Manipulation of the rand is a threat to our constitutional democracy
- Faith Muthambi
- 28 Mar 2017 11:58 (South Africa)
The screaming headlines were predictable, Rand plunges on President’s action, Rand plummets on recall, ‘Reckless’ Zuma blasted; Reshuffle speculated after Gordhan’s unexpected recall, Zuma-Gordhan rift hits the Rand, Zuma’s game puts boot into the SA economy. One would have thought that President Jacob Zuma has done anything wrong (sic) in summoning the Minister of Finance, Pravin Gordhan.
Overlooked in this hysteria is the obvious – ministers serve at the pleasure and behest of the president. This is a constitutional prerogative. And President Zuma’s action in summoning any minister falls within the realm of his constitutional role and powers.
Arguably, having created a myth of a defiant and super-minister in Minister Gordhan, it must have been difficult for the media to come to terms with the fact that Minister Gordhan’s powers are limited. Perhaps the infuriating aspect of the minister being summoned is that it provides proof that President Zuma is not the lame-duck president that the media has invested in projecting. In one fell swoop their investment in projecting an image of a powerless president went up in smoke.
Indeed, for the last few months, the media, analysts and their owners have gone as far as suggesting that President Zuma has been thoroughly emasculated since an attempt to pass a motion of no confidence on his leadership by some in his party. But such efforts are troubling for a nascent democracy.
Indeed, our sovereignty and our freedom mean nothing if a democratically elected president, acting within powers vested in him by the Constitution, can be whipped into line by foreign entities. This is a message that the media is asking South Africans to come to terms with. It makes a mockery of our struggle for freedom. It is an insult to our nationhood and our independence. This is the state of affairs that the screaming headlines expect us to embrace. We are told we should prostrate ourselves before the gods of the market, the banks and the ratings agencies.
But the manipulation of our currency is easy to manipulate. Indeed, the hysteria around the summoning of the Minister of Finance is nothing short of a collective, dishonest and deliberate amnesia. Thanks to the recent findings of the Competition Commission, we now know how individuals and certain financial institutions have colluded on prices for bids, offers and bid-offer spreads for the spot trades in relation to currency trading involving US dollar/ rand currency pair. This involved among others manipulating “the price of bids and offers through agreements to refrain from trading and creating fictitious bids and offers at particular times”.
Their activities were co-ordinated to achieve maximum profit. The much-loved rating agencies, often invoked to whip the democratic governments into line, have also not dressed themselves in glory. Last month the rating agency Standard & Poor paid a $1.5-billion fine for its “corrupt” practices.
Moody’s for its part also agreed to pay almost $864-million “to resolve a multiyear US investigation into credit ratings on subprime mortgage securities”. These rating agencies have lorded over a number of economies, prescribing certain standards, while they themselves have failed to comply with the very standards they have set for themselves.
We must protect our democracy from being sold to the highest bidder. The dictum that “the price of freedom is eternal vigilance” is as relevant today as when it was first crafted. Indeed, one of the mistakes liberation movements make the world over is to assume that the struggle for liberation ends the minute freedom is attained.
But history points otherwise and this is irrespective to how freedom is attained. Those who get into power through an outright revolution find themselves engaged in a protracted economic battle for their independence long after the guns have gone silent. Those who go through the process of reconciliation and compromise are often lulled to sleep while their former adversaries seek new ways of sustaining their economic interests.
The first process the enemies of liberation embark on is to join in the festivities and celebration of independence. The intention is to lull the victors to sleep. The next step is find ways in which they could keep freedom in check. This is achieved by spelling out what good behaviour in a democracy entails for the new mandarins.
Once this is done, the formerly oppressed find themselves lodged in a new struggle of affirmation. Once this is done, their freedom and independence can be easily be controlled and held in check. Any behaviour that disrupts the status is immediately punished.
This is exactly the situation that South Africans find themselves in. Their democracy is held at ransom by use of the financial markets. Leaders are then told that their freedom only goes as far as satisfying the dictates of those who control the economy. Interestingly, we are told that for the markets to function optimally, we must embrace constitutionalism, which often is used to ensure the maintenance of the status quo. It comes as no surprise that institutions that are not known for supporting freedom often run to the courts at the slightest provocation. They do so not with the intention of addressing the economic inequalities but more to whip into line the legitimately elected government should they suspect that their economic interests are threatened.
The fluctuation of the rand has become a very useful tool in corralling government into a particular behaviour. Manipulation of the rand has become an additional arsenal used by those invested in the regime change agenda. It is an insult to freedom and a threat to our constitutional dispensation. DM
Faith Muthambi is South Africa’s Minister of Communications
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