Washington and Pretoria in a conditional, necessary relationship

South Africa's relationship with the United States has often been beneficial, bringing Pretoria things like preferential trade terms and financial support for programmes such as the transition from fossil fuel-based power generation to renewable energy.

But it is never a free lunch for Pretoria. A senior American official on a trip to South Africa last week set out the terms.

Speaking to the media and local entrepreneurs in Johannesburg last week, US Deputy Treasury Secretary Wally Adeyemo outlined how the US-SA economic relationship could be maintained and strengthened. A key element was the need for Pretoria to tackle corruption.

The comments came against a backdrop of souring relations between Washington and Pretoria, largely over South Africa's apparent cosy relationship with Moscow despite Russia's invasion of Ukraine two years ago. In December 2022, Washington reacted angrily after a Russian military cargo ship, the Lady R, docked at South Africa's main naval base in Simonstown, some 40km south of Cape Town. It was reportedly making a long-awaited delivery of military equipment, mainly ammunition.

The US ambassador to South Africa, Reuben Brigety, disagreed, saying he would 'stake his life' on the accuracy of intelligence assessments that South Africa had violated US sanctions imposed on Moscow following the Russian invasion of Ukraine.

There have been visits by South African officials to Moscow over the past year and joint military exercises with Russia and China off South Africa's Indian Ocean coast a year ago. This, together with the continued failure to publicly confront Moscow over its invasion of Ukraine and alleged war crimes there, has contributed to a dramatic deterioration in previously warm relations with the US.

South Africa, in turn, promoted the BRICS bloc - initially comprising Brazil, Russia, India, China and South Africa - as a geopolitical counterweight to 'the West', especially the US, which has accelerated the deterioration. BRICS now includes other countries such as Ethiopia, Egypt, Saudi Arabia and Iran.

The US House of Representatives, riven by partisan bickering and barely functional, passed a measure - the US-South Africa Bilateral Relations Review Act - in early February. It calls for an end to South Africa's preferential trade and diplomatic status.

The US is one of South Africa's most important trading partners, worth an estimated $25.5 billion in 2022, comprising $9.3 billion in US exports and $16.2 billion in imports.

The American diplomat softened the US-SA divide with an anecdote about being a child and watching Nelson Mandela's release after 27 years in prison with his tearful father.

"Nelson Mandela's release became more than a historic event; it became a defining chapter in the collective narrative of the anti-apartheid struggle and the global struggle for civil rights," Adeyemo said.

Since then, there had been "progress and setbacks".

"An important facilitator of our economic relationship is the African Growth and Opportunity Act (AGOA), a cornerstone that provides African companies and workers from 32 countries with duty-free access to our market for more than 7,000 products," Adeyemo said.

South Africa has consistently been among the top beneficiaries of this arrangement.

"Thanks to AGOA, more than $3 billion of South African exports entered the United States duty-free last year.

"This benefit represents America's commitment to a strong economic relationship with South Africa, as well as economic integration with other countries in Africa.

"President Biden has urged the US Congress to renew AGOA - showing support not just for a trade agreement, but for our close partnership with Africa."

Having set the scene, the US official went on to outline Washington's expectations.

There are, he said, "three key areas to unlocking the economic potential of the South African economy: reliable electricity; deepening South Africa's connection to the global economy, especially the clean energy supply chain; and stemming the tide of corruption".

Adeyemo pointed out that "no country's economy can succeed without keeping the lights on".

South Africa had the resources to generate reliable electricity for its citizens, he insisted, but a lack of political will was holding it back.

What was needed, he said, was to modernise the country's electricity grid and allow new "green" sources of generation to come online.

"Enabling more renewable energy development is a sustainable and cost-effective way to end the electricity crisis.

"The United States understands the magnitude of the challenge and, along with the other parties to the Just Energy Transition Partnership (JETP), stands ready to provide South Africa with financial resources and technical assistance to jumpstart the energy transition and solve the energy crisis," Adeyemo said.

"Two years into this first-of-its-kind JETP model, South Africa has made significant progress in implementing policies that open up power generation to private sector investment, resulting in 66 gigawatts of renewable energy projects at various stages of development," he added.

"If unlocked with transmission investment, this pipeline would be more than enough to end load shedding and meet South Africa's air pollution and climate goals.

"We (supported) a nearly $2 billion package for South Africa, including development policy loans from the World Bank and the African Development Bank, and our partnership stands ready to provide more than $9 billion in financial assistance."

The US was also committed to ensuring that SA's energy transition was a "just" one.

"We have increased our grant commitment by $45 million in 2022 to support job training programmes, and [Treasury] Secretary [Janet] Yellen visited last January to talk to workers and communities about their challenges and aspirations.

"The clean energy transition should create jobs and economic opportunity. Many of the minerals at the heart of this transition are found here," said Adeyemo.

"Given the global demand for these minerals, the clean energy supply chain should create significant jobs for South Africans," he added. 

But this would not happen, nor would the industry thrive, without "the right economic incentives for companies to invest in extraction".

"The history of mining and many other industries in South Africa is one of racism.

"To afford the costs of dealing with the legacy of racism, South Africa needs the wealth and opportunity that this sector can bring to the country. This can and must be done in a way that does not concentrate the benefits of investment in the sector in the hands of a few."

To unlock the full potential of South Africa's rich resources, policies were needed that would allow the country's diverse services sector to thrive.

"The United States is investing to support the growth of South Africa's diversified economy. For example, the American Development Finance Corporation supported the Africa Data Centres project, which is bringing 35 megawatts of capacity to South Africa, creating hundreds of construction jobs, and helping to provide the digital infrastructure needed for the growing IT and fintech sectors, as well as other sectors of the economy."   

"The United States is investing to support the growth of South Africa's diversified economy. For example, the American Development Finance Corporation supported the Africa Data Centres project, which is bringing 35 megawatts of capacity to South Africa, creating hundreds of construction jobs, and helping to provide the digital infrastructure needed for the growing IT and fintech sectors, as well as other sectors of the economy."  

Finally, there was the issue of corruption, which the US official said was holding back progress on reliable energy and other challenges.

"Corruption is a tax that the rich and powerful impose on everyone else. No nation is immune.

"We want to use international frameworks to fight corruption and promote transparency."

There was no reaction from South African officials, although Africa watchers said senior Washington officials do not make such statements without an agenda, in this case including both carrots and sticks - the loss of AGOA status and worse looming in the background, even as the US offers help in addressing critical challenges facing Pretoria.