Cablegate: Scenesetter for Senator Obama's Visit to South
VZCZCXYZ0000
RR RUEHWEB
DE RUEHSA #3339/01 2271457
ZNR UUUUU ZZH
R 151457Z AUG 06
FM AMEMBASSY PRETORIA
TO RUEHC/SECSTATE WASHDC 5095
INFO RUEHDJ/AMEMBASSY DJIBOUTI 0230
RUEHLGB/AMEMBASSY KIGALI 0884
RUEHKI/AMEMBASSY KINSHASA 1826
RUEHNR/AMEMBASSY NAIROBI 6095
UNCLAS PRETORIA 003339
SIPDIS
SENSITIVE
SIPDIS
FOR SENATOR OBAMA FROM AMBASSADOR BOST
E.O. 12958: N/A
TAGS: OREP PREL PGOV ECON KHIV SF
SUBJECT: SCENESETTER FOR SENATOR OBAMA'S VISIT TO SOUTH
AFRICA
REF: A. STATE 102469
B. PRETORIA 2967
This cable is Sensitive but Unclassified. Not for Internet
distribution.
1. (SBU) Welcome to South Africa, an anchor country in our
Africa policy. Since the end of apartheid in 1994, the
African National Congress (ANC)-led South African Government
(SAG) has made major progress toward establishing a vibrant
democracy and market-based economy. The SAG has focused on
political and economic transformation: closing the gap
between the historically privileged and disadvantaged
communities -- primarily through government-provided housing,
electricity, and water to the poor -- and creating employment
and business opportunities. South Africa continues to face
serious challenges, including income inequality between
blacks and whites, massive unemployment, entrenched poverty,
violent crime, and a severe HIV/AIDS pandemic. Taken
together, these problems are intensifying political tensions
within the ANC-led ruling coalition. The next ANC president
will not be selected until the party's December 2007
congress, but rumor-mongering and behind-the-scenes
electioneering for the top job already are in full swing.
While the likely victor is unclear, much will depend on the
fate of former SAG Deputy President (and still ANC Deputy
President) Jacob Zuma. Fired from his national position in
June 2005 after his financial advisor was convicted on
corruption and fraud charges, Zuma faces similar charges in a
trial set to begin September 5.
2. (SBU) Despite its challenges, South Africa remains the
continent's best prospect for establishing a successful
democratic society with widespread prosperity as the SAG
moves from political to economic transformation. South
Africa plays a key role in promoting peace and stability in
Africa, and is an important voice on global trade and
nonproliferation issues. U.S.-South African relations are
positive, as reflected by President Bush's July 2003 visit to
South Africa and President Mbeki's reciprocal June 2005 trip
to Washington. We share objectives on the African continent
and work together closely on those issues.
------------------
POLITICAL OVERVIEW
------------------
3. (SBU) The African National Congress (ANC) dominates the
political scene in South Africa. President Thabo Mbeki began
his current five-year term on April 27, 2004. The ANC won 70
percent of the vote and 279 of 400 seats in the National
Assembly at the April 14, 2004 poll. A subsequent "floor
crossing" period in September 2005, in which parliamentarians
were allowed to switch parties, boosted the ANC's total to
293. The ANC also won 66 percent of the vote nationally in
March 2006 local elections. The Democratic Alliance (DA) is
the largest of several small opposition parties in
parliament, with 47 seats. The ANC leads the administrations
in all nine of South Africa's provinces.
4. (SBU) The ANC is part of a tripartite alliance whose other
members are the South African Communist Party (SACP) and the
Congress of South African Trade Unions (COSATU). The ANC-led
alliance is a broad-based political movement in which schisms
have appeared in recent years, largely based on the SACP's
and COSATU's opposition to the government's economic,
HIV/AIDS, and Zimbabwe policies. However, the alliance is
likely to hold together, at least in the short term. Despite
their dissatisfaction with many ANC policies, most SACP and
COSATU leaders remain intensely loyal to the ruling party and
prefer to lobby for change from inside the alliance. They
also likely calculate that splitting from the alliance and
fielding candidates independently could have catastrophic
electoral results.
