PIC capture is not about the Guptas alone

As I noted more than two years ago, the tapping of public sector pensions to “recapitalise” parastatals — notably Eskom — was debated and apparently approved in principle by the ANC’s economic transformation committee (ETC) in May 2015.

Since the Mbeki era, proponents of competition in a regulated wholesale electricity market have proposed a clear separation between power generation — which could be in part private — and a transmission grid available to all players. This would allow the sale of some power stations to private investors.

ETC head Enoch Godongwana instead proposed bringing “equity partners” on board without breaking up the parastatal.

Supposedly because “privatisation” is unpalatable to “the left”, this could not be done because partnerships with private pension funds are off limits as a form of “privatisation”.

In reality, of course, no private pension fund will invest in Eskom — not without fundamental changes to how it operates, which the ANC lacks the stomach to bring about.

This is the real reason why PIC (and the GEPF money it manages) have sole access to this unique investment opportunity!

It is true that a further decline in Eskom poses a catastrophic threat to the interests of the PIC’s clients and to the value of the pension and insurance policies those clients protect. (And to everything else in this country.) But throwing money at unreformed parastatals will not avert such a catastrophe.

 

The PIC has also slowly established precedents for “political investing” in companies that offer no, or vanishingly little, prospect of returns. By throwing money into marginal platinum miner Lonmin, for example, it has hinted at a future in which public-sector pension funds will be used to buy out ailing but “politically connected” companies, so dumping their environmental and labour legacies onto retired public sector workers.

Eskom is a much bigger sinkhole, of course, but PIC is already getting sucked towards it.

So is this a problem caused by the Guptas and their friends in the Zuma faction?

Not really. Most of the ETC are anti-Zuma. And one important advocate in the wider movement is the hugely influential ANC Gauteng chair Paul Mashatile, who last year went on a tour to quietly promote just this course of action. He is pretty certain to be on the Ramaphosa/Mantashe slate as treasurer general.

 

What kind of president would Ramaphosa be?

This is an excerpt from a Huffington Post piece on CR, written by Liesl Pretorius on 17 August 2017.

Who is Cyril Ramaphosa?

Professor Anthony Butler of the University of Cape Town, who wrote a biography of Cyril Ramaphosa, says he’s not sure if he “ever really got to the bottom of” who Ramaphosa is. We asked him …

1. If someone only knows Ramaphosa as deputy president, who would you say he is, based on your research for the book?

… I think when he was younger he was one of those people who had an immediate charisma and compelling effect on people around him. I think he was someone who got what he wanted and who was always charming and I think to some degree that was moderated by his genuine religious commitment when he was young. I think that religion was a very important force in his early political career until maybe some way to university or perhaps even a bit later, 1976. Ideologically since moving across that boundary between liberation theology and black consciousness after university, I think he has never really settled on any firm ideological position. So I spoke to people who were really committed Marxists including one of his close friends who worked for the Stasi in East Germany and who remained a communist after the fall of the Soviet Union … who insisted that Ramaphosa was pulling the wool over the eyes of business people and his liberal friends and that deep down he was a committed socialist. And if he was to rise to power, he would immediately move left and surprise everybody. But I also talked to business people who said exactly the opposite — that Cyril was pulling the wool over the eyes of his leftist supporters. I think his closest friends were quite conservative. Particularly James Motlatsi … his fellow creator of the mine workers’ union and I think that perhaps Cyril is in fact a conservative. And perhaps a pragmatic conservative who pushes soft social-democratic possibilities, but very cautiously.

But he’s able to speak to quite different audiences in a way that convinces them that he’s one of them …

Cyril has friends of all different kinds and he keeps them apart, so he will meet with his old friends from the University of the North on one day of the year … he’ll meet with his old white business palls and play golf with them and invite people in groups to his farm. And he will entertain quite, very different kinds of people apart from one another. And each of those different groups of people believes that Cyril is one of them or is sympathetic towards them. And he’s maintained that really over his whole life. To a degree that suggests it’s a big part of his personality — that he’s not able or willing to commit himself to any particular — not just ideological position — but any particular group of friends … What kind of person is he? He’s also quite capable of being an intimidating person but the face that he presents to the world is most usually charming and he’s effective at charming almost anybody that he wants to charm … The other thing about him is … he’s very energetic, persistent, determined, hard to stop when he sets his mind on something and unflappable …

2. If it’s hard to stop him when he puts his mind to something, why did he leave politics for business when he came up against competition?

