Department of International Relations and Cooperation: Medium term Strategic Plan 2009/12 briefing

Meeting report

Mr Ayanda Ntsaluba, Director-General: Department of International Relations and Cooperation, reported that the focus of the Department of International Relations and Cooperation (DICO) over the next three years would be on leveraging possibilities internationally. DICO planned to extend South African constitutional principles externally and advance the principles underpinning South African international relations policy.

The Department's strategic priorities were the consolidation of the African Agenda, strengthening of South-South co-operation, strengthening of North-South Co-operation, participation in the global system of governance and strengthening of political and economic relations. The Department outlined its work for building organisational capacity, diplomatic training, corporate services, supply chain management, property and facilities management and asset management.

The approved Medium Term Expenditure Framework (MTEF) budget allocations were R5.3 billion for 2009/10, R5.4 billion for 2010/11, and R5.5 billion for 2011/2012. The department had recorded close to 100% spending in the three preceding fiscal years. Mr Ntsaluba noted that this was a flat increase, if viewed graphically. In real terms it amounted to a decrease in budget. The Department was financially vulnerable as it was subject to fluctuations in the exchange rate.

Discussion
Mr B Mnguni (ANC, Free State) referred to the stated foreign policy priorities. South Africa had been criticised for decisions in the United Nations (UN), as amongst other matters it was perceived not to support the arrest of the Sudanese President Al-Bashir. He asked how DICO handled this and how much damage these conflicts of opinion had caused in South Africa’s international relations.

Mr K Sinclair (COPE, Northern Cape) asked the Department to elaborate on South Africa’s role in the UN. He asked if the issues would change with the new government.

Mr Ntsaluba responded foreign policy was aimed navigating between a number of opposing obligations. South Africa tended to work multilaterally through the UN, often as part of the African Union (AU) block. There were conflicts with other African countries on issues such as capital punishment. Capital punishment was against the Constitution of South Africa, but the majority of African countries did have the death penalty. South Africa could not be seen to attack other African countries in the UN forums. It had to consider how to stay firm on domestic principles while considering that it worked in this block. Trade-offs had to be made.

The Al-Bashir case highlighted this contradiction. South Africa was a signatory to the Rome Statute and had its own International Criminal Court (ICC) Act, and had certain obligations in terms of these agreements if a warrant of arrest is issued. South Africa did not necessarily agree with the AU decision, but continued to be committed to it. Multi-lateralism accepted that South Africa would win some arguments and lose some in terms of the final decision. Finally, South Africa had to respond based on its own Constitutional imperatives. This took the highest precedence. He added that the media often oversimplified issues. These issues needed to be contextualised and were not easy to explain. Answering whether there was likely to be a change in the position of South Africa, he noted that DICO was generally of the opinion that it was not that South Africa’s position was wrong, but rather that it had been poorly communicated. Mr Ntsaluba specifically noted the Myanmar case. South Africa had simply stated that, in view of the fact that the UN and the Security Council were in place, powerful countries should not be allowed to take issues that they wanted to resolve to an inappropriate forum, because they should rather exercise their veto powers in the UN and Security Council. South Africa had stated that this issue would be appropriately dealt with by the Human Rights Council. Again the simplistic interpretation of this had resulted in reports being issued that stated that South Africa no longer supported the struggle of the people of Myanmar.
More proactive communication was needed on these issues, so that the South African public would  fully understand the position of the Department.

Mr Mnguni asked what the Department's exposure to business intelligence was, and what its interaction was with economic matters. He felt this was pertinent because of the surge in foreign interest in Africa and the preference for using South Africa as a base.

Mr Jerry Matjila, Deputy Director-General: Asia and Middle East Branch,  Department of International Relations and Cooperation replied that the Department recognised the increasing importance for economic relations and had increased emphasis on business intelligence. It was retooling DICO staff to understand the international marketplace, with a focus on emerging markets. This economic diplomacy would make it possible for the South African companies to move into these markets. The business intelligence from DICO would also outline the potential opportunities, threats and risks to South African companies in these markets.

