The Department of International Relations and Cooperation (DIRCO) spoke about shifting South Africa’s policies to a changing global environment. The global climate is changing from North to South and from West to East, and South Africa must implement measures that align with that changing climate. South Africa is aligning its interests with the global environment not only by becoming an active international player, but by increasing its missions abroad and bringing business to South Africa. As for being an active player, Deputy Minister Luwellyn Landers emphasised that South Africa’s stance on conflict is to work to resolve conflict by way of dialogue and negotiation.
Members asked about DIRCO's property acquisition strategy abroad, about South Africa importing more than it was exporting and beneficiation; why South Africa was giving aid to Cuba; informing the South African public about its success stories and about South Africa’s stance on Palestine.
The Chairperson opened the meeting, saying the country requires deep commitment. Government officials must satisfy the hopes and aspirations of the people that have given them the responsibility to serve them in the fifth democratic parliament. He welcomed the Deputy Minister, Mr Luwellyn Landers, who would lead the presentation by DIRCO. He noted that the Committee has learned that they should reach an agreement with the department on the time frame for a presentation beforehand so as not to offend the department by cutting them short.
Deputy Minister Landers said that the presentation would be about an hour, as the department wanted to leave room for discussion. The Chairperson agreed with the time frame as this would leave 45 minutes for questions.
Presentation by DIRCO
Deputy Minister of International Relations and Cooperation, Luwellyn Landers, introduced the delegation and provided a briefing covering political trends.
Since 1994 South Africa’s engagement in the international sphere has seen a substantial increase in multilateral relations and South Africa has been hosting more and more international events. There has been a shift towards economic diplomacy. The Committee will hear that phrase used over and over again because it plays an important role in what DIRCO does. There is soft diplomacy, cultural diplomacy and diplomacy for state to state relations. However, the increase in international relations has led to challenges, particularly resources. Regrettably the department feels that it cannot sustain its current engagement in international relations and is feeling the pinch.
The Changing Global Environment
The government is aware of the costs they are faced with in a changing global environment. There has been a redistribution of power from the West to the East and from the North to the South. The centre of gravity is from the developed countries in the North to the developing countries in the South. There is a growing cloud and influence of new formations such as Brazil, Russia, India, China and South Africa (BRICS), Group of 20 (G20), Colombia, Indonesia, Egypt, Turkey, South Africa (CIVETS), India, Brazil, South Africa (IBSA) and many others. DIRCO looks at the way in which those formations are influencing the global agenda and dialogue. There is also the growing impact from non-state actors and social influence. Moreover, there is a general growth in advancement in technology
Global Trends that Impact on SA’s Influence
These global trends impact South Africa. There is a new transnational resource agenda, where scarce resources fuel tensions and protectionism. This shift not only affects Western powers, but emerging powers as well. Scarcity leads to sharing, and as resources gain prominence, conflict becomes asymmetrical and the world is confronted with consistent political instability. On that note, he wanted to make something clear on South Africa’s position on conflict. South Africa works to resolve conflict by way of dialogue and negotiation. He repeated himself, South Africa’s position on conflict is to work to resolve conflict by way of dialogue and negotiation. The short time that he has been in this position, he has come to learn the importance of that statement. It is easy for people, be they politicians or non-government organisations (NGOs), or people of influence to say that "South Africa’s position should be the following…". That position may be too simplistic.
South Africa’s Current Global Standing
Many global institutions need to be reformed to reflect the current global realities and reflect the emergence of developing democracies and states. South Africa has moved from being the skunk in the world to a responsible and influential state actor.
Ambassador Jerry M Matjila, the Director-General of DIRCO, continued:
SA’s Expanding Global Footprint; 1994-2013
In 1994 most South African missions were in Europe, one in Asia and some in Africa. In 2011, the government began to increase its number of missions. The map in the presentation shows that South Africa is in every region of the world. That is why DIRCO has a 24-hour service from Argentina, which is deep in the south, to Moscow, deep in the north. The footprints that South Africa is leaving are strategically decided upon and they are led by national interest. He asked if the Committee could remember the inherited backlog of 1994, the South African budget of R150 billion was not enough. South Africa was a new democracy that had to engage with the rest of the world aggressively. There was a backlog and to accomplish their goals they had to be citizens of the world, hence the footprint. If you do not trade, you do not succeed. However, to trade, one must manufacture. So in 1994, they had to look at the goods that they could trade as well as services they could employ. They had to retool the workforce to compete in world affairs, expand. He asked if the Committee could recall that the South African budget was R1.1 trillion last year, which means that they were able to move the economy and mobilise the resources to perform well. Not many countries can increase their budget ten times in a short time span of two decades.
