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Southern Africa Report Archive

Increasingly, the logic of the ANC's GEAR document has replaced the more bottom-up, popularly-driven developmental logic of the movement's initial Reconstruction and Development Programme. The ANC's ``growth plan'' has become, primarily, one of setting the stage for a presumed influx of international investment, with all bets now being placed on such initiatives as an ever more welcoming posture towards the Bretton Woods institutions and an ever more ``flexible'' labour market. Bond reports on the emergence of the ``Campaign Against Neo-liberalism in South Africa'' for example, while also providing the reader with a context for situating a pair of critical initiatives whose founding documents we reproduce here. (jbv)

vol 12 no 2

Fighting neo-liberalism: The South African front
Patrick Bond


Printable Version
 
Southern Africa Report

SAR, Vol 12 No 2, February 1997
Page 14
"South Africa"

FIGHTING NEO-LIBERALISM:
THE SOUTH AFRICAN FRONT

BY PATRICK BOND

Patrick Bond is indefatigable.

There would have been delight in the boardrooms at 19th and H Streets in Washington, DC in December 1993, when the International Monetary Fund granted an $850 million loan tying the first democratic government of South Africa into classical structural adjustment policies. And indeed not only did the new government follow IMF advice religiously, it liberalized the economy faster and further than expected. Moreover, former socialist street activists now in lead economic ministries regularly sought and advertised the praise of IMF managing director Michel Camdessus.

Yet something was still not right. For the Reconstruction and Development Programme (RDP) issued by the ANC and its campaign partners just three months after that first IMF loan harshly condemned the Bretton Woods institutions. And as the months passed following South Africa's April 1994 election, World Bank staff found that try as they might, they simply couldn't sell a loan in Pretoria. Nor has the IMF lent again.

The Bank's luck began to change, finally, in early 1997 - as Southern Africa Report was going to press - with Trade and Industry Minister Alec Erwin preparing to borrow R340 million (US$67 million) for improving the export competitiveness of small and medium businesses. Bank staff hope that this icebreaker may lead to several other financing projects that follow from their prolific technical advice in several ministries.

The overall trend

As we will emphasize below, progressive resistance is sure to continue to impede this process to some degree. But what, in the first instance, are we to make of Erwin's recent step? In fact, his willingness to take it needn't surprise us very much. After all, globalization - or what many of us used to call imperialism or neo-colonialism - has become the watchword of the 1990s. And just what is it that the forces of neo-liberalism want poor and working-class people to think? Simply put, that globalization makes it impossible to resist international pressure and to regulate or transform national and local economies. Globalization disempowers us from advocating anything remotely progressive in terms of far-reaching social policy, worker's rights, ecological safeguards, people-centred development, gender equality, and self-reliant economics.

Unfortunately, there are plenty of signs, during the late 1990s, that the ANC has itself bought this line. Thus, once the country achieved international respectability, an unholy alliance of South Africa's (white) economic and (white/black) political rulers moved to hoard for themselves the bulk of globalization's benefits, in the form of lower tariffs on imported luxury goods and labour-saving machinery; deregulation, liberalization and privatization; and the ability to move their savings to offshore banks. Although resistance has often been impressive, workers and the poor have paid the price in the three main struggles over economic policy thus far:

* International trade:
South Africa signed the General Agreement on Tariffs and Trade in December 1993 following secretive negotiations mainly involving apartheid bureaucrats, big business representatives and labour's team of post-Fordists. After the 1994 election, Manuel (then Trade and Industry Minister) removed tariffs even faster than GATT required in key areas, leading to firm closures and job losses.

* Foreign investment:
The ANC government's energetic campaign for new foreign investments never paid off. In any case, the merits of inviting the likes of American purveyors of cosmetics and sweetened liquid (Pepsi) to set up shop locally were questionable. Traditionally, foreign direct investment intensified the South African economy's apartheid-era bias towards both export of raw materials and local production of luxury goods that were affordable only to a small, mainly pale section of the population. Production by state-of-the-art foreign investors was also more highly-mechanized, generating fewer jobs and a greater outflow of profits from South Africa.

