Drew Forrest asks SACP deputy general secretary Jeremy Cronin to clarify the party’s stance on state ownership of industry
Why focus on Sasol and Mittal Steel?
The broad context is the trend in government and the ANC policy conference. There’s growing consensus about the need for a developmental state, led by an industrial policy.
Sasol is a strategic enterprise; it produces much of the 40% of our fuel that comes from domestic production. And it’s being wooed internationally. In 10 years we could find it has largely moved offshore and that South Africa’s strategic aims no longer top its agenda. The ANC is neglecting the issues of energy sustainability and the peaking of global oil production. Where is our 20- to 25-year plan? Sasol must be part of it; so must the oil refineries, which are running out of capacity. Government should be looking to build new plants, at new joint ventures with private capital.
Mittal also produces a very critical resource, particularly given government’s infrastructure programme. Yet because its pricing is premised on global markets, it forces us to pay a 30% premium on our own steel. Again the issue is reasserting national sovereignty over our own development path.
By flagging Sasol and Mittal, we also wanted to highlight the role of public institutions like the Public Investment Corporation [PIC] and Industrial Development Corporation in exerting national leverage over the investment decisions of such entities. It was a tragedy that they let Iscor go. The PIC is more activist under Brian Molefe, but the focus has been on the complexion of boardrooms.
The SACP’s ultimate aim, according to the congress, is to nationalise ”the commanding heights of the economy”. What else is in your sights? The banks and mines, as per the Freedom Charter?
There’s no hit list of corporations to be nationalised and we’re not looking at a simple bureaucratic accumulation of state businesses. There’s no one route. Bear in mind that the charter was written in the Fifties, when even social democracies were nationalising – it’s really about identifying key economic challenges. The economy is still untransformed. Power is still concentrated in the mining-energy-finance complex; we’re still export dependent and reliant on imports for capital goods. Public ownership won’t necessarily change that — after all, Iscor under apartheid was publicly owned. The real question is: how do we take strategic control over the character of our development?
Sasol and Mittal’s market cap totals about R500-billion. Would you compensate, and at market rates?
I don’t claim that a two-line congress resolution has all the answers. We would follow the Constitution and wouldn’t feel too restricted by its property clause that says ”market-related” and that property should not be confiscated in a lawless way. But it also requires government to look at how an enterprise was developed, its historic role, whether it was built with public resources and whether it was used by the apartheid war machine.
Have the failures of the Soviet Union and of nationalisation in Africa made no impression on the SACP?
We’ve always said public funds need to be shepherded; we’ve got to be careful about bureaucratic ownership. There’ve been huge failures, but also many successes. The German public transport system is one example and both Iscor and Sasol built their technical capacity as publicly funded entities.
Since the late Nineties, when the policy was to sell off everything, we’ve seen disastrous privatisations in South Africa. Telkom’s policies are all wrong. But the Airports Company South Africa was partially privatised and is, by and large, well run. Returns are handsome and there’s been massive reinvestment, hence the contrast with privately owned airports in South America. That’s why Aeroporti di Roma pulled out — they weren’t getting sufficient return on their investment.
You’re talking about utilities. Isn’t one lesson of the 20th Century that the state can’t run industries?
I agree there’s a difference. Car manufacturing would be difficult because it’s tied into world markets, but that doesn’t apply to producing fuel or steel from local raw materials for local consumption. China’s steel industry is among the world’s most efficient, but remains state-owned. It has imported Japanese technology and moved away from running worker towns and providing worker holidays to focus more narrowly on production.
How would you deal with BEE shareholders in Sasol, for example?
There’s absolutely no reason why BEE interests should be treated differently — we’d take account of how these stakes were acquired. Indeed, we want to highlight how the wave of recent BEE transactions has weakened government’s hand, rather than deepening national sovereignty over strategic areas.
Wouldn’t nationalisation scare off foreign investment or do you consider that irrelevant? Does the SACP want a siege economy?
We obviously don’t want a siege economy — it doesn’t work. Cuba’s under a siege, not of its own making, and is desperate for investment. But, at the same time, you’ve got to have a developmental growth path that addresses your huge problems. Foreign investment is critical – but not left to its own devices. The state has got to have muscle and leverage. The government now agrees that the days of wholesale privatisation are over: if you can’t build an effective Eskom or Telkom, you’re not going to get investment.
There would be a hue and cry, as in Latin America. But if you’re going to nationalise, handle it intelligently, not demagogically. Zimbabwe drives home the point that strident anti-imperialism is often just a cover for repression.