Letter: Discrediting SA may benefit US
Imogen Larsen suggests new ratings may have been manipulated by America, which may find the Brics’s fraternity discomforting.
Johannesburg - The downgrading of South Africa by rating agencies Standard & Poor’s and Fitch is a bitter pill to swallow, which has possibly severe consequences for our country. I don’t profess to be an economic fundi, but from my rudimentary knowledge of unsavoury international politics, I have become increasingly sceptical.
Admittedly, there are significant negatives retarding the country’s growth potential. The government, organised labour and the oft intransigent business community require a lot of introspection. However, I fail to understand which entity benefits from a downgrade.
The result of punitive downgrades can only have the effect of being hugely detrimental for the targeted country and the biggest losers are the poorer sections of the community.
Downgrades will result in the depreciation of an already weak rand, products and services become more expensive, and a general malaise ensues as investors look elsewhere.
Conspiracy theories can be noisome and a distraction from reality, but my scepticism gives rise to a very real perception of an all-pervasive American influence.
We have observed over the years that when the US isn’t maintaining its international dominance by military adventurism, it uses its financial muscle to manipulate the global economy to its own selfish advantage.
That’s why no western country dares rocking the boat by criticising Uncle Sam.
The only entity that will benefit from a downgrade of South Africa is the US and the wealthy Western bloc who control the purse strings of world finance, because we will then be paying a lot more to them servicing our current and future borrowings.
The three major rating agencies are, unsurprisingly, American companies, and experience has shown that such businesses are invariably hugely partisan to the American national interest.
One can appreciate the need for rating agencies to regulate personal credit worthiness as companies need to know their lending for goods or services is safe.
But loans to parastatals like Transnet are safeguarded by the government’s guarantees, so one has to query the necessity to downgrade such state enterprises.
Also, no one realistically expects the government to default on loans in the current financial climate.
The ICC (International Chamber of Commerce) and the World Bank should rather worry about the European countries in real financial distress, the ones that have shown a worrying tendency of a possible default, such as the aptly termed Pigs, namely Portugal, Ireland, Greece and Spain.
In such instances, a financial watch alert could be sent out to international investors.
And the rating agencies could pay more attention to their host country’s $16 trillion national deficit.
Could the reason for the rating agencies’ downgrading of Brand SA be American displeasure of our fraternity with our Brics partners and the intention to establish a Brics Bank to finance economic growth in that club of nations? Is this a warning shot across our bows? Think about it.
America tolerated Saddam Hussein until he threatened to demand payment for Iraq’s vast oil production in alternate currencies to the American dollar.
The Americans then invaded his country under false pretenses of weapons of mass destruction and took control of the Iraqi oil fields.
Similarly with Muammar Gaddafi who was an avid proponent of breaking the international dominance of the dollar by establishing an African financial bloc with a regional AU bank. And as the Afrikaans saying goes: “Kyk hoe lyk hy nou” (loosely translated as “Look where he is now”.)
This is the glaring lesson – you mess with America’s hegemony at your peril.
As part of the global village, we must honour our international commitments, but we need to insist on mutual respect from the major Western powers and the establishment of an African Development Bank will go a long way to preserving our domestic sovereignty from the bullying of American surrogate financial agencies.
Craighall Park, Joburg
* The views expressed here are not necessarily those of Independent Newspapers.