Hello and welcome to the So What podcast, in which political economic analyst JP Landman
discusses the issues uppermost in the minds of South Africans. You can find a written
version of this content on JP's website, jplantman.co.za. I am Ruda Landman and I am your host.
Hello and as always a very warm welcome to this conversation. This one accompanies JP's
research note dated the 7th of March 2025 under the title 40 Days That Changed the World.
It's now been a little bit more than 40 days since Donald Trump became the American President
and the world has changed. Yes, whether it's 40 days or 48 days in that
period, it really changed the world in ways that very, very few people have foreseen.
That's the reality that we're living with. For better or for worse?
For better or for worse, I think definitely for worse, not for better. And then I want
to start off by saying Henry Kissinger that used to be the American Secretary of State
and probably the most important diplomat in America in the second half of the previous
century said to be an enemy of America is dangerous, but to be a friend is fatal. And
that is what we're seeing happening, whether it's Mexico and Canada, loyal neighbors of
America, whether it's Ukraine, whether it's Europe, all over its friends that are getting
the same bad treatment from Trump. And it's really a question of it is fatal to be a friend
of America. And then I'm not even talking about the people, many hundreds of thousands
who live from the word that USAID used to do, not only, but particularly on HIV AIDS,
but also on food programs, helping people suffering from hunger. And all of that, of
course, is now out of the window. And that just proves the point. It is fatal to be a
friend of America. But how can he do it?
He's tearing up agreements, going back on treaties. There should be a law, surely.
No, the fact is he is doing it. It boggles the mind. It goes completely beyond what one
can call rational behavior or legitimate behavior in the international order.
There used to be a rules-based order, no longer.
Yeah, I think that's the simple reality. Outside and inside America, Trump is on record
as saying that judges that rule against him should be impeached. So that's inside and
outside America, the rules-based order has been thrown out. So that's the reality.
You know, I want to challenge listeners to send me the coordinates of one square meter
of land in this country that was grabbed by the state. Yet he wants to grab Panama, Greenland,
Canada, and Gaza. It is simply astonishing. Yet he's complaining about non-existent land
grabs here. No, the reality is that after this first couple of weeks of behavior, not
of just talking, but of actual behavior and actual decisions that have been announced,
I think one can only come to the conclusion America is no longer a serious country.
You quote the FT who had a headline recently, the Financial Times, America is now an enemy
of the West.
Think about that. You know, the Financial Times is a middle-of-the-road newspaper and
that is their conclusion that America is now an enemy of the West. It's an astonishing
headline but I think a very apt one. It describes what is going on.
But Trump is actually also withdrawing America from the world.
Yes, and that's very important to note. There's nothing exceptional about South Africa. Trump
has basically declared war on all his friends except on Putin and Russia, but for the rest
war all over. Maybe not warfare.
And Israel.
And Israel, yeah, absolutely. But for the rest, he's bullying his friends. That's the
reality. Now the question is how must one react to that? And I think we can learn something
from his first term. In 2017 when he was inaugurated as president the first time, on his first
day in the Oval Office, he withdrew America from the TPP. The TPP is the then was the
Trans-Pacific Partnership, 12 countries on the Pacific who over a space of more than
a decade negotiated a very sophisticated gold standard trade agreement. There was protection
for labor rights, protection for environmental rights, protection for intellectual property
rights. It was really the gold standard of agreements. And the Obama administration in
their time put a lot of effort into it.
On his first day in office, he withdrew America from the TPP. It had a shocking effect and
a sort of numbing effect on the remaining 11 members. In fact, I think it was the Minister
of Foreign Affairs of Japan said they cannot really carry on with the TPP without America.
That is not the way it turned out. After a couple of months, the countries pulled themselves
together. They renegotiated the agreement, this time without the intellectual property
protections that the United States fought very hard for. That's the irony of it.
And they reestablished the TPP under a new name. Today, China, South Korea, the other
kingdom are all lining up to become members of this renewed TPP. So the world carried
on without America. And that is what we will have to do. He's now, as we know, he's withdrawn
the US from the World Health Organization, although it will take time to take effect.
He's withdrawn the US from the Paris Climate Agreement. He's withdrawn the US from the
trade agreement in North America. He clearly wants to withdraw the US from support for
Ukraine, which is not an agreement, but it was.
And probably the G20.
And probably the G20, if you look at the way that these people behaved towards the meeting
being held in South Africa. So the reality is he's withdrawing America from the world
and the rest of us must adapt to that.
Where does this leave South Africa?
In 2012, that's now 13 years ago, the first National Planning Commission under the chairmanship
of then Minister Trevor Emmanuel developed the South African and published the South
African National Development Plan. And that plan made two points amongst a lot of others.
The one is that power was shifting from the West to the East. And secondly, South Africa
must adjust to that by diversifying its relationships and have relationships with all in the world.
