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How 2025 shaped investor confidence economic environment Patrick: Well, we could go through the companies that have closed down. It’s a terrible list, as well as those that are downsizing with hundreds, and in a few cases, thousands of jobs and crucial parts of the old economy lost, including many of the steel foundaries. And now, let’s say, competition that threatens – not only from Chinese dumping, as I say, that that’s been defended against, maybe not enough, the steel industry may say, ‘too little, too late,’ but then we’ve also probably got the Zimbabwean production – up to five megatonnes coming at us – very, very heavy steel production that we can anticipate there. So it does look quite grim. And then we’ve seen the attempt to get smelters back up and running, with cheaper electricity deals. We’ve seen probably, in two weeks from now, the Carbon Border Adjustment Mechanism hitting, especially, steel and aluminium, and eventually cars and petrochems which have very high CO2 content. I’ve seen a debate the last year, which is quite unsatisfactory, about decarbonization and the Just Energy Transition Partnership, and especially the inability to move from coal to gas. I think Parks Tau probably made a big mistake by trying to get a trade deal with the US that was based on import of liquefied natural gas, and maybe some chickens that the US consumer market don’t like, some of the parts of those chlorinated chickens, so they expect us to. And when you look at it all together, a lot of the deindustrialization under way, and continuing under these conditions, where we’re losing big export markets, I think what we’ll be seeing in January, is how Europeans who are being accused of outsourcing their CO2 emissions by importing the steel, the aluminium, the cars and other big CO2 intensive products. And they were letting South Africa do it. Well, because we have only a R6 per tonne carbon tax, and there’s right now in Europe, 85 euro a tonne for their emissions trading scheme, the gap between those is so high that they’re now going to basically make our industrial exports uncompetitive. Those are huge exports to the EU, and then a year later to the UK. They basically penalize us, a sort of climate sanctions. Maybe we deserve it. We’ve been really polluting up a storm. We’re the third highest in the world in terms of the emissions per person per unit of output. So we have a very inefficient economy, and now we’re going to get, I think, a cold shower on that side. So yeah, I would expect the de-industrialization to continue. Some of the big unions that I talk to occasionally, the mining, the metal workers, they’re very frustrated and the attempt to get a real just transition, again with the Mpumalanga coal workers, with coal-fired power plants, with some of the heavy industrial sectors, it’s really just tokenistic. They’ve got $12.5 billion, R245 billion in a fund in the presidency, and I just don’t see it moving at all. Certainly, the consultations with the people affected have been been minimal. Nosipho: Sure. That is quite a sobering assessment then of what we can expect going forward. But maybe Patrick, what urgent policy or structural interventions then are required in 2026 to reverse de-industrialization address high unemployment and create a more inclusive economic model? Patrick: Either we go with our rhetoric, which has been quite interesting and progressive and saying, well we need to recognize multipolarity and then we work in a collective way and we penalize Donald Trump. I’m sort of until this week or the presidency to say to the other G20 members hey please stick up for us. Why couldn’t we have had some collective response to Trump to his dropping out of the K of the Paris climate agreement and the UN climate discussions dropping out of the World Health Organization messing up the world trading system with his chaotic tariffs dropping US aid which hurts us terribly with about eight and a half billion rand from the PEPAR their aids medicines programs dropped the 1 billion dollar in loans for the jetp just energy transition program withdrawn by Trump. All of this going on all around the world, probably invading Venezuela in the next few days, the role in Gaza of the US military. , we could have, I think, put a case that Trump shouldn’t have come and we should have had collective responses and start to to work against what is now eventually happened, which is a trade war in 1930 style, right? That in the US they call that smoo holly. That is that they descended into this competitive protectionism. I suspect that’s the way we’re going to go. We’re seeing our own International Trade Administration Commission put on the tariffs, but they have to. I mean, otherwise the dumping from China because, , China doesn’t have the same market in the US. They’re down 20% on their exports to the US. So, they’re putting all of their excess production elsewhere and that that excess production is billowing up all over the place. 50% excess in Chinese automobiles for example. So, we’re getting huge inflows now of those and and Indian cars as well. So I think you you kind of either have to do the rhetoric of bricks and multiparism and alternative multilateralism. We failed to do that. They they simply didn’t have the guts to stand up to Donald Trump in a collective way. So it was one country after the other. They were all divided and conquered including South Africa. And then the alternative would be to do I would call it because I had a small role in the reconstruction and development program that is you meet basic needs. you see where the huge deficit in society and the infrastructure of housing and water systems. I’m in I’m in Millville, a nice bohemian suburb of Joberg near the universities and my water isn’t working this week. And I say that about a lot of my neighbors here in Joberg, maybe yours as well. And I think that’s where the priority should be and that the job creation could come from meeting basic needs and basic infrastructure and rebuilding our clothing, textiles, appliances, footwear, electronics, all those basic industries. We had very strong in the 80s 90s and then they were devastated by free trade. To me that would be the way forward. It would be looking inward but and of course looking to the continent trying to finally get this African continental free trade area up and running after 5 years of terrible disappointments. Does that make sense? In other words, you go you go local. Your gaze turns to the people that you should be. Of course, I’m on the left, so I’m not sure everyone in the house will agree. Nosipho: An interesting perspective, looking inward then… I guess maybe I’m going to, turn to you then, Patrick, because that did sound like a politically charged question in terms of this opportunity then, that Neil believes is being presented by the US, for the DA to show some patriotism. Patriotism. I hope I got that right. But Patrick, what is your take on that question? Patrick: It’s so hard to figure out, isn’t it, given the various currents in the business community. Anglo American just announcing, oh, we’re