5. (SBU) President Mbeki remains securely at the ANC's helm,
but currently is embroiled in managing internal party
tensions related to succession, his centralized
decisionmaking, and former Deputy President Zuma's upcoming
corruption trial. Mbeki's popularity, affected by continued
high levels of crime, unemployment, a delayed response to the
HIV/AIDS crisis, and the slow delivery of services to South
Africa's majority population, fluctuated throughout his first
five-year term. However, a recent poll showed that 77
percent of South Africans approve of the job he is doing, a
figure almost identical to that of Nelson Mandela at the same
point in his Presidency. Mbeki's standing within the party
has taken a beating during the past year. Supporters of
Jacob Zuma accuse Mbeki of conspiring against his party
deputy; using charges of rape (on which Zuma was acquitted in
May 2006) and corruption to ensure Zuma does not become the
next ANC president. Many within the party's grassroots think
Mbeki does not listen to or consult with ANC structures
before making decisions, such as when he overrode the
selection of several hundred local candidates by ANC branches
to ensure gender parity on party lists for the March 2006
local elections.
------------------------------------------
FOREIGN POLICY - FOCUS ON PROMOTING AFRICA
------------------------------------------
6. (U) South Africa has taken a high-profile role in
promoting Africa's development. South Africa served as the
first chair of the African Union until July 2003 and helped
to establish continental institutions such as the Pan-African
Parliament (which sits in South Africa), and the AU Peace and
Security Council. President Mbeki is the driving force
behind the New Partnership for Africa's Development (NEPAD),
an African-developed program to strengthen economic and
political governance across the continent and a framework for
productive partnership with the international community.
South Africa led the negotiations which ended the conflicts
in Burundi and the Democratic Republic of the Congo, and it
is playing a leading role in the mediation in Cote d'Ivoire.
7. (SBU) South Africa recognizes that, by virtue of its
regional political, economic, and military clout, it has a
responsibility to participate in peace support operations.
Approximately 2,615 troops currently are deployed in UN and
AU Missions in Burundi, DRC, Sudan, Cote d'Ivoire, and
Ethiopia/Eritrea. While the U.S. has a strong policy
interest in seeing South Africa expand and enhance its peace
support capabilities, our ability to support these efforts
has been limited by the suspension of FMF and IMET (about $7
million per annum) military assistance because of the lack of
an Article 98 agreement with South Africa. One positive
development is South Africa's decision to participate in the
African Contingency Operations Training and Assistance
program (ACOTA) through which we can work together to enhance
the capacity of the South African National Defense Force
(SANDF) for robust participation in multilateral peace
support operations. The first ACOTA training exercise will
take place in late August.
8. (SBU) Zimbabwe remains a continuing, and often
frustrating, challenge for President Mbeki. While it is
clear that South Africa wants political and economic reform
in Zimbabwe, its "quiet diplomacy" policy of
behind-the-scenes talks has failed to produce results. SAG
officials argue that additional pressure, such as sanctions,
would have little effect on President Mugabe and could
destabilize Zimbabwe (with spillover effects in South
Africa). In recent months, South Africa appears increasingly
concerned about the deteriorating economic situation in
Zimbabwe.
9. (SBU) While overall U.S.-South African relations are
positive, South Africa sometimes takes positions on global
issues that run counter to U.S. interests. For example,
South Africa abstained on the IAEA Board of Governor's
resolution to refer the dossier on Iran's nuclear program to
the UN Security Council. As current chair of the G-77 and
former head of the Non-Aligned Movement (NAM), South Africa
has taken up the cause of a greater "South" voice in
international institutions, increased development assistance,
an expanded UN Security Council, and lower trade barriers.
