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The economic impact of the Russia-Ukraine crisis

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On 24 February 2022, the world woke up to the news of Russia announcing its “special military operation” to “demilitarise” and “deNazify” Ukraine.

This announcement was followed by a sophisticated, all-out attack by land and air.

As Russia began its invasion, the rest of the world watched in anguish, contemplating the unavoidable international political and economic implications.

There are competing views as to why Russia invaded Ukraine.

Some argue that the attacks were based on Ukraine’s desire to join NATO, while others link the invasion to the Minsk agreements.

The Minsk agreements are two treaties signed in 2014 and 2015 aimed at ending the war in Donbass.

To provide a bit of context one needs to go back to 2014.

Moscow was angered that its candidate lost Ukraine’s presidential mantle in elections in 2014.

This resulted in Donetsk and Luhansk announcing their autonomy from Kiev.

In September of that year the government of Kiev and the separatist leaders agreed to a 12-point ceasefire called Minsk I.

Despite the signing of the agreement, the fighting continued resulting in Russia, Ukraine and the Special Monitoring Mission of the Organisation for Security and Co-operation in Europe (OSCE) signing Minsk II.

The agreement called on Ukraine to control the state border and embark on constitutional reform and decentralisation.

Despite an election held in 2018 in the eastern regions, the US and the EU have refused to recognise the legitimacy of the vote, thus violating the agreement.

The OSCE has reported significant daily increases in ceasefire violations in the affected areas since February 2014.

While the US is not a signatory, it has expressed the importance of implementing the agreement.

Instead of accepting the existing agreement, Ukraine allegedly never implemented its provision, thereby incensing Moscow as well as ethnic Russians in Ukraine.

On 16 February 2022, the Russian parliament adopted a resolution requesting President Vladmir Putin to recognise Donetsk and Lugansk.

This agreement was signed on 21 February 2022 and followed by a request to deploy armed forces.

Inevitably the conflict dynamics have escalated.

While some believe themselves to be immune to the conflict, economists warn that it will have far-reaching global consequences as armed conflict tends to disrupt supply chains and increase the price of food and gas.

They predict a further increase in oil prices per barrel as Russia is the world’s largest natural gas exporter and the second largest exporter of crude oil.

This is important as oil prices directly impact transportation, logistics and air freights.

On 24 February, global oil prices past $105 per barrel warranting these predictions.

In addition, Russia is the world’s largest supplier of palladium, a material used by automakers for catalytic converters and to clean car exhaust fumes, a delay which would affect auto production.

It is worth noting that Ukraine is a major provider of wheat, corn and barley.

A lack of yellow maize, or even a slowdown in production, could result in an increase of meat prices.

Combined, Russia and Ukraine export more than a third of the world’s wheat and 20 percent of its maize.

They also account for 80 percent of global sunflower oil exports.

They supply all major international buyers, as well as many emerging markets.

In 2020, 90 percent of the African continent’s $4 billion agricultural imports from Russia were wheat and six percent sunflower oil.

South Africa does not produce enough wheat and is heavily reliant on imports from these countries.

It imported more than 30 percent of its wheat from these two countries over the past five years.

Western states have announced a coordinated series of sanctions aimed at Russian elites.

However, critics warn that they may be ineffective as the country’s economy is large enough to absorb even the most severe sanctions.

Its central bank has more than $630 billion in foreign reserves and gold.

Its sovereign wealth accounts for an additional $190 billion.

Russian debt accounts for a mere 20 percent of its gross domestic product (GDP).

The European Commission’s president, Ursula Von der Leyen, states that the bloc would target Russia’s energy sector by preventing European companies from providing Russia with the technology needed to upgrade its refineries.

The US Department of Treasury has committed itself to prevent Russia’s state-owned Gazprom from raising money to fund its projects in the US.

It is worth noting that Russia and Ukraine’s imports and exports to the US account for less than one percent, while Europe and Russia are interdependent.

The EU needs Russian gas, while Russia needs the EU’s money.

Some warn that the EU’s decision could be detrimental as it receives over a third of its natural gas from Russia.

This is used for home heating and energy generation.

These fears were intensified when the natural gas price in Europe increased by 62 percent on 24 February.

It is believed that Russia has been preparing for economic isolation for years and that it could better absorb the sanctions than Europe’s ability to reduce its dependence on Russia’s oil, gas and coal.

