Russia's strategic interests in Africa

At the moment, for Russia there are only two areas of foreign economic expansion in the world that have not yet been embedded in other people's economic pyramids
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15 2 2021
 

Assessment of the situation
 

Currently, there is a clash between two opposing geopolitical processes.

On the one hand, China seeks to earmark and stake out a large part of the overall economy of the planet in order to create its own closed cluster, allowing it to form on its basis an economy that is fairly large, stable and little dependent on foreign markets. Capable of providing China with a resource and financial base sufficient for a successful military and ideological confrontation with the rest of the world. Ideally, enough to ignore anything outside the "new Great Wall of China”.

On the other hand, Western transnational financial capital, headed by members of corporate boards of directors or shareholders (colloquially often referred to as "unknown fathers"), is trying to restore and even expand the global common world based on the dominance of the dollar, in order to gain the ability to freely plunder any national economy and independently determine who to pay, or rather not to pay, taxes to and how much.

In accordance with the principles of dialectics, the desire of the "unknown fathers" did not arise from scratch, but was the result of an over-concentration of capital in the financial sector. In 1917, banks accounted for barely 3% of the total capitalisation of the Western economy. In 1967, their share only slightly exceeded 5%.

In 2017, financial corporations already controlled a quarter of the world's capital, and by the end of 2019, the top ten largest purely financial funds had capital 7 times larger than the capitalisation of the top ten largest world corporations producing anything tangible ($25.95 trillion versus $3.61 trillion).

However, in the war of "monetary denomination against the lathe" a standoff develops not only between financiers and production workers, but primarily between financiers.

In the ranking of the largest banks, about half, including the top three, is occupied by the banking and financial structures of China, which control more than 40% of all money. If in 2017, the top 8 largest financial structures (funds and/or banks) in the world had a total capital of $17.51 trillion, 9.2 trillion of which was "Chinese", then two years later (in 2019), out of 25.95 "total" trillion, banking and financial structures from China owned 13.2 trillion.

At the same time, the Chinese leadership is aware of the vulnerability of the economic mechanism formed now from the American and European sales markets, which can be closed by Western capital. Hence the desire of Beijing to have time to transform the "occupied" space of the common market into its own separate patrimony through the creation of a closed economic cluster. For example, in the form of a Regional Comprehensive Economic Partnership (RCEP).

This limits the size of the remaining space for the expansion of the "unknown fathers" project and increases the importance of Russia as a near-term and medium-term goal of their expansion. Both to exclude a possible (even inevitable) geopolitical (including military) rapprochement between Moscow and Beijing, and to annex the profits generated by the Russian economy in favour of Western multinational financial corporations.

To counter this, Russia, in the current conditions, can only strengthen its military defence capability, which will protect it from the West’s direct military aggression, but does not guarantee security in general. In the $1.61 trillion of the country's GDP in 2019, 667 billion (41.4%) was foreign trade turnover. And the export in it was equal to 422 billion, or two-thirds.

In the event of the blocking of Russian exports, which are overwhelmingly focused on the countries of the European Union, the Russian economy will face major internal problems, fraught with causing, firstly, an economic, and then a political collapse of the state.

Thus, Russia faces the urgent task of enlarging the scale of its economy and creating its own stable closed cluster that can ensure the stability of the economic development of the Russian Federation in the long term.

Formulation of the problem.

In the current environmental conditions, for Russia there are only two areas in the world that are not yet embedded in other people's economic pyramids - these are the post-Soviet republics and the countries of the African continent.

The former seem closer logically and simpler in the ethno-cultural sense, since only three decades ago they were part of a single common cultural and economic space. However, today they are almost universally anti-Russian. With the difference that some, like Belarus, portray consent to the Union State, others, like Ukraine or Georgia, "defend their right to a European choice", and others, like Armenia or Kazakhstan, prefer the multi-vector approach.

At the same time, even if we find a way to include them in the Russian economic structure, they will increase the final size of GDP slightly. The total GDP of Belarus, Ukraine, Moldova, Armenia, Georgia, Azerbaijan, Tajikistan, Uzbekistan, Kyrgyzstan, Turkmenistan and Kazakhstan is only 0.6 trillion, while the GDP of the Russian Federation in 2019 exceeds $1.6 trillion.

At the same time, 55 African states collectively account for a GDP of 2.396 trillion, almost 0.5 trillion of which comes from Egypt and Algeria – today the two most interested states in rapprochement with Russia and the leading Russian trading partners in Africa. In addition, they, not without reason, still may claim to leadership on the continent.

However, judging by the fact that on October 23rd, 2019, delegations from all the countries of the Black Continent arrived in Sochi for the Russia–Africa forum, and 43 of them were represented by top officials, there is a very, very great interest in Russia.

