1 00:00:00,000 --> 00:00:11,240 Hello and welcome to the So What podcast, in which political economic analyst JP Landman 2 00:00:11,240 --> 00:00:16,400 discusses the issues uppermost in the minds of South Africans. You can find a written 3 00:00:16,400 --> 00:00:28,760 version of this content on JP's website, jplandman.co.za. I am Ruda Landman and I am your host. 4 00:00:28,760 --> 00:00:33,560 These first few recordings were done at our dining room table, but we will soon be moving 5 00:00:33,560 --> 00:00:42,040 into a studio. Hello and a very warm welcome, as always, to this recording, which accompanies 6 00:00:42,040 --> 00:00:51,220 JP's latest research note. It's dated 27 June 2023 and the title is Integrating Economics 7 00:00:51,220 --> 00:00:59,480 and Foreign Policy. JP, you quote a biographer who wrote a biography of Zbigniew Brzezinski, 8 00:00:59,480 --> 00:01:06,840 Jimmy Carter's national security advisor. He said, the ignorance of geopolitical minds 9 00:01:06,840 --> 00:01:14,640 about economics is matched only by the economics profession's ignorance about foreign policy. 10 00:01:14,640 --> 00:01:19,320 And then you say that's a very apt description of the current debate in South Africa. What 11 00:01:19,320 --> 00:01:27,040 do you mean? Well, what the biographer said was that Brzezinski and other foreign affairs 12 00:01:27,040 --> 00:01:33,440 luminaries like Henry Kissinger and Marlene Albrecht, the names he used, were all people 13 00:01:33,440 --> 00:01:37,880 that were not really very much interested in economics. They were interested in geopolitical 14 00:01:37,880 --> 00:01:46,200 maneuvers. But economics are extremely important in any country. And if you're the world's 15 00:01:46,200 --> 00:01:50,660 number one economy like America, you can probably afford not to worry too much about economics. 16 00:01:50,660 --> 00:01:55,920 When you're a smaller country like South Africa, you actually have to. And what struck me about 17 00:01:55,920 --> 00:02:01,920 that remark by the biographer is simply that in the debate that we currently have in South 18 00:02:01,920 --> 00:02:06,160 Africa about our foreign policy, the relationship with the US, the relationship with Russia 19 00:02:06,160 --> 00:02:16,320 and so on, there is almost a Chinese wall, dare I say, between economics and diplomacy 20 00:02:16,320 --> 00:02:21,440 or foreign policy. And it is as if the two are totally disconnected and not talking to 21 00:02:21,440 --> 00:02:27,120 each other and not the one reinforcing the other. And you believe they should be integrated? 22 00:02:27,120 --> 00:02:32,580 Absolutely. It should absolutely be integrated. And it is just noticeable that even the US 23 00:02:32,580 --> 00:02:39,160 now is moving to a much more integrated economic and foreign policy approach. So I think we 24 00:02:39,160 --> 00:02:44,120 also have to do that. And now the question then arises, well, how do you integrate them? 25 00:02:44,120 --> 00:02:49,320 What in economics is important in foreign relations and the other way around? Now, thankfully, 26 00:02:49,320 --> 00:02:54,440 the Minister of Finance, Inokwa Nungwana, answered this question in parliament. And 27 00:02:54,440 --> 00:02:59,440 he said there are four transmission channels, that's what he called them, determining the 28 00:02:59,440 --> 00:03:05,900 influence of foreign policy on our domestic economy. And those four transmission channels 29 00:03:05,900 --> 00:03:14,120 or four areas is basically the currency, trade and supply chains, investment and liquidity. 30 00:03:14,120 --> 00:03:18,840 And what I do in Inokwa is to take each of these four areas or each of these four transmission 31 00:03:18,840 --> 00:03:25,660 channels, and we look at to what extent foreign policy decisions affect the local economy 32 00:03:25,660 --> 00:03:30,640 via that transmission channel. Now, the first one, if I can just plunge into it, is the 33 00:03:30,640 --> 00:03:39,160 currency. And we saw it immediately when the Lady R fracas, based in the open and became 34 00:03:39,160 --> 00:03:44,680 a hot topic. What happened to the currency? What happened to the round? Well, it depreciated 35 00:03:44,680 --> 00:03:50,440 immediately. It is recovered, then recovered a little bit, but it is still very, very weak. 36 00:03:50,440 --> 00:03:55,560 What was the impact of that depreciating currency? Well, the Reserve Bank increased interest 37 00:03:55,560 --> 00:04:01,480 rates by 50 basis points, while everybody up till that point expected the bank to increase 38 00:04:01,480 --> 00:04:08,120 by 25 basis points. Now, you can say 25 basis points, a quarter of a percent is not a lot. 39 00:04:08,120 --> 00:04:15,400 But if you think that you levy that interest rate charge across the entire economy, individuals, 40 00:04:15,400 --> 00:04:21,000 households, businesses, government itself, and so on, it adds up to a huge amount of 41 00:04:21,000 --> 00:04:27,720 money. So, the transmission channel worked very immediately. The currency depreciated 42 00:04:27,720 --> 00:04:32,560 when there was a foreign policy dispute, and sub-Africans are paying the price through 43 00:04:32,560 --> 00:04:39,080 high interest rates. Simple. So, it was better, it would have been better for us to have a 44 00:04:39,080 --> 00:04:45,160 foreign policy stance that would not have precipitated that kind of currency depreciation. 45 00:04:45,160 --> 00:04:50,760 The second one is the trade and supply chain. This is where the whole AGOA thing, African 46 00:04:50,760 --> 00:04:55,840 Growth and Opportunity Act, where that debate comes in. But of course, it's about much more 47 00:04:55,840 --> 00:05:00,880 than just AGOA. As the minister pointed out in parliament, it's not just trade, which 48 00:05:00,880 --> 00:05:08,080 is AGOA, it's also supply chain. We cannot by any stretch of the imagination produce 49 00:05:08,080 --> 00:05:12,960 everything that we need in the country ourselves. It's not possible. We're using cell phones, 50 00:05:12,960 --> 00:05:17,440 which were imported, we're using software, which are imported, we're using oil, we run 51 00:05:17,440 --> 00:05:23,720 our motor cars, which are imported and so on. So, it's about much more than just AGOA, 52 00:05:23,720 --> 00:05:30,040 it's also trade. And what we did was to look at the trade, comparing the trade of two blocks. 53 00:05:30,040 --> 00:05:35,760 The one is four main Western countries, and those countries are the US, Germany, Japan, 54 00:05:35,760 --> 00:05:39,760 and the United Kingdom. They are our main trading partners. 55 00:05:39,760 --> 00:05:45,160 Japan is an interesting case, because it's not physically in the West, or geographically 56 00:05:45,160 --> 00:05:50,360 in the West, but it's part of the G7 and part of that whole economic block. 57 00:05:50,360 --> 00:05:53,760 Absolutely. Yeah, you're quite right. It's located in the East, but it's part of the 58 00:05:53,760 --> 00:06:02,720 West. One of the things one must remember. And it is very clear that we export much more 59 00:06:02,720 --> 00:06:08,440 to the four Western countries than what we export to the BRICS. So, in terms of bringing 60 00:06:08,440 --> 00:06:14,560 money into the country by selling our goods, our main clients are sitting in the West, 61 00:06:14,560 --> 00:06:21,360 not in BRICS. In fact, the relationship is about two times. We export twice as much to 62 00:06:21,360 --> 00:06:27,320 the four Western countries than what we export to the four BRICS countries. 63 00:06:27,320 --> 00:06:32,920 If you move to the import side or the supply side, you find much the same thing. We import 64 00:06:32,920 --> 00:06:39,200 much more from the BRICS countries than what we import from the four Western countries. 65 00:06:39,200 --> 00:06:44,200 And 70% of the BRICS imports really come from China. I must just put that as a sub note. 66 00:06:44,200 --> 00:06:50,280 So it's not so much Russia, Brazil, even India. China is the main provider of imports into 67 00:06:50,280 --> 00:06:56,880 South Africa. But here is the point. We run a trade surplus with the four Western countries. 68 00:06:56,880 --> 00:07:01,400 We run a huge trade deficit with the BRICS countries, which basically means a deficit 69 00:07:01,400 --> 00:07:06,880 with China. Now, if you're a capital scarce country like South Africa, it is better to 70 00:07:06,880 --> 00:07:11,880 have a surplus than a deficit. Deficit has to be paid for. So we run a deficit with BRICS 71 00:07:11,880 --> 00:07:16,880 and we run a surplus with the West. You can clearly see that the surplus of the West is 72 00:07:16,880 --> 00:07:22,960 helping to pay for the deficit with the BRICS countries. And again, if that is where your 73 00:07:22,960 --> 00:07:28,160 clients are, if that is where the people are who buy your goods, it is appropriate, I think, 74 00:07:28,160 --> 00:07:33,800 to treat them with respect and maintain good relationships. 