peace. Several of the leaders in the African peace delegation have participated in responding to violent conflict or have worked to end conflict. That experience may be usefully applied to Russia’s war on Ukraine.

By bringing the unique peace initiative together, African presidents are attempting to advance their leadership on the global stage. This is an incredible challenge for a continent that has often been applauded for its potential, but which must now deliver.

Rama Yade is the senior director of the Atlantic Council’s Africa Center and a senior fellow at the Europe Center. She is a professor at Sciences Po Paris and Mohammed 6 Polytechnic University in Morocco. She was a member of the French cabinet, serving as deputy minister for foreign affairs and human rights and ambassador to UNESCO.

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The post Give Africa’s peace delegation for Ukraine a chance appeared first on Atlantic Council.

This month’s topline events

G7 Unites on China. At a G7 summit meeting in Hiroshima, Japan, President Joe Biden and other democratic leaders came together on China, pledging to “derisk” without “decoupling” from China’s economy and agreeing on a coordinating mechanism to counter economic coercion and an initiative to diversify supply chains. The G7 also called out Beijing’s militancy in the Indo-Pacific and political interference in democracies, while making clear it was prepared to “build constructive and stable relations” with China. With European allies eager to calm tensions, Biden also indicated he expected a thaw in relations with Beijing, as US officials began a new round of bilateral meetings with their Chinese counterparts.

• Shaping the order. The summit’s success in projecting a common front on China could set the table for meaningful policy coordination between the US and its allies, particularly on economic issues. The prospects of a more unified approach appear to have garnered concern in Beijing, which summoned Japan’s ambassador to rebuke the G7’s effort to “smear and attack China.” But as highlighted by French President Emmanuel Macron’s recent visit to Beijing, the US and its allies still have a ways to go to coordinate efforts on engaging with the world’s second largest economy.
• Hitting home. America’s economy will be more secure over time if the US and its allies are able to reduce dependence on Chinese products in critical industries and limit Beijing’s ability to engage in economic coercion.
• What to do. Building on the momentum generated by the summit, the Biden administration should seek to formulate a common allied strategy for how to deal with China over the longer term.

Ukraine Gets F-16’s. With Ukrainian president Volodymyr Zelensky traveling to Japan to join the G7 leaders summit, President Biden indicated that the US had agreed to allow allies to deliver US-built F-16 fighter planes to Ukraine and will participate in a joint effort to train Ukrainian pilots. The move comes as Russian forces appeared to take full control of Bakhmut, ending a monthslong battle for the eastern city and constituting Russia’s first battlefield victory in nearly a year. But the success may be fleeting, as Ukraine prepared for the launch of a major counteroffensive operation.

• Shaping the order. Biden’s decision on F-16’s marks another major shift on weapons support that could substantially bolster the ability of Ukrainian forces to push back Russian forces, though it will be several months before Ukrainian pilots will be able to use the planes in combat. More broadly, Zelensky’s appearance at the G7 summit served as a further demonstration of democratic solidarity and an indicator for how significantly relations with Russia – once a member of the G7 (then the G8) – have deteriorated.
• Hitting home. Americans will be safer if Ukraine succeeds in standing up to Russia’s aggression and flagrant assault on its democratic neighbor.
• What to do. The Biden administration should work with allies to expedite the training of Ukrainian pilots and facilitate the delivery of the F-16’s, while also reconsidering its position on providing ATACMS, the longer range missile system that could also bolster Ukraine’s ability to succeed.

Arab League Welcomes Assad.  After years of diplomatic isolation following his use of chemical weapons and commission of widescale atrocities against civilians to crush a popular uprising, Syrian President Bashar al-Assad was warmly received by Saudi crown prince Mohammed bin Sultan and other Arab leaders at an Arab League Summit in Jeddah. The move comes as Assad continues to consolidate his grip on power, while Saudi Arabia and other Gulf states enter a rapprochement with Iran.

• Shaping the order. The Arab League’s normalization of relations with Assad – a murderous dictator responsible for the deaths of thousands of innocent civilians – is a demoralizing setback for efforts to advance a rules-based, democratic order. Assad’s resurrection appears to be part of a global trend of welcoming authoritarian leaders back from the cold, as Venezuelan dictator Nicolas Maduro was invited by Brazil to participate in a South American leaders summit, sending the message to autocrats that violent repression ultimately pays dividends.
• Hitting home. The rehabilitation of autocrats like Assad undermines American values and US interests in a stable and prosperous world order.
• What to do. The US and its democratic allies should stand together in opposing Assad’s reintegration into the international community, and maintain sanctions and other efforts to ensure that Assad is ultimately held accountable for his actions.

Quote of the Month

“Russia’s aggression against Ukraine… has shaken the international order… [Japan] has a mission to uphold the free and open international order based on the rule of law, and to demonstrate to the world its determination to fully defend peace and prosperity.”
– Japanese Prime Minister Kishida, speaking at the G7 Summit in Hiroshima, May 21, 2023

State of the Order this month: Unchanged

Assessing the five core pillars of the democratic world order    

Democracy (↓)

• Syrian President Bashar al-Assad was given a warm welcome at an Arab League Summit in Jeddah, after years of diplomatic isolation following his use of chemical weapons and commission of widescale atrocities against civilians.
• After facing his biggest election challenge in over two decades, Turkish president Recep Tayyip Erdogan won re-election amidst a campaign process marred by pro-government media bias, limits on free speech, and other obstacles on the opposition.
• Venezuela’s authoritarian leader Nicolas Maduro was invited to participate in a summit of South American leaders in Brazil, as Brazilin president Lula de Silva joined Maduro in criticizing US sanctions against Venezuela.
• Overall, the democracy pillar was weakened.

Security ()

• President Biden agreed to allow NATO allies to deliver US-built F-16 fighter planes to Ukraine, while pledging US participation in a joint effort to train Ukrainian pilots.
• The US signed a new defense cooperation agreement with Papua New Guinea – the largest island nation in the Pacific – that will deepen security ties between the two nations, as Washington seeks to counter China’s rising influence in the region.
• In a show of solidarity, Chinese President Xi Jinping told visiting Russian Prime Minister Mikhail Mishustin that Beijing will maintain “firm support” for Moscow’s “core interest.”
• The US accused South Africa of secretly supplying arms to Russia, despite the country’s professed neutrality on the war in Ukraine – a claim South African leaders initially denied and then promised to investigate.
• Russia and Belarus signed an agreement formalizing the deployment of Russian tactical nuclear weapons in Belarus, a move that appears intended as a warning to the West as it steps up support for Ukraine.
• On balance, the security pillar was unchanged.

Trade (↑)

• The US and its G7 partners agreed to establish a new coordinating mechanism to counter economic coercion and launch a new initiative to diversify supply chains away from China, while pledging to “derisk” without “decoupling” from China’s economy.
• The US and Taiwan reached a trade and investment agreement in an effort to liberalize and deepen economic ties between the two nations.
• China signed a free trade agreement with Ecuador, as Beijing looks to deepen its economic ties and influence in Latin America.
• G7 leaders agreed to new economic sanctions against Russia for its war in Ukraine, and the US announced a slate of new measures to restrict Russian trade. The UK followed suit, announcing a ban on Russian diamonds.
• On balance, the trade pillar was strengthened.

Commons ()

• G7 Leaders released a Clean Energy Action Plan, providing commitments across seven specific areas, including promoting clean energy technologies, with goal of reaching net-zero emissions by 2050 and limiting global temperature rise to 1.5 degrees Celsius.
• A joint report by the United Nations’ Food and Agriculture Organization and World Food Programme contends that, unless immediate action is taken, acute food insecurity will likely be exacerbated over the next six months.
• The World Health Organization declared an end to the COVID-19 global health emergency, marking an end to one of the most deadly and devastating pandemics in modern history.
• On balance, the global commons pillar was unchanged.

Alliances (↑)

• Meeting in Hiroshima, President Biden and his G7 counterparts reaffirmed their solidarity to support Ukraine “for as long as it takes,” as Ukrainian President Volodymyr Zelensky joined the summit in-person. G7 leaders also came together on China, pledging to counter economic coercion and voicing opposition to Beijing’s militarization of the Indo-Pacific.
• President Biden joined leaders of the Indo-Pacific Quad – US, Australia, India, and Japan – for a summit in Hiroshima, resulting in a joint pledge to cooperate toward a region where “where all countries are free from coercion” – an indirect reference to China.
• US Secretary of State Tony Blinken traveled to Oslo for a NATO foreign ministers meeting to discuss potential security guarantees for Ukraine, including the possibility of NATO membership, though allies remain divided on the issue.
• Overall, the alliance pillar was strengthened. 

Strengthened (↑)________Unchanged ()________Weakened (↓)

What is the democratic world order? Also known as the liberal order, the rules-based order, or simply the free world, the democratic world order encompasses the rules, norms, alliances, and institutions created and supported by leading democracies over the past seven decades to foster security, democracy, prosperity, and a healthy planet.

This month’s top reads

Three must-read commentaries on the democratic order     

• Liza Tobin, in Foreign Policy, argues that US policy toward China should be reoriented to achieve what should be American’s long-term goal of a democratic China.
• Emile Hokeinam, in Foreign Affairs, suggests that Syrian president Assad has turned a weak hand into a winning one, and that the Arab embrace of Assad will only encourage more brutality.
• Soner Cagaptay, in Foreign Affairs, opines that President Erdogan’s victory in the Turkish elections could solidify Turkey’s shift from an illiberal democracy to a Putin-style autocracy.

Action and analysis by the Atlantic Council

Our experts weigh in on this month’s events

• Fred Kempe, in Inflection Points, contends that the drama of US debt ceiling negotiations underscores the enduring promise of America’s global leadership and the growing perils of its decline.
• Dan Fried and Aaron Korewa, in the New Atlanticist, explore the potential for Poland to serve as a leader in Europe amidst the ongoing political turmoil.
• Ash Jain was quoted in Foreign Policy on US efforts to win over countries in dealing with China, by not talking about China.
• Joslyn Brodfueher and Zelma Sergejeva, writing for the Atlantic Council, highlight the potential to fortify NATO’s unified front against Russian aggression as the alliance prepares for its upcoming summit in Vilnius.
• Matthew Kroenig, in Foreign Policy, suggests that even Machiavelli preferred democracy over tyranny, because democracies have stronger political institutions that provide the source for greater national power and influence.

__________________________________________________

The Democratic Order Initiative is an Atlantic Council initiative aimed at reenergizing American global leadership and strengthening cooperation among the world’s democracies in support of a rules-based democratic order. Sign on to the Council’s Declaration of Principles for Freedom, Prosperity, and Peace by clicking here.

Ash Jain – Director for Democratic Order
Dan Fried – Distinguished Fellow
Soda Lo – Project Assistant

If you would like to be added to our email list for future publications and events, or to learn more about the Democratic Order Initiative, please email AJain@atlanticcouncil.org.

The post State of the Order: Assessing May 2023 appeared first on Atlantic Council.

1. Why are Russia and China teaming up with South Africa?

Teaming up may be a misleading term, as South Africa has longstanding ties with both Russia and China. South Africa’s ruling party, the African National Congress (ANC), received significant Soviet support during the anti-apartheid struggle, including both military and financial backing. South Africa became a member of the BRICS consortium of economies in 2014—which also includes Brazil, Russia, India, and China—and has had strong economic engagement with China since the early 2000s. Also, Russia, China, and South Africa have previously conducted bilateral and other multilateral joint training exercises. So defense cooperation among these nations is neither unprecedented nor wholly unanticipated.

In addition to the practical and diplomatic advantages of shared drills with South Africa, its location aligns strategically with Russian and Chinese efforts to project naval power in African waters. Russia has increased its activities in the Indian Ocean in recent years, for example with efforts to secure port access for its navy in Mozambique. China similarly wants to increase its ability to deploy the People’s Liberation Army Navy worldwide, including in the Indian and Atlantic oceans. To support its navy’s push, China must ensure logistics provision and access in ports or basing in countries along these coasts, such as in Kenya, the Seychelles, Tanzania, or Angola. Straddling both these coasts, of course, is South Africa.

—Sarah Daly is a nonresident fellow at the Africa Center.

As with the previous exercise between South Africa, Russia, and the People’s Republic of China in 2019, these trilateral naval exercises are likely to prove to be of limited warfighting value, but are incredibly valuable to the diplomatic interests of each country. As has been true throughout history, a navy that is capable of sustained global operations is a unique element of national strength that contributes heavily to advancing diplomatic efforts. This exercise in naval diplomacy enables South Africa to demonstrate its independent foreign policy, Russia to highlight its continued relations with nations of the Global South, and China to demonstrate the increasing global reach of its navy.  

The United States and like-minded allies and partners also understand the value of naval diplomacy. The US Navy has the USS Hershel “Woody” Williams, an expeditionary sea base (ESB) that is permanently forward deployed to the region with one of its primary missions being to support ongoing diplomatic efforts and engage with countries in Africa. This ESB makes frequent visits to countries throughout the continent for engagement opportunities and most recently visited South Africa in August 2022.  

—LCDR Marek Jestrab is the 2022-2023 senior US Navy fellow at the Atlantic Council’s Scowcroft Center for Strategy and Security. These views do not represent the US Navy or the Department of Defense.

South Africa is a regional hegemon in southern Africa and economically, diplomatically, and militarily among the giants of the African continent, making it an obvious focus for attention. It also has historically warm relations with China dating back to the struggle against apartheid. Finally, South Africa has an ambivalent relationship with the United States and the rest of the Western “international community.” The move is popular with many South Africans, especially those who align with the ruling ANC. 

—Michael Shurkin is a nonresident senior fellow at the Africa Center.

2. What is South Africa’s political motivation in aligning with these two militaries?

South Africa has repeatedly emphasized its neutrality vis-à-vis Russia’s invasion of Ukraine. South African President Cyril Ramaphosa has pushed for negotiations in official calls with Russian President Vladimir Putin and asserted that he would be willing to mediate a peaceful resolution to the conflict. That said, South Africa is stretching the limits of neutrality. Hosting high-level bilateral meetings, describing relations as “friendly,” and participating in “routine” joint military drills indicate support for, rather than cordiality toward, Russia. South Africa’s friendly and routine relations are antithetical to the West’s aims to isolate, deter, and defeat Russia. In an increasingly polarized diplomatic environment, non-alignment can appear to be de-facto alignment with Russia.   

South Africa’s particular approach to non-alignment in this case contributes to the tension. While South Africa has officially acknowledged the illegality of the invasion, it has resisted pressure to enforce sanctions or cut ties. Its actions increasingly belie its stated desire to remain neutral and independent from ‘great power’ struggles, and some segments of the South African public are questioning the government’s stance.

From a military readiness standpoint, the exercise included joint tactical maneuvers as well as rescue and recovery drills; the latter align with threat risks presented by piracy and illicit activities in the Indian Ocean. These shared drills represent a legitimate training opportunity for the South African Defense Force (SADF). South Africa is not the primary partner or recipient of US naval training exercises in Africa, although SADF participated in Shared Accord last summer and other military-to-military assistance focusing on developing and improving medical capabilities. South Africa has previously participated in US Africa Command’s Indian Ocean drills, which focus on East African nations, although not in the past few years. Other US naval exercises in Africa focus on the Gulf of Guinea and the Mediterranean.

—Sarah Daly

3. What new lessons did we learn from this exercise regarding Russian and Chinese capabilities?

Russia brought a hypersonic missile, apparently for display purposes. This show and tell indicates Russia’s desire to demonstrate its technical strength to the world and prove that it can maintain external commitments despite the strain of its war in Ukraine on its armed forces, economy, and political stability. 

—Sarah Daly

China’s focus on the maritime domain, through a sustained investment in shipbuilding, is a key element of its strategic objective to disrupt the international order and challenge the United States. The exponential growth of China’s maritime forces has already resulted in it being the world’s largest navy with approximately 340 battle force ships, compared to 294 in the US Navy’s current inventory. This trilateral exercise, conducted thousands of miles from its shoreline, is further evidence of its strategic plan to become a global navy. As China’s sustained investment in shipbuilding results in expected growth to 400 warships by 2025 and 440 warships by 2030, policymakers must be aware of China’s intent to use its maritime force for worldwide power projection and expanded naval diplomacy.

—Marek Jestrab

4. What message does it send to have these drills coincide with the one-year anniversary of the war in Ukraine, and with reports of increased Chinese support of Russia in the war?

At the very least, it signals that South Africa is not concerned with Ukraine and not interested in towing the Western line. South Africa would prefer to highlight its independence and its willingness to conduct its international relations as it sees fit. 

—Michael Shurkin

Russia’s recent diplomatic and military push in South Africa signals that it can continue its foreign relations as a bilateral security partner despite the ongoing crisis in Ukraine. Conducting drills with Russia and China at such a contentious time seemingly suggests that South Africa condones Russia’s actions in Ukraine—even if its stated stance is one of non-alignment. South Africa’s asserted neutral position is shared by fellow BRICS member India, which has also faced scrutiny for maintaining diplomatic, economic, and military relations with Russia following the invasion of Ukraine. India has continued to purchase Russian oil and participated in Russia’s Vostok 2022 military exercises with China in August. We should be circumspect about assigning greater meaning to the timing or “message” of these drills.

—Sarah Daly

The post What we learned from the Russia-China-South Africa military drills appeared first on Atlantic Council.

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South Africa is the thirteenth largest greenhouse gas emitter in the world, relying on coal for 70 percent of its total energy supply. Eskom, South Africa’s debt-ridden public utility, drives this coal consumption due to its vertical monopoly over the nation’s energy system, favoring its coal-fired power plants over private renewable generation. This top-down system drastically reduces the potential profitability of independent clean energy investments and, compounded with Eskom’s inability to fund clean energy projects, hinders South Africa from achieving its emissions reduction targets.

Enter the JETP. The JETP is an agreement between the governments of South Africa, the United States, United Kingdom, France, Germany, and the European Union to accelerate the decommissioning of South Africa’s coal-fired power plants. In October 2021, in anticipation of the funding commitment, the South African government revised its Nationally Determined Contribution (NDC) to encompass more ambitious climate goals, including lowering its 2030 target emissions range by 32 percent. These revisions paved the way for the official JETP deal during COP26 in November 2021.

At face value, the JETP may appear insufficient to transition South Africa’s energy sector away from coal. Despite the partnership’s $8.5-billion offering, Eskom has estimated that it will require $27 billion to kickstart the shift away from coal-fired generation in coming years. Another analysis from Stellenbosch University predicted that South Africa will need at least $250 billion over the next three decades to expand clean energy infrastructure in line with United Nations Sustainable Development Goals. As such, to understand the significance of the JETP, one must not look at its size, but rather its substance.

As part of the JETP agreement, the South African government and the International Partners Group (IPG) have agreed to develop an investment plan to identify key decarbonization projects. These projects would be funded by an international financing package, likely composed of both concessional and non-concessional loans. But while this investment plan will dictate the allocation of JETP funds, its hidden value lies in the corresponding reforms South Africa must implement to maximize the package’s impact. These reforms, some of which are stated in South Africa six-month update on the JETP, have the potential to elevate the partnership from a one-time injection of infrastructure funding to a sustainable pipeline for private sector investment.

One example of an already successful reform is the liberalization of South Africa’s electricity generation market. In August 2021, President Cyril Ramaphosa announced that the threshold under which companies can produce their own electricity without a license would be increased from 1 megawatt (MW) to 100 MW. This change, which drastically reduced the obstacles to private clean energy investment, has spurred the development of approximately 4.5 gigawatts (GW) of projects since its adoption, including two 100-MW solar PV projects.

Another reform is a proposal to establish a South African independent system operator. As detailed in parliamentary legislation revealed in February, this plan aims to create a competitive market for electricity generation by transitioning from a single-buyer electricity market to a multi-market structure. While the legislative text has yet to be finalized, if successful, this plan would break up Eskom’s vertical monopoly on the electricity market, thereby ensuring the fair treatment of electricity generators and increasing investor confidence in South Africa’s clean energy sector.

Notably, these JETP reforms would be buttressed by supplementary policies, such as the introduction of a regulated green finance taxonomy, which would provide guidance to investors regarding environmentally sustainable assets and investments. Another policy, the strengthening of a progressive carbon tax, would put added pressure on energy producers to switch to lower-emitting generation sources. Altogether, the intended result would be the creation of a nationwide sustainable finance ecosystem that acts as a force multiplier for JETP funds while attracting investment from private and philanthropic financiers. In this way, the JETP amplifies public sector spending.

Interestingly, while the JETP investment plan will identify key decarbonization projects, it will likely entail differing roles for public and private sector funding. As evidenced by the liberalization of South Africa’s electricity licensing, there is sizable private sector interest in developing certain segments of South Africa’s energy sector, such as renewable power generation. However, there is little private sector interest in other projects that are less profitable, such as transmission and distribution. JETP funds will thus likely be used to finance projects that support South Africa’s overall energy transition but would not otherwise receive private funding.

Furthermore, the JETP financing package also presents an opportunity for multilateral development banks (MDBs) and development finance institutions (DFIs) to experiment with novel financial mechanisms. Reacting to pressure to take action against climate change, global policymakers, such as US Treasury Secretary Janet Yellen, have urged MDBs and DFIs to take greater risk in their clean energy investments in emerging economies. Through financial mechanisms such as layered debt structures, these organizations can de-risk clean energy investments and, hopefully, attract developers for necessary transition projects. Nonetheless, MDBs and DFIs are not responsible for changing domestic policies, and these investments are insignificant without corresponding energy sector regulatory reforms.

Of course, the JETP is not without criticism. Despite being a core element of the JETP, the just transition elements of the agreement remain to be described in any significant detail. While the South African government has stated its intent to gain buy-in from all affected parties, it may prove exceedingly difficult to provide economic relief to the nearly 120,000 workers employed in coal mines and aging power plants. Other complaints have centered on the JETP’s lack of transparency and lengthy development period; before South Africa’s released its six-month update in June, there had been essentially no public communication regarding the JETP’s progress. Hopefully, the public will soon see increased communication from JETP leaders as the South African government and IPG release their draft investment plan in the coming weeks.

Policymakers are working to determine if the JETP can shape and influence similar partnerships with other carbon-intensive economies. However, the answer is complicated, as it depends on individual national circumstances. Indonesia, for example, runs a state-run energy monopoly that subsidizes coal-fired power plants and grants the coal industry vast control over mining permits. Indeed, until recently, Indonesia’s energy policy made it difficult for any new renewable energy projects to earn a positive return on investment. India, meanwhile, has a private sector that responds to clean energy initiatives but struggles to keep up with rapid economic growth. Notably, just transition partnerships are also country-driven and rely on individualized consultations between host-nation leaders and partner governments. For these reasons, it is impossible to totally “copy-and-paste” JETP agreements from country to country.

Moving forward, the JETP is slated to enter a critical development period as the partners aim to finalize the investment plan ahead of COP27 in November. This plan will illustrate crucial details about the nature of infrastructure projects and related financing structures. Nonetheless, these measures—and the success of the JETP—are contingent on domestic energy sector reforms that maximize the effect of public spending and induce the flow of private capital.

Christopher Cassidy is a project assistant at the Atlantic Council Global Energy Center.

This work was conducted in cooperation with the Global Energy Transition Politics and Policy Research Group at the Institute for Advanced Sustainability Studies.

EnergySource

EnergySource is the Global Energy Center’s (GEC) online publication providing commentary and analysis on developments in the energy and climate sector from a wide-array of thought leaders, politicians, and experts.

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The post The Just Energy Transition Partnership with South Africa will hinge on domestic reform appeared first on Atlantic Council.

Russia’s imports decreased by 9.7% from February to March 2022, including losses from many of Russia’s top trade partners and politically neutral countries. Shipping container traffic to Russia decreased by 50% in March in St. Petersburg, Vladivostok, and Novorossiysk, Russia’s most highly-trafficked ports. This decrease in exports to Russia is a predictable symptom of war, but there are more factors in play. Initially, impediments to trade began in February and March as the ruble rapidly devalued, causing Russian buyers to become reluctant or unable to complete payments. Suppliers struggled to execute transactions following Russia’s cutoff from the SWIFT system, and international shipping ceased to service goods to Russia. Now, Russia’s maritime sector broadly faces issues with ship certification and insurance coverage. Some companies have inadvertently abandoned or scaled back business with Russia due to disrupted trade routes and a lack of input materials. The Russian economy as a whole has contracted since the invasion, impeding its purchasing and import abilities. 

Some exporters, like Pakistan, Brazil, and Jordan, have not experienced the same drops in trade with Russia as countries like Vietnam or India. The answer to this discrepancy lies in the exports themselves: Brazil’s exports to Russia are driven primarily by soybeans, cow meat, and ground nuts. Another supposed “fence-sitter,” Pakistan, is in a similar situation, with citrus as its top export to Russia. Agricultural products aren’t subject to sanctions, so these exports to Russia may continue unmarred. On the other hand, the majority of India, Vietnam, and China’s exports to Russia are technological products, which are more likely to be caught in the crossfire of Western sanctions. Companies face a choice: comply with sanctions and lose business with Russia, or risk losing business with the US. 

India’s trading relationship with the US is 12 times the size of its relationship with Russia, meaning that it’s in companies’ best interests to prioritize trade with the US. As a result, Indian companies such as Tata Steel have withdrawn or paused business with Russia. Meanwhile, the State Bank of India, the country’s largest lender, has blocked transactions with any entities on EU, US, or UN sanctions lists, irrespective of currency, out of fear that such transactions could lead to sanctions on the bank. Even China, Russia’s supposed economic lifeline, shaved off 30% from its exports to Russia in the past two months, before the worst of its lockdowns hit. The Chinese government, though pushing back against the West politically, has issued subtle warnings to Chinese companies to proceed with caution rather than violate sanctions and get caught in the crossfire between Russia and the West. Chinese banks have suspended business with Russia, and some tech companies including Lenovo Group Ltd. and Xiaomi Corp, SZ DJI Technology Co. have quietly scaled back or paused operations. So while foreign ministers offer even-handed statements, finance ministers are quietly signaling that Russia may become an increasingly risky place to invest.

One risk beyond sanctions involves reputational hazards. Chinese auto company Geely, for example, suspended its operations in Russia in March in order to evaluate potential reputational hazards to the brand. These reputational risks are legitimate, exemplified by Ukrainian vice prime minister Mykhailo Fedorov publicly calling on Chinese company DJI to halt its business in Russia.

Although countries and businesses face a range of reasons to halt business with Russia, the throughline is the West’s economic weight, which, through sanctions, has made transacting with Russia too risky and unwieldy. However, it’s possible that as time goes on, firms may find ways to circumvent the restrictions sanctions impose. Following the SWIFT cut-off, Indian firms were initially unable to purchase oil from Russia, but have since begun using spot deals to buy it at a discount. If that is any indication, workarounds may be possible, and there is a high incentive for their pursuit. But as sanctions lists continue to expand and come into effect, the risks of noncompliance will symmetrically increase. Despite the political statements of many “neutral” countries, the West’s desired outcome to punish Russia economically seems to be achieving global buy-in.

Josh Lipsky is the director of the GeoEconomics Center.
Sophia Busch is a Program Assistant with the GeoEconomics Center.

At the intersection of economics, finance, and foreign policy, the GeoEconomics Center is a translation hub with the goal of helping shape a better global economic future.

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The post Where do the “fence-sitters” sit on trade with Russia? appeared first on Atlantic Council.

This is the third in a five-part series of Atlantic Council publications calling for the United States and its allies to revitalize the rules-based international system and establish new institutions to strengthen cooperation among democracies to succeed in an era of strategic competition.

The first, Present at the Re-Creation: A Global Strategy for Revitalizing, Adapting, and Defending a Rules-Based International System, sets forth an overarching global strategy for the United States and its allies that focuses on the need to strengthen cooperation among democracies, while simultaneously seeking to engage other global powers in areas of common interest.

The second, From the G7 to a D-10: Strengthening Democratic Cooperation for Today’s Challenges, proposes the creation of a new D-10 as a core group of leading democracies to develop joint strategies for addressing today’s most pressing global challenges.

This report makes the case for an Alliance of Democracies and draws on relevant sections from these two publications.

Atlantic Council Strategy Paper Series Oct 30, 2019

Present at the re-creation: A global strategy for revitalizing, adapting, and defending a rules-based international system

By Ash Jain, Matthew Kroenig

We need a new strategy—one that is both ambitious and innovative, geared towards meeting the challenges and opportunities that the new decade brings.

China NATO

Report Jun 8, 2021

From the G7 to a D-10: Strengthening democratic cooperation for today’s challenges

By Ash Jain, Matthew Kroenig

With the rules-based democratic order under threat, leading democracies need to develop common strategic approaches that pool their collective influence to confront today’s challenges.

Australia Economy & Business

Executive summary

On December 9–10, President Joe Biden will host a Summit for Democracy, a virtual event to which the leaders of more than one hundred democracies worldwide have been invited. The summit is aimed at setting forth an affirmative agenda for “democratic renewal” and tackling “the greatest threats faced by democracies today through collective action.”¹ This will kick off what the administration is calling a “year of action,” which will culminate in a second summit, this time in person, approximately one year later.

The summit convenes at a time when democracy is facing unprecedented challenges. Autocratic powers, particularly China and Russia, have become more assertive in challenging key tenets of the global system, each in their own ways but increasingly aligned, as they engage in coercive tactics to expand their influence.² Meanwhile, democracies are on the defensive as they seek to contend with these global threats. Many nations, including the United States, face deeply polarized electorates and increasing distrust in institutions among their own citizens. As Biden has highlighted, the world is in the midst of a fundamental debate—an inflection point—between “those who argue that autocracy is the best way forward” and “those who understand that democracy is essential to meeting [today’s] challenges.”³

To succeed in this new era, the United States and its democratic allies and partners must strengthen cooperation. Working together, leading democracies retain a preponderance of power over China and other revisionist autocracies that would allow them to decisively shape global outcomes. But they need new institutions, formal and informal, that are fit for purpose, and reflect the evolving global distribution of power and the nature of today’s challenges. While institutions created in the post-World War II era, such as the North Atlantic Treaty Organization (NATO), have convened democracies for decades, most are segmented by geographic region. But this system of institutions requires adaptation and renewal to address the challenges of today’s world. The United States and its allies need new entities that facilitate cooperation not just in specific regions, but among larger groups of democracies worldwide.⁴

An Alliance of Democracies could play an essential role in this regard. It would serve as a political alliance aimed at forging common threat assessments and coordinating strategies among democracies to position the free world for success in the growing strategic competition with revisionist autocratic powers. The alliance would help foster cooperation to defend against a wide range of threats to democratic countries, counter authoritarianism, and advance shared interests and values.

Support for closer alignments among democracies is building. In hosting the Group of Seven (G7) summit earlier this year, British Prime Minister Boris Johnson sought to advance the idea of a D-10 club of democracies.⁵ Lawmakers in the United Kingdom (UK) and Canada have expressed support for new coalitions of democracies, and the “traffic light coalition” that will form a new government in Germany explicitly referenced support for initiatives such as an “Alliance of Democracies” in a recent policy paper.⁶ In the United States, proposals for closer cooperation among democracies have drawn bipartisan support among lawmakers in Congress.