-----------------------------------------
THE ECONOMY AND THE STRUGGLE TO TRANSFORM
-----------------------------------------
10. (SBU) As the dominant and most developed economy in
sub-Saharan Africa, South Africa is markedly different from
other countries of the region. It is a middle income,
emerging market economy with GDP per capita of $5,105 (2005),
akin to Chile, Malaysia, or Thailand. The South African
government's fiscal and monetary policies are excellent. The
ANC government steadily reduced the fiscal deficit from
nearly 6 percent of GDP in 1994-95 to a nearly balanced
budget in 2005-06. The forecast for the 2006-07 fiscal
deficit is 1.5 percent as a result of expansionary policies.
The South African Reserve Bank (SARB) is independent and
committed to low inflation. CPIX (CPI minus mortgage cost)
inflation has fallen from 12.4 percent at the beginning of
2003 to 4.8 percent (June 2006), within the SARB's official 3
to 6 percent target. Real GDP growth in 2005 climbed to 4.7
percent from 4.5 percent in 2004 as a result of strong
consumer spending. Analysts expect growth to slow to 4.2
percent in 2006.
11. (SBU) South Africa's single greatest economic challenge
is to accelerate growth. Moderate growth since 1994,
averaging 3.2 percent a year, has not been sufficient to
address widespread unemployment and reduce poverty. The
official unemployment rate, currently 26.7 percent, has only
recently begun to decline, and is significantly higher among
black South Africans than among whites. Income inequality
between white and black South Africans remains high. Poverty
is widespread. Fifty-six percent of black South Africans,
but only four percent of whites, live in poverty.
Nevertheless, the government has made strides in the areas of
transfer payments and public services to close the gap.
Nearly 1.5 million low-cost homes have been built to provide
shelter to six million people, four million households
provided with electricity, and nine million people connected
to clean water. The government's broad-based Black Economic
Empowerment (BEE) program provides ownership and employment
opportunities to blacks and has helped the black middle class
double in size since 1994.
-----------------------------
U.S. SUPPORT FOR SOUTH AFRICA
-----------------------------
12. (U) Since 1994, the United States Government has
contributed approximately $1.217 billion toward South
Africa's development, plus $201 million in credit guarantees.
Currently, our development assistance program focuses on
HIV/AIDS and strengthening the healthcare system, addressing
unemployment through job-skills training and education,
creating models for efficient service delivery, and reducing
gender-based violence as part of the President's Women's
Justice and Empowerment Initiative (WJEI). A wide range of
U.S. private foundations and NGOs are also at work in South
Africa. Among them are the Gates Foundation (HIV/AIDS), the
Ford Foundation (higher education), and the Rockefeller
Foundation (adult education).
13. (U) Nineteen U.S. agencies, including the FBI, CDC,
Customs, and USAID, are represented at our Mission in South
Africa: Embassy Pretoria and the three consulates in Durban,
Cape Town and Johannesburg. The Mission has 281 U.S.
employees, and 564 local employees. More than 40 percent of
Mission staff provide regional services to other U.S.
embassies in Africa. The Mission has embarked on an
ambitious program to build safe office facilities. In FY05
we completed the new Consulate compound in Cape Town, and in
FY06 we will award the design/build contract for the new
Consulate building in Johannesburg.
