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South Africa: A fading rainbow?

Democracy is not an easy thing to do. It is not something that can be implemented over night nor does the ability to vote mean that things will immediately turn out for the better. For democracy to work, institutions need to be in place and civil society must work together to grow something organically.

Notions of idealism have often ignored the fundamentals of rationalism and pragmatism. In effect, just because something may seem right, it doesn’t mean it is going to work. To a large extent, this forms the building blocks of modern Conservatism and many of the views of the 18th century politician Edmund Burke. Societies don’t become something overnight, they evolve through history and culture. The lessons of revolution and visionary leaders have often led to mass murder and the brutality of totalitarian regimes.

The problem with democracy is that when it is in place, citizens expect results immediately. Yet, when things don’t, old habits often die hard. One only has to look at Russia. Western critics of the current Russian leadership may have some salient points regarding Vladimir Putin’s authoritarian style, yet let us remember that democracy as we know it has never existed there at all. Before Stalin and Lenin, Russia was ruled by hereditary Tsars. Authoritarianism and the security blanket of socialism are the systems that Russians know; it may be some time before the framework of democracy beds-in.

The same can be said of South Africa. The pressure for the country to flourish remains intense, almost on the verge of burdensome. The peaceful legacy of Nelson Mandela’s leadership was a platform for countries overcoming long legacies of discrimination to aspire to, any step backward is deemed a desecration of Mandela’s legacy

The current crisis involving the South Africa questions not only the stability of the economy, but the essence of its democracy. The shooting and subsequent killings of protesting miners at a platinum mine near Rustenburg asks not only questions of the police, but questions about politics and society.

Since 16 August, South Africa’s platinum mines have become inoperable. Mass demonstrations by several unions have prevented workers returning to the pits and have put future operations in doubt. The protests have continued to gain momentum and not just in Rustenburg, miners from across the country have joined in wild-cat strikes. The return of the banished former ANC Youth Leader Julius Malema has only stoked the fire further.

Malema is no stranger to controversy. A fierce critic of South Africa’s current leadership, Malema has openly stated his admiration and friendship of Zimbabwe’s ageing tyrant Robert Mugabe, discredited the Government of Botswana and called for the South African mining sector to be renationalised. The 31-year-old raised headlines initially for singing the infamous ‘Shoot the Boer’ at ANC rallies, Boer being the white farmers who settled in South Africa in the 17th and 18th century, now a looser term for white South Africans. In April 2012, Malema was finally banned for calling President Zuma a dictator. Yet, it does not appear to have curtailed his opinions. Malema this week was talking to the South African army, in what has been perceived as a threat to national security.

Whilst Malema’s rhetoric can be deemed as absurd and opportunistic, to what extent does it echo with many of the workers in South Africa’s mining community? Since the end of Apartheid, are they materially better off? Life expectancy has dropped to 52 years old, over a tenth of the population is living with HIV, on top of poor educational standards, crime remains an inherent problem with high murder and violent crime rates. Figures also put the unemployment rate at 25%, though many believe it to be around 40%. Has freedom from Apartheid brought opportunity? For the masses living in black townships, how many would argue that much has changed?

Whilst many poor black South Africans have suffered, the political elite have prospered. 100 years since the ANC was born, to what extent does it really represent its constituents? Why has it introduced a secrecy law that critics believe to be akin to Apartheid-era politics. Why were the miners in Rustenburg arrested under an obscure Apartheid law?

South Africa has struggled like any country whilst it attempted to re-emerge from its bleak past. South Africa is held up as a beacon because what was enshrined in its constitution made it the world’s most equal society. Yet the strikes and gaps in wealth tell another story. A new black elite has managed to develop from the seeds of freedom. From what should have been an opportunity for liberation and new beginnings has led to greed, corruption and a failure of the masses. Whilst the miners may return to work this week, what remains is a seriously inequal society and the fault lines that will only become wider.


Debt and football: writing off the Greeks

Good news stories are something of a premium in Greece at the moment. Last night’s victory over Russia in Warsaw at the European Championships made it hard for any football supporter not to be delighted for the tournament’s rank outsiders. The energy and celebrations at the end of the game sent the thousands of Greeks fans in the stadium into ecstasy, whilst much of the country greeted the news in the same way back home.

Yet, this is far removed from the shock and optimism after the country’s victory in Euro 2004. Greece was a founding member of the Euro zone economy, its people were becoming wealthier and EU money was investing in capital projects that would help improve the way of life. That Greece is now a distant and rose-tinted memory. As the financial crisis began to bite in Europe, European delegates began to understand how desperate the situation in Greece had become. Several countries including France and Germany had broken the rules of the European Central Bank’s growth and stability pact. The pact stated that a country’s budget deficit should not exceed 3% of its GDP and its national debt should not exceed 60 per cent of GDP. Little did they know how Greece managed to stay in between the lines.