In addition, former US Secretary of State Madeleine Albright and former US National Security Advisor Stephen Hadley were joined by distinguished former officials from nineteen democracies worldwide—including former NATO Secretary General Anders Fogh Rasmussen, former Swedish Prime Minister Carl Bildt, and former Japanese Foreign Minister Yoriko Kawaguchi—in endorsing a Declaration of Principles that called for partnerships that bring together likeminded governments, including “a potential new alliance of free nations” to advance a rules-based order.⁷ A call to create such an alliance was also made by signatories to the Copenhagen Charter for an Alliances of Democracies, issued earlier this year, which includes the heads of the National Endowment for Democracy, National Democratic Institute, and International Republican Institute.⁸

Biden’s call for a Summit for Democracy and the underlying rationale for convening such a summit—advancing democratic cooperation in the context of a global struggle between democracy and autocracy—could help propel the idea of an alliance forward. The administration’s plan for a series of summits—one this year and one next—could engender habits of cooperation among democracies, providing the building blocks for a sustainable network of democracies. If these summits continue on an annual basis, they could serve as a de facto alliance, leaving the door open to a more formalized entity down the road.

This report explains why an Alliance of Democracies is needed today, and how the leaders of the free world should act to bring this concept into reality. It describes the strategic context for the creation of such an alliance, its potential mission and organizational structure, and its proposed membership – initially, perhaps thirty or forty consolidated democracies that share concerns about challenges to the free world and are committed to taking action. The report proposes specific areas around which to prioritize alliance action. It addresses concerns that have been raised about an Alliance of Democracies, and contends that the strategic benefits of such an alliance outweigh the costs, including the political and diplomatic capital that would be required to create it. The report describes how an Alliance of Democracies could galvanize meaningful cooperation on global challenges and help restore confidence in the free world.

Lead authors

Former staff

Ash Jain

Scowcroft Center for Strategy and Security Scowcroft Strategy Initiative

Europe & Eurasia Indo-Pacific

Staff

Matthew Kroenig

Vice President and Senior Director, Scowcroft Center for Strategy and Security

Scowcroft Center for Strategy and Security

China Defense Policy

The post An Alliance of Democracies: From concept to reality in an era of strategic competition appeared first on Atlantic Council.

In this seventy-sixth session of the United Nations General Assembly, Africans represent the largest group, with 28 percent of the votes, ahead of Asia with 27 percent, and well above the Americas at 17 percent, and Western Europe at 15 percent. Yet everyone knows that Africa does not decide anything. The real decision-making body is the Security Council, and its five permanent members are China, Russia, France, Great Britain, and the United States.

The founding of this prestigious council was based on the results of World War II, where global superpowers were defined based on hard power. What about the African people? Weren’t they involved in the victory over Hitler’s Germany? The French launched the Resistance from Brazzaville, and numerous African countries served in the war. They deserve their seat at the victory banquet. 

Besides, the United Nations Security Council still functions on a conventional framework, which was written back in 1945, before the majority of African countries had gained independence from their colonizers—which is another fault to correct.

This gap is all the less bearable because the African continent has dealt with issues threatening peace and security for centuries. Africa even was home to one of the world’s first human-rights charters: the Manden Charter, launched by the great Sundiata Keita, founder of the Mali Empire, long before the English Bill of Rights (1689) and France’s Declaration of the Rights of Man and of the Citizen (1789), and perhaps even before the Magna Carta (1215).

Capitalizing on culture

The composition of the UN Security Council—let’s call it aristocratic for this argument—does not reflect the current world at all. Today, the notion of power has evolved from hard power, which is forceful and coercive, to a subtle but more influential power. Soft power enables a nation to lead other countries through influence, which allows those countries to lead their own development without coercive interference, which is what the Security Council should note. Afghanistan and the Sahel are proof of the limits of hard power—and Black Panther, the 2018 movie based on a Marvel comic, is the consecration of soft power. That’s right, it’s Wakanda time.

Africa and its powerful creative industries—driven by connected youth amid the biggest digital revolution of the past two decades—shine beyond the borders of Nollywood to influence Hollywood. This growing market expands its influence everywhere: Nigeria’s entertainment and media market doubled from 2014 to 2019 to become the fastest-growing in the world, according to the audit firm PricewaterhouseCoopers (PwC). When Nigeria incorporated Nollywood in its gross domestic product in 2013 (in a rebasing of data), it became the largest economy in Africa. From Dior to Louis Vuitton, luxury fashion has been renewed with African inspirations. Ready-to-wear brands such as Sweden’s H&M and Spain’s Zara have joined in as well. African Fashion Weeks from Johannesburg to Lagos have inspired international celebrity entertainers like Beyoncé and Rihanna, who is a fashion designer herself.

Beyoncé’s Disney-produced musical, Black Is King, is a celebration of Africa, dreamed up in line with the global success of Black Panther, which featured award-winning African actors in Hollywood such as Lupita Nyong’o and Daniel Kaluuya. Moreover, Netflix has greatly enriched its platform of African series, targeting African audiences and not just English speakers. In the music industry, Nigerian artists such as Burna Boy, Davido, and Wizkid have signed with major US labels such as Sony and regularly win Grammy awards. Burna Boy’s songs were included on the playlist for US President Joe Biden’s inauguration. Jay-Z, Will Smith, and Jada Pinkett Smith backed a Broadway musical, Fela!, about a Nigerian singer that won three Tony Awards in 2010. Not so long ago, Nigerians were paying dearly for collaborations with American and European stars, but now the opposite is true. Soft power is now the predominant power.

At United Nations Plaza, these changes have not been taken into consideration. It is quite alarming that the ruling procedures for the security council have not been amended since 1982. The Security Council was built on the principle of sovereignty and equality of all nations; therefore, democratization and reformation of this organization are overdue and a reassessment must ensure fairness and justice for the African continent. Fairness should start with demography. Africa is predicted to become the largest population of the world in the next twenty years, and it already is the youngest: Almost one in four world inhabitants will be a sub-Saharan African in 2050.

Three options for the Security Council

Several African candidates merit consideration for a permanent seat on the UN Security Council. First, Nigeria is the continent’s most populous nation, at more than 210 million people. In 1963, after its independence in 1960, Nigeria was one of the founding members of the Organization of African Unity (OAU), now known as the African Union. From 1960 to 1995, Nigeria provided $61 billion in funding for the anti-apartheid struggle in South Africa. This country also assisted prominent leaders of liberation movements in decision-making against the military government regimes of the time throughout the continent. Nigeria founded the Economic Community of West African States (ECOWAS) in 1975, when it utilized its soft power to address a civil war in Angola through OAU policy. By nationalizing Barclays Bank and British Petroleum in the late 1970s, Nigeria was able to pressure the British and contribute to Zimbabwe’s independence.

Another contender for a permanent seat is South Africa. Despite recent concerns about xenophobic violence against African migrants, South Africa has a universal audience because of its powerful story of transformation. The iconic struggle and leadership of the late Nelson Mandela, who went from jail to the presidency, is known the world over. After holding its first democratic elections in 1994, one of the most multiracial countries in Africa went on to have one of the most remarkable constitutions in the world through the Convention for a Democratic South Africa talks, where the current president of South Africa, Cyril Ramaphosa, was chief negotiator for Mandela’s African National Congress party. Since then, South Africa has diversified its industry and now plays a role in the Southern African Development Community, is a member of the Group of Twenty (G20) nations, and is regarded as one of the “BRICS”—five major emerging economies, alongside Brazil, Russia, India, and China.

Sports has played a role in South Africa’s appealing story. Shortly after its first free elections, South Africa won the 1995 Rugby World Cup. Bafana Bafana, the South African soccer team, was allowed to play international soccer again, after being banned due to nation’s apartheid policy, and went on to win the 1996 African Cup of Nations. These achievements through sports showed that diversity is far more powerful than segregation, and provided a stepping-stone for the country’s influence in Africa and around the globe. In 2010, South Africa was the first African country to host the FIFA World Cup. This year, South Africa assumed the presidency of the Confederation of African Football, the leading voice on sports on the continent and a hub for creative industries.

“Oho! Congo, couched in your forest bed, queen over subdued Africa,

Let the phalli of the mountains bear your pavilion high…”

Right in the middle of Africa’s heart lies the Democratic Republic of Congo (DRC), heralded above through the words of poet Léopold Sédar Senghor, the first president of Senegal. The DRC is not only a queen—it is mythical Wakanda. It has always been and was so much so that, in a crazy move, the bloodthirsty Belgian King Leopold II decreed Congo as his personal possession. The richness of the resources surfaced in US Ambassador Linda Thomas-Greenfield’s recent remarks at the Atlantic Council. Speaking about Congolese minerals including cobalt, copper, zinc, silver, gold, platinum, and other resources that contribute to the world electronics industry, she said: “Every time I see the movie Wakanda, I think this is DRC. And I know it was an imaginary story, but imagine a DRC where the resources that are available there are being used to build the country, are being used to educate the people, are being used to provide health care and services for the people of DRC, and we would have a Wakanda in the making.” 

Not only is this country rich in terms of its soil, but also in history and culture. With two hundred ethnic groups and two hundred different languages, the DRC is the largest French-speaking country in the world, with more students in school than residents of France. Kinshasa, with its seventeen million inhabitants, is the largest French-speaking city in the world, before Paris. At the UN Security Council, Congo would know how to speak to the three hundred million French-speaking people in the world and the thirty million Lingala-speakers of Africa.

But the most important reason why the DRC should be a permanent member of the Security Council lies less in its strengths than its weaknesses: thirty years of civil wars, political coups, the impotence of the six thousand UN peacekeepers in the eastern DRC (present for two decades), and the distress of 4.5 million displaced people. These are the reasons why the DRC is never quoted among the pretendants to a UN permanent seat. Its tragedy does not even seem to upset the international community, even though a collapse of the DRC, under the pressure of dark forces, would have a tragic, deep, large, and long-term effect on the African continent and beyond.

The reasons why the DRC should join the Security Council are to gain a powerful lever to stop myriad manipulations by its neighbors and the international community, and to help this country’s voice to be heard. The DRC would bring to the Security Council something referred to as “weakness politics”: the effects of fragility causing processes that lead to achievements and the shaping of events. Such a change would be the best and most innovative way to reform and democratize this body. Bring out the new wineskins!

Rama Yade is senior director of the Atlantic Council’s Africa Center and a senior fellow at the Europe Center. 

Further reading

Fast Thinking Sep 21, 2021

FAST THINKING: Biden’s UN reality check

By Atlantic Council

President Biden spoke of “relentless diplomacy” at the UN on Tuesday. But can that relentlessness overcome transatlantic strains, not to mention a still-raging pandemic and climate crisis?

Africa Crisis Management

New Atlanticist Sep 10, 2021

Gregory Meeks: For counterterrorism and economic opportunity, turn toward Africa

By Katherine Walla

After the US withdrawal from Afghanistan, it has become clear that “terrorism now is global, and we’ve got to work in a multilateral way to combat and fight that,” said US Representative Gregory Meeks.

Afghanistan Africa

New Atlanticist May 25, 2021

Linda Thomas-Greenfield on Africa’s most overlooked crises and opportunities

By Katherine Walla

Thomas-Greenfield spoke about US President Joe Biden’s outlook on Africa with Ambassador Rama Yade, director of the Atlantic Council’s Africa Center, at an event celebrating Africa Day and introducing the Africa Center’s new team and mission.

Africa Crisis Management

The post Make way for Wakanda: The UN Security Council needs an African seat appeared first on Atlantic Council.

The post CBDC Tracker cited in Quartz Africa about South Africa’s test of a digital currency appeared first on Atlantic Council.

The report “States on the cusp” explores the complex ways in which the illicit trade in otherwise licit goods (including alcohol, pharmaceuticals, luxury goods, cigarettes, electronics, and much more) threatens the stability, security, and prosperity of vulnerable states around the world, especially in the Global South. This groundbreaking study at the nexus of illicit trade, organized crime, and official corruption proposes actionable solutions for combating illicit trade and bringing states back from the cusp of functionality.

Executive summary

Illicit trade is an umbrella term that covers multiple crimes and commodities, including the theft, diversion, adulteration, counterfeiting, and production of substandard goods, all acts which can occur at multiple points along a supply chain. It is initiated, enabled, and protected by a wide range of actors, from unethical corporations and corrupt officials at all levels of government to armed violent groups in conflict zones and organized crime networks operating locally and transnationally. 

As global trade routes increasingly encompass developing economies—as a source, transit, and market for consumer goods—they present unique challenges to creating effective national and, by implication, regional and global regimes against illicit trade. For many states around the world, and especially in the Global South, these challenges threaten to destabilize social, economic, and political structures. These states are the world’s “states on the cusp.” 

The term illicit trade, for the purpose of this report, refers to illegal production, movement, or sale of normally legal goods. Such illegal movement is often carried out to derive profit by avoiding costs such as those imposed by taxes or customs duties. There is a particularly strong incentive for illicit trade in cases where goods are subject to high duties, or where goods are subsidized to be cheaper in one jurisdiction (food, sugar, and flour are examples) but not in another, providing incentives for illegal cross-border trade. The phrase “licit goods traded illicitly” captures this phenomenon neatly. Importantly, however, this definition also includes some goods that are counterfeited to pass off as being licit, and then traded either illicitly (avoiding scrutiny) or, on occasion, in legal markets. 

The trade in counterfeit goods alone has been estimated to be worth between 3 and 7 percent of global GDP. Many forms of illicit trade, including counterfeit medicines, substandard goods, and the falsification or adulteration of food and agricultural commodities, medical equipment, and consumer and industrial goods have serious public health and safety implications. Other forms of illicit trade have huge environmental, social, and economic impacts, not least of which is reduced revenue collection which weakens state institutions, creating a downward spiral of higher illicit trade intertwined with weaker state capacity.

Reversing this trend, therefore, must be a global public good. 

This complex mix of products and commodities being traded illegally raises the important question of whether advances in technology can assist in more effective regulation. At the core of these efforts is ensuring that commodities are both produced and traded legally to protect consumers from harm. Here, “harm” refers to harms to the public (arising from poor quality or counterfeit products) and to the state (such products harms the state’s ability to collect essential revenues and to control markets in accordance with democratic processes).

Global economic trends in international trade and ever more complex supply chains are, however, reducing the role that governments can play in monitoring and regulating trade, creating both greater vulnerabilities and increasing the importance of the private sector as a critical actor. This poses significant new challenges. With an estimated 80 percent of global trade travelling by sea, the trend toward the privatization of ports and other critical infrastructure and the proliferation of free trade zones have created a growing blind spot for governments seeking to understand and regulate supply chains and illicit trade. For some forms of illicit trade, the role of small air shipments through private carriers has had a similar effect, eroding law enforcement’s ability to monitor, predict, and interdict where and how illicitly traded goods will reach the hands of their consumers. Online marketplaces and small package shipping are replacing the physical spaces where illicit transactions used to take place; their market size and reach are expanding while at the same time reducing the stigma of illegality. 

In short, the scope for illegality is growing, just as the capacity for states to respond is weakening. Can advances in technology fill the gap? 

Sophisticated and rapidly evolving technologies are bringing new ways to track, trace, monitor, and maintain records with integrity. They are steadily reinforcing law enforcement’s capacity to identify criminality in the vastness of the surface and dark web. Despite the promise that technology has to offer, some longstanding stumbling blocks need to be overcome. Some of these are particularly acute in developing economies. At the most basic level, for example, no system can provide quality control over data entry when those responsible for entering the primary data are either willfully or through lack of capacity corrupting that content. 

More generally, the lack of global standards and effective and consistent legal frameworks, and, increasingly, questions about jurisdiction caused by cyber-enabled trade and global supply chains, may limit the impact of purely national regimes of oversight and enforcement regimes.  

Lack of capacity, insecurity, and multiple forms and levels of corruption are pertinent features of developing economies that compound the inherent challenges of responding to illicit trade. Evidence from case studies around the world, as well as two commissioned for this report—examining the political economy of illicit tobacco in Southern Africa and of counterfeit medicines in Central America—reveal that political actors and state institutions are complicit in enabling, promoting, and protecting illicit trade at the very highest levels of the state. They also show that it is often the most vulnerable and underserved in society who rely on illicit markets to meet basic needs. 

While there are clear distinctions by commodity and context, the perpetuation of illicit markets and trade within developing economies often can be exacerbated by systematic and serious failures in governance and political will, rather than technical shortcomings that can easily be overcome. Technical solutions also may have unintended consequences for governance and the poor. That does not mean that they should not be used, but rather that a better understanding of the economic, political, and social context in which they are implemented is desirable. Implemented effectively, they hold great promise in taking forward steps to undercut illicit markets and improve citizens’ well-being.

However, the changing landscape for infrastructure, investment, and development assistance also has reduced the leverage of more traditional multilateral institutions to insist upon the governance and policy reforms that would address these issues. These changes have had contradictory outcomes: increasing trade on the one hand but weakening regulatory systems and conditionalities (that had been a growing part of traditional multilateral development bank practices) on the other. Requirements for transparency, broad-based development benefits for the citizenry, or democratic governance have been weakened, although not removed, in the new financing landscape. 

Against this backdrop, private sector innovation for providing technology-based tools to enhance regulatory capacity combined with citizen empowerment is key. Such innovations, however, should be grounded in an understanding of the context into which they are introduced and be governed by effective oversight systems, including effective and transparent public-private partnerships. 

How to address illicit trade in developing economies, therefore, remains unsurprisingly complex. Wins often will be incremental and setbacks frequent. The overall goal simply may be to constrain the enabling environment for illicit trade rather than allowing it to endlessly expand, to target efforts where they have the greatest chance of sustained success, and to prioritize those commodities where the harmful implications are the greatest. 

This is a volatile time in global history, marked by rapid technological and political changesplus a global COVID-19 pandemic. We must develop a better understanding of the political economy of illicit trade and craft an active monitoring capacity for intervenening. In this report, we put forward a commodity- and context-specific political economy approach to achieve this and conclude with some guidance for policy makers from any sector, public or private, to assess when and how to respond to illicit trade, and to work in and with developing economies.  

This study offers five key principles in conclusion:

1. Be commodity specific at the global level

As the nature of illicit trade differs according to commodity, its industry, and the interests of key stakeholders, the solutions required to combat it differ. Some commodities are more suited to coordinated efforts, including those with a humanitarian or moral imperative (the greater the harm, the greater the imperative to act). 

Yet there is considerable divergence on what goods should be prohibited, pronounced differences in quality standards, and issues of property rights and penalties, often occurring as fault lines between developing and developed economies. The harmonization of laws and the coordination of enforcement efforts benefit from a global approach. Segmented approaches do not consider the problem’s interconnectedness nor points of convergence. 

2. Be context specific at the local level

The illicit economy reality from one locality to another can differ sharply. Knowing the local context and finding solutions and innovations that are tailored to that local context and that account for the perceptions, attitudes, and impacts on the local population is important. A clear understanding of the underlying causes, political dimensions, and network structures of illicit trade, as well as the links between national and local power holders, will support the design of effective strategies and programs to counter illicit trade. Citizens’ views on acceptable and intolerable practices matter and must be considered, and perhaps moderated, if interventions are to be achieved.

In many developing economies, the state is unlikely to be a trusted interlocutor. Criminal groups providing the commodities may have a higher degree of legitimacy in some localities than the state. Civil society may be a better spokesperson and communicator than the state.

3. Consider the operational implications

Developing countries have operational challenges, which may undermine illicit trade solutions, ranging from inability to bear financial costs to poor connectivity and infrastructure, and low staff skill sets (e.g., technology familiarity). 

Poorly designed or overly complex solutions may hinder progress. For example, many systems are not set up for consumers and end users, require specialized technology, or produce data that users cannot process in a meaningful way. Although officials can face an overwhelming number of different systems, integrated systems can offer unified platforms for interoperability across scanners, handheld devices, and information systems. Overlapping jurisdictions offer a fundamental challenge: disentangling, simplifying, and coordinating agencies’ use of solutions ought to be prioritized.

4. Plan for independent oversight

Governments need to plan for independent oversight. Although there are several options, effective oversight mechanisms generally need three things:  

• Independence: The ability to operate free from the influence of the parties they are monitoring, as well as from political interference;
• Resources: The financial and human resources to properly perform their function—to visit sites, to investigate, and to issue public reports;
• Power: Some capacity for enforcement, including publication of credible reports to leverage public opinion, plus the support of a criminal justice or financial penalty process to sanction contravention.

5. Target comprehensive reform, not quick fixes

Broad and holistic strategies are required to respond to what is often a global challenge, not just a regional or national one. Solutions are unlikely to be successful in isolation, and fragmented approaches are more easily undermined. Ideally, interventions (including technological interventions) are combined with other economic, social, governmental, and enforcement activities.

Responses need to address: corruption fueled by illicit trade, underworld links between industry and individuals, the broader costs to the state due to illicit practices, and stopping misinformation about illicit trade. 

Policy makers’ agenda should be about coalition-building: step-by-step approaches to overcome one vested interest at a time. Doing so might enable a “state on the cusp” to avoid one possible outcome of big bang comprehensive reform efforts, which is the potential for powerful opponents to coalesce quickly against an overt and aggressive agenda, thereby killing it.

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Issue Brief Jun 14, 2019

Dark pharma: Counterfeit and contraband pharmaceuticals in Central America

By Peter Tinti

This working paper, the second in a series on the global illicit economy, focuses on the “dark pharma” trade in Central America, where no country has been spared the problem of counterfeit and contraband pharmaceuticals making their way to consumers.

Latin America Security & Defense

Issue Brief Mar 1, 2019

The illicit tobacco trade in Zimbabwe and South Africa

By Simone Haysom

This groundbreaking study of the illicit tobacco trade in southern Africa explores how this trade supports organized crime, helps enable official corruption, and erodes state structures.

Non-Traditional Threats South Africa

The post States on the cusp: Overcoming illicit trade’s corrosive effects in developing economies appeared first on Atlantic Council.

On this #DFRLabCoffeeBreak, Aisha Abdool Karim, journalist at the Bhekisisa Centre for Health Journalism joins DFRLab Research Assistant Tessa Knight. The two discuss South Africa’s reaction to and plan for dealing with COVID-19 as well as disinformation that can lead average South Africans astray.

South Africa has a history of dealing with pandemics and creating strong social movements around community health. However, a wave of disinformation has hit, fueled by both greed and a desire to end suffering caused by COVID-19. This has left many South Africans vulnerable and made proper treatment for more than just the coronavirus much more difficult.

The #DFRLabCoffeeBreak is a video series meant to discuss how disinformation and digital change affect industries, policy making, and society with a community of experts, academics, and leaders from around the world.

The Atlantic Council’s Digital Forensic Research Lab (DFRLab) has operationalized the study of disinformation by exposing falsehoods and fake news, documenting human rights abuses, and building digital resilience worldwide.

learn more

The post #DFRLabCoffeeBreak with Bhekisisa Centre for Health Journalism, Aisha Abdool Karim appeared first on Atlantic Council.

South Africa is one of several nations facing an international outcry over increases in COVID-19 related violence against civilians by security forces enforcing quarantine measures. Since South Africa instituted a country-wide lockdown on March 27, the number of violent incidents by police against civilians has reportedly more than doubled, with poor and vulnerable populations most affected. (For reference, conflict data tracking website ACLED reports that in the two months prior to lockdown, approximately twelve “violence against civilians” events were recorded; in the two months following it, the number rose to nearly thirty.)

As restrictions start to ease and the country begins its reopening, the number of COVID-19 cases in South Africa has been lower than many initial projections. During a June 17 press conference, President Ramaphosa announced that there have been 80,412 confirmed coronavirus cases in South Africa. Of these, 44,331 people (around 55 percent) have already recovered, and 1,674 people have died in the developing country of nearly 60 million. This has prompted many to praise the lockdown measures for flattening the country’s curve. However, questions surrounding the steep human rights costs of the lockdown are emerging country-and world-wide.    

Under initial drastic regulations that began March 26 (Level 5 of South Africa’s 5-tiered plan), citizens were under a strict curfew and shelter-in-place orders and were prohibited from leaving their homes for anything other than essential trips to the grocery store, pharmacy, or hospital. Any outdoor exercise, interprovincial travel, and even the sale of alcohol and cigarettes was prohibited countrywide. The enforcement of these stringent policies came with an initial mobilization of nearly 3,000 soldiers, deployed overwhelmingly to informal settlements known as townships. Heavy fines for breaking the law were also implemented. To enforce the quarantine orders, Police Minister Bheki Cele set up more than 190 roadblocks and over 680 vehicle checkpoints across the country, encouraging security forces to “destroy” any stores selling liquor and authorizing the use of force to enforce the ban.

For the millions of poor South Africans working and living in the informal sector, the country’s quarantine mandates have presented an impossible challenge. Faced with persistent food and income insecurity, and dwelling in informal settlements lacking basic hygiene facilities including running water and toilets, millions of under-resourced South African households have been simply unable to heed the government’s COVID-19 regulations. As hunger and despair mounted and promised public aid was not delivered, unrest across the country began escalating.

Within the first seven days of lockdown, security forces had arrested more than 2,000 people for quarantine-related infractions. The first reports of looting and public protests over the lack of service deliveries broke towards the end of April—about a month after the Level 5 lockdown started—and on April 21, President Ramaphosa announced the deployment of an additional 73,180 South African National Defence Force (SANDF) troops to help with enforcement. The move was unprecedented: the “largest deployment of SANDF troops” in post-democratic South Africa, best understood when put into context with 2017 figures that list the total (visible) number of police officers in the country at 102,059.

As of June 1, over 230,000 people had been arrested. Most have been due to minor violations, including being outdoors without a permit or possessing alcohol and/or cigarettes. The deployment of troops has prompted outcries from civil society and the UN, who warned that excessive policing and the potentially deadly risks associated with the enforcement of harsh lockdowns and curfews could “spark a human rights disaster.”

South Africa suffers from deep-seated inequality and is consistently ranked as one of the least safe and most violent countries in the world. In particular, both public and private South African security forces have had long, documented histories of brutality, racially-biased policing, and excessive use of force, in part due to the legacy of the apartheid-era militias. However, when the county’s lockdown measures were implemented, two interesting trends related to violence emerged. The first was an overall decrease in most types of violent activity. March’s murders were down by 72 percent when compared to the previous year; assaults fell by 85 percent; and violent robbery by 70 percent. The country’s ban on alcohol appears also to have had a significant effect on the emptying of hospital beds and decreasing crime overall, 40 percent of which is related to alcohol. However, while violence decreased in general, a specific type of violence escalated dramatically: violence against civilians by security forces.

Within weeks following the lockdown, photos and videos began circulating on social media, depicting various security sector forces (allegedly) using aggressive force and brutality in townships against even minor lockdown infractions. In Alexandra, a township outside Johannesburg, South African Police Services (SAPS) used water cannons and rubber bullets to disperse people peacefully queuing outside food shops. The use of tear gas on protesters and the shooting of rubber bullets into groups of people has been reported across the country. At least ten South Africans (all Black) have already died in police action during the lockdown. As the spotlight is turned on police brutality worldwide, the names and stories of these victims continue to emerge in the South African news media.

One such example is the online and in-person protests over the death of Collins Khosa. Khosa was found to have died from blunt force trauma to the head after SANDF entered his home and violently detained him, suspecting he had cups of alcohol in his front yard. The family’s court filing against the officers—who denied all charges—stated that Khosa was strangled, slammed against a cement wall and a steel gate, and then hit with the butt of a machine gun. Afterwards, the family reported that he could not walk, began to vomit, and lost speech. When his partner tried to wake him a few hours later, he was unconscious.

Township resident Sibusio Amos was another victim of police brutality after he was found drinking in an informal bar, violating government regulations. Police used rubber bullets to remove him and other patrons from the shebeen, then allegedly followed him home and fatally shot him on his veranda. Several children were caught in the crossfire and had to be taken to the hospital. While Khosa’s death and the clearing of the involved SANDF officers are the subject of ongoing investigations into police brutality by the Independent Police Investigation Directorate (IPID), other deaths including Amos’ remain uninvestigated. The South African government has issued a statement condemning the alleged police misconduct.

South Africa is not alone in this alarming trend of heavy-handed pandemic policing in Africa. A Kenyan policing oversight body alleges that police have killed fifteen Kenyans since the government imposed its dusk-to-dawn curfew, part of a wider set of government-imposed coronavirus measures. The Independent Policing Oversight Body (IPOB) states that as of June 5,  it had received eighty-seven complaints against the police, including harassment, assaults, inhumane treatment, sexual assault, shootings, and death. Protests against what some Kenyans feel like is unpunished police brutality broke out on June 1. In Nigeria, security forces are reported to have killed at least twenty-eight civilians, while 873 cases of police brutality had been documented as of April 1.

Longstanding policing challenges in South Africa are being made even more difficult by the current threat of the coronavirus. While the enforcement of aggressive lockdown measures has contributed to limiting the transmission of COVID-19, it has also left at least ten people dead and has criminalized thousands of others. As in Kenya, Nigeria, and even the United States, the threat of police brutality has created a sort of “double pandemic” for poor, predominately Black individuals: that of the virus and of brutality at the hands of the police. As thousands join in on marches and protests from Cape Town to Johannesburg against security sector violence largely targeted at Black communities, it is becoming increasingly apparent that the COVID-19 pandemic has aggravated many deeply rooted structural cleavages and spurred racial tensions. As such, it is likely that post-pandemic South Africa will encounter new trials and tribulations regarding police accountability, transparency, and justice on its long walk to reconciliation.

Katie Trippe is an intern with the Atlantic Council’s Africa Center.

Questions? Tweet them to our experts @ACAfricaCenter.

For more content, go to our Coronavirus: Africa page.

New Atlanticist Jun 18, 2020

Kenyan President Uhuru Kenyatta says his country needs ‘fiscal space’ amid the COVID-19 crisis

By Larry Luxner

“Coronavirus is mainly a health issue, and our key focus is ensuring that we keep our people safe,” Kenyatta said. “But this is also an economic crisis because it has resulted in some key sectors hugely affected by lockdowns. We were forced to close our airspace, which affected tourism, a very critical part of our economy.”

Africa Coronavirus

AfricaSource Jun 10, 2020

Progress on African free trade: An interview with AfCFTA Secretary General Wamkele Mene

By Aubrey Hruby

Watch Africa Center Senior Fellow Aubrey Hruby’s exclusive interview with Mr. Wamkele Mene, Secretary General of the African Continental Free Trade Area Secretariat, on the status of the agreement and the impact of COVID-19.

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Event Recap Jun 2, 2020

Afreximbank president champions African free trade alongside COVID-19 response

By Africa Center

On Tuesday, June 2, the Africa Center hosted Prof. Benedict Oramah, President and Chairman of the Board of Directors of the African Export-Import Bank (Afreximbank), for a discussion on innovative financing amid COVID-19.

Africa Coronavirus

The post Pandemic policing: South Africa’s most vulnerable face a sharp increase in police-related brutality appeared first on Atlantic Council.

Globally, almost 250 million women and girls between the ages of fifteen and forty-nine suffer physical or sexual violence at the hands of an intimate partner each year. These numbers are set to skyrocket, however, as the health, security, and financial worries caused by the coronavirus outbreak intensify domestic tensions and force families to lock down in what is statistically the most dangerous place a woman can be: her home. Home isolation orders present abusers with increased opportunity to inflict harm on victims who are rendered more vulnerable by reduced access to their support networks and limited options for escape from the home. Governments struggling to respond to the coronavirus epidemic have failed to respond to this spillover effect – and to a similar crisis affecting vulnerable children – with increased services that cater to those at risk. This has left domestic violence response centers overwhelmed by the heightened demands on their services.