To put it in ordinary English, maintain your old relationships, but build new ones. Maintain
that which you have, but develop new relationships for trade and exports.
And it looks, if we look at our export figures, it looks as if that is precisely what has
happened in the 13 years since that National Development Plan was published. We quoted
in the note, but let me just repeat it. Today, our biggest export share, 35%, goes to China,
India, and what is called the Asian nations. Basically Asia. That's where it's going.
35% biggest portion of our exports. Second biggest is to Africa, largely Sotheg, 25%.
And tying with them in the second place is Europe, also taking 25% of our exports. So
between them, you're looking at 85% of South African exports. And then North America, which
includes Canada and the US, 8%, Middle East, 4%, South America, 3%. So our exports have
already diversified quite substantially towards the East and away from what we can call the
US. That has happened.
Can I just ask something in between? Many people are very worried about the AGOA and
we will probably lose that. But North America, Canada and the US only take 8% of our total
exports. Will it have that much of an effect?
Yes, it will have an effect because think of a wine farmer in the Western Cape that's
exporting to America. It'll affect them. I think the sectors that will be particularly
influenced will be motor car, automotive exports. We export a lot of that to America. And the
AGOA, that'll be affected. And if in general, Trump decides to levy South African exports
to the US, which is what I think he will do, it'll obviously make our products more expensive
and less competitive and we could lose some trade from that. So yes, it will have an impact.
Okay. But you were saying that we have actually already, if I may borrow a word from the,
I think the Obama administration, pivoted towards the East, that Asia already takes
35% of our exports. Yes.
So this makes nonsense of the idea that South Africa must choose between the US and China.
Yeah, absolutely. A lot of people want to sort of almost, if I can use the word, threaten
one by saying, oh, you must choose this side or that side. And that's exactly what the
National Development Plan 13 years ago said you shouldn't do. US developed relations were
with everybody. Now, if America doesn't want to have relations with you, well, fine. You
can't force them to have relations with you. From your side, keep it open, try and keep
it going. And if that doesn't work, then it doesn't work. Then you've got to develop
other possibilities. Now, the one big possibility that is beginning to become available is the
African Free Trade Agreement, which effectively only started last year in terms of physical
exports going into Africa. That's an obvious market. And for the rest, one must develop
other markets. There's the Middle East, I think is a big potential agricultural market.
Recently, for the first time in a long time, we could start selling fruit to, I think,
Vietnam again. So yeah, there are possibilities elsewhere in the world, and that'll have to
be exploited.
Do we know, do we have an idea, a feel for how bad the impact will be if Trump goes all
the way with his tariffs and levies?
Yes, in South Africa, the work has been done by Elna Mulman, who, as you know, is the top
rated economist. And she's run the numbers on what would happen if there's a 10% levy
by America on its trade partners, and all the trade partners also reciprocate with 10%.
So 10% both ways. And basically what she said is that in the first year, world GDP will
be half a percent lower. And then the second year, the cumulative effect will be GDP will
be 0.8% lower. For the United States alone, it'll be 1.1% lower in the first year and
1.3% lower in the second year. For South Africa, it'll be 0.1% lower in the first year and
cumulatively 0.2% in the second year. But these are, of course, all theoretical exercises.
You know, one doesn't know, will it be 10%, will it be 20%? We don't know how it'll play
out. But it gives you more or less a feel for how things can pan out.
But we are hit badly when it comes to aid rather than trade.
Yes, absolutely. So aid, not trade. It's a reversal of the normal story. South Africa
in 2024-25 was supposed to receive from the United States aid to the value of $439 million
US dollars. Now, if you multiply that with an exchange rate of 18.50, then that will
come to 7.2 billion rand. Now, in the context of the South African economy, it's small.
It's only 0.1%. But of course, it has a direct impact on specific selected sectors. So you
cannot just dismiss it. A lot of the pain of that 7.2 billion rand not coming our way
will fall on health programs, specifically HIV AIDS treatment. As you know, George Bush
in 2003, that's already, what is it, 22 years ago, started PEPFAR, the President's Program
Emergency Plan for AIDS Relief. That will come to an end, has come to an end already.
The letters have been sent, clinics have closed, nurses and doctors have been laid off. And
obviously patients are not getting, they are not getting their medicine and their treatment.
And that makes very real the point that Kissinger made, to be a friend of America is fatal.
These people may now die, probably will die. I mean, that is the fatality of being a friend
of America. How do you see South Africa's reaction up to now? Was it good, bad, indifferent?