* Global finance:
Moral surrender was the only way to describe the ANC's decisions to fully repay apartheid's $18 billion foreign commercial bank debt and to gradually phase out exchange controls in the name of attracting new foreign finance. Debt-rescheduling negotiations were carried out by incompetent Reserve Bank bureaucrats and naive ANC economists in 1993, and the result was a bum deal.

Terms of resistance

Why, in the long run, could anyone have expected that the ANC's dealings with the IMF and the World Bank (the "International Financial Institutions" or "IFIs") would continue to defy this broader policy-making trend? The most likely reason seems to be the weight and seriousness of the three assertions deployed by Bank opponents (in government, in parliament and in society as a whole) to prevent the flow of credit for so long:

* The high cost of Bank money:
All foreign loans have this problem, given that the rand tends to decline in value against currencies in which loans are denominated. London School of Economics researchers released a study in 1993 showing that when Eskom borrowed abroad, the country's single largest foreign debtor ran up twice the interest bill of a local capital market loan. Yet the Eskom loans were to fund rand- (not dollar-) denominated expenses - and foreign costed inputs, such as new turbines, could easily have been financed through much cheaper import-export banks. The cost of foreign loans became especially prohibitive in 1996 when the rand crashed more than 30% against the dollar. And repaying foreign loans requires shifting more resources into export-earning activities rather than meeting domestic basic needs.

* The existing surplus of money within South Africa:
The financial markets remained ridiculously liquid, with the Johannesburg Stock Exchange still hitting record highs in 1996. Given that pension payments and insurance premiums providing the handful of institutional investors some R50 billion a year in income during the 1990s, there was no reason not to source credit and investment equity from such funds (which were otherwise on a self-destructive course in overvalued stock market shares, office buildings and shopping malls).

* The strings attached to foreign loans, which quickly become the hangman's rope:
This was sufficiently well documented, thanks to the tragic lessons of other African countries, that the word "conditionality" soon became a spectre that self-respecting Pretoria bureaucrats of both old and new vintages feared enormously.

IFI leadership

And yet, how long can good arguments hold out against the ostensible "global logic of capital"? Certainly, the IFIs were not prepared to yield ground to such otherwise obvious and sensible reasons for caution. Instead, poor leadership on the ground by it's own bureaucrats was a common insider explanation for the Bank's failure to lend.

This must have been particularly irritating at head office, for at least US$10 million was spent in policy-oriented research for South Africa between 1990 and 1996, as the Bank desperately sought an African "success-story" - only to have presiding over the South Africa operations of the Bank in the initial stages one Isaac Sam, a US citizen originally from Ghana. In early 1995, Sam was charged with the rape of an office cleaning worker. Police reportedly "lost" the critical evidence so the case was dropped, but sufficient public relations damage was done that Sam had to be replaced in October 1995. It was at this point that Bank president James Wolfensohn hastened to appear on South African television to reaffirm his willingness to lend!

Nevertheless, notwithstanding Sam's replacement by a much more suave resident representative (with a social democratic sales-pitch) - Judith Edstrom - and promises of a forthcoming $750 million infrastructure loan, there was sufficient resistance to the Bank in Democratic Movement circles that another year passed before the arduous task of putting the first credit together really began.

(Other explanations for the long delay in lending included the ease of access to alternative sources of foreign credit - the ANC government periodically issued securities to raise hard currency when required - and the fact that international financiers were already sufficiently satisfied with SA's evolving economic policies and the hegemonic mimicking of neo-liberal analysis by local compradors so as not to require their own loan-related conditionalities via further Bank interventions.)

Contradictions ... and resistance

Still, unlike Robert Mugabe in Zimbabwe, South Africa's more conservative leaders - notably Nelson Mandela - had become extremely reticent to criticize the Bank and IMF, and, notwithstanding the militant sensibility of many ANC constituents, had begun regularly to praise the Bretton Woods institutions for having confidence in South Africa's evolving, homegrown, "structural adjustment."