The nations of the Global North – such as Canada, Germany, Spain, the UK and the US – suffered early waves of the pandemic and have already reported stark increases in demand for emergency shelters. As the pandemic spreads to Africa, the incidence of domestic assault is increasing there, too. In South Africa, where COVID-19 cases have been concentrated, 148 people have been arrested and charged with crimes relating to gender-based violence (GBV), and over 2,000 complaints of GBV were made to the South African Police Service in first seven days of the lockdown.

With an alarming 4,793 confirmed COVID-19 cases, South Africa has the largest number of COVID-19 infections on the continent, prompting President Cyril Ramaphosa to declare a twenty-one day nationwide lockdown beginning on March 27. Part of this initiative included the deployment of 24,389 security forces responsible for the enforcement of this strict policy. One of the very few countries to enforce exceptionally strict policies, the South African government has also prohibited the sale of cigarettes and alcohol, which have been identified as catalysts for domestic violence as well as immune system suppressants.

While these policies have apparently been effective at slowing the transmission of COVID-19, South Africa has experienced a wave of crime, including an increase in robbery, vandalism and gender-based violence. In an open letter to the South African people, President Ramaphosa condemned these “despicable” actions and reaffirmed his commitment to prioritizing responses to gender-based violence in the national COVID-19 response. He also promised unbroken commitment to the Emergency Response Plan to end violence against women and children that was introduced in 2019. Additionally, the GBV National Command Centre, which operates a national call center facility, has remained fully operational – and reports that it has received 12,000 calls since the implementation of the lockdown.

Prior to the onset of the coronavirus pandemic, rates of gender-based violence in South Africa were among the highest in the world. According to government reports, a South African woman is murdered every three hours on average, with many assaulted and raped before their demise. The rate in violence against women had already ignited protests in many parts of South Africa, leading the government in September 2019 to recognize the dire state of women within the country by declaring gender-based violence and femicide a national crisis.

South Africa is not alone. In Kenya, the National Council on Administration of Justice has also reported a spike in sexual offenses, and has identified the primary perpetrators as “close relatives, guardians, and/or persons living with the victims.”

Human Rights Watch has reported that one 16-year-old Kenyan girl was captured and sexually assaulted by a man who reportedly kidnapped her because he “needed female company” in order to get through the lockdown. Fortunately, she was rescued by neighbors and is now in a safe house. But violence is the daily reality for women and girls across Kenya, where 45 percent of women and girls aged fifteen to forty-nine have experienced physical violence and another 14 percent have reported experiencing sexual violence. (The true rate of violence is likely much higher due to the typical under-reporting of sexual crimes.)

Heightened rates of intimate partner violence during the pandemic should not have taken authorities off guard. During the 2014-16 Ebola virus outbreak that ravaged through some West African countries, there was similar evidence confirming that the safeguard measures implemented to prevent the spread of the Ebola virus also rendered women extremely vulnerable to GBV, and particularly increased the risk of sexual violence. Additionally, as resources for reproductive and sexual health were redirected towards the emergency Ebola response, many countries saw accompanying increases in maternal mortality. Should this pattern continue, there will be larger consequences for women and girls, beyond exposure to the virus.

UN Women has advocated loudly for actions to address this “shadow pandemic” of sexual violence. Under the leadership of the Executive Director, Phumzile Mlambo-Ngcuka, it has issued a series of recommendations to help governments, international and national civil society organizations, and United Nations (UN) agencies to curb the widespread violence against women and girls across the globe. These recommendations include allocating additional resources to address sexual violence in national COVID-19 response plans; strengthening services for women who experience violence – i.e. expanding capacity of shelters, strengthening hotlines, and ensuring psychosocial support; and placing women at the forefront of policy changes, solutions and recovery strategies. The UN Trust Fund to End Violence against Women has also established a COVID-19 Funding Window, which aims to support existing civil society organizations and fund new projects specifically designed to support women and girls who experience violence in the context of the pandemic.

Given that the time for preparation in most countries is already long gone, governments need to take these recommendations as more than friendly suggestions. Women cannot continue fall through the cracks during times of crisis, especially given that many women in Africa become the primary caregivers for their families in times of poor health. Restricting people to their homes is the best way to contain the virus, no doubt, but in doing so it is important to recognize that many for many women, the home is not a safe haven. Too many lives have already been lost to the virus, so governments and civil society must do what they can to protect those women who are now doubly vulnerable. 

Joanne Chukwueke is an intern with the Atlantic Council’s Africa Center.

Questions? Tweet them to our experts @ACAfricaCenter. 

For more content, go to our Coronavirus: Africa page.

AfricaSource Apr 20, 2020

African private sector mobilizes COVID-19 response

By Aubrey Hruby

In times when neighbors are competing with each other for medical supplies, the private sector is creating partners out of competitors. Across the continent, coalitions are coming together to support public health responses and fight the virus: a private sector response that is even more important in resource-constrained African countries.

Africa Coronavirus

AfricaSource Apr 17, 2020

Barriers to mass testing for COVID-19 in Africa

By Bronwyn Bruton and Neil Edwards

Beyond top-line concerns over supply of test kits, other barriers to mass testing for COVID-19 in Africa include logistical constraints surrounding access to rural and densely populated urban areas, limitations on healthcare personnel and facilities, distrust of healthcare workers, and stigma associated with the virus itself.

Africa Coronavirus

AfricaSource Apr 2, 2020

Coronavirus deals a blow to Ethiopia’s elections

By Bronwyn Bruton

On March 31, the government of Ethiopia indefinitely postponed historic elections that were scheduled to take place in August. This makes Ethiopia the first African nation, in what is likely to be a wave of countries, forced to set back highly contentious political contests in response to the novel coronavirus pandemic, with significant implications for the outcome.

Africa Coronavirus

The post The “shadow pandemic” of gender-based violence appeared first on Atlantic Council.

The post Hruby in the Africa Report: Africa’s innovators vs the virus appeared first on Atlantic Council.

Despite COVID-19’s slow start in Africa and the hope that the continent might remain relatively unscathed, as of April 6, there were 9,867 confirmed cases in 51 out of the 54 countries across the continent. Similar to approaches to the pandemic globally, African government responses have varied, with common themes including border closures, banning public gatherings, and in some cases local and even nationwide lockdowns. But some responses have been more robust than others.

On April 2, Google released statistical breakdowns by country of residents’ mobility to a variety of common locations including retail and recreation spaces, grocery stores, transit stations, places of work, and residences. Each of these metrics (described below) details the percent change of mobility to each location from February 16 to March 29 against an earlier baseline. This data, which spans twenty-seven African countries, is taken from Google users that have their location trackers turned on in their phone. While it may not be representative of a broad range of socio-economic classes (and may have some statistical inaccuracies), it does provide some insight into how well government responses have fared since their implementation.

A compilation of the complete dataset for African countries is at the bottom of this page, while graphs of each of the country’s mobility over time can be viewed via individual Google country reports. Measurements do not track the entire nation, distinguish between urban and rural, and are skewed to the third of African mobile users (250 million) that can afford to buy a smartphone. Nonetheless, the data provides an imperfect framework for understanding the effect of different government responses across the continent.

The twenty-seven countries in the following dataset include Angola, Benin, Botswana, Burkina Faso, Cameroon, Cabo Verde, Côte d’Ivoire, Egypt, Gabon, Ghana, Guinea-Bissau, Kenya, Libya, Mali, Mauritius, Mozambique, Namibia, Niger, Nigeria, Rwanda, Senegal, South Africa, Tanzania, Togo, Uganda, Zambia, and Zimbabwe. Below is a breakdown of the countries with the highest and lowest percent changes in resident mobility to common locations.

Travel to transit stations:

This metric tracks mobility trends in the visits to public transportation stations including buses and train stations. This metric is vital, especially in Africa, where passengers are routinely crammed into buses, with riders overflowing the seats and aisles—putting them at a higher risk of transmission. The continued use of public transportation could have dire consequences on the number of confirmed cases across the continent. However, some African countries, through imposed travel bans, lockdowns, and restrictions on travel, have severely decreased the use of public transportation. They are listed below:

Beyond these top five countries, ten of the twenty-seven in the dataset have reported at least a 50 percent reduction in the number of people (that were tracked by Google) that have visited public transportation stations. While these numbers are quite promising, they may reflect socio-economic differences. It may be that those who own a smartphone can afford alternative forms of transportation. However, this data is consistent with the intensity of government responses in these respective countries, which have all imposed substantial restrictions to movement by March 29. In Rwanda, for example, only essential movement throughout the country is allowed. Those found driving on the streets are stopped by police and have their cars confiscated—only to have them returned after the lockdown is lifted.

The countries with the lowest percent change recorded less than a 20 percent reduction in visits to transportation stations. In a previous Atlantic Council analysis, I discuss the implications of continued public transportation use in Tanzania, which can be applied more broadly.  

Travel to retail and recreation:

This metric tracks mobility trends in the visitations of places like restaurants, cafes, shopping centers, museums, libraries, and movie theaters. As listed below, eight out of the twenty-seven African countries detail at least a 50 percent reduction in their mobility to retail and recreation spaces—demonstrating the impact of government policies that shut down non-essential businesses.   

In contrast, five countries tracked by Google experienced less than a 20 percent reduction in travel to retail and recreation spaces. They include:

As the data shows, the countries that have the lowest percent change in the daily travel to retail and recreation spaces are also among the countries that have some of the lowest confirmed cases on the continent. For example, Zimbabwe with only nine confirmed cases has only a 2 percent change since February 16—by far the lowest among countries within the Africa dataset. This suggests that those monitored by Google living in Zimbabwe are not avoiding trips to crowded retail and recreation spaces as a preventative measure against COVID-19. This may be evidence that individuals in countries with fewer cases may feel less motivated to change their daily behavior.

Travel to grocery and pharmacy:

This metric tracks mobility trends in the visitations of places like grocery stores, specialty food shops, drug stores, and pharmacies. It is not clear whether or not this metric includes visits to local village markets. The countries with the highest percent changes are listed below:

Six of the twenty-seven countries (tracked by Google) recorded at least a 40 percent reduction in the amount of people visiting grocery stores and pharmacies since February 16.

In contrast, Ghana is the only country in the dataset to endure an increase in the number of people going to grocery stores and pharmacies. However, just days before Google’s data collection concluded, Ghana imposed a lockdown. This latest percentage increase likely reflects people across the country preparing to stay at home and abide by the lockdown order. Previous to the announcement, Ghana had recorded substantial decreases in the number of people going to grocery stores and pharmacies—upward of a 20 percent reduction.

Four other countries: Botswana, Tanzania, Zambia, and Mozambique have also endured lower percent changes in the number of people going to the grocery store and the pharmacy compared to the rest of the countries in the dataset.

Travel to places of work:

This metric tracks mobility trends of places of work. This metric may be problematic since work in most African nations occurs in the informal economy which does not necessarily have a physical address. Regardless, this data provides an idea of the extent to which the government lockdowns and policies have impacted normal work activities; or in the case of the bottom ranking countries, how life is business as usual.

Again, the top countries with the highest percentage change in travel to places of work are among countries that took immediate preventive actions against COVID-19. Although the individual countries have endured a wide range of reductions, spanning from 30 to almost 70 percent.

The countries with the lowest percent reductions demonstrate a lack of change to the daily work routines of the individuals that were tracked by Google. Three countries including Ghana, Benin, and Mozambique recorded an increase in the number of people that traveled to a place of work. Meanwhile, the remaining countries on the list either reported no change or a relatively small reduction of 3 percent.

Staying at home:

One of the best metrics provided by Google is the mobility trends for places of residence, representing tracked users staying at home during the outbreak.  

Coinciding with the other findings, as residents of Mauritius, South Africa, Rwanda, Angola, and Cabo Verde reduce their travel to usual destinations, they are increasingly staying at home. Although every African country in the dataset has experienced an increase in the number of their residents that are staying at home, six countries including Tanzania, Benin, Cameroon, Ghana, Mali, and Niger have endured less than a 10 percent increase. Tanzania has had the lowest percentage change, with only a 3 percent increase of its tracked residents staying at home, compared to the baseline figures from earlier this year. This may reflect the rhetoric of President Magafuli, who recently encouraged Tanzanians to continue to attend places of worship.  

Conclusion:

The major finding across the Google metrics is the consistency of countries appearing in the top and bottom lists for percent change in mobility to the various common locations. Countries with the highest percent change in metrics across the board—including travel to retail and recreation spaces, grocery stores, transit stations, workplaces, and places of residence—include Angola, Cabo Verde, Mauritius, Namibia, Rwanda, and South Africa. These numbers most likely reflect the stringent restrictions on travel imposed by the governments of the aforementioned countries. In contrast, the countries with the lowest percent change in mobility to the various common locations include Benin, Botswana, Ghana, Tanzania, and Zimbabwe—possibly reflecting unchanged daily behavior and continued travel amongst those tracked.

Thus, as the data supports, these residents were not staying home as compared to the rest of the countries in the dataset. Since people in these countries are not practicing social distancing and staying at home, it is a fair prediction that the number of cases is likely to rise steeply in the coming weeks. These Google metrics, although an imperfect framework, provide valuable data that should continue to be released periodically to help inform governments and policymakers alike of the progress made by lockdowns and travel restrictions.

Neil Edwards is an intern with the Atlantic Council’s Africa Center.

Want to read more on this data and its implications? See additional visualizations and a summary of key thematic findings here.

Questions? Tweet them to our experts @ACAfricaCenter.

For more content, go to our Coronavirus: Africa page.

AfricaSource Apr 2, 2020

Coronavirus deals a blow to Ethiopia’s elections

By Bronwyn Bruton

On March 31, the government of Ethiopia indefinitely postponed historic elections that were scheduled to take place in August. This makes Ethiopia the first African nation, in what is likely to be a wave of countries, forced to set back highly contentious political contests in response to the novel coronavirus pandemic, with significant implications for the outcome.

Africa Coronavirus

AfricaSource Mar 26, 2020

COVID-19 in the DR Congo

By Private: Pierre Englebert

As of March 24, the Democratic Republic of Congo had only forty-eight confirmed cases of coronavirus, with three dead of the disease. But although Congo is only in the very first stages of the pandemic, the contrast between the degree of state capacity and social discipline that it takes to stifle the disease and Congo’s record on these two counts is particularly worrisome.

Africa Coronavirus

AfricaSource Mar 30, 2020

Coronavirus comes to Sudan

Not yet one year into a historic political transition and in the midst of an economic collapse, Sudan’s future was already hanging in the balance. The addition of a national and global public health crisis now has the potential for a ‘make or break’ impact on the country.

Africa Coronavirus

The post Using Google reports to estimate Africa’s response to COVID-19: A compilation of the data appeared first on Atlantic Council.

Google’s reports utilize anonymized user location data and compare movements against a recent baseline, with reports tracking mobility associated with retail & recreation, transit stations, grocery & pharmacy, parks, work, and residences. Based on the sampling, it is worth noting that in the African context these reports are likely to be most representative of urban areas, especially capitals and principal cities. Thus, the data must be taken with a grain of salt. But at the same time, these urban areas are the locales in which governments are most capable of enforcing social distancing, and thus the information is still relevant.

It is also clear from above that not all countries are included due to minimal data. As updates and additions come in, attempts will be made to update this blog intermittently. For reference, the current data and graphs account for data through March 29. This means that the impact of lockdowns in Botswana and parts of Ghana and Nigeria, among others, will not yet be apparent. As a snapshot from March 29, though, the data still gives some insights into which countries have been most proactive and the extent to which existing lockdowns have been effective. Below are some initial findings:

Lockdowns are having an effect

South Africa stands out on the map as having significantly reduced retail and transit activities, with movements down 79 and 80 percent respectively. Even more interestingly, you can see in the time series graphic below that these drops directly followed the March 26 lockdown orders. Of the other relative standouts (Mauritius, Angola, Cabo Verde, Rwanda, and Nambia), all had already imposed substantial restrictions to movement by March 29. The implication appears to be that sensitization campaigns and the like are no substitute for more stringent measures.

African democracies are proving capable of enforcing lockdowns

There has been talk that authoritarian governments might be best suited to enforce lockdowns and restrict movement, but the initial data from Africa suggests that democracies can do so efficiently too. Of Africa’s top democracies, per the Economist Intelligence Unit’s Democracy Index, Mauritius (#1), Cabo Verde (#3), South Africa (#4), and Namibia (#7) are all among the most proactive and effective at social distancing to date. The tiny island nations of Mauritius and Cabo Verde have been especially effective, though surely in large part due to plummeting tourism, with Mauritius reducing retail and transit activities by a stunning 89 percent. As in South Africa, Mauritius’ sharp declines came in conjunction with a mandated lockdown.

Of the other top democracies, Botswana (#2) and Ghana (#5) have imposed more stringent measures in the past days. But as of March 29 had only reduced movements by 10 to 15 percent. For the other side of the coin, Rwanda’s measures have also been effective, reducing transit movements by 75 percent.

Certain countries lag behind

The average reduction in retail movements between the twenty-seven countries with data is about 37 percent, but Zimbabwe has achieved as little as a 2 percent reduction. Other than Ghana and Botswana, Tanzania also stands out, with its reduction of 16 percent supporting previous Africa Center analysis of a mild Tanzanian response. The data on residential movements also back up these trends. The same set of high performers lead the way with increases of around 24 percent staying at home, while Tanzania brings up the absolute rear with an increase of only 3 percent.

As discussed above, though, several of these countries have imposed new restrictions in the past days, and some of these “lagging” countries still have low reported caseloads, partially explaining their tepid responses. Zimbabwe, for example, still sits at less than ten confirmed cases, as of April 6. Accordingly, it will be important to follow this data in the coming weeks as countries adapt. But with uncertainty over the extent to which cases are going untested or unreported, there are concerns that wait-and-see approaches could backfire. Botswana, for example, declared a state of emergency immediately after its index case was confirmed, but having delayed more than a week since neighboring South Africa upped its efforts, only time will tell if restrictions should have been pursued more proactively.

Luke Tyburski is a project assistant with the Atlantic Council’s Africa Center.

Looking for a deeper dive into Google’s mobility data? Find a more detailed breakdown here.

Questions? Tweet them to our experts @ACAfricaCenter.

For more content, go to our Coronavirus: Africa page.

AfricaSource Apr 2, 2020

Coronavirus deals a blow to Ethiopia’s elections

By Bronwyn Bruton

On March 31, the government of Ethiopia indefinitely postponed historic elections that were scheduled to take place in August. This makes Ethiopia the first African nation, in what is likely to be a wave of countries, forced to set back highly contentious political contests in response to the novel coronavirus pandemic, with significant implications for the outcome.

Africa Coronavirus

AfricaSource Mar 26, 2020

COVID-19 in the DR Congo

By Private: Pierre Englebert

As of March 24, the Democratic Republic of Congo had only forty-eight confirmed cases of coronavirus, with three dead of the disease. But although Congo is only in the very first stages of the pandemic, the contrast between the degree of state capacity and social discipline that it takes to stifle the disease and Congo’s record on these two counts is particularly worrisome.

Africa Coronavirus

AfricaSource Mar 30, 2020

Coronavirus comes to Sudan

Not yet one year into a historic political transition and in the midst of an economic collapse, Sudan’s future was already hanging in the balance. The addition of a national and global public health crisis now has the potential for a ‘make or break’ impact on the country.

Africa Coronavirus

The post Using Google reports to estimate Africa’s response to COVID-19: Key findings appeared first on Atlantic Council.

While South Africa’s initial spike in COVID-19 cases all involved those who were wealthier and had been traveling, if the virus is not contained and community transmission intensifies, it could pose a very high risk to lower-income communities who rely on public transportation, do not have savings and must continue working, cannot afford hygiene products, live with large households, and reside in informal settlements. As this jump occurs, the spread of the virus will increase rapidly. Indeed, the number of cases in South Africa has skyrocketed from 150 (March 19) to 554 (March 24) in merely five days.

There could be two very different narratives that result from the coronavirus’s spread in South Africa: that of the isolation of wealthy South Africans—more similar to much of the West’s experience—and that of the sheer destructiveness of the virus to lower-income South African communities.

Though in recent weeks some have speculated that youthful African countries may fare relatively well compared to countries with more aged populations such as Italy and the United States, this is not a full picture of the reality of the situation for several African countries. In South Africa especially, despite the large youth population and smaller elderly population, there is a significant percentage of the population who live with chronic, underlying conditions, such as diabetes and respiratory illness, and these people are likely to be at higher risk of severe symptoms, complications, and death if infected by the coronavirus—especially if their underlying illness is not well-managed through regular medical care. Though the risk posed to individuals with HIV is still unknown, there is a particularly high concern among South African public health professionals and doctors that COVID-19 could cause more severe symptoms in the high number of HIV-positive individuals living in the country. Of those with HIV in South Africa, nearly two-and-a-half million do not regularly take anti-retroviral drugs to manage their condition, rendering them more vulnerable to illnesses and infections. Many also live with or are at a higher risk for tuberculosis, which some fear could compound the respiratory effects of COVID-19.

South Africa is one of Africa’s richer nations and has an atypically-strong public health system. But, like the Western nations, it is still vastly underprepared to handle a high caseload of individuals sick with COVID-19. With fewer than one thousand beds to support a population of fifty-six million, South Africa does not have anywhere near enough Intensive Care Unit (ICU) beds to respond to a virus reaching high-risk populations and spreading exponentially. If the health system becomes overwhelmed, drastic measures will need to be taken, and individuals who could otherwise be saved may not survive without proper care. Of course, hospital needs unrelated to COVID-19 may also be neglected as hospital staff must quickly decide how to prioritize cases.

Because of the significant risk posed to its population, South African officials have acted quickly and dramatically to respond to the pandemic and attempt to contain its spread. The government has declared a national state of disaster, closed many land ports and schools across the nation, barred entry to citizens of certain high-risk countries and revoked visas, and criminalized the spread of false information about the coronavirus, hoping to prevent the rampant spread of false rumors such as that black people are immune to the virus or that it can be cured using homemade remedies such as garlic. In wealthier areas, drive-in testing sites have been set up and measures are being planned to try and prevent panic-buying and create specific times for the elderly to shop. Testing, treatment, and quarantine for suspected cases are now legally enforced—even resulting in court action against a family who refused to isolate in Gauteng province. South Africa also limited gatherings to one hundred people, and to fifty people at gatherings where alcohol is present. However, despite these efforts, some people continued to attend events such as church services, seeking hope and comfort during these unprecedented and anxious times—though potentially creating more opportunities for the spread of the virus. On March 23, President Cyril Ramaphosa declared a twenty-one day national lockdown to keep residents at home beginning on March 26.

South Africa faces a large threat from the novel coronavirus pandemic and will need to continue to take drastic measures to reduce the spread of the virus and support its economy (a separate, forthcoming blog will examine the likely impacts of COVID-19 on South Africa’s economy). However, South Africa’s poorest are most at risk, and this crisis will likely highlight and deepen divides and resentment between the country’s richest and poorest as two very different experiences of the COVID-19 pandemic take hold in one of the world’s most dramatically unequal countries.

Alyssa Harvie is a program assistant with the Atlantic Council’s Africa Center. Follow her on Twitter @alyssaharvie.   

Questions? Tweet them to our experts @ACAfricaCenter.

For more content, go to our Coronavirus: Africa page.

AfricaSource Mar 30, 2020

Coronavirus comes to Sudan

Not yet one year into a historic political transition and in the midst of an economic collapse, Sudan’s future was already hanging in the balance. The addition of a national and global public health crisis now has the potential for a ‘make or break’ impact on the country.

Africa Coronavirus

AfricaSource Mar 26, 2020

COVID-19 in the DR Congo

By Private: Pierre Englebert

As of March 24, the Democratic Republic of Congo had only forty-eight confirmed cases of coronavirus, with three dead of the disease. But although Congo is only in the very first stages of the pandemic, the contrast between the degree of state capacity and social discipline that it takes to stifle the disease and Congo’s record on these two counts is particularly worrisome.

Africa Coronavirus

AfricaSource Mar 26, 2020

A rough road ahead for Nigeria

By Aubrey Hruby

Africa’s giant, Nigeria, is awakening to a new economic and social reality as a result of the coronavirus crisis. The country of two hundred million has already recorded over fifty cases and its first COVID-related death. News of high-profile infectees is starting to drive social change and spur calls for stronger government action.

Africa Coronavirus

The post COVID-19 pandemic: In a nation of extreme inequality, South Africa’s poorest are most at risk appeared first on Atlantic Council.

The post Hruby quoted in African Business on the Africa Investment Forum appeared first on Atlantic Council.

Illicit cigarettes have long been associated with conflict, terrorism financing, and organized crime. Yet the flourishing illicit tobacco market in South Africa speaks to a less sensational but equally destabilizing set of risks. At the core of this challenge is the state’s ability to provide effective regulation of an industry that is vulnerable to gray and black markets. As is true in South Africa, many countries around the world must provide this regulation in the midst of high levels of official corruption and a history of accommodating powerful private sector actors rather than bringing them to account. As such the challenge is bound up with the state’s ability to regulate legal markets, not just eradicate illegal ones.

The case study presented in my Atlantic Council working paper on the illicit tobacco trade shows how failures in the South African state from 2013 to 2018 led to an explosion in this activity.

Illicit cigarette trade began to pick up in South Africa around 2002 at a time when there was a rise in the presence of counterfeit products on the market and cross-border smuggling from Zimbabwe. But it wasn’t until 2006, when the modus operandi switched from cross-border smuggling to under-declaration, that the illicit cigarette trade started to flourish. At this point a core group of small tobacco companies set themselves up in competition with big multinational tobacco companies. Some of these independent producers set up factories that employed numerous methods to evade paying taxes on their products: they operated undeclared double shifts, ran their machines at night, and/or hid the true scale of their production by paying off customs officials and using fraudulent paperwork.

As this illicit industry picked up, profits escalated, making the beneficiaries more visible to law enforcement. But in a context conducive to corruption, it also gave them power to buy political protection. Both the South African Revenue Service and the South African police set up dedicated teams to tackle the problem. However, the police’s task team worked closely with individuals linked to Big Tobacco to undertake their investigation, which compromised the effort.

Many people with whom I spoke for this study attributed the considerable influence Big Tobacco has in South Africa to its position as a substantial taxpayer; a sophisticated public relations and lobby presence, funded by corporate coffers; and the private resources that these companies have invested into investigating others in the trade. There is evidence that these private resources have included corporate espionage and money laundering.  The close relationship Big Tobacco had with the police task team may have deflected attention away from their own operations.

In 2014, the South African Revenue Service’s investigations into several illicit trade and financial flow cases collided with corrupt interests and exploded in an ugly scandal involving the small and multinational tobacco companies it had been investigating. Eventually, the South African Revenue Service was restructured, seemingly to protect the interests of political figures, decimating its capacity to investigate the illicit economy. The restructuring also diminished the state’s ability to reign in corporate misbehavior, hampering the investigation of complex illicit financial flows.

This had a terrible knock-on effect for the fight against the illicit economy. A recent Commission of Inquiry into concerns about the decline in the integrity of the South African Revenue Service revealed that, through the restructuring, tremendous damage was done to “the benefit of delinquent taxpayers and the disadvantage of major taxpayers who try to comply.” The tobacco sector was held up as primary example of this problem. “Measures to counter criminality were rendered ineffective,” concluded retired Judge Robert Nugent, “and those who trade illicitly in commodities like cigarettes operate with little constraint.”

There were also consequences for the shadow economy. Before it was restructured, the South African Revenue Service provided imperfect but perceptible enforcement through its investigations and raids. When these declined, it led to unrestrained competition between tobacco smugglers, which fueled tensions between the various players. This tension has been linked to assassinations (successful and failed) and acts of vandalism. Cigarettes have also emerged as a preferred currency in the underworld as their ease of distribution in cash-based markets makes them ideal for money laundering.

While this situation may seem rather bleak there are now signs of a recovery in South Africa. South African President Cyril Ramaphosa has pledged to root out corruption. On his watch, protection for players in the tobacco industry has declined and some areas of law enforcement have begun to regain strength. South African Revenue Service disputes with tobacco companies (both small and large), which were mothballed during the administration of Ramaphosa’s predecessor, Jacob Zuma, have been dusted off, and steps have been taken toward litigation and asset seizure.

There is now in South Africa a promising environment for tackling the illicit tobacco trade. Several government departments are acting to curb this illicit trade and reduce smoking-related diseases. There are also a range of non-state actors — from academics providing impartial evidence on the prospects and effects of policies to groups advocating for marginalized constituents and journalists investigating criminal offenders — that can contribute to the response.

A democratic framework has the potential to hold people committing criminal acts to account. There are also key policy and technological interventions, such as track-and-trace technologies, which could reduce the difficulties the state faces with regards to detection and monitoring. The trick lies in implementing an impartial response across the industry with a broad definition of illicit financial flows that captures criminal behavior by small and big players.

It is crucial South Africa gets the regulatory balance right and serves as a positive role model for the region.

Simone Haysom is a senior analyst at the Global Initiative Against Transnational Organized Crime. Follow her on Twitter @simonehaysom.

The post In South Africa, illicit cigarettes are a smoking gun on corruption appeared first on Atlantic Council.

This groundbreaking study of the illicit tobacco trade in southern Africa explores how this trade supports organized crime, helps enable official corruption, and erodes state structures. A major feature of South Africa’s, and to a lesser extent Zimbabwe’s, political economy revolves around conflict—overt and covert, violent and non-violent—over who makes the most money from the illicit tobacco trade, who controls that trade, and how the state responds to it. This conflict now takes places in the midst of huge political transitions within the ruling parties of both countries.

The study maps the key dimensions of the illicit cigarette trade in Zimbabwe and South Africa, including the key actors, the pathways of trade and the accompanying ‘modalities’ of criminality, as well as other important dimensions of the illicit cigarette market in southern Africa. It identifies “good-faith actors,” primarily in South Africa, whose positions could be strengthened by policy and technical interventions, explores opportunities for such intervention, and assesses the practical solutions that can be applied to combat illicit trade and tax evasion in the tobacco industry.

The study should be of interest to those policymakers, experts, and the general public who want to expand their awareness of the nexus between this illicit trade in otherwise licit goods, official corruption, and organized criminal networks.

Introduction

This study was conducted to explore how the illicit trade in licit goods supports organized crime, corruption, and erodes state structures. The illicit tobacco trade in southern Africa occupies a prominent place in southern African politics, due to its prominent role in the ‘state capture’ scandals that characterized politics in South Africa between 2013 and 2018. Indeed, the illicit tobacco trade occupies a prominent place in public debate in South Africa, both about crimes that may have been committed in the last five years, and about how the current administration responds to the illicit economy right now. Conflict—overt and covert, violent and non-violent—over who makes the most money from illicit tobacco, who controls it, and how the state responds to it, is a major feature of South Africa’s, and to a lesser extent Zimbabwe’s, political economy. This conflict now takes places in the midst of huge political transitions within the ruling parties of both countries. 

This case study maps the key dimensions of the illicit cigarette trade in Zimbabwe and South Africa, including the key actors, the pathways of trade and the accompanying ‘modalities’ of criminality, as well as other important dimensions of the illicit cigarette market in southern Africa. It then identifies ‘good-faith actors,’ primarily in South Africa, whose positions could be strengthened by policy and technical interventions, explores opportunities for such intervention, and assesses the practical solutions that can be applied to combat illicit trade and tax evasion in the tobacco industry. The paper contributes to expanding awareness among policymakers and the public of the nexus between the illicit trade in licit goods, corruption, and organized criminal networks.

