SOUTH AFRICA: Russia set to inject billions into the South African economy

Russian President Vladimir Putin launched a powerful Russian economic foray into South Africa on Wednesday (September 6), announcing more than a billion dollars of new deals and predicting a wave of others. "We are convinced that we have all the reasons for the activation of the bilateral trade and economic relations. We believe that this will help to the larger extent to realise the science and technology and productive potential which we have in our co-operation and of course this will help us to use, to significant extent, our colossal natural resource in our country." he told South African President Thabo Mbeki at a business forum in Cape Town. The forum marked a new relationship between two of the world's biggest emerging market economies. Deals signed at the forum included a billion dollar investment in a manganese plant by Russian tycoon Victor Vekselberg and co-operation agreements between state-owned Vnesheconombank and South Africa's Industrial Development Corporation and Nedbank. South Africa's De Beers, the world's biggest diamond producer, signed an agreement with Russia's Alrosa to examine joint prospecting and exploration in Russia and other regions. Together, the two groups account for 75 percent of the global diamond market. Russia is booming so fast the government has started hoarding windfall oil money in a stabilisation fund to stop it fuelling inflation and disrupting the economy, and Russian firms in the energy and metals sectors have begun looking abroad for investment opportunities in the past year. Putin's visit, the first to sub-Saharan Africa by a Russian head of state, has been dominated by a drive to boost co-operation between the two mineral-producing superpowers. He is accompanied by 100 business leaders. Moscow has long historical ties with South Africa's ruling African National Congress (ANC), many of whose leaders received military training in Russia during the battle against white minority rule that ended in 1994. Putin has made clear that his two-day visit, which ends later on Wednesday, is motivated more by hard-headed economic considerations than nostalgia. Both Mbeki and Putin said political ties were running far ahead of economic links, with trade running at less than $200 million last year. "We can and must look at the business opportunity and look at what it is we can do together that would benefit both countries, both peoples to see what indeed are this business opportunities and most certainly both governments will be very very keen to give all the necessary support so that we achieve progress in that regard," Mbeki said. Outlining his shopping list of possible future projects, Putin also listed tourism and investment in a plant to assemble Russian mini-vans.

ITN Source | September 7, 2006

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