Foreign Affairs Budget Speech - Address by Deputy Minister Aziz Pahad to the National Assembly, 28 May 2002

Madame Speaker,

International relations has to be carried out in a world that has fundamentally changed in the last decade.

Today, we live in an era of profound change, distinguished by globalisation. We cannot role it back or ignore it. Globalisation has been made possible by the unprecedented dismantling of barriers to trade and capital mobility together with unprecedented technological advances and steadily declining costs of transportation, communication and IT.

Globalisation’s manifestations have a profound impact on the global economy, and the world political order and indeed every country’s foreign policy is influenced by these manifestations, which inter alia, are :

Dramatic increase in the flows of capital :
In 1980 cross-border transactions in bonds and equities (shares issued by companies) were equivalent to 8% of Japanese GDP; in 1998 the figure was 91%. During the same period it increased in the US from 9% to 230%, in Germany from 7% to 334% of GDP.

The global bond market is remarkably big. In 1997 it was US$25trillion. By mid-1999, the total value of bonds outstanding had reached US$34 trillion. That exceeds not only the total capitalisation of all the world’s stock markets (US$27,5 trillion in 199 ) but also the total GDP of all the world’s countries ( US$30,1 trillion in 1997 ). More than half of all bonds in 1999 were issued by governments or other public sector agencies. And just under half of all bonds were of USA origin.
The daily turnover on the world’s foreign exchange markets rose from US$1,6 trillion in 1995 to US$ 2 trillion in 1998, implying annual flows of more than US$400 trillion ( SA’s approx R11 billion per day or approx. US$1 billion ). The volatility of the financial markets, largely determined by speculators, is a cause for serious concern e.q. Asian meltdown.
Monopolisation is taking place at an unprecedented pace. Nobody is immune, not even the large multinational companies. For example : of the Fortune 500 top companies of 1980, 60% of them had disappeared by 1994 ( either bankrupt or merged with other companies ).
Growing concentration of financial and economic power.
In 1997, around 90% of total bond issuance was issued by just 20 firms ( of which Merrill Lynch, Morgan Stanley and JP Morgan accounted for around a fifth ).
A transnational communications take-over in the US created a company whose market value exceeds the GDP of nearly half of all UN members.

A task force, sponsored by the New York Council of Foreign Affairs, concluded that the assets of the three top billionaires are more than the combined GDP of all least developed countries and their 600 million people.

While there is greater demand for liberalisation of economies there is increased protestenism, e.q. OECD agricultural subsidy of + $300 billion a year; USA … re + $160 billion agricultural subsidies; anti-dumping and other non-tarrif restrictions.

Unprecedented scientific technological revolution. In 1993 there were 50 pages on the World Wide web. Today there are more than 50 million. In 1997 143 million people used the Internet. By 2002 there are over 700 million users. In 1996 the e-commerce market was $2.6 billion, by 2002 expected to grow to $300 billion. Globalisation has opened up new possibilities for growth.
Spectacular advances have been made, but it is grossly uneven. Nearly 1,3 billion people do not have access to clean water; one in seven children of primary school age is out of school; an estimated 1.3 billion people live on incomes of less than 1$ a day. It has been estimated that a 4% levy on the world’s 225 most well-to-do-people would suffice to provide the following essentials for all those in developing countries: adequate food, safe water and sanitation, basic education, basic health care and reproductive health care.

We have moved from a world which once was marked by governments with control over resources to one where little wealth is common or public. We live in a world where inequality of wealth and opportunities are growing within countries. In the USA, for example, the inequality based on falling real wages for low-paid workers is unparalleled since the Great Depression. The same story emerges in Europe.

Some consequences:

Extreme right wing tendencies.
But the growing inequalities between countries is even more stark – one fifth of the world’s people living in the highest-income countries have :

86% of the world’s GDP – the bottom fifth have a mere 1%
82% of the world’s export markets – the bottom fifth just 1%
OECD countries with 19% of the global population, have 71% of the global trade in goods and services, 58% of foreign direct investment and 91% of all Internet users.
What are the consequences for Africa:

The number of Africa’s poor have grown relentlessly and Africa’s share of the world’s absolute poor increased from 25% to 30% in the 1990’s
Africa’s share of world trade has plummeted since 1960;
It now accounts for less than 2% of world trade and if SA is taken out of the equation, the figure for Africa is a mere 1.2%;
Africa is the only region to see investments and savings decline after 1970. The savings rate in many African countries are the lowest in the world.