Method

To gather evidence for this report, the author and researchers conducted semi-structured interviews in April and May 2018.¹ They conducted eighteen interviews in Beitbridge and Harare in Zimbabwe, plus another sixteen in South Africa in Johannesburg, Cape Town, and, via phone, Port Elizabeth. They spoke to people who work in or close to the tobacco industry, including those who have been accused of smuggling, as well people who have studied, reported, or investigated the tobacco industry. Interview questions varied depending on the position of the respondent, but always included their views on the impact of illicit trade and potential solutions, including regulation and technology. 

Interviewees included current and former smugglers, staff of tobacco companies, lawyers, active and former law enforcement with a range of mandates, industry representatives, academics, journalists, and other people involved in the regulation of the tobacco industry and processing of tobacco products. Researchers conducted a literature review of academic papers, media and industry reports, and court case proceedings related to the illicit trade. 

Regional context

The illicit tobacco market in southern Africa is distinguished by two key facts: first, South Africa provides the largest, most profitable, and therefore most important consumer market and cigarette production hub; second, Zimbabwe is the biggest tobacco producer in the region and indeed the continent.² The trade is regionalized: besides Zimbabwe and South Africa, illicit cigarettes are also sold in and trafficked through neighbouring countries Botswana, Namibia, and Mozambique. Smuggling routes can shift through different countries, depending on the enforcement regime, a feature that complicates policy and enforcement responses. However, because Zimbabwe, Namibia, Botswana, and Mozambique have small populations and lower rates of disposable income, the South African market will remain the focus of cigarette smugglers interested in large profits.   

Presently the illicit cigarette market is dominated by ‘genuine’ contraband (as opposed to counterfeit products, which were predominant in the 2000s). Genuine contraband cigarettes are produced in legally registered factories under registered brands, with the profits coming from tax evasion. The specific taxes evaded are either value added taxes (VAT) or excise tax. However, the nature of ‘illicit’ practices in the tobacco industry must be understood more broadly than as just the sale of untaxed products. A comprehensive understanding of the nature and impact of illicit practices must also take into consideration the avoidance or evasion of corporate income tax, anti-competitive practices, and the contribution of illicit trade to facilitating corruption and accelerating the erosion of state institutions. All of these are marked features of the illicit tobacco trade in southern Africa.

British American Tobacco (BAT) is the largest multinational tobacco company present in both South Africa and Zimbabwe. Precise figures are contested, but the most recent Euromonitor report to which we have access (2016) records that BAT held 74 percent share of the licit market, followed by Japan Tobacco International (JTI, 9 percent) and Philip Morris International (PMI, 8 percent) in South Africa.³ The estimate of BAT market share in Zimbabwe—around 80 percent—comes from industry insiders. This dominance of the tobacco market, combined with the high excise tax on cigarettes, makes BAT one of the largest contributors to the fiscus of any company operating in those territories.⁴ In South Africa, this has given BAT ‘a seat at the table’—and we suggest, arguably more—in determining the enforcement response. BAT lobbies hard against the illicit cigarette trade to protect its market share and engages its own surveillance and enforcement actions. At the same time, the owners of smaller companies producing illicit cigarettes have, in almost all cases, widely known high-level political connections in either Zimbabwe or South Africa, or both. As a result, illicit tobacco (and we argue, licit tobacco too) has become a major feature of the political economy of corruption in the region.

The final feature of the local context, when considering the climate for curbing illicit trade, is that both Zimbabwe and South Africa have recently undergone political transitions, whereby ruling parties remained in control, but different factions took over from long-standing presidents. Both the new presidents, Cyril Ramaphosa of the African National Congress (ANC) in South Africa and Emmerson Mnangagwa of the Zimbabwe African National Union–Patriotic Front (ZANU–PF) in Zimbabwe, have declared that they are backing strong anti-corruption drives. 

1: Political economy of the illicit cigarette trade

Zimbabwe

Context

In Zimbabwe, between 19 and 35 percent of the population of sixteen million smoke.⁵ BAT has a factory producing cigarettes for the Zimbabwean market and neighbouring countries. Other than BAT, there are two main tobacco-product manufacturing companies operating in Zimbabwe, Savanna Tobacco and Gold Leaf. Both of these companies have their main market in South Africa. Recently, a few more tobacco companies have been set up in Zimbabwe, but their ownership and the nature of their products is unclear.

The prices of tax-paid cigarettes within Zimbabwe differ according to the brand; the range is between $1.20 and $1.60 per pack.⁶ The cost of a loose cigarette sold at a retail outlet is about $0.06 to $0.10.⁷ The price of a pack of cigarettes on the black market is a third of the price of a pack for which full taxes have been paid.⁸ There is, therefore, a domestic illicit market in Zimbabwe, but in the words of one informant in South Africa: “[In the past] independent factories in Zim existed [only] in order to smuggle to SA.”⁹

Zimbabwe-produced cigarettes are smuggled into all its neighbouring countries, with the clear majority being smuggled into South Africa. The exact scale and number of cigarettes smuggled is unknown. Nonetheless, interviewees were unanimous in the belief that large amounts of cigarettes are smuggled into South Africa daily.¹⁰ The majority of seizures of illicit cigarettes in South Africa have been of Pacific and Gold Leaf, both brands made by the Savanna Tobacco company.

Fuel tankers and trucks were once used to smuggle cigarettes across the Beitbridge border, making use of the balance of trade discrepancy between the two countries.¹¹ (Beitbridge sits along the Zimbabwe-South Africa border, with the Limpopo River running between the two countries.) This scam made use of the fact that tankers could plausibly claim to be leaving Zimbabwe ‘empty’ after dropping off loads of fuel. (Research conducted by the Global Initiative against Transnational Organized Crime, a non-profit, on other smuggling economies in southern Africa has shown that many trucking companies also actively seek to defray their costs by filling otherwise empty vehicles with illicit loads.)¹² In fact, according to sources, during the heyday of cross-border cigarette smuggling in the late 1990s and early 2000s, some enterprising individuals even set up routes that brought licit goods to Mozambique where ‘empty’ trucks would be filled with second-hand clothes, which were then smuggled into Zimbabwe and replaced with cigarettes that in turn were smuggled into South Africa.¹³

However, since Zimbabwean authorities introduced vehicle scanners, and barcode scanners were introduced on the South African side at some border crossing points (notably the Beitbridge border crossing), all high-loaded trucks are now scanned. Consequently, the use of fuel tankers for smuggling is mostly non-existent now. All large vehicles are scanned and if scanning images are suspicious the trucks are examined, which entails having their goods physically off-loaded and examined individually.¹⁴ Through the introduction of these measures at the border—notably the use of scanners on trucks—smuggling cigarettes has become high risk for small-scale businessmen who lack political protection.¹⁵

Actors and modalities

The actors involved in the smuggling of cigarettes from Zimbabwe to South Africa can be divided into two groups: organized low-level smuggling operations run by individual entrepreneurs or groups of entrepreneurs, and organised smuggling cartels with political protection who smuggle the largest loads of illicit cigarettes into South Africa.

1: Small-scale smugglers

Several informants described the practices of small entrepreneurs who are in the cigarette smuggling business. These smugglers send men across the Limpopo River at informal border-crossing points in the bush.¹⁶ Small trucks and minibuses are hired for this purpose from Harare. Some of these vehicles have their seats taken out and their windows tinted to prevent people from seeing inside. 

The process of offloading the cigarettes takes very little time. The cigarettes are brought to the various crossing points to get moved across the river by ‘runners.’ The runners are mostly unemployed young men below the age of forty. This is done at night, between midnight and 3:00 a.m., when most people are asleep. The ‘runners’ physically carry the cigarettes in ‘shangani’ (plastic bags) on their backs and cross the Limpopo River to South Africa. The soldiers who guard these crossing points on both sides of the border are bribed to turn the other way. Informants report that it is easy to bribe the soldiers on both sides of the border.¹⁷

The buyers at the South African side are businessmen who will be waiting to fetch the cigarettes from the runners.¹⁸ To get to their destinations, their trucks use small and private roads to avoid tollgates, roadblocks, and ad-hoc searches by law enforcement on main roads¹⁹

‘Malaityas’ (people in the cross-border transportation business) argued that the scanners and other measures at the Beitbridge border crossing have made it risky for truck drivers to be involved in cigarette smuggling.²⁰ Over time this has led to greater use of the informal border crossing by small-scale smugglers. 

For those who continue to use the official border crossing at Beitbridge, buses with hidden compartments are used to smuggle cigarettes, as they are not scanned but only subject to sporadic road checks.²¹ Small cars are also not scanned, but former smugglers say that as they can only carry small volumes, the risks outweigh the potential gain, which means this is not a popular method of smuggling.²²

Drivers pay heavy fines to the South African authorities if caught smuggling and, in most cases, people end up losing their vehicles and hence their livelihoods.²³ However, drivers are sometimes able to bribe their way out of trouble—and they allege that some police officers actively seek out illicit goods in order to extract a bribe. 

While smugglers and transporters accused both South African and Zimbabwean police and army officials of soliciting bribes, the Zimbabwean side of the border is seen as being more permeable and affected by corruption. According to one malaitya interviewed for this study: 

“It’s easier to bribe officials on the Zimbabwe side because they speak the same language, it’s home; everybody understands that life is difficult in Zimbabwe. We all know how everyone is trying to survive. It’s a different story on the South African side. You can even get arrested for trying to bribe an officer.”²⁴

South African police were considered to be periodically effective and harsh. If a smuggler is actually arrested, it is almost always on the South African side of the border, and they are taken to South African courts.²⁵

2: The ‘untouchables’

There are also actors involved in organized cigarette smuggling syndicates who are described by law enforcement as ‘big people’ who are ‘untouchable.’²⁶ A former smuggler claims that one of these cigarette-smuggling cartels involves politicians in the highest levels of government from both Zimbabwe and South Africa, but would not divulge names. This cartel is said to operate a smuggling scheme that runs from Harare to Durban. Huge trucks are used to smuggle the cigarettes from their loading points in Harare through formal border crossing points and onwards to their destination. These trucks are not stopped or searched on the Zimbabwean side of the border. 

The cigarette brands that are most frequently smuggled are Remington Gold and Pacific Blue, both owned by Savanna Tobacco.²⁷ Beitbridge border post is a major point of entry.²⁸ Seizures at this border post accounted for 82 percent of seizures of illicit cigarettes made in South Africa in 2016.²⁹ However, in recent years there have been seizures of Zimbabwean cigarettes, mostly Savanna’s Pacific brand, on the South Africa-Botswana and South Africa-Mozambique borders. 

Savanna Tobacco is owned by Adam Molai, who is married to the niece of former Zimbabwean President Robert Mugabe and appears to have had political protection during Mugabe’s regime.³⁰ His company has previously been implicated in tobacco-smuggling allegations. Cigarettes manufactured by Savanna have been intercepted being smuggled across the border hidden in an array of different vehicles, including oil tankers and mobile horse stables, in which the product was hidden in secret compartments, false floors, and/or stashed amongst other stock.³¹

Since the political transition, Molai’s position may have changed. Interviews with law enforcement in Zimbabwe confirmed that Savanna Tobacco has recently been ordered to pay tax it has failed to pay the state over the years.³² According to a former smuggler in South Africa, “Adam [Molai] has lost political protection, and is also under financial pressure.”³³ For his part, Molai denies all the allegations against him and has shown that he is prepared to sue for libel to protect his reputation.

Another significant figure is Simon Rudland, the owner of Gold Leaf Tobacco Corporation (GLTC), who has cigarette factories in South Africa and a tobacco-processing factory in Zimbabwe. Rudland owns a suite of companies, including farms, mines in Zimbabwe and the Democratic Republic of Congo, a logistics company, and a bus company.³⁴ Rudland has residences in Zimbabwe, South Africa, and the United Kingdom. Our informants claim that he attends Zanu-PF (Zimbabwe’s ruling party) rallies and makes large contributions towards Zanu-PF congresses.³⁵ His South African business partner, Ebrahim Adamjee, also owns around fifty petrol stations across the country and a large amount of property in Linbro Park, Johannesburg.³⁶ As far back as 2006, Rudland and Adamjee were both arrested—but not convicted—for respective charges related to money laundering and cigarette smuggling from Zimbabwe to South Africa.³⁷ Rudland has denied any wrongdoing. 

Law enforcement response

Police and military informants described how cooperation between their agencies, the customs agency, and central intelligence authorities had been successful in the past in cracking down on smugglers by conducting regular raids at known smuggling points and tracking cigarette smuggling vehicles from their loading points in Harare to the border.³⁸ But aside from resource constraints and a reliance on ad-hoc ‘tip offs,’ their activities were largely scuppered by constant interference and stonewalling of investigations by superiors if their investigations touched on politically connected people. Junior officers would also be sanctioned for refusing bribes that were intended to filter upwards to their superiors.³⁹

Interviews suggested that officials within enforcement agencies know which individuals run the major cigarette smuggling cartels but cannot act against them because of their political protection.⁴⁰ Even drivers who had been apprehended at the border would sometimes be released if they were able to communicate with people within these cartels.

While it is evident that current Zimbabwean President Emmerson Mnangagwa wants to secure greater legitimacy at home and abroad by being seen to be hard-line on corruption, it seems unlikely that he will tackle major sources of party finance.⁴¹ This would appear to be particularly likely where the profits from these illicit trades accrue to networks within the Zimbabwean military, given the key role the military played in Mnangagwa’s rise to the presidency. (We could not verify a link between the military and cigarette smuggling, though the military’s involvement in smuggling Marange diamonds and rhino horn is well documented.)⁴² It is most likely that his anti-corruption drive will target the allies of his predecessor, and other political rivals, as already seems to be the case.⁴³

The current crackdown on Molai suggests something of the political economy of enforcement in Zimbabwe. Molai, who was connected to Mugabe and is alleged to have channelled rents toward him, is now subject to an investigation related to an irregularly appointed government tender.⁴⁴ If this takes the same form as other bad-faith, illicit-economy corruption crackdowns in the region, it will either aim to put Molai out of business, in order to allow for new entrants in the illicit market or the expansion of existing interests, or it will lever his patronage towards the new regime.⁴⁵ As stated, Molai denies all the allegations against him.

South Africa

Context

Prior to 1993, a single company, the Rembrandt Group, held the majority of the legitimate tobacco market in South Africa. Rembrandt was an Afrikaner-owned company and received strong support from the apartheid government, and taxes on tobacco and cigarettes were virtually non-existent.⁴⁶ As the apartheid regime ended and the transition to democracy began, the threat of smoking to public health became a priority. The Tobacco and Related Products Control Act was promulgated in 1993. Since then, stringent controls on smoking in public places have been implemented, as well as higher taxes on cigarettes. The end of apartheid also saw the opening of South Africa’s markets and borders to the rest of the world, ending a lengthy period of isolation. Following the transition, Rembrandt ceded its market share to BAT, handing over what was a near-monopoly share of approximately 93 percent.⁴⁷

Since the passing of the Tobacco and Related Products Control Act, there has been a recorded reduction in the share of smokers and cigarettes smoked in South Africa. This has been credited to increasing taxes on cigarettes and a determined public health policy aimed at curbing smoking in public places and raising awareness of the health hazards posed by smoking.⁴⁸ The share of smokers in the population has been declining slowly in recent years to around 20 percent of the total population in 2017.⁴⁹ Companies now compete for a much more limited pool of consumers in South Africa.⁵⁰

The South African Revenue Service (SARS) should collect R17.85/$1.50 tax (R15.52 in excise duties and R2.33 in VAT) per pack of cigarettes for the 2018/2019 year, based on the national budget. Any pack of cigarettes selling for less than this amount is assumed to be illicit. Illicit cigarettes are cheap, selling for as little as R5 or R10 ($0.40 or $0.85) per pack. These cigarettes can readily be found at street vendors and the average corner store all over the country.⁵¹ The low price and ready availability means that illicit cigarettes are highly accessible and popular with low-income consumers.

Estimates from 2002, when the illicit cigarette trade was picking up pace, indicate that BAT’s market share stood at between 86 percent and 95 percent;⁵² more recent estimates put its market share at around 74 percent (see above), though large multinationals claim to have lost 10 percent of their market to illicit cigarettes in the last year alone.⁵³ Other ‘independent’ tobacco companies make up most of the rest of the market that is not controlled by BAT. Several of these companies have been publicly alleged to have links to the illicit cigarette trade.⁵⁴

Academic and civil society observers of the tobacco market claim that for several years since 2006 the large multinationals deliberately exaggerated the size of the illicit market as a way to lobby against rises in excise duty, which the South African government was pursuing to bring its policy into line with international recommendations and to curb rates of smoking.⁵⁵ An industry group called the Tobacco Institute of Southern Africa (TISA) blamed the purported high and increasing level of illicit trade on the excise tax, which they claimed increased the incentive for criminal actors to enter into the tobacco trade and harmed the market position of multinationals. These claims are not born out by research (see Box: Do ‘sin taxes’ encourage smuggling?) and, in fact, these claims follow a global pattern which has seen multinational tobacco companies use the issue of illicit tobacco to lobby government to lower taxes.⁵⁶

However, the same observers are in agreement that the scale of illicit activity in the cigarette market has escalated substantially over the past three years, believed to be the result of diminished state capacity from corruption, as explained below. Between 2014 and the 2017 tax year, excise revenue from tobacco products fell by 16 percent.⁵⁷ The number of cigarette packs on which tax was paid fell by 27 percent, while the rate of consumption fell only slightly. 

The quantity of taxed cigarettes legally sold and consumed has decreased significantly in the past two years. In the 2017-2018 financial year, the number of taxed cigarette packs amounted to about 763 million. After a relatively stable market size during 2010-2015, there was a steep drop in the legal quantities of cigarettes of 26 percent in the last two years. This steep decrease cannot be explained by standard factors such as the evolution of cigarette price, disposable income, population dynamics, and tobacco control legislation. A possible explanation could be a significant increase in illicit cigarette trade. At the same time, reports by SARS of seizures of illicit cigarettes do not point to an increase in seizures. As SARS has not released consistent figures⁵⁸ on its illicit cigarette seizures over the years, its Annual Report suggests that the tax year 2014-2015 seems to have been the highwater mark for seizures, with 204 million individual cigarette sticks seized and almost 1500 interventions against illicit trade by the revenue service. The rate of seizure almost halved in 2015-2016 to 133 million sticks, and in the years between 2016-2017 and 2017-2018 they were 17.5 million and 61.4 million sticks seized, respectively.⁵⁹ As stated above and in the rest of this paper, this correlates with a serious diminishment of the state’s capacity to investigate the illicit economy in general. 

A recent study released by IPSOS, and funded by TISA, concluded South Africa loses R7 billion ($590 million) per annum to the illicit cigarette trade and that of the total cigarette market around 20 percent of trade was illicit.⁶⁰ However, the figure does not count losses to transfer pricing and tax-base erosion or take into consideration that rates of smoking would fall were there to be fewer low-cost products on the market. The calculation of the size of the illicit market is also complicated by the fact that most measures will only count a pack selling below the tax threshold as being illicit – but, where brands are not competing for the bottom of the market, there is nothing to stop ‘untaxed’ cigarettes being sold for prices above the tax threshold. 

Actors, routes and modalities

The public debate, state response and industry dynamics of the cigarette trade are highly bifurcated by a line that divides the largest multinationals, including BAT, Philip Morris International and Japan Tobacco International, from around five of the so-called ‘independent’ producers, who have locally or regionally registered brands and are alleged to play the largest role in producing illicit cigarettes.

The multinational tobacco companies are represented by TISA, an organization that the independent producers deride as BAT’s ‘mouthpiece’ and claim exists only to give more credibility to, and suggest a broader range of beneficiaries for, BAT’s lobbying.⁶¹ A separate industry platform, the Fair Trade Independent Tobacco Association (FITA), was created in 2012 to protect the interests of small tobacco companies in a region dominated by big multinationals, though it is likewise considered to be a propaganda and lobbying tool for members that are allegedly under-declaring. Several of FITA’s members have been accused of smuggling (often in the form of under-declaring).  Both TISA and FITA deny that their members are involved in illegal activity and have pledged to take action against any of their members found to be contravening the tax, customs, and excise laws of the country. 

Several of the owners of FITA’s ‘independent’ companies are Zimbabwean citizens (including: Hardy Cronje, owner of Home of Cut Rag; David Prioleau, owner of Protobac; and Simon Rudland, co-owner of Gold Leaf Tobacco Corporation, or GLTC). Many of them use distributors who come from Indian, Pakistani, and Bangladeshi networks, with a strong presence in the retail sector catering to low-income markets, particularly supermarkets and bulk wholesalers (such a market is typically referred to as a “cash and carry”).⁶²

BAT has a large factory in Heidelberg that supplies South Africa and the broader southern African region (and is BAT’s eighth biggest factory globally). It produces cigarettes branded by its global trademarks. A mid-range brand such as rival PMI’s Marlboro sells for around R40 ($3.40) in 2018. BAT distributes across the entire country. 

FITA’s members have more localized distribution networks and markets. Most FITA members have their factories in Gauteng, typically in Johannesburg CBD or industrial areas such as Kempton or Linbro Park. Amalgamated Tobacco Manufacturers’ (ATM) factory is in Pietermaritzburg in Kwa-Zulu Natal, and Home of Cut Rag is located near Port Elizabeth in the Eastern Cape.⁶³ In terms of market control, there is territorial division. ATM is said to control KZN, Carnilinx controls Gauteng, and Gold Leaf distributes in Gauteng and the Eastern Cape. No company has dominance or control over the Western Cape market, which is considered to be the most lucrative. 

Illicit cigarettes are typically found for sale in small, owner-staffed general dealers called ‘spaza shops,’ found in townships, or set up as street stalls. According to the BAT-funded IPSOS study, out of the top ten brands found being sold below the tax threshold, six of them are produced by GLTC, owned by Simon Rudland.⁶⁴ GLTC cigarettes are estimated to account for between 70 percent and 80 percent of the illicit cigarette trade.⁶⁵ GLTC has denied claims that it is engaged in illegal activities.

Modalities

Our typology of the smuggling of cigarettes in South Africa distinguishes between what we term ‘internal smuggling,’ which involves various methods for evading paying tax on the sale of goods, and cross-border smuggling, both the conventional variety involving material goods and more intangible financial crimes. 

Internal smuggling

the simple yet effective practice of under-declaring production to the revenue service. The undeclared surplus is then sold, tax-free, typically on the black market. This technique has been utilized by tobacco manufacturers globally for years. Factories in South Africa operate double shifts, running their machines at night, and/or they hide the true scale of their production by paying off customs officials and using fraudulent paperwork. They make use of all the available gaps in SARS’s monitoring of their ‘bond’ warehouses, for example reusing invoices for one hundred cases of cigarettes for multiple deliveries of one hundred cases each time.⁶⁶ Or they obscure the quantity of their production and avoid paying excise through round-tripping and ghost exports—claiming that stock has been exported, when in fact it has been sold in the domestic market.⁶⁷

Many of the companies that are undeclaring and using round-tripping have a business model that blends licit and illicit—often they have entire brands that are produced and accounted for entirely legally, though these account for a minority of their business.⁶⁸ Academic research has found this combination of licit and illicit production and/or sale to be a feature of illicit cigarette markets in jurisdictions across the world.⁶⁹

Counterfeiting

When cigarettes are counterfeited they are packaged in identical or near-identical branding to popular cigarette brands (typically the premium brands made by multinationals). In addition to this fraud, tax is not paid on these products. Counterfeiting was prevalent in the 1990s, but its incidence was eclipsed, though not entirely eliminated, by under-declaration in the 2000s. Counterfeit cigarettes also can be smuggled across borders.

Cross border modalities

Cross-border smuggling

As described above, a large proportion of illicit cigarette seizures are of Zimbabwe-manufactured cigarettes that have been smuggled over the border. Cigarettes have also been smuggled across the Namibian, Botswanan, and Mozambican borders (though they were not necessarily produced in these adjacent countries). The police’s Directorate for Priority Crime Investigation (also known as the Hawks)  list cigarettes manufactured in Botswana (Sasha and Caspian brands, produced by Benson Craig) and Mozambique (Pall Mall and Safari brands, produced by BAT) as “commonly smuggled.”⁷⁰ Smuggled cigarettes also have been seized at sea ports, though these all represent a minority of both recorded seizures and alleged illegal activity. 

‘Losing’ stock in transit

Surplus stock destined for a cross-border market is sometimes ‘lost’ while in transit, though in fact it has been smuggled into the market where it disappeared or into an adjacent market (as such, it can be internal or cross-border). For a cross-border example, this method was alleged to be have been used in a recent case before the Namibian Supreme Court involving Benson Craig.⁷¹ Namibian authorities impounded a shipment of cigarettes, apparently bound for Namibia. Benson Craig claimed that the shipment had ‘mistakenly’ been marked as bound for Namibia but instead was in transit to another destination, and therefore not subject to tax and had been unlawfully impounded. Benson Craig’s arguments were upheld; the company won the case. Nevertheless, although Benson Craig was vindicated, the alleged methodology has been deployed by others in the past, so that cigarettes could be smuggled into either the Namibian or South African market and sold cheaply on the black market. 

Grey Areas

Cross-border financial methods

its profits in the South African tobacco industry. The boundary between tax avoidance and evasion is not always clear, but the revenue service may lack the expertise to pursue these cases and states also tend to be cautious about litigating on these issues as they run the risk—if they lose the case—of creating entirely legal routes to evade tax. 

BAT has been accused of both profit shifting and transfer pricing. Profit shifting is a tax planning strategy used by multinational corporations to shift profits from higher-tax locations to lower-tax locations. The result is two-fold. First, the corporation makes a larger profit due to lower tax rates, and second, higher-tax locations see a decrease in tax revenue. Transfer pricing⁷² involves setting a price for goods and services sold between related legal entities within an enterprise, typically between a parent and subsidiary company. This relates to tax-base erosion in that goods and services could be traded between parent and subsidiary companies that exist in different tax locations across borders. By their nature, profit shifting and transfer pricing are modalities that can only be exploited by multinational corporations. 

Law enforcement

The fate of law-enforcement efforts against the illicit tobacco trade show that tobacco companies’ political connections have been influential in allowing illicit trade to flourish. Despite being declared a national priority several years ago, the industry has grown with relative impunity since. While the state does make seizures of illicit cigarettes, these are mostly of the Pacific brand, which is produced by Zimbabwean company Savanna and may not fall under South African political protection. 

While the state response stretches back to the early 2000s, the past four years are most illustrative of the power that actors in the tobacco industry have amassed, and of the consequent erosion of state capacity. 

In 2014, the illicit cigarette trade was made a priority and an interagency task team—the Illicit Tobacco Task Team (ITTT)—was established to investigate and prosecute individuals associated with the industry. This involved a number of enforcement agencies, including the National Prosecuting Authority (NPA), the Hawks and its Crime Intelligence division, as well as the State Security Agency (SSA). 

However, the ITTT effort did not include SARS. At the same time, SARS was running its own investigation, named Project Honey Badger. This investigation was conducted, in part, by the High-Risk Investigations Unit (HRIU) at SARS, an elite investigative unit dedicated to cases involving the illicit economy. There was little collaboration between the two state investigations, as SARS officials considered the ITTT to be compromised and instructed staff not to share information with it. The HRIU was later disbanded under a cloud of scandal. Many believe it was disbanded because it targeted people in the illicit cigarette industry (and other illicit trades) who were important to the president’s patronage network.⁷³

Yusuf Kajee of ATM and Adriano Mazzotti of Carnilinx have been most prominently associated with the illicit trade and were under investigation as part of Project Honey Badger. Both have denied that they have engaged in illicit trade and are not tax compliant.  ATM has been linked to the Zuma family. Edward Zuma, son of the former South African president, was once director of the company and later became a ‘silent partner.’⁷⁴ Carnilinx owner, Adriano Mazzotti, has admitted to smuggling and other illegal activity relating to his business though he has subsequently retracted these statements. Mazzotti donated R200,000 to the opposition political party Economic Freedom Fighters (EFF) in 2013, and Mazzotti’s partner at Carnilinx, Kyle Phillips, provided R1 million to the EFF’s firebrand opposition-party leader Julius Malema to settle debts that would have prevented Malema from becoming a member of parliament. Journalists claim they have proof that Mazzotti also provided funding for the ANC presidential campaign of Nkosazana Dlamini-Zuma in 2017.  In addition to covering part of the costs of Dlamini-Zuma’s campaign, he also used his clothing company to produce T-shirts and caps for her campaign.⁷⁵ Mazzotti and Dlamini-Zuma have both denied the claims or that they have any relationship, despite photographic evidence of them together meeting on more than one occasion.  In late 2018 it was also revealed that Malema was living in a house in an upmarket suburb of Johannesburg that is owned by Mazzotti. Mazzotti and Malema claim this is a straightforward rental agreement and is not untoward.

BAT may have been complicit in illegal practices. British American Tobacco has also allegedly sought to maintain its near monopoly share of the market for tobacco in South Africa through anti-competitive practices and corrupt relationships with the state. BAT funded Forensic Security Services (FSS) in a corporate espionage campaign against independent manufacturers and has been accused of bribery.⁷⁶ These claims have been detailed in a signed affidavit by Francois van der Westhuizen, who had worked for FSS, which alleged BAT had bribed police and tax officials to turn a blind eye to “BAT’s tax evasion and money laundering.” BAT instituted an inquiry led by law firm Norton Rose Fullbright to investigate these claims, but has not yet released the findings, even though media reports the inquiry is complete.⁷⁷ Another key strategy has been to acquire influence in state agencies and promote action against independent manufacturers that threaten BAT’s majority. BAT’s status as one of the largest single contributors to the national fiscus gives it leverage to gain proximity to state structures and allows it to frame the debate about loss of revenue in a narrow way that hones in on excises loss, rather than tax along the full value chain, which would bring Base Erosion and Profit Shifting (BEPS) losses into view. 

The Illicit Tobacco Task Team provides a good example of this: it was not investigating the tobacco industry at large, rather it allowed TISA to be a member of the team. Media sources in South Africa have suggested that being part of the ITTT and having influence in the State Security Agency may have allowed TISA’s members a say in who was investigated, while also deflecting scrutiny from their own actions. In 2016, when a whistle blower at FSS released confidential documents, it emerged that, in addition to paying people employed by their competitors to spy for them, BAT also had police officers and advocate Belinda Walters, who was FITA’s chairperson, on their payroll.⁷⁸

The Walters case is perhaps the most notorious example of the tobacco industry’s overreach into state institutions.⁷⁹ According to leaked documents and media reports, Walters was a triple agent who spied for BAT while also in the employ of the State Security Agency, before turning on BAT to spy on behalf of Carnilinx (the company she was hired to spy on). BAT paid Walter £30,500 to spy for them, disbursed from their London office through Travelex cards, which may have broken anti-money laundering laws.⁸⁰ It was Walter who set in motion the series of events that gave Tom Moyane the pretext to fire the HRIU’s lead investigator and later disband the unit. While BAT ordered an independent inquiry into its involvement in corporate espionage and bribery, it has never released the findings of this inquiry.

