Abu Dhabi, UAESaturday 20 July 2019

Russia finds a willing commercial partner in Africa but at what cost?

A crisis sent Zimbabwe President Emmerson Mnangagwa to Moscow where the Kremlin offered investment

Russian President Vladimir Putin (R) shakes hands with Zimbabwean President Emmerson Mnangagwa (L) during a signing ceremony following their talks in the Kremlin in Moscow, on January 15, 2019. Zimbabwean President arrived in Moscow on a three-day official visit. / AFP / POOL / Sergei CHIRIKOV
Russian President Vladimir Putin (R) shakes hands with Zimbabwean President Emmerson Mnangagwa (L) during a signing ceremony following their talks in the Kremlin in Moscow, on January 15, 2019. Zimbabwean President arrived in Moscow on a three-day official visit. / AFP / POOL / Sergei CHIRIKOV

While protestors and police clashed on the streets of Zimbabwe, the country’s president Emmerson Mnangagwa was en route to Russia in search of help.

Amid a growing economic crisis which has brought civilians out in force, Zimbabwe is not the first – and will not be the last – to send a politician to Moscow looking for aid.

Over the past year, Russian President Vladimir Putin has escalated the process of rebuilding old Soviet-era ties going back to the Cold War.

Moscow lacks the financial firepower of China, the US or the EU, its main rivals to its African ambitions. It does however, have weapons and state-owned resource companies. With China now running into a PR problem over criticism of lending that leaves countries heavily in its debt, the timing of a renewed push into Africa could not be better for Mr Putin.

“Increasingly isolationist policies by the US and France has created a security vacuum which Russia has been able to exploit,” says Chris Kiernan, an analyst at Cape Town business intelligence firm Signal Risk. “Africa does not have a strong overarching security architecture or a Nato equivalent, so there is little to deter an uptick in Russian involvement. This also allows Putin to place Russia as a key international player in absence of competition from other states.”

Security is an area in which many African governments are eager to accept help from outside, and especially from a government that requires few painful reforms in return, says Mr Kiernan. In the Central African Republic (CAR), a landlocked country with a history of internal strife, Russian private military contractors with ties to the Kremlin are guarding Faustin-Archange Touadera, the country’s embattled president.

These contractors belong to the Wagner Group, a shadowy private military organisation run by close associates of Mr Putin. Wagner has also been linked to Russian actions in Syria and the war-torn Donbass region of the Ukraine. Most recently, reports have said Wagner operatives have been dispatched to Venezuela to help protect embattled president Nicolás Maduro.

In July last year, three Russian journalists in the CAR to investigate Wagner’s activities were shot dead by unknown gunmen. Critics of Mr Putin’s government were quick to blame the hit on the Kremlin. Others caution that direct evidence that this was an assassination has yet to materialise.

“With regards to CAR, proof has yet to be published that Russia or Wagner have transgressed international law,” says Mr Kiernan. The CAR military has little control outside the country’s capital Bangui, and ravaging warlords and bandits are a common hazard. Bringing in professional contractors may not necessarily be a bad thing, Mr Kiernan says.

“The military needs all the help and resources it can procure in order to establish some form of lasting peace and security in CAR. While Russian interests may be prioritised by Wagner, the company's presence is aiding the security situation, at least for the moment.”

Still, Russia has some way to go to catch up with its competitors vying for African trade, especially China. Africa Development Bank figures show China's bilateral trade with Africa rose from $11 billion to $166 billion over the last decade. By contrast, Russia’s trade with the continent is $20bn. This is something Mr Putin’s government is now actively working to improve.

In November last year, the Russian foreign minister Sergey Lavrov said Moscow was now expanding its links to developing countries, especially those in Africa.

“We must certainly continue our energetic efforts to further build on the geographical diversification of Russia’s foreign economic relations, primarily through the deepening of cooperation with other Asian countries and Africa,” Mr Lavrov told the Business Council of the foreign ministry in Moscow.

Russian military equipment, already a staple across Africa, is an obvious trade leader. Moscow’s sales to the continent of hardware, ranging from tanks to armoured personnel carriers and small arms, has doubled in five years, according to the Stockholm International Peace Research Institute. Today, Russia supplies nearly 40 per cent of Africa’s imported arms. China meanwhile accounts for 17 per cent and the US 11 per cent.

These deals are helped by the fact that many senior African diplomats and officials began their careers as revolutionaries, trained and equipped by the Soviet Union.

“Many of the old relationships from liberation struggle days are still intact,” says Elizabeth Sidiropoulos, chief executive of the South African Institute for International Affairs in Johannesburg. For example, former South African president Jacob Zuma underwent guerrilla training in Russia during the apartheid era and speaks Russian.

Until he was forced out of office in early 2018, Mr Zuma made numerous trips to Russia, and had been pushing a nuclear project worth $70bn that would have seen a fleet of power stations supplied by Rosatom, the Russian nuclear engineering provider. Mr Zuma’s successor, Cyril Ramaphosa, has since scotched the deal, which was deeply unpopular with the public.

A final plank in Russia’s emerging Africa strategy is resources. In this regard, Moscow’s long-term goal is different from other players such as China, which sources vast quantities of raw materials to fuel its behemoth manufacturing industry. By contrast, Russia sees resource-rich areas as a means of expanding its influence around the world.

“Russia has well established state-linked resources companies, and by securing African resource deposits it helps these companies influence the markets,” Ms Sidiropoulos says.

Mega-companies such as platinum producer Norilsk, oil producer Lukoil, and stainless steel manufacturer Rusal are investing across Africa. Recently, Renova Group invested $350 million in a manganese mine in the Kalahari Desert of Namibia. And in Uganda, another Russian conglomerate, RT Global Resources, has the contract to build a $4bn oil refinery.

These kinds of deals are likely to increase. Russia has long drawn on its own deep well of mineral resources over the past century. These are finite, however, and Russian companies need to find fresh mineral and energy deposits if they are to remain relevant.

“According to popular theory, Russia, with its own resource base dwindling, needs adequate and sustained access to foreign energy reserves,” says Gerrit Olivier, a former ambassador to Moscow for the South African government. “Hence its focus on Africa's substantial and largely untapped and less costly mineral, oil and natural gas reserves.”

For this reason, companies such as Rosgeologia – a Russian state-owned company dedicated to uncovering new mineral and energy deposits - have made Africa a priority, Mr Olivier adds.

As for Mr Mnangagwa, it appears his visit to Moscow was a success, even if he had to cut his trip short to calm flaring tempers back home.

“In 48 hours, there are signs serious investments are on the way [from Russia],” Mr Mnangagwa said via his official Twitter account. “Alrosa, the world’s largest diamond company, has decided to launch operations in Zimbabwe, and we have signed a series of agreements that will lead to investment, development and jobs.”

Alrosa, along with China’s Anjin Investments, will now partner with the Zimbabwean state in developing the field. Other agreements with Russia included a fertiliser supply contract and two financing deals worth $267mn.

Updated: January 30, 2019 08:18 PM

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