He came up against something much bigger than that … The consultations that [former president Nelson] Mandela went through were very unlikely to favour Ramaphosa. [Thabo] Mbeki was the ascendant man in the ANC and I think Ramaphosa saw that Mandela was not going to back him. But at the same time I think he felt that he deserved it. I think he was genuinely angry, and not just Ramaphosa. There was a sentiment among people in the trade union movement that the exiles had come back, they were arrogant … and that they expected to take over … Mbeki really represented that expectation of the exiles. I think Ramaphosa and the people around him were very resentful … He is and always has been deeply ambitious. And then he was essentially told by Mandela to leave … Dr Motlana, Mandela’s physician … told me he was present at the meeting where Cyril was told to leave and he reported Mandela as saying that you’re young enough to come back in 10 years.

And you can see that one of Ramaphosa’s weaknesses was that he had a narrow power base … Also, he was very young and in some respects a newcomer to the ANC.

So, I don’t think he had much choice. He could have fought it out but he would have lost …

3. What kind of a leader do you think he would be if he is successful in the leadership race?

… I suppose we can look at the past. And it’s clear that he … is somebody who is able to sustain concentration, to negotiate for long periods of time; to operate in different spheres simultaneously. So, he [has] a lot of skills that you need to be a president. He also has … developed a sophisticated grasp of financial-legal issues … I think maybe most important is [that his experience as] a constitutional negotiator indicated that he could manage a large and sophisticated team in complex and sustained negotiations. That’s another unusual skill. People who have worked with him in business have often complained that he moves between micromanaging — the one thing that always sticks in my head is how he insisted on choosing the clothes that the staff wore on his farm — so, very minute attention to detail but at the same time … failing to be sufficiently decisive, interestingly particularly in pursuit of his own interests. He didn’t want to be seen to be pursuing his own interests … But he took some very strong decisions about how Shanduka would operate. In particular, he had an overwhelmingly black executive management team that he placed trust in. Unlike many other BEE barons whose businesses were run by white executives … So Cyril was always determined that his businesses should be black businesses and in fact that’s one of the areas in which he showed real determination that progress should be made rapidly, not just in his own business, but he believes in BEE … The other thing about him as a president, I think, is not just that he’s rich, which may help in providing insulation against temptation but he’s also … a principled person. So, I don’t think we want to exaggerate this — in that politics and business require a degree of flexibility and negotiation of ethical quandaries that don’t have simple solutions — but … he thinks too much of himself to act unethically just to make money. And he also doesn’t care … who’s his friend, I don’t think. He’s never tried to build a constituency of sycophants and he wouldn’t begin to do that. So, I think there are quite a lot of strengths. The problems I think are that at some point the decisions of presidents have to become ideological in one sense or another. If you’re going to be a successful president, you have to impart some sense of direction to your administration and it remains unclear what he believes in. So, he believes in finding solutions. A classic example is the minimum wage negotiations … He demonstrated his mastery of a certain kind of politics. Most politicians would not have been able to come out with a [solution] that was both reasonably rational but also protected his own interests quite successfully.

But on the other hand, it wouldn’t be good for the country if the whole presidency was a negotiation of that kind, because there are a large number of hard decisions that need to be taken and pushed through …

And in order to do that, you would have to have a clear idea of what your project is …

The full article is here http://projects.huffingtonpost.co.za/articles/cyril-ramaphosa-can-mr-nice-be-a-decisive-president/?utm_hp_ref=za-homepage

 

The personality of Nelson Mandela, Part 2

When WMC actually existed, Mandela saw through it and condemned it.

Nelson Mandela on Anglo American Corporation in 1953:

“The Oppenheimers sometimes presented their companies as enemies of apartheid. Ernest and Harry each served as opposition members of parliament protesting against the evils of segregation. At the same time, Anglo was at heart a mining house, whose profits were built out of the exploitation of migrant workers from across the southern African subcontinent. In reality, Anglo mines were just as cruel in their operation as those of supposedly less salubrious mining houses, serving up the same fare of tuberculosis, crippling injury and racist brutality … Nelson Mandela captured the bitterness that Anglo’s seeming hypocrisy provoked very well in this 1953 comment: ‘Rather than attempt the costly, dubious and dangerous task of crushing the non-European mass movement by force, [the Oppenheimers] would seek to divert it with fine words and promises and divide it by giving concessions and bribes to a privileged minority.’

(From Anthony Butler, Cyril Ramaphosa, 2007, p.122.)

The personality of Nelson Mandela, Part 1

There is an interesting tale that illuminates something of the character of Nelson Mandela and his close friend Mac Maharaj. Together with Cyril Ramaphosa, they were the key ANC figures in the negotiation of SA’s new constitutional settlement.