75 00:07:33,800 --> 00:07:38,320 I just want to point out to the listeners that those of you who are interested in the 76 00:07:38,320 --> 00:07:45,880 hard data do go to the written note. There are very clear figures which illustrate everything 77 00:07:45,880 --> 00:07:47,360 that you have just said. 78 00:07:47,360 --> 00:07:52,760 Yes, indeed. And that may be very useful. We're just talking conceptually. And while 79 00:07:52,760 --> 00:07:57,480 we're on it, can I recognize the contribution that was made by Peter Roo in the research 80 00:07:57,480 --> 00:08:03,320 for this note? He's the one who worked on the numbers and compiled the numbers. So there 81 00:08:03,320 --> 00:08:07,520 are four transmission channels, so four areas of impact. There's the currency. We talked 82 00:08:07,520 --> 00:08:11,840 about that. There is trade and supply chain. We talked about that. 83 00:08:11,840 --> 00:08:16,560 Just before we move off trade and supply chain, it is quite clear if you look at the fact 84 00:08:16,560 --> 00:08:21,960 that we export about twice as much to Europe or to those four countries rather than what 85 00:08:21,960 --> 00:08:27,120 we export to BRICS. It is quite clear that it is much easier for sub-African exporters 86 00:08:27,120 --> 00:08:30,800 to get their products into those countries than to get their products into the BRICS 87 00:08:30,800 --> 00:08:36,840 countries. So there's clearly a whole area of work that needs to be done. 88 00:08:36,840 --> 00:08:41,040 And one who would like to see the Department of Foreign Affairs, instead of embarrassing 89 00:08:41,040 --> 00:08:46,840 us internationally, rather help our exporters to get their exports into countries like China 90 00:08:46,840 --> 00:08:49,360 and the other BRICS countries. 91 00:08:49,360 --> 00:08:53,080 The third transmission channel is investment. And here we're talking about foreign direct 92 00:08:53,080 --> 00:08:59,520 investment. And again, the numbers, which are in the written piece, are simply overwhelming. 93 00:08:59,520 --> 00:09:05,760 We get three times as much investment from the four Western countries that we refer to 94 00:09:05,760 --> 00:09:12,280 than what we get from BRICS. And that would make sense. The BRICS countries, even China, 95 00:09:12,280 --> 00:09:18,240 are developing countries and they would have less capital available. China may be the outlier, 96 00:09:18,240 --> 00:09:23,060 while the developed countries, the four countries that we're looking at, are mature economies 97 00:09:23,060 --> 00:09:26,200 and they have more capital that they can disperse. 98 00:09:26,200 --> 00:09:27,200 So we get three... 99 00:09:27,200 --> 00:09:31,000 They look for investment opportunities outside of their own borders. 100 00:09:31,000 --> 00:09:36,640 They do. And increasingly, Indian and Chinese companies are also doing it, but there are 101 00:09:36,640 --> 00:09:42,440 many more European countries or companies from those four countries investing in South 102 00:09:42,440 --> 00:09:48,520 Africa than they are from the BRICS countries. But the bottom line of this paragraph, for 103 00:09:48,520 --> 00:09:53,480 purposes of the audio, is three times more. We get three times more investment from those 104 00:09:53,480 --> 00:09:57,720 four Western countries than what we get from the four BRICS countries. 105 00:09:57,720 --> 00:10:03,200 And the last one is liquidity. And liquidity is an interesting one, because liquidity is 106 00:10:03,200 --> 00:10:08,600 a little bit like your bank account. Sometimes you are overdrawn because you have to pay 107 00:10:08,600 --> 00:10:16,000 medical expenses or you buy furniture or you buy a car or whatever, and you need credit. 108 00:10:16,000 --> 00:10:21,520 You need a bank overdraft. Now, the same goes for the country. When the country runs a current 109 00:10:21,520 --> 00:10:28,800 account deficit, it needs to finance that deficit in one way or another. You need a 110 00:10:28,800 --> 00:10:33,720 positive inflow on your capital account to pay for a deficit on the trade account. 