Captain Karagounis. (Guardian)

Even when the Euro finally became an economic reality, many officials believed that Greece simply wasn’t ready to join. The underlying currency and economic conditions would have made convergence for the whole of the Euro zone difficult. When the Greek government collapsed and its successors opened the books, the whole of the world was shocked. Previous administrations had managed to ‘cook the books’ on an enormous scale, using accounting methods that had placed huge chunks of the Greek national debt off the official records. Overnight officials discovered that Greece was running annual deficits of 12% with a national debt of 129% of GDP.

The downward spiral has continued from there since. As successive Greek governments have implemented severe austerity measures in return for EU bailouts, the social contract for ordinary citizens has begun to dissipate. Cuts to the public sector, higher taxes as well the inability to feed their families has seen Greeks take the streets on a daily basis. News footage no longer depicts Athens as the birthplace of democracy, but a city defiled with graffiti and polluted with tear gas. The language that invented the words crisis, chaos and catastrophe has brought them to life.

Panic on the streets of Athens.

The Greeks inability to trust any politician or economist makes its long term future even more indecisive. Since the crisis unfolded, over 10 per cent of the population has emigrated in search of work and most likely a settled life. With them, they have taken their money. Over a third of Greek bank deposits have left the country since the crisis began, €9 billion has left since the beginning of the year.

It is unsurprising then that many have turned to alternative parties in the recent elections. Not only has the far-right party Golden Dawn managed to generate great support, but the radical left party Syriza has taken votes away from the tradition socialist party Pasok. Syriza, led by its charismatic and young leader Alexis Tsipras has vowed that Greece will remain in the Euro but stop the austerity measures by reneging on its outstanding debt. A victory for Syriza in the re-run of last month’s general election is more than likely to be the first step of Greece leaving the Euro zone.

Yet how rational can the Greeks be at a time like this? Many have been unemployed for over two years, whereas those in work have not been paid for months. They are seeing all around them that a country in Western Europe has become destitute and suffering affliction that you would only associate with a war-torn nation. Suicide and food kitchens are part of the daily routine. Any political party that gives them a glimmer of hope is bound to cajole them to vote that way. Yet it is an entire fantasy. Greeks long to remain in the Euro because it once gave them everything they wanted, yet remaining in it would entirely undermine their recovery. The Syriza party may be acting out of goodwill, with a hue of opportunism, yet even they wouldn’t be able to remain in the EU without paying their debts. It would only lead to other debt-ridden countries in the Euro zone to doing the same, pushing the overall picture in the wrong direction.

The problem beyond both inside and outside of Greece is the fact no one is certain of what will happen next. The recent bail out of Spanish banks pushed Spanish and Italian bond yields to historical highs. The EU Troika may have finally laid down contingency plans for future crises, but inevitably they have acted too little and too late. If Greece falls then the economically uncompetitive Italy and Spain are bound to fall next, bringing down the already bailed out Irish and Portuguese. Capital flight may have created a safe haven in the non-Euro member UK, but its banks are heavily indebted to Spanish and Italian banks, who’s not to say that the UK could fall into another deep financial crisis as well?

The questions surrounding Euro bonds seem futile, they may avert short term crises, but they do not underwrite the fundamental problems that these countries face. The German Chancellor Angela Merkel is increasingly becoming isolated as world and EU leaders ask her to react, whilst her own country feels that their prudence should not be sacrificed for feckless southerners. If the Germans put forward the bulk of an EU firewall would it do anything or is it too late? Would a Greek return to the drachma see an instant return to growth or would it lead to high inflation. These are all the questions that no one seems to have the answer to.

The only thing that is certain is Greece will play Germany in the quarter-finals. Who will win? I’m not sure. We thought Greece would leave earlier, but they seem to have a knack of hanging on and causing a bit of damage. The football may be important to most, but Monday’s results will have implications for us all.

UK Economy: Where to next?

What a fine mess we have got ourselves into. Today, Britain became the latest country to return to recession after figures revealed that the British economy shrunk by 0.2% between January and March this year. After months of commentary asking whether Britain would face a double-dip recession, the Chancellor George Osborne will now face a brutal bombardment to whether his plans are working.

The belief in the Treasury was that growth would not be easy to come by, the independent Office for Budget Responsibility (OBR) forecast growth at 0.8 per cent in 2012 and 2.1 per cent in 2013. The original figures were far more hopeful.