When Mac was a prisoner on Robben Island, Mandela took him under his wing and determined, in the manner of the Island, that he should be inducted into the wisdom of the ANC. Every day during a rest period, the two men would break from work in the quarry and sit down together among the rocks. Mandela would place himself on a large boulder, and Maharaj would occupy a far smaller rock nearby. The older man would talk about his philosophy of politics and offer up his famous homespun wisdom, advising Maharaj, for example, that the Afrikaner is best talked to in Afrikaans – only if you learn his language will he listen to what you have to say.

Mac eventually tired of sitting always on the smaller stone. One day, when the time came for them to break from work, he ran as fast as he could to their meeting place and planted himself on the larger boulder. A few minutes later Mandela arrived, only to find Mac sitting in his place. He observed the small rock, his face quite expressionless. With an almost imperceptible turning of his head, he scanned the area for another place to sit. Without comment, he then walked over to where Maharaj was sitting, and stood over him. He began to talk in the normal way and remained on his feet for the whole session. The next day, a resigned Mac took up his usual place on the smaller stone.

(From Anthony Butler, Cyril Ramaphosa, 2007).

Prohibition of Mixed Marriages Act, 1949

ACT

To prohibit marriages between Europeans and non-Europeans, and to provide for matters incidental thereto.

________________________________________

(English text signed by the Governor-General.)

(Assented to 1st July, 1949.)

________________________________________

BE IT ENACTED by the King’s Most Excellent Majesty, the Senate and the House of Assembly of the Union of South Africa, as follows:―

1. (1) As from the date of commencement of this Act a marriage between a European and a non-European may not be solemnized, and any such marriage solemnized in contravention of the provisions of this section shall be void and of no effect: Provided that— (a) any such marriage shall be deemed to be valid, if— (i) it has been solemnized in good faith by a marriage officer, and neither of the parties concerned, or any other person in collusion with one or the other of them, has made any false statement relating to the said marriage amounting to a contravention of section four; and (ii) any party to such marriage professing to be a European or a non-European, as the case may be, is in appearance obviously what he professes to be, or is able to show, in the case of a party professing to be a European, that he habitually consorts with Europeans as a European, or in the case of a party professing to be a non-European, that he habitually consorts with non-Europeans as a non-European; (b) where any such marriage has been solemnized in good faith by a marriage officer, any children born or conceived of such marriage before it has been declared by a competent court to be invalid, shall be deemed to be legitimate. (2) If any male person who is domiciled in the Union enters into a marriage outside the Union which cannot be solemnized in the Union in terms of sub-section (1), then such marriage shall be void and of no effect in the Union.

2. Any marriage officer who knowingly performs a marriage ceremony between a European and a non-European shall be guilty of an offence and liable to a fine not exceeding fifty pounds.

3. Any person who is in appearance obviously a European or a non-European, as the case may be, shall for the purposes of this Act be deemed to be such, unless and until the contrary is proved.

4. Any person who makes a false statement to a marriage officer, relating to the question whether any party seeking to have his marriage solemnized by such marriage officer is a European or a non-European, knowing such statement to be false, shall be guilty of an offence and liable to the penalties prescribed by law for the crime of perjury.

5. This Act shall be called the Prohibition of Mixed Marriages Act, 1949.

Tradition and the Top 6

What is this strange thing called the “top six” of the ANC? An historical accident of relatively recent creation, it is not mentioned at all in the movement’s constitution.

For most of the ANC’s history, there have been at most three key national positions: president, treasurer and secretary-general.

The deputy presidency was introduced only in 1958 as part of an exercise in ethnic, regional and generational rebalancing. Two years later, after the banning of the ANC, the exile movement was run by its deputy president, OR Tambo. While Tambo also became “acting president” in 1967, he retained the office of deputy president until 1985, when a still incarcerated Nelson Mandela was “elected” to this position.

The prominent position of secretary-general has changed just as much over the years. Walter Sisulu and Tambo held the office in succession in the 1950s before later ascending to the deputy presidency and presidency, respectively.

In 1991, Cyril Ramaphosa defeated both the incumbent Alfred Nzo, and Jacob Zuma, for the position. Kgalema Motlanthe and then Gwede Mantashe succeeded him, creating a new “tradition”: an unbroken succession of former National Union of Mineworkers leaders in the post. The position of national chairman was created only in 1991. The office has no obvious function other than as a parking space for those with long-term ambitions, but it nonetheless carries prestige and expresses “seniority”.

The treasurer-general post has become more important as “donations” have become the lifeblood of a spendthrift movement. Incumbents Mathews Phosa and Zweli Mkhize have had a higher profile, and greater ambition, than their predecessors.