This contradiction came to a head last October when the quiet, relatively unhindered process of drawing local economic bureaucrats more closely into Bank-think met loud public resistance. Finance Minister Trevor Manuel had chaired a plenary session at the Bank-IMF annual meeting and there invited Camdessus to South Africa "to meet the critics" (specifically, students and trade unions). Manuel is an intimidating figure, once a grassroots leader in the Cape Town ghettoes, soon after 1990 a confidante of Mandela, then largely self-taught in economics but today quite capable of holding his own in various fora of the global bourgeoisie. Nonetheless, worried at how far astray Manuel (not to mention Mandela) was now wandering, a loose coalition calling itself the "Campaign Against Neo-liberalism in South Africa" (CANSA) formed spontaneously, receiving the endorsements of 60 key activists from social movements within two days (see CANSA's formal statement on the visit, reproduced below).

Camdessus was greeted in mid-October by televised protests at his arrival in Johannesburg and prior to his Cape Town parliamentary session, sharp hostility from several ANC MPs, the cancellation of scheduled meetings with labour and community leaders, harsh press statements by the Progressive Primary Health Care Network, SA Students Congress and the SA Communist Party, and an upsurge of anti-IMF publicity. CANSA demanded a publicly-televised debate with Camdessus, but in spite of the cancelled meetings, Manuel's aids begged off claiming there was no time on Camdessus' busy schedule.

The trip was a disaster. For although Manuel again received the IMF's blessing for his neo-liberal policies, this did nothing to halt eroding financial market confidence in South Africa as a profitable location for liquid funds.

Emblematic of this contradiction was testimony to parliament by the SA Chamber of Business chief economist, Ben van Rensburg, a few months earlier: "One delegate (of the Washington-based Institute of International Finance) said he will advise his clients that South Africa is safe as an investment destination for a time horizon of eight months ... The three-year perspective is terrible and the five-year perspective is impossible." To translate, existing policies - especially the highest real interest rates in the country's history and gradual financial liberalisation - are good for banks, yet contain such profound internal contradictions that they may well lead to economic implosion.

Erwin and Edstrom, Inc.

Moreover, the sharp attack on Camdessus by progressive activists renewed business concerns about Manuel's ability to persuade dissenters to get with the programme. So it was now up to former workerist - and still SACP Central Committee member - Alec Erwin to immediately defend government's honour (in a Mail and Guardian newspaper interview headlined `Erwin slams loan critics'):

"Our policies are consciously designed to prevent the possible pitfalls of a World Bank loan and the effects they've sometimes had on other economies ... [World Bank] influence is negligible; second, we've put in place policies designed to prevent the detrimental effects that some of their projects might actually have ... We often use World Bank expertise and feel sufficiently experienced not to be threatened."

Soon after, apparently smarting from CANSA's attacks, the Bank's Edstrom wrote to the Mail and Guardian and applauded Erwin for drawing his "own conclusions as to the course South Africa should take" (though without confessing her `negligible influence'). Moreover, she complained,

"I am baffled by the sentiments of some groups that contact with the Bank constitutes contamination and should therefore be curtailed. The Bank has learnt a lot from groups with differing views. Exchanges with NGOs and civil society groups have had a direct and positive impact on its understanding of and sensitivity to social and environmental aspects of development programmes. We seek more dialogue, not less."

Tellingly, aside from such now-familiar pitches for community "participation" in the design of neo-liberal policies, Edstrom refused to rebut or even acknowledge four very specific public charges made by members of CANSA two weeks earlier in the Mail and Guardian:

* Two Bank economists and the Bank economic model were utilized in the June 1996 macroeconomic strategy - which aside from its pro-corporate bias has already, after just four months, bombed with respect to 1996 predictions for job creation, interest rates and the strength of the rand (three of the strategy's most crucial targets).

* In 1994 - 95, the Bank's deputy resident representative led an infrastructure planning team whose proposals will - unless policy is changed dramatically - soon reduce the lot of the urban poor and low-paid workers to pit latrines, water taps within 200 meters and no electricity, instead of the decent sanitation and household water and electricity "lifeline" supply promised in the RDP.

* The Bank-designed land redistribution programme, dating to 1992 - 93 and endorsed by government in 1994, is yet to get off the ground largely because it relies nearly entirely on market forces.

* Forceful Bank advice from 1991 - 94 to limit state housing subsidies and to trust commercial banks to make township home loans - instead of the state and community agencies advocated in the RDP - helps explain the present housing delivery fiasco.

