WASHINGTON – As a journalist, I was privileged to be a correspondent in South Africa for three years in the 1970s. I then returned for six-week stints in each of the past three years. Similarly, in the mid-1990s I was assigned to Prague and for three years traveled extensively in post-communist Europe. The transformations in the two regions are both similar and very different.
Communist Eastern Europe was a dreary place. Capital cities were run down, people were poorly dressed. There was little that was new or colourful. Often there was little to buy in the shops, sales people were sullen or belligerent. Restaurant menus were limited and quality substandard. There was little street traffic, the boxy Hungarian buses belched smoke and locals were embarrassed by their out of date, ill performing locally-made cars and trucks. People weren’t free to talk to foreigners but there was little doubt that they were scornful of their rulers.
In both locales, long enduring repressive governments unexpectedly and peacefully yielded power. In Eastern Europe it occurred from 1989 to 1991, in South Africa in 1994. Despite obvious cultural differences the initial stages in both places were the same: political prisoners went free and open debate flourished as restrictions on speech and travel were lifted. Free and fair elections took place, bringing to power the likes of Lech Walesa, Vaclav Havel, and Nelson Mandela.
Transformation was the stated goal in both regions, but the meaning of the term was quite different.
In Eastern Europe transformation meant upending a communist system that had constrained freedom and failed economically. People wanted integration with the West, restoration of private property, democracy, rule of law, free media, an independent judiciary, and privatisation of state industries.
In South Africa transformation was based on race. The objective was to extend the freedoms that had been reserved to whites to the majority. Importantly, there was no consensus on transforming the economy. Not surprisingly, many ANC leaders who had endured long imprisonment retained an affinity to socialism. There was a residual loyalty to the old Soviet Union and communist Eastern Europe, allies in the liberation struggle.
The late scholar and former communist Neville Alexander wrote in his memoirs that, “the collapse of the Soviet Union and the end of the Cold War… put all socialists and would-be revolutionaries on their back foot.” He lamented that there was no revolution. He observed, correctly in my view, that “apartheid capitalism was succeeded by post-apartheid capitalism…at best what we got was no more than regime change.”
Last year, Moeletsi Mbeki wrote in the Mail & Guardian, that “the 1994 settlement created a political elite that controlled the state but not the economy. The previous elite, which had controlled both the state and the economy, lost political power but retained control of the economy.” That situation, “is an unstable mix,” he added.
So, what are the comparative results on transformation 20 or so years later?
By any measure Eastern Europe has registered achievements that exceeded even the most optimistic expectations. Colour has returned, construction goes on everywhere as the gap between east and west narrows. Countries from Estonia in the north to Bulgaria in the south are free and independent and no longer satellites of Moscow. Communism is finished. Democracy and free markets are the norm.
Most of the post-communist states applied to join the North Atlantic Treaty Organization and are now members. Since 2004 they are members of the European Union and trade has shifted from east to west. Governments peacefully come and go, yielding to the popular will. Poland has recently been the fastest growing economy in all of Europe and some post-communist states like Estonia and Slovakia are members of the euro currency zone.
South Africa, as it approaches the 20th anniversary of democracy, has likewise registered significant gains. An economy hobbled by apartheid-era sanctions has been liberated and local businesses are free to operate wherever they choose. SA capital has flooded into neighbouring states, not least because companies feel more welcome there than at home. Tourism, particularly in the Cape, has boomed in ways unthinkable during apartheid. South Africans are no longer global outcasts, but welcomed as citizens of Mandela’s rainbow nation. As in Eastern Europe, no one wishes to return to the way things were.
The SA government has also registered successes. Three million new homes have been built, 75% of all homes now have electricity, social grants are provided to 12 million poor people and in recent years the rate of HIV infection has fallen by 50%.
But where the ANC government has failed, is in education and the economy. It is extraordinary that serious analysts can conclude that the educational system is worse now than 20 years ago. Similarly the economy does not grown fast enough to provide employment to the numbers of people entering the labor force. Unemployment may be as high as 36%. Corruption is rampant but Transparency International says it is not much better in some East European countries.
John Kane-Berman of the SA Institute of Race Relations says it is clear that the ANC can’t run an economy. He faults the ruling party for clinging to discredited notion that the state can create jobs. Kane-Berman says “there is no way that Finance Minister Pravin Gordhan’s goal of 5 million jobs by 2020 can be met as long as Trade and Industry Minister Rob Davies imposes onerous regulations on small and medium business.”
Stated simply, the government is divided and can’t decide if it favors globalisation and foreign investment. At the recent Brics summit in Durban, most of the country’s leading companies were not present, even though the Chinese, Russians, Brazilians and Indians brought business delegations. Mining executive Rick Menell, who was at Durban, believes the government is in the process of overcoming its mistrust of the private sector. “Marikana,” he says “was a shock to them and it has opened the door to resumed cooperation.”
Venture capitalist Hlumelo Biko argues that to become an economic leader in the continent, South Africa must modify black empowerment regulations that divide instead of unite. “Is it fair that white children suffer because their parents were racists?” he asks. “Is it fair that talented white children have to be forced into entrepreneurship because of a newly formed glass ceiling preventing their promotion?”
On the economy South Africa is losing the transformation battle. Unless it changes direction, growth will remain sluggish and its stature and reputation will continue to be eroded.
* Economics columnist Barry Wood was for two decades the chief economics correspondent of Voice of America radio.