Shortly before the SARS High-Risk Investigations Unit was shut down, SARS had launched a case against BAT for a huge shortfall in tax payments, and it is believed to relate to profit-shifting and transfer-pricing practices. According to financial journalist Rob Rose, 

“BAT’s recent annual report lists a ‘contingent liability’ for a dispute it has with SARS dating back to 2011, when the tax authority challenged the ‘debt financing’ of BAT SA between 2006 and 2010. Essentially, this implies that SARS must have believed BAT put in place artificial structures designed to shift profits offshore and reduce the tax it pays. The upshot: SARS hit BAT with a tax bill for R2.01 billion for ‘tax and interest’ it should have paid.”⁸¹

This debt is the single biggest dispute between the Revenue Service and any single taxpayer. BAT has subsequently downplayed the significance of this debt, saying that it covers a twelve-year period in which the company paid over R100 billion in taxes, and R14 billion in 2017 alone. However, the investigation into BAT’s tax affairs appears to have halted at the beginning of the inquiry and sources with knowledge of complex disputes with high-value tax payers say that initial calculations of BEPS (Base Erosion and Profit Shifting) disputes are usually the “tip of the iceberg.” BAT subsidiaries have been fined or investigated for tax evasion or fraud charges in Australia, Korea, Vietnam, Bangladesh, and Russia. 

After the appointment of Tom Moyane, an ally of then-President Zuma, as head of SARS, many of the staff involved in investigations against illicit trade ground to a halt. The events surrounding the decimation of SARS’ investigative capacity were highly controversial at the time and have continued to generate embarrassment for the ruling party. Early in 2018, President Ramaphosa ordered a Commission of Inquiry into tax administration and governance at SARS headed by Judge Robert Nugent (hereafter, the Nugent Inquiry). In its report, the Nugent Inquiry has concluded that under Moyane’s leadership the organisational structure of the institution had been remodelled to “the benefit of delinquent taxpayers and the disadvantage of major taxpayers who try to comply.” In detail, Nugent spells the various deleterious effects of Moyane’s decisions:

“The Large Business Centre (LBC)⁸² as it had existed was eviscerated to the detriment both of governance and revenue collection. The restructuring of the organisation displaced some 200 managerial employees from their jobs, many of whom ended up in positions that had no content or even job description, and in exasperation skilled professionals left. Others remain in supernumerary posts with their skills and experience going to waste. Customs was adversely affected…. Measures to counter criminality were rendered ineffective and those who trade illicitly in commodities like cigarettes operate with little constraint.”⁸³

These findings support the analysis that political influence in SARS and law enforcement services, such as the Hawks, have played a crucial role in staying investigations into players alleged to be in the illicit trade. For example, the case against Adriano Mazzotti, which was dropped in 2014, was likely due to the political influence he had in his dealings with the Zuma family. The damage to the Large Business Centre likewise affected the Revenue Service’s ability to curtail corporate tax evasion.

Testimony at this inquiry has revealed the impact on the response to illicit tobacco in particular. Staff at the Revenue Service testified that once it focused on curbing the illicit cigarette trade, the collection of excise on tobacco rose, and once the High-Risk Unit was disbanded this progress was lost, the trend reversed.⁸⁴

Revenue is, however, not the only indicator of the decline of the state response: the other is the lack of prosecution for a number of actors who have been publicly linked, through press exposés, to criminal activity and prima facie evidence of corruption. 

Even more disheartening, recent analysis suggests that in the gap created by the destruction of SARS capacity, the big multinationals have also become involved in smuggling practices, either under-declaring or leveraging their relationship with subsidiaries in neighbouring countries to smuggle. Under this view, the illicit cigarette market has grown to a size that the ‘independent’ companies do not have the production capacity to meet and their role is being exaggerated by the multinationals. A leading expert on the illicit tobacco trade in South Africa has been quoted in the press saying, “SARS has been weakened to the extent that people are taking chances. I’m confident big industry has become more complicit in the illegal trade.”⁸⁵ TISA denies that their members are involved smuggling, stating that members “declare every single cigarette they produce in or import into South Africa to the South African Revenue Service” and pass regular audits. TISA also argues that sales of members’ product without tax paid can be attributed to the sale of stolen stock or cross-border smuggling. It denies that FITA members do not have production capacity to meet the size of the illicit market and recommends SARS conduct a national audit of total capacity and total production to clarify this issue. 

As BAT’s putative debt to the revenue service, and as the practices that led to the dispute are likely to have continued between 2010 and 2018, if BAT is forced to settle its arrears with SARS the liability will now be much higher. While BAT attributes the destruction of SARS capacity to ‘state capture’ by the smaller illicit manufacturers, it has also benefited from revenue service’s decline.  Furthermore, multinationals have a motivation to exaggerate the size of the illicit market in order to fight ‘sin’ tax increases, which they argue encourage smuggling and under-declaring (see Box on sin taxes). This tactic has had moderate success. The WHO recommends that tobacco tax incidence be pegged to at least 70 percent of the retail selling price of tobacco price. Since 1994, South Africa has followed a targeted tax incidence approach which pegged the tax incidence at 52 percent in 2015.⁸⁶ South Africa’s increases in excise on cigarettes have been modest in recent years.⁸⁷

Both the ‘independent’ illicit companies and BAT use the media to propagandize stories that obscure their role, legitimize their activities, and seek to harm their competitors. These stories have ideological veils with strong emotive appeals to issues of key national importance and these are effective in shaping public attitudes about the form the state’s response should take. In the case of TISA, their narrative is that they are upholding the rule of law, creating jobs, and making huge contributions to the fiscus in the face of rampant corruption in the state and criminality on the part of independent manufacturers—they are, in other words, holding the line for South Africa’s progress towards development according to existing policies. This narrative has been pushed with renewed vigour in 2018 in the form of an advertising campaign encompassing prime media advertisements which exhorted South Africans to “#takebackthetax”: these advertisements claim that revenue lost to the illicit trade could be put to use employing ‘corruption investigators’ and could have prevented recent fuel price hikes. The independent manufacturers, as represented by FITA, take the position that they have been unfairly maligned by an unscrupulous, criminal multinational, that the illicit market is driven by counterfeiters based in other countries, and that they are being punished for supporting racial transformation of business and ‘radical economic transformation’ of the entire economy. These positions blatantly borrow the language of highly fractious national debates about how South Africa should address inequality and discrimination in order to distract attention from allegedly illegal or unethical practices. 

Impact of illicit trade?

Integration with other criminal networks

Since SARS enforcement and investigative capacity was curtailed, there has been a large escalation in competition between the ‘independent’ companies. This has taken the form of a price war, verbal threats, private legal action by one company to force the closure of a competitor’s factory in Lesotho, attempted and successful assassinations, and the vandalism of the machinery of a factory as part of a dispute between two independent companies.⁸⁸ This escalation is driving severe tensions and, according to one smuggler, “It will only stop when someone dies in the industry. Someone is going to get killed. Because the big players are flexing their muscles.”⁸⁹

This violence is, for the most part, contained within the industry, but has also spilled out as two players compete for greater access to the Western Cape market, something that has driven them into business arrangements with Cape gang and underworld figures.⁹⁰ It appears these arrangements arose initially when a controversial Cape nightclub owner bought debt attached to a prominent independent cigarette manufacturer, who agreed to pay him off partially in cigarette stock, which the Cape nightclub owner then sold through his gang-related distribution networks.⁹¹ This then led to an overture by different underworld networks in Johannesburg to enter the Western Cape market through providing cheap stock to rival gangs in the Western Cape. This had fed into violent destabilization of the Cape underworld and flooded poor Cape Town neighbourhoods with cheap, illicit stock. 

In Gauteng, one figure has also allegedly drawn on gang networks in Ryger Park to carry out a (failed) assassination of Luis Pestana, in which his bodyguard, Gerard Strydom, himself the boss of a bouncer security network that controls most of the nightclubs on the East Rand of Johannesburg, was shot.⁹² Other hits have also been linked to the illicit cigarette trade.⁹³

The illicit trade is also feeding other criminal markets, albeit indirectly. According to people within the tobacco industry, there has been a steep increase in the hijacking of trucks containing cigarettes.⁹⁴ No one has accused industry players of being behind these hijackings, but informants say that the independent companies buy the stolen stock from the hijackers (as they have the accounting practices to absorb this cheap influx of stock). The ease of moving the stolen goods through the illicit tobacco sector may be fuelling the hijacking phenomenon. 

Revenue loss (and public health)

As quoted above, figures from TISA suggest that between 2010 and 2016, R27 billion ($2.2 billion) in revenue has been lost to the illicit cigarette trade. These figures are disputed, on the basis that TISA methodology for measuring lost excise is flawed and because it does not take account of all tax revenue that can be lost through illegal behaviour. Nevertheless, the loss of revenue to the country could be close to or higher than TISA’s estimate and therefore represents a significant loss to the fiscus. 

The impact of revenue loss from excise taxes is twofold. Obviously, this deprives the government of money for its general budget, but the ‘sin taxes’ from which most of this revenue should derive are also supposed to offset the costs of treating citizens who have smoking-related diseases such as lung cancer. Currently, 20 percent of the population age fifteen or older are smokers. The World Health Organisation (WHO) suggests a benchmark for a successful transition to the smoking ‘end game’ is to reduce smoking to 5 percent or less of the population. In South Africa, the low cost of illicit cigarettes is believed to be a major driver of continued smoking. According to Hana Ross, principal researcher of the Economics of Tobacco Control Project at the University of Cape Town, “if South Africa starts to control the illicit market, we would see a huge change in behaviour with many people trying to quit (and some succeeding), many smokers reducing the number of cigarettes they smoke in a day, and many young people not starting to smoke.”⁹⁵

Corruption

Arguably the most severe impact of the illicit trade has been how it has fuelled the corruption of individuals within the state and how this, in turn, has contributed to the destruction of state capacity to investigate the illicit economy or prosecute serious commercial crimes. Many within the industry maintain that high-level corruption was not necessary to conduct business. According to one former cigarette smuggler, “you don’t need high-level corruption” for smuggling. “You just need the people looking at production sheets, and tip-offs about raids.”⁹⁶ However, as players in the industry amassed large amounts of wealth, the scrutiny from the state increased, as did their ability to corrupt people at high levels within the government. As both these phenomena increased—the visibility of the industry and the scrutiny of the state—more laws needed to be broken and investigations had to be halted. 

For example, Yusuf Kajee is said to have involved Edward Zuma in ATM, because Kajee has a conviction for tax evasion (related to his involvement in Delta tobacco, before ATM was set up) and so was ineligible for a state license to manufacture cigarettes.⁹⁷ Kajee reportedly made regular payments to a private account, the proceeds from which were used for upgrades to Jacob Zuma’s private homestead in Nkandla.⁹⁸ Kajee denies that he made any payments to Jacob Zuma or that his relationship to Edward Zuma was improper. Additionally, at the time that the SARS HRIU was destroyed, it was investigating the industry and was set to take away fifteen licences (more than the number of ‘independent’ companies, so it is likely that one or more of the multinational tobacco companies also would have been threatened with a licence revocation).⁹⁹ Since then, none of these companies have had their licences threatened and no progress has been made in the cases of tax evasion launched by SARS against BAT and the ‘independent’ companies. 

This corruption does not only affect the response to illicit tobacco but has also weakened state capacity to deal with any illicit trade. 

2: Identifying and supporting ‘virtuous’ and reform-minded actors

This paper is intended to address the question of how ‘virtuous’ or reform-minded actors can respond to the illicit trade in tobacco in South Africa and Zimbabwe. As a starting point, we need to carefully assess what exactly requires a response. The mainstream narrative in South Africa about the illicit trade focuses almost exclusively on the loss of excise tax to the fiscus because of under-declaration. But we argue that the response should also address: the corruption that allows and is also fuelled by illicit trade; the underworld links between the tobacco industry and individuals suspected to be running extortion rackets or trafficking in narcotics; and the broader range of costs to the state due to illicit practices in the tobacco trade, including cross-border tax dodging. An additional discrete objective could be stopping misinformation about the illicit tobacco trade, which obscures the public health consequences of smoking and distorts debates about how to best achieve the twin (and sometimes contradictory) aims of reducing the number of smokers in South Africa and maximising the economic benefits of the tobacco industry to the country. A holistic reform effort would consider all of these aspects of the trade’s harmful impact. 

One should also ask whether the bulk of reform efforts should be focused on South Africa, because without the South African market, the incentives for illicit cigarette production and smuggling in the region fall drastically. In our opinion, this should be the case. This calculation might also be different if there was a political opening in Zimbabwe which provided a tailwind to reform efforts—currently the opposite situation pertains. 

Indications are that, since South Africa’s change of president, the government wants to be seen to be cracking down on illicit tobacco. The National Treasury, in its annual budget speech, outlined three key measures it would be moving towards: maintaining increases in the so-called ‘sin tax’, mandating plain packaging for cigarette packs, and implementing a ‘track and trace system.’ The acting head of SARS, Mark Kingon, has made several strong statements in the press about reviving a strong focus on the illicit economy, with a particular emphasis on illicit cigarettes.J¹⁰⁰ In May 2018, the scale and impact of the illicit cigarette trade was discussed in Parliament. Public statements issued in 2018 on the illicit cigarette trade indicated a renewed push from law enforcement to tackle the issue. Industry players also confirmed this impression. According to one tobacco industry representative, “my impression is that they [the government] are sweeping the floor clean and it is going to be harder to buy protection.”¹⁰¹

The National Treasury and the Revenue Service are crucial actors. National Treasury sets the excise level for tobacco products and plays a powerful role in shaping how government will balance the need to reduce smoking while also ensuring maximum tax compliance. The crimes at the heart of this trade also fall directly under the mandate of the South African Revenue Service, which must dedicate skills and resources to both improve the integrity of the customs system and investigate complex financial arrangements like transfer pricing and tax-base erosion. The United Nations Economic Commission for Africa has argued that BEPS offences constitute a grave problem for developing countries and that they should be considered as part of the broader agenda against illicit financial flows. They are, however, very difficult for developing countries to tackle: 

“[While] the schemes involved are similar to those used in criminal activities…what prevents some of their activities being exposed as tax evasion is mainly because multinational companies can back up what they do with opinions from tax advisers that make it difficult to establish the intent necessary for a criminal offence. Given that the base erosion and profit shifting schemes are often very complex, involving convoluted circumventions of complex tax provisions in various jurisdictions that are often shrouded in tax haven jurisdiction, it becomes difficult for revenue authorities to challenge their legality in a court.”¹⁰²

For South Africa to pursue such cases will require a large and long-term investments of skills and time. 

While many key staff left the revenue service under Moyane’s rule, an independent inquiry is now investigating a wide range of governance issues in the organization, in what is seen as a step towards repairing it.¹⁰³ Indeed, there appears to be high-level political support for other law enforcement bodies to act against the people who were linked to high-profile corruption scandals during the Zuma era, which will also involve the National Prosecution Agency and Police Service in curbing illicit activities. 

Some of the figures linked to the illicit cigarette trade—like Adriano Mazzotti and Yusuf Kajee—are prominent in the roll call for the post-Zuma clean up. According to recent media reports, SARS has obtained warrants to seize Mazzotti’s assets for alleged underpayment of tax debts.¹⁰⁴ There is high public appetite for conviction and the seizure of assets, an appetite that can best be summarized as a thirst for retribution after the years of waste and decline under the Zuma administration. There are obvious opportunities with this kind of political tailwind, and as mentioned, the state appears to be moving on them already.¹⁰⁵ However, a strong note of caution should be issued. While these motives currently align with public interest in many cases, they do not represent a careful and holistic assessment of where intervention should lie. For example, the directors of GLTC, Simon Rudland and Ebrahim Adamjee, the figures who are widely alleged to be most prolific and powerful in the illicit cigarette trade, have never been linked to Zuma, and until recently enjoyed a very low public profile. Since TISA’s renewed advocacy on the illicit trade, GLTC has been more prominent in the debate, but again in a fashion that represents the interests of ‘Big Tobacco’ and not a strategic assessment of where most revenue is lost, or damage is done to state institutions. 

Likewise, multinational players such as BAT need to be treated with the same scrutiny as smaller players who have been more tainted by Zuma-era scandals. According to one former law enforcement official: “If you want to look at the industry, look at it as a whole. You need to put equal pressure on the industry, otherwise it’s like a water bed, and if you push down on one side, it will balloon on the other.”¹⁰⁶ Current interventions do not tackle complex cross-border financial crimes allegedly committed by multinationals. In addition, the state seems to be moving into the same relationship with BAT that led to co-option of the ITTT team and the abuse of state resources preceding the scandal around the alleged corporate espionage by BAT against its competitors. The symptoms of this lie in TISA’s prominent role in the parliamentary hearings on illicit tobacco, supported by comments made by interviewees for this study.¹⁰⁷ Worryingly, the tobacco industry still appears to exert a particular and substantial influence on the South African state. There has been strong industry pushback, from all quarters, on the new legislation.

If one sets aside more informal forms of influence in South Africa, the legal and political basis for an effective response appears to be good. South Africa is a signatory to the leading international protocol on regulating the cigarette industry—the Protocol to Eliminate Illicit Trade in Tobacco Products—which is published by the WHO Framework Convention on Tobacco Control.  The aim of the protocol is to:

“secure the supply chain of tobacco products, through licensing, due diligence and record keeping, and requires the establishment of a global tracking and tracing regime that will allow Governments to effectively follow up tobacco products from the point of production to the first point of sale. In order for it to be effective, the Protocol provides for intensive international cooperation including on information sharing, technical and law enforcement, cooperation, mutual legal and administrative assistance, and extradition.”¹⁰⁸

However, the government has not ratified this protocol.¹⁰⁹ South Africa has, however, made progressive moves to adhere to the WHO guidelines on tobacco control, the most recent being those announced by Treasury in the 2018 budget speech. 

Looking outside of law enforcement and political action on corruption and organized crime, we also need to consider the role of civil society. There are actors outside the state who have important roles to play, such as academia, the health department and public health advocates, and industry platforms with an interest in limiting the illicit economy.

Health Minister Aaron Motsoaledi has made a strong stand against the tobacco industry, promising stricter legislation to reduce the number of smokers, including of e-cigarettes.¹¹⁰

A draft Tobacco Bill is out for comment, which will include regulation on e-cigarettes, a 100 percent restriction on smoking indoors and further restrictions on outdoor smoking, and the removal of advertising at place of sale and of vending machines. The Department of Health has set up a Tobacco Task Team with includes representative from Basic and Higher Education, labour organisations, and civil society associations which advocate around health problems such as cancer, heart disease and diabetes which are linked to smoking. 

Academic institutions can provide an objective and independent view of what is happening in the market and introduce perspectives that may be neglected by government or commercial actors, such as how tax or price changes impact the poor at the household level, or scientific evidence of the links between proposed or actual policy changes and behaviour change. Advocacy groups like the National Council Against Smoking also try to raise the profile of the public health harm caused by tobacco in the debate. 

Lastly, the actions taken by neighbouring countries are still important. An obvious consequence of greater enforcement in South Africa (and so the elimination of the opportunities for under-declaration there) is that factories will relocate to outside of the country’s borders. (According to our sources, prior to around 2002 foreign countries were the predominant sources of illicit cigarettes sold in South Africa.) Zimbabwe will remain the best location for illicit production, due to the proximity to tobacco supply chains and because the major players in the illicit cigarette trade are already embedded there, with the political connections and logistical systems they need to be successful.  

3: Identifying tools for response: legal, policy and technological instruments to combat the illicit economy

A key objective of this paper is to assess the opportunities for improving the response to illicit trade and diminishing its negative impacts on the economies of South Africa and Zimbabwe, and the functioning of their state institutions. 

In Zimbabwe, it is notable that scanners on its side of the border, plus barcode readers and sniffer dogs on the South African side of the border, have been effective at discouraging truck drivers in Zimbabwe from small- and medium-scale smuggling by changing their risk calculation. Zimbabwe also has legislation to address the illicit tobacco trade: the Finance Act (Chapter 23:04), Customs and Excise Act (Chapter 23:02), and Criminal Law (Codification and Reform) Act (Chapter 9:3).¹¹¹ However, the political situation in Zimbabwe is currently unfavourable for supporting an effective and fair anti-corruption drive, which would be a necessary pre-condition to tackling the highly organized, politically connected cartels that undertake large-scale smuggling, even if there was a clear technological gap. But given the primacy of South Africa to the cigarette market, the question of fronting a comprehensive legal, political, and technologically adequate response is considered primarily for this jurisdiction. 

The WHO outlines several tax administration measures that can be implemented to better monitor and ensure compliance with tax law in the tobacco industry.¹¹² We consider the prospects for each measure in South Africa: 

The use of licenses: South Africa already requires companies to seek licenses to produce tobacco products. The effectiveness of the license system appears to rest on the integrity of the vetting system. As described above, Yusuf Kajee’s co-option of Edward Zuma into his tobacco company appears to have removed a legitimate obstacle to him being awarded a production license (which Kajee denies). As this gambit was successful, the problem does not appear to be whether licenses are required but whether they are awarded and withdrawn impartially. 

Physical Controls inside factories: For ensuring compliance around domestic production, some countries place emphasis on conducting physical controls, which often involve the stationing, full time, of a tax official at factories. It is already SARS practice to visit factories and to physically check for compliance. The tobacco industry is pushing for this approach to be renewed and is a major thrust of the state’s strategy to curb illicit production. It is easy to see why, as it has been hugely unsuccessful in the past. Measures for mitigation notwithstanding (such as frequent rotation and surprise visits), the degree of contact between officials and business owners gives rise to many opportunities for fraud and corruption and requires a robust solution which can withstand such opportunities. 

Audits and other checks on individual and corporate tax compliance: SARS has units in place to pursue non-compliant tax payers through audits and other measures, as well as public commitments to address the growth of the illicit economy through its tax and customs mandate. This was part of the work the enforcement capacity in SARS was pursuing against figures in the tobacco trade, and formed part of the investigations which had led to them threatening fifteen companies with license revocations as well as large bills for unpaid tax. These tools are undoubtedly effective when pursued rigorously and independently. 

Requiring tax stamps: Since the 1970s the South Africa state has required a mark (referred to as a ‘diamond stamp,’ since it is a diamond-shaped embossed mark obtained through mechanical pressure on the cigarette pack) to be affixed to every pack of cigarettes to indicate excise has been paid. This system is widely considered to be ineffective by a wide range of people in the tobacco industry, as the stamp can be easily counterfeited and SARS does not have good control over their issue. More sophisticated stamping technologies could be used, accompanied with more sophisticated monitoring technology in place at production facilities, such as banderol-based stamps. 

Such stamps carry multi-level security features as a protection against counterfeiting and carry unique codes to enable traceability. These require producers and importers to place orders for stamps via a secure connection to a government authority, who verifies and then approves the order. Such systems enable traceability across the distribution chain. 

In its 2017 Budget Review, the National Treasury announced that secure track and trace solutions should be introduced for tobacco products. Accordingly, Article 17 of the Tax Administration Laws Amendment Act (2016) has been modified to mandate the marking, tracking, and tracing of domestic and imported tobacco products. 

Among experts interviewed for this study, track and trace systems received the broadest acceptance from actors within the tobacco industry and those who regulate or study it. These systems were seen as technical measures that could improve compliance. The implementation of a track and trace system, if it were impossible to tamper with, would guarantee that everything manufactured in South Africa would be automatically reported to a central database for full and accurate accounting. This would improve upon current dysfunctional systems because track and trace systems remove human intervention. “You can’t bribe computers,” as one informant put it. With a good and tobacco-industry independent track and trace system, “there would be no direct contact between people looking at numbers and people generating them.”  

There is also evidence that track and trace systems have been effective in curbing illicit tobacco trade in other countries.  When Brazil introduced a track and trace system (secure banderol-based stamps), it led to a rise in excise tax collection of $100 million in 2008. (In a telling development, the illicit market in Brazil has not disappeared as smuggled illicit cigarettes from Paraguay have filled the place of domestic illicit production. In Paraguay, a prominent political figure is profiting from the illicit cigarette trade). In California, a mixture of the implementation of a banderol-based tax stamp using track and trace technology and other measures to increase compliance led to a drop in tax evasion of 37 percent. In Africa, Kenya also provides an example of a country where these measures have helped to curb illicit trade. 

Several informants felt it was important that industry not be involved in the choice of technology for the track and trace system. This is the approach required by the WHO which argues against all self-control systems and instructs contact with the Tobacco industry to be limited to that strictly necessary for implementation. Both TISA and FITA are, however, lobbying for close consultation on the form that track and trace systems take. Likewise, implicit in the success of a track and trace system is the restitution of SARS. Having a track and trace system operated by a decimated tax administration would not work. Hiring new tax officials and strengthening the capacity and ethics inside SARS are important administrative measures, without which any accounting system would be compromised.

In the same vein, high-level political support for cigarette manufacturers will also need to be withdrawn. The crucial policies and laws to ensure this lie in different direction: combating corruption and ensuring the separation of personal interests from the exercise of public office. This means strengthening the performance of the Financial Intelligence Centre, the Public Protector’s Office, and the use of the Public Financial Management Act. This infrastructure is in place and has been effective in the past—the test will lie in the Ramaphosa government’s willingness to use it. 

The assessment of the opportunities to address the illicit trade is, therefore, in the greater scheme of things favourable. There are a range of state and non-state actors in South Africa that can contribute to the response. A democratic framework has the potential to hold people committing criminal acts to account, while there are key policy and technological interventions which could reduce the difficulties the state faces regarding detection and monitoring. The key ingredient will be the political will to prioritize this issue and enact a full and impartial response. The political arena, unfortunately, also is where prospects for success may sour. 

With credit to Mafaro Kasipo and Michael McLaggan for research inputs, and Marco Magrin for research assistance

Such stamps carry multi-level security features as a protection against counterfeiting and carry unique codes to enable traceability. These require producers and importers to place orders for stamps via a secure connection to a government authority, who verifies and then approves the order. Such systems enable traceability across the distribution chain. 

In its 2017 Budget Review, the National Treasury announced that secure track and trace solutions should be introduced for tobacco products. Accordingly, Article 17 of the Tax Administration Laws Amendment Act (2016) has been modified to mandate the marking, tracking, and tracing of domestic and imported tobacco products. 

Among experts interviewed for this study, track and trace systems received the broadest acceptance from actors within the tobacco industry and those who regulate or study it. These systems were seen as technical measures that could improve compliance. The implementation of a track and trace system, if it were impossible to tamper with, would guarantee that everything manufactured in South Africa would be automatically reported to a central database for full and accurate accounting. This would improve upon current dysfunctional systems because track and trace systems remove human intervention. “You can’t bribe computers,” as one informant put it. With a good and tobacco-industry independent track and trace system, “there would be no direct contact between people looking at numbers and people generating them.”¹¹³

There is also evidence that track and trace systems have been effective in curbing illicit tobacco trade in other countries.  When Brazil introduced a track and trace system (secure banderol-based stamps), it led to a rise in excise tax collection of $100 million in 2008. (In a telling development, the illicit market in Brazil has not disappeared as smuggled illicit cigarettes from Paraguay have filled the place of domestic illicit production. In Paraguay, a prominent political figure is profiting from the illicit cigarette trade). In California, a mixture of the implementation of a banderol-based tax stamp using track and trace technology and other measures to increase compliance led to a drop in tax evasion of 37 percent.¹¹⁴ In Africa, Kenya also provides an example of a country where these measures have helped to curb illicit trade. 

Several informants felt it was important that industry not be involved in the choice of technology for the track and trace system. This is the approach required by the WHO which argues against all self-control systems and instructs contact with the Tobacco industry to be limited to that strictly necessary for implementation. Both TISA and FITA are, however, lobbying for close consultation on the form that track and trace systems take. Likewise, implicit in the success of a track and trace system is the restitution of SARS. Having a track and trace system operated by a decimated tax administration would not work. Hiring new tax officials and strengthening the capacity and ethics inside SARS are important administrative measures, without which any accounting system would be compromised.

In the same vein, high-level political support for cigarette manufacturers will also need to be withdrawn. The crucial policies and laws to ensure this lie in different direction: combating corruption and ensuring the separation of personal interests from the exercise of public office. This means strengthening the performance of the Financial Intelligence Centre, the Public Protector’s Office, and the use of the Public Financial Management Act. This infrastructure is in place and has been effective in the past—the test will lie in the Ramaphosa government’s willingness to use it. 

The assessment of the opportunities to address the illicit trade is, therefore, in the greater scheme of things favourable. There are a range of state and non-state actors in South Africa that can contribute to the response. A democratic framework has the potential to hold people committing criminal acts to account, while there are key policy and technological interventions which could reduce the difficulties the state faces regarding detection and monitoring. The key ingredient will be the political will to prioritize this issue and enact a full and impartial response. The political arena, unfortunately, also is where prospects for success may sour. 

With credit to Mafaro Kasipo and Michael McLaggan for research inputs, and Marco Magrin for research assistance

This working paper was supported through a grant from SICPA SA.

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That very same day, some 9,000 kilometers to the south, in the small village of Umtata, in the remote eastern part of the Cape Province of what was then the Union of South Africa, a baby boy was born among the local Thembu people. The child was given the name Rolihlahla, which in the Xhosa colloquial meant “troublemaker”; in later years, the man would be affectionally known by his clan name, Madiba (it was only when he was seven and sent to a nearby Methodist mission school that his teachers would have him christened with the English name of “Nelson” and register the name of his grandfather as his surname). Who would have predicted that the child would not just survive, but, overcoming his rather modest beginnings (his father died when he was not even ten years old, leaving behind four wives, four sons, and nine daughters) as well as the many vicissitudes of his long life, cause a great deal of “trouble” for some of the great and powerful of this world—all without recourse to arms?

Nelson Rolihlahla Mandela—Madiba—is rightly remembered as one of the great figures of the century that was virtually coterminous with his life. The dignity and magnanimity with which he led his beloved country’s transition from a racialist dictatorship to a democratic state alone would have secured his place in history, but it is the example of his broad vision and pragmatic approach that should perhaps constitute his most fitting legacy to those who will follow in the next hundred years.

At the trial in 1964 that saw him sentenced to life in prison, rather than trying to plead his case before a tribunal already rigged against him, he used what might well have been his last public speech to appeal instead to the court of international public opinion: “During my lifetime I have dedicated myself to this struggle of the African people. I have fought against white domination, and I have fought against black domination. I have cherished the ideal of a democratic and free society in which all persons live together in harmony and with equal opportunities. It is an ideal which I hope to live for and to achieve. But if needs be, it is an ideal for which I am prepared to die.” And all through the ensuing twenty-seven years when he was kept isolated on a desolate island prison, he somehow remained steadfast in his conviction that, as he wrote in a prison memoir, “one day… all men, the exalted and the wretched of the earth, can live as equals.”

Mandela’s life underscored, however, that it is not enough to be a visionary: to make dreams a reality requires pragmatism. While still imprisoned, in 1988, he secretly offered to open negotiations with the apartheid regime and when, a year later, F.W. de Klerk took over from the hardline Afrikaner nationalist P.W. Botha, he found a negotiating partner with whom he could engage. In 1993, the two men shared the Nobel Peace Prize, and, in May 1994, Mandela was inaugurated as president of the new South Africa with de Klerk as one of his deputy presidents.

Even the much-admired Truth and Reconciliation Commission that Mandela’s government established and entrusted to Archbishop Desmond Tutu had a political expediency as well as a moral purpose. As the commission’s report concluded, while the apartheid regime was “the primary perpetrator of gross violations of human rights in South Africa,” the African National Congress (ANC) and its organs also “committed gross violations of human rights in the course of their political activities and armed struggles, for which they are morally and politically accountable.” The commission even concluded damningly that the ANC’s armed wing, uMkhonto we Sizwe, “ended up killing fewer security force members than civilians.” It was, therefore, useful that South Africans of all races be given an opportunity for memorialize the past without giving rise to mass prosecutions and the recriminations that would follow them.