Mr Mnguni noted that the presentation had mentioned that the recent visit of American Secretary of State, Hilary Clinton, had improved relations. He asked if there had been tensions and what the benefits of improved relations were.

Mr Ntsaluba responded that South Africa had always had cordial relations with the USA. There was a Bi-National Commission in the Clinton-Mandela era, headed by the then-deputy presidents, Al Gore and Thabo Mbeki, which was a structured mechanism to deal with the areas of misunderstanding. During this period, areas of contention were attended to speedily through this mechanism. This mechanism was no longer in place in the Bush era, meaning there was no provision for regular exchanges. Later in the Bush administration, the  interactions, though increased, remained informal. It was the Department's position that a structured mechanism was necessary, in order to deal with the inevitable differences between the two countries. Good relationships were not characterised by a lack of tension, but rather they were reflected in how the parties dealt with the points of tension. His view was that Senator Clinton's visit was an indication of the Americans' willingness to restore more solid relations, largely because there were so many issues on which South Africa and USA needed to co-operate within Africa.

Ms S Chen (DA; Gauteng) noted the request for R153 million for the 2010 Shanghai World Expo. She asked for more detail of South Africa's participation, and how the outcomes and achievements would be measured.

Mr Matjila responded that South Africa needed to be at the Shanghai World Expo (the Expo) to market the country. This was a six month continuous event (May to October 2010) and South Africa's participation encompassed several government departments. This was important because China was a growing market. South Africa still had a trade surplus with China but aimed to close that gap in the next fifteen years with an increase in the value-added basket of goods. The budget for this had been adjusted and DICO aimed to use this to represent South Africa well. South Africa was mindful of the competition from the other 192 participating countries. South Africa had gained in trade of services recently, specifically in the sectors of banking, technology and mining services. Over these six months, waves of people would attend the Expo. Each month would have a theme and the theme for May 2010 would be the FIFA World Cup. The other themes would promote all aspects of South African society, including tourism. Other initiatives to interact with this market were all increasing South African mission capabilities in Shanghai, Beijing and Hong Kong. He noted that DICO also planned roadshows in the provinces and received assistance from the Chinese South Africans and Chinese business community. More details would be given to members as this process unfolded.

Ms Chen asked if DICO would participate in the China in Africa conference hosted by the University of Johannesburg.

Mr Matjila responded that China and India had expressed great interest in promoting a relationship with South Africa. China had sent trade missions. China had huge liquidity and had sent its biggest banks on a buying mission to South Africa as part of its greater mission to buy companies abroad. China had also recognised that South Africa's challenge with logistics (mainly road and rail transport) were an impediment to growth and were assisting in that area. Mr Matjila stated that the key to sustainability of this relationship was local partnerships. The focus was currently on building a trade council with China.

Mr Sinclair noted that former-President Thabo Mbeki had warned of Chinese imperialism. While he understood that South Africa should engage on the economic benefit of bilateral trade, he was concerned about Chinese business activities killing local entrepreneurs in the rural provinces, like the Northern Cape. This also related to Bangladeshi and Indian businesses. He asked if there would be a change in the engagement in future.

Mr Matjila responded that DICO had a comprehensive plan for the managing this relationship. South Africa had a bi-national Commission with China and met three times a year to discuss issues. China had made a R300 million injection to skills development in South Africa. This was aimed at improving the competitiveness of the textiles industry. Energy and environmental issues were challenges in China. In order to address this, China had proposed moving its manufacturing operations closer to South African mines, to reduce the environmental impact and cost of transportation of the South Africa raw materials used in manufacturing. There was a change in attitude from China. It had expressed interest in working with South Africa on issues of health, education, agriculture, science and technology, manufacturing, trade, transport and public job creation programmes. This was in line with South Africa's five national priorities. There were still problems with the low cost and low quality of some Chinese goods in our market. DICO was dealing with that and had a structure for co-operation with China.

Ms E van Lingen (DA; Eastern Cape) referred to the practice of “twinning”, where local governments interacted internationally under the pretext of economic development. She mentioned an interaction between the Coega municipality in the Eastern Cape with Brazil and Switzerland as an example of this. She asked if DICO had guidelines or regulations for this and whether agreements were possible or needed to be approved in Parliament.