South Africa’s Shifting Global Trade
He turned to the graphs. The world is changing, and Africa helped South Africa with its trade in value added products. If one looks at trade with Africa and the other nations, Europe was 60% in 1994 and last year, there was an exponential increase in its trade in the European Union (EU). In other words, South Africa had had to expand factories, train a new workforce and such. With the Americas (mostly the United States and Canada, part Brazil and others), if one looks at the expansion of missions, you can see it is superimposed with the expansion in business. When you see the missions in Africa, today we have 47 missions in Africa, and you see the return for those missions in terms of more business. Even though European missions have not increased much in size, we have re-tooled the workforce, so that we can compete with the European market. Asia and the Middle East are the biggest trade partners and have surpassed Europe. What DIRCO did to expand the market and reduce risk is engagement. What is good for South Africa is good business. China is the biggest trading partner; it has replaced America, Germany and Japan as the biggest trading partner. South Africa sends commodities to Japan, Korea and China. They started at three missions and now South Africa has 32 missions in Asia. One can see the effect that the missions had on business. That is why the department says that if they get more resources, they will bring more money back home. Job creation is development. The data in the presentation is an indication of what can be done. South Africa went from more or less R143 billion worth of exports in 1994, to almost R2 trillion in global trade. They cannot say that South Africa is not doing well, not many countries have this phenomenal growth.
When people come from the rest of Africa to South Africa, they leave with goods made in South Africa. If one adds up what the Africans buy and what they have in ships leaving our ports, perhaps South Africa needs to rethink its trade with Africa. Many times South Africa does not view them as assets; sometimes we see them as a nuisance. If one weighs these things, how the Africans come to South Africa, one can see the case for the continent.
DIRCO Strategic Plan Aligned to NDP and MTSF
The DIRCO Strategic Plan is aligned with the National Development Plan (NDP) and the Medium Term Strategic Framework (MTSF). DIRCO is working on the African Union's Agenda 2063, the fifty-year vision for Africa, which should be adopted at the AU summit in 2015. Once the agenda is adopted, governments in Africa will ask South Africa to streamline the NDP with the AU agenda. Part of what members must do is to build skills and prioritize skilled services. The more skilled labour, the more South Africa will be able to participate in the world. The second part of the alignment is to focus on trade promotion. He hopes that in the perspective of 2015-2019, South Africa can have value added exports. South Africa must penetrate more and more markets. South Africa also needs to be part of the world. South Africa needs to be present when the rules are made in the international community. For example, the UN has 45 agencies, and South Africa must participate in those agencies because they make global rules. By the time those rules are passed, it will be too late to participate. DIRCO spent a lot of time on the UN Convention on the Law of the Sea, they are currently in the second phase of this convention. This law making process is important for South Africa because it will add a large piece of land to South Africa. Overall, the South is important, and South Africa is part of the South. When we look at the top twenty countries in the world, we see that the pecking order is changing. If one goes to the G20 and see who sits at the G20 table, they will see that the South dominates. The south rescued the depression in the north. However, this is not to say that South Africa must disregard the North because the North has major investments in South Africa.
Mr Caiphus Ramashau, Chief Financial Officer (CFO) for DIRCO, summarised the Medium Term Expenditure Framework (MTEF) the budget.
DIRCO Annual Performance Plan (APP)
Mr Caiphus Ramashau explained the budget is allocated to five programmes: Administration, International Relations, International Cooperation, Public Diplomacy & State Protocol; and International Transfers. The second programme, International Relations takes the biggest chunk of the budget.
2014/15 Baseline Assessment
The baseline assessment is R5 754.324 million. One of the biggest challenges and cost drivers is keeping property abroad for missions. For example, after five years in Angola, the landlord had higher demands because he received offers from new players, which increased the budget for maintaining missions abroad. Another chunk of the money will also be needed to maintain memberships in organisations like the UN and the AU.