Well so far, there's been a remarkable, what is called the strategic silence. The only
person who made one comment was Minister Gwede Mantash, who said we should then withhold
mineral exports. And after that he went quiet. So clearly some collective discipline was
imposed on him. I think the South African government has been very disciplined in not
talking and feeding the flames. The problem that we have in South Africa is that there
are two groups. The one is sort of coming from the liberal side of our political spectrum,
not the left, but the liberals. And then the far right in the form of referendum and solidarity
are feeding a lot of narratives that South Africa should go out to the US and do what
they want and so on and so forth. And that is not going to happen. A lot of these people
hope that with Trump's help they can achieve things, or with American pressure they can
achieve things domestically, which they can't achieve through normal political processes.
I'm afraid they will be disappointed. And the reason I say they will be disappointed
is there is such a thing as a reaction or a backlash. And we're seeing it playing out
in Canada right now at this moment. In Canada, the government of Justin Trudeau, the prime
minister, was in so much trouble that he resigned as leader of the party and as prime minister.
He's just in acting capacity now while his party is looking for a successor. But they
were supposed to lose completely in the coming election in Canada and the opposition was
supposed to be a shoe in. Since Trump has started insulting the Canadians, that has
changed around completely. Now that doesn't mean that's how the election will end.
Why are the conservatives in Canada, if I can put it that way, on Trump's side?
They perceive to be that, yes. And all that what the liberals, the governing party, has
done is to just have a lot of clips of the opposition leaders saying friendly things
about Trump and broadcasting this to the nation. And there's clearly a reaction there. And
I want to stress that this is not a uniquely Canadian thing. It is standard politics that
you find an enemy outside the country and you mobilize against the enemy and that's
how you build your support base. Then people don't vote on internal issues. They vote
on this external enemy. Trump himself has done it with the immigration issue. He's really
blown that up enormously and that made him president of the US. So it's a standard technique,
but we're seeing it playing out in a moderate, polite country like Canada.
Now what is the danger for South Africa? The danger for South Africa is that if that kind
of Canadian reaction takes hold here, it is not inconceivable that the ANC goes back to
50%. People will just say, we haven't had enough of this. And if it is sort of right-wing
far right-wing whites who are seen to be flaming the fires here, then it may very well affect
the distribution of political support for parties.
The question comes up, whose side are you on?
Simple as that.
So what, to summarize, the accepted world order has changed.
And that's very difficult for, I think, particularly white people in South Africa to accept. We
grew up under the Pax Americana. Pax Americana is no more.
When we grow up, we want to be like America, no longer.
No longer, absolutely no longer. And we have to accept that and we must adjust to that
reality. It's no good trying to pretend it's not happening.
The second, so what is the idea that South Africa has to choose between America and China
is very misguided. And the export numbers tell us that. Our further salvation will not
lie with the Americans. It would lie with other nations. If the Americans levy us and
put 25% import tariffs, you know, how on earth will you go to exports there? You probably
won't.
The third, so what I think is an important one, and that is the chainsaw that Trump has
taken to United States-Europe relations, United States-EU relations, I think could very well
provide or create an opportunity for South Africa. And I was thinking, why did Mr. Ramaphosa
invite Zelensky on a state visit here? You know, it's an interesting kind of almost
anomaly in terms of recent behavior. And all I can think is, Zelensky is now clearly the
one man who Europe wants to protect. Europe wants to be seen to stand by him and effectively
stand by him. By inviting me here for a state visit, one can capitalize on the rupture between
the US and EU.
And it's not just South Africa?
I think that's a very important point to note. USAID has been dismantled worldwide, whether
it's Pakistan or Indonesia or South Africa or Lesotho. It's a worldwide thing. Tariffs
are being levied left, right and center on friends, not on Russia, interestingly, but
on friends. So yes, it is not just a South African thing. And we must get over the feeling
that it's our fault. It is not our fault. We're dealing with a very particular individual
on the other side.
Your last bullet point under the sow. What's losing US support will force South Africa
to get its house in order. We must display a greater sense of urgency in doing what we
must do. What do you mean?
We know that we have to fix energy. We know that we have to particularly transmission.
The generation, I think, is busy being fixed, but we have to do more on transmission side,
electricity transmission. We clearly have to fix railways. We clearly have to fix the
ports. We clearly have to fix water. These are the basic things that we must get right.
And it is at the moment just taking too long. It is simply just taking too long. This development
of America, it brings an urgency to our domestic agenda, which we must grab hands on and deal
with and get it behind us.
Because we are in a certain sense now on our own.
We are on our own.
We have to grow up and do it ourselves.
We've got to pay the aids bill ourselves. We've got to find that money in the budget. If the
money is not in the budget, we must grow the economy so that the budget can be there, so
that we can look after all our aids patients.
I must just point out that 83% of aid spending comes from South Africa anyway, but 17% doesn't.
That used to come from the Americans. And that 17% cannot just be left to die. We must
deal with that. So I think we must have a greater sense of urgency in fixing our problems
and getting our own show on the road.
Thank you very much.
Thank you.
Until next time, goodbye.