China’s Economic Reckoning
The Price of Failed Reforms
NEW PILLARS FOR A NEW WORLD
As the 1980s drew to a close I could not see much of the world from my prison cell, but I knew it was changing. There was little doubt in my mind that this would have a profound impact on my country, on the southern African region and the continent of which I am proud to be a citizen. Although this process of global change is far from complete, it is clear that all nations will have boldly to recast their nets if they are to reap any benefit from international affairs in the post-Cold War era.
The African National Congress (ANC) believes that the charting of a new foreign policy for South Africa is a key element in the creation of a peaceful and prosperous country. Apartheid corroded the very essence of life in South Africa. This is why the country's emerging political leaders are challenged to build a nation in which all people-irrespective of race, color, creed, religion or sex-can assert fully their human worth; after apartheid, our people deserve nothing less than the right to life, liberty and the pursuit of happiness.
This vision cannot be realized until South Africa can again participate fully in world affairs. For four decades South Africa's international relations were dogged by the apartheid issue. By the end of the 1980s, South Africa was one of the most isolated states on earth. Recovering from this will be no easy task. Conscious of this difficulty, the ANC is involved in developing those policies which will be necessary to take South Africa into the new world order as a responsible global citizen. Additionally, it is concerned with the need to forge a truly professional diplomatic service which will serve all of South Africa's peoples and represent their rich diversity. Fortunately, foreign governments have recognized the importance of this and are generously providing training for young South Africans who wish to make careers in foreign affairs.
Within the context of the current multiparty negotiations, preliminary discussions are also under way between political parties with an interest in foreign affairs in an effort to bridge the divides between them on important policy questions. The pillars upon which our foreign policy will rest are the following beliefs:
-that issues of human rights are central to international relations and an understanding that they extend beyond the political, embracing the economic, social and environmental;
-that just and lasting solutions to the problems of humankind can only come through the promotion of democracy worldwide;
-that considerations of justice and respect for international law should guide the relations between nations;
-that peace is the goal for which all nations should strive, and where this breaks down, internationally agreed and nonviolent mechanisms, including effective arms-control regimes, must be employed;
-that the concerns and interests of the continent of Africa should be reflected in our foreign-policy choices;
-that economic development depends on growing regional and international economic cooperation in an interdependent world.
These convictions stand in stark contrast to how, for nearly five decades, apartheid South Africa disastrously conducted its international relations.
DEMOCRACY AND DIVERSITY
Because the world is a more dangerous place, the international community dare not relinquish its commitment to human rights. This appeal also has a special significance for South Africa. The anti-apartheid campaign was the most important human-rights crusade of the post-World War II era. Its success was a demonstration, in my opinion, of the oneness of our common humanity: in these troubled times, its passion should not be lost. Consequently, South Africa will not be indifferent to the rights of others. Human rights will be the light that guides our foreign affairs.
Only true democracy can guarantee rights. This is why the ANC's decision to take up arms to secure the rights of South Africa's people will only be fulfilled in a government of the people, by the people and for the people. We have always embraced the cry for democracy across the world and South Africa will therefore be at the forefront of global efforts to promote and foster democratic systems of government. This is especially important in Africa, and our concerns will be fixed upon securing a spirit of tolerance and the ethos of governance throughout the continent. There cannot be one system for Africa and another for the rest of the world. If there is a single lesson to be drawn from Africa's postcolonial history, it is that accountable government is good government.
The growing violence of narrow "nationalism," which can lead to the Balkanization of states, is of particular concern to South Africans. Ancient and long-dormant animosities have been unlocked by the ending of the Cold War, and these now threaten the very existence of some countries. Some suggest that an international divide is emerging between countries that tolerate diversity and those that do not. The latter will fall prey to internecine strife, sapping, if not destroying, the potential of their people. These countries will fall further and further behind the great technological advances being made elsewhere. As we witness in Yugoslavia, it is the young who will inherit the political and economic wasteland consigned to them by the archaic enmities of their fathers.
For many this fate beckons South Africa. Respect for diversity has been central to the ANC's political credo. As South Africa gears itself for its first democratic election, this tradition will guide our electoral campaign. But beyond our shores we will, as responsible international citizens, also honor this creed. A central goal of our foreign policy will, therefore, be to promote institutions and forces that, through democratic means, seek to make the world safe for diversity.
