Trevor Manuel’s long history of collaboration with Washington and London raises prospects for “default” by the industrialized North on payment of climate debt to the impoverished South
[UPDATE, April 27: The global elite has indeed chosen Trevor Manuel as co-chair of the Green Climate Fund. As Patrick Bond wrote in the article below, this appointment further undermines the credibility of the already dubious Cancun agenda.]
by Patrick Bond
South Africa’s most vocal neoliberal politician, Trevor Manuel, is apparently being seriously considered as co-chair of the Green Climate Fund. On April 28-29 in Mexico City, Manuel and other elites meet to design the world’s biggest-ever replenishing pool of aid money: a promised $100 billion of annual grants by 2020, more than the International Monetary Fund (IMF), World Bank and allied regional banks put together.
The Climate Justice lobby is furious, because as a network of 90 progressive organizations wrote to the United Nations, “The integrity and potential of a truly just and effective climate fund has already been compromised by the 2010 Cancún decisions to involve the World Bank as interim trustee.” A Friends of the Earth International study earlier this month attacked the Bank for increased coal financing, especially $3.75 billion loaned to South Africa’s Eskom a year ago.
Manuel chaired the Bank/IMF Board of Governors in 2000, as well as the Bank’s Development Committee from 2001-05. He was one of two United Nations Special Envoys to the 2002 Monterrey Financing for Development summit, a member of Tony Blair’s 2004-05 Commission for Africa, and chair of the 2007 G-20 summit.
Manuel was appointed UN Special Envoy for Development Finance in 2008, headed a 2009 IMF committee that successfully advocated a $750 billion capital increase, and served on the UN’s High Level Advisory Group on Climate Change Finance in 2010. (Within the latter, he suggested that up to half the $100 billion climate fund be sourced from controversial private-sector emissions trading, not aid budgets.)
No one from the Third World has such experience, nor has anyone in these circuits such a formidable anti-colonial political pedigree, including several 1980s police detentions as one of Cape Town’s most important anti-apartheid activists. Yet despite occasional rhetorical attacks on “Washington Consensus” economic policies (part of SA’s “talk left walk right” tradition), since the mid-1990s Manuel has been loyal to the pro-corporate cause.
Even before taking power in 1994, he was considered a World Economic Forum “Global Leader for Tomorrow,” and in 1997 and 2007 Euromoney magazine named him African Finance Minister of the Year. No wonder, as in late 1993 he had agreed to repay apartheid-era commercial bank debt against all logic, and negotiated an $850 million IMF loan that straightjacketed Nelson Mandela.
With Manuel as trade minister from 1994-96, liberalisation demolished the clothing, textile, footwear, appliance, electronics and other vulnerable manufacturing sectors, as he drove tariffs below what even the World Trade Organisation demanded. After moving to the finance ministry in 1996, Manuel imposed the “non-negotiable”Growth, Employment and Redistribution policy (co-authored by World Bank staff), which by the time of its 2001 demise had not achieved a single target aside from inflation.
Manuel also cut the primary corporate tax rate from 48 percent in 1994 to 30 percent five years later, and then allowed the country’s biggest corporations to move their financial headquarters to London, which ballooned the current account deficit. That in turn required Manuel to arrange such vast financing inflows that the foreign debt soared from the $25 billion inherited at apartheid’s close to $80 billion by early 2009.
At that stage, with the world economy teetering, The Economist magazine named South Africa the most risky of the 17 main emerging markets, and the SA government released data conceding that the country was much more economically divided than in 1994, overtaking Brazil as the world’s most unequal major country.
“We are not in recession,” Manuel quickly declared in February 2009. “Although it sometimes feels in people’s minds that the economy is in recession, as of now we are looking at positive growth.” At that very moment, it turned out, the SA economy was shrinking by a stunning 6.4 percent (annualized), and indeed had been in recession for several months prior.
More than 1.2 million jobs were lost in the subsequent year, as unemployment soared to around 40 percent (including those who gave up looking). But in October 2008, just as IMF managing director Dominque Strauss-Kahn told the rest of the world to try quick-fix state deficit spending, Manuel sent the opposite message to his impoverished constituents: “We need to disabuse people of the notion that we will have a mighty powerful developmental state capable of planning and creating all manner of employment.”
This echoed his 2001 statement to a local Sunday newspaper: “I want someone to tell me how the government is going to create jobs. It’s a terrible admission, but governments around the world are impotent when it comes to creating jobs.”
Governments under the neoliberal thumb are also impotent when it comes to service delivery, and thanks partly to his fiscal conservatism, municipal state failure characterizes all of South Africa, resulting in more protests per capita against local government in Manuel’s latter years as finance minister than nearly anywhere in the world (the police count at peak was more than 10,000/year).
Ironically, said Manuel in his miserly 2004 budget speech, “The privilege we have in a democratic South Africa is that the poor are unbelievably tolerant.” In 2008, when an opposition politician begged that food vouchers be made available, Manuel replied that there was no way to ensure “vouchers will be distributed and used for food only, and not to buy alcohol or other things.”
Disgust for poor people extended to AIDS medicines, which in December 2001 aligned Manuel with his AIDS-denialist president Thabo Mbeki in refusing access: “The little I know about anti?retrovirals is that unless you maintain a very strict regime … they can pump you full of anti?retrovirals, sadly, all that you’re going to do, because you are erratic, is to develop a series of drug?resistant diseases inside your body.”
Instead of delivering sufficient medicines, money and post-neoliberal policy to the health system, schools and municipalities, Manuel promoted privatization, even at the Monterrey global finance summit: “Public-private partnerships are important win-win tools for governments and the private sector, as they provide an innovative way of delivering public services in a cost-effective manner.”