CANSA debates

CANSA also pointed out (in a contribution to the new journal, debate: Voices of the South African Left) just how ironic it was that Erwin aimed to enhance export competitiveness with the new loan he himself was actively bartering with the Bank (cited above), given the Bank's "intrinsic tendency to generate overoptimistic market studies in order to promote exports at all costs." In so arguing, CANSA cited the words of Carlos Lopez, a leading United Nations Development Programme official: "The World Bank figures are always exaggerated to give a rosy picture of whatever it is they are involved in."

CANSA also made several appeals:

"We hope the IMF will cease sending its managing director here on fruitless missions to sell neo-liberal muti to critics. Broader boycotts, tougher demonstrations, even more hostile parliamentarians and louder demands for transparent public debates ... will result.

"The World Bank should close its Johannesburg office and release its economists - with their R700,000 per annum packages - to compete for jobs in the private sector.

"Government should remember its election mandate and open the RDP document to page 146: `Above all, we must pursue policies that enhance national self-sufficiency and enable us to reduce dependence on international financial institutions.'

"And ordinary citizens and organizations of civil society interested in challenging the drift away from the RDP and social justice towards neo-liberalism should join the campaign."

What next?

As always, it has been difficult to separate structural from struggle factors in determining what continues to prevent South Africa's full capitulation not just to the IMF/World Bank policy framework (a sell-out which is, in any case, quite advanced, as recent issues of SAR have documented), but, more specifically, to a lending relationship that spells even more certain disaster. Although defeats have been suffered, South Africa's progressive forces can claim, nonetheless, to have had some success in holding the World Bank at lending arms-length until now.

This sense of having made some sort of a dent in global financial power - harking back, as this struggle also does, to the successful financial sanctions' campaigns of the 1980s - will undergird social movement confidence for what may be a still more bruising 1997 campaign: to cancel the US$20 billion in inherited apartheid debt.

In the wake of the anti-Camdessus mobilizations, leaders of an even broader "National NGO Coalition" consisting of more than 3,000 groups endorsed further critiques of the Bank and IMF, and launched an appeal to have the apartheid foreign debt put on the national political agenda. Mandela has himself forgiven Namibia's inherited US$175 million debt to Pretoria, and, notwithstanding the continuing influence of Manuel and Erwin, it may yet be possible for a combination of mobilisations by South African progressives on the ground and solidarity activists in Northern financial centres to force foreign banks to open their books to the apartheid-era page (see the second document - out of Cape Town - reproduced below).

If Swiss banks are finally conceding their entanglements with Nazi Germany after half a century (and preparing to recompense Jewish survivors), looking back one to two decades to learn who benefitted from financing apartheid might be a good next step for progressives. It would not only provide another form of truth and reconciliation, but possibly a better future free of entanglements with international bankers, whose preferred policies will no doubt further underdevelop and polarize this fragile society.

=========================

BOX:
DOCUMENT I
CANSA vs. CAMDESSUS

As members of popular organizations and activists of the Democratic Movement, we have come together to launch a "Campaign Against Neo-liberalism in South Africa" ... we must make the following points about the Camdessus visit:

* The Finance Ministry's attempt to establish `good relations' with the IMF follows its promotion of a macroeconomic strategy in June 1996 which bears an uncanny similarity to the IMF's 11 new "principles for economic success," also termed the "11 Commandments." The Growth, Employment and Redistribution strategy, emphasizing cuts in government expenditure (particularly "consumption" expenditure which will threaten social services), continuing high real interest rates, export-led growth and trade liberalisation, privatization and permission for increased capital flight from South Africa, mimics the free-market, monetarist policies that across the world favour the interests of powerful conglomerates and banks at the expense of workers, the poor, women, youth and other marginalized social forces. The warm reception received by the SA delegation to the IMF/World Bank Annual Meeting in Washington earlier this month follows months of close collaboration in designing SA economic and development policy, marking a fundamental departure from policies outlined in the RDP ...

