How Big Money, Washington and the IMF Trumped Mandela

By Steve Weissman,

The nationalization of the mines, banks and monopoly industries is the policy of the ANC, and the change or modifications of our views in this regard is inconceivable,” wrote Nelson Mandela in January 1990, two weeks before he was released from his long captivity on Robben Island. He was assuring his comrades in the African National Congress that he remained loyal to the socialist economic program enshrined in their mid-1950s Freedom Charter. The ANC would, he promised, give back to the people of South Africa the riches that wealthy whites had stolen from them under British colonial rule and the years of Afrikaner-led apartheid.

Four years later, he would become president of all South Africa, democratically elected in the country’s first election in which the overwhelmingly non-white majority was allowed to vote. But by that time, Mandela and his closest aides had secretly agreed to precisely the change of views that he had called “inconceivable.”

The ANC gave up nationalization and a radical redistribution of wealth. They promised to repay $25 billion in debt that the apartheid government had amassed. They removed exchange controls, allowing the largest corporations and richest whites to send their money abroad. And instead of top-down state socialism, as once practiced by the now defunct Soviet Union, or preferably a Scandinavian mixed economy, they went whole hog for the privately controlled, “free market,” trickle-down economics preached by Milton Friedman and the Chicago School, the Austrian economist Friedrich Hayek, British prime minister Margaret Thatcher, American president Bill Clinton, and “the Washington consensus.”

The result of this neo-liberal economic agenda has been both tragic and predictable. Along with its justly praised one-person, one-vote political democracy, South Africa now suffers a greater gap between rich and poor, white and black, than under apartheid. “Mandela deserves great credit for ending racial apartheid,” says the Belfast-born, American-educated political economist Patrick Bond, a veteran of the first ANC government. “But his legacy includes the continuation of mass poverty.”

The full history of Mandela’s turnabout has yet to be written. But part of the story is told by the country’s best known and most well-connected economist Sampie Terreblanche, in his widely quoted “Lost in Transformation: South Africa’s Search for a New Future since 1986,” published in 2012. As he tells it, there was basically a quiet capitalist coup, and its chief organizer was South Africa’s leading industrialist and one of the world’s richest men, Sir Harry Oppenheimer, the retired chairman of the Anglo-American Corporation and De Beers Consolidated Mines.

Known as a big business opponent of apartheid but not a supporter of the ANC, Oppenheimer began in 1991 to host a series of secret meetings of the country’s mining and energy leaders, along with the bosses of U.S. and British companies active in South Africa. Also present were young American-trained ANC economists, who were reporting back to Mandela. The meetings began at Oppenheimer’s Johannesburg estate, Little Brenthurst, and then shifted to the African Development Bank on the road to Pretoria, where it was easier to maintain the secrecy. Oppenheimer also lunched regularly with Mandela, who went out of his way to consult the mining magnate on issues of economic importance.

According to the now octogenarian Terreblanche in an interview this past August, Uncle Sam played a major role in tandem with Oppenheimer and his Brenthurst Group. The Americans – first under George H.W. Bush and increasingly under Bill Clinton – threatened the ANC “in a rather diplomatic way” and told them “if you are not going to accept our proposals, we can destabilize South Africa.” Terreblanche also speculates that the Americans passed money “under the table.”

All this came to a head in 1994, when the International Monetary Fund agreed to loan South Africa $850 million for the transition, but only if the ANC would sign off on the economic deal they had worked out with Oppenheimer, his Brenthurst Group of fellow moguls, and the Clinton Administration in Washington. For South Africa’s best-known white revolutionary Ronnie Kasrils, a leader of the South African Communist Party and co-founder with Mandela of the ANC’s armed wing, “Spear of the Nation,” this was “our Faustian moment.” With all its strings, the loan precluded a radical economic agenda, as did all the other concessions that the ANC made “to keep negotiations on track and take delivery of the promised land for our people.”

In the new introduction to his memoirs “Armed and Dangerous,” Kasrils blames himself as well as Mandela for having “chickened out,” his exact words. “Doubt had come to reign supreme: we believed, wrongly, there was no other option, that we had to be cautious, since by 1991 our once powerful ally, the Soviet Union, bankrupted by the arms race, had collapsed. Inexcusably, we had lost faith in the ability of our own revolutionary masses.”

Would hanging tough have brought on the bloodbath that Mandela feared? “To break apartheid through negotiation, rather than a bloody civil war, seemed then an option too good to be ignored,” Kasrils recalls. But “to lose our nerve was not necessary or inevitable.” The country’s vast mineral reserves and the declining morale of the old order would have allowed far greater gains at the negotiating table. “If we had held our nerve, we could have pressed forward without making the concessions we did.”

Without extensive historical research, no one can know with any certainty. But the lack of democracy within the legalized ANC, the secrecy of all the negotiations, and the movement’s willingness to go along with Mandela, who had been locked away for 27 years and never really understood the alternatives to joining a privately controlled global economy, gave Oppenheimer and his allies an enormous bargaining advantage.

A veteran of the Berkeley Free Speech Movement and the New Left monthly Ramparts, Steve Weissman lived for many years in London, working as a magazine writer and television producer. He now lives and works in France, where he is researching a new book, “Big Money: How Global Banks, Corporations, and Speculators Rule and How To Break Their Hold.”