But the problem of its practical implementation in trade and economic relations is also quite acute. Although the total trade turnover of the "African direction" in Russia has started to grow actively and has already reached $20 billion, against the background of 50 billion of African trade with America, 150 billion with China and 300 billion with the EU (primarily with France), it still looks quite pale. And India's $59.2 billion trade with the South African customs union is also impressive.

In other words, today 51.7% of the foreign trade of most African countries remains centred on the European Union, 25.8% - on China, 10.2% - on India, 8.6% - on the United States, and only 3.7% - on Russia.

The situation may seem unpromising, although in reality the situation just opens up wide opportunities for the Russian Federation. There are two initial reasons.

Firstly, the picture is formed because Moscow has only just started to regain its position in Africa after almost a quarter of a century of absence due to the results of the collapse of the USSR. In the 1970s, more than 36% of the foreign trade of African countries was centred on the USSR.

Secondly, the geopolitical crisis of the United States and the European Union leads to a weakening not only of their international influence, but also of their trade and economic opportunities. This creates a void that is gradually being filled by Russia. Now, first and foremost, in the most profitable, but narrow in terms of money and directions, niches.

However, the fact that the volume of Russian-African trade has doubled in 5 years (2013 - $9.9 billion, 2018 - $20.2 billion), and the share of food and industrial goods in it has already exceeded the volume of arms supplies to Algeria and Egypt, indicates very great prospects. But their implementation requires huge and painstaking work.

The main trading partners of the Russian Federation in 2018 were the Arabic-speaking countries of North Africa - Egypt ($7.7 billion), Algeria ($4.6 billion), Morocco ($1.5 billion) and Tunisia ($821 million). Among the rest, only South Africa stood out ($1.1 billion).

Russia mainly supplies weapons and food to Africa, and in return receives minerals and food products. According to SIPRI, Egypt in 2013-2018 bought 2.2 billion’s worth of Russian weapons, and Algeria — 4.5 billion. At the same time, the annual volume of arms purchases in the case of Egypt from Russia increased from almost zero in 2013 to $813 million in 2018, in the case of Algeria — almost 5-fold, to $1.2 billion.

In addition, Russian companies are implementing energy projects in Ethiopia, the Republic of the Congo, Equatorial Guinea, Morocco and South Sudan, and expanding trade with Angola, Mozambique and Zimbabwe. For example, RUSAL in Guinea produces 60% of all the bauxite it uses.

This raises a number of problems caused by the attempt to conduct Russian economic expansion in African countries according to the rules of the traditional European colonial model. It provides for the support of the current government in any country simply because it is officially acting, even if the government is literally sitting on bayonets. If only it expresses its willingness to agree to sign contracts for the development of existing natural resources.

In some cases, we even manage to stabilise the existing state institutions, but as a rule, the strength of the political structure in the target countries remains low. On the one hand, due to the still low development of social and state institutions in African countries.

In the presence of the usual external attributes of power (coat of arms, anthem, institution of national elections, president, parliament, supreme court, etc.), most of the structure of society, and therefore the state, remains clan-based, and sometimes even close to tribal. As a result, state posts are occupied by people from the victorious clan, who seek to use control over power in favour of only their own enrichment.

And when it succeeds, the other clans immediately resort to separatism in the hope of "redividing the pie", or even better, to be able to take it completely for themselves. This makes them extremely sensitive to the promises of "competitors". The Central African Republic, Mozambique and Sudan are examples of this.

This creates a danger for Russia to become embroiled in completely unnecessary internal civil, religious or ethnic divisions, which exclude the prospect of large-scale long-term investments that allow it to claim even longer-term profits.

Conclusions.

The African continent remains the last available space for Russian economic expansion, which, given the current geopolitical prospects and trends in the world, is the only way to form its own sustainable self-sufficient cluster. The creation of this can ensure that Russia wins a worthy place in the next round of global geopolitical competition, in the long term by 2030-2050.

The prospective volume of Russian-African trade, due to the replacement of primarily European, then American, competitors, if successful, can reach $300-350 billion a year, which is 17.5 times higher than the current trade volumes of the Russian Federation with African countries, and can also reduce Russia's dependence on trade with the West twofold.

With a competent line for the development of cooperation, especially in the option of forming a trade space on terms similar to (or close to) the form of a Regional Comprehensive Economic Partnership, in the future 10-15 years it is possible to create an economic cluster with a total GDP of about $4.5 trillion, in which Russia will have an undeniable financial and technological superiority.

The Russian strategy for the development of Africa should take into account, or even directly copy, the most advantageous elements of the Chinese and Indian lines. First, we should take the "infrastructure" part and the "debt relief" mechanism, and second - a bet on providing African countries with the necessary transport and equipment, although not as advanced as the Western one, but at much more competitive prices. Especially in terms of agricultural machinery.

This will simultaneously create a huge sales market for Russian technical goods, get a financial source for their further improvement and development of new technologies, as well as form an idea of Russia as a very attractive "third" version of Civilisation, fundamentally (and for the better) different from both the "American West" (including its European component) and China.

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