Helen Zille urges “boxing smart with cool heads” on Trump Tariffs; creaking GNU; Business pressure
Chair of the Democratic Alliance’s Federal Executive, Helen Zille, shares some Uber Truths in this timeous interview with BizNews editor Alec Hogg – discussing the DA’s view on staying in the GNU (or being ejected from it); the pressure being imposed on the party’s GNU decision by Big Business; why the DA has approached the courts to block the VAT increase; what to do about the proposed Trump Tariffs – and what South Africans should do about jerking the country out of a 15 year economic coma.
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Edited transcript of the interview
Alec Hogg (00:06.958):
The world is a crazy place right now. Helen Zille is the chair of the Federal Executive at the Democratic Alliance. Helen, we're getting a glimpse into the way your life runs as per normal. I guess it's business as usual to deal with this kind of drama. To those of us outside watching, it feels almost like the whole world is on a knife edge, with South Africa being even more so.
Where are we right now? Where is South Africa? Should we be worried?
Helen Zille (00:42.377):
Well, obviously, Trump's tariffs are having an enormously negative effect on us. Trump wants to stop South Africa from being a connector country for exports, such as Mercedes-Benz out of East London. Many countries have brought jobs to South Africa by making use of South Africa's AGOA status internationally, which has helped us enormously by creating a lot of jobs. By slapping such high tariffs on us—I think it's 25% on South Africa—it makes it very, very difficult to export our goods, or any other goods from people who've invested in building factories in South Africa, to the United States. And that is going to have an enormously negative impact on our economy. So we're bracing for that. We've seen the whole world reacting to President Trump's announcements, especially in the last 24 hours.
Alec Hogg (01:38.894):
You have sent a delegation to Washington, and we now hear that a business delegation has been there as well and returned. Is there any brightness in the gloom?
Helen Zille (01:55.029):
President Trump is dead opposed to any race-based legislation in South Africa and any indication of the persecution of minorities. Now, we also don't think that race-based legislation is helpful in a supposedly non-racial democracy. We're completely opposed to discrimination and oppression of minorities. That's why we were appalled by the Constitutional Court judgment that said "Boer" is not hate speech. Of course, it is hate speech in our opinion, and I think in most people's opinion. So those kinds of things are worrying, but we don’t believe that all South Africans should be punished. The people who will be most profoundly punished are those who are going to lose their jobs in car factories, those who are going to lose their jobs on the farms of the Western Cape and other places, because we, for example, export lots of citrus to the United States and other agricultural products. So, the workers are going to be hardest hit by these measures, and this is the tragedy for South Africa.
Alec Hogg (03:13.23):
Yeah, BMW produces 50% of their cars in South Africa for the US market, and of course, they'll be priced out immediately. The numbers, I did some work on them the other day, were 23 billion rand worth of exports. So, this is a very serious issue. But on the other hand, those who have connections with Donald Trump and his people say he can be a very good friend. We haven’t explored that opportunity yet. Is there anything within the Government of National Unity (GNU)? We'll talk about that in a moment, which could maybe change the situation, or turn it around so that America starts supporting us rather than punishing us?
Helen Zille (03:54.293):
We have to box very smart, because we are not important to America. Minority rights are massively important to Donald Trump in South Africa, but our economy is of absolutely no significance in the American scheme of things. We shouldn’t think that we can retaliate at an economic level and give the USA a bloody nose. We have to box very, very smart here. Boxing smart would be, for example, not increasing tariffs to impossible levels but reducing tariffs, especially on products that we don’t make in South Africa, to encourage people to invest in South Africa so that we can make up for a lot of the trade we will lose to America. We have to do serious calculations—no knee-jerk reactions, proper economic analysis, and long-term thinking because that’s what it will take.
Alec Hogg (05:00.046):
Cool heads. What about the GNU? We’ve been told that the DA is moving out or pulling out. There’s a lot of heat around the conversation after the budget. Are you able to bring some cool heads into that discussion as well?