He discussed the 2013/14 Expenditure Outcomes; the 2014 Budget allocation per programme and per Economic Classification; and provided an overview of the MTEF allocation and payment transfers.
DIRCO is looking at how they can manage properties abroad. As mentioned before, they have problems with landlords, and in one of the properties the landlord asked for an upfront increase of 500%. They will also be reviewing the African Renaissance and International Co-Operation Fund (ARF). DIRCO will look at the best way to consolidate an amendment to manage the work better and to respond to issues more effectively. The ARF provides assistance mainly on the African continent or to other countries in the South, as well as Cuba.
Mr J Londt (DA; Western Cape) said he was a new Member and he enjoyed the presentation. He joked that he could see that the department was cash strapped because it was a small delegation that only has the essential people. He had a few questions on the fact that South Africa had 125 missions abroad. He asked if DIRCO was planning to expand. If so, where and why? He asked if there were places that were not giving South Africa a return for their investment. The government must look at areas where South Africa is getting value for money and where it is not. He asked about the number of properties that South Africa owns, and the number that they rent. He asked about the plan for purchasing property moving forward. He had a question on why the department handles the property themselves, and not public works. Seeing the way that Public Works is doing, he is glad that DIRCO is managing the properties, but he was just curious as to the reason.
Mr S Mthimunye (ANC; Mpumalanga) asked about the plan for black owned South African business in Africa in terms of the plan and vision. Secondly, DIRCO made a point that China has become the biggest trading partner. However, his concern, non-diplomatic as it may be and he hoped he was allowed to say this in the meeting, was about quality assuredness. The quality of goods from China is not very good, and so he wanted to know the type of quality assurance mechanism government has in place. He asked if tourism was on the decline or increasing, the Committee was getting different signals. His last point was to ask the Chairperson to give the Committee information when the department engages in international work. He wanted hands-on information on the international work that the department is doing.
Mr L Mokoena (EFF; Free State) said that he was always moving from the perception that government has so many people to ensure are employed in the country. He hears the numbers and the investment that South Africa is attracting and he is worried that it is not translating into job creation. When he looked at the graphs he saw an interesting trend, where in 1992 South Africa was exporting more than importing. there are dips between 1998 until the cross over in 2003, when South Africa started importing more than exporting. That seems to be the trend until now. He is worried because in a country that needs to employ more people, it would seem to him that South Africa needs to be exporting more than importing. Perhaps we are not aggressive enough, as the missions increase, we are not chasing business enough. The question is the aggressiveness with which we are chasing this, if it is good to have international relations. If we cannot solve our internal issues, we will have problems. For example broadband, it is important for rural people too. Malaysia shut down trade in mining and beneficiated, South Africa was supposed to have benefited from beneficiation too. South Africa should have been the number one nickel exporter. His question was why they are expanding in the missions and how they are relating them to South Africa’s internal problems.
Deputy Minister Landers said DIRCO is aware that one of the challenges faced by parliamentary committees is the drastic cutback in overseas visits. A member of the Portfolio Committee had asked how the Committee is expected to conduct oversight of the department when all of the work is done outside the country and when the Committee plans to take a trip to see the missions abroad, it cannot go because they are restricted to one overseas visit per annum. There is a reason for the restrictions, however, and there is a history of abuse of overseas visits. Now everyone is paying the price. If Mr Mthimunye wants to be told of the work DIRCO is doing and wants the hands-on information, he can petition to be part of the delegation. However, that is provided that DIRCO does not break parliament rules. Furthermore, even if he became part of the delegation, he could not accompany DIRCO every time. However, it can only benefit their work as an oversight committee. Mr Mokoena raised the issue of importing more than exporting. He made an important point that Malaysia shut down raw material exports, and focused on beneficiation. It is true that South Africa should have benefited from Malaysia’s shut down. However, they did not because South Africa does not want to export those goods. South Africa wants to see what those countries are doing with the nickel that they buy from South Africa, and analyse why South Africa is not doing what those countries are doing with the nickel. It is the same issue with platinum. When countries receive South Africa’s valuable platinum, South Africa must ask why they are not producing finished products as well so that South African citizens benefit. This principle applies to all of South Africa’s raw materials. South Africa is saying to the world that they are making money from the exports, but South Africa should do an exercise on how much they lost by exporting the raw material that they could have benefited from. South Africa must ask what those countries are doing with all the raw materials that South Africa is exporting, and why South Africa cannot do the same thing. Benefiting from using the raw materials is not going to happen overnight, but there are various initiatives to make it happen over a period of time. Those finished items that South Africa imports, South Africa should be making. It is part of how the world works. South Africa digs up the resources, but the other countries make the product and South Africa buys these products made from its own materials. Some of those materials are not finite; Britain learned that lesson. The UK mines are a sad reminder of what can happen and South Africa does not want to see themselves in that situation.
