Only the hush-hush R1-trillion nuclear building deal from Russia is enjoying the most urgent and the fastest of fast tracks. One wonders why

If legislation, press conferences and presidential announcements spurred growth and created jobs, South Africa would currently be enjoying high levels of prosperity and maximum employment.

Instead, we are witnessing the once fabled “Rainbow Nation” curdle into the “Republic of Resentment”.
Doubtless nonplussed by the response to his own lack of suitable responses during the president’s parliamentary question time of two weeks ago, President Jacob Zuma last week staged a flurry of press conferences.

The one on Tuesday was, strangely, an update on his own State of the Nation speech delivered in February. This does away with pesky and aggressive red berets leaping up and down and demanding that he “pay back the money”.

While the EFF could not disrupt the message here or assail the integrity of the messenger, the markets were unimpressed. Zuma claimed that it was “not doom and gloom” and that the country’s economy was, contrary to every indicator, actually “strengthening”. This did not prevent the rand touching historic lows the same day, its sharpest fall in 14 years, nor stop the release of manufacturing production figures, published also on Tuesday, indicating that the sector is actually in recession.

No matter. Stepping up to the plate and offering candour instead of blame-placing is not on the Luthuli House script.
Wishing away the fact that the ANC has actually been in charge of South Africa and its economic course for more than two decades, and that the country’s growth rate has halved on his seven-year watch, Zuma placed the problems of the present on two factors: apartheid — or “colonialism of a special type” in the quasi-revolutionary speak of the ANC — and on world conditions.

“Who is not to in crisis? The globe is in crisis?” the president offered by way of partial explanation.

There is both truth and avoidance in this simple observation. The after-waves of the global financial crisis of 2008 are still very much with us, especially in the low-growth euro zone, Japan and now in the once-favoured “emerging markets” in which distressed economic neighbourhood we are bracketed.

But if the president is right, then, on his observation, we are either hapless bystanders in a world we don’t control, or objects of a history of perpetual victimisation. Or perhaps both.

But Zuma is not entirely correct in his observation of the global economic condition. Because the country in which the current financial crisis first emerged, the US, is in fact staging a powerful recovery. Its growth is up, unemployment is down, its currency is surging, and the US Federal Reserve has stopped its extraordinary bond-buying exercise via quantitative easing and is poised to raise interest rates next month.

So why is the US doing so well, relative to the Brics countries where we find the ideological waters lapping Russia, and China and even Brazil, so much warmer than the apparently cold capitalism of America?

Just before last Christmas last year, Bret Stephens published an explanation in the Wall Street Journal entitled “The marvel of American resilience”. More than any other single explanation, his insight, based on the huge disruption which the US fracking industry has had on upending energy markets, slashed greenhouse emissions and reduced domestic oil prices, compels.

He writes: “The [fracking] revolution happened in the US not because of any great advantage in geology — China, Algeria and Argentina each have larger recoverable shale gas reserves. It didn’t happen because America’s big energy companies are uniquely smart or skilled or deep-pocketed.”

Rather, he suggests, fracking happened because “Americans almost uniquely in the world, have property rights to the minerals under their yards…and because our deep capital markets were willing to bet against experts [who had another view].”

Rather than specific ideas, or choosing 100 new industrialists as our Department of Trade and Industry is currently championing, the US economy “creates broad spaces” for “innovation and enterprise”.

All of which leads to Zuma’s second next press conference last week. On Thursday he announced that, because of the deliberations at a talk shop labelled “Operation Phakisa”, 30 future exploration wells “could produce 370 000 barrels of oil per day”. What he didn’t announce was that they might produce far fewer barrels than that and not create at all the hundreds and thousands of promised jobs. It all depends on what the drilling yields and whether we attract the interest of those much-maligned foreign oil exploration companies.

It depends, in other words, on the climate the government creates to promote or retard investment, and to protect or diminish property ownership. Zuma failed to add that last month in July it was reported that “a hush has fallen over SA’s oil and gas exploration as plummeting oil prices coincided with a lack of progress in creating attractive legislation for the oil and gas sector”.

Translated, this means there is deep industry unhappiness about how much of the oil company investment the government will take for itself through a so-called “free carry”. Legislative amendments promised six months ago are apparently still “on hold”.

Then there is the slight problem caused by the state agency PetroSA, which is meant to promote activity in exploration and issue licences. It’s in turmoil and on life (or governmental) support. Its R14.9-billion reported loss is, even by the standards of other state enterprises, eye-watering. But then again, as Alec Hogg wrote on Biznews, the chairman who presided over this fiasco, the now axed Nonhlanhla Jiyane, was shockingly ill-qualified to preside over this, or perhaps any other, company.

So much for offshore oil and gas. Onshore, a few years ago fracking was punted as the game changer for South Africa, in exactly the same way it has spurred growth and cut energy imports in the US. That was the word from ANC policy chiefs.

But while we can argue the merits or demerits of property ownership, the nature of environmental disruption caused by this hydraulic fracturing clearly requires sensible and sustainable regulation. Problem was that Pretoria waited more than a year between promising the regulations and actually publishing them.

When they finally emerged in June, Dewald van Rensburg in City Press noted: “The regulations have been so long in the making that the whole economic landscape for the potential extraction of shale has changed fundamentally.”
The major shale exploration licence-holder here, Shell, has in the interim upped sticks and left the playing field entirely.

It seems that only the hush-hush R1-trillion nuclear building deal from Russia, to be paid for by the unsuspecting taxpayer here, is enjoying the most urgent and the fastest of fast tracks. One wonders why.

This article first appeared in The Times