In 1997 Africa’s debt was estimated to be $159 billion and by 1999 this increased to 201 billion dollars. We are faced with the reality that outstanding external debts in many African countries exceed the entire GDP, and debt service requirements exceed 25% of total export earnings.

Overseas development assistance has dropped more than one fifth in real terms since 1992.

Many of our countries have taken steps to create a climate conducive to direct foreign investment. They have either through structural adjustment programmes or as country programmes put in place trade liberalisation policies; the strengthening of the rule of law; improvements in legal and other instruments; greater investment in infrastructure development, privatisation, greater accountability and transparency, greater degree of financial and budgetary discipline and the creation and consolidation of multi-party democracies. However foreign direct investment has not flowed sufficiently to Africa.

Electrical power consumption per person in Africa is the lowest in the world; Tokyo has more telephones than the whole of Africa; less than half of 1% of all Africans have used the internet.

Diseases such as HIV/Aids, Malaria and Tuberculosis are rampant.

Poverty and wealth are very unequally distributed and many of the "wretched of the earth" are condemned to lives of extreme poverty and degradation. This situation is unacceptable and unsustainable.

This stark reality provides a fertile environment for conflict, instability and underdevelopment.

The ANC’s January 8th statement on the occasion of the 90th anniversary calls on us "to ensure that the process of globalisation does not result in the further all round widening of the gap between the rich developed North and the poor developing South ... which would condemn billions of people to poverty ... This would be a certain recipe for the most catastrophic social upheavals engulfing the whole globe".

How do we respond to this challenge? Over the last decade we have witnessed the rampant growth of neo-liberal and neo-conservative ideologies which confuse market economies with market societies and argue that the debate about the nature of political economy has ended. The neo-liberal paradigm gives little consideration to concerns about representative democracy, human rights and social justice, and the environment. It sees globalisation as a de-regulated process of being able to do anything anywhere in order to maximise profit.

This is a recipe for a global catastrophe.

[Financial Times – 08/05/2000]. "Vigorous market competition helps create individuals of a particular sort; homo economic or egoistic maximising men.

This although sold as political neutral markets in fact encourage to spread of "materialistic values …"

By default the world is now opting for a version of capitalism in which profit motives is largely unrestrained …

There is an alternative. The Commonwealth Heads of Government Meeting at Fancourt declared that:

"In today’s world, no country is untouched by the forces of globalisation. Our destinies are linked together as never before. The challenge is to seize the opportunities opened by globalisation, while minimising its risks" … The persistence of poverty and human deprivation diminishes us all. It makes global peace and security fragile, limits the growth of markets, and forces millions to migrate in search of a better life. It constitutes a deep and fundamental structural flaw in the world economy. The greatest challenge therefore facing us is how to channel the forces of globalisation for the elimination of poverty and the empowerment of human beings to lead fulfilling lives."

The historic United Nations Millennium Declaration endorsed by all the world leaders declared:

" We believe that the central challenge we face today is to ensure that globalisation becomes a positive force for all the world’s people. For while globalisation offers great opportunities, at present its benefits are very unevenly shared, while its costs are unevenly distributed. We recognise that developing countries and countries with economies in transition face special difficulties in responding to this central challenge. Thus, only through broad and sustained efforts to create a shared future, based upon our common humanity in all its diversity, can globalisation be made fully inclusive and equitable. These efforts must include policies and measures, at the global level, which correspond to the needs of developing countries and economies in transition, and are formulated and implemented with their effective participation".


This reflects the sentiments of a growing broad and representative movement, united in our rejection of neo-liberalism and blind faith in markets. What is energising is a perspective of globalisation based on a democratic and just world order and a new system of collective responsibility.

This demands that, in the context of NEPAD, we must mobilise this powerful army to ensure that the Millennium Summit targets, are met, inter alia:

Halve the world’s very poor by 2015
Primary education for all by 2015
Reduce maternal mortality by three quarters and under 5 mortality by two thirds, also by 2015
Halt and then reverse the spread of HIV/Aids, malaria and other major diseases by 2015.
Madam Speaker

The year 2001 will undoubtedly be remembered for the terrible tragedy that occurred on September 11th. We are now having to deal with new policies, inter alia, "global coalition against terrorism," "you are either with us or against us," the "axis of evil," "clash of civilisations," etc.

Also, the debate between unilateralism and multilateralism is growing more pronounced.

All this impacts fundamentally on international relations. Notwithstanding the fundamental changes to international relations after 11th September 2001, the global challenges affecting humanity are precisely the same as those before 11th September 2001!

If anything, these challenges have taken on a new urgency. There is growing consensus internationally that to defeat terrorism, a holistic approach must be adopted in dealing with the root causes thereof.

