June 1, 2012 / 2:06 PM / 8 years ago

EU cautions S.Africa's ANC on "Look East" policy

JOHANNESBURG (Reuters) - South Africa’s ruling African National Congress (ANC) is walking a precarious path if it pursues policies shunning the West in favour of fellow BRICS members India and China to fund its development, Europe’s envoy to Pretoria said on Friday.

President Jacob Zuma dances before delivering his closing address at the National General Council of his ruling African National Congress (ANC), in the coastal city of Durban September 24, 2010. REUTERS/Mike Hutchings

The ANC, which has ruled since apartheid ended in 1994, has sent mixed messages to Western powers about how welcome their capital is in Africa’s largest economy, with a top official last week saying they were dropping in importance.

“Attack us - that is fine. It does not matter. But don’t say that in this economic period we don’t need each other because that undermines the relationship,” Roeland van de Geer, head of the European Union delegation to South Africa, told Reuters.

“If you get these remarks without nuance, it spoils a lot. I cannot correct that. The damage is done,” he said.

ANC Secretary General Gwede Mantashe - also chairman of the Communist Party - told Reuters last week the continent’s largest economies were shunning “sulking” Western investors and adopting a “Look East” policy to fuel their growth.

South Africa is increasingly tying its economic and diplomatic fortunes to emerging nations, having joined the BRICS group of Brazil, Russia, India and China early last year.

But the European Union is South Africa’s largest overall trading partner, with the bulk of South Africa’s exports to the 27-member bloc being manufactured goods. These provide more jobs at home than exports to its biggest single-country trading partner, China, most of whose imports are unprocessed minerals.

The EU is also the source of nearly all foreign direct investment (FDI) in South Africa, with Britain alone accounting for 49 percent of FDI stock at the end of 2010 compared with just 4 percent for China, according to central bank data.

Van De Geer recommended South Africa follow the model of other BRICS powers, who rely heavily on trade with the West as well as boosting commerce between themselves.

The ANC has dispatched top officials with regularity to reassure European and U.S. investors their money is safe.

But the party, which sits in an official governing alliance with unions and the Communist Party, has also sent powerful delegations to China to see how Beijing uses state-owned firms to guide its fast-growing economy.

ANC officials have also shown their distrust of Western firms, for example by trying, unsuccessfully, to roll back approval for Wal-Mart’s $2.4 billion acquisition of retailer Massmart.

“The world is in an economic crisis. Do not give up on any of your investors,” Van De Geer said.

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