S van der Merwe: South African Chamber of Business luncheon

28 September 2006

Diplomatic investment in Africa

Ladies and gentlemen,

Thank you very much indeed for the opportunity to address you today. I have
chosen to focus this discussion on our diplomatic efforts in Africa and called
it, "Diplomatic investment in Africa".

We make this investment in the belief that every rand that we spend, every
diplomatic effort that we employ on the continent will advance our national
interests.

Our democracy has been about a move from our apartheid past towards a just
society based on human dignity and the achievement of equality on
non-racialism, non-sexism, on the supremacy of our Constitution and the rule of
law. We often express our goals for our new society in terms of creating a
better life for all our citizens. We have also determined that political
freedom alone will not be sustained if not underpinned by tangible
socio-economic transformation.

Creating this better life for all entails the adoption and implementation of
a value-based set of policies and programmes aimed at amongst others
creating:

a) a competitive fast growing economy which creates sufficient jobs for all
jobseekers
b) a redistribution of income and opportunities in favour of the poor
c) a society capable of ensuring that sound health, education and other
services are available to all
d) an environment in which homes are safe and places of work are
productive.

The attainment of these objectives is what we consider to be our national
interest.

The thrust of our foreign policy agenda is, therefore, to advance our
national interests and values through bilateral and multilateral relations
guided by this vision of a better South Africa in a better Africa, and in a
just and equal world.

Consequently, our foreign policy has as one of its key pillars our work on
the African continent. In this regard policy priorities are aimed tackling
poverty and underdevelopment, of promoting democracy and good governance, and
at the peaceful resolution of conflict. It has remained a major pre-occupation
for our government to work with countries on the continent towards the
resolution of conflict, to sustaining the peace, and in the long term in
post-conflict reconstruction efforts.

We recognise that the effects of conflict are reflected in economic
collapse, destruction of infrastructure, impoverishment of people, of refugee
flows and environmental degradation and these affect not only the countries and
areas in conflict but also its neighbours and the continent as a whole. And
there is no doubt that Africa is the continent most affected by poverty and
underdevelopment and the connection between conflict and underdevelopment is
more visible here than anywhere else.

South Africa has in the past 12 years invested its resources, human and
financial, in diplomatic efforts across the continent for example in the
Democratic Republic of the Congo (DRC) where six South African departments are
working with the government and the people of the DRC towards a successful
outcome of the first democratic elections held in that country in over 40
years. President Mbeki leads a peace effort in Cote d'Ivoire where conflicts
between north and south have wreaked havoc on a country that was once immensely
prosperous. In the Sudan, one of the oldest conflicts on the continent has been
raging and South Africa chairs the Post Conflict Reconstruction Committee of
the African Union (AU), and there are others.

We have made and will continue to make our contribution to resolving these
conflicts and we believe that extraordinary progress has been made. All these
diplomatic efforts are aimed at realising our own national objectives and also
the objectives of the AU, which, in its Constitutive Act envisages an Africa
that is prosperous and peaceful. This is a vital aspect of our work in the
Department of Foreign Affairs.

It is clear therefore that we believe that our efforts in other countries
are inextricably linked to the development and well-being of our own country
and we recognise that true national liberation must be underpinned by economic
prosperity and independence.

Many independent African countries today are still economically dependent on
conditional aid coming from developed countries and when they experience
instability, they face the threat of being plunged into both political and
economic crises raising questions about their ability to play a meaningful role
in transforming their societies.

What we often forget is that aid itself is often used as tool of foreign
policy, an economic tool to achieve long-term political objectives.

We do not seek this approach in our work.

Most developed countries of the world today enjoy both these forms of
independence, political and economic and conversely many of those countries
that are deemed underdeveloped are still economically dependent on developed
countries, thus undermining whatever political independence they enjoy and even
their sovereignty. There is clearly an inextricable link between political and
economic independence and these are not mutually exclusive nor should they be.
In fact, just as political freedom is unsustainable if not supported by
socio-economic development so will our political diplomatic efforts fail if not
underpinned by a long-term developmental vision.