Can the past of the top six tell us anything about the likely future of the current incumbents? Under Mandela, the presidency rose in status, in part because of the exile movement’s elaboration of a “Mandela myth”. The linkage of the position to the state presidency thereafter allowed the incumbent to combine state and party mechanisms of control. This means all eyes are now on this big prize.

The deputy presidency, by contrast, is important primarily as an ostensible stepping stone to the presidency. Thabo Mbeki followed this route, becoming ANC deputy president in 1994 and ANC president in 1997. But Mandela arguably only succeeded to the presidency in 1991 because Tambo was ill.

Walter Sisulu, the deputy elected in 1991, did not go on to become president. He was elevated to the position to stop a battle between the real contenders for presidential power: Mbeki and Chris Hani.

Jacob Zuma was probably elected deputy only because Mbeki believed he could destroy him before he could rise to the very top. Zuma may have made the same fatal misjudgment when he selected his deputy, Ramaphosa, at the Mangaung conference in 2012.

If Ramaphosa seizes the presidency in December, the “stepping stone” status of the deputy presidency will become firmly established.

Little wonder, then, that Mpumalanga chairman David Mabuza and NEC grandee Lindiwe Sisulu, among others, are fiercely jostling for this position: they hope it will take them to the very pinnacle of power five or 10 years hence.

Scrupulous historians will argue that none of this can ever prove the obvious falsehood that the deputy president of the ANC always rises to the presidency, or that such a trajectory is “an ANC tradition”. At the current historical conjuncture, however, the history of the ANC is far easier to change than its future.

• Butler teaches public policy at the University of Cape Town.

A year later, part 2: My response to Dr Lushaba’s “open letter”

I responded to Dr Lushaba’s letter on 10 September 2016. Dr Lushaba’s letter has since been posted on the Internet but my reply has not. I am therefore posting it here for reference purposes. It addresses some of the inaccurate claims made by Dr Lushaba in his open letter about the composition of the student body, the curriculum, and employment equity, as well as requesting that Dr Lushaba correct a fabricated quotation.

Anthony Butler

7 September 2017*

[*I have now included my email to Dr Lushaba as an appendix — AB 14 August 2020.]

10 September 2016

Dear Dr Lushaba

I have decided to respond briefly to your ‘open letter’. Some of the issues you touch on will have to be dealt with collectively in our department meetings. Others can only be discussed in a meeting between the two of us. However, there are several matters of interpretation and clarification that I would like to address, in order to limit confusion on the part of our students, potential applicants, and other external stakeholders.

Curriculum issues

The Department of Political Studies started introducing a new and integrated undergraduate Major in Politics and Governance in January 2016, in place of the three previous Majors in Politics, International Relations, and Public Policy and Administration. All new students admitted since January 2016 now follow the new Major. This was the result of decisions taken during a departmental review in 2014, which identified several weaknesses with the existing Majors.

This Major includes a new emphasis on African and South African Politics. Our first year courses, and POL2038F Comparative Politics, have always drawn heavily on African cases, and this continues to be true. In 2017, we will introduce POL2043S South African Politics. (In the past, SA Politics was only available to a minority of our students taking the old Politics Major.)

In the third year, alongside POL3029F Politics of Africa and the Global South, we are introducing POL3046S South African Political Thought. POL3030F Conflict in World Politics draws heavily on African materials. POL3037F Policy and Administration and POL3038S Urban Politics and Administration focus on governance issues in South Africa.

There is also a new focus on African and South African politics at postgraduate level. Starting in January 2017, the Honours programme in Politics will change its structure. It was previously centred on the discipline of Political Science (as practiced in North America) with a compulsory course, POL4012F, in Comparative Politics.

In January 2016, I proposed the creation of a new programme in African Politics. However, a working group, comprising Dr Thiven Reddy, Dr Zwelethu Jolobe, Dr Lauren Paremoer and Dr Lwazi Lushaba, recommended against this option on a variety of grounds, and in favour of a reorientation of the existing Politics programme.

