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Wednesday, January 29, 2020
CAPE TOWN, Sep 23 2008 (IPS) - Minutes after the news broke today that Trevor Manuel, South African minister of finance, resigned from his post, the South African currency lost ground against international currencies, falling 20 cents against the dollar within less than an hour.
The rand recouped some of its losses when Manuel later said that he was willing to serve under a new leader.
Manuel has chaired the World Bank's development committee and has just been appointed chair of an International Monetary Fund committee that will investigate decision-making in the institution.
The turbulence that South Africa is experiencing follows the ruling African National Congress’s (ANC) decision to ‘‘recall’’ President Thabo Mbeki. He resigned on Sep 21. Today another 14 members of his executive, including deputy finance minister Jabu Moleketi, resigned.
In South Africa’s mainstream media the response has been that Manuel’s resignation is bad news because he is ''trusted'' by international investors and the financial markets. Economist Mike Schussler told a local television station that the country could experience a steady economic decline in the long run if the wrong person is appointed.
However, Prof Patrick Bond, economist and director of the University of KwaZulu Natal's Centre for Civil Society in Durban, South Africa, was not sorry to hear of Manuel's decision to quit. Contrary to what mainstream media pundits say, ‘‘Manuel and governor of the Reserve Bank Tito Mboweni have, under Thabo Mbeki, been responsible for extreme economic instability,’’ Bond told IPS.
‘‘There have been five major currency crashes since 1996. Unemployment has doubled and the country has seen the highest interest rates in its history; and there has been controversial privatisation and commercialisation of state services. The Washington-friendly policies these people adopted need reversing,’’ Bond insisted.
‘‘Regardless of whether Manuel is invited back, the departure of so many of his business-friendly colleagues – such as deputy president Phumzile Mlambo-Ngcuka, public enterprises minister Alec Erwin and Moleketi – could have a dramatic impact on the ideological balance of forces.
‘‘Against those who say the government and economy are now in crisis because leading personalities depart and the stock market falls by a few percent, there are many more in civil society who will celebrate the opportunity to hear new voices for economic democracy, a more caring society and a healthier environment,’’ Bond argued.
‘‘Many of those who resigned drowned out those new voices from below, so as to play the same old Washington Consensus tunes. They were deeply disrespectful of trade unions and social movements and will not be missed,’’ Bond concluded. The Washington Consensus refers to the neoliberal package of policies that include liberalisation and deregulation.
Sociologist Dr. Ashwin Desai from the Centre for Sociological Research at the University of the Witwatersrand in Johannesburg, South Africa, believes that there have been clear signs that the ANC was unhappy with the economic policies implemented under Mbeki.
‘‘There has been a crescendo of criticism from the left of the spectrum that economic policies did not meet its own goals around GEAR,’’ Desai told IPS. GEAR stands for the Growth, Employment and Redistribution macro-economic policy adopted under the leadership of Mbeki and Manuel.
‘‘Mbeki made promises around job creation and the reduction of poverty which have not been met. The increase in worker salaries have since 1996 been consistently lower that the increase in the general cost of living. Cabinet ministers have been caught in economic policies shaped by GEAR.
‘‘With new blood in the cabinet, there may be a rethink of mega-projects that have not fulfilled the expectations of the poor,’’ Desai argued.
He is, however, concerned about the way forward: ANC president Jacob Zuma ‘‘has said that the economic policies will not be changed. But he cannot have his cake and eat it. You cannot speak out against the policies instituted under Mbeki and not be willing to change. It is political doublespeak.
‘‘However, I am glad that the ANC had the courage to act quickly against Mbeki after Judge Chris Nicholson implied that he interfered in the corruption case against Jacob Zuma. The fact that someone as powerful as Mbeki could be removed is a positive sign of democracy at work.’’
Desai was referring to a recent court finding that dismissed the corruption case against Zuma and found that Mbeki had interfered with his prosecution.
Bond put it plainly: ‘‘There will be many broken hearts and tears when the incoming leaders (under Zuma) fail to deliver on their promises. There are, according to the police, 10,000 Gatherings Act incidents per year already, many reflecting lack of service delivery and, in turn, worsening inequality.
‘‘If Jacob Zuma's team changes macroeconomic and microdevelopment policies – specifically by making water, electricity, education, health care, housing and land more affordable through more generous subsidies – then the basis for many social protests will disappear. If instead, as I fear, he continues business-as-usual in a context of global and local economic storms, we're going to have quite a wild ride.’’
Desai describes the Mbeki legacy as a ‘‘poisoned chalice’’: ‘‘The new leadership is inheriting an economic framework that may not leave much room for manoeuvring – the expected job creation and the supply of housing may not be realised. The economic reality of this situation will hit us in six to seven months when the people find that the promises made by the leaders cannot be met.’’
Patrick Craven, spokesperson for the Zuma-allied Congress of South African Trade Unions (COSATU), says there is no reason for the new leaders not to meet the expectations of ordinary people. ‘‘A part of Mbeki's failure was because of his top-down approach. He did not allow for discussion with the South African Communist Party, COSATU or even within the ANC.
‘‘He simply handed down his polices and this has led to many economic mistakes, such as the many interest rate hikes which have had a devastating impact on the economy. However, there are some very good employment creation and economic policies in place which can be developed to meet the targets.’’
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