Parliament’s decision on Tuesday to pass a motion in favour of suspending diplomatic relations with Tel Aviv could compromise export growth of 85.2% from South Africa to Israel over the last three years.
Should the Cabinet decide to forge ahead with the motion that was tabled by the EFF and supported by the ANC, exports to Israel could drop down and be difficult to recover, says Thina Nodada, director of Waymaker Trade Solutions.
Last year alone, South Africa yielded $350.9 million in exports to Israel, he said.
Taking a closer look at what he described as “massive growth”, Nodada said: “The biggest exports from South Africa to Israel are mineral fuels and oils, followed by precious stones and metals from the mining industry.”
Fruit is the third-biggest export sector that has seen a significant increase in quantities exported to Israel, since 2020.
Data shared with Freight News by Francois Fouche, an economist and research fellow at GIBS Business School, shows that 39.79% of exports to Israel in 2021 were coal, followed by diamonds (30.54%) and grapes (4.14%).
The combined trade value of exports to Israel for the same year was $182 million.
The current trade of $350.9 million represents and increase of 87.5%.
However, yesterday’s grandstanding by EFF leader Julius Malema and 249 kowtowing members of parliament – 91 MPs voted against the motion – wouldn’t “have a massive impact on South Africa if diplomatic relations with Israel were brought to a halt,” Nodada said.
“This is due to the fact that Israel takes up a total of 0.28% of South Africa’s exports.
“The aspect that we need to look at is that we have such good growth over the last three years.
“We were on a growing trajectory from a trade perspective, and halting this may bring an end to all that growth.”
Fouche lamented South Africa’s estrangement of Israel, saying Israel has become one of the most diversified economies in the world, strong on innovation and with solid statistics to back up that view.
Freight News also understands that, within economist circles in the country, it is said that the ANC’s support of the EFF motion is an attempt to grow its stature among the large Muslim community of the Western Cape, where the Democratic Alliance is tipped to retain power in next year’s national election.
Speculation is rife that Cabinet won’t proceed with the motion as current developments in the Middle East point to some sort of a ceasefire being imminent.
It has also been pointed out by various political analysts that a clean diplomatic break with Israel won’t be practical, as it will result in severing all ties with the government of Benjamin Netanyahu, including access to Palestinian interests in Israeli territory.
Fouche said it’s really not a good idea to be seen picking the side of Hamas over Israel.
Nodada said it could spell disaster for the country’s continued inclusion in the African Growth and Opportunity Act (Agoa) if US sentiment turned against South Africa because of the support that President Cyril Ramaphosa’s government appears to be showing for a terror organisation.
Recently, threats emanated from Washington – and not for the first time this year – that South Africa’s Agoa benefits should be reviewed “out-of-cycle” because of its refusal to condemn Russia for its war on Ukraine.
The push by some legislators from Capitol Hill against South Africa’s continued inclusion in Agoa, totalling $25.5 billion in tariff-free exports to the US as per 2022-data, was exacerbated by incidents of presumed skulduggery in favour of sustaining relations with the government of Vladimir Putin.
The late-night visit last December to Simons Town Naval Base by the Lady R, a banned Russian vessel, and subsequent efforts to obfuscate the reason for its off-radar docking is one such incident.
Recently Niger, Gabon, Uganda and the Central African Republic were all expelled from Agoa because of its support for terror organisations, suppression of civil liberties and reluctance to uphold the rule of law.
South Africa does not want to be seen as conducting itself in an undemocratic manner, Nododa said.
“The US may not be very impressed by South Africa’s decision to suspend diplomatic relations with Israel.”