Despite all these, Gazprom announced that its gas exports to Europe were continuing as normal.

While the world watches with bated breath as the conflict rages there are some promising signs.

Russian and Ukrainian delegates are currently meeting on the border with Belarus to start a dialogue and Ukraine’s President Volodymyr Zelenskyy has called on Israel to serve as a mediator between himself and Putin.

Let us pray that reason prevails.

  • Sanet Madonsela is a double cum laude graduate and a PhD candidate in the Centre for Gender and Africa Studies at the University of the Free State. She is also the chairperson of the South African Association of Political Science’s Emerging Scholars Research Committee and the projects and events coordinator for the International Association for Political Science Students.

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Opinion

Operation Dudula confirms we are a country in real trouble

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Unbidden, the spectre of a failed state haunts the contemporary imagination of South Africa.

State responsibility and accountability have been piecemeal, with the citizenry of South Africa is left to fend for itself, as organs of state have grounded to a halt due to historical missteps in securing our physical and knowledge infrastructures, and contemporary endemic mismanagement of vital resources.

Many have warned us of the spiralling road to purgatory – Justice Malala, the Arch, Kader Asmal, Thabo Mbeki, Athol Williams.

And many social phenomena have been harbingers of a South Africa in violent transition – the Marikana massacre; roiling xenophobic attacks that have maimed particularly African transnationals; rising unemployment, particularly among the youth; and the militarisation of the state in “defence of order and the rule of law” during COVID-19.

In this firepit of uncertainty exacerbated by a lengthy state of emergency in response to a global pandemic, South Africa’s destitute have been embattled psychologically, physically, emotionally and financially.

Survival – life – is not guaranteed.

A multivalent and multipronged response has been constrained, as various government departments lack the political will, knowledge and sense of deep responsibility and accountability towards the people.

The gravity and sheer overwhelm that comes with recognising this thin knife-edge we are teetering on has led to South Africa cycling between mass inertia and rabble-rousing rebellions, literally and otherwise, that agitate for a reorganisation of the social order.

How do we uphold the value of life?

Operation Dudula, like many other social movements in the country, foregrounds the vast, seemingly insurmountable obstacles we face in living lives of and with dignity in South Africa.

They respond to the question: “How do we uphold the value of life, no matter race, creed, nationality or religion, when we as South Africans are annihilated on the throne of a hetero-patriarchal, capitalist democratic state that has lost favour among those who matter – the people?”

Listening closely to the rhetoric from the face of Operation Dudula, Nhlanhla Lux Dlamini, one hears the lion roaring and, like so many before him, he uses hyper-masculine and performative tropes of protector, provider, hustler and gangster as swirling metaphors tempered by “the rule of law” to assert that South Africa is for South Africans.

Using unsubstantiated claims that pit illegal foreigners against local South Africans, the messiness and complex contextual nature of criminal activity, inclusive of intent, range of crimes and the identity of perpetrators, are reduced to legality or illegality of citizenship.

Yet statistics do not support the suggestion that crime is being driven by illegal foreigners or undocumented migrants – the leading majority of our male prison population is South African.

While the existence of Operation Dudula is becoming a sustained and vocal threat to the veneer of “business as usual” in the country and to the lives of non-nationals, there are seeds of potential cast among the operation’s challenges.

However, this potential will be wasted and destroyed if we do not recognise and collectively respond to the:

* inter-related and inter-dependent nature of South Africa’s contemporary state of affairs;

* power inherent in an active citizenry that understands that I am my brothers’ and sisters’ keeper, irrespective of socially constructed, performed and maintained markers of difference; and

* collective psychological and emotional trauma that undergirds our interactions with each other, and “the other”.

We are a country in trouble

Our xenophobic responses to perceived and real threats in South Africa over the past two decades confirm that stereotyping and scapegoating are part of rudimentary attempts to eradicate these threats to self, and to effectively disarm them.

However, history also shows that annihilation of the other does not secure one’s self.

Instead, the sublimation and vanquishing of the other has detrimental effects on a thinking-feeling human being whose righteous logic of “being right” cannot withstand the internal reckoning that will come from annihilating another.

As Hemphill states, “each death and each riot activate another memory of another life lost without justice or reason; this is how trauma unhealed haunts and accumulates, re-emerging and reanimating the body. It does not disappear.”

We are a country in trouble. We are a world troubled.

