From CounterPunch - 4 March 2016

Austerity Gathers Pace in Schizophrenic South Africa

by Patrick Bond

 

A wedge is being quickly driven through Pretoria’s political elite, splitting even those who operated tightly together in the murky 1980s Durban spy scene during the fight against apartheid. Amongst the victims are vast numbers of poor people beginning to bear the brunt of the diverse shakeouts now underway, in a confrontation between the country’s two most powerful 21^st century politicians: President Jacob Zuma and his predecessor Thabo Mbeki. That battle began more than a decade ago, when Mbeki fired Zuma as Deputy President in 2005 after a corruption conviction against a long-time Zuma associate.

The revival of the duel comes at a very tense time here, what with student, worker and community protests having intensified last month after the December-January summer break. Repeated currency crashes have left a 30% decline in value over the past year, so the country’s financiers and upper-middle class commentariat are nearly universally applauding Finance Minister Pravin Gordhan for maintaining low-grade austerity. The economic threat to this faction is a ‘junk’ label by international credit rating agencies, one which appears imminent and will lead to faster capital flight.

But Gordhan was himself under growing political threat, becoming visibly furious with Zuma’s top police and tax authorities last week, as his parliamentary Budget Speech preparations were interrupted by allegations he once set up a ‘rogue unit’ to spy on Zuma, during the time Gordhan ran the tax agency. The ruling party appears split down the middle with durable loyalty to Zuma, on the one hand, balanced against fear that Gordhan’s misfortunes will reverberate chaotically across the sickly economy on the other.

To make matters even muddier, Zuma – formerly head of the African National Congress (ANC) spy unit during the liberation struggle when Gordhan was amongst his most loyal cohort working from Durban – was defended in court this week against allegations against his allied spies within state security. In April 2009, just before being elected president, as Zuma was preparing to be charged for 783 counts of corruption, his spooks foiled the prosecution by releasing transcripts of tapped phone calls between Mbeki’s main crime investigator, Leonard McCarthy, and Bulelani Ngcuka, who was a former prosecutor and the husband of Mbeki’s then Deputy President.

Though it is unclear how much Mbeki knew and endorsed, the two apparently arranged the timing of earlier attacks on Zuma to coincide with Mbeki’s ambition to serve a third term as ANC leader in late 2007. Mbeki’s failure to win support for that bid (as Zuma replaced him in a decisive election) led, by September 2008, to Mbeki’s sacking as state president nine months before his term was due to end. The firing was done in a fit of collective rage by the ANC National Executive just after a Durban judge affirmed that Zuma was being victimised in a political conspiracy.

The main conspirator, McCarthy, was – without any apparent due diligence investigation at the time – quickly moved from Pretoria to Washington in 2008, to become World Bank Vice President: Integrity (sic), with the assistance of Mbeki ally, Finance Minister Trevor Manuel. As McCarthy put it, he needed a makeover to appear ‘squeaky clean.’ He wasn’t, a fact that we are continually reminded of, while the World Bank continues to employ McCarthy on sensitive investigations.

Meanwhile back in South Africa, corruption was spreading like wildfire, and in one futile effort to douse an obvious source, illegal cigarette smuggling, local tax authorities ran foul of Zuma’s spies as well as his son Edward in 2011. Those investigations, in turn, apparently generated the recent attack on Gordhan, who before becoming finance minister initially in 2009, was the chief tax commissioner.

The unprecedented contagion of what Zuma last week called ‘gossip and rumour’ around his inner circle threatens the internal stability of the Pretoria regime. The loyalty of many key individuals is being tested. Indeed the ANC’s schizophrenia was amplified two weeks prior to Gordhan’s Budget Speech when, just before his State of the Nation Address on February 11, Zuma himself finally agreed to repay some of the $16 million in state subsidies that were spent on upgrading his rural palace, Nkandla. This about-turn occurred after Zuma compelled ANC parliamentarians to support him when he had refused to ‘pay back the money!’, as opposition politicians long demanded.

While society tried to steady its political feet on this SA Titanic, the economic ship also continued to list dangerously, what with world financial markets roiling the currency and ever-worsening GDP statistics fueling capital flight. In spite of bending over backwards to meet financial markets’ demands for a lower budget deficit (he promised it will be just 2.4% of GDP by 2018, down from 3.8%), Gordhan was pummeled by an immediate 3.2% currency collapse in the minutes after he spoke to parliament.