leaving now. And then John Steenhuisen becoming so friendly with China, on the grounds of their major imports of our agricultural goods. That’s perfectly reasonable. But this is a terrain that we’re not really used to, is it? That where maybe we could say back in 1999, when Anglo, De Beers, Investec, Old Mutual, SAB, they all relisted their primary listing in London, you could sort of see patriotism wasn’t quite in that English- speaking fraction of the JSE. Afrikaner capital stayed behind. And it’s a very interesting question when you then take it, to whether you can look west, and see Donald Trump as representing some sort of ordinary western corporate interest. He’s not. He’s made chaotic policy decisions, because of an ideology that he’s bringing in, called paleo-conservatism. That’s what they call it there, in a paleo – stone age – ideology, a populist nationalism. And if you look around the west, you look at Britain you see that coming through Reform Party right now, in terms of popularity, though they won’t get in for another three years. Anybody watching the G20 will be happy that at least Kier Starmer or whomever replaces him a year from now – since he’s so terribly unpopular – will be from the Labour side, pro South Africa, in the G20. But then you look at Germany; again, probably the largest party now is the AFD, the neo-Nazi party. Or the French, where the National Front are still the number one party. And that means that we’re looking at when you’d say, well, pro-west, and you want the multilateral institutions that typically would give corporates some confidence – the World Trade Organization, IMF, World Bank – they’re in tatters there. The WTO has fallen apart. Trump is putting on tariffs which his own Supreme Court would probably in the next few days judge to be illegal. He said it’s an emergency. They’re going to look at and say, “Of course it’s not.” And Congress is the one that should be given that power, to put on tariffs and to manage trade policy. So, we’re in a chaotic situation where this paleo-conservatism of Donald Trump and then of course neo-conservative elements in the State Department there, with militarism in Venezuela and the Caribbean, the alliance with Israel. And then you’ve got, of course, the neoliberal tradition. In all of that, what South Africa has said, what the BRICS summit in Brazil announced, what last year in Russia, they said, “Well, we’re going to do something different in multilateralism that will be more equitable, multi-polar.” But they haven’t really done much at all, and they haven’t come together. So, I don’t think it really matters, does it? Whether Steenhuisen and some of the corporates look west, it’s chaos out there. And in fact, if you want to see who the main champion for intellectual property rights and trade regulations and all, it’s actually coming more from China. It’s coming from the BRICS. One example just to end off, is to make it so confusing, if Cyril Ramaphosa seems like he’s – if the support for Palestine seems like he’s – irritating the West, by calling them out on genocide, sure. But Parks Tau says he’s not going to impose a coal embargo, that is of Glencore and African Rainbow Minerals which export coal to Israel, and he says it’s because the WTO would consider that discriminatory. It’s a classic problem, right? We call it talk left, walk right, when it comes to these big foreign policy processes. And I don’t think Steenhuisen and Ramaphosa will have all that much difference between them. Nosipho: And of course, just to pick up on that point that you made, that Supreme Court ruling will definitely have major implications then for Trump’s tariffs… how does that political dynamic there, of South Africa not being used as a pawn, then, but what is your assessment or your take then on what Thabo had to say? Patrick: If you’d allow me though, I’d also like to very quickly just say to my friends Mtho and Khulekani that the problem that you’re identifying and the satisfaction you’re getting from solving the problem especially that led us off the grey list, I don’t think we’ve solved it. I think the Eskom solution was we lost about a quarter of our effective demand from the Energy Intensive Users Group. You can look at their stats, but their peak in 2008, they’re down a quarter in demand. And especially this year, we’ll see with the ferrochrome smelters closing, with steel foundries closing, and even Ravi Naidoo, the former Reserve Bank deputy governor, will tell you that at least half of the reason we don’t have load shedding is because the guzzlers have been turned off, and we’re under that extreme competition from especially the Chinese dumping of steel. So, that would be one thing. The other financial matter is, I think, we really did need the grey list. We were getting so sloppy. We have a Reserve Bank and a Treasury that that snickered when they heard about banks that were manipulating our currency, and it was the Competition Commission that picked that up. And they weren’t all the way through their 28 banks, they made some mistakes. But even the United States, New York State specifically, was prosecuting banks for their ‘ZAR Domination’, their chat room. And our own banks are again and again violating basic norms of business practice. In fact, PwC has been naming South Africa as the number one site for money laundering, and procurement fraud, and corporate bribery. This is the shame: that we haven’t transformed white capital to become ethical. They committed a crime against humanity by profiting from apartheid, and we really haven’t come to grips with that. And they therefore are continuing to rank number one on the PwC list of economic crime and fraud, that you can find on their website. So those would be the challenges and I don’t think looking to the west solves them. I think it’s going to be, as I say, gazing downwards to the vast majority, with more than two-thirds of our society consuming less than R65 per day, and therefore in poverty. I think that’s where big contradictions in society rise. The JSE going from about 85,000 to 110,000 on the main FTSE index, but the society suffering worse unemployment and these big layoffs in in big industry. It’s it’s untenable. Nosipho: And I guess we’re going to have to leave it there, Patrick… And Patrick, you have the final word then this evening. Patrick: Well, I’d agree that the trade problem gets much worse on January 1, with sanctions from Europe on the big industries, and then a year later the UK hits the same Carbon Border Adjustment Mmechanism. And we’re way behind, and the idea we go to methane from the United States with Parks Tau isn’t going to solve that problem. Very very good to be with all of you dear people. Thank thanks for having the tolerance to hear my left point of view. Nosipho: Fantastic. Thank you so much. to all of you this evening, advocate Mtho, president of Sacci, Khulekani, CEO at Business Unity South Africa, and political economist, Professor Patrick Bond. And that wraps up this evening’s edition of Power Business. https://www.youtube.com/watch?v=2-mZwggQqkU Back |
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