It is for this reason, as I have said, that we place a great deal of
emphasis on eradicating the sources of conflict on the continent followed by
creating a sustainable peace and ultimately supporting efforts at post-conflict
reconstruction. Both government and business, we believe, appreciate that the
peace dividend that emanates from such a continuum provides immense benefits
for both governments and civil society. Our challenge is now to consolidate
this peace once attained to avoid relapse into conflict.

Against this background on the African continent and in the modern world,
diplomacy in the 21st century is entirely different to the world of the first
professional diplomats dating back to ancient Greece. Our diplomatic efforts
can no longer focus solely on traditional methods of diplomacy.

The modern world is characterised by lightning fast connectivity in every
area by dazzling speed in everything we do. Globalisation has changed our lives
forever and it has resulted in increasing complexity of international economic
relations and indeed in the world of diplomacy.

Foreign services across the world are reviewing their approach to diplomacy,
away from purely political diplomatic work fostering relationships with
friendly countries to engaging in what is now called economic diplomacy.

Important for us and I believe for you, is that the new diplomacy is no
longer undertaken only by the Ministry of Foreign Affairs. Diplomacy in the
modern world is influenced by many factors and many players.

In 2000 Thomas Friedman wrote:

"Globalisation is not a phenomenon. It is not just some passing trend. Today
it is an over arching international system shaping the domestic politics and
foreign relations to virtually every country and we need to understand it as
such."

The question of defining the new diplomacy or post-modern diplomacy is one
that most countries of the world are engaged with today.

In a discussion paper on Diplomacy Raymond Saner and Lichia Yiu reflect
that:

"Globalisation and democratisation have rendered the professional boundaries
of diplomacy more porous and put into question the territorial claims of the
traditional diplomats. Alternative diplomatic actors have emerged within and
outside the State and often act independently of the Ministry of Foreign
Affairs. Diplomacy as a profession has undergone changes in terms of
definition, qualification and role expectation of what a diplomat is or is not
supposed to do."

"These major developments of emerging diplomatic activities external to the
traditional prerogatives of the Ministry of Foreign Affairs deserve greater
attention and invite rethinking of the definition of diplomacy, role definition
of diplomats and the functions and tasks of the Ministry of Foreign Affairs.
Diplomats and civil servants of the Department of Foreign Affairs are
confronted with new actors, new agenda items and new working methods and are
caught with inadequate training and preparation. Adaptation of traditional
diplomacy to the reality of post-modern diplomacy has become an urgent
necessity."

Key to the thesis that they put forward is the simultaneous participation of
multiple state and non-state actors. Boundaries have become blurred between the
various forms of diplomatic actors.

For example at the central government level, important ministries
responsible for specialised policies and in South Africa this would include
such ministries as trade and industry, communications, health and others
increasingly engage in policy dialogues with counterparts in other countries.
There is growing use of international conferencing where such ministries are
involved and the traditional role of the ministries of foreign affairs is
changing.

So how do foreign ministries respond? Some either try to block entry of
other ministries in the international arena or play an overarching
co-ordination role of inter-ministerial foreign economic policy
formulation.

South Africa's response to these questions has been at central government
level, to arrange itself in clusters of government departments forming Cabinet
committees dealing with broad areas of work. In this case the International
Relations Peace and Security Cabinet Cluster combine the Minister of Foreign
Affairs and economic Ministers such as finance, trade and industry, minerals
and energy and the security Ministers from defence, policing and the security
services. In this way, while the Minister of Foreign Affairs co-ordinates the
cluster, other Ministers play a role at cabinet level. The rationale for the
new system is to facilitate creative and cross-cutting thinking on policy
issues and to provide for political and policy discussions before formal
decisions are made.

But in the post-modern world of diplomacy there are other actors besides
state actors. These include global companies and trans-national
non-governmental organisations (NGOs).

Saner and Yiu argue that while these players all assume different roles
there are also common tasks for all these "post-modern diplomats," be they
state actors or non-state actors. These tasks include:

* to influence political, economic and social policies to create the right
conditions for economic development taking into account the needs and
aspirations of other stakeholders
* to work with rule-making international bodies whose decisions affect
international trade and financial regulations
* use multiple international fora and media channels to safeguard the image and
reputation of their own country, enterprise (so called reputation
capital)
* create social capital through dialogue with all stakeholders who might be
impacted by the process of economic development and globalisation
* sustain credibility and legitimacy of their representative bodies in the eyes
of the public and their own communities.