Early in 2016, the Faculty’s Graduate Programmes Committee approved the addition of a new alternate core course, POL4050S Contemporary Debates in African Politics, to the politics programme. As you know, the course was designed by — and will be taught by – Dr Lwazi Lushaba. You indicated that it would include the following themes:

  • Macro Approaches to the Study of Modern African Politics
  • Colonialism in Africa: An Epoch or an Episode
  • The Post-Colonial State: Its Character and Problems
  • Nationalism(s) and Postcolonial Transformation
  • Politics of Economic Reform (SAP) in the 80’s and 90’s
  • Civil Society and Democratization Debates
  • Ethnic Plurality and the Federal Solution in Africa
  • Contested Citizenship and National Cohesion in Africa
  • Africa in the Modern Ideological Sciences of Man
  • Methodological Questions for the Study of African Politics

At Master’s level, students on the Politics programme will still be encouraged to take courses in data analysis but these will no longer be compulsory. This reflects our commitment to a wide range of approaches to the study of political phenomena. Students will be encouraged to take courses in Global Political Thought (convenor Dr Thiven Reddy), Comparative Politics (convenor Dr Zwelethu Jolobe) and South African Politics (convenor Prof Anthony Butler), among others.

Our other programmes, in IR, transformative justice, and public policy, increasingly have an African and/or South African focus. In International Relations Honours, for example, one key element of the core course is the study of African innovations in IR theory. Our public policy programmes focus on key policy challenges in SA. I am not able to comment in a fully informed way about all of these fields: for further information about our specializations, potential applicants should contact the programme convenors:

  • Politics programmes: Dr Thiven Reddy
  • International Relations programmes: A/Prof John Akokpari
  • Justice and Transformation programmes: Dr Helen Scanlon
  • Public Policy and Administration programmes: Dr Vinothan Naidoo

The overall postgraduate convenor is Dr Zwelethu Jolobe.

Employment equity

Although change in academic departments is sometimes slow, our department has been undergoing quite rapid generational change. One welcome outcome of this process has been the increasing representation of black South Africans and women among the academic staff. We fully expect this trend to continue and we are very active in searching for the best candidates to fill our vacancies while also advancing employment equity.

Staff Employment Equity Profile (2017-)

Full time academic staff (gender)

Male 8
Female 5

Full time academic staff (employment equity category)

Black 3
Col 1
Indian 2
White 4
Other** 3

**Non-SA citizens: 1 from Ghana, 2 from the UK

Postgraduate Recruitment

One response to your letter has been some concern that the department does not encourage applications from black South Africans. The Department collects data on the self-attributed race of the South African citizens admitted to our postgraduate programmes. This data is used for planning purposes and for monitoring the impact of our admissions policies. There has been a significant increase in the number of our postgraduate students who are Black South Africans in recent years, especially at Honours level. We are committed to making further progress in this direction, and especially at Master’s and PhD levels.

Equity category Level of enrolment 2016 Number of students
Black Hons 16
  Master’s 5
  Total Black 21
Coloured Hons 4
  Master’s 9
  Total Coloured 13
Indian Hons 1
  Master’s 2
  Total Indian 3
White Hons 13
  Master’s 10
  Total White 23
Undeclared* Hons 6
Master’s 7
Total Undeclared 13

*The category “undeclared” includes students who did not identify a racial group.

Earlier this year we established a plan further to increase the numbers of Black, Coloured and Indian students at Master’s as well as at Honours level, and to ensure that they thrive in our programmes. All staff members will this year participate in admission decisions in the programmes in which they teach. They will work together to identify students with potential and to support them once they are admitted.

Departmental governance

You identified in your letter what you believe is an unsatisfactory governance system in the Department, and an undemocratic leadership style on the part of the Head of Department. There may well be merit in these claims, although I believe HoDs face more constraints – budgetary, administrative, and legal — than their colleagues often realize.

As you know, my three-year term as HoD comes to an end in December 2016, and I am not putting my name forward for a second term. As I said when I took up the position in 2014, a three-year term is more than long enough for any incumbent. The process for deciding upon a new Head of Department is built upon consultation and consensus and it will undertaken by the faculty in the normal way.

The appointment of a new HoD will, I am sure, bring fresh energy, ideas, and leadership. It will also provide an excellent opportunity for the Department to discuss together how decisions should be taken under the new Head of Department and how the longer term strategic priorities of the department should be collectively identified and realized.

Requested correction

There is one passage in your open letter where I would like to ask for a correction.

In my email to you, I stated that, “I have received complaints from students and parents who believed the POL1005S lecture on 15 August was ‘disrupted’. They were confused about the purpose of the proceedings. They were uncertain about the educational value of the singing.”

You transcribed this as follows:

“[T]he HoD claims in his letter to be writing me because he had received complaints from ‘students and parents who believed the POL 1005S lecture on 15 August was “disrupted”’. They were confused about the purpose of the proceedings. They were uncertain about the educational value of the singing and stomping of feet (italics mine)’.”

I am not concerned here with how this error (the insertion of “stomping of feet (italics mine)” entered your narrative. However, the invention makes me deeply uneasy and I would be grateful if you could correct it in any versions of your letter posted on the Internet.

