Hints of Russia’s future in South Africa’s past

Since Russia’s invasion of Ukraine, allied nations have unleashed a suite of sanctions so rapid and broad in its reach that there are no true precedents. Even, say, curbs on Venezuela — oil producer cut off from global finance — are by necessity imperfect.
But there’s another commodity exporter whose experience offers less obvious lessons for sanctioning nations and for Moscow: South Africa. Facing ignominy over its apartheid policies, repression and military aggression beyond its borders, Pretoria found itself isolated and severely constrained from the mid-1980s, for a period that lasted until after opposition leader Nelson Mandela’s release from prison in 1990. Yes, Russia is a far larger economy, and it exports oil instead of importing it. The world is more integrated than back then, raising the cost of imposing pain.
It’s still striking how four decades ago, despite the moral outrage that drove the measures, sanctioning nations left loopholes because they wanted natural resources, and how South Africa was able to find alternative trade partners, much like Russia has. While there were unintended consequences for Pretoria’s domestic economy, not all were negative — a familiar tale. And yet, for all those weaknesses, restrictions did contribute to the demise of White minority rule, largely because South Africa in the early 1980s, like Russia in 2022, was already an uncompetitive economy overdependent on extractive industries when the measures hit. The edifice collapsed.
Today, not only is Russia’s economy contracting — two out of three scenarios in an internal report seen by Bloomberg News suggested it would return to prewar level only at the end of the decade or later, thanks to transport blockades, tech and financial curbs — but it is struggling on the battlefield. In the space of not much over a week, Moscow has seen months of gains reversed as a Ukraine counter-offensive makes swift progress. That has caught Russia off-guard and unsettled even pro-Kremlin hawks.
South Africa is a timely reminder that when the going is already tough, extra constraints do encourage elites to press for credible negotiation.
The apartheid regime began in earnest in the late 1940s, when the National Party gained power and passed the clutch of racial laws that came to underpin the system. Boycotts trickled in slowly from then on, after the Sharpeville Massacre in 1960 and the violently quashed Soweto uprising of 1976. Restrictions accelerated in the 1980s as patience ran out and perestroika reforms in the Soviet Union suggested there would no longer be a need for the US in particular to tolerate this bulwark against African communism. International investors left and punishment reached an apogee with the Comprehensive Anti-Apartheid Act of 1986, when Congress finally overcame President Ronald Reagan’s sanctions reticence.
Just as for Russia, it’s obvious at a glance that trade sanctions were never the immobilising blow they were intended to be, in part because the world needed metals and fuel. It was a porous system. South Africa remained a coal exporter even to European nations and increased sales to Asian economies. There was plenty of mislabeling and re-exporting — with Britain reportedly importing through the Netherlands — tactics that are also used today. The country still sold gold, in bars if not in Krugerrands. It was able to strongarm landlocked Botswana and Zimbabwe into sanctions-busting. More importantly, though oil was South Africa’s “Achilles’ heel,” it was never cut off from international markets, thanks to Iran and others, and had already for years invested in getting oil from coal.
Circumventing sanctions drove up costs as the terms of trade deteriorated, an “apartheid discount” was applied to exports and a “pariah cost” to imports, but ultimately the ability to access what it needed kept South Africa and its White elites in business — for a time. Taiwan and Israel stepped up. It’s all too recognisable a picture, as Russia, rebuffed by the West, pushes its oil and coal into other markets. Even Western corporates’ divestment did not batter growth immediately. Like now, assets were simply sold cheaply to locals.

—Bloomberg