The Big Read: Time is not on our side as we near the economic junkyard

10 December 2015 - 02:12 By Tony Leon

South Africa, as it ends 2015, a year we would probably rather forget, faces an economic crisis as serious as the political train wreck of 30 years ago, in 1985. Then President PW Botha famously never crossed the Rubicon River to full-throttled democracy, despite having promised to do so. Instead, he unleashed the dogs of war on neighbouring countries, imposed a state of emergency and watched as the currency slid, and foreign banks refused to roll over loans to South African borrowers.As the able chronicler of our very bumpy transition from apartheid to democracy, Patti Waldmeir wrote of those perilous times: "The country was facing the most acute financial crisis in its fled by all means, legal and illegal, markets were forced to close and the government imposed a unilateral moratorium on the repayment of foreign debt."Now, in conditions of democratic peace, this country faces another financial crisis, heralded by last Friday's announcement by two sovereign credit rating agencies that they are downgrading our rating (Fitch) and placing us on "negative watch" (Standard and Poor's).In basic terms, markets expect us to be downgraded to junk status, or below investment grade, within months if not years. This means a huge chunk of foreign investors will be obliged to withdraw from our markets, stop providing credit to our ailing state enterprises and will push the price of government borrowing (already costing the taxpayer R126-billion every year to finance) into the stratosphere.No good blaming PW or apartheid for this unhappy mess, it is of far more recent origin and largely self-created.On the subject of PW-nostalgia, which famously is career-limiting for opposition politicians if not for the king of the Zulus, I was struck this week by some long-forgotten events over which he presided back in the annus horribilis of 1985.Preparing for a series of lectures in Tel Aviv, Israel, on our democratic transition, was a reminder of how little light there was back then at the end of the South African tunnel. Imprisoned in Pollsmoor, Nelson Mandela was both invisible and yet loomed large over the political landscape.Strangely enough, even though he failed to act on his own realisation for fear of being thought weak by a surging right wing and because of his own lack of imagination, Botha realised the status quo had to change even though he could not go the whole hog. And so his reformist moves were lashed with doses of repression.But the ferment of the time in ruling party circles meant that he authorised his intelligence services and his minister of justice to commence talks with Mandela in prison and with the ANC in England.Just how deep the realisation was that apartheid was unsustainable was revealed in a document by the then hugely powerful Broederbond, whose writ ran very deep across Afrikanerdom.In Israel, where lousy politics does not, yet anyway, affect its surging hi-tech economy and the cartloads of foreign investors piling into this "start-up nation", it is useful to provide reminders of how difficult it is to defy, indefinitely, the forces of political gravity.This was precisely the realisation which dawned more than 30 years ago on the high priests of the Afrikaner ruling establishment. I read my students in Tel Aviv a long-forgotten Broederbond document put into circulation in 1983 by its new chairman, Pieter de Lange. It seems pretty small beer now, but back then to suggest that "the maintenance of the status quo" was unsustainable with the "effective exclusion of black participation in the political process" was a big change. Not only did the Broederbond realise the present order was a "threat to white survival", it even dared posit that "the head of government need not be white".As Waldmeir noted, while the document went only so far, "It was a shocking and revolutionary denial of the premise which had underpinned decades of National Party rule."Many more shocks, a huge struggle and the leadership of Botha's successor and, most consequentially, Mandela himself, would still be required to change South African politics. But the realisation at least dawned before the change that something radical had to be done. And even in the unlikeliest places back then there were some glimmers of enlightenment.One wonders today, as the country stares down the barrel of a credit downgrade and perhaps the loss of our most important flag on the continent, our investment grade economic status, whether any stirrings of change are afoot to arrest our dramatic decline.Our president seems to suffer from an economic autism quite as acute as PW Botha's blinkered political vision. Botha believed the world back then was against him and he had reached the limits of change. Zuma offers the utterly unrealistic and helpless shrug that all emerging markets are doing badly and so we are no different from them.This hardly explains India's growth or even unmentionable - in ruling circles anyway - Israel. We are rated worse in international markets than Turkey. And that country sits in a war zone with Syria as its neighbour, not Lesotho.The rating agencies tell us that the route out of the cul de sac our crushingly poor economic policies have placed us in is "to make the tough choices".It took a long time to abandon our disastrous visa regime policy. But abandon it, like the old political choices, we eventually were forced to do.So what of the disaster of state enterprise captured and plundered by friends of the president? Or the labour policy which prevents jobs being created? Or the slew of investor-bashing laws being processed through parliament?Do we turn around before time is called and we plunge into the economic junkyard? Like the political overlords of the past, our current government might have some things on its side. But like them, it doesn't have time.

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