Helen Zille (05:01.653):
Cool heads.
Helen Zille (05:15.113):
Yes.
Helen Zille (05:18.537):
We always have cool heads. We went into the GNU in order to share power. That is what coalitions do all over the world, Alec. No one goes into a coalition to be absorbed by the larger party and prop them up because they didn’t get enough votes in the election. In countries where coalitions work, the bigger party and the smaller party accept that a coalition means power-sharing. The ANC, sadly, does not accept that. As they’ve often said, this is just a tactical move until they get above 50% again. They don’t understand that the DA is in the GNU to share power, but most critically to get South Africa’s economy back on a growth path so that we can create more jobs. To get growth, you need investment. We have to make sure that we do everything possible to make South Africa an investor-friendly destination. The DA’s crucial economic reforms are at the heart of that quest. By the end of January, if we are to make any impact for the betterment of South Africa, we have to be able to say, “In 2029, we brought down unemployment by X percentage, created X thousand new jobs,” and so on. Then, our participation in government would have been worth it. The ANC isn’t interested in any of it.
Alec Hogg (06:50.198):
The big issue is, and I had a very close look at the by-election results over the last few days, which were really... the DA has been losing ground there, not in the staunch DA areas. But subsequent to this more hardline stance you took on the budget, suddenly the by-elections seemed to be doing a lot better for the DA. But there might have been those who were saying the GNU hasn’t really worked in your favour. That was until very recently when you stood up against the VAT increase.
Helen Zille (07:29.919):
Well, no one likes their party to be subservient to a bigger party in the coalition. Our voters want us to stand up and fight for their interests. We won’t just do knee-jerk fighting either. We evaluate every situation and determine what we need to fight for and what is winnable. Coalitions are very complex and very difficult. In the by-elections where we lost ground, you have to understand that these were by-elections, or one by-election in particular, in a place where our councillor had been very ill for years. For several reasons, we didn’t want to be cruel and cold to move him out at such a critical stage in his life. He passed away, and he had left an unserviced ward. Even though we put in a proportional representation councillor to fill the gap, it’s difficult to compensate for an absent ward councillor, and that’s where the other parties got their foot in the door very substantially. These are the kinds of things that obviously hit us hard, and in those very marginal seats where we won previously with only 29% of the vote—because the vote was split across many parties—we’re going to feel the pain. And we did.
Alec Hogg (08:52.122):
Let’s focus, if we can, on the VAT story. The DA standing firm against it. What are your plans now going forward?
Helen Zille (09:04.661):
Well, the DA never has only one track in a fight. We try to have multiple tracks, multiple fallback positions. Obviously, Plan A was to win concessions in political negotiations. I saw, ironically and quite cynically, that Paul Mashatile said, “We’re in the GNU based on the Statement of Intent that we both signed.” That is true, but the ANC has never respected any of the clauses of the Statement of Intent, most particularly Clause 19 and 19.3, which define sufficient consensus on all GNU decisions. On the budget, they’ve ignored it because they said, “It’s our way or the highway,” and “We’re not going to give any compromise to you, although we’re going to ask for lots of compromises from the DA.” This was very difficult. Now, we’ve moved from the first track, which is the political negotiation track, to the second track, which is the legal track. We always had the legal track in abeyance, but you don’t want to move onto the legal track unless you’ve absolutely exhausted all other options in the political track. Now we’re on the legal track, and we think we have the best possible chance to interdict the VAT increase and have Clause 7.4 of the VAT Act declared unconstitutional. That’s what we’re working very hard to achieve, and in that way, we will stop the VAT increase.
Alec Hogg (10:41.688):
Could you explain it in terms that your voters can understand what it is that you are asking the courts to do here?