And if we are to survive this as a collective, not as divided parts of the collective, we will have to critically question and consciously resist years of indoctrination and socialisation that assert that “might is right” – that fighting and going to war (on local and on foreign soil) is a righteous endeavour if one does so to protect the sovereignty of land, borders, bodies and ideologies.

The revolution will not be televised, for it is an internal one.

We have no map to chart the way forward as old-world orders dissolve; as the earth implodes under the heaviness of human waste and damage; and as humans continue to live desperate lives separated from the life-giving forces of nature and the divine feminine.

Moving forward, those resident in South Africa will have to fashion new social compacts that uphold the sovereignty of individuals and their right to dignified life, supported by collective and individual interventions that supersede the state.

Ordinary citizens will have to free themselves from mental shackles as they actively re-root and reroute themselves in ancient philosophies and ways of being that extend beyond one originary myth.

We will have to trust and grow the potential that exists within an uncertain world and trust the humanness within self and others to guide us to each other; to draw closer when every fibre of our being rages against that shattering of physical and ideological distance.

We are not without ordinary examples of this work.

My research and those of my students among African transnational migrants demonstrate alternative ways of interacting that support rather than degrade the financial, emotional and spiritual well-being of citizen and non-citizen.

Born out of need, acts of connection and micro-resistance reorder, question and negate the jarring and dissonant narratives and realities of difference that were part of South Africa’s foundations.

Through love, kindness and mutual support and guidance, South Africans and other nationals reframe the reality of living in South Africa, exposing an ethic of care and commitment to a collective well-being that is not based on socially constructed forms of inclusion and exclusion, or politically orchestrated forms of responsibility.

The existence of Operation Dudula and the Gift of the Givers, for example, confirms that we have work to do across generations in this country.

Our work includes the painstaking process of healing our individual and collective psyches and the re-envisioning of a future that is supportive of all life.

We need to serve life and make our country and “the world safe for human differences” (Benedict).

The time to evolve, consciously, is upon us.

  • Professor Joy Owen is the head of the Department of Anthropology at the University of the Free State.

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Opinion

Discharging raw sewage into rivers a national security issue

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The recent news has been dominated by so many things that an important signal has been drowned out by the noise.

That small signal is the announcement by the National Institute for Communicable Diseases (NICD) that typhoid has been identified in parts of South Africa, so the prudent approach is to boil the water coming from taps.

While this is an important development, it needs to be placed into context.

For starters, the NICD is a credible institution, so anything they say must be taken seriously.

This issue brings three important factors into clear focus.

Let us unpack each of these in order to gain greater perspective.

The issue of trust

The first is the issue of trust.

This is a global phenomenon, most notably associated with social media that has enabled each person to theoretically have access to the entire quantum of our cumulative knowledge as an apex species on planet earth.

In an instant, each person has the capacity to become an expert on a given topic.

We have seen this playing out in the COVID-19 space, most notably as the efficacy of the vaccination programme has been questioned.

While it is great that so much information is available to everyone instantly, it is also a problem, because unless the individual is trained to filter out the noise, they are rapidly overloaded with stuff that causes them to panic.

In South Africa this has an added dimension, driven by the findings of the Zondo Commission, which in general indicates a severe trust deficit between the government and the general population.

Seen in this light, it is highly likely that the typhoid issue will fall directly into that chasm of trust and serve to widen it even further.

This needs to be dealt with in our collective best interest, because panic serves nobody in a constructive way.

Therefore, the first part of my core message is that we must avoid the urge to become instant experts by deferring the scientific facts to the scientific professionals.

Sadly, science has been a victim of this trust deficit, so my voice might be lost in the howling gale of discontentment.

Deteriorating water quality

The second is the problem of deteriorating water quality.

In this regard, we are on absolutely solid ground, because we know – without fear of contradiction – that our water quality has been on a downward trajectory for some time.

If we are looking for a pivotal moment, we might consider the acid mine drainage decant that first hit the public attention in 2002.

Amid a flurry of activism and a media frenzy, we have the sad reality, two decades later, that absolutely nothing has been done about this matter.

Highly acidic mine water – rich in a dissolved cocktail of metals that include uranium, arsenic, cadmium, and mercury – has continued to flow into our rivers and dams in mining areas of the country.

But more importantly, we have also witnessed the systematic collapse of our wastewater infrastructure, which has accelerated over the past decade – this is best epitomised by the unsuccessful attempt of the SANDF to prevent the flow of raw sewage into the Vaal River at Emfuleni.