In the quarter of a century since Mandela became president, respect for the rule of law and the protection of private property rights on the main have spared South Africa the trauma of neighboring Zimbabwe’s wholesale descent into basket-case status under the yoke, until late last year, of Robert Mugabe, a liberation-era leader definitely not endowed with either Mandela’s depth of humanity or his broadness of mind.

And, although Mandela could probably have been reelected indefinitely, his graceful exit in 1999 after serving just a single term in office helped to consolidate the young democracy—a lesson on good governance that was, alas, lost on his two immediate successors, both of whom were removed from office before they finished their second terms (although the fact that South Africa’s constitutional structures managed both transitions peacefully and relatively smoothly is yet another debt his country owes Mandela).

The accomplishments of post-apartheid South Africa are significant, not only in terms of the maintenance of constitutional order and democratic practice, but in the improvements to the day-to-day lives of millions whom the old regime had systematically marginalized. The lifting of sanctions imposed because of apartheid quickly doubled South Africa’s per capita gross domestic product, resulting in many black South Africans moving into the middle class. Up until the global recession in 2008, the country consistently posted positive (albeit all-too-modest) economic growth—a feat not many African countries north of South Africa could boast of two decades after their own independence. Yet, much remains to be done as the effects of the decades of institutional racism cannot be erased easily. Even as many blacks ascended to the commanding heights of the economy—current President Matamela Cyril Ramaphosa, for example, rose from union organizer to be one of the richest individuals in South Africa—there persists high levels of unemployment and underemployment. Youth unemployment, especially in rural black communities, approaches 50 percent. Even more worrisome indicator is the persistently high and, indeed, increasing inequality: whether one prefers to measure the Gini coefficient or the Palma ratio, South Africa still comes in at the top of the charts for having the starkest income inequality in the world.

On the eve of the centenary, in Johannesburg’s Bidvest Wanderers Stadium, former US President Barack Obama delivered the annual Nelson Mandela Lecture to mark the occasion. He chose as his theme “Renewing the Mandela Legacy and Promoting Active Citizenship in a Changing World.” Later this year, Beyoncé, Jay-Z, and other A-list performers will join African artists like Femi Kuti and D’banj on stage in the same city to pay tribute to the legacy with a “Mandela 100” concert under the banner of “Be the Generation.” In addition to a recently-released anthology of 255 of Mandela’s inspiring (and hitherto mostly-unpublished) prison letters, enough other books about him have been published this year to deplete a small forest.

The tributes are, of course, quite fitting. However, Mandela’s grandeur consisted not of political posturing or virtue signaling, but in matching a greatness of soul capable of dreaming big with a wisdom of mind directed by political realism. That is a rare combination, one which his would-be heirs—both in South Africa and elsewhere—would do well to emulate.

J. Peter Pham is vice president of the Atlantic Council and director of its Africa Center.  

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On Friday, July 13, the Atlantic Council’s Africa Center hosted a conversation with Minister of Trade and Industry of the Republic of South Africa the Hon. Rob Davies.

In his prepared remarks, Davies discussed ways in which South Africa is looking to accelerate economic growth, trade, and investment on the African continent. He highlighted South Africa’s recent signing of the African Continental Free Trade Agreement (AfCFTA) at the African Union Summit in Mauritania as the first step in a larger drive to help African countries play a greater role in the global economy, uniting states with a combined GDP of more than two trillion dollars. Davies also emphasized South Africa’s desire to modernize its economy and education systems to effectively address future challenges, closing the skills gap to prepare for the the digital revolution and the rapid automation of labor. He concluded by reiterating South Africa’s desire to deepen its relations with American companies and strengthen a mutually beneficial economic relationship with the United States.  

A discussion, moderated by Atlantic Council Vice President and Africa Center Director Dr. J. Peter Pham, followed Davies’ remarks, which centered on the economic benefits of further regional integration, the need to modernize South Africa’s education system to improve economic empowerment, and the development of South Africa’s energy sector.

The South African delegation also included South African Ambassador to the United States H.E. Mninwa J. Mahlangu; Department of Trade and Industry Deputy Director-General Ms. Xolelwa Mlumbi-Peter; and Departmental Spokesperson Mr. Sidwell Medupe. Also in attendance and participating in the discussion were Zimbabwean Ambassador to the United States H.E. Ammon Mutembwa, former US Ambassador to Niger Eunice Reddick, and a number of US and non-US government officials, business leaders, and civil society actors.

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Dr. J. Peter Pham, Atlantic Council vice president and Africa Center director, and Mr. Bart Oosterveld, C. Boyden Grey fellow on global finance and growth and Global Business & Economics Program director, welcomed participants. Mr. Brian C. McK. Henderson, Atlantic Council treasurer, introduced Kganyago, with whom he had worked earlier in the central banker’s career.

In his remarks, Kganyago addressed the issue of South Africa’s fiscal resilience, and how the country is positioned to deal with shocks from the global economy. He laid out how strong fiscal institutions and a healthy regulatory regime allowed South Africa to weather the 2008 financial crisis and subsequent recession while many countries fared poorly. As the global economy has recovered, so too has South Africa, rebuilding its economic buffers, reining in inflation, and reducing its debt to GDP ratio.

Nevertheless, Kganyago warned of external risks to South Africa’s “going forward” policy. The rise of protectionism, trade conflicts, and public and private debt will threaten the world’s economy if left unchecked. Kganyago also warned that low interest rates and growth for several African countries have allowed political actors to become complacent, and that key structural reforms were not being undertaken, particularly in the continent’s most vulnerable economies.

Kganyago also acknowledged that, despite positive developments in South Africa’s macroeconomic environment, slow growth, a poor education system, and a stubbornly high unemployment rate—which is currently at 27 percent—preclude any monetary policymaker’s ability to address poverty, and urged structural reforms within South Africa. Despite this, Kganyago showed optimism in South Africa’s “robust democratic institutions” and “world-class constitution,” which have stood up to political challenges in the past few years. With a strong judiciary, Kganyago remained confident in the continued independence of the SARB and his ability to make sound fiscal policy decisions without political interference.  

A discussion, moderated by Pham, followed Kganyago’s remarks. In a question and answer session, he discussed ways that South African could stimulate economic growth, how to provide a social safety net to the country’s most vulnerable, the impact of land reform on the economy, and the role of financial technology in the country’s economic future. Kganyago also acknowledged that, despite its abundance of mineral wealth, South Africa does not fully harness the potential of its mining sector to contribute to the economy and create employment because political uncertainty over the relevant legal regime discourages the type of long-term investment required.

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President Jacob Zuma’s February 14^th resignation will certainly be welcomed by the business and investor community alike, but the fundamentals of the South African economy spell continued slow growth for the foreseeable future. To dramatically improve South Africa’s economic trajectory, a President Ramaphosa will have to tackle the country’s most pervasive and difficult economic challenges: labor market rigidity, quality education, and economic disparity.

Labor Market Rigidities

One of the major causes of South Africa’s economic woes over the last decade has been the rigidity and broader inefficiencies of its labor market. It is an economy burdened with vast unskilled unemployment but historical structures oriented around high-skilled capital-intensive industries. Today, almost 50 percent of South Africa’s economy is rooted in capital-intensive industries, with finance and business services leading the way. The most recent World Economic Forum Global Competitiveness Report underscores a number of the country’s shortcomings in this area, highlighting its poor performance vis-à-vis employer-to-employee relationships, wage flexibility, and labor laws. Indeed, the report ranks South Africa 97^th out of 140 economies surveyed for labor market efficiency and 135^th in hiring and firing practices. These inefficiencies discourage employers from hiring new employees and hinder the market’s ability to absorb new workers, particularly those vying for low skilled jobs.

Crumbling Education System

A high-skilled economy would be possible for South Africa if the country had a solid track record of mass and rapid skill transfer. Instead, South Africa has become infamous for its poor education system. With many problems rooted in the legacy of apartheid and racist policies such as the Bantu Education Act of 1953, through which educational redlining ensured that Blacks received an education that would limit their socioeconomic mobility, the country still struggles with segregation by race and income, with the top 20 percent of schools outperforming the rest by astonishing margins. There have been disturbing stories of text books being burnt to hide corruption and dramatic levels of teacher absenteeism. Indeed, a 2015 Organization for Economic Cooperation and Development (OECD) table of seventy-six education systems ranked South Africa second-to-last in mathematics and sciences.

South Africa’s poor education system not only hurts its students in the immediate term, but also damages future generations of workers who will lack the skills needed to obtain the select few jobs that are available to them. Bold reforms are necessary to improve this, ranging from repurposing spending in favor of mobile learning to implementing vocational training to using approaches like blockchain to verify relevant work experience and performance.  Without dramatic interventions in low-income education, South Africa’s economy will continue to exclude those left behind by its crumbling education system and stymie growth.

Dangerous Wealth Gap

Lastly, tackling South Africa’s dangerous wealth gap is imperative to improving its economic fundamentals. With just 10 percent of the population owning close to 95 percent of all assets and earning close to 60 percent of income, South Africa is one of the most unequal societies in the world. The country’s economic inequality – measured by the Gini Index – has remained consistently above 60 percent since the early 1990s, despite marginal gains in economic growth and government efforts, albethey incomplete, to reduce wage inequality. Programs such as broad-based, black economic empowerment have failed to deliver enough of a reduction in inequality and it is no wonder that social instability, illustrated by high crime rates, continues to plague the country. 

In his first months as leaders of South Africa’s governing ANC party, Ramaphosa promised to inject life back into the party (which has struggled for purpose after more than two decades in power) and crack down on the crony corruption of the past administration. He has also committed to an aggressive plan to rescue the economy and recapture the support of South Africans disillusioned by the anemic economic growth throughout the Zuma years.  The success of such a plan is yet to be determined, but he should leverage the good will and optimism that will follow a Zuma resignation by moving quickly on meaningful reforms. A Ramaphosa “new deal” with teeth—the willingness to address hard political issues and commitment to rapid implementation—could pave a new path for South Africa into the future.  Now is the time to attack the many bottlenecks that hinder the country’s economic prosperity and gain global confidence in the process.

Aubrey Hruby is a senior fellow in the Atlantic Council’s Africa Center. Follow her on Twitter @AubreyHruby.

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The NEC’s decision followed a marathon thirteen-hour meeting on February 12 to decide the fate of Zuma, who has been plagued by corruption allegations.

Zuma’s successor, Cyril Ramaphosa, was elected president of the ANC in December of 2017, defeating Zuma’s former wife, Nkosazana Dlamini-Zuma.

Ramaphosa faces a delicate balancing act. By forcing Zuma to heed the NEC’s call and resign, he would risk alienating large vote banks that remain loyal to the president. On the flip side, allowing Zuma to prolong this political crisis risks further tarnishing the ANC brand under Ramaphosa’s leadership.  

With the NEC’s decision, the ball is now in Zuma’s court.

J. Peter Pham, vice president for regional initiatives and director of the Atlantic Council’s Africa Center, discussed the unfolding crisis in South Africa in an interview with the New Atlanticist’s Ashish Kumar Sen. Here are excerpts from our interview.

Q: Jacob Zuma has faced corruption allegations for some time now, but he has never been charged. Why have these allegations come to a head now?

Pham: Jacob Zuma has dodged not just corruption allegations, but even a rape accusation over the years. It is not the first time that he has faced serious criminal charges. Three things have made this different.

First, the mismanagement of the economy, including the botched firing just under a year ago of a respected finance minister, Pravin Gordhan. This led to some of the worst hits to the rand in recent memory and a serious loss of investor confidence in the South African economy, which is Africa’s most developed economy and its largest in terms of per capital gross domestic product.

Second, there is a political calculation within the African National Congress (ANC)—the liberation movement that has become the dominant party in South Africa. The toll of the mismanagement and corruption allegations, and the sheer incompetence of its governance led to some of the worst poll results they have had. They were beaten in many of the largest urban centers in last year’s regional and municipal elections.

Third, there is a lifting of the veil on the full extent of the nature of the corruption such. You have official government anti-corruption agencies and courts talking openly and using the term “state capture” with regard to a family of ex-patriate Indians—the Guptas—who are close to Zuma and his family allegedly seizing command of the state and milking it for its resources. Whatever the truth of those allegations, they have certainly been played out spectacularly on the international stage, leading to the collapse of a storied British public relations firm—Bell Pottinger—and all sorts of unseemly accusations around a number of multinationals in the financial sector, including the South African units of Goldman Sachs, McKinsey, and KPMG.

The ANC actually governs as a coalition with the Congress of South African Trade Unions (COSATU) and the South African Communist Party, both of which have previously come out very strongly for Zuma’s removal. Within his own party, Zuma suffered a setback when his former wife, Nkosazana Dlamini-Zuma, lost her bid to become his successor—president of the ANC—to Cyril Ramaphosa. That defeat might have been by a slim margin, but it shifted momentum within the party itself.

Q: What kind of support does Zuma have within the ANC and in South Africa?

Pham: Jacob Zuma is, if nothing else, a survivor. Although he is known mostly for his eccentricities and the allegations of corruption that have surrounded him for a number of years, this is a man who early in his life spent ten years imprisoned under the apartheid regime with Nelson Mandela on Robben Island. After his release, he spent fifteen years in exile. He has been a minister and served as deputy president he was fired as deputy president; he was not convicted on a charge of rape; he escaped conviction on numerous counts of corruption on procedural grounds, although the courts have recently reinstated some of those charges; and he has been censured by South Africa’s highest court for using public money to upgrade his private home in Nkandla.

Besides being a political survivor, Zuma also is a popular politician, especially with rural constituencies and outside larger urban centers. Many of the blocs of key voters for the ANC are part of his core constituency. Even though he lost the bid to get his former wife elected as his successor, many of those who were elected to positions in the National Executive Committee (NEC) as well as other party organs are aligned with him.

Q: And yet the ANC decided that he should step down from the presidency?

Pham: That decision was made by the six-member NEC. What is telling is not so much the decision, but how agonizingly slow the decision-making process has been. Despite the fact that Cyril Ramaphosa was elected in December as the head of the party and that he has expressed openly since January his desire that Zuma not finish his term, it has taken up to now—only after a marathon thirteen-hour meeting—to get a consensus of the six-member NEC to ask him to step aside. We don’t even know if he will agree to do so.

Although it highlights the fact that power and momentum is shifting toward Ramaphosa, it also shows that Zuma is not entirely a spent force.

One could say that the long, drawn-out process could be a sign of weakness on the part of the new leader, but it could also be a sign of prudence. Ramaphosa has a very careful balancing act. He beat Zuma’s former wife to be president of the party, but he is going to need some of the Zuma constituency to turn out and vote for the party in the elections. That’s why the emphasis has been on allowing Zuma, insofar as possible, a dignified exit.

Balanced against that consideration is the other consideration that the longer Jacob Zuma holds out, the more damage it does to the ANC brand. It is a very tough balancing act that Ramaphosa has at the moment.

Q: What are the consequences for the ANC should Zuma decide not to heed his party’s calls to step down?

Pham: We don’t know what he is going to decide. Reportedly, he has been given a forty-eight-hour deadline to respond.

This is a party decision, it is not a constitutional provision. Similar circumstances happened in 2009. Zuma’s predecessor Thabo Mbeki had fired Zuma as deputy president of South Africa. Zuma then subsequently won the election within the ANC to become the new party president, and pulled a maneuver not unlike the one that Ramaphosa has pulled off which is to have the NEC “recall” Mbeki. That time, Mbeki listened to the ANC leadership and handed in his resignation as head of state.

Thabo Mbeki didn’t need to step down. He did so because he was a loyal soldier of the ANC and obeyed the party. There is no constitutional requirement that Jacob Zuma step down.

If he refuses to go, the party then faces a choice. It has 249 seats in the 400-member National Assembly. It only takes 201 votes to remove him from office in a no-confidence vote. South Africa is a hybrid system in which the president is selected by parliamentary majority, much like a prime minister in many countries.

However, a motion of no confidence, if it were to pass, would bring down not just the president but the entire government. The cabinet, deputy ministers, all lose their positions. Many of them are members of the National Assembly, belonging to the ANC or its allied parties. The question is: Will parliamentarians vote to bring him down with no guarantee that they will be reappointed to their posts? Plus, there is the humiliation for the party to vote for a no confidence measure that is, in formally speaking, aimed at a government it formed.

The other way is impeachment of the president, but there are only very narrow grounds for such a motion. Impeachment will require 267 members, which means that the ANC would have to rely on votes from the opposition, which would probably give the votes. While it would remove only Zuma, it would be humiliating for the ANC to go into elections with one of its own presidents formally impeached by the National Assembly.

Q: Has Zuma cost the ANC public support ahead of the elections in 2019?

Pham: The allegations of corruption around him have hurt the ANC’s brand. The ANC lost major urban centers, including Johannesburg and Pretoria, in municipal elections last year.

On the other hand, one cannot forget that Zuma still commands a lot of votes that deliver to the ANC, especially in rural constituencies. At the same time, his continuing presence makes it difficult for the ANC to rebrand itself, which is really what the party is attempting to do to get away from the corruption allegations that are personified in Zuma. To be fair to Zuma, he is not the only one facing corruption allegations. Ironically, the new secretary general of the ANC, Ace Magashule, who delivered the ANC’s demand to Zuma, had his own offices raided by an elite squad from the anti-corruption authority just last month in connection with an investigation into the siphoning of millions of rand meant to aid local dairy farmers.

Q: In a country that has been dominated by the ANC, what does a weakened ANC mean politically for South Africa?

Pham: There are a couple of trends. One is that the ANC’s proportion of the vote has fallen in every single election—national, regional, or municipal—since 1994 when the first democratic elections were held in South Africa. Nowadays, it receives now just barely above 50 percent of the votes cast.

Cynics often joke that because of increasing voter apathy the largest single vote-getter in South Africa is “none of the above!” On the other hand, the opposition has been divided between the classically liberal opposition centered around the Democratic Alliance which governs the Western Cape, Cape Town, and a number of municipalities; and on the ANC’s left groups like the Economic Freedom Fighters led by Julius Malema, a former youth leader of the ANC who was expelled from the party. The ANC still occupies something of a middle ground.

Rather tellingly, after the municipal elections, the liberal opposition and the radical left managed to form working majorities to keep the ANC from power at the local level in several areas. I think it will be very difficult for this to occur at the national level.

So, a weakened ANC is leading to a more pluralistic system, or at the least the possibility of that.

Q: What do we know of Cyril Ramaphosa?

Pham: He was a labor activist best known during the anti-apartheid struggle as the head of the United Mine Workers. Later he became very wealthy as a businessman and in fact a mine owner. His backers would say his background enables him to empathize with the struggles of ordinary South Africans, while also appreciating the concerns of the business community.

Of the two leading candidates for the presidency of the ANC he was viewed as the one who was more business friendly—or as I would rather put it, the business community was more comfortable with him rather than Zuma’s former wife, who is more outspoken.

Q: What is his biggest challenge?

Pham: His biggest challenge is going to be, first of all, uniting the ANC. Whatever one can say about Zuma, his removal, although it removes a burden on the ANC and helps with the rebranding effort, will alienate some people within the ANC.

Ramaphosa’s challenge will be how to unite the party between those who back Zuma and those who do not, while reaching out to disaffected voters to win the next election.

Externally, he has got all sorts of challenges. The ANC has delivered on some things over the years. There has been a growing black middle class since 1994, but much of this has been achieved through wealth transfers. Most people acknowledge that you have reached a limit on how much you can tax and transfer wealth. Now you have got to create wealth.

For many, the promise of liberation has not quite been delivered. If one looks over the nearly quarter of a century of ANC government, South Africa’s record on delivering services has been dismal. Everyone is focused at the moment on the fact that Cape Town is going to run out of water and is facing Day Zero sometime in the coming months, but shortages have also long plagued the power sector and been a serious obstacle to industry. The quality of education is also not up to the mark. By one educational metric, South African school leavers score at literally the bottom internationally in terms of math scores. The unemployment rate for South Africa is high even for a continent that is noted for high youth unemployment.

Ashish Kumar Sen is the deputy director of communications at the Atlantic Council. Follow him on Twitter @AshishSen.

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On Tuesday, November 29, the Africa Center at the Atlantic Council launched its newest report, Forging a New Era in US-South African Relations.

Atlantic Council Vice President and Africa Center Director Dr. J. Peter Pham welcomed guests and underscored the need for a renewed US-South Africa relationship, which he said has taken on a lower profile in recent years.

The report’s author Anthony Carroll summarized the report’s findings: “Ke Nako! It’s time. It’s time for a reset in our relationship.” Myriad opportunities for mutual benefit exist and could be strengthened, said Carroll, noting that more than six hundred US companies already operate in South Africa. He suggested that four competitive advantages account for continued US business interest: access to capital markets; market sophistication; rule of law and judicial independence; and media and thought leadership.

At the same time, Carroll said, serious challenges threaten to undercut these advantages—high rates of corruption and state capture, an economic recession and a thirty-billion-rand budget shortfall, unreliable power provision, and weak primary and secondary education, among other challenges.

Carroll concluded with recommendations for how to reinvigorate the US-South Africa relationship. In particular, he emphasized that the United States needs to act urgently on four tracks: trade liberalization, business-to-business relations, government-to-government relations, and university and think tank collaboration.

A discussion, moderated by Africa Center Senior Fellow Aubrey Hruby, followed Carroll’s remarks and included Ambassador Donald Gips, principal at Albright Stonebridge Group and ambassador to South Africa from 2009 to 2013, and Mr. Rob Eloff, co-founder of Lateral Capital. Panelists emphasized the need for pragmatism in the US-South African relationship, the potential of South Africa to serve as a “bridge” to further US investment in Africa, and the future of US policy toward the country. Panelists also took questions from the audience, which consisted of US and non-US government officials, business leaders, and civil society actors.

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As one of the African continent’s largest and most sophisticated economies, South Africa offers a myriad of opportunities for engagement with the United States on diplomatic, commercial, security, and social fronts. It is a self-sufficient, complex, and dynamic country in a struggling, complex, and dynamic region. Yet, the centrality of South Africa to the United States’ relationship with the wider continent is underappreciated by Washington’s policy community, which has become distracted by the displays of dysfunctionality and high-level corruption that have come to characterize South African politics. These political dramatics have knocked US relations with South Africa off track by obscuring the enduring social inequities at the heart of South Africa’s problems, both in media depictions of South Africa and in serious policy discussions.

As Anthony Carroll details in the Africa Center’s newest report, Forging a New Era in US-South African Relations, the United States has a significant stake in South Africa’s future. The country has the potential to serve as a peacekeeper and economic flagship for the whole of Africa. Currently, it falls far short of this potential—but the upside trade and security benefits of an improved relationship between Washington and Pretoria are significant. At the same time, the downside risks of ignoring the relationship are severe: increased social unrest in South Africa would have disastrous consequences for the entire continent.

This report assesses the potential role of the United States in assuring South Africa’s passage through a difficult political and economic period, and recommends a new high-level effort to investigate progress on four tracks: trade liberalization, business-to-business relations, government-to-government relations, and university and think tank collaboration.

South Africa is a strong and independent nation, and relations with the United States have been strained. The findings of this report suggest a need—on both sides—for a stronger and more vigorous relationship between Pretoria and Washington. 

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As Aubrey Hruby and I documented in a report last year, those countries that rely heavily on the export of one or two resources to drive their economic growth have suffered as a result of the emerging market downturn and its knock-on effects, both in terms of demand for their commodities and in availability of financing for their major infrastructure and other development projects.

Nigeria, Africa’s most populous country and one which only emerged as the continent’s biggest economy three years ago, is bedeviled not only by low petroleum prices, but decreased production due to attacks by the militants in the oil-producing Niger Delta region—at one point last year, the amount of crude being pumped nearly reached the lowest point in three decades. The rest of the economy in the West African giant essentially stagnated, hammered both by the government’s maladroit management of the currency float and by the failure of President Muhammadu Buhari’s administration to make much headway in improving the country’s overall business climate, as witnessed by Nigeria’s abysmal 169^th place ranking among 190 countries analyzed in the World Bank’s Doing Business 2017 report. 

Angola nudged ahead of Nigeria early last year to become Africa’s biggest oil producer, thanks in part to the latter country’s problems with its militants, but the distinction means less in a world of depressed hydrocarbon prices. With inflation projected to have been around 45 percent in 2016, while the country’s currency, the kwanza, lost nearly 20 percent of its value during the same period, the country’s grim prospects heading into the new year add to the uncertainty with the announced plans of longtime President José Eduardo dos Santos to retire later this year (elections are scheduled for August).

Similarly, Algeria’s heavy dependence on energy exports caused the growth to slow down to an estimated 3.6 percent in 2016 with the World Bank estimating it will plunge further in the coming year. Low oil prices will continue to weigh on government finances as inflation and unemployment both increase; the dinar has nominally depreciated 20 percent over the last two years. The 2017 budget signed by the country’s octogenarian President Abdelaziz Bouteflika in late December raises taxes to compensate for declining revenues from hydrocarbons, signaling that the heavy public spending that enabled the regime to weather the so-called Arab Spring is no longer an option.

While South Africa was spared an end-of-the-year downgrade by Standard & Poor’s of its sovereign credit—it remains at BBB-, one notch above “junk” status—Moody’s opened 2017 by placing the country on a downgrade review, a step which serves notice to investors, some of whom have fiduciary obligations barring them from doing business in places branded with “junk” status. Moreover, the numerous corruption scandals surrounding President Jacob Zuma have divided the ruling African National Congress, already reeling from unprecedented rebuff in the August 2016 local government and municipal elections, adding to the political volatility that undermines investor confidence just as the country regained its title as Africa’s largest economy.

Despite its wealth of natural resources, both in terms of extractives and in potential for renewable energy, to say nothing of the extraordinary human capital in its people, the Democratic Republic of the Congo will struggle economically in the coming year. Notwithstanding a rickety last-minute political deal pushed by the country’s influential Roman Catholic bishops that is supposed to lead to presidential elections before the end of 2017, President Joseph Kabila’s decision to violate the constitution and hold on to power despite the December 19, 2016, expiration of his final term casts a long shadow over the fourth most-populous country on the African continent and the largest country by area in Sub-Saharan Africa. As Sasha Lezhnev of the Enough Project pointed out recently, the political crisis is not without its connection to economic woes, past and present: “Corruption has increased and prices for the key commodities that Congo produces have plummeted in recent years, e.g. with the price of copper going down by nearly half over the past five years. Average Congolese people are bearing the brunt of this. The price of some foodstuffs is up as high as 80 percent; the Congolese Franc has lost 27 percent of its value in 2016; inflation has increased to nearly 6 percent; Central Bank foreign exchange reserves have decreased by nearly half (45 percent) over the past two years. The Congolese government is also slashing state services, with budget cuts of 22 percent and a further 14 percent, including a 90 percent cut in spending on healthcare equipment.”

If some of the bigger and resource-dependent economies in Africa are in the doldrums, some of the continent’s medium-sized and more diversified economies will make interesting watching in the new year.

Côte d’Ivoire may well be Africa’s new economic powerhouse, with a diversified economy and growth in 2016 expected to hit 8.5 percent, the second-highest in the world. While there are occasional hiccups like the mutiny this past weekend by some soldiers left over from the country’s civil war a decade ago, by and large President Alassane Ouattara, an economist and former International Monetary Fund (IMF) director, is widely credited with sound macroeconomic management. Overwhelmingly reelected to a second and final four-year term in 2015, he has laid out an ambitious National Development Plan with major structural reforms to consolidate the private sector as well as to achieve inclusive growth. The IMF’s most recent regional economic outlook projects Côte d’Ivoire’s real gross domestic product (GDP) to continue growing at roughly 8 percent annually over the next few years, while the median for Sub-Saharan Africa will be just shy of 4.5 percent. According to data from the Ivorian government’s Center for the Promotion of Investments in Côte d’Ivoire (CEPICI), through in the first nine months of 2016, some 5,720 new enterprises were started in the country, many drawn by the business-friendly regulatory environment.

Fresh off hosting the 22^nd Conference of Parties (COP22) of the United Nations Framework Convention on Climate Change two months ago in Marrakech, Morocco continues to forge a role as an African—and, indeed, a global—leader on renewable energy. The kingdom, which is on track to meet more than 40 percent of its needs through renewable energy, primarily solar and wind, by 2020—an extraordinary turnaround given that just a few years ago the country was, according to the World Bank, the Middle East’s largest energy importer, depending on fossil fuels for over 97 percent of its energy. Moreover, in pursuit of the goal of making Morocco the commercial gateway to Africa as well as Africa’s bridge to Europe, King Mohammed VI has been busy implementing his strategy of making Africa the “top priority” of his foreign policy, with a string of official visits across Africa, including recent forays to Rwanda, Ethiopia, and Nigeria, that have resulted in agreements for multibillion-dollar cross-investments in the agriculture, energy, and financial sectors, as well as the historic announcement last month of a Moroccan-Nigerian joint venture to build a gas pipeline to connect the two countries that will eventually link up to Europe. 

Senegal has long been a bastion of political stability in West Africa, a reputation consolidated in 2016 when voters in a constitutional referendum not only reaffirmed the two-term limit on the presidency, but cut the term of office itself down to five years from the current seven years, as well as enacted a raft of other measures to further good governance. President Macky Sall’s Plan for an Emerging Senegal, crafted with help from McKinsey consultants, includes twenty-seven flagship projects and seventeen major reforms, encompassing diverse sectors ranging from agriculture to energy to education to health to financial services to tourism. The objective of all this is to increase the West African country’s productivity in order to grow its GDP, create jobs, and facilitate industrialization. According to the year-end update to Ernst & Young’s Africa Attractiveness Index, Senegal—along with Côte d’Ivoire, Ethiopia, Kenya, and Tanzania—is expected to continue growing in the high single digits in 2017.

One possible bump in Senegal’s road to the future is that the country was counting on a second Millennium Challenge Compact from the United States to help address regional obstacles to economic growth. The Millennium Challenge Corporation (MCC) board selected the country a year ago, but the Senegalese government’s December 2016 decision to only vote for, but to actively co-sponsor, United Nations Security Council Resolution 2334 on Israeli settlements not only in Judea and Samaria (the West Bank), but also in the Jewish Quarter of Jerusalem, may cause Congress to closely scrutinize of a major appropriation for Senegal like an MCC compact, given the broad bipartisan support in the House of Representatives last week—by a margin of 342 to 80 votes—for a measure condemning the UN resolution and the Obama administration’s abstention on it. 

A largely diversified economic base, Kenya has largely been resilient through the emerging markets downturn of the last year. While final numbers for 2016 are still being crunched, it looks like East Africa’s largest economy grew by at least the 5.9 percent forecasted by the World Bank and that may even approach the 6.8 percent growth the revised IMF prediction estimated in October. One of Kenya’s advantages has been its membership in the East African Community, which has evolved from a customs union to a common market and has long-term aspirations of a monetary union and a political federation. On the other hand, the country faces not-insignificant political, security, and economic uncertainty in 2017 with presidential, parliamentary, and local government elections scheduled for August; the ongoing threat posed by al-Shabaab terrorists operating out of neighboring Somalia (recall that 2016 began with more than 100 Kenyan soldiers killed when the al-Qaeda-linked militants overran a peacekeeping base in El Adde, Somalia); and yet-to-be-determined impact on private-sector credit following the signing last year by President Uhuru Kenyatta of legislation capping interest rates at 4 percent above the benchmark central bank rate.