* The IMF and World Bank have the ability to psychologically influence prospective foreign investors, in a context in which foreign investment is incorrectly seen by a small group of government policy-makers and advisors as the overarching factor for economic growth. Since the 1980s, South Africa has succeeded in attracting merely large amounts of "hot money" foreign investment into speculative stock and bond markets (leading to subsequent bouts of currency volatility), with virtually none of the direct foreign investment that might challenge existing monopolistic conditions, transfer technology, or create jobs and products for consumption in the local market. We believe, therefore, that the move towards close relations with the IMF, premised upon attracting what the Minister of Water Affairs correctly termed the "mythical foreign investor," should be viewed with alarm by all those in South Africa committed to sustainable, people-centred development ...

* Across the Third World, Structural Adjustment Programmes imposed by the IMF and World Bank to obtain the repayment of foreign debt have led to famine, environmental destruction, and the dismantling of health, education, infrastructural and social welfare programmes. These programmes nearly always include the same set of measures: currency devaluation, decontrol of exchange rates, higher interest rates, financial deregulation, trade liberalisation, privatization, wage cuts, reduction in the public service through budget cuts and massive retrenchments, labour market deregulation, and the like. The social costs, typically including large increases in the prices of basic goods and food, intensified poverty, deterioration of public services, and rising unemployment, are nearly always borne by those people, especially women and children, who never received any benefits from the borrowings. Structural Adjustment Programmes have also made small economies vulnerable to transnational corporations that exploit cheap labour (often imprisoned in union-free export processing zones devoid of health and safety regulations with wages that sink to US$1 per day) and that dump toxic wastes and poisons produced in the rich industrialized countries.

* Debt repayment has become an important mechanism for transferring wealth from the people of the South to financiers of the North. According to the United Nations, developing countries paid US$1,662 trillion in debt servicing between 1980 and 1992. This amount is three times the original amount owed in 1980. Yet in spite of the above transfers the total Third World debt still stands at over US$1,3 trillion. It is not commonly known that the Third World has repaid almost a trillion dollars of principle over and above US$771 billion in interest. In Sub-Saharan Africa the ratios of foreign debt to Gross National Product rose from 51% in 1982 to 100% in 1992, and of foreign debt to total exports from 192% in 1982 to 290% in 1992, a period during which the Third World debt crisis was allegedly resolved. The external debt of the Third World has become an eternal debt and stands as the largest immediate obstacle to growth and sustainable development. It is therefore crucial that progressive forces in South Africa add their voice to the calls made internationally to cancel Third World debt as the first step towards building equitable and just relationships between and within different parts of the world. The meagre gold sales belatedly proposed by Camdessus to help finance extremely limited debt relief, and only for those countries which religiously adopt the IMF's 11 Commandments, are far too little, far too late, and it is a reflection of the exploitative character of Northern political leadership of the IMF that even these gold sales were not approved at the last meetings.

* In the light of the near-universal failure of IMF and the World Bank policies in the developing world, we wish to urge extreme caution upon Finance Minister Manuel. Rather than naively providing Camdessus legitimacy to sell IMF policies to critics in trade unions and social movements, Minister Manuel should take up the mantle of leadership by using IMF and World Bank platforms to call for the cancellation of Third World debt, including the inherited US$18 billion apartheid foreign debt ...

by the Campaign Against Neo-liberalism in South Africa 16 October 1996

=========================

BOX:
CANSA SIGNATORIES

The signatories to the above CANSA statement include some leading activists from the following social movements: labour, community, women, students, environment, progressive religious, primary healthcare, education, media, progressive research NGOs.

Individual endorsements: (Individuals sign in their own capacity; organisations are listed for identification purposes only, not as endorsers; list updated to 17 October.)

