Address by Deputy Minister of Foreign Affairs, Ms Sue van der Merwe on the occasion of the South African Chamber of Business Luncheon, Johannesburg Country Club, 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 competitive fast growing economy which creates sufficient jobs for all jobseekers; of
• a redistribution of income and opportunities in favour of the poor;
• a society capable of ensuring that sound health, education and other services are available to all; and
• 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, where six South African Departments are working with the government and the people of the Congo towards a successful outcome of the first democratic elections held in that country in over forty years. President Mbeki leads a peace effort in Cote d'Ivoire where conflict 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…. 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 African Union, 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 wellbeing 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." End quote

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 coordination 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 combines 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 coordinates 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 NGO's.

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 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 2257 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 5 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;
• stablishment 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 and
• 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 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 PetroSA 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.

In 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.