Embracing Putin is a gamble

South Africa’s warm ties with Russia are proving to be a big gamble for the economy. [View in browser]( [Bloomberg]( Most countries’ foreign policy is geared toward furthering their economic interests. South Africa appears to be adopting the opposite approach. Pretoria insists it’s taking a neutral stance toward Russia’s invasion of Ukraine, yet it has done little to dispel recent US accusations that it supplied weapons to Moscow. Moreover, President Cyril Ramaphosa has been talking to Russian leader Vladimir Putin about deepening ties, while the head of its army held similar discussions with his Russian counterpart yesterday. Key Reading: - [South Africa Downplays Army Chief Visit to Moscow After US Spat]( - [South Africa Says Row With US Resolved After Investor Alarm]( - [South Africa, US Look to Ease Strain After Russia Weapons Dustup]( - [Rand at Record Low on Fears Russia Row Will Hit US Trade Ties]( US President Joe Biden’s administration, which has been on a drive to improve long-neglected relations with Africa and build opposition to Russia’s invasion of Ukraine, is understandably irked. Thousands of South African products enter US markets duty-free under the American Growth and Opportunity Act, an incentive that could be imperiled when the program expires in 2025 — or even sooner. That prospect sent the rand to a record low last week when the furor over the alleged weapons sales erupted. Pretoria’s political allegiances have also angered the European Union and the UK, two other main destinations for its manufactured goods. In addition, Africa’s most industrialized economy has sent mixed messages to the West on Beijing, conducting joint naval exercises with China and Russia in February. While having warm ties with China makes sense — it’s South Africa’s top trade partner — Russia’s two-way flow of goods are less than 5% of those with the US. Competition for influence in emerging nations is heating up. Leaders from the Group of Seven rich-world economies have made outreach to the Global South a key focus of their summit later this week. There’s no denying that ties between leaders of South Africa’s ruling African National Congress and their Russian counterparts are deep-rooted. The former Soviet Union backed the fight against apartheid and a number of ANC officials received training and sanctuary there. With South Africa confronting record power outages and a 32.9% unemployment rate, opinion polls show the ANC risks losing its almost three-decade hold on power in elections next year. The obvious play would be for Ramaphosa to not alienate partners that can help him kick-start the moribund economy. His government doesn’t seem to see it that way. — [Mike Cohen]( Captain Oleg Gladkiy and crew members of the Russian frigate Admiral Gorshkov ahead of naval drills between Russia, South Africa and China in Richard’s Bay on Feb. 22. Photographer: Waldo Swiegers/Bloomberg Check out the latest [Washington Edition newsletter](. You can [sign up]( now to get it in your inbox every weekday. And if you are enjoying this newsletter, sign up [here](. Global Headlines Ukraine’s air defenses [destroyed]( a Russian missile blitz overnight that included six Kinzhal hypersonic weapons targeting the capital, Kyiv. “It was exceptional in its intensity,” the city’s military administration chief Serhiy Popko said. Ukrainian officials said all 18 Russian rockets, including nine Kalibr cruise missiles and three ground-launched weapons, were intercepted. - A top Chinese envoy, Li Hui, visits Kyiv today at the start of his tour of Ukraine and four other nations including Russia that’s intended to bolster President Xi Jinping’s [credentials]( as a global peacemaker. - Ukrainian investigators said they found [evidence]( of “large-scale corruption” at the country’s Supreme Court. - Follow our rolling coverage of the war in Ukraine [here](. The US is already paying a price via “substantially” higher borrowing costs for its failure to raise the federal debt limit, Treasury Secretary Janet Yellen warned, as talks between the White House and lawmakers from both parties continued into a second week. Hours after Republican House Speaker Kevin McCarthy said, “We are nowhere near reaching a conclusion” in the talks, Yellen sent a letter warning the Treasury could [run out of cash]( as soon as June 1. China’s youth jobless rate rose to a record 20.4% in April, showing the economy is still struggling to absorb new workers even as the overall labor force declines. The unemployment figures among young people [are a big concern](, because some 11.58 million students are expected to graduate from universities and colleges this year. An upstart Thai political party delivered a [shocking blow]( to a royalist establishment that has suppressed democracy over the past two decades. Now the question is whether Move Forward — alone among major political forces calling for amendments to a law that restricts criticism of the nation’s powerful monarchy — can implement real change without a fight. - Pro-royalist members of Thailand’s upper house are [under pressure]( to back Move Forward leader Pita Limjaroenrat as the next premier after he called for a coalition government of pro-democracy parties. Best of Bloomberg Opinion - [Turkey’s Erdogan Poised for a Third Decade in Power: Bobby Ghosh]( - [There’s No Alternative to Missiles for Ukraine: Therese Raphael]( - [Want to Save the Planet? Re-Industrialize: Andy Mukherjee]( Major oil companies should pay $12 billion to [repair environmental devastation]( in Nigeria’s crude-rich Niger River delta, a group of international experts chaired by British lawmaker and former Archbishop of York, John Sentamu, said in a report. Spills from the firms’ infrastructure have transformed the region into “one of the most polluted places on Earth,” it said. Fishermen stand in crude oil polluted waters in Goi, Nigeria, on Jan. 31, 2020. Photographer: George Osodi/Bloomberg Explainers You Can Use - [Why Turkey’s Erdogan Faces His First-Ever Runoff Vote]( - [Unproven Drugs Reap Billions for Years After Taking FDA Shortcut]( - [Microsoft Inks Deal to Pay for CO2 Stored Below the Sea]( London is the biggest center for fintech startups in Europe, but its crown has slipped in recent years, [Aisha S Gani]( reports. And just as Paris has benefited from the shift of finance jobs from the UK after the seismic shock of Brexit, so the French capital is now pushing to become a genuine [alternative]( to either London or Berlin as a thriving center for fintech founders. Tune in to Bloomberg TV’s Balance of Power at 5pm to 6pm ET weekdays with Washington correspondents [Annmarie Hordern]( and [Joe Mathieu](. You can watch and listen on Bloomberg channels and online [here](. News to Note - Pakistan’s army said it will no longer show “restraint” on groups attacking its property and [vowed action]( against those who were part of protests after former Premier Imran Khan’s arrest last week. - Allies of former US Vice President Mike Pence have formed a political action committee to support him as he moves closer to [oppose]( his former boss Donald Trump for the 2024 Republican presidential nomination. - Prime Minister Rishi Sunak’s challenge to steady his governing Conservative Party in the wake of damaging UK local election results was laid bare yesterday when Home Secretary Suella Braverman [staked her claim]( to succeed him as party leader in a 40-minute speech. - Taiwan’s main opposition party is set [to nominate]( Hou Yu-ih, the mayor of New Taipei City, as its candidate for next year’s presidential election, sources say. - Hong Kong libraries have [purged books]( about China’s deadly 1989 Tiananmen Square crackdown, marking the latest step in the city’s campaign against free speech. And finally ... Back in 2021, US and Mexican authorities agreed to cooperate on a crackdown against companies allegedly involved in trafficking the narcotic [fentanyl](. Yet little more than 18 months later, the effort has stalled. As [Michael O’Boyle]( reports, the collapse of what US officials describe as a once-promising sign of cooperation underscores the fraught relations between the countries at a time when synthetic drugs are killing Americans in record numbers. Officials from the Mexican attorney general’s office unload hundreds of pounds of seized fentanyl and methamphetamine at their Tijuana headquarters in October 2022. Source: The Washington Post Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Want to sponsor this newsletter? [Get in touch here](. You received this message because you are subscribed to Bloomberg's Bloomberg Politics newsletter. 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