The early 1990s
ONE CANNOT UNDERESTIMATE the pressures and forces, both physical and economic, that bore down on the ANC at the time of the negotiations and transition to democracy. Indeed, President F.W. de Klerk was not only struggling to save as much political power for the white minority as possible, within the context of unprecedented violence against the ANC support base, but also economic power for the traditional business elite in mining, industry and agriculture. As he says in his autobiography, The Last Trek, ‘I was deeply aware of the fact that our challenge was not only to negotiate a new constitution, but also to ensure that, after the election, the ANC would implement the right economic and financial policies.’1 Everything he did was aimed at ensuring that the final journey out of apartheid would not entail the dreaded farewell to an economic system from which the Afrikaners in particular and whites in general had benefitted so much.
Nor was De Klerk expressing the interests of his party alone. Afrikaner capital had long sought to become part of the global market economy. De Klerk had been in discussion with the country’s economic elite, its financial institutions and the Western powers alike to safeguard common business interests. This entailed a conscious attempt, largely successful as it turned out, at weaning the ANC away from radical economic transformation. And in De Klerk’s judgement, as a man who had accepted the need to hand over the political levers of power, ‘the National Party’s greatest contribution … was to promote the adoption of a balanced economic policy framework which could assure growth and progress and which would steer a course away from the socialist tendencies which the ANC had espoused for the whole of its existence, as a result of its close alliance with the Congress of South African Trade Unions and the South African Communist Party.’2
De Klerk wrote of the need in particular to encourage the ANC’s economic team: ‘With this in mind, I gave Derek Keys [his finance minister, previously a leading figure in the mining company Gencor] the task of entering into discussions on the economy with key people in the ANC … Derek Keys did wonderful work and succeeded in winning the confidence of the ANC.’ This was before the 1994 election. De Klerk went on to state that Keys ‘regularly reported back to the [National Party] Cabinet on his discussions with the ANC’.3 Keys was briefly maintained by Mandela in the new Government of National Unity as minister of finance for continuity purposes and to maintain business confidence, with the ANC’s Alec Erwin as his deputy. Chris Liebenberg4 took over from him until 1996, when Trevor Manuel, now well prepared for the strategic portfolio, became finance minister.
I have learnt from Vishnu Padayachee how crucial Keys’s role was, together with that of Chris Stals, Reserve Bank governor from 1989 to 1999, and later the equally affable and seasoned apartheid-era banker, Chris Liebenberg. Says Padayachee: ‘[Keys] won over the young and inexperienced ANC cadres – “God gave me the gift of this communist,” he said of Alec Erwin … [Keys] was charming, and he was always well armed with beautiful slides (he called them his “dirty pictures”) and economic data, which were hard to challenge. For he was able to rely on Treasury and the Reserve Bank team, and I learnt that Rudolf Gouws of RMB [Rand Merchant Bank] also supplied Keys with economic data for the presentations he made. Keys adapted the Mont Fleur scenarios, using the fresh, in-depth data supplied to him by these sources. What chance did our guys have to really challenge all this impressive-looking stuff? Key to Keys (excuse the pun) was to prove the dire state of our public finances at the time. Once this could be “proven” to the ANC, any talk of redistribution etc. could be ruled out. And it worked like a charm.’5 No wonder that De Klerk could claim: ‘We also made positive contributions to the development of the government’s economic strategy – the Growth, Employment and Reconstruction [sic] strategy known as GEAR.’6
In fact, as Jay Naidoo, the minister in charge of the RDP programme in Mandela’s Cabinet, makes clear, the new policy of Gear was completely unexpected and imposed from outside: ‘In complete secrecy, a plot was devised by a cabal that operated outside traditional ANC structures, the Tripartite Alliance and even Cabinet and parliament, in order to terminate the RDP initiative. The RDP office was closed within weeks and a new strategy known as GEAR … became the programme for advancing development in South Africa. In one Stalinist process, the entire social consensus between the alliance partners and the majority of citizens which we had been building for decades was destroyed. It was an event that still informs the broken trust between citizens and government today. I felt that this was one of those rare occasions when Mandela acted like an orthodox president, responding to false fears and giving in to the idea that we had to follow the rest of the world and adopt a neo-liberal economic policy.’7
As for Mandela, it has long been understood that it was his trip to Davos in 1992, for a meeting of the World Economic Forum, of the high and mighty of global capitalism, that changed his mind about the ANC’s economic principles. Meeting the world’s business and political elite, he reported, dissuaded him from pursuing radical economic policies. Unless South Africa joined the global free market economy and avoided the disasters of socialism, he came to believe, the country would suffer economically, investors would be frightened off, and South Africa would face isolation like Cuba or become a failed state like Zimbabwe. No doubt the collapse of the Soviet Union and, before that, signs of failure in the socialist East European bloc would have raised Mandela’s concerns in prison. One may be inclined to think that he already had doubts on the road to Davos.