Mr Ntsaluba responded that the practice of twinning was going to end soon. Certain agreements contravened procedures in terms of the Constitution, legislation and other international agreements. DICO planned to enforce the Ministerial Handbook to regulate these visits, as the provisions of the handbook also governed Premiers. Accordingly the Department would workshop these guidelines. Additionally DICO should be involved in organising these trips and this would also allow South Africa's missions in foreign countries to be aware of the visits and add substance to the trips.

Mr K Sinclair (DA; Northern Cape) thought a more structured approach to international relations would be useful.

The Chairperson asked what the international marketing of sub-national government, namely at provincial and local levels, entailed.

Mr Ntsaluba responded that DICO had a workshop with all the provinces and representatives of local government. DICO was in the process of establishing a single brand icon for South Africa. This would allow all levels of sub-national government to market themselves internationally under a single brand icon that was definitively representative of South Africa. This would be used on all marketing and the specific information of the province or municipality could be added below.

Mr Ntsaluba said that this would go to Cabinet for consideration and the Department  envisaged a decision on it by the end of October.

Mr Sinclair commented that, considering the negative outcomes, Zimbabwe remained a serious challenge. Stability in Zimbabwe was a key to peace in the Southern African Development Community (SADC) region and Africa. He hoped that President Zuma's planned visit to Zimbabwe would resolve the issues.

Mr Ntsaluba responded that the inclusive government was a step forward and the fact that it had held up was positive. However, DICO was worried by the delay in implementing certain elements of the Global Political Agreement. It was also concerned about the recent walk- out from the Cabinet meeting and other difficulties. President Zuma also had some concerns as the Chairperson of SADC. He would present a progress report on Zimbabwe at the next SADC summit and a determination would be made on the need for further action. South Africa continued to urge the Zimbabwean government to rise above the sectional interests. He added that if Zimbabwe were to slide back again, there might not be another opportunity for resolution. The implications for South Africa were a matter for concern.

Mr Sinclair asked what South Africa's position was on Afghanistan and North Korea.

Mr Matjila responded that South Africa had not neglected the issues around peace in Afghanistan. South Africa was not the major player in the region. The North Atlantic Treaty Organisation (NATO) countries and the USA were the major players. South Africa's concern was for the MTN satellite company there and for the safety of South African nationals working for security companies in Afghanistan. South Africa hoped for movement toward peace and security.

Mr Matjila said that South Africa had good relations with North Korea but was also not a major player there. China, Japan, the USA, South Korea and Russia were the major players and South Africa supported all confidence-building measures in the Korean peninsula.

Mr F Adams (ANC; Western Cape) referred to the comments on human resources capacity building. He noted that the vacancy level in the Department was very high and asked what action DICO had taken. He felt this amounted to an issue of efficiency.

Ms Mathu Joyini, Deputy Director-General: Human Resources, Department of International Relations and Cooperation, responded that the strategic plan was prepared with information available up to April 2009. Since then people had been pulled from head office to fill vacancies abroad. They had started the cycle and the number of vacancies would decrease by 37. Of the 197 vacant posts at head office, DICO had filled 128 to date. Of the 128, 74 were internal promotions in line with DICO policy, therefore the real impact on vacancies amounted to 54 new people needing to be added to the staff. She added that there were also retirements and transfers over the last five months, resulting in a turnover rate for the year of about 7%. DICO was in the process of advertising and interviewing to fill vacancies. The unfunded vacancies were deliberately put in to supplement the operational budget. Once the Department had moved to the new head office building, the vacancies would be refunded. The Department had also marketed itself to attract the necessary talent.

Mr Adams remarked that the ratio of women at top management level was low, and thought this should be addressed.

Ms Joyini responded that the Department had achieved 33% representation of women and now targeted 50% by 2010. There had been a concerted effort to achieve this and DICO would now advertise, stating the preference for women explicitly. It had explored head hunting as another way to bring women into the Department as part of the consistent effort to improve.