The admission that the target to wipe out the budget deficit within this Parliament would not be fulfilled only made the Chancellor and his Treasury team more resolute. Whilst America has seen a healthy return to growth, Britain has been undermined by the uncertainty caused by the debt crisis within the Euro zone. The bite of austerity would continue for at least another two years into the next Parliament.

Ironically, as these harsher conditions have ensued, the government debt is actually increasing. The loss in tax revenues has meant the Coalition will increase national debt to around £1.4 trillion by the end of this Parliament. So whilst the budget deficit may eventually be eradicated, there will still be a long term national debt burden for future generations to deal with. Economists are still uncertain of the long term effects of low interest rates combined with tranches of quantitative easing.

So was the Labour shadow chancellor Ed Balls correct? Was the coalition government cutting ‘too far and too fast’? It appears now that the coalition’s strategy is running at the same timescale as former Labour chancellor Alastair Darling expected it to before the last general election. According to Mr Balls the coalition has made the cuts but created no growth.

However, despite the poor headlines for the Chancellor in recent weeks, it is unlikely to shake him and his Liberal Democrat partners. Mr Balls has been vociferous, yet despite his so-called ‘five point plan’ he is yet to suggest anything of substance. The double-dip may actually force pressure on the Labour treasury team to announce some of their ideas, a stage which may get them caught out.

The previous set of employment figures showed that for the first times there were more jobs created in the private sector than lost in the public sector, a trend that Mr Osborne can only hope to continue. Today’s figures if anything are more likely to make the Chancellor ignore calls from the opposite benches and look towards greater market reforms from the right. As chief strategist of the Conservative party, be certain it will not be something he is willing to get wrong.

The EU: Ode to joy or not?

The internal strife emanating throughout Europe is transforming the union into a concord of disharmony. In streets and city squares, hoards of protesters commune to aim their vitriol at lacklustre governments and impugned banks. The years of cheap credit and profligacy have returned to haunt many nations as their debt-ridden treasuries have been forced to implement austerity measures in return for financial bailouts. In Madrid, protesters known as los indignados (meaning ‘the outraged’) have occupied the Puerta del Sol, rejecting the punishing measures accepted by its government. Meanwhile in Athens, Syntagma Square has seen months of violent clashes between riot police and demonstrators, as the Greek government implemented tough austerity measures in return for EU loans. Dublin, Lisbon, London and Rome have also seen a surge in protests and occupy movements, all in reaction to the prospect of cuts to welfare and an unreformed financial sector. What is most noticeable about the swelling in anger is the increasing distrust and hostility between nations. Germany, the central political and economic power is increasingly being slurred with Nazi characterisations, as it forces the ‘feckless’ Greeks to accept the tranches of bailout money. The open antagonism between the prudent Northern Europeans and their reckless Southern cousins is opening tensions to the sustainability of the whole fiscal and political union.

Yet as the continuous infighting continues, many of Europe’s other countries are beginning to lose sight of the European dream. Welcomed in from beyond the frosty realms of the Iron Curtain, Eastern Europe is discovering that the party they thought that was inviting is not as welcoming as they previously thought.

Many policy chiefs in the corridors of power of Brussels believed that a larger political union would create a stronger economic union. To an extent they were correct; here was the world’s largest and most successful internal market. All countries from the Eastern bloc yearned to join; even some North African countries sought membership. The European Union had the benefits of close political and defensive ties with America, multilateralism and a form of welfare capitalism. How the tides of fortune have ebbed away.

Countries that EU technocrats may have one day expected to join are weighing up their options. Georgia, Ukraine and Kazakhstan resent Europe’s hesitancy and hypocrisy. In fact, the West’s biggest proponent in the former Soviet bloc, President Saakashvili of Georgia, could flout the constitutional rules and run again for Presidency in 2013. Why should any of these countries listen to hedonistic messages of prudence when the European Central Bank is printing money to buy debt from its own shambolic economies? Even Hungary, an EU member, is flouting union rules over budget-deficit targets and media freedom. Turkey appeared to go cold over Europe many years ago. Russia is happy to see former satellite states return to the fold.

What about that great American hope? The US was once the Baltic States biggest and most loyal admirer. Countries like Poland were steadfast in their support of NATO and happy to commit men on the ground in war zones. Not to mention America’s new missile defence shield, to the chagrin of Russia. Yet, American foreign policy is heading west once again. The geopolitical and economic shift to Asia is seeing American strategy head towards the Pacific and the emerging markets. No longer is Europe the primary frontier. Obama’s decision to abandon the shield and along with the EU’s inexistent foreign policy is turning the once idealistic Poles and Czechs into hardnosed endorsers of Realpolitik.

