PREMIUM FREE TRIAL

Trump tweets, rand reels: South Africa’s land EWC debate explodes on Twitter

JOHANNESBURG — At 4:28 am South African time on Thursday morning, US President Donald Trump entered the fray in SA’s land EWC debate. His tweet on the subject – which is visible below – came just after Fox News’ Tucker Carlson interviewed Marian Tupy of US think-tank Cato Institute. The style of Carlson’s interview is an utter disgrace to journalism. Tucker was sensational and erroneous in his statements and questions. For example, he incorrectly stated that SA has already changed its Constitution to allow land EWC. He also insults former US President Barack Obama in the most childish way in a throwaway comment towards the end of the interview. It’s clearly not journalism but propaganda. However, the damage has been done as ordinary South Africans woke up to a rand that weakened sharply this morning. The ANC, though, is also chiefly to blame for this situation. It has utterly failed to properly communicate its exact stance on land EWC and, in effect, sparked political and economic uncertainty. – Gareth van Zyl

By Colleen Goko

(Bloomberg) – South Africa’s rand slumped against the dollar after a tweet by US President Donald Trump on the country’s land debate prompted speculation of possible sanctions against the country.

The currency weakened as much as 1.8 percent after Trump said he asked US Secretary of State Mike Pompeo “to closely study the South Africa land and farm seizures and expropriations”. The South African government hit back, tweeting that it “totally rejects this narrow perception which only seeks to divide our nation.”

The acting US ambassador to the country will be summoned to explain Trump’s comments, two people familiar with the situation said Thursday. He was intervening in an ongoing debate about whether South Africa should implement a policy of seizing land without paying for it in a bid to address inequalities built up during apartheid.

The comment raised concern that the US could target South Africa with economic sanctions having already moved against Turkey, a decision that would weaken the rand further, according to Hironori Sannami, an emerging-market currency trader at Mizuho Bank.

The rand was 1.8 percent weaker at 14.4232 per dollar by 9:22am in Johannesburg. Yields on benchmark 2026 government bonds rose 4 basis points to 8.97 percent. The benchmark FTSE/JSE All Share Index climbed 0.1 percent, supported by shares in companies that benefit from rand weakness.

On Wednesday, South African President Cyril Ramaphosa told parliament that increasing access to land for the poor would happen in an orderly fashion and would initially focus on making state property available. The rand strengthened on his comments.

“One tweet does not make a book,” said Warrick Butler, a currency trader at Standard Bank Group Ltd. “There are far too many other components affecting the rand. If the dollar reverses its recent correction then so too will the rand regardless of Twitter.”


Trump wades into South African race politics with farm tweet

By John Harney and Colleen Goko

(Bloomberg) – With legal questions mounting at home, US President Donald Trump waded into South Africa’s racially charged debate about land reform, triggering a selloff in the rand.

Trump said in a tweet that he’s asked US Secretary of State Mike Pompeo to “closely study the South Africa land and farm seizures and expropriations.” He was intervening in a controversy about whether South Africa should implement a policy of seizing land without paying for it in a bid to address inequalities built up during apartheid and colonial rule.

The comment raised concern that the US could punish South Africa economically, having already sanctioned Turkey. South Africa is the biggest beneficiary of the African Growth & Opportunity Act, which grants many of its products duty-free access to US markets.

US President Donald Trump speaks during an announcement in the Rose Garden of the White House in Washington, D.C., U.S., on Thursday, June 1, 2017. Trump announced the U.S. would withdraw from the Paris climate pact and that he will seek to renegotiate the international agreement in a way that treats American workers better.
File photo: US President Donald Trump speaks during an announcement in the Rose Garden of the White House in Washington, DC, US. Photographer: Andrew Harrer/Bloomberg

The rand weakened 1.9 percent to 14.4384 per dollar by 9:37 a.m. in Johannesburg. Yields on benchmark 2026 government bonds rose 4 basis points to 8.97 percent.

“Emerging-market currencies in general have been under downward pressure since early morning in Asia amid a rebound in the dollar and Trump’s tweet further added pressure on the South African currency,” Hironori Sannami, an emerging-market currency trader at Mizuho Bank.

Trump’s tweet about a region that has never been on his radar suggested a distraction tactic: This week, his former campaign chairman, Paul Manafort, was convicted in a federal court of tax and bank fraud, and his one-time lawyer, Michael Cohen, pleaded guilty to campaign-finance crimes.