Around the globe, new conflicts and divides are surfacing. The chasm between the industrialized North and the underdeveloped South is deepening. If there is to be global harmony, the international community will have to discover mechanisms to bridge the divide between its rich and its poor. South Africa can play an important role in this regard because it is situated at a particular confluence of world affairs. But so too the United Nations has been freed from the straightjacket of the Cold War. South Africa's people look forward to our country's return as a full and active member of the United Nations family. It is the ANC's view that the United Nations has a pivotal role to play in fostering global security and order. But to achieve this, serious attention must be paid to a restructuring of the organization. South Africa intends to play a vigorous role in the debate on this issue. The United Nations should not be dominated by a single power or group of powers, or else its legitimacy will continuously be called into question. We hope a mechanism can be found so that the Security Council can reflect the full tapestry of humankind.
The United Nations and other international organizations have an important role to play in controlling the worldwide flow of arms. We know this from bitter experience. South Africa's transition to democracy has been unnecessarily violent; much of the blame lies in the proliferation of small arms throughout southern Africa. In addition to acceding to the major arms-control regimes, South Africa will actively support the United Nations' commitment to a general and complete disarmament under effective international control.
OUR AFRICAN DESTINY
South Africa cannot escape its African destiny. If we do not devote our energies to this continent, we too could fall victim to the forces that have brought ruin to its various parts. Like the United Nations, the Organization of African Unity needs to be attuned to the changes at work throughout the world. A democratic South Africa will bring to an end an important chapter in Africa's efforts to achieve unity and closer cooperation, but it will not close the book.
Africa's international position has been acutely affected by global change. Some of this is positive. It has, for instance, become less likely that our continent will, as in the past, be treated as a battleground by contending forces in wider international conflicts. Economically the position appears less promising. The shift in international attention toward Eastern Europe has, in the view of some, increased Africa's marginalization and weakened the continent's economic position. Africa must respond to this by transforming its economic base. Greater economic cooperation between the countries of the continent and the reshaping of trading networks can make a significant contribution in this regard.
Southern Africa commands a special priority in our foreign policy. We are inextricably part of southern Africa and our destiny is linked to that of a region, which is much more than a mere geographical concept. The historical patterns of relations in southern Africa have, however, been highly uneven and inequitable. The regional economy that emerged under colonialism entrenched the domination of one country (South Africa) and incorporated other countries in subsidiary and dependent roles as labor reserves, markets for South African commodities, suppliers of certain services (such as transport) or providers of cheap and convenient resources (like water, electricity and some raw materials). South Africa's visible exports to the rest of the region exceed imports by more than five to one. This is a reflection not just of the stronger productive base of the South African economy, but of barriers of various kinds that have kept goods produced in regional states out of the South African market. Destructive apartheid policies have, moreover, caused further distortions. While South Africans experienced discrimination and repression at home, southern Africa fell victim to apartheid's destabilization strategy, which left two million dead and inflicted an estimated $62.45 billion of damage on the economies of our neighbors.
I share the view of many that the forging of closer economic relations can potentially be of great benefit both to a democratic South Africa and the rest of southern Africa. Increased trade with southern Africa and the wider continent could be of considerable significance for our manufacturing industries. Neighboring countries, too, could benefit by expanding their exports to South Africa. At present, only Zimbabwe and some of the Southern African Customs Union countries, foremost among them Swaziland, have more than a token presence in the South African market. This is in part a reflection of the strong underlying protectionist stance toward potential imports from the region. If this were to change, agricultural and industrial producers in several neighboring countries could receive an important boost. Cooperation in regional construction, infrastructure and resource development projects, as well as in virtually every sector and area, could also be of considerable benefit. In several cases, notably that of potential water and hydropower projects in several Southern African Development Community member states, projects will not be economically viable unless they can count on exports to South Africa. At the same time, South Africa would benefit in environmental terms by importing hydropower and could well become absolutely dependent on water imports from other countries in the years ahead.
Southern Africa will, however, only prosper if the principles of equity, mutual benefit and peaceful cooperation are the tenets that inform its future. Reconstruction cannot be imposed on the region by external forces or unilaterally by ourselves as the region's most powerful state. It must be the collective enterprise of southern Africa's people. Democratic South Africa will, therefore, resist any pressure or temptation to pursue its own interests at the expense of the subcontinent. Likewise, militaristic approaches to security and cooperation have no place in southern Africa. In partnership with its neighbors, a democratic South Africa will promote the creation of regional structures for crisis prevention and management. These should be augmented by institutions that offer facilitation, mediation and arbitration of interstate conflicts.