Towards the future

I know we all have the interests of our students at heart and I believe the Department as a whole has an immensely promising future. It is great privilege to spend time with such talented colleagues, and I am sure that we will all continue to work well together in the years ahead.

Yours sincerely

Prof Anthony Butler

Head of the Department of the Political Studies

UCT

10 September 2016

Appendix: Email from Anthony Butler to Lwazi Lushaba, 24 August 2016

From: Anthony Butler
Sent: 24 August 2016 02:38 PM
To: Lwazi Lushaba <lwazi.lushaba@uct.ac.za>
Cc: Dean of Humanities <hum-dean@uct.ac.za>; John Akokpari <john.akokpari@uct.ac.za>
Subject: Lwazi Lushaba lecture 15 August

Dear Lwazi

I am writing as promised in follow up to our conversation earlier today.

I have received complaints from students and parents who believed the POL1005S lecture on 15 August was ‘disrupted’. They were confused about the purpose of the proceedings. They were uncertain about the educational value of the singing. They highlighted the presence of at least one student interdicted from coming onto the campus who was invited to speak (Masixolo Mlandu). They noted that a petition was circulated calling for the reinstatement of excluded students.

As I explained earlier, academic staff and students are free to engage in political activity. However, a lecture is an opportunity for learning and not for political mobilisation. I am especially concerned that the educational purposes of such a lecture should be clearly explained to students.

I record here your response that the students were provided with an “experience” that you considered beneficial for them. I also record here your claim that you invited #RMF to come to the lecture and that you were not aware of the identities of individual speakers. I am not persuaded that either of these responses discharges your responsibilities to the students.

Please feel free to consult the convenor or me in future if you need to talk through what might or might not be appropriate in a lecture.

Best wishes

Anthony

Prof Anthony Butler

Head of the Department of Political Studies

University of Cape Town

+27 (0)21 650 3384

anthony.butler@uct.ac.za

Public Investment Corporation RET

It looks increasingly likely that a win by President Jacob Zuma’s incumbent faction at the ANC’s conference in December will bring about “radical economic transformation” — there will be an unprecedented transfer of wealth from ordinary working people to an already bloated elite.

The key instrument in this radical programme of reverse empowerment will be the Public Investment Corporation (PIC), an entity that manages R1.8-trillion in government employees’ pensions and other guardian funds.

Earlier this week, Finance Minister Malusi Gigaba told union federation Cosatu’s central executive committee that he could not guarantee PIC-managed funds would not be used to “re-capitalise” state-owned enterprises (SOEs).

Such SOEs include the struggling national flag carrier, South African Airways (SAA), the SABC, and PetroSA, which have, together, accumulated losses of more than R25bn over the past decade.

In a carefully disseminated narrative, such SOE bailouts have been hailed as protecting jobs and promoting the national interest. In the absence of incentives to reform, however, SOE rescues simply buy time and space for further looting and mismanagement. The drunkards are soon back for another hand-out — and the Treasury’s pockets are now empty.

In the case of the SA National Roads Agency, the PIC has taken a step further, becoming the Gauteng pariah’s primary bond holder. This looks like an abuse of pensioners’ savings to rescue political elites from the fal-lout of the e-tolls debacle.

The worst is yet to come. The PIC has now established significant precedents for “political investing” in companies that offer no, or vanishingly little, prospect of returns. The PIC has thrown money into marginal platinum miner Lonmin. This has set a precedent for public-sector pension funds to be used to buy out ailing and “politically connected” resource houses, so dumping their toxic environmental and labour legacies on unwitting public-sector pensioners.

On yet another front, the PIC’s role in the purchase of the terminally sick Independent Media empire by Sekunjalo Investments has still not been explained or justified. This move has opened the door to a stream of further politically motivated abuses.

Public-sector pensioners are now being carefully groomed by their abusers to pay for a massive injection of capital into one of the world’s largest financial white elephants: Eskom.

 

Back in May 2015, the head of the ANC’s economic transformation committee, Enoch Godongwana, proposed that private pension funds might “address Eskom’s cash-flow situation … in return for equity”. The roughly R100bn initially required, however, could never be forthcoming from private institutional investors in SA, or from international power companies, in the absence of governance reforms that the ANC is too weak-kneed and compromised to contemplate.

For this reason, ANC leaders have spent two years lobbying for “worker investment” in paraststals to “protect jobs” and to “promote development and transformation”. But the only funds the workers have to invest are their pensions.