Two billion rand later, we are no closer today to finding a solution than we were a decade ago.

The numbers are staggering.

As a nation, we produce over five billion litres of raw sewage every day.

The latest credible calculation of that flow indicated that about 4.2 billion litres were being discharged daily into our rivers in an untreated format.

That represents a tsunami of human waste inundating our rivers and dams, without respite, for more than a decade.

This is probably our biggest single challenge as a nation.

In my professional opinion, this is a national security issue, because it impacts negatively on the lives of each citizen daily.

It is destroying the economy from within by damaging the health of the individual, without them even knowing about it.

You see, in sewage return flows, we find every substance that is ever dispensed in the retail sector.

Think of the pharmaceutical industry.

Imagine how much medication is sold each day by major pharmacies countrywide.

Every item sold ends up in the sewage stream in a partially metabolised format.

These include antibiotics, antiretrovirals, antidepressants, oestrogen used for contraception and Viagra used to keep an aging population happy.

So, we need to think of the sewage streams being discharged into our rivers and dams as thousands of tons of medication, still viable even in its partially metabolised form, to which we are exposing trillions of pathogenic microbes that are flourishing in the warm nutrient-rich waters.

Think of this as a boot camp for microbes, because lazy and weak ones are destroyed by the low concentration of antibiotics, leaving only the stronger ones to flourish.

In short, our boot camp for microbes is producing the next generation of multidrug-resistant pathogens.

It is happening right before our eyes. 

Simply think about this logically and draw your own conclusion if you choose to mistrust science for reasons of your own. 

Does it make sense to allow the discharge of more than four billion litres of sewage daily into our rivers and dams, without anticipating some form of unintended consequence? 

Ability to cope as a nation

The third is the issue of our ability to cope as a nation.

Here is where it gets really interesting, because at the very time when we are facing multiple risks to our economic well-being – COVID-19, unemployment, capital flight, energy crisis and corruption, to name but a few – we also need to be at our peak performance when it comes to finding solutions.

We can say, with a high level of confidence, that our capacity to reach consensus on the way to solve the complex problems we are facing is probably at an historic low (and deteriorating).

In fact, we can say that there is an inverse relationship between our need to find consensus on a viable way ahead and our capacity to generate the very consensus on which our survival as a species depends.

This sounds a little dramatic, but I am using it to illustrate the point that, globally, our capacity to unite in the face of a single common threat – climate change – is being eroded by many forces.

These include the deficit of trust in the government (point one noted above), the growing mistrust of science (exacerbated by the COVID-19 pandemic and the manifest as social pushback from the anti-vaxxers and the climate change denialists) and the increased sense of helplessness that each person is confronted with.

All of these are manifested in the typhoid issue.

While typhoid is clearly a bad thing, we need to place it in context.

Just as the COVID-19 issue has shown us, the fatalities are relatively few, and while tragic to the individual families impacted, seen through the lens of logic and reason, this is not a show-stopper.

What it does is highlight the issue of our failing sewage infrastructure.

We can no longer simply accept that incompetent politicians can muddle their way through a growing crisis.

We have to hold them accountable.

We must convert the rising sense of rage into the high-octane rocket fuel of change.

We need to say enough is enough.

Now is the time that we demand technically competent people be appointed into specialist jobs, and then held fully accountable.

We need to depoliticise the deployment of cadres, for that policy has brought us the failing infrastructure we see in Eskom, PRASA, municipal wastewater systems and many other failed SOEs.

In the face of the typhoid outbreak, we need to renew our trust in science, but also wake up and smell the coffee by realising that we cannot simply discharge billions of litres of acidic mine water and raw sewage into our rivers and dams, without encountering unintended consequences.

Those consequences might just be deadly.

  • Professor Anthony Turton is an affiliated professor in the Centre for Environmental Management at the University of the Free State. He specialises in strategic planning, transboundary water resource management, policy and institutional issues, conflict resolution, political risk assessment for large infrastructural projects and research programme design. He is also the director of Nanodyn Systems Pty Ltd.

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Opinion

Africa is forging a new path towards self-reliance

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Dear Fellow South African,

Africa’s management of the COVID-19 pandemic is a story of defied expectations.