If it can weather the political crises that have led to mass demonstrations and the declaration of a state of emergency in late 2016, Ethiopia will, according to IMF estimates, be positioned to overtake Kenya as East Africa’s largest economy sometime in the coming year, having posted 10.8 percent average annual growth over the last decade, before drought hit the core agricultural sector this year (and anti-government protests erupted). Nevertheless, investors continue to flock to there—some $500 million in new foreign direct investment entered in the last three months of 2016 and an additional $3.5 billion was being processed, according to one analysis—and its large internal market (Ethiopia is the 13^th most populous country in the world) and low labor costs make it an attractive location to manufacture fast-moving consumer goods. In addition, Ethiopia’s investment in hydropower—last month authorities inaugurated Africa’s tallest dam, the Gibe III dam on the Omo River, doubling the country’s electrical output—will not only give it a reliable source of energy, but provide electricity to the region, including Kenya, which has signed up to buy some of the power produced.   

African countries face many challenges in 2017, but, alongside these, there are the fundamentally positive dynamics of many of their economies, including a growing labor force, increased urbanization, and advances in technology, as I argued recently in a new Atlantic Council Strategy Paper, A Measured US Strategy for the New Africa. The 2016 Republican Party Platform affirmed: “We recognize Africa’s extraordinary potential. Both the United States and our many African allies will become stronger through investment, trade, and promotion of the democratic and free market principles that have brought prosperity around the world. We pledge to be the best partner of all African nations in their pursuit of economic freedom and human rights.” As a new US administration takes office in less than two weeks, it’s time to look for ways to fulfill that pledge so that American citizens and business can join their African counterparts in grasping the continent’s burgeoning opportunities.

J. Peter Pham is Vice President of the Atlantic Council and Director of its Africa Center. Follow the Africa Center on Twitter @ACAfricaCenter.

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Decisions by South Africa, Burundi, and the Gambia to leave the court raise questions about its future

Near simultaneous decisions by South Africa, Burundi, and the Gambia to withdraw from the International Criminal Court have sparked fears of an exodus of African countries from The Hague-based court that is widely perceived as biased against Africans. Such a scenario raises serious concerns about the court’s future as well as questions about the judicial recourse that would remain for victims of the world’s worst atrocities.

South Africa announced its intention to leave the International Criminal Court (ICC) on October 21. The move shocked many in the international community who have long viewed South Africa as a champion of human rights on the continent.

Shortly before South Africa’s decision was made public Burundian lawmakers overwhelmingly voted in favor of withdrawing from the court after ICC prosecutor, Fatou Bensouda, announced that she would open an investigation into the ongoing human rights abuses in Burundi.

Last week, the Gambia—whose president, Yahya Jammeh, has been described as “Africa’s worst dictator”—became the third African country to announce its intention to withdraw from the court. It cited the ICC’s “persecution and humiliation of people of color, especially Africans” as the reason for its decision.

The crumbling credibility of the ICC in Africa is widely acknowledged. Since its inception in 1998, nine of the court’s ten investigations have been in African countries and to date it has secured only four convictions, all of them against African leaders. This has angered many African countries  that claim that the ICC has an “Africa problem,” with some even going as far as to say that the ICC is inherently racist.  This concern is exacerbated by the fact that three UN Security Council members (including the United States) have not ratified the Rome Statute, exempting them from ICC scrutiny.

The African Union (AU) was fiercely critical of the ICC’s first prosecutor, Luis Moreno-Ocampo, an Argentinian, and lobbied intensely for the appointment of an African prosecutor in his stead. Bensouda became the ICC’s second prosecutor in 2011. She previously served as justice minister in Jammeh’s administration. Bensouda has not managed to dramatically improve the perception of the court among critical states, least of all in her own country.

Unlike with both Burundi and the Gambia, South Africa’s decision to leave the ICC was not associated with an attempt to avoid prosecution for egregious human right abuses. Instead, South Africa’s decision to withdraw came just one month before its Constitutional Court is due to hear an appeal of a lower court judgment that found that the government violated its obligations to the ICC by failing to arrest Sudanese President Omar Al Bashir when he attended a regional summit in Johannesburg last year. Bashir has been indicted by the ICC on charges of war crimes, crimes against humanity, and genocide.

In a written submission to the United Nations, South Africa justified its withdrawal from the ICC stating that its diplomatic conventions (read: immunity) for visiting heads of state were in conflict with its obligations to the ICC to arrest wanted war criminals.

This move is indicative of South African President Jacob Zuma’s desperation and the waning popularity of the ruling African National Congress (ANC). Zuma’s legacy is laden with scandal. The current political crisis in South Africa is centered around deeply entrenched corruption and cronyism at the highest levels of government. The Constitutional Court has already ruled against Zuma once this year. He cannot afford to suffer another domestic embarrassment at this level.

In August, the ANC suffered its worst loss at the polls since it came to power, a sign that the party’s liberation credentials and the remnants of Nelson Mandela’s legacy are no longer enough to mobilize its once loyal voter base. With the decision to leave the ICC, Zuma is clearly indicating that his party’s attention is focused on domestic affairs and that there is little consideration given to reassuring the international community of the legitimacy of his leadership.

It is true that there are valid criticisms of the ICC, but without it, there are limited alternatives. The African Union founded the African Court on Human and Peoples’ Rights in 1998, but to date the court faces more severe legitimacy concerns than the ICC—only thirty of the fifty-four AU member states are party to the protocol that established the court, and of those thirty only seven have recognized the competence of the court to receive cases referred by NGOs or individuals.

The African Court on Human and Peoples’ Rights also faces severe funding challenges—by 2011, the court’s budget was $6 million, in contrast to the ICC, which operates on a budget of $153 million. The African court will be hard pressed to secure further funding because it is perceived to be merely replicating the ICC’s work.

African states represent the most substantial bloc of countries under the ICC’s jurisdiction, placing them in a unique position to lobby for more focused attention on the prosecution of crimes in other non-African countries. South Africa had the potential to play an important role in strengthening the credibility of the ICC in Africa, a role that it has now divested itself of, with no public deliberation over the consequences. South Africa could also have initiated a consultative process with ICC member states to discuss concerns over how to resolve its obligations to the court as well as its commitment to immunity for visiting heads of state. Instead of working to improve the functioning of the ICC, South Africa has made it clear to other African countries that abandoning the court altogether is a viable alternative. 

Chloë McGrath is a visiting fellow in the Atlantic Council’s Africa Center.

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Cronjé’s remarks situated the ANC’s recent electoral loss in the broader economic history of South Africa. He noted that the party has demonstrated a capacity for both ruthless violence and pragmatic economic management at different times since the end of Apartheid. He argued that the party’s legitimacy stems from the country’s economic performance and, as the South African economy has slowed over recent years, the party has consistently lost support.

Citing independent IRR and other polls, Cronjé noted that South Africa’s youth are increasing looking beyond the ANC, or refusing to vote at all. This trend, coupled with the extreme factionalized nature of the ANC’s political elite, has contributed to the recent rise in support for opposition parties that have begun to threaten the ANC’s historical dominance at the ballot box. Looking forward, Cronjé presented two possible scenarios for the political trajectory of the ANC and South Africa.

Other participants in the event included the Honorable William Bellamy, Warburg professor of international relations at Simmons College and former US ambassador to Kenya; the Honorable John Campbell, Ralph Bunche senior fellow for Africa policy studies at the Council on Foreign Relations and former US ambassador to Nigeria; and the Honorable James Moore, Jr., executive director of the McDonough School of Business at Georgetown University and former assistant secretary of commerce for trade development; as well as other foreign officials and representatives of think tanks and non-governmental organizations. 

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“The results of this municipal election have certainly created significant shockwaves for the ANC. Losing control over two major municipalities will definitely be a profound wake-up call for the party, as will slipping below the 60 percent mark for the first time since it came to power,” said McGrath.

“The losses suffered by the ANC will shore up the case of anti-Zuma contingents within the party—some of whom even called for his resignation earlier in the year,” she added.

The ANC, it’s main opposition party the Democratic Alliance (DA), and the newly-founded Economic Freedom Fighters (EFF) party competed for municipal seats and mayoral positions in the recent elections. The ANC lost key battleground municipalities to its main opposition—particularly Nelson Mandela Bay, which encompasses Port Elizabeth, and Tshwane, home to the administrative capital Pretoria, both of which have historically voted for ANC leadership. However, the ANC is still leading national polls and has won every national election since Nelson Mandela was elected president in 1994 following the end of apartheid.

South Africa will hold its next general election in 2019.

Corruption scandals and protracted unemployment have eroded the reputation of President Jacob Zuma and the ANC—of which Zuma is the leader. Zuma’s power and his party’s political influence are seemingly declining on the national level.

“The corruption allegations against President Zuma, most notably the scandal surrounding his luxury homestead Nkandla, have played a pivotal role in these municipal elections. Corruption allegations against Zuma are not new—in fact they predate his presidency—going back as far as the early 1990s,” said McGrath.

South Africa has been reeling from economic shocks borne out of the country’s 2009 recession; the value of the rand has been halved over the past five years. Staggering unemployment and increased inequality between wealthy and impoverished communities define South Africa’s current economic climate and in turn, have driven the campaign platforms of the country’s political parties. The ruling ANC party entered the municipal election season touting a platform to address the core issues stemming out of the economic crisis, but these proposed policies were seen as incoherent in the eyes of the voting public.

The ANC’s failure to address such challenges has opened the door for its main opposition parties to strengthen their own campaign platforms.

“The DA’s convincing win in the Nelson Mandela Bay and Tshwane municipalities, and the close competition they provided to the ANC in Johannesburg—with the help of the EFF—definitely signals that the DA is setting itself up well for the national elections in 2019. In order for their gains to be protected, it will be necessary for the DA’s policies to both stimulate economic growth while acting to reduce inequality,” said McGrath.

“The South African electorate is clearly tired of the enrichment of elite outsiders, and has an appetite for change—but that DA will need to deliver on its promises to reinforce the confidence of its new voters, and to attract further voters in the next election,” she added.

The Atlantic Council’s Chloë McGrath spoke in an interview with the New Atlanticist’s Mitch Hulse. Here are excerpts from our interview:

Q: To what extent have South Africa’s economic crisis and corruption allegations against President Jacob Zuma influenced these municipal elections?

McGrath: The corruption allegations against President Zuma, most notably the scandal surrounding his luxury homestead Nkandla, have played a pivotal role in these municipal elections. Corruption allegations against Zuma are not new—in fact they predate his presidency—going back as far as the early 1990s. In 2009, a court decision to drop 783 corruption charges against Zuma cleared the way for him to run for president, but recently a high court overturned the decision, and the charges are now effectively reinstated. This dealt a major blow to the ANC just a few weeks before the country went to the polls, affirming public distrust of the president and further exacerbating frustration over his apparent inability to turn the economy around.  

The Constitutional Court’s ruling in March this year found that President Zuma had “failed to uphold the Constitution” when he disregarded the recommendations made in the Public Prosecutor’s report on the upgrades to his private homestead, Nkandla. The president is now mandated to pay back the sum of ZAR 78 million, as determined by the national treasury, within 45 days, and we have yet to see whether this will actually happen. Public outrage over Nkandla took an amusing turn when President Zuma returned to Nkandla to cast his ballot last Wednesday—the election results have shown that he lost miserably in his home area where the Inkatha Freedom Party (IFP) won the majority.

Q: While the DA has largely framed their campaign as an alternative to Zuma, many voters have indicated they are looking to the DA in hopes they can improve South Africa’s stagnant economy. Has the DA proposed policies that can successfully do so? Do you see the DA as having a sustainable political platform for upcoming elections at the national level? Does Mmusi Maimane’s nomination indicate a shift in the racial makeup of the post-apartheid DA?

McGrath: The DA has proposed several policies for how they intend to stimulate the South African economy to pull it out of the current downward spiral. Much of the DA’s appeal has been because of their record of clean governance and improved local service delivery, and so they tend to mobilize voters around these two issues. But there has been significant attention paid to devising immediate steps necessary to stimulate the economy. Although the South African economy was slow to recover from the global financial crisis, the DA asserts that the blame for the current stagnation is largely due to internal constraints and factors, of which their key concerns are the electricity supply problem, a volatile and over regulated labor market, and low investor confidence that they ascribe to the poor political leadership of the ANC. The DA’s proposed solutions to these problems would have the potential to stimulate improvement, at least in the interim, but it is not certain how politically feasible some of their suggestions are in the long term. Additionally, there needs to be a focus on job creation for the largely unskilled workforce that makes up a significant proportion of the country’s unemployed population. Until there is mass job creation that takes into realistically takes into account the lack of skills in the work force, many citizens will remain in the informal sector or indefinitely unemployed.

The DA’s convincing win in the Nelson Mandela Bay and Tshwane municipalities, and the close competition they provided to the ANC in Johannesburg—with the help of the EFF—definitely signals that the DA is setting itself up well for the national elections in 2019. In order for their gains to be protected, it will be necessary for the DA’s policies to both stimulate economic growth while acting to reduce inequality. The South African electorate is clearly tired of the enrichment of elite outsiders, and has an appetite for change—but that DA will need to deliver on its promises to reinforce the confidence of its new voters, and to attract further voters in the next election.

Mmusi Maimane’s election as the DA’s first black leader in 2015 was horribly overdue. But yes, you could say that this development indicates that the DA has taken seriously the allegations concerning its historically white support base. There has been a lot of transformation in the party, but some people are still skeptical about whether Maimane will be a puppet of Helen Zille and other white party executives – so it’s going to be important for him to clearly set himself apart as a strong leader who is not merely bent into the shape of the party. But Maimane’s mark on the party has already begun to mature – and this election is proof of the evolving nature of the party’s mass appeal and its credibility with the electorate.

Q: Opposition parties to the ANC have called the mayoral elections a referendum on Jacob Zuma’s leadership of the country. South Africa will hold general elections in 2019. What do the results mean for Zuma’s political control both in the country and in the ANC itself? Is Zuma’s administration on its way out?

McGrath: The results of this municipal election have certainly created significant shockwaves for the ANC. Losing control over two major municipalities will definitely be a profound wake-up call for the party, as will slipping below the 60 percent mark for the first time since it came to power. President Zuma is currently serving his second of two terms in office, so he will not be able to contest the next election. He is unpopular with voters and even unpopular within his own party. The losses suffered by the ANC will shore up the case of anti-Zuma contingents within the party—some of whom even called for his resignation earlier in the year. Zuma’s successor in the party has yet to be determined, but the two favored candidates are his ex-wife and current head of the AU, Nkosazana Dlamini-Zuma, and current deputy president Cyril Ramaphosa, a union-leader who has the support of COSATU, the Congress of South African Trade Unions. The ANC needs some serious introspection—and since Zuma’s tenure will come to a natural end in 2019, the end of his time in power is not sufficient to signal whether the party has taken the lessons of this election cycle to heart. The real proof will come in whatever changes, if any, they will make to their governance approach, as well as whether there will be a serious clamp down on corruption or cronyism. Nominating Zuma’s successor from outside of ruling party elite would be a clear indicator of change, but it is highly unlikely that this will take place.

All this being said, the ANC still secured 53.91 percent of the national vote, and the party’s liberation struggle credentials still appeal to the majority of South Africans who trust the brand.

Q: It’s likely that coalition governments will have to be formed in many parts of the country.  To what extent will the Economic Freedom Fighters control the balance of power between the DA and the ANC? What will a coalition government look like since the DA has said that they will not partner with the ANC?

McGrath: The conclusive results on the municipal elections have ushered in an era of precarious power sharing. While the DA has unsurprisingly secured a majority in the city of Cape Town, they do not have above 50 percent in Tshwane and Nelson Mandela Bay so they will be required to enter into a coalition with other parties. The EFF came in third in this election—securing just over eight percent of the vote nationwide in what has been their first local election—and all eyes are turned on these two parties as the coalition talks get underway. The radical leftist EFF is diametrically opposed to the DA on many policy issues, yet the two parties do share a common distaste of ANC power. The EFF has been very clear that it will not enter into a coalition with the ANC, and it is yet to be determined whether a deal will be reached with the DA. When asked about coalition possibilities, the EFF said that although the opposition parties failed to gain over 50 percent of the vote in the major municipalities, one thing was clear from the voters: the choice to turn against the ANC. Thus the EFF has indicated that to enter into an ANC coalition would be to disregard this clear message from the electorate, and that would be detrimental for EFF reputation. After the DA officially obtained the majority in Tshwane, Mmusi Maimane has said that he would be willing to partner with the EFF despite the insults directed at him by the party. In my opinion, an EFF coalition with the DA would be good for both parties, and although fraught with potential obstacles, has the ability to strengthen democratic practice in the country. The DA is aware that its victory is in part due to the EFF attracting votes that would ordinarily go to the ANC, and acknowledges that the real work of governance now begins as the party look ahead to delivering on campaign promises.

Q: While it seems that the Democratic Alliance is gaining influence in urban ANC strongholds, rural voters continue to largely vote for the ANC. Do you foresee an intensified divide between urban and rural communities in the future? How will this influence future elections in South Africa?

McGrath: There is definitely an intensified divide between the urban and rural communities in South Africa, but what is interesting is that South Africa’s urbanization is further ahead than many African countries, so the urban concentration of voters is quite significant. Rural voters are in some ways more insulated from the failures of the ANC, and more likely to cling to liberation credentials and nostalgic allegiances than are urban voters who generally have more access to the media and critical debate, as well as failures of service delivery in high density areas. This election, it seems like the ANC has been increasingly relegated to the rural vote and will need to readjust its strategies to counter the negative impression that the party has among urban voters. In order to have a shot at taking over leadership at a national level, the DA and the EFF will have to refocus their efforts to appeal to rural communities and the grassroots more broadly—which will not be an easy task—but will be necessary for the opposition to convincingly dislodge the ANC from power.

Chloë McGrath is a visiting fellow with the Atlantic Council’s Africa Center.

Mitch Hulse is an editorial assistant at the Atlantic Council.

Julia Goldman and Meghan Rowley, interns at the Atlantic Council, contributed to this report.

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Corruption, unemployment and poor local service delivery are the core issues in this municipal election. Many South Africans previously disadvantaged under the apartheid government are frustrated by the fact that their living conditions are not much improved since 1994 when the country officially transitioned to democracy – 21.7 percent of South Africans live in extreme poverty unable to meet their basic nutritional requirements. Official unemployment figures hit a twelve-year high in the first quarter of 2016, reaching 26.7 percent. But not everyone is so badly off – the gap between rich and poor is growing as party elites and those on the “inside” continue to enrich themselves. Less connected “outsider” citizens are aware that in addition to the consequences of institutionalized exclusion, there is an indisputable link between their lack of opportunity and the enrichment of the elite bureaucrats controlling the purse strings of government coffers.

The Players

In recent years, the ANC has increasingly been forced to rely on  its liberation struggle credentials to draw supportive voters to the polls. Inter-party heckling over the use of Nelson Mandela’s legacy as a campaign tool highlights the disproportionate reliance that the party has on its ownership of South Africa’s icon of freedom.  But the party’s branding can only carry it so far – many loyal voters are disillusioned by the lack of improvement in their circumstances and are losing patience. Factionalism is rife, and the party is mired in corruption allegations and its inability to revive the ailing economy. Aware of its precarious position, the ANC made some controversial candidate choices. The nomination of an outsider to stand for the contested municipality of Tshwane ignited warring ANC factions and sparked violent protests.  Just last week, an ANC ward councilor candidate was killed in the Nelson Mandela Municipality – the urban area most likely to fall into opposition control.

Voters disenchanted with the performance of the ANC have an appetite for change. The Democratic Alliance (DA) and the Economic Freedom Fighters (EFF) are the two major contenders. The DA is South Africa’s leading opposition party – a liberal party that has set itself apart with track record of transparent governance. The DA elected Mmusi Maimane as its first black leader in May 2015, but has struggled to distance itself from its historically white reputation. The DA first gained control over Cape Town – the only one of eight major metropoles currently controlled by the opposition – through a coalition with seven smaller parties in the 2006 election. After bringing Cape Town under its jurisdiction, the DA then went on to win the Western Cape Province. In the 2014 election, the DA won 22.23 percent of the popular vote.

The EFF – a party that identifies itself as a “radical and militant economic emancipation movement” positioned left of the ANC – is contesting their first local election this year. Established three years ago by expelled ANC Youth League leader Julius Malema, the controversial party won twenty-five parliamentary seats in the 2014 national election. The EFF’s rhetoric has had particular appeal to South Africa’s youth – of whom 63 percent (3.2 million) are unemployed. This week, EFF leadership met with former president Thabo Mbeki, purportedly to court his vote ahead of Wednesday’s election. Mbeki was ‘recalled’ from the presidency by the ANC in 2008 amid allegations that he had “misused his power”, and has refused to campaign on behalf of the party this year. 

The Future?

There is no question as to whether the ANC will suffer significant losses in this pivotal election. Rather, the question that remains is how significant these losses will be. Polls commissioned by a private broadcasting company show the DA leading in three of the most contested municipal areas: Tshwane in which the administrative capital Pretoria is situated, Nelson Mandela Bay, encompassing Port Elizabeth, and Johannesburg. However, given the paucity of available polling data it is difficult to know for sure how credible these predictions are.  A single opposition party winning a majority is unlikely, but the ANC dropping below the 50 percent mark would be enough to substantially unsettle the political status quo. That being said, the ANC’s legacy remains a force to be reckoned with, and for the DA and the EFF to make a breakthrough in the contested municipalities, many ANC voters will need to either stay home or cross the floor.

Chloë McGrath is a visiting fellow at the Atlantic Council’s Africa Center. You can follow her on Twitter @malawicoffee.

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Ahead of South Africa’s municipal elections, the Atlantic Council’s Africa Center hosted a roundtable discussion on July 26 in Washington to engage with Bernstein and her proposed policy solutions to mend the country’s economic crisis—captured in the CDE’s seven-part report series, “The Growth Agenda.” Bernstein asserted that South Africa needs “accelerated growth that is urban-led, private sector-driven, enabled by a smart state, and targeted at mass employment” in order to reverse its current trajectory. Bernstein unpacked five key policy priorities that she believes have the potential to transform South Africa’s economic path:

Rapid inclusive job growth

Rapid inclusive job growth should be at the center of policy solutions, according to Bernstein, who noted with concern the lack of prominence that job growth has received on the political agenda. The government needs to “focus on creating jobs for the work force we actually have” said Bernstein—observing that much of South African job growth has focused on establishing a high-wage high-skill job market, which does not yet exist in the country.

An effective growth and employment strategy must account for South Africa’s poor education system and vocational training deficit. Although low skilled labor-intensive growth may not be politically desirable, Bernstein argued that the majority of unemployed people would prefer to receive a low, but steady, wage rather than to remain out of the workforce indefinitely.

Simplified Regulatory Environment

Bernstein contended that current labor regulations in South Africa prevent the country from being internationally competitive. Trade unions in South Africa have considerable power and often demand unrealistically high wage rates for low-skill jobs. Although there is much to be said for the creation of “decent work,” a term defined by the International Labor Organization (ILO), even public sector jobs in South Africa often fail to meet these standards with their compensation schemes.

Bernstein suggested that the government and unions should acknowledge that a “low wage is better than no wage at all.”

Private sector-led growth

It is not possible for South Africa to concurrently espouse anti-business rhetoric and call for the private sector-led growth that is the key to job creation. Bernstein spoke of the government’s “deeply held suspicion that the pursuit of profit must always lead to adverse social and developmental consequences, and that firms [are often viewed] as stubborn obstacles to transformation.”

The government has routinely sent mixed messages to local businesses and international investors through an opaque regulatory system with transient goal posts. Black Economic Empowerment, the national affirmative action policy, has failed to deliver to majority of previously disadvantaged citizens in the country. Instead, the policy has led to furthering elites who are entrenched within the current government.

Education and vocational-training

To overcome inequality in South Africa, the government must adapt its education and skills training strategy to direct the country on a sustainable path out of poverty, said Bernstein.

Since its democratic transition, South Africa has seen a dramatic increase in access to education but this has not been mirrored by improved quality—perpetuating the large number of unskilled workers who are unemployed.

“Education reform takes time,” argued Bernstein. In the interim, it is vital that the country capitalize on the creation of jobs for low skilled workers, while simultaneously working to improve the education system, she added.

Urban refocusing

South Africa has experienced rapid urbanization, with approximately 62 percent of the population dwelling in urban areas in 2011. South Africa’s urban economies consistently outperform those in the rural areas, but policymakers have failed to capitalize on the opportunities presented by cities as centers of urban growth. Bernstein argued that “if the South African economy is to grow more quickly and if it is to do so in a way that creates mass employment, this can only happen in our cities.”

ANC faces strong opposition

The ANC’s continued lack of policy coherence for inclusive growth and job creation has led to disillusionment among some of the party’s most loyal supporters. The EFF—formed in 2014—will compete in municipal elections for the first time. The EFF’s rising popularity—combined with the increased traction of the ANC’s chief opposition party, the Democratic Alliance—poses a serious threat to the ANC’s former voter strongholds in major municipalities, including Tshwane and Nelson Mandela Bay.

Bernstein concluded by speculating on how major losses for the ANC in this election could precipitate substantial “reverberations” that have the potential to alter the policy direction of South Africa. However, with poor polling data, it is difficult to predict how significant this swing could be. 

Chloë McGrath is a visiting fellow at the Atlantic Council’s Africa Center. You can follow her on Twitter @malawicoffee.

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Bernstein’s remarks focused on the key findings of a new series of CDE reports entitled “The Growth Agenda: Priorities for Mass Employment and Inclusion in South Africa.” She noted that, despite a reduction in the income gap between white and black South Africans, overall inequality in the country has not fallen—in fact, the gap between elites and non-elites within racial groups has grown larger than the divide between comparable groups across races. This persistence is due, in part, to the country’s reliance on a growth strategy that privileges a select elite. Instead, she argued, South Africa needs to move towards a more inclusive growth model that encourages the emergence of labor-intensive industries and mass employment, creates an attractive and competitive business environment for private enterprise, expands the country’s skills pool, and recognizes the importance of well-organized urban centers. She concluded that failure to achieve inclusive growth could have consequences for the South African social contract, its constitution, and its democratic political system.

Other participants at the event included senior US officials and representatives of research institutions and non-governmental organizations.

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The delayed announcement of Tshwane’s mayoral candidate combined with the ensuing unrest is symptomatic of the factionalism that is rife within the ANC. It’s been a difficult few years for the party that is struggling to recollect itself. The country’s president, Jacob Zuma, has survived two no-confidence votes against him in the last year, partly triggered by what has been termed his ‘reckless’ economic management of the country. In December 2015, Zuma fired two finance ministers within two days, triggering panic in the markets. Following pressure from within his party, he then appointed former finance minister Pravin Gordhan to the post, in an effort to stabilize the economy ahead of the municipal elections. Nevertheless, in 2016 the economy is expected to expand at its slowest rate since 2009. And, earlier this year, the public protector investigated President Zuma’s expenditure on his renowned private homestead and recommended that he pay back the money spent on non-security upgrades. Later, the Constitutional Court ruled that President Jacob Zuma failed to uphold the Constitution when he disregarded the public protector’s recommendations. In addition, the High Court has now ruled that a decision to drop the corruption charges facing Jacob Zuma before he came president was “irrational”. As a result, it is possible that the National Prosecuting Authority (NPA) will now reinstate over 700 charges against the president.

The monumental student protests at universities around South Africa have acted as a barometer of public discontent with the lack of economic progress experienced by black South Africans more than twenty years after the official end of apartheid. The rising popularity of the radical Economic Freedom Fighters (EFF) party headed up by former ANC youth league president Julius Malema illustrates a growing appetite for change. With the foundations of its loyalty base deeply shaken, the ANC has become skittish and protective in recent months, suspicious of what it perceives to be a growing “regime change agenda” among internationally funded non-profits. The party has failed to bring factionalism under control and the cracks are increasingly pronounced as the August 3 election approaches.

Last Monday morning the ANC announced a “neutral” choice for mayoral candidate–Thoko Didiza. A relatively young, popular member of the party, Didiza was chosen in part to avoid inciting the simmering factional disputes between supporters of the current mayor and those who support his deputy. It appears that Didiza is competent and well qualified for the job – with fourteen years of government experience and a former position as minister of land, agriculture, and public works under former President Thabo Mbeki, she has had her fair share of governance experience. With Didiza’s nomination, the ANC is aware of how close they are to losing some major power bases in the country, and are attempting to bridge the fine line between drawing back disgruntled voters and not alienating supporters distributed across political factions. The Tshwane protests show that party unity is no easy task to achieve, and residents have gone as far as to threaten to vote for the historically white DA if their concerns are not addressed—and quickly.

The events surrounding the unrest in Tshwane highlight a deeply embedded flaw in ANC party structures – a lack of democratic processes that threaten to exacerbate existing factionalism. The ANC has retained its centralized leadership despite calls for it to reform, alienating membership and leaders at the lower levels of the party. As opposition parties gain traction against the once “undefeatable” ANC in the run-up to August’s elections, the cracks are more pronounced than ever. The Tshwane protests have shown the lengths that ANC supporters are willing to go to in order to express their displeasure – and if the last week is anything to go by, the prospect of the ANC losing control of Tshwane and potentially other major urban areas does not bode well for peaceful transition.

Chloë McGrath is a Visiting Fellow with the Africa Center. Follow her at @MalawiCoffee 

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Xi may have to spend some time on this trip reassuring African leaders that trade relations will remain strong, said Aubrey Hruby, a Washington D.C.-based economist. The Chinese government is unrivalled in its willingness to fund big infrastructure projects in Africa, although American companies still provide the highest foreign direct investment to African countries, she said.

“It’s a mutually beneficial perspective,” said Hruby. “There are not a lot of entities in the world that would fund African infrastructure the way China has.”

Read the full article here.

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The international relations text, entitled “A Better Africa in a Better and Just World,” was drawn up by a panel chaired by Deputy Minister in the Presidency Obed Bapela that included such foreign policy heavyweights as South African President Jacob Zuma’s ex-wife, African Union Commission Chairperson Nkosazana Dlamini-Zuma; South African Minister of International Relations and Cooperation Maite Nkoana-Mashabane; Minister of Trade and Industry Rob Davies; former Director-General of the National Intelligence Agency Billy Masetlha; former National Commission of Police Bhekokwakhe “Bheki” Cele; and former Deputy Ministers for International Relations and Cooperation Ebrahim Ismail Ebrahim and Susan van der Merwe—in short, some of the very individuals who are responsible for the day-to-day management of country’s foreign relations. And how do these worthies view the world and their country’s place in it?

First, far from distancing itself from the Marxist-Leninist wreckage of the last century, the South African leadership reaffirms its ideological roots: “The ANC is revolutionary national liberation movement which is an integral part of the international revolutionary movement to liberate humanity from the bondage of imperialism and neo colonialism.” The text even goes so far as to quote the founder of the Soviet Union: “This theoretical formulation is affirmed by Vladimir Lenin when he maintains that, ‘revolutionary scientific theory is the weapon to make us judge and define the methods of struggle correctly. It is a weapon that helps us analyze and understand correctly the cause of development of human society at every moment, to analyze and understand correctly every turning point of society and to carry out the revolutionary transformation of society’.”

Far from celebrating the fall of the Berlin Wall a quarter of a century ago, the ANC document actually laments “the sudden collapse of socialism in the world [that] altered completely the balance of forces in favor of imperialism” because “it ushered in a new world hegemonic era of global socio economic agenda of capitalism and free market imperatives” wherein “the global economic trajectory is on a path to serve the interests of the international monopoly capital.” Chief among the ostensible beneficiaries of this new “imperialism” that has “plunged humanity in a perpetual socio-economic crisis” is none other than the United States, which stands accused of “effectively using its aggressive foreign policy to advance its national interests.”