Mr Adams asked DICO to provide the Committee with the list of countries with whom South Africa had extradition treaties.

Mr Ntsaluba responded that he did have such a list, but did not have it with him and so would liaise with the Committee Secretary to distribute it to Members.

The Chairperson queried the treatment of DICO property in Berlin. He noted that this building was vacant and the Bambatha Group was interested in using it. He asked how this would be treated, and specifically how the plans related to the disposal of assets.

Mr Ntsaluba responded that the property was in Bonn, Germany. It was an old chancellory and was zoned for this purpose. This created difficulty in using it for other purposes. In light of this, the Bambatha Group had modified its proposal. The Bambatha proposal was under consideration by Germany, who would make its decision based on what would fit into the regulatory requirements of Germany.

The Chairperson asked if DICO had considered a Public-Private Partnership (PPP) in disposal of the DICO properties.

Mr Ntsaluba responded that the property in Bonn had not been sold because the offers to date had been unsatisfactory and would have resulted in a loss on sale. He noted that DICO had looked at its options and considered PPP most viable in countries with a more vibrant property market. Due to the current budgetary constraints in the fiscus, raising capital for these kinds of transactions was difficult.

The Chairperson asked what resources South Africa primarily traded with the USA, EU and others.

Mr Ntsaluba responded that intra-African trade had improved. South Africa had a trade surplus with Nigeria and Angola, primarily importing oil. The basket of goods South Africa exported to other African countries were industrial goods, manufactured and finished goods, and was quite diversified.  South Africa imported mainly oil (raw materials) and this created sensitivity. This was contradictory to South African trade with Europe and the USA. South Africa mainly exported raw materials and did not export a large volume of manufactured goods. The same trade pattern applied to China. South Africa was looking at changing this trade pattern. This was a matter of international competitiveness and part of the approach was to build a domestic industrial base.  Another part of this was the expansion of trade in services, particularly in banking. Standard Bank already had a growing footprint in Africa and investment incentives for trade in Africa were in place. One problem that had been noted was the conduct of South African companies abroad and DICO was in discussions to develop a code of conduct as a means for regulation.
 
The Chairperson asked if the figure provided for South Africa's contribution to the AU included the figure for the Pan African Parliament.

Mr Ntsaluba responded that the AU figure was inclusive of the contribution to the Pan African Parliament. It excluded South Africa's activities as host to the Pan African Parliament. This included rent for Gallagher Estate, ICT support and transportation. This was detailed in the host country agreement.

The Chairperson asked what benefit South Africa realised from the forums in which it participated with the EU, Caribbean region and others.

Mr Matjila responded that this was called the African Caribbean Pacific (ACP) countries. This was a forum between the EU and the former colonies of Europe, and was an attempt by Europe to develop the economies of the former colonies. Trade was structured unconventionally according to agreements reached in these forums. The agreements were characterised by fixed export prices, way above the internationally competitive price level. This was a special trade arrangement. It was revised in line with World Trade Organisation (WTO) compatibility, which prescribed that trade regimes had to be globally applicable. These agreements had been revised due to objections by countries producing the same export commodities  selling at the market price. The European Investment Global Fund was a direct support payment to these countries for development, amounting to € 3 billion. Despite renegotiation of certain agreements, an umbilical cord still existed. The Economic Partnership Agreements (EPAs) were part of a discussion to restructure trade patterns between Europe and the 77 countries of ACP.

The Chairperson asked why Ms Fatima Hajig was still noted as a Deputy Minister.

Mr Ntsaluba responded that this issue had arisen also in relation to the Annual Report. The reporting period covered also the period of the previous fiscal year, prior to the reshuffle of Cabinet.

The Chairperson asked if documentation on South Africa's dealing with China could be provided to members. He congratulated the delegation on their presentation.

Committee Business
The Committee adopted the Report of the Select Committee on Trade and International Relations on Budget Vote 32 and the Medium Term Strategic Framework 2009-2012 of the Department of Trade and Industry, dated 29 June 2009. It further passed a motion to publish the report.

The meeting was adjourned.