111 00:10:33,720 --> 00:10:40,600 Now, South Africa, generally speaking, is a current account deficit country. We're not 112 00:10:40,600 --> 00:10:46,400 there every year, and there are now in COVID and so on times where we were not a deficit 113 00:10:46,400 --> 00:10:53,280 country. But generally speaking, we are. We're a capital scarce country. And when you need 114 00:10:53,280 --> 00:10:57,880 that overdraft, when you don't have capital to finance your needs, that's when you need 115 00:10:57,880 --> 00:11:04,760 liquidity. Now, where does the liquidity come from? It comes from essentially international 116 00:11:04,760 --> 00:11:12,440 private sector companies like pension funds, like insurance companies, like banks, who 117 00:11:12,440 --> 00:11:19,040 advance money to two countries. They make what is called portfolio investments, or they 118 00:11:19,040 --> 00:11:24,520 can also make direct loans in the case of a bank. Into South Africa, that is how money 119 00:11:24,520 --> 00:11:30,160 comes in, and you use that money to finance your deficit. Now, these are not governments 120 00:11:30,160 --> 00:11:34,720 providing the money. I think that's very important to say. It's private companies that provide 121 00:11:34,720 --> 00:11:37,560 the money. And funds, pension funds. And pension funds. 122 00:11:37,560 --> 00:11:41,200 Yeah, that's what I mean by private. Pension funds, insurance companies, banks, and so 123 00:11:41,200 --> 00:11:48,460 on. Rich individuals, family offices, that sort of thing. Now, these people operate much 124 00:11:48,460 --> 00:11:55,600 more on optics. They obviously do their fundamental research, but optics affect them. And if you 125 00:11:55,600 --> 00:12:01,080 do silly things that make them risk averse, that is the term, and they become risk averse, 126 00:12:01,080 --> 00:12:05,280 then they don't supply you with the money. And you don't have liquidity. Now, what happens 127 00:12:05,280 --> 00:12:11,080 if you don't have liquidity? Well, you absolutely slow down the functioning of the economy. 128 00:12:11,080 --> 00:12:17,680 That is what happened in South Africa after 1985, or in 1985, when P.W. Borda made his 129 00:12:17,680 --> 00:12:24,120 famous or infamous Rubicon speech. Just before they made the speech, Citibank said they're 130 00:12:24,120 --> 00:12:29,680 no longer going to supply South Africa with liquidity. They stopped our credit lines, 131 00:12:29,680 --> 00:12:34,060 and we were forced into a dead standstill. Other banks, of course, other institutions 132 00:12:34,060 --> 00:12:41,600 followed Citibank. And from 1985 to 1993, basically a period of eight years, we struggled 133 00:12:41,600 --> 00:12:47,360 with liquidity, and you see it in our economic growth numbers. Growth simply slumped, because 134 00:12:47,360 --> 00:12:53,560 what normally happens when you don't have the capital available to finance a deficit, 135 00:12:53,560 --> 00:12:58,280 it's like a household as well, you're forced to go into a surplus. You're forced to lower 136 00:12:58,280 --> 00:13:04,040 your expenditure so that you generate a surplus. Now, in economic terms, the way you do it 137 00:13:04,040 --> 00:13:11,240 is you force down GDP growth, you make the economy smaller, literally, so that it needs 138 00:13:11,240 --> 00:13:16,680 less capital, and then you are in a position where you're not dependent on foreign capital. 139 00:13:16,680 --> 00:13:22,600 We were there for eight years, 1985 to 1993. It's not a comfortable place to be. And what 140 00:13:22,600 --> 00:13:26,920 we must understand is not just about foreign direct investment, which is the third transmission 141 00:13:26,920 --> 00:13:32,000 channel. It is also about this fourth transmission channel, which is liquidity, or think of it 142 00:13:32,000 --> 00:13:38,200 as a bank overdraft. So these are the four areas where the Minister of Finance said there 143 00:13:38,200 --> 00:13:44,000 are clear avenues, or as he called it, channels through which the economy gets affected. And 144 00:13:44,000 --> 00:13:49,080 I find it a very useful frame through which to look at our foreign policy. 