• Butler teaches public policy at the University of Cape Town

Parastatal budgeting (a vaguely prescient column from 2011)

Parastatals’ ‘budgets for dummies’ the way to go

 Business Day

18 Mar 2011

Anthony Butler

SA HAS become the site of two fascinating experiments in the methodology of budgetary accountability. Contrasting approaches to the transparency of government budgets — the Treasury model and the parastatal model — can now be compared for the first time.

The National Treasury was recently awarded top prize in the International Budget Partnership’s Open Budget Index, for overseeing the world’s most “transparent, participatory, and accountable” budget process. The partnership praised the Treasury for providing clear information to MPs, civil society groups and the media, so enabling citizens to participate in decision-making and hold the executive to account.

The alternative approach has been pioneered in the parastatal sector, where public borrowing now virtually equals that of the government itself. The parastatal model has four key features. First, it avoids overdependence on numerical data. When parastatals must use numbers, they use the simpler ones they believe ordinary citizens are best able to grasp. Confusing government subsidies, bail-outs and Treasury loan guarantees are omitted. Eschewing the complex data tables favoured by the Treasury, parastatal managers round financial information up to the nearest R5bn or R10bn.

For this reason, stateowned logistics group Transnet claimed in 2008 that its Johannesburg-toDurban fuel pipeline would cost R10bn. This rose to R15bn in April last year, before accelerating upwards this year to R25bn.

In a move towards still greater transparency, the Department of Transport uses R100bn — the reported cost of its proposed revamp of passenger rail services — as its basic unit of account. On Tuesday, Transnet announced its own R100bn project, this time for a major new port development. In the interests of citizen accountability, a detailed budgetary breakdown was provided: there would be “two phases” amounting to “R50bn in each phase”. Such easily understood R50bn or R100bn increments are also favoured by Eskom when communicating cost increases for its Medupi and Kusile power stations.

Second, parastatals have democratised their financial management processes by drawing large numbers of democratically elected citizens into their web of financial transactions. While private companies typically retain a single CE and finance director for several years, Transnet and Eskom have increased citizen participation by allocating such jobs to large numbers of middle managers on a rotating or “acting” basis. A further innovation in democratic transparency has been the publication in advance of the names of new parastatal CEs in The New Age newspaper, so citizens can learn their identities before Cabinet ministers and the members of parastatal boards have been notified of their own decisions.

Third, in the interests of transparency, it has been decided that all major infrastructure projects — highspeed rail links, airports, pipelines, sports stadiums and ports — will henceforth be located in Durban. This will allow citizens and MPs to inspect all of the projects in a single day.

The only exceptions to this rule are the nuclear power stations President Jacob Zuma has apparently agreed to purchase from France. In the light of recent events in Japan, such plants must be located, for technical reasons, in the Eastern Cape or in the northern suburbs of Cape Town.

The Open Budget Index is best viewed as a discredited instrument of western imperialism. Its methodological shortcomings have been exposed by its incorrect classification of China — a partner that Public Enterprises Minister Malusi Gigaba has identified as a good governance model — as “among the least transparent countries in the world”.

Despite its superficial attractions, the Treasury model — with its mass of detailed argumentation, small font sizes and dense statistical tables — is too labyrinthine for citizens, and Cabinet ministers, to follow. It is surely highly undemocratic that the finance minister has made available to the general public information that is too complex for even the president and his head of government communications to understand.

Butler teaches politics at Wits University.

Apartheid and democracy. Part 2

Is democracy good?

Wednesday 30 August 2017

The global political context has radically changed since the mid-1990s when I wrote Democracy and Apartheid. We no longer live in an age of liberal triumphalism. Political analysts do not expect “democracy” to solve all our problems. And we only have to look at the president of the US to see that democracy can have very negative consequences and not just positive ones.

Some of the critiques of democracy that are worth considering are:

#1 Liberal representative democracy is shallow or meaningless so its presence or absence is of little or no interest

Many critics have complained that this “liberal democracy” is shallow. What is needed, they argue, is a system that is more “deliberative” and/or “egalitarian”. “Deeper” or “deliberative” forms of decision making would involve citizens talking and understanding rather than just voting. A more “egalitarian” system might be one in which urban, educated, wealthy elites do not dominate political debate.

#2 Liberal democracy is counter-revolutionary

More direct critics (especially in the Marxist tradition) have complained that “bourgeois democracy” (the kind that we call “liberal representative democracy”) is a sham.

After all, the power of the “capitalist state” is deployed in the interests of the capitalist class in order to reproduce and sustain the capitalist system. The function of democracy (according to Marxists) is merely to make capitalism seem “legitimate” to those who are oppressed by it. In this way, democracy helps to delay the glorious revolution. “Bourgeois democracy” of the kind introduced in 1994 is therefore bad because it generates “false consciousness” among the population about the real condition of their lives.