Soon after his prison release in February 1990, Mandela began engaging with South Africa’s leading businessmen, Harry Oppenheimer in particular, Douw Steyn and others.8 From that time ANC comrades began to complain that it was easier to obtain a meeting with Mandela if you were in business or a celebrity. That’s easy to say. Mandela was arguably carrying a responsibility weightier than the rest of us put together, and he realised he had to meet with such people, particularly from the white community, to ensure that they were carried along for change.
This helps explain the anecdote told by Elias Masilela, a former member of the ANC underground, who met Mandela on an early visit of his to Swaziland. When Masilela in the presence of fellow exiles asked him about nationalisation and its feasibility, Mandela ‘was visibly irritated by the question, to the extent that he felt it did not warrant a response. Not only that, he suddenly lost the appetite for the meeting and immediately stood up and walked out of the room.’9 Masilela would probably have had in mind the statement Mandela made in January 1990, shortly before his release, when he wrote to the Mass Democratic Movement: ‘The nationalisation of the mines, banks and monopoly industries is the policy of the ANC, and a change or modification of our views in this regard is inconceivable. Black economic empowerment is a goal we fully support and encourage, but in our situation state control of certain sectors of the economy is unavoidable.’10
In retrospect, it seems that most in the ANC leadership, except for those involved directly in the economic discussions behind closed doors with the National Party and big business, were virtually, sleepwalking into a disastrous accommodation with the powerful capitalist system. Our focus was on other battlegrounds, on tasks that included organising ANC structures, mobilising our forces behind mass action, confronting the sinister violence unleashed against our people, and preparing for the forthcoming election campaign. Those were dangerous and exciting challenges, and we turned our backs on the dismal science of economics as we contested for the prize of political power. It needs to be said, that lack of economic focus represents the Faustian pact of a collective leadership to which I belonged. For just as one cannot claim to have been ignorant of a law one infringes, neither can one claim innocence in having left the barn door open when the economic horse has bolted. There can be no excuses for what was a major irresponsibility and I personally regret having let my guard down or allowed myself to be seduced by the thought of political power when constant vigilance was required. We should have been aware. We should have put up a fight. Instead, we allowed the ANC to succumb to the neo-liberal, free market economic embrace because some of us were fast asleep. Perhaps it was akin to tip-toeing into the future.
Could we have decided on a different economic course or was there no alternative to the path we chose in the transition from apartheid to democracy? To judge the outcome, one needs to consider the context of the times and the balance of forces.
The ANC was a popular liberation movement with the might of the masses behind it. On the other hand, the De Klerk government had a formidable military and police force under its command and all the considerable resources of state power. In comparison MK was a far smaller, lightly equipped adversary. But the continuing state of civil war in South Africa demonstrated that the people of the country were not prepared to live under the old conditions, and the regime could no longer rule in the old way. The economy was in dire straits, and the campaign to boycott South Africa had resulted in foreign banks calling in the loans that had propped up the apartheid army and economy. It was in these circumstances that De Klerk sued for peace.
In this context, in which neither side could vanquish the other, negotiations got under way. To reach agreement on a new political and constitutional settlement was never going to be easy. Mandela’s assessment of the situation was that it was vital to maintain stability and unity.
The ANC faced stubborn bargaining from the old order and violent destabilisation. Yet a universally acclaimed solution was reached. Key to the achievement was a willingness by both sides to compromise in attaining a new constitution based upon agreed principles. This agreement was achieved through undertakings by the ANC not to disrupt the economy by the adoption of radical policies. These undertakings became the glue that held the transition together, laying the foundation for the beginnings of a just and democratic society.11 That was a truly tremendous achievement, and credit is due to Nelson Mandela’s leadership.
It was in the area of the economic order that generous concessions to big business were agreed upon behind closed doors, outside the constitutional negotiations, between the ANC and the regime. It was judged that the fundamental measures required to transform the economy had to wait. Anything precipitate could jeopardise a fragile transitional process, risk opposition from the Western powers or the prospect of an investment boycott, or so it was thought.
Yet, in my view, those claiming at the time that there was no alternative were throwing away the strong cards in the hand of a movement that had won the support of the masses and the acclaim of the global community. It seems to me that those of us who negotiated at the economic level focused too much on how weak we were as a country and an economy, and did not factor in our strengths as a movement. I characterise their approach as preferring to tip-toe into the future when a more robust approach was necessary. The question is: how much more might we have gained if we had not reined in the Mass Democratic Movement, the trade unions and even MK, with the young lions swelling its ranks? One is left to imagine the leverage those forces could have given to the ANC at the negotiations table and beyond, particularly as watchdogs over government as part of a robust civil society in the years to follow. With their continued empowerment, they would have stiffened the ANC’s backbone and helped counter corrupt forces. Our failure to hold a militant course for economic transformation at that time of mass activism in my view opened the gates to the disaster that has overtaken us.