Yet he had done what the financiers demanded: increased the austerity begun a year earlier by the prior finance minister Nhlanhla Nene, who was fired in a farcical musical chairs operation in December that led to Gordhan’s return. Though Gordhan was once a leftist, his new budget provides just a 3.5% nominal increase to foster care providers (who play such a vital role given the catastrophic AIDS orphan rate) and a 6.1% rise for mothers who are Child Support Grant recipients.

These poor families face double-digit inflation this year thanks to food, electricity and transport hikes. So Gordhan’s ‘real’ – after-inflation – cuts to welfare grants of several percent lower the incomes of 16.5 million recipients (out of the country’s 55 million population). They will struggle to find more holes in their frayed belts to tighten them up, given that 63% of South Africans – mostly women – already live below the poverty line.

Worse is to come, what with South Africa’s foreign debt having doubled to $145 billion since 2009, with debt/GDP levels at mid-1980s levels. As a result of that worsening vulnerability, the men who really yank Gordhan’s chain work for Standard&Poors, Fitch and Moodys credit rating agencies, and financiers such as New York-based Goldman Sachs. The latter bank helped raid the South African currency on January 11, sending it down 9% to R17.99/$ in just 13 minutes of flash-crash speculation, shortly after telling its traders that globally, the rand’s decline is the bank’s second most aggressive bet for 2016 (after the dollar’s rise).

The dire financial situation is far more complicated than mere ill-will, for it is useful to recall that back in 2009, when IMF managing director Dominique Strauss-Kahn advocated deficit spending to save world capitalism from implosion, Moody’s actually upgraded Gordhan after his soaring 7.3% deficit/GDP rise that year. The agency actually raised South Africa’s credit rating from BBB+ to A-. (With similar wild abandon, Moody’s also rated Lehman Brothers as ‘investment grade’ just days before it crashed.)

Whimsical though they are, these agencies have at least put pressure on Gordhan to throw cold water on Zuma’s $100 billion nuclear energy dreams, notwithstanding intense pressure to buy reactors from Moscow and Beijing. And to Gordhan’s credit, he dodged that round of Russian Roulette by kicking the bullet over to Energy Minister Tina Joemat-Pettersson, to do “preparatory work for investment in nuclear power.”

More objectionably, Gordhan’s budget included a substantial $40 million increase in funds for the notorious Public Order Policing (POP) unit – the unpunished Marikana Massacre hit-men who joked about defective muti while planting weapons on their victims – instead of defunding the POP and replacing it with skilled peace-broking units. But on the other hand, Gordhan slashed $500 million in overall spending on defence, public order and safety services from the 2018 spending projections made by his predecessor.

But it was when Gordhan bragged of the state’s most active spending that leaders of my residential community grew furious. After living on Durban’s seaside Bluff neighbourhood for many years, the highlight of Budget Day for me was reviewing the carnage with the South Durban Community Environmental Alliance in a long strategy session two hours after Gordhan finished speaking. In the basement of a shabby community hall that Gordhan himself once frequented when he was a Durban activist, as rusty fans blew back the city’s

 humid air at us, two dozen hardened activists of all races, classes, genders and ages mulled over his generosity towards the parastatal corporation Transnet and other behemoths within the local port-petrochemical complex – the activists’ sworn enemies.

Gordhan would not be the first politician accused of pandering to the construction mafia by turning a blind eye to repeated collusion and overpricing here in Durban. The current outrage is Transnet’s racist rerouting of the oft-exploding pipeline that doubles petrol-pumping capacity to Johannesburg from the Engen and Shell/BP plants at Africa’s largest refining complex, sandwiching the Indian suburb of Merebank, whose Settlers Primary School has an asthma rate that was not long ago measured at 52%, the world’s highest. Last month’s cost estimate revision on what Transnet originally priced at around $400 million, is now nearly $2 billion.

Gordhan announced another $19 billion in state spending on “inter-modal transport and logistics networks [to] improve South Africa’s competitiveness,” but vast shares of those spoils are going to
Zuma’s White Elephant breeding project: useless fossil-centric infrastructure.

Here in South Durban, we worry that the Baltic Dry Index – which measures shipping capacity – is now at its lowest in history (around 300 after a 2008 peak of 12 000). And with demand having crashed, fossil fuel prices have also hit the floor, casting a dark spell over Gordhan’s brag that “work has begun on a new gas terminal and oil and ship repair facilities at Durban.”

Ironically perhaps, this sentence came just three lines after Gordhan praised the Paris UN Summit’s (highly dubious) commitment to fighting climate change. He continued, “We need to accelerate infrastructure investment in the period ahead. So we must broaden the range and scope of our co-funding partnerships with private sector investors.”