These are, inter alia:

Eradication of poverty, communicable and pandemic diseases;
Ensuring sustainable development;
Combating the negative consequences of globalisation;
Preventing global warming;
Containing the threats to global peace and security, amongst others, the current conflict in the Middle East;
Eradicating racism, xenophobia and other forms of intolerance;
Combating transnational crime and terrorism.
Sadly, different perspectives of the current global situation are emerging, differing interpretations reflecting two different basic agendas – the development agenda and the security agenda. Among countries of the South there is a perception that some countries of the developed North are giving priority to the security agenda to the detriment of the development agenda, thus failing to see the inter-connectivity between security and development.

Failure to appreciate this is resulting in the growing alienation of many and the disillusionment with the manner in which governments conduct their business, as well as reaction to the existing global environment.

Madam Speaker

The situation in the Middle East continues to deteriote. This constitutes a serious threat to international peace and security and undoubtedly creates the most fertile breeding ground for terrorism.

In the last few days Israeli troops again invaded the West Bank towns of Tulkarm, Qalgiya, Bethlehem. Israel also plans to implement further movement restrictions in the Palestinian Territories whereby the Gaza Strip would be divided into four separate areas and the West Bank into eight; Palestinians would only be allowed to travel between their own towns and cities in different areas between 05:00 and 19:00 daily and only if they are in possession of permits issued by the Israeli military authorities; and merchandise destined for or coming from the Palestinian territories as well as merchandise moving between Palestinian cities would have to be transhipped from incoming trucks onto local trucks.

This was followed immediately by another suicide bomb.

Condemn bombing
An Israeli author Amos Oz wrote:

"I am willing to fight the just war for the survival of Israel. I refuse, however, to fight for the continued occupation of Palestinian land. This war is unjust. It saps my country’s sanity and morality and corrupts its soul … I saw kids grow up with hatred in their eyes. Eyes that I was ashamed to meet.

"Ometz le’ Saren" [courage to refuse] – is a filling response to Amos’ agony. A few weeks a group from the "Ometz le Saren" visited South Africa to learn from SA’s experiences. The peace forces in Israel are motivated by the interests of Israel and understand that this can best be served if ensuring that the interests as Palestinians are defended.

They made the choice to break out of the spiral of repression, violent resistance, more severe repression and greater violence. They made the choice not to be participants in the perpetuation of the illegal occupation of the Palestinian Territories. They made the choice not to be perpetrators, nor even bystanders, in the humiliation and persecution of the Palestinian people but to challenge the legality of the occupation and of the orders given to Israeli soldiers in the Occupied Territories. This is more than their democratic right. It is their patriotic and humane duty.

Security does not bring peace. Justice brings peace and that peace guarantees security. I am convinced that their road is the road that will lead to peace and security for both Israelis and Palestinians.

The Government of South Africa unequivocally condemns the collective punishment imposed against the Palestinians and continuing attempts by the State of Israel to destroy the infrastructure of the Palestinian National Authority, its legitimately elected leadership the extra-judicial killings and the loss of many innocent lives.

Security Council resolutions treated with impunity
Serious consequences for multilaterism
"Seek and destroy" policy doomed to failure. The leaders of Israel must appreciate the basic truth that fundamental to the ending of terrorism and conflict is the establishment of an independent Palestinian state. No amount of violence against the Palestinians will stop their struggle for the establishment of their own independent homeland.

While we unreservedly recognise the right of the Israelis to live in their own state within secure borders, this will only become a reality if the legitimate right of the Palestinian people for an independent State becomes a reality. South Africa therefore welcomes the Arab league proposal that Israel should withdraw to the 1967 borders in exchange for recognition by the entire Arab world. This proposal creates the possibility for an historic process that could end the tensions and conflict in the Middle East.

The peoples of Palestine and Israel are condemned by history to live together and they have no choice but to succeed or live in perpetual conflict together.

All pressures must be intensified to restart the political process to find a negotiated settlement of the fundamental causes of this conflict. The argument that there will be no substantive negotiations until peace is achieved, is unsustainable. Peace negotiations are necessary to end the conflict and violence!


At the 1st ever Africa – EU Summit [Cairo 2000] President Mbeki said:

"Cairo will have meaning only to the extent that all of us, without exception, wage the struggle to end human suffering in Africa with the passionate intensity of the humanists who have given dignity to despised human beings, while others were happy to enclose themselves within their little worlds of selective and false fulfilment.

In the interests of humanity let us through concrete action contribute to making this an African century.

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2003 Department of Foreign Affairs, Republic of South Africa