145 00:13:49,080 --> 00:13:56,280 But if one listens to that, it just really sounds as if our Department of Foreign Affairs 146 00:13:56,280 --> 00:14:04,640 is, it is almost not understandable what they do. But then you put the other side on the 147 00:14:04,640 --> 00:14:10,480 piece of paper, and that is geopolitics, and you say, no, we have to also look at South 148 00:14:10,480 --> 00:14:15,600 Africa's position in the world. And there is a rationality to their actions. 149 00:14:15,600 --> 00:14:21,520 No, absolutely. That is what Brzezinski's biographer said. He said the ignorance of 150 00:14:21,520 --> 00:14:27,800 the geopolitical minds about economics is matched only by the economics profession's 151 00:14:27,800 --> 00:14:32,000 ignorance of foreign policy. And I think it's a beautiful summary, because if you now look 152 00:14:32,000 --> 00:14:36,880 at South Africa's foreign policy stance, what is it? Well, the first point to factor in 153 00:14:36,880 --> 00:14:43,560 is that South Africa accepts that the world is busy breaking up into three blocks. There 154 00:14:43,560 --> 00:14:50,920 is the Western Bloc, which is led by the US, and one can basically say the G7 countries, 155 00:14:50,920 --> 00:14:56,840 plus some smaller players like Australia and New Zealand and so on. And it's not the West, 156 00:14:56,840 --> 00:15:01,560 because it includes, as you've pointed out, Japan. It includes Australia, which sits in 157 00:15:01,560 --> 00:15:08,400 the East. That's the G7 Bloc. The second Bloc that's forming in the world is China, and 158 00:15:08,400 --> 00:15:14,040 the country is very dependent on China, very much in the influence sphere of China. Now, 159 00:15:14,040 --> 00:15:20,160 the China Bloc is not as cohesive and as strong at this stage as the G7, but it's forming. 160 00:15:20,160 --> 00:15:24,360 There's no question about it. And the third block is what is loosely referred to as the 161 00:15:24,360 --> 00:15:29,920 Global South. Now, who is the Global South? Well, it includes South America, the continent 162 00:15:29,920 --> 00:15:36,880 of South America. It includes Africa. It includes the Middle East. It includes India and even 163 00:15:36,880 --> 00:15:41,880 China. So you can see that that is by far the biggest block in the world. It's also 164 00:15:41,880 --> 00:15:48,960 the least cohesive. Now, South Africa is part of the Global South. We are there by way of 165 00:15:48,960 --> 00:15:56,680 tradition. We follow the principles of the Bandung Conference of 1955, the non-alignment 166 00:15:56,680 --> 00:16:05,360 conference that was held there. And we basically say the world cannot be unipolar. South Africa 167 00:16:05,360 --> 00:16:10,720 is very much against the unipolar world. And we would like to see a multipolar world where 168 00:16:10,720 --> 00:16:17,080 everybody is treated with respect and dignity. And this Global South position that South 169 00:16:17,080 --> 00:16:23,300 Africa have will not be abandoned and it will not move over into the G7 Bloc simply because 170 00:16:23,300 --> 00:16:28,200 the G7 Bloc is South Africa's most important economic partners, more important than the 171 00:16:28,200 --> 00:16:33,640 BRICS partners. So economically, we belong with the G7. Politically, we belong with the 172 00:16:33,640 --> 00:16:39,000 Global South. We want to stay clear of China. I think that is very clear. South Africa is 173 00:16:39,000 --> 00:16:44,760 one of the few countries in Africa where there are no Belt and Road Initiative projects. The 174 00:16:44,760 --> 00:16:50,600 same logic. If you're against a unipolar American world, you're also against the unipolar Chinese 175 00:16:50,600 --> 00:16:55,800 world. So we very much see ourselves as part of the Global South and that position South 176 00:16:55,800 --> 00:17:01,800 Africa will not give up. So now the trick is to integrate these two things. Economically, 177 00:17:01,800 --> 00:17:07,200 you belong with the G7. Politically, you are part of the Global South. And then you want 178 00:17:07,200 --> 00:17:11,840 to maintain good relations with China because they're a huge export market, but they're 179 00:17:11,840 --> 00:17:18,160 also a US supplier of goods in your supply chain. So we want to be friends with everybody, 180 00:17:18,160 --> 00:17:22,480 which is a perfectly legitimate and laudable stance. But then your foreign policy must 