The Common Sense’s Diary

Happy new year. Oil prices are down from $80 to $60 over the past year. The dollar index is down around 10%. As a consequence, global energy prices are way down. For South Africa’s economy, this is good news, as it means reduced input prices, lower inflation, and more breathing room for households. That President Donald Trump is entirely to thank for this, because of his rejection of climate ideology, enforcement of the Donroe Doctrine (including in the arrest of Maduro), and drive to weaken the dollar, is something you will not hear across a lot of elite Western society.

What a start to the year for South African foreign policy. On Venezuela, the South Africans have accused the United States (US) of driving an imperialist agenda destabilising the world. On Iran, the messaging is the same. President Cyril Ramaphosa has said Trump’s America is a threat to civilisation. Meanwhile, the South African navy is conducting drills with its Russian, Iranian, and Chinese counterparts. For anyone who has been living under a rock for the past decade, the signalling is unmistakable.

The upsides for South Africa in maintaining such a foreign policy are zero. Confidence, fixed investment, and growth will stay down and the ANC will suffer further political losses. As a consequence, national interest does not come into South Africa’s foreign policy, neither does the survival of the ANC. All of that is overridden by the nexus of corruption and ideology.

Just think of energy policy. Trump would be the South African government’s biggest energy and coal ally. Burn lots of coal and SA could again grow its economy at 5%+. But the government, the ANC, the media, and business treat him with contempt. Not caring about national interest is not only an ANC problem.

Howard Lutnick, who negotiates on trade for the Trump administration, said something really important on a recent All-In podcast. He explained that each time the US strikes a deal on trade, the hurdles for the next deal are set higher. This is to inspire countries to be first movers in striking terms with Washington. It’s a sound strategy. Measure the South African approach against that strategy.

The current foreign policy is not “new” in that sense of being driven by corruption and ideology. The South Africans post-1994 took money from Taiwan to delay the recognition of China, money from Suharto to polish the credentials of a murderous regime in Indonesia, money from Abacha to polish his murderous regime in Nigeria, money from Libya to lobby around Lockerbie, money from Iraq to lobby against oil sanctions. The dots do all the work in joining themselves.

Last week this newspaper wrote about Chinese port building ventures around Africa. There are almost 50 such ventures over more than 20 African economies. The potential upsides for Africa’s economy are vast. Oddly, there is no project in South Africa. Why? One reason is that non-Western diplomats sometimes let slip that it is immensely difficult to get anything done with the South Africans.

Democratic Alliance (DA) leader John Steenhuisen’s position in the DA seems to be increasingly perilous. Key factions want him out and are digging for dirt to leak to the media. Caution is warranted. He has been firmly committed to the GNU, the DA within the GNU has exerted some considerable influence on policy from the budget to the BEE, there is renewed ideological clarity around the DA, and support for his party is up under his leadership. If the DA gets its GNU positioning wrong and, at the same time, turns away from the renewed ideological clarity achieved on questions such as BEE, then it may lose all the ground gained over the ANC.

Fikile Mbalula did a wild thing over the weekend and recommitted the ANC to seizing property without compensation and nationalising the Reserve Bank. The only rider was that these policies would be enforced once the party has regained its 50%+ national majority. He did not explain why, if the policies had merit, any delay was necessary, as the ANC could strike a deal with MK and the EFF right now to get those policies enforced. That the party lost that majority because it turned to such policies (and crushed investor confidence and fixed investment as a consequence) seems to have escaped Mr Mbalula completely. Some say he may be the most pragmatic and Ramaphosa-allied chap to take over the ANC. If that is true, the ANC may be on a trajectory to cease existing.