If we agree with these tasks as joint tasks then we must accept that there
is considerable responsibility on all of us that are actors in the post-modern
world of diplomacy. This is I believe where members of the business community
come in as part now of the post-modern diplomatic community.

Please understand that I am not planning to appoint all or any of you
present as ambassadors to our new mission in Trinidad and Tobago just in time
for the cricket world cup next year, or to some other glamorous posting. It is
your role as non-state actors particularly on the African continent that I wish
to explore.

We recognise the critical role that a partnership between government and the
business community can play in achieving our foreign policy objectives and
contributing to our vision of a better life for all. It is indeed very
encouraging to read that South African business has increasingly been involved
in creating economic opportunities in Africa that have greatly enhanced our
international standing. According to the results of a survey published in 2004
by South African Institute of International Affairs (SAIIA) on doing business
in Africa:

* In less than a decade, South Africa has become one of the top 10 investors
in and trading partner of many African countries, displacing those companies
from Europe (particularly in countries that are former colonial powers) and
America, which have traditionally retained their economic links with
Africa.

* These developments make an examination of the role being played by our
country and particularly its business community, important to the unfolding
picture of trade and investment in Africa. South Africans believe their
commitment to making Africa work is long-term.

Furthermore, according to Who Owns Whom: An Analysis of South African
Investments, it shows that 232 South African investments employed a total of 71
874 people; of these 69 617 are drawn from the local population and 2 257 are
South African.

It is however important that our engagement with the continent be aimed at
forging partnerships for sustainable development in creating real
socio-economic development rather than focussing on short-term profit gain.

A point made by Duncan Mboyana of Eskom is appropriate in this context when
he says that:

"Business on the continent is a relationship not just a transaction. If you
miss the relations, you will have endless trouble with the transaction."

We should therefore remain focused on our long-term political and economic
objectives to create a better life for all through sustainable national
economies. This will help dispel the view that South Africa through its
businesses is using its relative economic strength to re-colonise the
continent.

Indeed, these perceptions may be far from the truth but serve the agenda of
those that are threatened by our status as an independent-minded country with a
principled and predictable foreign policy. We should, therefore, avoid giving
ammunition to our detractors and engage our interlocutors as equals and promote
the same values that we hold dear in our own society.

And concerns have been raised as to whether there exist a set of shared
values that we hold dear in our society and whether if they do exist, these
values guide our behaviour and our attitudes abroad.

Business people quite legitimately expect that there should be a return on
investment. The question then is 'at what point do our political objectives and
your economic ones converge to make the greatest impact in terms of our long
term foreign policy agenda and indeed the long-term goals for our country?' If
we can provide an answer as to what this convergence point is then we can
consider ourselves to be well on the way to attaining our vision to create a
better South Africa in a better Africa, and a just and equal world through
sustainable national economies.

In recognition of the challenges that have been raised, we are increasing
the capacity of our foreign missions to be able to address the post-modern era
challenges as well as support our traditional diplomatic efforts to create
opportunities for South African business abroad. With regards to Africa in
particular we intend to have diplomatic representation in every country in
Africa in the next five years.

In addition, we are also increasing both qualitatively and quantitatively,
the number of political and economic diplomacy instruments to support our
foreign policy agenda. Key among our political diplomacy efforts are:

* conclusion of bilateral agreements
* conclusion of bilateral protection and promotion of investment
agreements
* establishment of joint economic commissions and business forums
* inclusion of business delegations on foreign high level visits

* working through South-South co-operation and North-South dialogue to
create a rules based multilateral trade regime
* overall, creating and enabling business environment.

Each opportunity of course also presents threats. While the nature of the
post-modern world, its closeness and connectivity, makes life easier on the one
hand, it is also linked with dangers and volatility for governments and
business. In this regard, it would not be correct to end this discussion
without mentioning energy and its impact on international politics and its
impact on our work in Africa. Our economic security and to a large extent that
of the rest of the world depends on access to stable, reliable and diverse
sources of energy.

