International World Poor Politics leads to Poor Economic Conditions: South African Case Study

Poor Politics leads to Poor Economic Conditions: South African Case Study

International relations experts could not have predicted such a turn of events. Decades-old territorial dispute, with origin thousands of miles away, has ramifications that could have long-lasting effects on South Africa’s economic standing. By choosing to get involved in the question of Western Sahara sovereignty, while its own economy is floundering, South Africa is starving-off the very economic forces it so vitally needs to get back on its feet. 




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By Nadish Rahman

The whole matter started off in 1976, when Spain withdrew from Western Sahara, leaving it to Moroccan administration. Seven years later, a paramilitary group aiming at the independence of the area formed, and named itself the Polisario. Western Sahara is a semi-autonomous area, with the UN considering the Polisario to be a representative body for the purposes of the ongoing negotiations, but with effective Moroccan control over the region. The Moroccan companies who do business in the region develop the local economy and provide services to the local communities, but the Polisario hopes to seize control of the entire local billion-dollar economy (mostly fishing and mining). On April 27th, 2017, UN Negotiations were re-launched, and the Polisario front looked for a way to twist the Moroccan arm and find new levers. On the next day, it launched its attack.

The Polisario front sent requests to Panamanian and South African courts, in April of 2017, to get them to issue court restraining orders on cargo ships transporting ore from the Western Sahara, transiting through their harbors for refuelling. The Panamanian court quickly dismissed the matter and declared itself incompetent, as it is under UN jurisdiction. After four days, time to investigate and examine the claims from the Polisario, the ship was released. The shipping company Ultrabulk stated: “The UN has issued no trade embargo nor sanctions involving Western Sahara, which would render our trade against the international law.” Samia Errazzouki wrote for Reuters :”The vessel was held on May 18 and is the second tanker carrying phosphate cargo from Moroccan exporter OCP stopped this month by a Polisario challenge. Polisario claims the cargo was transported illegally, a new tactic in its dispute with Morocco.

However, the same request was sent to Port Elizabeth, South Africa, as the Polisario knew that ore shipments transited through the harbor for refuelling. TheSouth African court took it upon itself to rule on the matter, miffing at the same time the United Nations. Selby Mbenenge, Clive Plasket et Glenn Goosen (the local Court magistrates) therefore decided to withhold the Cherry Blossom in the Port Elizabeth harbor, preventing it from delivering its phosphate rock headed for New Zealand to be manufactured into fertilizers.

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To this day, the cargo ship is still locked in the harbor. The decision was naturally welcomed by the Polisario, but surprised everyone else. “We’re very experienced ship owners and we’ve never seen anything like this,” said Mark Ravenscroft, chartering director for the Cherry Blossom’s owner, AM Nomikos. Judges are usually known to operate on the basis of strict legal rules, such as jurisdictional regulations, which are set in place precisely to keep them from grabbing political power and intervening into political matters – a standard which has long existed in the Western democratic tradition known as the separation of powers. However, judges Selby Mbenenge, Clive Plasket et Glenn Goosen chose to acquiesce the Polisario’s request.

The consequences of this decision were quick to arise. Businesses are avoiding South Africa more and more, as their confidence in the country’s economic stability has been dented by what they see as erratic and partisan decision-making. The dent in business confidence is unlikely to pass, as the Polisario has announced its intention to carry out more disrupting actions in the weeks and months to come. In addition, this out-of-the-blue decision hits the economy at a time when it is already been severely stressed by other factors. The price to pay for this instability has already risen to dangerous levels, and is still rising.

Unsurprisingly, the three main rating agencies (Standard & Poor’s, Fitch, and Moody’s) have downgraded South Africa into the “junk” category, as analysts doubt the country will be able to recover anytime soon from the mess it has gotten itself into. The Coface analysis stated: “the persistent failure to respond to the people’s expectations on unemployment, poverty and corruption remains a source of social instability (…) Yet, South Africa’s performances are satisfactory according to the World Bank’s governance indicators, but are on a deteriorating trend with regard the rule of law (86th in 2015, i.e. ten places lower in a year). Crime levels and corruption are also handicapping the business environment.” Because several other countries in the area have stable – or even booming – economies, businesses which would like to maintain their presence in the area but extract themselves from the danger of being in South African jurisdictions, will have little difficulty moving their head offices a few hundred miles away, across the border.Follow us on Social Media

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