Last-minute views on the US election from President Thabo’s brother

MONEYWEB, Byron Kennedy, 01 November 2004

Moeletsi Mbeki: Deputy chairman, South African Institute of International Affairs

MONEYWEB: Next up we’ve got Moeletsi Mbeki. He’s the deputy chairman of the South African Institute of International Affairs. He’s also our President’s brother – Thabo, of course – and the reason we asked him onto tonight’s programme is to discuss tomorrow’s election in the US. It all looks to be fairly poised, as Arthur Buchner told us – that’s the race for the presidency. George W Bush, though, is favourite to land another four-year term. Moeletsi, in a nutshell, what is the difference in the policies between the Democrats and the Republicans?

MOELETSI MBEKI: Well I was in the United States the week before last. I must confess I didn’t see much of a difference, from what I could hear. There’s a bit more emphasis by the Democrats on consultation with the United Nations on issues of international affairs than there is by the Republicans, but I don’t know how credible all that is.

MONEYWEB: Now, which result in your book would be the best for our economy in South Africa?

MOELETSI MBEKI: I really don’t think it makes much difference, because if you look at what Bill Clinton did for Africa, and George Bush afterwards, there wasn’t much difference in terms of their policies towards Africa.

MONEYWEB: Are there any industries specifically that could be affected by different outcomes?

MOELETSI MBEKI: Well, as you know, we are exporting to the United States under the Africa Growth and Opportunity Act. It was passed under Clinton, and Bush has extended it for another I think another eight years or so, which is why I was saying there isn’t really much of a difference between the two of them. This law is in the books, so it really will make no difference who comes in, because that’s the law which to a large extent is regulating our trade with the United States at the moment, and the car exports and all those things are going under AGOA. So really I don’t think it will make any difference to South Africa specifically.

MONEYWEB: Now, bookmakers reckon that Bush and the Republicans have got a 58% chance of winning the election. That means that 42% go the way of John Kerry and the Democrats. Do you think it might be a lot closer than that on the day?

MOELETSI MBEKI: We’ll see. Your guess is as good as mine and the pollsters themselves say they have a margin of error of three to four per cent, so whatever their predictions are it’s like a tidal wave – that’s essentially what it looks like.

MONEYWEB: Is there anything at this late stage that could swing in Kerry’s favour?

MOELETSI MBEKI: I wouldn’t have thought so. I think the American public is split between the Democrats and the Republicans, and that is the way in which American politics has panned out. This looks like this is a long-term trend. It’s not just a flash in the pan, and that’s the way the American politics are now. The minor pronouncement here, the wrong word there – I don’t think it makes any difference.

MONEYWEB: All right so you’ve said it doesn’t make any difference either way what would be best for South Africa, but if Bush does in fact get back in how do you think the likes of the dollar is going to react to the news? Arthur Buchner has told us that he would expect the dollar to weaken significantly. Would you go along with that?

MOELETSI MBEKI: Because of the re-election of Bush?


MOELETSI MBEKI: Well I’m not sure why that should be the case.

MONEYWEB: All right, let’s move on. The contrarian view has it that the US economy is being pretty much held together by sticky plaster, and once this election is out of the way the massive current account deficit will come home to roost in the US, and the rest of the world with it. Do you think there’s much chance of that happening?

MOELETSI MBEKI: Well, there are so many predictions about dire consequences of the American deficits and all the rest of it. You actually have to go to the United States to understand the scale of the economy of the United States relative even to that of Europe. It’s a massive economy. So there aren’t many things that will shake the United States economy, or the dollar for that matter. Of course, there are other big players that are emerging like China and India and so on and so forth, but these are long-term trends, this is not something that will hit the dollar tomorrow. So of course the speculators will always do their own thing, but I think for us in Africa the reality is that the US economy is a massive and a very strong economy, and all the indications are that the strengthening of China actually strengthens the American economy, it doesn’t weaken its position in the world. If you look at research and development information technologies, the United States is miles ahead of its rivals, Japan and the European Union, because they have enormous research and development budgets. So yes, you may have the normal up and downs in terms of business cycles, which really for us are not that significant. But in the medium term I think the American economy remains very powerful, it remains the leading economy in the world.

MONEYWEB: All right, let’s move away from the US election and that economy and to black empowerment deals in South Africa. You’ve been critical of some of the enrichment schemes that have been set up. Do you think that train of thought is likely to change any time soon?

MOELETSI MBEKI: No, I’ve never been critical of enrichment schemes. All I criticised is – let’s face it, the guys who are giving their money to their friends, that’s their own decision. All I have criticised is that is not encouraging a culture of entrepreneurship in the country. That’s all that I have criticised. Now if a particular white-owned management wants to give money to their black friends, that’s a matter for them. The issue that I have raised is that the social consequences of black economic empowerment are that it undermines entrepreneurship, and ironically it perpetuates the role of the blacks as junior partners to the whites. But those people who want to continue to play the role of junior partner to the whites – well that’s their choice. At least we have a democracy. That’s the free choice they want to make.

MONEYWEB: Did you have a look at the revised structure of Absa’s empowerment transaction and the fact that they going to include around 430 of their employees as part of that? Do you think that’s a more palatable way of putting these structures in place?

MOELETSI MBEKI: Well, I’d rather hear what those employees have to say about that.

MONEYWEB: Fair enough. There was also news out today from the Minister of Public Works, Stella Sigcau, and the process for the property industry charter. We are hoping to talk to her in a little while. It is going to deal with the likes of land reform. Are you expecting anything out of the ordinary on that front?

MOELETSI MBEKI: Well, not really. My firm used to own a construction company. There is no, if I can quote or misquote Mr Mandela, there is no easy walk to entrepreneurship and building a company. All the goodwill in the world that the government can give to people – and I think they should help. But, at the end of the day, if you want to be an entrepreneur (and, by the way, very few people want to take that risk) – there is no shortcut.

MONEYWEB: That was Moeletsi Mbeki, he is our president Thabo’s brother, also the deputy chairman of the South African Institute of International Affairs. He says it doesn’t really matter which way the election goes for South Africa. Your view on that, Arthur?

ARTHUR BUCHNER: I think that our economy and our trade agreement that we have with the States, as Moeletsi mentioned, are almost cast in stone. There’s eight years to run on these things, so from that perspective, yes. But if the dollar had to weaken, the rand is going to strengthen. It has major impact on any one of the resource stocks which are listed on our market, and vice versa if the dollar works the other way. So anything that happens in the election from an economic perspective is definitely going to have an effect – and not only on South Africa but on the whole of the world.

Posted in Market commentary

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