Ambassador summoned

South African President Cyril Ramaphosa – who took office after his predecessor, Jacob Zuma, was forced out amid a whirlwind of corruption investigations and scandals – has embraced land seizures without compensation as a means to achieve equality and racial justice – and as the ruling African National Congress faces growing opposition before elections in 2018. The state hasn’t taken any property yet, and a planned amendment to the constitution is still work in progress.

The US’s acting ambassador to the country will be summoned to explain Trump’s comments, two people familiar with the situation said Thursday. The South African government tweeted that it “totally rejects this narrow perception which only seeks to divide our nation.”

“South Africa will speed up the pace of land reform in a careful and inclusive manner that does not divide our nation,” it said.

Racial lines

White farmers own almost three-quarters of South Africa’s agricultural land, according to an audit by farmers’ lobby group AgriSA published last year. Access to land is one of the symbols of inequality in the nation of about 56 million where wealth and poverty are largely divided along racial lines.

South Africa’s high crime rate has affected rural areas, with some farmers killed in attacks. Statistics released in May by AgriSA found that farm murders had decreased to 47 over the previous year, less than one-third of the highs in the late-1990s, although other groups argue attacks have recently increased.

In February, lawmakers began a process to change the constitution to allow for expropriation without compensation.

Ramaphosa told lawmakers in Cape Town on Wednesday that land reform would be done in an orderly fashion and individual property rights will be strengthened. The planned constitutional amendments will provide greater certainty to both those who want and own land, and promote growth, stability and food production, he said.


Trump tweet shows the damage that EWC is doing – IRR

IRR media release

President Donald Trump’s announcement that he has directed his Secretary of State, Mike Pompeo, to ‘study the South Africa land and farm seizures and expropriations and the large scale killing of farmers’ is another indication of the damage that the reckless handling of South Africa’s ‘land question’ is doing.

Expropriation without compensation (EWC) has become one of the dominant themes in the country’s politics. This has been deliberately driven by the government and ruling party, even though survey evidence has shown that land – particularly in the agrarian sense – is not a priority for South Africa’s people.

Senior politicians, including President Ramaphosa, have repeatedly endorsed the idea of compensation-free seizures of property. Over the past few weeks, this has extended to a commitment to amend Section 25 of the constitution. This is despite the president’s own declaration that nothing in the constitution prevented EWC. This decision was taken before the parliamentary review process into the matter had been completed. That the Bill of Rights should be tampered with in this fashion – for purely political reasons – sets a disturbing precedent.

That neither government nor the ruling party has seen fit to favour the country with a clear sense of what the proposed EWC system will entail has itself become a major concern for business. Based on a string of attempted policy and regulatory changes over the past decade, it is likely to entail significantly enhancing the discretion of the government to intervene in and abridge the property rights of individuals and businesses.

There is no guarantee that expropriations will ultimately be limited to land; once momentum begins to build, it is probably inevitable that they will extend to other spheres of the economy.

We at the Institute of Race Relations can attest to the degree of apprehension felt by business – both in South Africa and abroad.

President Trump’s announcement is the latest indication that the EWC drive is having consequences offshore. Seen alongside South Africa’s decision to terminate its bilateral investment treaties, EWC has prompted a great deal of concern about the security of their assets – particularly among the European investors most directly impacted.

Even president Ramaphosa’s investment envoys have referred to the difficulties that EWC has created for them in attempting to attract desperately needed funds to South Africa.

For South Africa, consternation about EWC has implications for the country’s eligibility for the African Growth and Opportunity Act (Agoa). Countries participating in Agoa must be, or be working towards, ‘a market-based economy that protects private property rights’. Intellectual property and private security ownership requirements (both property rights issues) have already been sources of tension with the United States within the Agoa context.

EWC could well lead to South Africa’s exclusion. This would be a significant disadvantage for South Africa, putting large volumes of exports and potentially tens of thousands of jobs at risk.

It is remarkable that South Africa’s government is apparently willing to risk its own economic interests for a policy choice that will do nothing to resolve the issues for which it is nominally being adopted.

The IRR will continue to lobby and apply pressure until the policy of EWC is abandoned and the property rights of all South Africans, black and white, are secure.

Make Better Decisions. Start your Biznews Premium FREE TRIAL today.