Worst of all, in terms of violating both climate and economic commonsense, Gordhan bragged about Transnet’s financing of the top priority Presidential Infrastructure Coordinating Commission project: the rail-to-ship transfer of 18 billion tonnes of coal in coming decades, dragged over mountains new heavy-duty railroads. That Waterburg-Richards Bay rail line – also costing upwards of $20 billion – may have looked profitable in 2008 with coal at $170/tonne, but now the price is $50/tonne. Yet the project trundles on, fertilising the northern areas of the country – including an area not far from Nkandla – with white elephant manure.

Further south in Durban, Toyota boss Johan van Zyl (whose plant – Africa’s largest – is adjacent to the old airport site) complained of frustrating delays in getting $7 billion Dig Out Port up and running back in 2012: “If return on investment is the line of thinking we may never see the infrastructure.” Similarly, amidst rumours of a two-year Dig Out Port delay last December, Durban Chamber of Commerce and Industry president Zeph Ndlovu insisted on adding this biggest single elephant to the herd: “We have to press ahead, and if we are to unseat our competitors up north, we can’t win this battle if we pull back every now and then and look at accounting principles.”

Whether Gordhan goes ahead with reducing the state payroll by tens of thousands of public servants as he promised the ratings agencies, or continues his nudge-nudge-wink-wink towards corporations’ $20 billion in annual Illicit Financial Flows, it’s in his coddling of accounting-challenged Durban cronies and the crack-down on welfare grant recipients that Gordhan has most decisively intervened in South Africa’s world-leading class struggle.

And this tearing of the social fabric by one faction of the ruling party, backed by the country’s core bourgeois interests and petit-bourgeois cheerleaders, makes the overall split between Gordhan’s technocrats and Zuma’s populists all the less appealing. Some might be tempted to hope that both factions succeed – in ripping each other’s power bases to shreds.

Patrick Bond has a joint appointment in political economy at the Wits University School of Governance in Johannesburg, alongside directing the University of KwaZulu-Natal Centre for Civil Society in Durban. His latest book is BRICS: An Anti-Capitalist Critique (co-edited with Ana Garcia), published by Pluto (London), Haymarket (Chicago), Jacana (Joburg) and Aakar (Delhi).

ZUMA AND ESKOM KEEP SOUTH AFRICA IN THE DARK

 

 

 

Zapiro in the Mail and Guardian from 14 December 2014 makes a very good introduction to the following article:

 

This article is from Counterpunch Weekend Edition 6-8 February 2015

 

For South Africa’s electricity supply, a muddle through, a meltdown or a miracle?

South Africa in the Dark

by PATRICK BOND

 

South Africa is losing its power, literally: it’s a process called “load shedding” that will last for the foreseeable future. The state energy utility Eskom is careening out of control, begging for an emergency $4.5 billion bailout within the $120 billion national budget later this month
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The coming fork in the road provides three distinct directions. The poorly-lit one straight ahead suffers from potholes that force stop-start-reverse maneuvers
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Second, the most scary route away from this fork lacks streetlights and appears to be illuminated only by a brief, fiery meltdown – utter grid failure – at the end of the road. Then, no Eskom or municipal electricity supplies will be available for weeks, they say.

In a third direction, looking leftwards, a light flickers at the end of a dangerous tunnel, but to get there safely means slowing the vehicle to a manageable pace and tossing the greediest 1% of passengers out, thus allowing everyone else to at least enjoy basic-needs electricity.

When originally built, this vehicle had the capacity to run quickly – with 43 000 MegaWatts of installed peak power – but in coming months and probably years, only 70% is available for use because of delayed maintenance. As a result, travel on the status quo road will become ever more chaotic as competition rises for declining electricity supplies.

Making excuses for muddling through

Eskom chief executive officer Tshediso Matona attributes “the unreliability of our equipment” to his predecessors, who delayed maintenance due to populist electioneering by the ruling party and, as well, “the World Cup played a big role” because the lights had to stay on in mid-2010.

Within corporate South Africa, the 31-member Energy Intensive Users’ Group (EIUG) comprises most of the mining houses and smelters customers; the EIUG consumes 44% of the country’s electricity. It’s at the core of what academics term the ‘Minerals Energy Complex’; its leaders were the main authors of the state energy policy in 2010.

The ‘muddling through’ scenario entails Eskom bumbling along, as it has the past quarter century since major decisions were taken about what was then its overcapacity crisis. Instead of mothballing its climate-wrecking coal-fired power plants, Eskom attracted new smelters constructed by BHP Billiton and the Anglo American Corporation by offering massive rates discount, which still today mean huge firms get power at 1/8^th what ordinary consumers pay.