Second, lest this be dismissed as so much pablum without real policy impact, the South African policymakers hail “the rise of emerging economies led by China in the world economy” as “herald[ing] a new dawn of hope for further possibilities of a new world order”:

China [sic] economic development trajectory remains a leading example of the triumph of humanity over adversity. The exemplary role of the collective leadership of the Communist Party of China in this regard should be a guiding lodestar of our own struggle.

In short, just as my colleagues and I worried might be the case, the ANC leadership has come to view China as the model for national development and that country’s Communist rulers worthy of emulation. Consequently, it is not surprising that, in recent years, South Africa has made its relationship with Beijing what is arguably its most important strategic tie—so much so that the ANC even claims, in intemperate language that even Chinese regime mouthpieces do not even use nowadays, that “the US, backed by its ideological apparatus, has tried a repeat of the Tiananmen Square against the Chinese government by parading to the world counter revolution as a popular uprising and counter revolutionaries as human rights activists.”

Third, its hostility to “US-led Western imperialism” also compels the ANC to embrace any and all who find themselves at odds with America and its European allies, as the tortured analysis of the confrontation with Vladimir Putin’s Russia highlights:

The US does not appreciate the resurgence of China and Russia as dominant factors in the arena of international power relations. It has instead declared a cold war against these two emerging world powers… Russia has not been spared the wrath of US-led Western imperialism. As with China, the Russian leadership is constantly being portrayed in the Western media and official discourse as monsters abusing human rights. As with China, counter revolutionary demonstrations and marches are being staged and given huge publicity in the Western media in order to destabilize and/provoke the Russian government… Whatever genuine concerns may exist within the Russian population and populations of former Soviet Union, there is a clear plot to exploit this in order to contain the rise of Russia globally. It is an encirclement strategy that seeks to isolate Russia in the manner that is being attempted on China as well… This is the context within which the crisis in Ukraine should be understood by the world progressive forces. The war taking place in Ukraine is not about Ukraine. Its intended target is Russia. As with China, Russia’s neighbors are being mobilized to adopt a hostile posture against Moscow, and enticed to join the European Union and NATO. Pro-West satellite states are being cultivated or as we saw with the coup in Ukraine, even invented, to encircle Russia and allow their territory to be used for the deployment of NATO’s hostile military hardware faced in the direction of Russia. These Western manoeuvers, directed from Washington, are reminiscent of Cold War. They have vowed in Washington that there will be Russia or China to challenge the US hegemony.

This analysis is stretched to other corners of the globe as well: “We see it unfolding in the streets of Latin America including in Venezuela which the US has strangely declared a threat to its ‘national security’, in the Middle East and in African countries with the sole intention of toppling a progressive democratically-elected governments.”

Fourth, the anti-US bias has not insignificant policy ramifications on the African continent, as witnessed by the ANC’s stance on the US Africa Command (AFRICOM):

The campaign to engage all [African Union] member state [sic] on the continent not to host these military bases continue [sic]; however, the question that should be posed is whether this is still preventable because in certain places on the continent AFRICOM has already established its footprint in the form of training soldiers and other newly devised mechanisms? The ANC has to deal with these realities and develop new strategies to take this campaign forward.

Fifth, moreover the anti-American mindset is segued by antipathy extended to close US allies in Africa and the Middle East like Morocco and Israel, both of which are singled out for extensive excoriation in the foreign policy document. The former country’s southern provinces are characterized as “one of the last bastions of colonialism on the African continent” and the ANC leaders pledge themselves to hold a “solidarity conference” for the Polisario Front separatists. With respect to the Jewish State, “the ANC has participated and will continue to participate in activities of the week-long program on Israeli Apartheid Week in solidarity with the Palestinians”; the document repeatedly references “the bombardment and the killings of innocent Palestinians by the Israeli military,” while not acknowledging any attacks on Israel, including missiles launched from Gaza.

On the eve of the historic 1994 polls which would sweep him into office as his country’s first democratically-elected president, Nelson Mandela penned a Foreign Affairs article on “South Africa’s Future Foreign Policy,” in which he laid out a strategy based on maintaining friendly relations with all major powers as well as his hope for a new form of statecraft anchored in the centrality of human rights, the promotion of democracy worldwide, respect for international law, and the conviction that “economic development depends on growing regional and international economic cooperation in an interdependent world.” In contrast to this broad vision, not even two years after Madiba was laid to rest, his successors have chosen to expend resources on small-bore objectives like the ANC’s  “discussion with the ruling parties of BRICS member states to sign a joint Memorandum of Understanding to promote stronger party-to-party relations… [which] will enable the parties to find common areas of cooperation… and present an alternative to the Washington Consensus.”

If the international relations document does indeed capture the mindset of the current ANC leadership—and there is little indication that it doesn’t—and if those politicians stick to their chosen course, the shift in South African foreign policy away from the balanced approach championed by Mandela will be a tragedy not only for the “Rainbow Nation” itself, but, indeed, for international society as a whole.

J. Peter Pham is Director of the Atlantic Council’s Africa Center. Follow the Africa Center on Twitter at @ACAfricaCenter.

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Listen to the full interview here.

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It’s hard to deny that these optics have hurt the ICC’s credibility in Africa. “Many Africans look at the prosecutor, Fatou Bensouda, and laugh outright that she poses as a paragon for legal virtue given that, while an African and a woman, she served as minister of justice for a literal tin-pot dictator, Yahya Jammeh of Gambia,” said J. Peter Pham, director of the Africa Center at the Atlantic Council, adding that the fact that a white South African judge of Afrikaner descent ordered Bashir’s travel ban only made things worse.

“Appearance alone just reinforces the stereotype of a runaway court out to get Africans,” Pham adds.

Read the full article here.

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Recent developments have validated these concerns as the siloviki around Putin have not only returned to the former Soviet Union’s theaters of operations in Africa, but done so in force across a range of sectors, the connections between which are, more often than not, far from transparent.

At the end of January, at the year’s first meeting of the Commission for Military-Technical Cooperation between the Russian Federation and Foreign States, Putin called for expanded arms sales to African, Asian, and Latin American countries and urged the panel to “intensify work with traditional and emerging partners” and to “pay more attention to new forms of customer relations,” including “the use of modern financial and marketing tools.” He also stressed that “we need to make maximum use of Russia’s competitive advantages, including our reputation…as a reliable, predictable partner who fulfills its obligations irrespective of any tactical preferences and the current political situation.”

Just a week later, Russian Deputy Foreign Minister Mikhail Bogdanov, who also doubles as Putin’s Special Representative for the Middle East and Africa, delivered a letter from his boss to African Union (AU) Commission Chairperson Nkosazana Dlamini-Zuma confirming his interest in strengthening Russia’s ties with Africa. The AU commission head welcomed the message and responded both with plans to open an AU representational office in Moscow and to visit the Russian capital in April.

Dr. Dlamini-Zuma’s ex-husband, South African President Jacob Zuma, has also cultivated worrisome links to the Kremlin. In December, a Russian rocket launched into orbit a secretive joint satellite system, dubbed “Project Condor,” that leaked documents revealed would provide Russian and South African intelligence services with surveillance of most of the African continent.

On February 17, the Ugandan government awarded RT Global Resources, a subsidiary of the largest Russian state holding company, Rostec, the contract to build the country’s first oil refinery, a project that could cost as much as $4 billion. The deal also gives the Russian firm a 60 percent stake in the refinery. The parent company, Rostec, is headed by Sergei Chemezov, a member of the supreme council of Putin’s United Russia party, who is on both United States and European Union sanctions lists.

Not only is this deal significant for its size and the impact on the oil discoveries along the Ugandan border with the Democratic Republic of the Congo (DRC) that are supposed to result in production by 2018, but also because it highlights some of the complex—to say nothing of not especially transparent—relationships involved. The refinery project is not, in fact, Rostec’s first foray into Uganda. Three years ago, the Ugandan military purchased more than half a dozen Sukhoi Su-30 twin-engine fighters from another Rostec subsidiary, Rosoboronexport, reputedly for $744 million. The acquisition was controversial in the East African country, not least because parliament was only advised of it as and asked to approve the expenditure retrospectively. Some of the warplanes have since then reportedly been deployed to South Sudan to shore up the regime of Salva Kiir Mayardit, who has been backed by Ugandan President Yoweri Museveni in the country’s fifteen-month-old civil war, a conflict that has killed tens of thousands and displaced two million others. It is difficult to imagine that the selection of a Russian group best known for its role in the arms industry to undertake the biggest infrastructure project Kampala has ever undertaken is not somehow connected to the outsized role the Ugandan military plays in country’s domestic politics.

The Ugandan refinery agreement and its backdrop of arms sales is not unlike the $3 billion deal, signed by Russia last September with Zimbabwean President Robert Mugabe and also involving Rostec, to create the largest platinum mine in the Southern African country. The Kremlin cemented its longstanding ties to the nonagenarian despot when it vetoed a United Nations Security Council resolution to impose sanctions on the regime after it stole the 2008 elections and brutally repressed the opposition. No mention of that episode was made by Russian Foreign Minister Sergey Lavrov, who lavished praise on Mugabe, declaring, “Russia would always be with Africa and today we got a confirmation from President Mugabe, a legend, an historical figure that Zimbabwe and Africa will always be with Russia.” For his part, the Zimbabwean ruler responded, “Those who imposed sanctions on Russian President Vladimir Putin have done so on us as well. These are the evil men of our world.”

Details of the Darwendale platinum project were announced by Russian Trade and Industry Minister Denis Manturov, who also happens to be the non-executive chairman of the Rostec board. According to one South African newspaper’s account of the press conference, Manturov specifically mentioned prospects for other deals, including for Uralvagonzavod, the largest manufacturer of tanks and other combat vehicles in the world.

Similarly, last year, writing in The Hill, I reported that President Joseph Kabila of the Democratic Republic of the Congo (DRC), facing an absolute constitutional bar against seeking a third consecutive term of office (or even amending that provision in the charter) as well as Western diplomats’ united insistence on respect for the law, was increasingly turning to Putin’s Kremlin for support. Since the diplomatic mission I mentioned, the ruler of the DRC has dispatched his military confidant, General François Olenga, to follow up with his Russian counterparts, and, in fact, a group of Congolese police commanders have received specialized training at the All-Russian Advanced Police Academy in Domodedovo.  As the democracy deficit in the DRC continues to grow—as underscored by last week’s arrest of an American diplomat, French and British journalists, and a number of pro-democracy activists (the diplomat was subsequently released)—is it just a coincidence that Russia’s ambassador at the court of Kabila fils would, at just this juncture, be publicly hailing “the success of the political dialogue between Moscow and Kinshasa that has led to mutual support on the international stage”?

While it may be too early to judge how recent Russian forays into Africa will play out, two things are already clear. First, rather than yesteryear’s preoccupation with winning an ideological contest, the motivations for today’s engagements in Africa are strategic, both political and economic. Second, notwithstanding the attention lavished on Africa during last year’s US-Africa Leaders Summit, America and its allies have yet to fully recognize what is at stake in the Kremlin’s renewed African play.  

J. Peter Pham is Director of the Atlantic Council’s Africa Center. Follow the Africa Center on Twitter at @ACAfricaCenter.

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The ANC’s courting of China has caused concern in the West. “In the worst case scenario, Chinese money in significant amounts and influence could tip the ANC in the wrong direction,” says Peter Pham, Africa analyst at the Washington-based Atlantic Council. “With the ANC being the way it is, if there is a heavy hand in the support, potentially it could result in shifts in governmental policy.”

Read the full article here.

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Africa Center Director J. Peter Pham spoke with Fox News on the passing of former South African President and anti-apartheid icon Nelson Mandela.

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And he joined it with supreme courage and dignity, in and out of the prisons to which he was confined for twenty-seven years, more than a quarter of his life, in three different locations: Robben Island, where he occupied a tiny cell for 18 years, and at the Poolsmoor and Victor Verster jails. When, defying the odds, and most likely his own expectations, he emerged a free man on February 11, 1990, his bearing was graceful; his visage bore no trace of bitterness. His autobiography, Long Walk to Freedom, is unlike most politicians’ life narratives. Like the man himself, it is devoid of self-pity and grandiosity and brims with magnanimity and wisdom.

This is remarkable in itself, for Mandela had every right to be an angry man. But he isn’t an ordinary man. He walked out of prison and immediately reentered the public political arena (though even in captivity he was part of national and international politics), calling for reconciliation and engaging South Africa’s white-minority leadership with the aim of dismantling the system of apartheid. The ending of apartheid owed to Mandela’s moral authority. The magnitude of that achievement, and Mandela’s place in history more generally, cannot be appreciated without a basic understanding of what South Africa’s apartheid system amounted to; that apartheid is fading into the mists of time it makes it all the more necessary to take a detour to provide context.

A comprehensive system of racial segregation undergirded by a plethora of intricate laws, apartheid had been in place since 1948 national elections, with Hendrik Verwoerd, who served as Minister of Native Affairs and then as Prime Minister from 1958 until being stabbed to death in parliament in September 1966, serving as chief architect. Apartheid, which can loosely be translated as “apartness,” had many aspects, but the common denominator, and overall purpose, was the systematic separation of whites (sixty percent were Afrikaners, the descendants of seventeenth century Dutch settlers; the rest English) and nonwhites. It was mind-numbing in its precision. There were laws enforcing residential segregation (the “Group Areas Act”); prohibiting sexual intercourse between whites and nonwhites (the “Immorality Act”); mandating separate educational institutions and specifying the content of textbooks used in nonwhite schools; requiring separate restrooms, bus stops, and ambulances; and defining the guidelines for commercials featuring white and nonwhite actors. And that’s just a sample.

Blacks required authorization stamps on their internal passports, which they had to have on their person at all times, in order to be lawfully present in white areas. Black farm workers had to seek written permission from their employers before they could accept better-paying jobs in cities. Those who had urban jobs were, depending on their classification for employment purposes, confined to townships, single-sex dormitories, or “homelands.” In one form or the other, all blacks were deemed to be citizens for these “homelands,” which the South African authorities claimed were sovereign entities. Because whites constituted 15 percent of the population but controlled 85 percent of the land (and the best parts) this effectively made blacks foreigners in their own country. Other nonwhites (Asians and so-called coloreds, or people of mixed race) endured daily discrimination, but the oppression faced by the South African black was in a different league altogether.

As Joseph Lelyveld has recounted in his superb book, Move Your Shadow: South Africa, Black and White, to its defenders (here it should be stressed that numerous courageous whites spoke out against and protested the system) apartheid was just because it rested on a multitude of laws. To defy it, therefore, was to engage in illegal conduct, or worse, sedition. It followed that to punish such acts was legitimate, an example of the rule of law in action. That the system was enforced not just by blatantly unfair laws but also through the systematic use of arbitrary imprisonment, torture and extrajudicial murder (the September 1977 slaying of the black nationalist Steve Biko while in police custody was perhaps the most notorious example) was omitted from this curious legalistic defense.

Most whites, as Lelyveld shows so adeptly, knew next to nothing about the daily lives of blacks (among the features of which were poverty, long commutes to work, police harassment and daily indignities, separation from families for those working in cities far from home) and yet opined freely on the black “character,” “psyche” and preferences. The result was that whites portrayed, to themselves and others, the way that blacks lived, worked, and were educated (to the extent that going far up the education ladder was realistic) as appropriate to their temperament. That temperament was, in turn, presented as childlike and unsuited to complex reasoning and tasks—a potted portrayal informed by racialism and essentialism. In other words, the system was benevolent, indeed in its victims’ best interest. Rebellion therefore amounted to what Karl Marx called false consciousness, or ingratitude; or worse (and this stereotype enabled so many whites to rationalize apartheid), blacks’ innate inclination to violence.

This digression on apartheid cannot, of course, do it justice. But without recalling the brutality and inhumanity of a system that is slowly fading from Western memories, it is impossible to understand the enormity of Mandela’s achievements, his strength of character and the caliber of his statesmanship.

Mandela had every right to be angry given what apartheid had done to him and to the majority of South Africans. But he did not indulge that emotion. Instead, upon his release from prison, he called for reconciliation and a multiracial democracy and a negotiated transition aimed at creating a new political order based on those principles. His interlocutor was Prime Minister F.W. De Klerk, who had been a stalwart supporter of apartheid and was elected president in 1989. But by then, De Klerk had come to doubt the viability of the system that he had long served. The reasons underlying his change of heart were entirely practical. Apartheid had brought South Africa international isolation. Moreover, it rested on the disenfranchisement of the nonwhite majority and the denial to them of basic rights, and was not sustainable, politically or economically.

Mandela’s genius and farsightedness lay in understanding that De Klerk, who took the courageous step of freeing him, had become (however reluctantly) a proponent of change, and that a peaceful, rather than blood-soaked, path to a new political order was finally possible. Perhaps Mandela’s greatest contribution to his country is the irreplaceable part he played—no one else had the moral stature or commanded the reverence required—in shepherding that delicate, difficult transition.

Mandela served as South Africa’s first popularly elected (and, needless to say, black) president from 1994-1999. He could easily have stayed on, but, in the mode of Cincinnatus and George Washington, he went into retirement, becoming a distinguished elder statesman. He understood, it seems, that he would have done his country little good by becoming a multi-term president—not just because of his age but also because South Africa needed a new generation of leaders. He did not want to be the giant oak tree beneath which nothing substantial can grow. That act of relinquishment required an extraordinary and all-too-rare mix of confidence and self-effacement. For most leaders the norm is hubris, the conflation of self and nation, grandiosity bred by pretensions of indispensability.

Does this giant have blemishes? Of course. In this respect Mandela is an ordinary leader and an ordinary man. The torrent of tributes and assessments that will follow his death will no doubt include criticisms, but he would not mind given his dislike of deification.

As a dissident, Mandela eventually despaired of a nonviolent solution to apartheid. In 1961, along with other members of the African National Congress (ANC), he helped establish Umkhonto We Sizwe (Spear of the Nation, or “MK”), an organization that would conduct bombing attacks against government facilities, launch guerrilla campaigns and mine rural roads. As a free man, president and ex-president, he did not hesitate to express his gratitude to those who had stood behind the anti-apartheid movement and the ANC. He did not care that among those individuals were the likes of Moammar el-Qaddafi and Fidel Castro. Other chinks will be found in Mandela’s armor. Post-apartheid South Africa has numerous problems, among them poverty, inequality, violence, corruption among those wielding economic and political power, and the disappointing quality of Mandela’s successors—Thabo Mbeki and Jacob Zuma—as president. There have been promises undelivered and hopes unrequited. These failures will doubtless be noted. That is to be expected; indeed it is required. Hagiography is not merely cloying, it is counterproductive: it promotes deception and offers no positive lessons for the future.

But in judging Nelson Mandela, fairness demands three things: consideration of the long arc of his life and his short term in office, not a focus on isolated episodes; remembrance of the nature of the system he was fighting; and recollection of the extent to which Western governments, their outlook shaped by a Cold War paradigm, seemed to smugly suggest open-ended “engagement” and dialogue and to caution against “extremism” in the struggle against a system that itself was extremist. When placed in such perspective, the criticisms of Mandela will be akin to gnat bites on an elephant.

Mandela combined the traits of heart and mind to exercise several (very) different variants of leadership. He was a political dissident and an insurgent. He was a prisoner of conscience. True to his given Xhosa name, Rolihlahla, or troublemaker— Nelson was the English name a teacher gave him on his first day at school—he created a great deal of trouble for the apartheid regime because he symbolized its injustice and cruelty as well as the possibility of defying it. He was the conciliator and the co-architect of the passage from one order to a new one. That process could have easily failed and set off a spiral of bloodshed. He was, as president, the chief executive of a problem-laden country and initiated various much-needed reforms. He is a revered elder statesman with global cachet and stature.

Few leaders have been able to play such varied parts in the drama of politics. The traits that are necessary to do so are seldom embodied in any one individual. Nelson Mandela had the intellect, character, and style to move from one demanding role to another. For that and more he will, long after death claims him, be remembered as one of history’s most compelling figures.

Rajan Menon is the Anne and Bernard Spitzer Professor of Political Science at the City College of New York/City University of New York, nonresident senior fellow at the Atlantic Council and the author, most recently, of The End of Alliances. This piece is originally appeared in The National Interest.

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Ansari Center Director J. Peter Pham welcomed participants to the roundtable and moderated the discussion, which included US government officials, representatives of nongovernmental organizations, and leading Africa experts.

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The meeting of leading practitioners and scholars, many of whom were focused on Africa, was co-chaired by General Sir David Richards, Chief of the Defence Staff of the United Kingdom; the Honorable Erastus Mwencha, Deputy Chairperson of the African Union Commission; the Honorable Luísa Días Diogo, former Prime Minister of Mozambique; and General (ret) Richard Myers, former Chairman of the Joint Chiefs of Staff of the United States. The event was hosted at Tswalu, South Africa’s largest private game reserve, by Jonathan Oppenheimer.

J. Peter Pham, director of the Ansari Africa Center, represented it at the meeting, which aimed to identify best practice in one of the areas of greatest weakness (and frequent failure) of peacebuilding missions: getting local economies up and running. The dialogue at Tswalu will open a process to better understand what characterizes failure or success in post-conflict economic reconstruction efforts, how to best transition from stabilization to development, and which areas and methods of expenditure can reap the greatest rewards.

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On January 27, 2012 the Michael S. Ansari Africa Center hosted a luncheon briefing by Angèle Makombo-Eboum, chair and former presidential candidate of the Ligue des Démocrates Congolais (LIDEC) party and spokesperson for the Forces de l’Opposition Réunies au Congo (FORECO) coalition, on the Democratic Republic of the Congo’s (DRC) November 2011 presidential election and the subsequent political climate in the country.

The elections drew unusually strong criticism from international election observers, including the Carter Center and the European Union; the Archbishop of Kinshasa, Cardinal Laurent Monsengwo Pasinya, flatly stated that the results “comply with neither the truth nor justice.” Makombo-Eboum, the only woman candidate for the presidency before she dropped out of the race in the hopes of uniting the opposition around a single candidate, addressed both the massive fraud that took place during the poll as well as possible ways for the DRC to transition out of what she called “a political crisis,” advocating for a Government of National Unity that would oversee transparent elections. The off-the-record discussion was moderated by J. Peter Pham, director of the Ansari Africa Center, and included participants from the Executive Branch and Congress, democracy and other advocacy groups, and the private sector.

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Executive Summary

Global governance—the collective management of common problems at the international level—is at a critical juncture.  Although global governance institutions have racked up many successes since their development after the Second World War, the growing number of issues on the international agenda, and their complexity, is outpacing the ability of international organizations and national governments to cope.

With the emergence of rapid globalization, the risks to the international system have grown to the extent that formerly localized threats are no longer locally containable but are now potentially dangerous to global security and stability.  At the beginning of the century, threats such as ethnic conflicts, infectious diseases, and terrorism as well as a new generation of global challenges including climate change, energy security, food and water scarcity, international migration flows, and new technologies are increasingly taking center stage.

Three effects of rapid globalization are driving demands for more effective global governance.  Interdependence has been a feature of economic globalization for many years, but the rise of China, India, Brazil, and other fast-growing economies has taken economic interdependence to a new level.  The multiple links among climate change and resources issues; the economic crisis; and state fragility—“hubs” of risks for the future—illustrate the interconnected nature of the challenges on the international agenda today.  Many of the issues cited above involve interwoven domestic and foreign challenges.  Domestic politics creates tight constraints on international cooperation and reduces the scope for compromise.

The shift to a multipolar world is complicating the prospects for effective global governance over the next 10 years. The expanding economic clout of emerging powers increases their political influence well beyond their borders.  Power is not only shifting from established powers to rising countries and, to some extent, the developing world, but also toward nonstate actors.  Diverse perspectives and suspicions about global governance, which is seen as a Western concept, will add to the difficulties of effectively mastering the growing number of challenges. 

• Brazilians feel there is a need for a redistribution of power from developed to developing states.  Some experts we consulted saw Brazil tending to like “old fashioned” multilateralism, which is state-centered and does not make room for nonstate actors.
• Many of our Chinese interlocutors see mounting global challenges and fundamental defects in the international system but emphasize the need for China to deal with its internal problems.  The Chinese envisage a “bigger structure” pulling together the various institutions and groups that have been established recently.  They see the G-20 as being a step forward but question whether North-South differences will impede cooperation on issues other than economics.
• For participants from the Persian Gulf region, the question is what sort of global institutions are most capable of inclusive power sharing.  They bemoaned the lack of strong regional organizations.
• The Indians thought existing international organizations are “grossly inadequate” and worried about an “absence of an internal equilibrium in Asia to ensure stability.”  They felt that India is not well positioned to help develop regional institutions for Asia given China’s preponderant role in the region.
• Russian experts we consulted see the world in 2025 as still one of great powers but with more opportunities for transnational cooperation.  The Russians worried about the relative lack of “transpacific security.”  The United States, Europe, and Russia also have scope for growing much closer, while China, “with the biggest economy,” will be the main factor in changing the world.
• The South Africans assessed that globalization appears to be strengthening regionalization as opposed to creating a single global polity.  They worried that the losers from globalization increasingly outnumber the winners.

In addition to the shift to a multipolar world, power is also shifting toward nonstate actors, be they agents or spoilers of cooperation.  On a positive note, transnational nongovernmental organizations, civil-society groups, churches and faith-based organizations, multinational corporations, other business bodies, and interest groups have been equally, if not more effective than states at reframing issues and mobilizing publics—a trend we expect to continue.  However, hostile nonstate actors such as criminal organizations and terrorist networks, all empowered by existing and new technologies, can pose serious security threats and compound systemic risks.  Many developing countries—which are likely to play an increasing role at the regional and global level—also suffer from a relative paucity of nonstate actors, that could help newly emerging states and their governments deal with the growing transnational challenges. 

Global governance institutions have adapted to some degree as new issues have emerged, but the adaptations have not necessarily been intentional or substantial enough to keep up with growing demand.  Rather, they have been spurred as much by outside forces as by the institutions themselves.

The emergence of informal groupings of leading countries, such as the G-20; the prospects for further regional cooperation, notably in East Asia; and the multiple contributions of nonstate actors to international cooperation—although highly useful—are unlikely to serve as permanent alternatives to rule-based, inclusive multilateral institutions.  Multilateral institutions can deliver public goods that summits, nonstate actors and regional frameworks cannot supply, or cannot do so in a reliable way.  Our foreign interlocutors stressed the need for decisions enjoying universal legitimacy, norms setting predictable patterns of behavior based on reciprocity, and mutually agreed instruments to resolve disputes and redress torts, such as in trade matters.

We assess that the multiple and diverse governance frameworks, however flexible, probably are not going to be sufficient to keep pace with the looming number of transnational and global challenges absent extensive institutional reforms and innovations.  The capacities of the current institutional patchwork will be stretched by the type of problems facing the global order over the next few decades.

Numerous studies indicate the growing fragility of many low-income developing states and potential for more conflict, particularly in cases where civil wars were never fully resolved.  Internal conflict or collapse of large populous states on the scale of an Ethiopia, Bangladesh, Pakistan or Nigeria would likely overwhelm international conflict management efforts.  Afghanistan, with approximately 28 million people, and Iraq, with 30 million, are among the most populous conflict management cases ever attempted, and they are proving difficult. 

Regional organizations have performed comparatively few large-scale operational responses to fragile states requiring humanitarian and peacemaking help.  Although we can expect increased political and economic engagement from rising powers—in part a reflection of their increasing global interests—emerging powers have deep-seated concerns about the consequences of the proactive management of state fragility.

Prevention, for example, often can require direct political intervention or even the threat or use of military force as a last resort.  Efforts to prevent conflict have often been slowed by reluctance and resistance to intervene directly, potentially overriding another country’s sovereignty.  Many experts in emerging states thought their governments probably would be particularly leery of any intervention if it is driven by the “West.” 

Another cluster of problems—the management of energy, food, and water resources—appears particularly unlikely to be effectively tackled without major governance innovations.  Individual international agencies respond to discrete cases, particularly humanitarian emergencies in individual countries.  However, no overall framework exists to manage the interrelated problems of food, water and energy.  The stakes are high in view of the impact that growing scarcities could have on undermining the open international system.  Resource competition in which major powers seek to secure reliable supplies could lead to a breakdown in cooperation in other areas.  Moreover, scarcities are likely to hit poor states the hardest, leading in the worst case to internal or interstate conflict and spillover to regional destabilization. 

Other over-the-horizon issues—migration, the potential opening of the Arctic, and risks associated with the biotechnology revolution—are likely to rise in importance and demand a higher level of cooperation.  These issues are difficult ones for multilateral cooperation because they involve more preventive action.  Under current circumstances, greater cooperation on those issues in which the risks are not clear-cut will be especially difficult to achieve. 

Potential Scenarios

Throughout the main text, we have sprinkled fictionalized scenarios that could result if, as we believe likely, the multiple and diverse governance frameworks struggle to keep pace with the looming number of transnational and global challenges.  The scenarios illustrate various permutations that could happen over the next 15 years.  The following summarizes what we see as the principal potential trajectories of the international system as it tries to confront new challenges. We believe the risks of an unreformed global governance system are likely to cumulate over time.  Crises—so long as they are not overwhelming—may actually spur greater innovation and change in the system.  Inaction over the long term increases the risks of a complete breakdown.    

Scenario I:  Barely Keeping Afloat
In this scenario, seen as the most likely one over the next several years, no one crisis will be so overwhelming as to threaten the international system even though collective management advances slowly.  Crises are dealt with ad hoc and temporary frameworks or institutions are devised to avert the most threatening aspects of them.  Formal institutions remain largely unreformed and Western states probably must shoulder a disproportionate share of “global governance” as developing countries prevent disruptions at home.  This future is not sustainable over the longer term as it depends on no crisis being so unmanageable as to overwhelm the international system. 

Scenario II:  Fragmentation
Powerful states and regions try to wall themselves off from outside threats.  Asia builds a regional order that is economically self-sufficient.  Global communications ensure globalization does not die, but it slows significantly.  Europe turns its focus inward as it wrestles with growing discontent with declining living standards.  With a growing work force, the US might be in a better position but may still be fiscally constrained if its budgetary shortfalls and long-term debt problems remain unresolved. 

Scenario III:  Concert of Europe Redux
Under this scenario, severe threats to the international system—possibly a looming environmental disaster or a conflict that risks spreading—prompt greater cooperation on solving global problems.  Significant reform of the international system becomes possible.  Although less likely than the first two scenarios in the immediate future, such a scenario might prove the best outcome over the longer term, building a resilient international system that would step up the level of overall cooperation on an array of problems.  The US increasingly shares power while China and India increase their burden sharing and the EU takes on a bigger global role.  A stable concert could also occur incrementally over a long period in which economic gaps shrink and per capita income converges.  

Scenario IV:  Gaming Reality:  Conflict Trumps Cooperation
This scenario is among the least likely, but the possibility cannot be dismissed.  The international system becomes threatening owing to domestic disruptions, particularly in emerging powers such as China.  Nationalistic pressures build as middle-class aspirations for the “good life” are stymied.  Tensions build between the United States and China, but also among some of the BRICs as competition grows for secure resources and clients.  A nuclear arms race in the Middle East could deal an equally destabilizing blow to prospects for continued global growth.  Suspicions and tensions make reforming global institutions impossible; budding regional efforts, particularly in Asia, also are undermined. 

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