We are sensitive to the fact that any program that promotes greater cooperation and integration in southern Africa must be sensitive to the acute imbalances in existing regional economic relations. Any move toward a common market or economic community must ensure that industrial development in the entire region is not prejudiced. It is essential therefore that a program to restructure regional economic relations after apartheid be carefully calibrated to avoid exacerbating inequities. Similar principles will govern the transformation of such exploitative aspects of the regional economy as the migrant labor system. With many others, we believe this system is detrimental to development. It is, nevertheless, deeply entrenched, and a number of countries have become critically dependent on it for employment and foreign-exchange earnings.
Democratic South Africa will not adopt a narrow, chauvinistic approach to this issue and will not make unilateral changes to the system. Instead, it will seek an acceptable regional solution that takes account of the needs of the labor-supplying states.
In forging links with our neighbors, the ANC will draw on an African tradition, of which we are a part, of promoting greater continental unity. We are currently involved in consultations with the Southern African Development Community, and the Eastern and Southern African Preferential Trade Area. We look forward to a mutually beneficial association with both of these important vehicles for promoting regional prosperity. At the same time we recognize that southern Africa cannot afford a proliferation of institutions or a duplication of efforts and that the challenges of the future will require considerable institutional development. We likewise look forward to becoming involved in the process of reforming the Southern African Customs Union, linking our country to Botswana, Lesotho, Namibia and Swaziland (BLNS). Although SACU is the oldest integration arrangement in Africa, its current modus operandi is far from satisfactory. The old formula, in which "captive markets" for South African goods in the BLNS were bought by the allocation of a disproportionate share of customs revenue, has recently come under strain from both the South African Finance Ministry and neighboring countries. Our approach to the reform of SACU will be guided by broader considerations than the implications for the South African treasury. We will seek to democratize the institutions of SACU, within the framework of a broader regional program, and to remove barriers in the existing arrangement to a more balanced location of industries.
THE ECONOMIC CRISIS
The primary motivation of the ANC's foreign economic policies as a whole will be to place South Africa on the path of rapid economic development with a view to addressing three key problem areas: slow growth, severe poverty, and extreme inequalities in living standards, income, and opportunity. The South African economy has grown very slowly since the early 1970s, with the exception of short periods of gold market booms. Annual gdp declined from almost six percent in the 1960s to less than four percent the following decade and to barely one percent during the 1980s. The economy contracted sharply during the recession-bound 1990s, and in 11 of the past 12 years, per capita income declined.
Poverty is manifested in extremely high levels of unemployment in South Africa, widely estimated to be above 40 percent, and by very poor social and economic indicators for the black population, particularly in the rural areas. These problems are compounded by the fact that inequalities remain entrenched on racial lines.
A recent World Bank report estimated that South African whites have a personal per capita income level that is 9.5 times higher than Africans, 4.5 times higher than people classified as colored (mixed race) by the apartheid system, and 3 times than Asians. Patterns of inequality extend beyond this to the provision of services, access to education, employment opportunities, and wealth generation-all still heavily inclined toward the white population.
As part of the global economy, South Africa has been deeply affected by the worldwide economic slowdown that began in the late 1980s, compounded in our case by the political uncertainties that face potential investors. There are many reasons for this state of affairs, the most important of which has been the political and economic policies of successive apartheid governments since 1948. These policies were destructive and wasteful but, more important, they conspired to prevent South Africa's economy from adapting to changing global conditions.
South Africa's staple exports-gold and other metals and minerals-have encountered deteriorating market conditions for many years, but the country has failed to develop more competitive alternatives. The ANC will inherit a relatively open economy, dependent on many imports from the outside world, but without the wherewithal to pay for them in the long term if the economy does not begin to grow rapidly. The key to South African recovery and growth is the strengthening of economic activities in which we have some potential and that are in international demand, but that have failed to achieve that potential in the past. Our manufacturing and service sectors will be critically important. South Africa does have potentially competitive manufacturing sectors such as metal engineering, pulp and paper, and some likely service sectors too, of which banking, insurance and tourism are the most important.
The ANC believes that the fundamental policies for achieving our potential in these and other sectors include: developing effective education and training programs; attracting foreign investment that strengthens our technological capacity and market access; engaging in a measured program of trade-policy reform that encourages competitive domestic sectors and lowers our import bill; a tough competition and antitrust policy that lowers prices and raises the efficiency of business as well as creates opportunities for black business development; and finally, the development of a range of initiatives to stimulate private sector investment and restructuring.
It is quite clear that the above policies are not a quick cure and that implementation will take some time. Given the inequalities in the South African economy it is equally clear that a number of short-term strategies are needed to help address immediate problems and to build the foundations of democracy. We must create jobs in urban and rural areas, partly through state intervention, assist small black business and micro-enterprises, improve access to housing and basic services, and restructure social-security programs for the very poor, the disabled, and the aged.