Sometimes the mines and smelters agree to lower their demand. But the EIUG retains sufficient power that its former director Mike Roussow is now a top Eskom advisor.

When, for example, last November 2 Eskom’s Majuba coal silo crashed, “National Load Shedding [a term for brown-out] was implemented affecting municipal customers and Eskom residential customers” and not the mega-guzzlers, according to the EIUG. Much later, there was “curtailment from Key Industrial Customers on 12 November to assist Eskom in meeting demand requirements over the peak.”

They are able to maintain this power because of prevailing power relations in the society. Ironically, the most angry passengers in the back of Eskom’s chaotic fleet include furious trade unionists and township residents who are ANC members but who have been paying extreme price increases annually – more than 150% cumulatively since 2007 – while experiencing degenerating service.

One green passenger, Earthlife’s Dominique Doyle, blamed Eskom for emitting more CO2 than anyone else in Africa and hence contributing to more atmospheric moisture which causes more rain. That in turn made Eskom’s coal dust a useless soup last March, thus causing further emergency load-shedding. It’s a refreshingly valid argument in scientific terms, and unusual, in a society near the bottom of world rankings in climate awareness.

‘Meltdown’ emanating from excessive mining and smelting
As a result of such ingrained EIUG stubbornness, the doomsday scenario is not impossible: an out-of-control rolling black-out that prevents Eskom from turning its dozen main powerplants back on without the infamous ‘black start’ routine.
Last June, the firm’s spokesperson Andrew Etzinger assured that that scenario would result in only a fortnight-long crisis, but not to worry, a good supply of diesel makes the black-start restart feasible at most power plants.

Providing relief from Etzinger’s persistent unfounded optimism, Eskom sustainability manager Steve Lennon confessed in August, “We would have to rely on our own black-start plant to start the system from scratch. We are not ready for that at all.”

There is a terrifying fictional precedent in which an entire advanced economy and society is hit by an indefinite ‘lights off!’ The US television series ‘Revolution’ is based on the premise that nanotechnology nerds can be influenced by asinine politicians. In the series plot, nanobots are let loose on the world, sucking up electricity sufficient to cause a 15-year blackout and social mayhem.

If a full grid collapse occurs, mutual aid systems that have existed in so many South African migrant-labour export sites – such as ‘stokvel’ collective savings – will be vital. More likely in less civilised places (such as Johanesburg’s wealthy suburbs), there will be a rush for household petrol generators and a new wave of wall-building around those elite establishments which can muster off-grid power, as the rest of society’s food runs out and municipal water pumps are turned off.

A miracle scenario?

If that is too horrible to contemplate, then we must hope that the ‘miracle’ scenario overcomes elites’ paralysis with grassroots consumer and community movements, a revitalised commitment by organised labour to broader public interests, and society’s renewed respect for environmentalists.

For instance, community activists conduct ‘service delivery protests’ – thousands last year, of which nearly 2000 became ‘violent’ according to police definitions – and on a day-to-day basis, reconnect power illegally.

For instance, the founder of the Soweto Electricity Crisis Committee (SECC), Trevor Ngwane, was fired by the ANC as a Johannesburg city councilor and as the party’s Soweto leader in 1999 and within six months the SECC had emerged as an inspiration for similar power struggles across the world.

Another miracle solution – the ‘Just Transition’ away from carbon-addicted economics – is provided by Alternative Information and Development Centre which sponsors the Million Climate Jobs campaign.

That campaign is illustrative of the light at the end of the tunnel, for it poses creative options that would allow metalworkers to turn their welding skills to making turbines for wind and tidal energy, auto-makers to produce new forms of public transport, and hole-digging mineworkers to return home to townships with the skills required to create underground biogas digesters for sanitation that also supply cooking methane.

A miracle scenario is actually one that Numsa itself occasionally dreams. Its renewable energy team has made inspiring statements over the past five years, led by the union’s education officer, Dinga Sikwebu, who is now a strong advocate for a broad United Front.

Illustrating some early connections in a precursor to the Front, Numsa took the lead in building a momentarily successful anti-Eskom alliance once before: over prices. Numsa had demanded that the National Energy Regulator of SA (Nersa) lower Eskom’s tariff hike that year from the firm’s proposed 16%. Although Nersa angrily blamed Numsa for a January 2013 labour-community protest that disrupted its first hearing, in Port Elizabeth, eventually the regulator agreed that Eskom should only get an 8% increase.

