South Africa finds itself walking a diplomatic tightrope as it desperately seeks billions in Gulf investment to rescue its faltering economy while maintaining controversial ties with Iran that are making investors nervous.
The nation’s ministers spent this year traveling across the Middle East asking for financial help from oil-rich monarchies, even as South African naval forces conducted joint military exercises with Iranian ships.
The country is attempting to juggle relationships with Saudi Arabia, the United Arab Emirates, and Qatar while strengthening bonds with BRICS alliance members Russia and China. This balancing act includes pursuing a legal case against Israel at the International Court of Justice and defending its engagement with Iran under a policy of non-alignment.
“Our foreign policy of non-alignment is not anti-West or anti anyone,” International Relations Minister Ronald Lamola said at a Pretoria foreign policy event on Monday, calling it a “sovereign choice grounded in the constitution and international law.”
As Africa’s most developed industrial nation, South Africa faces severe economic challenges. Manufacturing’s contribution to the economy has dropped dramatically from approximately 23% in the early 1980s to just over 11% today. Factory output declined again recently, with steel, machinery, and automotive plants reducing both production and workforce.
Rising oil prices have worsened the situation. While the International Monetary Fund predicted in February that inflation would decrease and growth would slowly return, conflicts affecting shipping through the Strait of Hormuz have pushed Brent crude over $100 per barrel. The South African Reserve Bank now cautions that inflation could approach 5% later this year if oil costs stay high, with the rand becoming increasingly vulnerable to Gulf region developments.
The government’s debt burden has reached 77% of economic output and keeps growing. Unemployment exceeds 32%. Electrical outages and deteriorating rail and port infrastructure have forced factories to operate at roughly two-thirds capacity, hampering the export growth South Africa desperately needs.
Public Works and Infrastructure Minister Dean Macpherson traveled through the Middle East earlier this year seeking investment from Saudi Arabia, Qatar, Kuwait, and the UAE for infrastructure, logistics, and real estate projects. Government officials described the trip as part of efforts to attract external funding that the state can no longer secure independently.
Gulf nations have shown interest and possess substantial financial resources. The UAE has emerged as Africa’s biggest foreign investor, directing over $110 billion to the continent from 2019 to 2023 according to government figures. In South Africa specifically, Abu Dhabi’s International Resources Holding established a strategic partnership with the Public Investment Corporation covering mining, rail, logistics, and green energy sectors.
Saudi Arabia’s ACWA Power has investigated multibillion-dollar hydrogen and renewable energy projects with South African companies. The UAE reports its investments in the country exceeded $1.3 billion in 2024 alone.
However, South Africa’s military cooperation with Iran has created complications. Early this year, the country hosted naval exercises called Will for Peace with China, Russia, and Iran off its eastern coastline, near Indian Ocean shipping routes connecting the Middle East, Asia, and Africa.
These drills attracted significant attention in Washington, particularly since Iran participated while South Africa was simultaneously courting Gulf states that view Tehran as their primary regional adversary.
The exercises also revealed divisions within South Africa’s government. After the African National Congress lost its parliamentary majority in 2024, it now governs alongside the Democratic Alliance (DA), which supports stronger Western relationships. The DA’s defense spokesman, Chris Hattingh, argued that hosting and training with heavily sanctioned forces involved in active conflicts cannot be considered neutral. “It is a political choice, whether the government admits it or not,” he said.
Domestic and international critics have questioned whether South Africa remains truly non-aligned or is shifting toward an anti-Western stance. In January, the country abstained from a UN Human Rights Council resolution condemning Iran’s violent suppression of protesters, refusing to criticize a government it has historically supported.
“I don’t think anyone still regards South Africa as truly non-aligned,” Darren Olivier, director of the African Defence Review, told The Media Line. “It has virtually ceased military exercises with Western countries and now primarily conducts them with fellow BRICS states, while investing far more heavily in military relationships with Russia, Iran, Cuba, and China over the past decade.”
“At this point, it’s less of a complete realignment and more a case of testing the waters,” he added.
Olivier noted that consequences are already emerging. “South Africa’s closeness with Iran and Russia has already affected investment, international partnerships, and confidence in the country,” he said. “It frequently comes up in investor discussions, creates friction around trade relationships with Western countries, and has become an issue the current US administration increasingly uses against Pretoria.”