Alas, one of the causes and catalysts of conflict in Africa today is the
scramble for natural resources particularly energy. The New Partnership for
Africa's Development (NEPAD) programme acknowledges that energy plays a
critical role in the development process, first as a domestic necessity but
also as a factor of production whose cost directly affects prices of other
goods and services and the competitiveness of enterprises.

In NEPAD documents it is noted that:

"Given the uneven distribution of these resources on the African continent,
it is recommended that the search for abundant and cheap energy should focus on
rationalising the territorial distribution of existing but unevenly allocated
energy resources. Furthermore, Africa should strive to develop its abundant
solar energy resources."

Constant threats to oil infrastructure in Iraq, turmoil in the Middle East,
political uncertainty regarding the relationship between countries such as Iran
and Venezuela with the United States of America(USA) demonstrated how oil
supply is vulnerable to geopolitical instability.

The oil boom in Africa presents both threats and opportunities for the
continent to grow and develop as envisaged by NEPAD. In particular, it is
critical that Africa takes ownership and control of the oil boom so that it
benefits the continent's citizens and supports development initiatives.

In line with NEPAD, there are opportunities for African countries to benefit
and take ownership of the oil economy through greater levels of
intra-continental trade and investment. Because African oil-producers often
lack sufficient capital to develop their own oil industries, they are forced to
rent out oil blocks to international oil companies in return for revenue.

This does present opportunities for South Africa, the private sector and
parastatals to invest in these countries and ensure that revenues derived from
oil are employed for development purposes. A recent example is the agreement
signed between Petro-South Africa (Petro-SA) and the Sudanese State oil
company, Sudapet for exclusive oil concession rights for oil in the Sudan.

Again the continent's oil producers often import capital equipment for their
oil industries from the east and the west, the oil boom could lead to the
development of specialist supply and service companies in South Africa and
other African nations to meet the demands of offshore oil and gas exploration
and development. Also it is important to promote debate on the establishment of
an independent African oil company as an alternative to the continent's
reliance on international oil companies.

But fundamentally, we need to approach our energy needs in a multiplicity of
ways not as a one-source solution, but to look at a variety of options to meet
our economies needs.

I wish to end on a simple but international note. This weekend our President
will welcome the Indian Prime Minister to our country on an official visit. He
will, amongst other things, be sharing with us the celebration of the 100 year
anniversary of the Satyagraha. This was the non-violent resistance movement
initiated by Mahatma Gandhi here in South Africa, which lead to the great
revolution against British imperialism in India and indeed influenced our own
people in their struggle against apartheid.

Satyagraha literally means the insistence on the truth. It epitomises the
non-violent resistance to that which is not the truth. It started a great
movement both here and in India in 1906 and the humble efforts of the Mahatma
galvanised the people of India and also the people of South Africa to oppose
repression and led to the revolutions in both countries, to two great
democracies, one of which is ours.

This simple man who led this great movement was not a polished diplomat nor
was he a captain of industry. He was a simple honest man. He taught us much and
we still learn from him.

In the context of our desire to eradicate poverty and quest for a better
life for our people and in the context of our new role as diplomats to promote
socio-economic development these simple words he said are pertinent. Gandhi
said:

"To the poor, God comes in the form of bread".

These words reflect the truth. They elevate to spiritual level the
necessities of life and the importance of our economic emancipations.

Success in today's competitive climate depends on a strong partnership of
government and private sector. For me, this occasion has brought a valuable
opportunity to share ideas on how we can work together for the benefit of South
Africa. This is especially important at a time when the challenges in the
global economy reminds us all of the interdependence of nations and economies
in today's world, and of the necessity for us to meet our goals through
co-operative endeavour.

I wish to thank you for your attention and to once again emphasise the
importance which government attaches to partnerships with civil society in
general and with the business community so that we can eradicate poverty on our
continent, we can help forge prosperous nations and achieve political and
economic independence for our people.

I thank you!

Issued by: Department of Foreign Affairs
28 September 2006
Source: Department of Foreign Affairs (http://www.dfa.gov.za/)