The lessons that Jacob Zuma can learn from PW Botha

Read the full article by Jackie Cameron in Biznews.com:  https://www.biznews.com/thought-leaders/2017/12/20/jacob-zuma-pw-botha/

The election of Cyril Ramaphosa as president of the African National Congress and Jacob Zuma remaining on as the South African president for a further 18 months, is reminiscent of another era in South African politics.

Almost 28 years earlier, in January 1989, the South African president, PW Botha, had a mild stroke and decided unilaterally and without thinking too deeply about the implications, to separate his position as president from that of leader of the National Party. Ostensibly Botha wanted to ‘lighten his workload’ and to be able fulfill the role as a national ‘unifier’ for all races. He resigned as party leader in February and requested the party to elect a new leader. FW de Klerk’s narrow victory as leader of the National Party on the same day set-in motion a chain of events that led to Botha being forced out seven months later.

The conflict that ensued between De Klerk and Botha was, at its core, a power struggle between two centers of power.  Botha became a president without a power base (except for the one that he believed he had among all “good South Africans”), and De Klerk felt that he had the base to implement his own reformist policies. Over the next few months Botha pretended as if nothing has changed and tried to continue with general policy-making decisions, including issues of national security, foreign affairs, constitutional affairs and the economy, while De Klerk attempted to stamp his authority on the government and began to contemplate some progressive reforms. Clashes ranged from subtle barbs by Botha, challenging his successor’s status and motives, and Botha’s private reception of the still-imprisoned Nelson Mandela without consulting De Klerk. 

The hostility between the two men eventually turned into open conflict over the date of the next general election and matters came to a head in August 1989, when a seething Botha publicly challenged De Klerk on his meeting with Kenneth Kaunda of Zambia. The vast majority of the NP caucus supported De Klerk. Botha had several options – he could fire the whole cabinet, call a general election or resign. After a volatile cabinet meeting where a bitter Botha levied recrimination against his colleagues, he announced his resignation on television the next day. As Botha’s successor, De Klerk then continued to transform the South African political landscape within the next six months.

While the constitutional position in which PW Botha found himself in 1989 differs from that which Zuma finds himself 28 years later, the principle of a weakened leader without a loyal and legitimate powerbase remains the same. Ramaphosa will soon want to change the direction of the country away from the ‘failing state’ that SA has become under the corruption, state capture and incompetence of the Zuma era. While Zuma has everything to gain from the status quo and still has his grip on the levers of power as President, the center of gravity has dramatically shifted to the new leader.

And during his remaining time as President and probably much sooner, Zuma will learn that Ramaposa’s power base has increased exponentially and that he will be directly challenged on all fronts. This includes Zuma’s prerogative to appoint cabinet ministers. Zuma’s short-term salvation might be that fact that 49% of the congress voted for his preferred candidate Dlameni-Zuma, but even this leverage will wear off as Ramaphosa tightens his grip on power. Conflict on policy and administration will emerge between Zuma and Ramaphosa, just like between FW de Klerk and PW Botha. Like Botha, Zuma will be on the losing side most of the time, and he probably has less than six months left as President of South Africa. 

Johann  van Rooyen, for Global Finances and Politics

EU crackdown on tax havens

The EU has placed 17 countries and territories on a tax haven blacklist and put a further 47 on notice. This follows the revelations contained in the Panama and the Paradise Papers, and estimates that about $673 billion is lost to governments each year due to aggressive tax avoidance.

The EU blacklist and will be linked to European legislation to ensure these jurisdictions will not be eligible for funds from the EU (except for development aid), but apart from that, no real sanctions were put in place.

The blacklist includes South Korea, Mongolia, Namibia, Panama, Trinidad & Tobago, Bahrain and the United Arab Emirates, Guam, American Samoa, Barbados, Grenada, Macau, the Marshall Islands, Palau, St Lucia, Samoa and Tunisia. Interestingly, only three countries on this list - St Lucia, Grenada and Panama - are also actively engaged in residency- and citizenship by investment programmes.