It is obvious to me that the primary components of our international economic relations, which must feed our development strategy, are the strengthening of our trade performance and our capacity to attract foreign investment. In addition we must examine the possibilities of obtaining technical and financial assistance from the developed industrial countries. We do not expect foreign investment to solve our economic problems, but we understand that it can play a very valuable role in our economic development. Though the inflow of direct and indirect investment will strengthen our reserves, most investment will have to be drawn from domestic sources. There are a number of institutions in our society with investment funds at hand, and more will grow.
These institutions will be expected to make a meaningful contribution to our economic development in a number of ways-some still under consideration-but including mechanisms such as prescribed investment. But foreign investors can open up new possibilities. They can bring new skills and technologies to a South Africa starved of innovation and technical know-how and can gain us access to new markets. Foreign investors can also provide competition for domestic monopolies and oligopolies, which have thrived on South Africa's isolation at the expense of ordinary people. They can establish partnerships with black South Africans who have deliberately been crippled, economically, by the apartheid system. The ANC believes the most important way to attract foreign investment is to create a stable and democratic political environment. Also important is the development of legitimate, transparent and consistent economic policies. Foreign companies should be treated as domestic companies, obeying our laws and gaining access to our incentives, and the ANC is committed to the principle of uniform treatment. And while we do not plan to provide exclusive incentives for all foreign investors, we realize that it might be necessary to make special arrangements to attract the kind of investment that will make a real difference in South Africa.
TRADE AND RECIPROCITY
The second primary component of our international economic relations that I referred to was our trade performance. Central to this concept, of course, is South Africa's full reintegration into the global trading regime. While we will strive to accommodate the concerns of the General Agreement on Tariffs and Trade (GATT) in regard to the high levels of protection of South African industry and to open our markets to global trade, we insist this is a two-way process. South Africa reserves the right to discriminate against the products of any country that will not open its market to South African goods. In short the concept of reciprocity will be paramount.
We cannot be expected to reintegrate our trade regime into the global system overnight, and we will resist any attempt by the GATT to force us to do so. While we will be enthusiastic supporters of free trade, we ask our trading partners and the GATT to understand that we cannot put thousands of jobs at risk by embarking on a speedy and uncoordinated revision of our total tariff regime. We shall undertake to reduce the number of tariff lines and to rationalize and simplify the tariff structure so that it begins to move closer to the rules and expectations of the GATT, but we are not prepared to place the demands of the global community ahead of the desires and needs of our people. We therefore envisage a considered program of trade policy reform that will address not only the levels of protection but also the development of effective export incentives that are internationally acceptable. The ANC remains concerned that, even if the Uruguay Round succeeds, the development of trading blocs (such as the European Community and NAFTA) might weaken the position of developing countries, particularly those-like South Africa-that are not members of any trading bloc. We remain concerned, too, that the Uruguay Round continues to neglect the interests of the South and that the negotiations seem disproportionately centered around the interests of farmers in the developed countries.
A democratic South Africa will seek new avenues for its export products, including agricultural produce, and we reserve the right within the framework of the GATT to seek new export markets as aggressively as possible. At the same time we recognize the importance of the European Community, our largest trade and investment partner, and will actively seek to consolidate our long-standing relationship with the EC. As part of this process we are currently examining a number of options in regard to our future economic relations with the EC with a view to gaining preferential access to European markets. In addition we are examining methods of expanding and strengthening our relationship with North America, Japan, and the Pacific Rim economies.
We will seek assurances from members of the major trading blocs on the issue of market access, and we will strive to strengthen our South-South ties to help protect us against economic marginalization.
FRIEND TO THE WORLD
South Africa's future foreign relations will be based on our belief that human rights should be the core concern of international relations, and we are ready to play a role in fostering peace and prosperity in the world we share with the community of nations. We are well aware how important and how difficult the process of reintegration into the global political and economic system will be for South Africa. The ANC will be among the first in South Africa to take full responsibility for our own destiny, but we believe that as a developing country undergoing a difficult transition, we can expect the developed industrial nations of the world to assist us in this task. We are prepared, too, to shoulder our share of the responsibility for the whole southern African region, not in the spirit of paternalism or dominance but mutual cooperation and respect.
The time has come for South Africa to take up its rightful and responsible place in the community of nations. Though the delays in this process, forced upon us by apartheid, make it all the more difficult for us, we believe that we have the resources and the commitment that will allow us to begin to make our own positive contribution to peace, prosperity and goodwill in the world in the very near future.