* Gillian Addison, Group for Environmental Monitoring
* Asghar Adelzadeh, National Institute for Economic Policy
* Chris Albertyn, Environmental Justice Networking Forum
* Jenny Albrecht, Foundation for Contemporary Research
* Stephanie Allais, South African Students' Congress
* Mercia Andrews, Trust for Christian Outreach and Education
* Brian Ashley, Alternative Information and Development Centre
* Marjorie Billing, New Women's Movement
* Patrick Bond, National Institute for Economic Policy
* Debby Byrne, Transport and General Workers' Union
* Phiroshaw Camay, Cooperative for Research and Education
* Madode Cuphe, Masifundise Education Project
* Lungi Daweti, Centre for Democratic Communications
* Art de Langa, Society for New Economics
* George Dor, National Institute for Economic Policy
* Rita Edwards, Trust for Christian Outreach and Education
* Greg Hussey, South African Health and Social Welfare Services
* Godfrey Jack, South African National Civic Organisation
* Martin Jenson, Trade Union Library and Education Centre
* Dot Keet, University of the Western Cape Centre for Southern African Studies
* Cecil Kganakga, National Community Radio Forum
* Wolfgang Kistner, Ecumenical Advice Bureau
* Oupa Lehulere, Khanya College
* Charley Lewis, Cosatu Information Technology Unit
* Hassen Lorgat, Public Services International
* Bobby Maake, Cosatu Information Technology Unit
* Ernest Maganya, Institute for African Alternatives
* Jabu Mahlangu, Centre for Democratic Communication
* Maxwell Malan, End Racism and Sexism through Education
* Althea MacQuene, International Labour Resource and Information Group
* Andre Marais, Alternative Information and Development Centre
* Frank Meintjies, Initiative for Participatory Development
* Ronnie Mokwatsane, Masifundise Education Project
* Yves Monten, Rural Development Services Network
* Dickson Motha, South African Plantation and Agricultural Workers Union
* Lumke Mtimde, National Community Radio Forum
* Victor Munnik, Environment and Development Agency Trust
* Nirmala Nair, Trust for Christian Outreach and Education
* Neil Nair, South African Municipal Workers Union
* Beyers Naude, Ecumenical Advice Bureau
* Neil Newman, Alternative Information and Development Centre
* Hugh Noble, University of South Africa
* Roseline Nyman, National Labour and Economic Development Institute
* Roben Penney, Environmental Monitoring Group
* Alex Pongolo, Masifundise Education Project
* Mark Povey, Development Research Institute
* Kgagelo Ramodite, National Health and Allied Workers Union
* David Sanders, University of the Western Cape Public Health Programme
* Vishwas Satgar, National Labour and Economic Development Institute
* Ighsaan Schroeder, Khanya College
* Selby Shezi, National Institute for Economic Policy
* Fiona Tregenna, South African Students' Congress
* Molefe Tselo, Ecumenical Service for Socio-Economic Transformation
* Stiaan van der Merwe, Ecumenical Advice Bureau
* Lou Wilkins, Cosatu Information Technology Unit

=========================

BOX:
DOCUMENT II
"ODEOUS DEBT"

The Executive Committee of the Cape Town-based Alternative Information and Development Centre (AIDC) has just approved the report it commissioned on a strategy for challenging apartheid South Africa's foreign debt.

Democratic South Africa has inherited a foreign debt of some R90 billion from the apartheid regime. The prevailing view amongst economists and politicians is that this sum presents no special problem. Their equanimity is based on the debt, which forms less than 4% of the public national debt, being well within acceptable foreign debt/GDP ratios.

The Report challenges this complacency on three grounds. First, R90 billion is an awful lot of money for the vast majority of South Africans who, in varying degrees, remain deprived of the basic necessities of life. Second, the balance of payments which is already cause for concern, could not bear the debt repayments, which between now and 2001 are scheduled to be between $1.5 billion to $1.6 billion each year. These amounts are more than enough to create a balance of payments crisis. Morality and international law provide the third basis for challenging the debt.

Morality and law lie at the heart of the strategy being recommended by the AIDC. The Report dusts down the Doctrine of Odious Debt, a doctrine of jurisprudence the US Government and the US Chief Justice helped develop. The US Government, in the aftermath of the American-Spanish War of 100 years ago, used the doctrine to repudiate Cuba's debt with Spain. The US Government argued that the debt that had been incurred without the consent of the Cuban people and by means of force of arms was odious. The US Government argued that the creditors knowingly took the risk of the investment when they made the odious loans.

