Kaput. That’s one German word which has migrated into common English usage. It’s defined as “ruined, broken, or not functioning”. And it fits a lot of things here and in the world right now.
Wednesday afternoon’s budget, assuming there is one, will reveal the ruin in our public finances; the chronic missed growth, fiscal and revenue goals will be on full display.
Then there are the many items from the “Department of Missed Opportunities”. This is one of the very few matters for which Cyril Ramaphosa has not built a ministry or bureaucracy to address, even though gargantuan government spending – at ruinous cost – is about the only growth point in the country right now.
As for solutions for SA to exit its downward economic spiral? Whatever expectations you have, best temper them immediately. This was illustrated in an illuminating analysis on Tuesday by econometric analyst Claude de Baissac, CEO of Eunomix.
He wrote in Business Day:
The last item, debt repayments, is now, number one in terms of all government expenditure, absorbing R389 billion of all state expenditure in 2024, being the debt service costs for our R6 trillion – and rising – national debt.
Back in the land of kaput’s origins, Germany, there is a decidedly different reaction to the multiple threats it now faces: a resurgent ultra-right force at home, a revanchist Russia to its East and the White House announcing the death of the old Atlantic Order and sending the message that Europe is on its own.
Kaput was the title of the 2024 bestseller by Wolfgang Munchau, which charted the decline of Europe’s number one economic power and most stable democracy, which he summed up with his subtitle End of the German Miracle.
Political obituaries are, though, sometimes premature. I learnt this for myself when I first visited Germany in October 1989, just before the infamous Berlin Wall was breached.
In exchange for some Deutschmarks, even holders of the old SA passport could cross from West to East Berlin as I duly did one grey Saturday morning. My host on that visit, a West Berlin MP, told me when we arrived in the Eastern half of the divided city to look carefully: threadbare shops, depressed shoppers, many uniformed soldiers. “This,” he informed me, “is the showpiece city, of the showpiece republic of the entire Soviet bloc. It won’t last.”
I doubted his prediction.
He was right though. Within weeks of that visit, Berlin’s infamous wall, dubbed by the Soviets as the “antifascist barrier” had fallen. And the map of Europe changed irreversibly, as it seemed at the time.
After that visit, I wrote, succumbing to the smug “end of history” thesis, that the Cold War was won “irrevocably and decisively by the West”. As predictions go, this has not aged that well.
Another premature note of optimism was sounded by one young, unnamed East German who crossed over in November 1989 – for the very first time – from the grim and repressive old GDR (East Germany) to the bright lights and freedom-embracing West Berlin.
“All Germans, East and West, are now one people.”
Yet, as the results of the recent German federal elections show, East and West Germany enjoy the same political conditions of freedom, but express their view of its results in decisively different ways.
In the entirety of East Germany, outside Berlin itself, every constituency was won by the far-right AfD (Alternative for Germany) party bar a few where the far-left Der Linke movement prevailed. The dominance of the Christian Democratic Union (CDU) of Germany (and the trailing Social Democratic Party of Germany) in the West found no following echo in the East. The AfD opposes any support for Ukraine, uses incendiary rhetoric against immigrants and among its newly elected MPs are Holocaust deniers and rhetoricians who parrot the phrases of the Nazi era.
The likely new German Chancellor, Friedrich Merz of the CDU, elected with just 28.6% of the national vote — its second worst result since 1949 — was expected to proceed with extreme caution in the best German tradition: he led a fractured country and faced a multiplicity of threats in Europe and beyond.
But even before a new CDU coalition deal with the SPD has been sealed, Merz moved with speed to address the new realities. Electrified by Trump’s threats to Germany’s security, and detestation at Russia’s aggression, Merz has abandoned the settled consensus on German fiscal and economic policy. He punched a hole in the 2009 constitutional “debt brake” to allow for the rapid rearming of Germany and massive expenditure on infrastructure.
“Commendable boldness” and “Fantastic Friedrich” the normally staid The Economist gushed in its report on Germany’s reawakening. Donald Trump has signalled that the US is no longer a dependable ally, Europe’s largest country and economy has found the beginning of a response. Of course, Merz still has to jump through a lot of hoops in the Bundestag (parliament) to translate ideas into reality. But he has signalled that the old ways don’t meet the challenge of current times.
Pain and misery
Here at home, ‘kaput’ hardly seems sufficient a word to define our economically devastated landscape, with more pain and misery to come from the same source of Germany’s woes, Trump’s White House.
‘Kaput’ too is the idea of a unified African response to the new world order offered by Trump. Recall just over a month ago, mineral minister Gwede Mantashe announced that Africa should withhold its minerals from the US in response to Trump’s aid withdrawal.
Yet, only last week, mineral-rich Botswana was meeting with US Secretary of State Marco Rubio. And then there was the beleaguered president of the DRC, in defence of whose country SA has lost lives and treasure in the Eastern Congo. DRC president Felix Tshisekedi has proposed granting American companies mining rights for the country’s critical minerals, especially cobalt. Tshisekedi confirmed to the New York Times that the Trump administration “has shown interest” in its vast mineral wealth.
So much for African unity, it’s a case of every country for itself in the new world order.
Any hope that the G20 will offer any relief from the beggar-thy-neighbour approach of Trump’s new world order and other countries’ response to it is delusional. But at least Johannesburg will get a new lick of paint and some of its cratering potholes filled, provided they are on the route for visiting dignitaries.
South Africa did not take advantage of the very benign conditions which prevailed when Trump’s nemesis, Joe Biden, was in power. This was illustrated in a report in Bloomberg, the news site, which in a report last week illustrated this with reference to the multi-billion-dollar climate finance pact. Trump has just cancelled Washington’s $1 billion loan pledge for the Just Energy Transition Partnership. And as the report by Antony Squazzin reveals, “More may follow, with the US having the power to block a $500 million disbursement to SA from the Climate Investment Fund.” Since Trump likes neither climate finance nor South Africa, this seems highly likely.
However, the real kicker in the report was the assertion that “Had South Africa acted faster [when Biden was president], the money could have been in the bank. More than a year ago, a US Treasury official said that the South African power utility declined billions of dollars to build out transmission infrastructure”.
Dither, delay, defer are part of Ramaphosa’s government’s DNA. Now that the old guardrails and guarantees are gone, what next?
Wednesday afternoon’s budget will be high on promises and pledges on spending and taxation plans. But if past form is guide to future performance, the rhetoric will, insofar as government performance goes, not be realistic. Targets will be missed, spending and debt will creep up, revenues will remain uncollected, and growth will dim.
As Trump reshapes the world order forcing a revolutionary change in thought and action even in countries as risk averse as Germany, in South Africa we are still led by true believers in the antiquated “national democratic revolution”. No change on that except an old warning from George Orwell, who wrote, “all revolutions are failures, but they are not all the same failure”.
Wednesday afternoon’s budget speech will lay bare the specifics of our own failures. And the missed opportunities as government dithered, delayed and failed to address the current realities of the world as it is. Not the one our ANC masters wished it were.