Helen Zille (10:52.203):
Section 7.4 of the VAT Act says that the Minister can announce in Parliament that there will be a VAT increase, and it will take effect on the day of the announcement, irrespective of whether Parliament supports the Budget. In this case, Minister Godongwana got up and announced a 0.5% VAT increase from May 1st. It then transpired that he couldn’t get his budget through Parliament. But nevertheless, the 0.5% VAT increase is still going ahead because that is the power the law gives him—irrespective of whether Parliament supports his budget. Our argument is that this is unconstitutional because it effectively gives the Minister legislative powers. He gets up and, by virtue of an announcement, makes a law. That violates the principle of the separation of powers. The Executive can’t make a law; it can only implement and execute the laws. That’s why they call it the Executive. We argue that the announcement was unconstitutional, and he should never have announced the VAT increase before getting the budget through Parliament.
Alec Hogg (12:34.104):
But now that he has got the budget through Parliament, wouldn’t it be a Pyrrhic victory even if the courts were to rule in your favor?
Helen Zille (12:42.473):
No, because we believe the announcement was irregular in various respects, and we believe we can still interdict the increase.
Alec Hogg (12:57.454):
Okay, but I suppose the bigger story—sorry, you said the crucial thing…
Helen Zille (13:00.811):
The process in the portfolio committee is absolutely critical to this whole argument. The process in the portfolio committee was entirely irregular. The portfolio committee never voted on the fiscal framework in its totality at the end. So, the document that appeared before Parliament had not been approved by the portfolio committee, and that’s another fatal procedural flaw we’re going after. We look at both process and substance and go after whatever we can when we switch to the legal track.
Alec Hogg (13:41.089):
Interesting. When you get the right processes in place, everybody knows where they are and the consequences if they don’t follow them. But as far as the GNU is concerned, many people in the business community are worried. We've seen the rand fall sharply when other emerging market currencies have risen against the US dollar. There’s a direct correlation between what's happening in South Africa politically and what's happening to the currency or our share price. How are you reading this, and what are the pointers for us now to look out for?
Helen Zille (14:20.543):
Well, the markets really like the GNU, and investors are saying, “No GNU, no investment.” We hope the ANC is getting the message because we’re good at opposition, we do it well, and we’re not simply going to stay in the GNU to prop up the ANC in implementing its policies the way it feels like. We’re in the GNU to get South Africa back on a growth path—growth and jobs. That’s a large part of the reason the markets like the GNU, because they know that with the DA in there, we’ll be getting rid of corruption, applying investor-friendly policies to get investment, growth, and jobs, and giving South Africa some prospects. If the ANC wants to kick us out at the same time as Trump piles on the tariff pressure, the ANC will be responsible for a recession the likes of which we’ve rarely seen. So let them take this message on board: The DA is not there as a gopher for the ANC. We are there with 22% of the vote to exercise the mandate of our voters to serve South Africa and get more people into jobs.
Alec Hogg (15:47.097):
So from what you've said now, it would confirm the talk that the DA is not going to leave the GNU. In fact, the ANC is going to have to make the decision to kick the DA out. Is that accurate?
Helen Zille (16:00.959):
No, I’m not necessarily saying that. It depends on the terms that the ANC puts on the table. All of this is about divisions within the ANC. The ANC is profoundly divided. Paul Mashatile wants the DA out of the GNU because they want Cyril Ramaphosa out of the ANC. This is all about factionalism in the ANC, which is a many-headed hydra. Some people in the ANC say, “Please allow the DA to stay, but make them four cabinet posts,” which is a joke because we’re already, in terms of the agreement, three cabinet posts short. Others say, “Kick them out immediately without hesitation.” And others say, “Let them stay because the alternative is too ghastly to contemplate.” So, the ANC is deeply divided around their internal succession dynamics. Paul Mashatile wants to succeed Cyril Ramaphosa, and there’s a battle for control of the party. From that perspective, it’s incredibly hard to predict where they will land.
Alec Hogg (17:21.221):
Helen Zille, Chair of the federal executive of the Democratic Alliance and I'm Alec Hogg from BizNews.com