ANC hand caught in the cookie jar

IF YOU really want to know what is meant by a “developmental” state, look no further than the decision by the Department of Trade and Industry to terminate its bilateral investment treaty with the Belgo-Luxembourg Economic Union. Another 12 bilateral investment treaties with European Union countries won’t be renewed when they expire.

What impelled a supremely arrogant African National Congress government to take action of this kind, action which will without doubt deter future investment in this country? The answer is that it was caught with its hand in the cookie jar, was roundly smacked and sent packing.

This was the last round in a longrunning dispute brought by Italian investors in SA’s granite mining sector, which arose out of the new mining law requiring 26% black ownership. The Italians sought appropriate compensation in terms of the investment treaties between SA, Italy and Luxembourg.

What this underlines is that the investment treaties, which the department now calls “old generation”, stand in the way of the gov- ernment’s desire and determination to exercise greater involvement in and control over the economy. That’s what a developmental state calls for, and it’s communism by another name. That’s why the trade and industry minister is Rob Davies, a dyed-in-the-wool South African Communist Party member.

The existing investment treaties may — note the operative word — be replaced by new treaties, but you can bet these will have to be constructed so as to reduce considerably the protections currently afforded interna- tional investors. Davies, meanwhile, isn’t a whit bothered by suggestions that investment will be curtailed.

“I can assure you,” he said, “there are plenty of other investors from other parts of the world who are happy to come and don’t insist on this.” Those investors who stay away will be locking themselves out of a growing continent. “That’s their choice,” he said dismissively.

Just to add to investor uncertainty is the Private Security Industry Regulation Amendment Bill, one clause of which seeks to ensure that “at least 51% of the ownership and control (of private security companies) is exercised by South African citizens,” although another subsection allows the police minister to prescribe different percentages of ownership for different categories in the security sector (even locksmiths may be affected). Companies have five years to comply with the new requirements.

Defending the bill to the National Council of Provinces, the responsible minister, Nathi Mthethwa, said there were more officers in private security than in the police force and army combined (Business Day, June 21). They are all well-armed and repre- sent, he says, a threat to state security. The Democratic Alliance has challenged Mthethwa to provide proof of this assertion.

So far he has provided none. I know of no occasion on which private security firms or individual security groupings have challenged the state. I know that employees of security firms went on strike on one occasion and misbehaved badly. I also know that Johannesburg metro police challenged SA Police Service members on one occasion and actually exchanged fire, but metro cops hardly constitute private security.

The bill ignores the security of citizens, which the state is clearly incapable of providing satisfactorily. We have one of the highest crime rates in the world and we need more men safeguarding us, not fewer. We also need a great deal more in the way of international investment.

But the department’s manner is hardly conducive to the global financial community. There are many other places offering better opportunities and secure investment codes.

E-mail: david@gleason.co.za Twitter: @TheTorqueColumn