The problem, though, was that Nersa – a ‘captive regulator’ whose first leader, Xolani Mkhwanazi went on to become BHP Billiton’s local boss, and who now defends the R11.5 billion Eskom subsidy he had repeatedly approved during the 1990s – did not delve into the rest of the energy crisis. So as Nersa napped, Eskom continued to mostly ignore renewable energy, and Transnet doubled the size of its Durban-Johannesburg oil pipeline without critical scrutiny.

Menu for a miracle

As Nersa regulation continues to fail society, ironically, the miracle option begins to look more plausible – even if highly unlikely – once one considers underlying political trends.

One factor is the extent of durable anger against the state over electricity, specifically what is sometimes described as ‘poor and expensive electricity supplies’, signifying problems with both access and costs.

The community protests are ubiquitous, sometimes victorious, but also full of dangers, including a localistic perspective without ideology. That problem dates back more than 15 years, to when waves of post-apartheid unrest swept urban and even small-town South Africa, even when Nelson Mandela ruled.

Over just the past six months, South Africa’s national media covered intense electricity protests in the core site of struggle, Soweto (against pre-payment meters) and in the townships of Thembelihle near Lenasia and Lawley near Ennerdale in southern Johannesburg, Kwanonqaba near Mossel Bay, Grabouw in the Western Cape, Mhlotsheni and Qhanqo villages in the Eastern Cape, Mankweng and Thoka near Pholokwane, and oThongathi north of Durban.

But a lack of linkages to one another and to similar water, housing, healthcare and education protests reflect how much a common democratic organisational home is desperately needed.

The fiery community protests have had their dark side: scores of electrocutions when activists reconnect wires without caution, kids not being able to attend school during demonstrations, and periodic outbursts of xenophobia.

Numsa’s deputy general secretary Carl Kloete offered one of the most optimistic scenarios of how, in the wake of Eskom’s repeated failures, a different electricity institution might emerge from the mess: “When we talk about social ownership of energy systems we are referring to the fact that ownership of energy resources must be taken out of private hands and be put in the hands of the public… When we talk about social ownership of energy systems we are referring to energy systems that respect our environmental rights, our rights for survival and those of future generations.”

Late last year, Numsa helped coalesce the United Front of community, social movement and environmental leaders. Last week, the Front’s interim National Working Committee made encouraging statements along these lines, too.

These values should be the basis for a coalition bringing together affordable energy activists in communities (as well as feminists possessing class consciousness), providing that such a transition would allow more Free Basic Electricity than at present, cross-subsidised by charging more to wealthier over-consumers. Earthlife Africa advocates a raise to 200 kWh/household/month is reasonable.

We all want miracles to happen. One example is the defeat of apartheid in spite of its decades-long attractiveness to multinational corporations and the West’s ‘democracies’ (recall how Washington officially labeled Nelson Mandela a ‘terrorist’ from 1961-2008!). Another South African miracle is the turnaround in life expectancy from 65 in 1994 to 52 in 2005 to 61 today, mainly as a result of 2.7 million people getting AntiRetroViral drugs from the public sector, which happened purely because of treatment activists. Access to medicines cut AIDS deaths from 364 000 in 2005 to 172 000 last year.

It is here that the United Front might explicitly claim to have within it all the most vital ingredients to provide the political will that generated those other two miracles, namely: the expertise and militancy of Eskom and Billiton workers, the anger of service delivery protesters, the desire of those poor masses lacking affordable electricity, the critical sensibility of environmentalists – all embracing the bravery and vigour of a young new organisation committed to fighting the state and capital from the left.

The sense South Africans have of paralysis above and movement below leaves these sorts of energy scenario planning exercises – ‘muddle through’, ‘meltdown’ and ‘miracle’ – in a rather fluid state.

But at a time the World Economic Forum’s Global Competitiveness Report labels South Africa the world’s most intense class struggle site, the vitality of the coming debate on how Eskom should produce, transmit and distribute its power will surely mean we look hard at the extremes as well as the status quo.

If change entails rejecting the capture of South Africa’s electricity by multinational corporations as well as the scamming behind ANC crony capitalism, it also must entail advocacy of an alternative strategy. And that means, as the electricity is cut erratically each week into the foreseeable future, and as more South Africans become ever more gatvol, we can hope – and work – for a miracle.

Patrick Bond directs the UKZN Centre for Civil Society and authored the book Politics of Climate Justice. He is a Numsa Institute advisory board member.