------------------------------
U.S.-S.A. TRADE AND INVESTMENT
------------------------------
14. (SBU) U.S.-South Africa trade grew 7 percent in 2006,
totaling $9.5 billion. U.S. exports were up 22 percent at
$3.6 billion, while South African exports to the United
States declined 1 percent at $5.8 billion. In 2005, South
Africa was the 35th largest trading partner of the United
States, equivalent to Turkey or Chile. It is the largest
U.S. export market in sub-Saharan Africa, twice the size of
Nigeria and equal to Russia or Argentina. South Africa was
the third largest beneficiary of AGOA in 2005. Its AGOA
exports grew strongly in 2003 and 2004 but fell 17 percent in
2005 due to declines in vehicle, iron/steel and clothing
exports. Over 600 U.S. firms have a presence in South Africa
with 85 percent using the country as a regional or
continental center. South Africa's stable government, sound
fiscal and monetary policy management and, by African
standards, its large market are the primary attractions for
U.S. businesses. South Africa has, however, failed to
attract a proportionate share of foreign direct investment
since 1994. Reasons include: crime, uncertainty about Black
Economic Empowerment policies, labor regulations, HIV/AIDS,
and the slow process of privatization. The U.S. is the
second largest foreign direct investor in South Africa ($4.9
billion at year-end 2004).
15. (SBU) Following six rounds of negotiations over three
years, the U.S. and the Southern African Customs Union (SACU:
South Africa, Botswana, Lesotho, Namibia, and Swaziland)
agreed in April that they could not conclude negotiations on
a free trade agreement (FTA) by their target date of December
2006. Negotiators subsequently agreed to deepen the
bilateral relationship through a Trade and Investment
Cooperation Agreement. The U.S. and SACU may meet later this
year to develop the specifics of the agreement.
--------------------------------------
HIV/AIDS: A CRISIS OF EPIC PROPORTIONS
--------------------------------------
16. (U) South Africa has the second largest number of HIV
infections in the world. HIV/AIDS is the country's leading
cause of death. Five to six million South Africans are
HIV-positive, including 2.9 million women. In 2005, an
estimated 800,000 more citizens became infected and over
300,000 died from AIDS. AIDS-related deaths will create
millions of orphans and generate additional social and
economic disruption. The number of AIDS-related deaths and
AIDS orphans is expected to climb by 2010 to 5.2 million and
1.5 million respectively. South African public health
facilities suffer from an acute shortage of skilled personnel
and laboratory and clinical infrastructure. Considerable
investment in human resources and infrastructure is necessary
to expand the national antiretroviral treatment program.
17. (SBU) It is estimated that approximately 200,000 of the
five to six million HIV-positive South Africans are receiving
antiretroviral (ARV) treatment. At the end of 2003 the SAG
prepared and endorsed an operational plan to treat AIDS using
ARVs in public facilities. Implementation of the plan has
been slow in all provinces except Gauteng and Western Cape.
It is likely that ARV drugs will not be widely available
through government programs until late 2006 or 2007. South
Africa has been a major recipient of Global Fund resources
with major grants awarded to the Western Cape Health
Department and a public-private consortium in KZN. Both
provide some treatment funding.
18. (SBU) The President's Emergency Plan for AIDS Relief
(PEPFAR) is beginning its third year of implementation
working with public and private sector prevention, treatment,
and care programs. To date, the U.S. has provided almost
$239 million through PEPFAR to support HIV/AIDS programs in
South Africa, making it the largest recipient of Emergency
Plan resources. The FY 2006 PEPFAR budget in South Africa is
$221 million. After three years of funding, the Emergency
Plan supports nearly 75,000 people in ARV treatment through
programs in all provinces. In addition, the South African
military has expanded prevention programs and publicly
collaborates with the U.S. military and NIH on ARV-based AIDS
treatment research. The Cabinet has endorsed a comprehensive
public sector HIV/AIDS treatment plan.
19. (U) South Africa has the strongest research and training
capacity of any country in the region, making it an important
partner in the fight against HIV/AIDS. USG agencies
(including USAID, DHHS, DOD, and the Peace Corps) have worked
with national and provincial health departments, the
military, universities and NGOs to strengthen primary health
care, prevention, disease surveillance and research.
President Bush and President Mbeki confirmed last July a
mutual commitment to expand HIV/AIDS collaboration,
particularly through the Emergency Plan. The mission has
prepared, in coordination with the government, a five-year
strategic plan focused on treatment, prevention, palliative
care, and the provision of care for orphans and other
vulnerable children.
Bost