Thoughts on South Africa's Day of Reconciliation

I am currently in South Africa and today (16th December) is a public holiday to celebrate the 1994 Truth and Reconciliation Commission which was chaired by Bishop Desmond Tutu. The Commission brought together victims of the apartheid regime ( - apartheid literally means “apartness” in Dutch) and some of the implementers of the previous oppressive regimes (particularly the regime under Botha) to tell the truth about what happened during the dark times in South Africa. The Commission is now held up as a model around the world as a way of moving a country forward from vicious divisive regimes towards more egalitarian humanistic and tolerant regimes. Bishop Tutu had to chart a difficult course, not apportioning blame but at the same time allowing reconciliation between oppressor and victim, which usually meant bringing together a white oppressor with a black victim. The world watched in rapt attention as stories of torture, arson, murder and worse were brought in front of a national audience and usually the victims or relatives of the victims.


In my view, Bishop Tutu deserves to be as celebrated a character as Mandela (or “Madiba” as they call him around here) as the Commission itself was an essential part of the bloodless transition from an apartheid government to a multi-racial government, and this public holiday is really a testament to how well Bishop Tutu managed the Commission, allowing the birth of essentially a new nation. And what a country it has become. After successfully hosting the World Cup this year, South Africa is now not only the biggest economy in Africa, but is clearly the most dynamic on the continent. Growth is strong, inflation is under control, migrants flock here from troubled adjacent nations, and the economy is generally still extremely vibrant. Under apartheid, South Africa was once isolated by the rest of the world, but the contrast now couldn’t be greater, with South Africa now incredibly plugged into the rest of the world, with South African leaders such as Thabo Mbeki acting as chief representative to the African Union on the Ivory Coast issue, South Africa being very active in many international organizations, taking a leading role in the World Trade Organization and the United Nations.

But of course progress is always relative. 16 years after the transition from apartheid to a truly democratic society there are still plenty of issues to be addressed. Although there has been a significant transfer of wealth to a newly emerged black middle class here, the vast majority of black South Africans remain uneducated and mired in poverty. In business the Black Empowerment Act requires that a minimum percentage of black South Africans have to be hired in companies with more than 15 employees – and this has certainly helped to transfer this wealth – but in education there is still a divide between the races. Most neighbourhood schools end up serving specific racial communities because apartheid still exists in terms of neighborhoods. Also violent robberies are becoming more widespread, with some shockingly open attacks in very public places – and this doesn’t seem to be a matter of race, but more the lack of effective policing in certain areas.

Unfortunately as well, racism is still alive in South Africa. Much of it is now covert in public, but it is still quite apparent when you speak to older anglos and Afrikaaners in private. For someone usually used to a reasonably multicultural environment, there are certain very obvious signs. First, I haven’t seen any multi-racial couples – I’m sure there are some, but they are definitely not common – and I haven’t seen one in the Port Elizabeth area. Second, despite the transfer of wealth to the new black middle class, the whites still hold the majority of the wealth, certainly in terms of their average per capita income. Third, most places I have been to, either to eat or drink or shop, clearly serve one specific racial community ( - the clear exception being gas/petrol stations). Fourth, land ownership is extremely important in terms of transfer of wealth, and although no one would wish a Mugabe-style forced transfer of farms to black farmers, many land claims by black farmers are still stuck in limbo years after the original claim. So nearly all agricultural means of production clearly still lies in white ( - mostly Afrikaaner) hands.

Like the Civil Rights movement in the US, though, letting the effects of de-segregation filter through to the roots of society will take time, and will probably only take visible effect one generation after the actual initial change. I am positive though that if South Africa can retain its democratic principles, its commitment to good business practices and keep a lid on corruption, it will prosper. South Africa is a country that has a lot for the rest of the world to admire – the weather, the scenery and the incredible cultural diversity here, but I think perhaps the transition to a better, more egalitarian politics is one of the most important things for the future of this country.

European meltdown?

Last week I did a talk for the second time on the European Financial crisis.  Each time I do this talk something nasty seems to happen afterwards. This time it is Irish banks and the impending bailout for the Irish government - last time it was Greece and it's bond market crisis and then the subsequent bailout.  In Europe the din from the masses is increasingly talking of doom and gloom with contagion to Portugal and Spain hitting the financial headlines. Even respected FT commentators are now "twittering" about the demise of the euro (see Gideon Rachman at http://www.ft.com/cms/s/0/85b62490-f66e-11df-846a-00144feab49a.html#axzz165SsmUg9) and Samuel Brittan at http://www.samuelbrittan.co.uk/text381_p.html). 

This is dangerous stuff, as the demise of the euro would indeed have far-reaching consequences way beyond Europe. The ramifications of the most successful example of economic integration to date failing because of market forces and contagion would have global consequences way beyond Europe. The prospects of further Asian economic integration would likely be dashed, and monetary integration that is supposed to occur in South America and Africa would quietly be dropped. Not only that, but the critics of market forces stopping governments ( - who are after all democratically elected) from achieving regional integration objectives would likely spark a big backlash against the financial markets in continental Europe. The British, on the other hand, would likely be thanking their lucky stars that they never took the plunge and joined the euro in the first place.

But despite all the hubris and chatter, there are several important points that the mainstream media appeared to have missed when reporting on Greece and Ireland.  The first is that these are small countries, and that the euro area will remain intact while some countries might decide that it is in their best interest to leave.  As long as these are only small players the euro will likely survive. The second point (outlined in David Mayes's excellent piece on banking regulation that was recently in a review that I edited - now published online at http://www.eustudies.org/files/eusa_review/fall10final3.pdf) is that with a single market in financial services there is an urgent need for banking regulation at a supranational level.  Hopefully EU member state countries will accept the transference of sovereignty in this area to a supranational banking regulator in the not-too-distant future.  The Irish crisis could easily have been averted had this already been in place.  The third is that given the crisis in public finances within Europe, there will hopefully be some agreement on transference of sovereignty in fiscal matters to the supranational level (just among the euro area member states?) perhaps in the same way that Australia has centralized it's debt issuance for it's states.  The fourth, and probably most important point is that it is in noone's interest to see this crisis spread through contagion as it will affect banks in all member states giving rise to even more problems with public finances throughout the euro area, so that action will likely be much more likely now that European leaders have seen the effects of papering over problems with the Stability and Growth pact or allowing inertia to set in in the ongoing evolution of economic integration within Europe. 

As Jean Monnet, one of the founding fathers of the European Union once said "People only accept change when they are faced with necessity, and only recognize necessity when a crisis is upon them."