181 00:17:22,480 --> 00:17:26,840 reflect the fact that you want to be more or less friends with everybody. And you say 182 00:17:26,840 --> 00:17:32,880 it is possible because Brazil and India have given us examples. Yes, that's the important 183 00:17:32,880 --> 00:17:38,600 learning point. What I've done in the note is to compare South Africa's behavior with 184 00:17:38,600 --> 00:17:44,800 Brazil and India. Why Brazil and India? They're both part of the Global South, like us. They're 185 00:17:44,800 --> 00:17:50,200 both democracies, just like we are. They're both against the unipolar world, just like 186 00:17:50,200 --> 00:17:58,120 we are. But they behaved very differently in the UN Security Council in votes and resolutions 187 00:17:58,120 --> 00:18:02,960 on the Ukraine war. They took a very different stance from what we did. We did not display 188 00:18:02,960 --> 00:18:10,760 the nuance of Brazil and India. India, by the way, played the game very cleverly and 189 00:18:10,760 --> 00:18:17,080 they have a very clear idea of what is their national interest. Why do I say that? Well, 190 00:18:17,080 --> 00:18:21,560 they refused to impose sanctions against Russia and in fact they went and they bought oil 191 00:18:21,560 --> 00:18:27,300 from Russia, but they bought it at a huge discount. When the market price was running 192 00:18:27,300 --> 00:18:33,000 at about $80 a barrel, they were buying for 45. Now that's a lovely discount to get for 193 00:18:33,000 --> 00:18:39,040 your country. More than that, they paid for it in rupees. To such an extent that Lavrov, 194 00:18:39,040 --> 00:18:43,280 the Russian Foreign Minister, had to travel to Delhi and he admitted, you can see the 195 00:18:43,280 --> 00:18:49,280 video on YouTube, he admitted that the rupees that the Russians now own, which sit in the 196 00:18:49,280 --> 00:18:53,800 Indian banking system, are of no use to the Russians. You know, what do you do with a 197 00:18:53,800 --> 00:18:58,000 rupee? Well, you can buy some Indian goods and then the surplus. So the Indians have 198 00:18:58,000 --> 00:19:03,080 got a very clear idea of what is in their own interest and they pursued it. They didn't 199 00:19:03,080 --> 00:19:08,600 impose sanctions, bought the oil, paid for it in rupees in terms of their own national 200 00:19:08,600 --> 00:19:14,400 interest. Now I don't detect that strong push for South Africa's national interest in our 201 00:19:14,400 --> 00:19:21,180 foreign policy. If you compare our position to Brazil, Lula from Brazil is very clear. 202 00:19:21,180 --> 00:19:26,320 He condemned the Russian invasion, but he also condemned the Western NATO specifically 203 00:19:26,320 --> 00:19:34,360 for stoking the war and by implication for supporting Ukraine. This was a while ago already. 204 00:19:34,360 --> 00:19:40,160 His foreign affairs advisor recently said, a lovely description, he said, you cannot 205 00:19:40,160 --> 00:19:45,600 judge the Ukraine war by the last one and a half years. It is a product of the Cold 206 00:19:45,600 --> 00:19:52,440 War. Ukraine is a victim of the Cold War. Now I haven't heard the South African government 207 00:19:52,440 --> 00:19:58,160 or Durko saying Ukraine is a victim here. We've bought into the binary position. It's 208 00:19:58,160 --> 00:20:04,920 either NATO and the US or Russia. My view from the beginning is what about the 43 million 209 00:20:04,920 --> 00:20:10,400 people who live in Ukraine? What about the 43 million Ukrainians? Do they not count? 210 00:20:10,400 --> 00:20:15,580 Are they of no relevance? It's not a binary story. It is much more complicated than just 211 00:20:15,580 --> 00:20:22,440 binary. Now the Brazilians clearly understand that and say it in public. We haven't said 212 00:20:22,440 --> 00:20:27,960 it in public. So if you compare our behavior to the behavior of India and to the behavior 213 00:20:27,960 --> 00:20:34,500 of Brazil, our diplomatic behavior that is, then clearly we're not as non-aligned as they 214 00:20:34,500 --> 00:20:43,280 are and not as firm in our own independent thinking and in our own independent search 215 00:20:43,280 --> 00:20:48,520 for what is in our national interest, like the Indians have done. It looks like people 216 00:20:48,520 --> 00:20:54,080 are thinking in terms of us and