“True democracy”, on a Marxist view, can only be realized outside the distortions of the capitalist system. The authoritarian state of East Germany (1949-90), to take one case, called itself the “German Democratic Republic”, despite being a police state with severe restrictions on opposition party and civil society activity, and the holding of “elections” in what was essentially a one-party state.

In the Marxist tradition, liberal representative democracy is a veneer applied to a system in which the capitalist class is dominant and the workers suffer from “false consciousness”. The Communist Party, by contrast, apparently enjoyed a “scientific understanding of society” that allowed it to discern the true interests of the masses. Apparently.

#3 “Liberal democracy” is merely a historically particular Western/colonial idea or practice

Other critics of “liberal democracy” include proponents of pre-colonial political traditions that purportedly offer the advantages of democracy without its malign western elements. See, for example, Andrew Nash’s presentation of something he calls “Mandela’s democracy” (POL5044S students – we will soon discuss this).

There is also potential for untried forms of democratic politics that cannot be realized through current (western) institutions and ideas. These are set out in a variety of utopian traditions, some of which focus on the potential of new technologies.
Can political science help us understand democracy in richer ways?

There have been two decades of innovation in political science since I wrote Democracy and Apartheid. (In my view, this is one further reason why the book is not useful for teaching.)

One trend is to treat many states as “hybrids” that combine different democratic and authoritarian practices, to differing degrees, rather than arguing that they are either democracies or they are not. A second trend has been to break down “democracy” into its various components or dimensions.

If I were writing a similar book today, I would use quite different concepts — such as “illiberal democracy” (Zakaria 1997), “hybrid regime”, or “Competitive Authoritarianism” (Levitsky and Way 2010) — to analyse apartheid SA.

These new concepts all emerged to help political scientists understand the numerous regimes that did not, and do not, fit the classification of states as “democratic” or “non-democratic” (or as “in transition” between the two). This dichotomy, and the idea that there was a general trend towards liberal democracy, dominated western political science in the 1990s. (This was also part of the argument of my book, but sadly I was not successful in developing any useful new concepts myself!)

I particularly value the analytic power of concepts like “hybrid regime” and “competitive authoritarianism”. Levitsky and Way’s “competitive authoritarian” regimes are different to “closed authoritarian regimes” because there are legal channels through which opposition parties can compete seriously for power – and conceivably even win. Examples today might be Russia, Malaysia, Angola, or Turkey.

Elections are held regularly, there is political opposition, and (circumscribed) civil liberties at least permit opposition parties to select candidates and organize campaigns. Not all political journalists are routinely jailed or killed. Not every ballot box is stuffed.

Democratic procedures therefore allow partial but genuine contestation for power. But these regimes are not “democracies”, according to Levitsky and Way, because competitive authoritarian regimes “fall short” on at least one, and usually more, of three “defining attributes of democracy”. These are (1) free elections, (2) broad protection of civil liberties, and (3) a “reasonably even playing field.”

Their writing is very clear although their arguments are complex. You can ask your lecturers about their approach or listen to Levitsky here https://www.youtube.com/watch?v=6aIlSdVhfDM

If I revisited the themes of Democracy and Apartheid today, twenty years on, I might explore the matter in something like these terms: was apartheid SA a “hybrid regime” (one that combined democratic and authoritarian practices) or perhaps a competitive authoritarian regime?

SA probably did not meet even the relatively minimal conditions for competitive authoritarianism after 1960, because the regime began to introduce wide ranging bans on opposition political parties — and to imprison or drive into exile a wide range of political opponents.

It is also interesting to “disaggregate democracy” in the way that has been attempted by the “Varieties of Democracy” project. This new approach makes it possible to trace how some of the contested component dimensions of democracy (they claim there are seven of these) have changed over the course of the twentieth and early twenty-first centuries in more than a hundred countries (including SA). There is a reference to the project site below if you want to see what is going on today in this part of political science.

Best wishes

 

Anthony Butler

30 August 2017

 

References

 

Butler, Anthony (1998) Democracy and Apartheid: Political theory, comparative politics and the modern South African State (New York, St Martin’s Press & Basingstoke, Macmillan).

Fukuyama, Francis (1989). :”The End of History”, The National Interest (16): 3–18.

Levitsky, Steven and Lucan Way (2010) Competitive Authoritarianism: Hybrid Regimes after the Cold War (Cambridge University Press).

Zakaria, Fareed (1991), ‘The rise of illiberal democracy’, Foreign Affairs (November-December)

 

The Varieties of Democracy project can be found at https://www.v-dem.net/en/