The EU’s decision to prevent the Euro from failing will see a new era of internal relations. Closer fiscal relationships will only mean tougher stances on imprudence. The collective voices of the right in Northern Europe will no longer tolerate the spending cultures of countries like Italy and Greece. EU expansion will certainly be welcoming to countries of the Balkans but it might not be as jovial as they thought.

Bankers’ Bonuses: A sensible policy.

The question surrounding bankers’ bonuses continues to dominate political debates. Fred Goodwin, the disgraced former Chief Executive of the Royal Bank of Scotland (RBS), joined an unflattering list of people, including Zimbabwean tyrant Robert Mugabe, to have their Knighthoods stripped. His successor, Stephen Hester, also succumb to growing public and political pressure by waiving his annual bonus.

Goodwin, who oversaw the flawed takeover of the Dutch bank ABN Amro, was made to resign after the UK government were forced to rescue RBS with a bailout package worth in the region of £45 billion. In 2009, RBS went on to report the biggest loss in UK corporate history totalling £24 billion. Goodwin, meanwhile, left with a pension pot worth in the region of £703,000 a year. Hester his replacement, by all accounts a good manager, has had to oversee massive changes in the organisation and deal with plenty of criticism as he has put to task. The UK government still owns 81 per cent of RBS shares.

Bankers are still not popular in the UK after the financial crisis in 2008, and despite the curbs on pay and apologies from bosses, financial regulation and policy is still an affliction on government policy, particularly bonuses. As the public sector endures a pay freeze and high inflation, it would be difficult for a government to be seen endorsing bonuses to a bank which is owned by the public.

Last year, the Chief Executive of Barclays Bob Diamond, once called the ‘unacceptable face of banking’ by the former Labour Business Secretary Peter Mandelson, told members of the House of Commons Treasury Committee that the period of remorse and apology for banks needed to end. Diamond, who received a £6.5 million bonus in 2010, believed the language being used on British financial institutions was unfair and could have an adverse impact on future regulation. The Barclays chief, aware of the public mood, introduced a new ethics code for misbehaving or ostentatious bankers.

Barclays boss Diamond

The government has been unable to counter the venomous attacks from the media and its ability to generate campaigns. The Daily Mail’s front page targeted ‘Sir Fred’ day after day and then subsequently Hester. The Transport Secretary Justine Greening was forced to be seen to prevent Network Rail chiefs from taking their annual bonuses too.

Perhaps this is where the Conservative party is getting into trouble. It is too keen to submit in what is developing into a shotgun democracy. It wants to protect the City but it doesn’t want to be seen as protective of bankers. The Labour Party, who can still form no sensible policy or opinion of their own, continues to flip flop on the spur of public opinion. They are more content on trying to target left-leaning Liberal Democrats and splitting the coalition. Their agenda is fast becoming one of envy and class, yet the Tories retreat from any form of debate. Most people agree that it was correct to strip Goodwin of his Knighthood, but the hysteria is spiralling out of control.

This is fast damaging London’s reputation. The RBS Chairman Sir Philip Hampton said that bankers’ pay is something that needs reforming but it would require an overview of how we want to the City to work. With a 50p rate of tax on highest earners will remain in place until the next election, London and the UK could potentially become an economically and politically ugly place to do business. It is a question that government must answer sensibly and putting business and jobs first. Otherwise, bonus season will become a never ending carousel for government.

Nigeria: Beyond the violence

It is unusual for African countries to make the news headlines in British media, yet the continuous violence in the Northern Nigerian city of Kano has created much concern and interest from across the world. An Islamic and self-declared jihadist organisation called Boko Haram, which means “western education is sacrilege” in the Hausa language, has been launching co-ordinated suicide attacks across the country as part of their demands for an Islamic caliphate under Sharia Law. In the past few months attacks have intensified with bombings on Christian churches, the UN building in Abuja and most recently several police stations, where 186 people were left dead. At the centre of it all is the hapless President Goodluck Jonathan. Elected last year after the death of his predecessor President Yar’Adua, 2012 has not begun good well.  Not only a state of emergency in the north of the country and border closures with Chad and Niger, he has had to deal with a general strike after the government removed a fuel subsidy. The incidents in Kano have so far seen the national Chief of Police sacked and the ‘reorganisation’ and ‘repositioning’ of the Nigerian Police Force. Do these events mark a new era of politics in Nigeria or do they simply comply with the world’s previous assumptions of the country?