Hopefully this will further counter the misperception that countries ‘selling’ 2^nd passports are necessarily synonymous with blacklisted tax havens or involved in dubious tax practices.

Electric cars cheaper than gas

Electric cars are already cheaper to own and run than petrol or diesel cars in the UK, US (Texas and California) and Japan, taking into account subsidies, purchase price, depreciation, fuel, insurance, taxation and maintenance.

According to an article in the Guardian, if this trend continues, electric cars are expected to become the cheapest option even without subsidies in a few years. Read the whole article below: https://www.theguardian.com/environment/2017/dec/01/electric-cars-already-cheaper-to-own-and-run-than-petrol-or-diesel-study

Great residency options for HNWIs

https://www.theglobeandmail.com/globe-investor/globe-wealth/real-estate-hot-spots-draw-the-worlds-affluent/article35942457/

CROSS BORDER PLANNING FOR THE PRIVATE CLIENT - LONDON 28-29 SEP 2017

I will be speaking at this event on 29th September in London. VIP passes with free attendance are available, should anybody be in the neighbourhood at the time: VIP Code FKW53524SPK.


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The end of Jacob Zuma?

Could the broad anti-Zuma protests which are now reaching a crescendo across South Africa, finally be bringing the President close to his Ceaușescu moment?  

The humiliating and crushing treatment dished out to Zuma at the main Workers’ Day rally in Bloemfontein on the 1^st of May where he was prevented from speaking by trade unions members, could finally spell the end of his presidency. This is in addition to several months of calls for his to resignation from leaders across the spectrum, including opposition parties, members of the tripartite alliance – Cosatu and the SACP, ANC veterans, three former South African Presidents and Archbishop Desmond Tutu, and even members of his own cabinet.

The significance of Zuma booed and heckled will have emboldened the anti-Zuma elements both within the ANC alliance and in the opposition, especially supporters of the EFF, a party which is frequently thrown out of Parliament when disrupting Zuma's speaches. His rapidly diminishing support-base is now limited to group of financial beneficiaries, assorted sycophants and the Gupta family. The rousing applause that Vice-President Cyril Ramaphosa received at a similar venue and his open criticism of Zuma, make it unlikely for the two men to ever appear together at a public venue again. 

When Nicolae Ceaușescu of Romania, Erich Honecker of East Germany were confronted by hostile and resentful crowds and were seen as powerless to do anything about it, the floodgates finally opened and soon led to their downfall. Zuma should keep these examples in mind in case he is considering an authoritarian response to growing opposition to his Presidency, as Matthews Posa warned he might doing.

In either case, South Africa has moved past the point of no-return, where either the masses in the streets will soon bring down Zuma, or his own Party will do so as an act of self-preservation.  

© Johann van Rooyen, 1 May 2017

Also see the author's other blog at  Residency and Citizenship for Investors

Why oil is doomed

According to Dieter Helm, an Oxford University economics professor with a track-record of correctly predicting oil prices, the oil market downturn has got a long way to run (cited by Jillian Ambrose in the Telegraph 17 April 2017). 

The main reason, he argues, is concern over climate change and the renewable energy revolution, in particular, electric cars. He says that the burgeoning market for electric vehicles is underestimated and 'could radically change' the outlook for oil demand. 

Even BP admits that electric car use could halve the demand of drivers for oil and that the number of electric vehicles could double from previous estimates of 57 million to 100 million in 2035. Even this is probably a vast under-estimation, considering the rate at which car companies are turning out new electric vehicles, Tesla being just one. BMW is planning to bring out several EV models and Chevy's Bolt offers a cheaper alternative with range of 400km on a single charge, comparable with Tesla and gas-powered engines. 

Helm argues that industry shifts to a low carbon future means prices may continue to fall ‘forever’ and so far only BP and Royal Dutch Shell are adjusting, albeit very slowly, away from oil to gas and towards low-carbon energy. He advises oil companies, with total assets of $1 trillion and $300 billion in gas assets to follow a 'ruthless harvest-and-exit strategy', slashing capital expenditure, pumping remaining reserves, cutting cost and paying out very high dividends.

(c) Johann van Rooyen, 20 April 2017