It is now two years since the first COVID-19 case in Africa was reported. Even as the burden of infections remains high – to date Africa has recorded over 11 million cases – dire predictions about Africa’s ability to withstand the health impact of the pandemic have not materialised.

Some have called it Africa’s COVID-19 paradox, that despite widespread poverty, poor living conditions, under-resourced national health systems and scant resources, the pandemic is being effectively managed in a number of African countries.

Several reasons have been suggested for this ‘paradox’. These include the continent’s relatively young population, experience in fighting outbreaks of disease, exposure of the population to previous infections, and limited travel connections in many countries.

Another reason that has been suggested is the rapid response of the African Union to the pandemic, driving a coordinated response and unified strategy. This strategy mobilised resources to fortify national health systems, set up an online platform to secure medical supplies, undertook a continent-wide drive to acquire vaccines, and drove effective public health communications.

At a time when decisive leadership was called for, the leaders of Africa stepped up.

In the course of the past two years, African countries have built remarkable resilience that will be invaluable for future health emergencies of this nature.

Faced with massive global shortages of medical equipment and diagnostics in the early days of the pandemic, African countries turned to local manufacturing of sanitisers, personal protective equipment, COVID-19 test kits and ventilators.

There is another aspect to Africa’s story of defied expectations, namely the realisation that as the global crisis unfolded, our continent could not rely on the generosity of wealthy countries. We had to do things for ourselves.

African countries have had to contend with wealthy nations pledging partnership, solidarity and cooperation, but at the same time acting in a way that holds back the continent’s recovery from the pandemic.

An example was the travel ban imposed late last year on South Africa and a number of other countries in the region in response to our scientists’ detection of the Omicron variant.

But nowhere has this been more apparent than in the unacceptable practice of developed countries buying up and hoarding all available COVID-19 vaccine stocks in quantities far exceeding the needs of their populations. This as vast swathes of the so-called developing world struggled to access them for their people.

Our experience of managing COVID-19 has emboldened the nations of Africa. It has shown us that resources and capabilities exist across our own continent to deal with emergencies of this magnitude.

It has reminded us that we have world-class institutions like the Africa Centres for Disease Control and Prevention that must be supported and capacitated to fulfil their mandates.

It has shown us how fragile our global partnerships can be, particularly in a global emergency.

Most importantly, it has strengthened our collective resolve to step up pressure on developed economy nations to give us not charity, but our just dues.

Countries of the global north have a responsibility to support Africa’s development in large part due to the role that many of these countries played in plundering, polluting and impoverishing our continent.

Last week, I attended the 6th Summit between the African Union and European Union in Brussels. There, African nations outlined their expectations from the partnership with the bloc as we work to recover from COVID-19 and manage the effects of climate change.

We welcome the help that EU countries continue to provide towards Africa’s sustainable development in a way that develops our capabilities and brings the continent closer to self-reliance.

Last year, South Africa was selected by the World Health Organisation (WHO) as the first site for a vaccine technology transfer hub. On the sidelines of last week’s Summit, the WHO announced that six African countries including South Africa will receive the technology needed to produce mRNA vaccines at scale for the continent.

We will continue to make the case for building Africa’s capacity to produce its own vaccines, including through a temporary waiver of the Agreement on Trade Related Aspects of Intellectual Property Rights at the World Trade Organisation (WTO).

We welcome the commitment of the AU-EU Summit “to engage constructively towards an agreement on a comprehensive WTO response to the pandemic, which includes trade related, as well as intellectual property related aspects.”

Without being able to manufacture our own vaccines, an equitable recovery will not be possible.

Building a better Africa and a better world is the cornerstone of South Africa’s foreign policy. For Africa to play a full and equal role in global affairs, we must first attend to the developmental challenges of the people of Africa.

We must uplift ourselves by making our own medicines to treat our people and save lives. We must develop our own economies through the African Continental Free Trade Area (AfCFTA), promoting investment and tourism within Africa, accelerating industrialisation, and driving green growth and low-carbon development. We must end all conflict and entrench democracy and good governance.

Thanks to our experience of the COVID-19 pandemic, the cause of African unity has been given a new lease on life. It has given renewed momentum to the project of political and economic integration, which has been strengthened by the advent of the AfCFTA.

Africa has found a new voice. It is bold and unapologetic in its expectations of our partners. At the same time, we are determined that Africa’s challenges must be, are being, and will be, solved by Africans themselves.

 

With best regards,

 

Cyril Ramaphosa

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