There is a belief with many Westerners that Nigeria is a land of dysfunction; dominated by internal strife, oil revenues and systemic corruption. The former US Secretary of State once declared that all Nigerians are crooks. Perhaps most people would associate it with email ‘419’ scams or documentaries by the filmmaker Louis Theroux. Yet the links to Britain are historical and continue to be present today. Acquired as a buffer from the Francophone dominated West Africa, the British Empire formed a country comprised of different religions, languages and tribes as a measure of convenience. Religious lines were split almost evenly between the Muslim north and Christian south, though religious relations were normally good. The country’s significance was reaffirmed several years later when oil was discovered at a time when the Royal Navy was changing its fleet from coal to oil powered vessels. When independence was granted in 1960, rule was governed in a similar way to the how the British had left it. The dominant population of Northern Muslims had power in the legislature and crucially the military, to the displeasure of the southern and western factions. The ugly Biafran War in 1970, which left over one million dead, is a direct legacy of the tension between the north and south.

Yet the underlying issue in Nigeria is not religious or ethnic conflict, but endemic corruption. Even as the country emerged from a military dictatorship, corruption has continued to play its part, from the local area boys to the state house. Nihu Ribadu, a prominent anti-corruption figure said that that since independence in 1960, over £380 billion dollars had been wasted or stolen by the government. Much of this money is laundered into British banks. In 2011, Transparency International ranked it the 143rd (out of 182) in its annual corruption index, yet Goldman Sachs deems it to be in an economic grouping behind the BRIC nations. As Africa’s most populous country, almost 160 million and growing, why is their thought to be so much potential when seventy per cent live under the poverty line?

Oil and petrodollars, continue to pollute the environment and the political system. As other countries have found, resource dependency inhibits creativity and innovation. As the state can rely on mineral wealth, it relies less on tax revenues and consequently accountability. The World Bank says that Nigeria’s oil wealth is siphoned off by only one per cent of the population.

After the oil price rises in the 1970s, it was the multinationals who filled the investment void vacated by the Government. Portrayed by some as a Faustian pact, the multinationals offered a more reliable investment to locals through jobs and wealth. However; not all benefitted, as local Governors became rich, other regions and ethnic groups were left out and felt the effects of oil spills and contamination. The lack of infrastructure or investment in health and education has been the main consequence. In 1993, fed up with the continuing pollution in the Niger Delta, protestors prompted a shutdown of Shell’s operations in the area. As a consequence, a military crackdown brought before a court several men accused of murder, with questionable evidence, including the playwright Ken Saro-Wiwa. All men were hanged for their crimes, stoking an international uproar, which saw several countries request Nigeria’s suspension from the Commonwealth.

Even with its massive oil exporting powers, almost 2.2 million barrels a day, Nigeria does not have any working oil refineries and therefore has to import the great majority of its oil. Many of the deals are struck by governing politicians and as the Africa watcher Richard Dowden says “Any politician who does not end up a multi-millionaire is regarded as a fool. Not many Nigerians are fools.”

And what of the nation’s politicians? Nigerian Parliamentarians are paid a salary of $1 million a year with $1 million in expenses to supplement it. Former rulers like Ibrahim Babingida and Sani Abacha both managed to steal billions of dollars and get away with it. The impunity and almost admiration for such men may be the reason why corruption happens and why there is so much of it. Simply because it is there and it works. It is part of the system, so there is no other way to function. As long as everyone receives their share then it is okay. Corruption is the oil that allows business to function. Tax collectors, telecoms companies, immigration officials all take part, especially the maligned police force.

The ruling Peoples Democratic Party [sic] (PDP), the new governing elite that succeeded the military, have a cosy arrangement that rotates the Presidency between a ruling southern Christian and northern Muslim. It in effect allows those in charge to have a share of the spoils whilst in charge, before the next rotation. The issue currently is that Jonathan succeeded Yar’Adua, who died before his tenure finished, before being re-elected. This led to violence in the city of Jos last year and the more recent anger in Kano. Muslims were annoyed at their PDP officials who acceded to Jonathan’s victory. Boko Haram is now exploiting that loss of trust by giving people an alternative, violence is their tool. For the first time in decades many Christians are leaving the north in fear.

Commentators argue that militants in the lawless Niger Delta were bought by government bribes to keep the peace; it is only likely that the members of Boko Haram will be bought with bags of bills sooner rather than later.

Prospects of Nigeria splitting or an African ‘awakening’ are not to be ruled out, but is anyone in a position to take it that step further? Nigeria is becoming strategically important to the West as it slowly becomes less dependent on Middle Eastern oil. Yet who is to say that the Gulf of Guinea will remain stable.

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