Amb Matjila said that the Committee had to keep in mind that what they want is a return on investments. Some missions are established for political reasons and some for purely economic reasons. For example, in Brussels they know how to do revenue, and being there allows for them to see how other countries do revenue. South Africa was able to study how to do revenue by looking at the World Customs Organisation (WCO). That was their system for revenue. Examples of economic missions are Shanghai, Los Angeles, Mumbai or Zurich. The government said to the Director General, that when he is abroad his role is to work as Wall Street. He had to find the men who controlled millions, and see if they would invest in South Africa. There are missions in Africa that are made for solidarity because South Africa is an African player or they want to participate in post conflict development. Maybe those missions will not provide a return on the Rand in the first months, but once the country they are helping stabilizes, South Africa will see a return. At a certain stage, the country will put bread on the table. Before South Africa opens up a mission, they do a lot of studies. When he goes to France, he sees that they have a lot of Chinese citizens visiting France. The difference between the number of Chinese tourists in France and in South Africa is quite large. He thinks South Africa can do better to attract tourism. As for the African continent and the African tourist, go to shopping malls and talk to producers and see who buys what, or if you look at car sales, South Africa moved from 6% in local content from 1994 to the current 66% threshold. Most auto companies are moving to South Africa for the African market. As for the idea that tourism is on the decline, the Department does a week of promotion around 27 April. They work to promote its products and work with top operators. If you go to the International Convention Centre (CTICCT) and see who is booking, you will see that they hold an annual conference and then they give people three days to tour. It promotes to companies to come to South Africa and hold their annual conference. When the companies come with the executive, the executive then comes with their families. Further, if you go to private hospitals in South Africa you will see the African middle class in the hospitals. You will see people recuperating from Germany and France. Tourism is no longer just to see animals. One sees a lot of gays and lesbians in South Africa, some even stay. When one looks at the statistics, one cannot look at it these visitors within the narrow definition of tourism. In terms of invitations to join the Department visits, they will leave the details to the Chairperson.
Mr Caiphus Ramashau responded to the property question. Currently South Africa has a large property portfolio for properties abroad. They have a total of 87 properties abroad. Some are chancelleries in Europe and Americas, with only one in Australia. The majority of them are very old, more than fifty years old. As for their managing the properties, the budget for managing properties was allocated to DIRCO in 1999. The department has been managing the leases because they understand the process and the environment abroad better than Public Works.
Amb Matjila said that what China and India do is buy properties. It was a trend to shy away from that because of financial strains. However, the department recently started looking at an acquisition strategy. The property in Brussels has been the same from 1967 until 2006; South Africa could have kept that. In 1994, a lot of countries bought properties, but South Africa rented in Swaziland and Botswana. An example of the expenditures abroad is the renovation of property in London. It cost a lot of money to renovate those properties. The same in the United States. The department would like assistance to at least to keep the properties in an acceptable state.
Mr Suka said that DIRCO is a very strategic department for building bridges, but it is quiet when telling their story to their own citizens. They have not told South African citizens that what the department is doing is good. The department does not have a good relationship with universities in a manner that they can channel people to international relations. Students are looking for jobs, but the department is quiet in the print and in electronic media. He would call it academic diplomacy. What the department projects to its own South Africans is important and they can up the level of promotion. There must be a balance in trade, but not all countries are genuine, there is a hidden agenda, but we should always raise our eyebrows. On another note, he asked how the department manages homesickness amongst their staff. He is raising this matter because when he visited the Greek islands, people had those types of complaints. He wanted to know South Africa’s stance on Palestine. It is important for members to know its stance so they speak as one government.
Ms M Dikgale (ANC; Limpopo) said that there is money and she does not mind pressing the budget. She asked if they are considering any other property.
