The South African Federation of Trade Unions is angered that credit ratings agencies S&P Global and Fitch have downgraded South Africa’s credit rating to full junk status, and Moody’s has placed the country on review for downgrade.
It is outrageous that these unelected enforcers of the big multinational monopoly corporations can wield such power to force governments to bend to the will of the rich and powerful, and use downgrades to blackmail them into carrying out policies which will bring even more misery to the working class and the poor.
These agencies exist to protect and advance the capitalist system and the profits and privileges of the ruling class. They represent an economic monopoly capitalist system which is corrupt to its core, which we see with the news that more and more international companies are proved to have been collaborators with the corrupt South African politicians and SOE officials.
The immediate consequences are sure to be still more job losses, as international companies and banks respond by withdrawing investments in South Africa and cancelling plans for future investment. An economy already imploding is likely to go into free-fall, with catastrophic consequences for the mass of the people.
For a country in which unemployment, at 36.85% by the broader definition, is six times the world average, 26% of the population are hungry on a daily basis and half of all South Africans do not have sufficient access to affordable, nutritious and safe food to meet basic health requirements, the effects of this downgrade will be devastating.
Thousands more will face hunger and destitution, and public services – education healthcare, social security – will be hit with savage spending cuts. Projects to improve the country’s infrastructure will be mothballed or abandoned altogether.
The rating agencies are downgrading us not because South Africa refused to impose their favored neoliberal, pro-business policies. Indeed the government, through the National Treasury and successive Finance Ministers including the current Minister, have been the most slavish followers of the very policies the agencies demand. Gigaba is implementing the same austerity cuts.
Their decisions are based on what they call correctly political instability, for which the ANC government must take the blame, as the country’s already grave economic crisis has been made far worse by the explosion of run-away corruption and maladministration within state-owned enterprises, the capture of law-enforcement agencies to protect the perpetrators and the ANC’s factional in-fighting.
The timing of the downgrades is not neutral. It is timed to give a clear signal to the forthcoming ANC conference. The instruction from America is clear – clean the mess but follow the course! The ANC will comply!
The government created these conditions firstly by abandoning their own mission, spelt out in the Freedom Charter, to follow the dictates of the Washington consensus, IMF and the World Bank when the world was expecting them to champion a pro-poor development path way back in 1995. This pro-rich agenda included privatisation, commercialisation and commodification.
In 1996 the government simply capitulated to the agenda of monopoly capital by unilaterally introducing a programme to cut corporate taxes, remove exchange controls, introduce inflation targeting policies whilst taking no steps to stop the illicit trade transfers, etc. These policies put a smile on the local and international capital but sentenced millions of workers to poverty and unemployment thereby helped to entrenched legacy of apartheid and colonialism.
The rating agencies have been emboldened by this outsourcing of policy to international markets and have been using their power to demand more pro-market policies.
Secondly the rating agencies were appalled by the removal of Nene, Gordhan and Jonas and the 11 cabinet reshuffles in 7 years. They have seen the former Public Protector’s state of the state capture report. They too have read the Gupta leaked emails. They have read the SACC and OUTA capture reports. They have seen hundreds of thousands marching in the streets in protest against all of these shenanigans.
They are now appalled, and they have become pro-democracy and anti-corruption. They hate the political instability as they can see that in the short and long run it will not guarantee profits for capital. Had they seen greater possibility of profit maximization, the rating agencies would not have raised a finger in protest against this chaotic political situation.
The current political situation has provided the ratings agencies with a reason for their drastic decisions, with S&P saying “a momentous political agenda has overshadowed policy making, despite the deteriorating economy and weakening public finances”.
If these rating agencies were punishing the government for following the radical economic programme they were mandated by the electorate to pursue, SAFTU would have been the first to occupy the streets in protest.
We call on the government to replace neoliberal strategies in the interests of business and follow what the Freedom Charter dictates. We are calling for the nationalisation of the commanding heights of the economy, the mines, banks and strategic monopoly industries, under democratic workers’ control and using the countries’ wealth for the benefit of the majority, not the parasitic rich minority in which credit rating agencies are integral and pernicious players.