Geopolitical Watch

SA should look north before turning east

The story of Zimbabwe’s economy
Zim economy.jpg

Cast in anachronistic, typical Cold War rhetoric, the ANC’s discussion document signalled a final tilt towards the East in foreign policy, which could cost the country dear on the economic front.

This is the interpretation of several reputable commentators in reaction to the discussion document prepared for the ANC’s national general council (NGC) meeting next month.

In its reaction to the document, the Institute for Race Relations (IRR) said the ANC seemed intent on “alienating the West and adopting a rigid pro-Russia and pro-China stance” and warns it would damage investor confidence.

The Institute for Security Studies (ISS) in its commentary also said that the “lavish praise for China” in the policy proposal, A better Africa in a better and just world, “has irked commentators like the Atlantic Council’s director for Africa, Peter Pham, who notes that the ANC document is couched in ‘intemperate language that even Chinese regime mouthpieces do not use nowadays’.

“Phrases like ‘the exemplary role of the collective leadership of the Communist Party of China in this regard should be a guiding lodestar of our own struggle’ and ‘Russia has not been spared the wrath of US-led Western imperialism’ reflect another era.”

If the ANC wants to put the country’s national interest first in the difficult and uncertain global economic and financial times, triggered by China’s own developing economic crisis, it should first look north before it turns its back on the West or abandons the neutral stance it has taken post-1994.

Lessons from Zimbabwe

In the face of ever-worsening economic realities, President Robert Mugabe of Zimbabwe was forced to abandon his hardline approach to the “imperialist West” and international institutions like the World Bank (WB) and International Monetary Fund (IMF). The need for foreign aid and investment has just become too great.

He also made an almost complete U-turn on some ‘empowerment’ economic policies that sought to force foreign companies to hand over a majority stake to Zimbabweans or the Zimbabwean government. 

The change in tack came in his recent state-of-the-nation address, inviting re-engagement with the West and calling for a strengthening of ties with multilateral bodies like the IMF and WB, which he and his government have in the past consistently bad-mouthed.

Fact is that the situation has become so dire in Zimbabwe that its finance minister, Patrick Chinamasa, has asked for a special meeting to be set up at the World Bank’s annual general meeting for him to confer with the country’s international creditors, which besides the IMF and WB, also include the African Development Bank. The purpose of the meeting is for Zimbabwe to present its case for fresh funding of its ailing economy.

Chinamasa said Zimbabwe was struggling to pay its debt arrears, amounting to $1.8 billion on its total debt of around $10 billion. The IMF, however, is telling Mugabe to first reform labour laws and reopen closed industries to improve the country’s productive capacity.

The Mugabe regime in Zimbabwe is now also all but rescinding its Indigenisation and Economic Empowerment Act, signed into law in 2008. This required foreign-owned firms to sell at least a 51% of their shares to Zimbabwean citizens or to the government. Henceforth they will only be “encouraged” to do so.

The only sector for which the requirement stays in place is mining, a sector in which Mugabe and his political allies have substantial vested interests. The sector is also the ruling party’s financial lifeline.

While pinning all his hopes on especially China, Mugabe has alienated the West over many years and made direct foreign investment for private sector investors prohibitively unattractive.

Conclusion

As South Africa has just discovered with the dumping of cheap Chinese steel on the local market, being completely in bed with the Chinese dragon does not look all that attractive anymore.

Some commentators have expressed fears that South Africa, with how BEE laws are playing out in practice and with planned amendments to property laws affecting business and agriculture, is slowly but surely drifting into a Zimbabwe-type scenario.

On the international relations stage South Africa’s ruling ANC has also increasingly bad-mouthed “Western imperialism” and its “neo-liberal” capitalist foundation, while increasingly nailing its political and economic colours to the Chinese mast.

The section on international relations in the ANC’s discussion document for its NGC   was prepared by the party’s international relations subcommittee, which includes heavyweights like African Union Commission chairwoman Nkosazana Dlamini-Zuma; International Relations Minister Maite Nkoana-Mashabane; and Lindiwe Zulu, formerly President Jacob Zuma’s international relations advisor.

It can only be hoped that the NGC itself will glance north of the border and realise that national interests should carry more weight in the international arena than ideological and affinity considerations.

by Steve Whiteman

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