Populism ‘making the world unstable’
Former UK PM warns that SA’s poor need to be lifted out of poverty
● Though the world’s leading central bankers may have stepped in to save the global economy from Armageddon during the financial crisis by flooding markets with cheap money, politics has had no such saviour since the near-collapse of the entire banking system.
The great recession of a decade ago unleashed a populist wave that has seen the British public reject the EU, a rise of authoritarianism best captured by the election of leaders such as Donald Trump and Brazil’s Jair Bolsonaro, the latter a populist who promises to punish his political enemies and roll back protection for minority groups.
Protectionism, nationalism and trade wars have struck a particular chord with voters in recent years and left the world “unstable”, said former UK prime minister David Cameron.
The “world we now live in will be a world of bilateral agreements rather than perhaps multilateral ones and that is a pity. What we must try to ensure happens is that we don’t slip backwards,” he said in an interview with Business Times on the sidelines of this week’s Discovery leadership conference in Johannesburg.
In years past, Cameron said, the US, Germany and Britain were the leading voices against protectionism; however the world’s biggest economy, led by Trump, has changed its tune.
“I worry that we could be slipping back; I think it would be a great mistake. We should have learnt the lessons from the 1930s. Protectionism doesn’t protect jobs, doesn’t really protect industries in the long term, it’s a mistake.”
Triggered by the Wall Street crash at the end of the roaring twenties, the Great Depression lasted a decade and was the worst economic downturn in the history of the industrialised world. In its aftermath, nations resorted to protectionism, which would eventually feed into the rise of strongman leaders across the modern world and eventually lead to World War 2 and the Cold War.
The political climate is once again seemingly ripe for the rise of strongman leaders; leaders who Cameron said are effectively providing “fake leadership because they are saying there are short cuts to success”.
These leaders may be open to elections, but they trample on the free press and the rule of law, he said.
“The rule of law is actually the most important of all those things. In the end, the fact that your government is subject to the courts and that your home is safe or your investments are safe and government can’t confiscate what you have and that you can take a government to court and win, these are incredibly important.
“Your institutions in this country were vital in withstanding the last eight years, so the strongman idea that is all about strongman leaders getting elected and doing big stuff and undermining the institutions is a wrong path.”
The rise of more populist leaders was further evidenced over the past few weeks by the imminent departure of German Chancellor Angela Merkel, who has led the country since 2005. This week, she said wouldn’t stand for re-election.
Cameron said she would be missed on the global stage.
“She was extremely capable and a strong supporter of sensible fiscal policies and sensible trade policies, open markets and freedom.”
Cameron’s six-year term as prime minister came to an abrupt end in 2016 after a British referendum that he called — on whether the island state should continue its membership of the EU — went against his preference. He was in favour of staying in the 28-member union, but badly miscalculated the mood of the public outside economic centres such as London.
Since that surprise result, the UK body politic has been in a mad panic over just what kind of economic future the one-time British Empire has outside the EU. The pound has weakened more than 12% against the dollar since the decision was made on June 23 2016.
Cameron wouldn’t be pressed on political developments at home since that populist
If you want to keep moving forward with free trade and liberal economics and liberal democracy you have to address the grievances
decision and on the performance of his successor, Theresa May, as the country battles to find amicable settlement terms with the EU by March next year.
“I believe strongly that you can be a member of the European Union and have very strong relations all around the world; that’s what I tried to do. But we are leaving the EU … and I think we are going to have to work even harder to say to countries like SA that we have a really special partnership,” he said.
There were reports in the British press this week of a possible return by Cameron to mainstream politics.
Speaking about the global mood of uncertainty, Cameron said that there’s “economic insecurity felt particularly by some people and some communities who have been left behind by globalisation, who haven’t seen the success that others have seen”.
“The second [aspect] is the sort of cultural insecurity that has come from quite high levels of movements of people and immigration in different countries. My argument is that if you want to keep moving forward with free trade and liberal economics and liberal democracy, you have to address the grievances.
“There is no good ranting and raving about the latest election in Brazil or America or wherever else; you’ve got to deal with the problems.
“I think it’s a very good case in point in SA, where we have got to make sure that more people are lifted out of poverty as investment comes into the economy.”
It was when former British prime minister David Cameron rolled up his sleeves to win the internal battles in his Conservative Party that he made the fatal mistake of calling a referendum — it would spell the end of his premiership. By calling for a vote on his country’s future membership of the European Union, I imagine he was banking on his preference winning because of his “popularity” and thereafter weeding out his eurosceptic opponents within his party. He clearly misread the situation and underestimated rivals such as Boris Johnson as the referendum went against his view that staying in the 28-member EU was the best course. He fell on his sword and after only six years, lost a job that he had aspired to for most of his adult life.
To some degree, President Cyril Ramaphosa faces a similar scenario. Just how much of his energy does he dedicate to solidifying his base within a party that is quite literally tearing itself apart at the seams, in a climate where the long-term health of the South African economy and its politics is at stake?
It’s a delicate balance, and when one considers the tough decisions that are still to be made over the fate of state-owned enterprises and the size of his inherited cabinet, it’s a road paved with many risks.
When Cameron first came to power in a coalition with the long forgotten Nick Clegg, a few years after the financial crisis, he perhaps had the clearest mandate of any leader in recent times. Fix the state coffers, and by that get the country living within its means or risk a deeper ruin the likes of which Greece is only now recovering from, if that at all. He followed an austerity course that would in the short term further depress growth. Despite reducing the welfare state and taking rather unpopular decisions, he won re-election rather handsomely and could do away with the coalition with the Liberal Democrats.
Buoyed by this victory, he would then go on to take his disastrous gamble and the rest, as they say, is history. But at the very least, he left the UK, fiscally at least, in a healthier position than when he first walked into Number 10. It’s something he reminded me of this week.
Ramaphosa also took the reins of SA in similar circumstances, in a country facing the abyss. Ratings downgrades were piling pressure on an already constrained fiscus as debt costs rose, an investment strike had brought the country to a stall and key funders of institutions such as Eskom and SAA were threatening to call in their loans, a decision that would have tipped the country over the edge.
Given the task that lay before him, one would have hoped that Ramaphosa would have been given the space to address the most pressing matters of stabilising SA Inc and breathing fresh confidence into its story. The general public, investors and even opposition parties gave him the space to correct the worst excesses of the Zuma administration, hence the “Ramaphoria” of the first quarter of this year.
What pricked that bubble was his party, which can’t escape factional battles more than a decade old — battles that are really premised on access to the public purse. Ramaphosa’s slim victory in December places him at the centre of the battles for supremacy at a time when there should be a national focus to steer the ship away from the iceberg-infested waters emerging-market countries find themselves in.
Cameron’s first term was about steadying the UK economy through a sovereign debt crisis. I can’t help but feel that Ramaphosa’s in-tray is much fuller. Investors are willing to give him the space to clear the mess of his predecessor, as evidenced by last week’s investment conference, but their expectations are tempered by the fraught battle for the soul of the ANC. Clandestine meetings between the party’s secretary-general and the former president serve only to raise concerns over how much Ramaphosa can do to get both his government and party to follow his vision.
It seems an insurmountable task to manage both the party and state given his slim margin of victory in December. He’ll need some support, which won’t come from Luthuli House, but from the likes of finance minister Tito Mboweni. That supposed “sober” ANC needs to step into the breach.
Expectations are tempered by the fraught battle for the soul of the ANC