He not only supported privatisation in principle, as finance minister Manuel put enormous pressure (equivalent to IMF conditionality) on municipalities – especially Johannesburg in 1999 – to impose commodification on the citizenry. In one of the world’s most important early 21st century water wars, residents of Soweto rebelled and the French firm Suez was eventually evicted from managing Johannesburg’s water in 2006.
Water privatisation was Washington Consensus advice, and as Manuel once put it, “Our relationship with the World Bank is generally structured around the reservoir of knowledge in the Bank” – with South Africa a guinea pig for the late-1990s “Knowledge Bank” strategy. Virtually without exception, Bank missions and neoliberal policy support in fields such as water, land reform, housing, public works, healthcare, and macroeconomics failed to deliver.
In spite of neoliberal ideology’s disgrace, president Jacob Zuma retained Manuel and his policies in 2009. In September that year, Congress of SA Trade Unions president Sdumo Dlamini called Manuel the “shop steward of business” because of his “outrageous” plea to the World Economic Forum’s Cape Town summit that business fight harder against workers. The mineworkers union termed Manuel’s challenge “bile, totally irresponsible… To say that business crumbles too easily is to reinforce business arrogance.”
Manuel also disappointed feminists for his persistent failure to keep budgeting promises, even transparency. “How do you measure government’s commitment to gender equality if you don’t know where the money’s going?” asked the Institute for Democracy in South Africa’s Penny Parenzee. Former ruling-party politician Pregs Govender helped developed gender-budgeting in 1994 but within a decade complained that Manuel reduced it to a “public relations exercise”.
As for a commitment to internationalism, in early 2009 when Pretoria revoked a visitor’s visa for the Dalai Lama on Beijing’s orders, Manuel defended the ban on the exiled Tibetan leader: “To say anything against the Dalai Lama is, in some quarters, equivalent to trying to shoot Bambi.”
At the same moment Manuel was sabotaging Zimbabwe’s recovery strategy, chosen by the new government of national unity, by insisting that Harare first repay $1 billion in arrears to the World Bank and IMF, otherwise “there was no way the plan could work.” Zimbabwean economist Eddie Cross complained, “In fact the IMF specifically told us to put the issue of debt management on the back burner… The South Africans on the other hand have reversed that proposal – I do not know on whose authority, but they are not being helpful at all.”
Given his biases and his miserable record, many within SA’s community, labour, environment, women’s, solidarity and AIDS-treatment movements would be happy to see the back of Manuel. His own career predilections may be decisive. Often suggested as a candidate for the top job at the Bank or IMF, Manuel recently confirmed anger at the way local politics evolved after Zuma booted Mbeki from the SA presidency.
In an open public letter last month, for example, Manuel told Zuma’s main spokesperson, Jimmy Manyi, “your behaviour is of the worst-order racist” after a (year-old) incident in which Manyi, then lead labour department official, claimed there were too many coloured workers in the Western Cape in relation to other parts of SA. Manyi had earlier offered a half-baked apology, but suffered no punishment. Once a political titan, Manuel now appears as has-been gadfly.
His disillusionment apparently began in December 2007, just prior to Mbeki’s defeat in the African National Congress (ANC) leadership election. After his finance ministry job was threatened by Zuma assistant Mo Shaik’s offhanded comments, Manuel penned another enraged open letter: “Your conduct is certainly not something in the tradition of the ANC… You have no right to turn this organisation into something that serves your ego.” In May 2009 Shaik, whose brother Schabir was convicted of corrupting Zuma during the infamous $6 billion arms deal, was made director of the SA intelligence service. Manuel was downgraded to a resource-scarce, do-little planning ministry.
It is easy to sympathize with Manuel’s frustrating struggle against ethnicism and cronyism, especially after his opponents’ apparent victories. However, former ANC member of parliament Andrew Feinstein records that the finance minister knew of arms-deal bribes solicited by the late defense minister Joe Modise. In court, Feinstein testified (without challenge) that in late 2000, Manuel surreptitiously advised him over lunch, “It’s possible there was some shit in the deal. But if there was, no one will ever uncover it. They’re not that stupid. Just let it lie.” Remarked Terry Crawford-Browne of Economists Allied for Arms Reduction, “By actively blocking thorough investigation of bribery payments, Manuel facilitated such crimes.”
Nevertheless, the myth of Manuel’s financial wizardry and integrity continues, in part thanks to a 600-page puff-piece biography, Choice not Fate (Penguin, 2008) by his former spokesperson Pippa Green (subsidized by BHP Billiton, Anglo American, Total oil and Rand Merchant Bank). And after all, recent politico-moral and economic scandals by World Bank presidents Robert Zoellick and Paul Wolfowitz (whom in2005 Manuel welcomed to the job as “a wonderful individual . . . perfectly capable”) confirm that global elites are already scraping the bottom of the financial leadership barrel.
Yet it is still tragic that as host to 2011’s world climate summit, South Africa leads (non-petroleum countries) in carbon emissions/GDP/capita, twenty times higher than even the US. Even more tragic: Manuel’s final budget countenanced more than $100 billion for additional coal-fired and nuclear power plants in coming years.
In sum, Manuel’s leadership of the Green Climate Fund adds a new quantum of global-scale risk. His long history of collaboration with Washington-London raises prospects for “default” by the industrialized North on payment of climate debt to the impoverished South. Indeed, if Pretoria’s main man link to the Bretton Woods Institutions, Manuel, co-chairs the fund and gives the Bank more influence, then expect new forms of subprime financing and blunt neoliberal economic weapons potentially fatal to climate change mitigation and adaptation.
(Patrick Bond is with the University of KwaZulu-Natal Centre for Civil Society in Durban: http://ccs.ukzn.ac.za )