Dr Y Vawda (EFF; Mpumalanga) said that mention had been made that South Africa gave aid to Cuba, he thought it was the other way around. He asked if they could clarify that point. He asked how the lease situation with Angola arose. South Africa should have had a plan to deal with that. He commented that there is great potential in South Africa but its biggest problem that the government needs to understand is that the country does not have the capacity to commercialise its resources. The government is keeping the majority of the population out of the mainstream economy, and that is the biggest challenge facing us. That is the issue that we must address. South Africa cannot bring in as many Chinese tourists as France because it does not have the capacity.
Ms E van Lingen (DA; Eastern Cape) said that she was worried about silent diplomacy. She wanted to know how much South Africa had invested in the Greek banks. On tourism, as far as she knows, Tourism has an item in its strategic plan, for people to be trained so that they understand the tourism market better. She asked if DIRCO was aware of that training plan and if the two departments were cooperating with one another and if the training was the cheapest solution.
Deputy Minister Landers said that he disagreed with Mr Suka. DIRCO arranges press conferences at least once a week. If the department is in Pretoria, it will make the statements in Pretoria, same with Cape Town. Moreover, the conferences are professionally handled and they cover a range of issues. The department is proud of their public diplomacy, he thinks they are doing an excellent job. Their job is to influence opinion domestically and internationally. As for threats and raising eyebrows, threat will always be there. Your friend today is your enemy tomorrow. People have been doing their job for many, many years, and so he does not feel that the insecurity is a problem. On Palestine and Gaza, the government has gone public and made its point very clear. As he said before, South Africa’s position on conflict is that they resolve a conflict by way of dialogue and negotiation. He is aware that there are people calling for South Africa to recall the ambassador from Israel, but the government chose to appoint an envoy instead. The envoy will consist of the former Foreign Affairs Deputy Minister, Aziz Pahad. The former ambassador will be accompanying him, and at this point they do not know who the third person will be. They will engage in dialogue with Israel, Hamas and the Palestinian government.
Amb Matjila made a joke about the name, academic diplomacy, and said they would look into it. He said that DIRCO wase engaging with students. The department launched the BRICS academic forum and they invited professors from every university. What the department had done in previous administrations has been to go to every province and engage the students. He worked with that programme, but the risk is that this world is full of spying. If you do not spy, you are out of business. He is not saying that South Africa is spying, but people are spying. They spy for information. Members are probably aware of the situation between the US and Germany. It is a big threat. The second threat is that they have local recruiter staff and their calculation is that if you have thirty of them, five or four work for local intelligence agencies. If one goes to the Chinese embassy, one will see more Chinese citizens working at the office, than local nationalities. That is because they know that although South Africa likes them, they might want something from them. The solution is to encourage students to work abroad and learn languages. There is always a risk of losing the employee to spy on you. The economy has grown to a point where the country has performed a miracle in many ways. The real question is whether the return is shared as the economy expands. They can look at places like the United Kingdom, where the UK promotes buying products made in the UK. That is a way of expanding the cake. If 1000 delegates go to a conference at the CTICCT, none of them go home without sightseeing. The private sector needs to be led. The government needs to start pilot projects. For example, South Africa represents a large portion of the platinum producers in the world; South Africa must build something like a platinum valley to work on platinum cells.
The Chairperson said that although their time was up, it was not their last meeting and he hoped that they would meet very soon. There is an interesting synergy between Tourism, the Department of Trade and Industry (DTI), and DIRCO, and so the Committee appreciates DIRCO's presence and the information they shared. The Committee feels ready to go and speak competently about the budget. They need to arrange a follow-up. He announced to the Committee that DTI would be meeting with the Committee next week. Also the Committee had an invitation to a heads of mission meeting from 25-29 August where they can meet people who can share their experiences at the mission stations when they are deployed. He envies the Members sometimes because they can ask questions, and he cannot. He gave his input on DIRCO’s propaganda, saying he had seen their work before being head of this Committee and he was very impressed. He thinks that they are doing great job with propaganda. He said to Mr Suka that the problem, which is a problem in parliament as a whole, is finding a media strategy that will particularly reach young people in the country.
The Committee adopted the minutes of the previous meeting. The Committee agreed that the minutes should not capture everything but should leave the content up to the discretion of the Committee Secretary.
The meeting was adjourned.
Apologies: Mr B Nthebe (ANC; North West), Ms W Zondi (ANC; KwaZulu-Natal).