them. Yes. And that's not good enough in a tri-polar 217 00:20:54,080 --> 00:20:58,280 world where you want to have relationships with anybody. You cannot afford the luxury 218 00:20:58,280 --> 00:21:07,000 of us and them. That's lazy thinking as it is in normal life. Have we seen knock-on effects, 219 00:21:07,000 --> 00:21:11,960 for example, in the relationship with the G7? Yes, we have seen knock-on effects. This 220 00:21:11,960 --> 00:21:17,880 year for the first time since the time Thabo Mbeki was president, we're talking over 20 221 00:21:17,880 --> 00:21:25,320 years here in total, South Africa was not invited to the G7, annual G7 summit. Even 222 00:21:25,320 --> 00:21:32,400 President Zuma went to all the G7 summits. President Ramaphosa went. This year the invitation 223 00:21:32,400 --> 00:21:39,620 did not arrive. Now you can say that is just coincidence. You can say Japan, who was the 224 00:21:39,620 --> 00:21:46,880 host this year, preferred to have the chairman of the African Union there. And I'm not persuaded 225 00:21:46,880 --> 00:21:52,400 at all because the African Union has been around for a long time and other host countries 226 00:21:52,400 --> 00:21:57,200 do not invite the chairman only. But while we're on the point, inviting the chairman 227 00:21:57,200 --> 00:22:02,240 of the African Union is actually, I think, not in Africa's best interest. What happens 228 00:22:02,240 --> 00:22:06,640 when you go to these summits regularly? Well, you develop a relationship with the other 229 00:22:06,640 --> 00:22:11,400 leaders. You can build trust. They can understand where you come from. You can continuously 230 00:22:11,400 --> 00:22:19,120 clarify misunderstandings. You become part of a network. If you have a rotating chairman, 231 00:22:19,120 --> 00:22:24,400 every year there's a new EU chairman, and if you have a rotating chairman now coming 232 00:22:24,400 --> 00:22:29,280 in and disappearing and coming in and disappearing, how do you build a network from which Africa 233 00:22:29,280 --> 00:22:35,640 as a continent can benefit? So I will never know. We will never know whether there's a 234 00:22:35,640 --> 00:22:42,360 link between our foreign policy missteps and the non-invitation to the G7, but I think 235 00:22:42,360 --> 00:22:47,600 it is something to take note of, and I think it is we bluff ourselves if we say, oh, it's 236 00:22:47,600 --> 00:22:52,480 only because Japan wanted to invite the whole African Union and not just a particular African 237 00:22:52,480 --> 00:22:59,120 country. But on the other hand, you do say that the United States may be overplaying 238 00:22:59,120 --> 00:23:05,600 its hand. Absolutely. Look, this whole note is about balance. It's about integrating 239 00:23:05,600 --> 00:23:11,400 ostensibly opposing things. It's about doing what is right, but in a way which takes you 240 00:23:11,400 --> 00:23:19,240 forward. Now, what we've seen in the US in the way that they handled the Lady R story, 241 00:23:19,240 --> 00:23:24,400 in the way that they sanctioned a private flight school in Oudtsweren, I mean, Oudtsweren 242 00:23:24,400 --> 00:23:30,560 of all places, you know, I come from that part of the world. It is really deep rural. 243 00:23:30,560 --> 00:23:35,880 To now say that that flight school is a potential threat to the security of the United States 244 00:23:35,880 --> 00:23:41,120 is simply just rubbish. I'm sorry, but it's just rubbish. Now, the problem with this kind 245 00:23:41,120 --> 00:23:48,420 of overplaying your hand, it looks very arrogant. It looks very bossy, and bossiness and arrogance 246 00:23:48,420 --> 00:23:53,640 can have a political side effect, and the political side effect is us and them, exactly 247 00:23:53,640 --> 00:23:59,400 what you referred to earlier. Plays into the hand of the people who want to mobilize. In 248 00:23:59,400 --> 00:24:07,040 1977, a year after the Soweto riots, South Africa was also in dire straits. And what 249 00:24:07,040 --> 00:24:13,320 did John Foster do? The then Prime Minister, he led the National Party to its biggest election 250 00:24:13,320 --> 00:24:18,600 victory in nearly five decades that it ruled the country. How did he achieve that? Well, 251 00:24:18,600 --> 00:24:23,520 he just ran against Jimmy Carter. That's all. You know, the