President Cyril Ramaphosa’s latest failure to explain the logic behind our lockdown’s curiously puritanical and arbitrary aspects grates, but remains far less consequential than his earlier “stimulus” speech.
We needed an economic stimulus years ago, and it’s disgraceful that only a global pandemic - rather than daily poverty and deaths of its electorate - proved spur enough for the government to provide one, but that is a quarrel for another day. The stimulus is substantial. And welcome.
How it will be financed remains troublingly unclear. An IMF loan seems the likely answer.
The IMF has form in debt slavery and economic colonisation. Their 1980s and 1990s is a litany of carefully destroyed developing economies. No matter what the problem was, they had the answer. It was the same every time: privatisation of government industries, increased interest rates, liberalisation of money markets (leading to devaluation of currencies) and lower government spending (for example on health and education). This programme was required to access their funds.
In most cases, as if by design, it had a predictable result. Multinationals extracted wealth from the countries. Natural resources like gold, diamonds and oil were expropriated overseas. Currencies collapsed. This was colonialism in all but name.
Today, the IMF works (very) slightly differently. Large loans are given with less or no conditionality to countries - like ours - that have no prospect of being able to pay them back. When countries inevitably become trapped in a debt cycle, onerous terms are applied. In Greece they crushed the economy. In Italy, they appointed a prime minister in what is nominally a democratic country.
For us, there will also be “technical” details to face - some of them slightly confusing, but all leaning in the same direction.
First, our borrowing will be denominated in dollars rather than rand, which means if the rand declines (which emerging market currencies do in global recessions, almost universally) the loan’s cost will inflate in value. Probably significantly.
Separately, the cost of simply insuring our sovereign debt for five years has more than doubled since January, and is now above 4%. This poverty tax, too, is dollar-denominated.
Though Donald Trump is losing the politics of Covid-19, the result of the epidemic, with the assistance of the global financial institutions, will be far more countries being heavily indebted to America. South Africa quite probably among them.
All of which is awful, but does not remove the fact that we need a stimulus. And we need money to fund it.
And the IMF (or China, a different regime but an equivalently awful outcome) are the obvious candidates.
Ramaphosa will probably try to put a gloss on proceedings, maybe even presenting the receipt of a loan as an achievement rather than a punishment. His opponents will inevitably attack his choice of before whom to bend the knee. Both positions will be nonsense.
Whether Ramaphosa is a good or bad man is also a question for another day. He has no options. The imbalance of wealth and power created by colonialism cannot be solved within an international financial system that simply re-enacts that colonialism without the guns. Who heads that financial system is immaterial: replacing the US for China simply alters the name of our coloniser.
The facts are simple. Is this likely to end badly for us? Yes.
Do we have any other options? No.
Our problem is not original. In 433BC, the Melians, a small principality facing the mighty Athenians, demanded fairness and justice. They were slaughtered by Athens. The chronicler Thucydides describes the Melians’ lesson: “Justice was something that only existed for great nations”. In this context, we are not a great nation.
For South Africa, debt slavery is the likely future. This is not a consequence of Zuma’s corruption, or Mbeki’s misjudgements, or Ramaphosa’s anything. This is a consequence of how the international finance system works. Our ultimate freedom has never looked further away.
* Donen SC is a legal practitioner and listed counsel of the International Criminal Court.