In 1923, the Royal Bank of Canada sought to recover debt from the recently established democratic government of Costa Rica. In the Costa Rican submission, the debt was illegitimate. The new government argued that the debt had been incurred by a dictator not the people of Costa Rica; the submission being that, at the time the loans were made, the people had been engaged in a political and military struggle to bring democracy to their country. The case was heard by Chief Justice Taft, of the US Supreme Court, sitting as arbitrator. Chief Justice Taft was persuaded by the Costa Ricans' submissions and fully upheld their Government's repudiation of the debt. Taft received no payment for his adjudication. He considered his promotion of the judicial settlement of the international dispute more than sufficient recompense.

The legal authority who did most to codify the Doctrine of Odious Debt was the emigre Russian, Alexander Sack, while he was a Professor of Law in France. It was his opinion that Government's invoking the doctrine would be required to prove that the debt ill-serve the public interest and that the creditors were well aware of this. Provided these proofs were met, the onus would by on the creditors to show that the funds were utilised for the benefit of the country. If the creditors could not do so, before an international tribunal, the debt would be unenforceable.

Using Sack's principles, the AIDC Report argues that all debts incurred during the apartheid years are illegitimate because the apartheid regime itself was illegitimate. The UN and the International Court of Justice were the most authoritative of the international bodies that, in vast numbers, proclaimed the apartheid state to be illegitimate and apartheid to be a crime against humanity.

Apartheid loans came from three sources: the IMF/World Bank, private commercial banks and individual speculators. The Report shows how each of these three groups actively and repeatedly supported apartheid and worked to undermine the international campaign to free South Africa from its racial dictatorship.

The Report's central proposition is that the government of the new South Africa should invoke the Doctrine of Odious Debt and should then enter into negotiations with the creditors for the cancellation of all the remaining foreign debt from the apartheid years.

The Report recognised that, even if sympathetic to the claims of democratic South Africa, the banks and their governments would probably balk at the precedent it might set for countries with debt burdens much greater than ours. The Report therefore anticipates the need for international solidarity action in support of democratic South Africa and suggests that the people who formed the anti-apartheid movements around the world would be a natural constituency for such action.

The AIDC further calls for the internationalisation of Affirmative Action and Truth and Reconciliation. It invites the outside world - more especially Britain and its Western allies - to acknowledge their own long role in the creation, development and defence of what eventually came to known as apartheid. Moreover, many people in the West individually benefited, whether directly or indirectly, from the brutally regimented and cheap labour of black South Africans under apartheid. The injustices inherited from apartheid that Affirmative Action is supposed to redress thus has an international dimension. The Report acknowledges that the debt cancellation might well have a price-tag for a number of Western citizens, not just large, anonymous and enormously wealthy transnational banks. The Report suggests that the debt cancellation should also be seen as a form of reparations; that, by cancelling the debt, the banks, governments and peoples of the West would be acknowledging their debt - both financial and moral - to black South Africans and that this acknowledgement would in effect be the West's submission before the Truth and Reconciliation Commission.

The Report asks what would happen if South Africa's claims fall on deaf ears. In this event, the AIDC calls upon the South African Government to be prepared to invoke the Doctrine of Odious Debt unilaterally. The AIDC recognises that the government will almost certainly need to be encouraged to take such a unilateral measure. Should South Africa's negotiators be left with little option other than unilateral implementation of the Doctrine of Odious Debt, the Report calls for a campaign by the Mass Democratic Movement (MDM) to urge the government to take such a step.

The Report predicts a hysterical response from business and some politicians to any move in the direction of unilateral action. These sources, it says, will seek to terrify the public with dire warnings of economic collapse; debt repudiation, according to these predictions, will result in South Africa being cut off from international capital. To allay these (induced) fears - and thereby also facilitate the mobilisation of the MDM - the Report claims that the option of unilateral action rests secure on 3 certainties. The 3 secure points are: the manifest failures of the World Bank/IMF policies elsewhere in the world and particularly in Africa; the fact that the economy survived the capital drought that followed the actual debt freeze imposed by the apartheid government in 1985; and the demonstrable failure of the Government's existing macro-economic policy, with its focus on being "foreign investor friendly."

The Report concludes on a note of urgency. Apartheid's debt is being paid back now. The strategy to challenge apartheid's foreign debt is seriously weakened by time. The AIDC's call is to act now.

Copies of the full Report are available from AIDC. Phone: 27-21-448-5197; fax 27-21-47-8583; email: aidc@iafrica.com

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