canvases went up the street 252 00:24:23,520 --> 00:24:27,200 and said, who do you vote for? John Foster or Jimmy Carter? And that's it. He wiped out 253 00:24:27,200 --> 00:24:34,200 the opposition. Same thing happened in Hungary more recently with the Prime Minister, Victor 254 00:24:34,200 --> 00:24:39,440 Orban. He ran against John Soros, who happened to be an Hungarian born citizen, but is now 255 00:24:39,440 --> 00:24:47,320 in the US. And he just ran against against George Soros. Mugabe ran against Tony Blair 256 00:24:47,320 --> 00:24:54,120 in several elections. So be careful for igniting us and them dynamic politics. It may really 257 00:24:54,120 --> 00:25:00,800 backfire against the things that you want to advance. In summary, so what? Well, I think 258 00:25:00,800 --> 00:25:06,440 the summary comes out very clearly. We are economically much more integrated with the 259 00:25:06,440 --> 00:25:12,320 West than what we are with BRICS. As the world shifts towards the BRICS, we will obviously 260 00:25:12,320 --> 00:25:17,080 also become more integrated with the BRICS. And we don't, we simply don't want to choose. 261 00:25:17,080 --> 00:25:22,400 We want to be part of both. But at the moment, we are much more part of the Western of BRICS. 262 00:25:22,400 --> 00:25:27,480 Economically, economically, economically, that's where we sit. Our foreign policy must reflect 263 00:25:27,480 --> 00:25:32,000 that. And if you take our foreign policy and you compare it with other countries from the 264 00:25:32,000 --> 00:25:38,120 global South, then you can see that we've made a couple of missteps that we we could 265 00:25:38,120 --> 00:25:43,040 have avoided. Just compare ourselves to India and compare ourselves to Brazil, those two 266 00:25:43,040 --> 00:25:48,400 other countries from the global South. As the world is breaking up into three blocks, 267 00:25:48,400 --> 00:25:54,320 it is our duty, it is our national interest, in my view, to maintain good relationships 268 00:25:54,320 --> 00:25:59,680 with all three blocks. We're not in favor of a unipolar world. We're in favor of a multipolar 269 00:25:59,680 --> 00:26:04,320 world. But then you must maintain relations with the multipolar world. You cannot say 270 00:26:04,320 --> 00:26:09,920 I will not deal with this one or deal with that one. I think we also, one of the so what's 271 00:26:09,920 --> 00:26:17,240 for me is that South Africa needs to have a much, much clearer idea of its own identity, 272 00:26:17,240 --> 00:26:22,440 what it stands, what it wants to say, and also its own national interest. And for me, 273 00:26:22,440 --> 00:26:26,720 the example remains India. You buy oil at a huge discount and you pay for it in your 274 00:26:26,720 --> 00:26:31,200 own currency. I mean, you know, it hardly can get better than that. But that's because 275 00:26:31,200 --> 00:26:36,400 the Indians pushed for it. They realized the Russians were in a weak position and they 276 00:26:36,400 --> 00:26:41,960 said, yes, we'll buy your oil, but at a discount, then you take our currency. And the Russians 277 00:26:41,960 --> 00:26:48,080 had to do that. So we can do, I really don't care what happens with Russia, but I do care 278 00:26:48,080 --> 00:26:54,040 about South Africa's national interest. And we must have a very clear idea what it is 279 00:26:54,040 --> 00:27:00,040 and then push for it aggressively in all the places where we interact. Essentially, it's 280 00:27:00,040 --> 00:27:07,840 about integrating own interest and international interest, own interest with our partners' 281 00:27:07,840 --> 00:27:12,400 interests, own identity of where you stand in the world. That is really what it comes 282 00:27:12,400 --> 00:27:19,840 down to. Thank you very much for a very clear and fresh look at the whole thing. And I think 283 00:27:19,840 --> 00:27:27,840 a more holistic view of the current international relations problem that we have. 284 00:27:27,840 --> 00:27:33,340 No, we must take our cue from the Brzezinski biographer. It is not just about geopolitics 285 00:27:33,340 --> 00:27:37,840 and it's not just about economics. It's about both. And it cannot be about either one. It 286 00:27:37,840 --> 00:27:45,840 must be about both. Yeah. Thank you very much. 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