Tensions are most pronounced with Washington, South Africa’s second-largest trading partner after China. South Africa primarily exports platinum-group metals, vehicles, steel, aluminum, and agricultural products like citrus and wine to the United States. Automotive and agricultural exports depend heavily on the African Growth and Opportunity Act (AGOA), which provides duty-free access to US markets; vehicles alone represented about two-thirds of South Africa’s AGOA exports last year.
This preferential access has deteriorated as the administration of President Donald Trump allowed AGOA to expire on September 30, renewing it only in February and only through the end of 2026. The month before expiration, Washington imposed a 30% tariff on South African goods, the highest rate on the continent. Vehicle shipments to the United States dropped by approximately three-quarters in 2025, though stronger mineral exports prevented overall totals from declining.
The US Supreme Court overturned the broad reciprocal tariffs in February, and the administration replaced them with a flat rate of roughly 10% to 15%, placing South Africa on equal footing with most other exporters but far below its previous duty-free status.
Despite political tensions, Trade Minister Parks Tau informed parliament on Tuesday that exports to the United States increased from 238 billion rand ($13 billion) in 2024 to 260 billion rand ($14 billion) in 2025.
President Trump boycotted the 2025 G20 summit South Africa hosted in Johannesburg, repeating unsubstantiated claims, rejected by Pretoria, that “white farmers are being killed” and their land seized.
In January, South Africa announced it would temporarily withdraw from the group as Washington assumed the presidency for 2026. At the same Johannesburg summit that the United States avoided, the UAE committed $1 billion to expand artificial intelligence infrastructure across Africa. The most widely referenced South African government land audit determined that whites—who comprise less than 8-10% of the population—still control roughly 72% of individually held agricultural and farmland. Black South Africans, who represent more than 80% of the population, own about 4% in that category.
Siphamandla Zondi, a politics professor at the University of Johannesburg, described the ANC’s approach as principled rather than opportunistic. “South Africa’s approach to BRICS and non-alignment is rooted in long-held traditions of South-South cooperation,” he said, tracing it to the Bandung Conference and the Non-Aligned Movement.
The party frames its Israel case as both a legal matter concerning Gaza and an issue of national identity, with President Cyril Ramaphosa stating in March that South Africa “would keep defending international law under the Genocide Convention.” This position has enhanced its standing throughout the Arab world and much of the Global South, even as it concerns Western governments and investors focused on geopolitical risk.
Nigeria, Africa’s other major economy, demonstrates the limitations of a more accommodating approach. It maintained its embassy in Tel Aviv and full diplomatic relations with Israel throughout the Gaza conflict, filed no genocide case at the ICJ, and like South Africa, seeks Emirati investment; the UAE lifted a visa restriction on Nigerians in 2023 and promised billions in new investment.
However, this warmer relationship provided Abuja little benefit in Washington. The Trump administration designated Nigeria a Country of Particular Concern over the killing of Christians, threatened military intervention, and had already imposed a 10% tariff.
Meanwhile, Saudi Arabia and the UAE are rapidly expanding across Africa in ports, logistics, renewable energy, food security, and critical minerals, seeking influence beyond oil and positioning in future supply chains. However, their largest recent commitments have gone elsewhere, with tens of billions allocated to projects in Egypt and Mauritania over two years, far exceeding what the UAE has invested in South Africa.
South Africa remains one of the continent’s largest economies. It produces more platinum than any nation and supplies much of the world’s manganese and chromium, minerals that both Gulf and Western supply chains require.
The greater risk for South Africa may be less the loss of Gulf funding than developing a reputation for unpredictability among risk-conscious investors. The country is attempting to maintain positions that don’t align easily: depending on Western markets, aligning with America’s adversaries, staying close to Russia and China, and courting Gulf states that fear Iran.
“Investors want certainty and long-term predictability,” said Darren Bergman, the DA’s former shadow minister for international relations. “There is still uncertainty about where South Africa actually stands internationally, and investors dislike uncertainty.”
“The danger is antagonizing major trade partners such as the United States and possibly the European Union,” Bergman said. “South Africa has to balance both sides carefully.”
