South Africa, Trump and the EWC

These bills were the now Bela Act and the Expropriation Without Compensation (EWC) Act, with the latter having had some serious international concerns, and in particular the US, where President Trump didn’t mince his words regarding his administration’s view on the current development and “constitutional amendment” that was pushed through by the ANC led government without proper consultation process with the Government of National Unity (GNU) partners.

As mentioned in an earlier article, the first 100 days of the new Trump administration will be telling in determining the US’s policy direction and stance related to trade, foreign policy, foreign aid & funding and ultimately access to the US market. In this regard, the South African government did not make the best of decisions when our foreign policy is scrutinised at the hand of our “friendship” with Iran, Russia and China as viewed from a geo-political perspective. Further to this is fact that the South African government took Israel to the International Court of Justice in relation with the ongoing war between Israel and Hamas, not to mention MTN’s involvement in the Iranian market despite international sanctions at the time of operation. MTN has since sold most its 49% stake in Irancell and currently only holds a minority stake that will be sold off in coming months.

The international diplomatic storm started with Trump’s post on his social media network “Truth Social” and Elon Musk’s “X” in the early hours of Sunday morning about regarding scrapping all foreign aid to South Africa and possible future funding to South Africa. The cutting of aid to South Africa is subject pending a full investigation by Trump administration related to their view on EWC, land grabs and treating minority groups “very badly”.

The Rand reacted sharply as the it depreciated by 2% following President’s Trump social post with the South African presidency responding in calm and measured approach on the morning of Monday the 3rd of February. In Ramaphosa’s response he stated that South Africa is a “constitutional democracy that is deeply rooted in the rule of law, justice and equality” and that South African government has not confiscated any land. President Ramaphosa also mentioned that the Expropriation Act is not a “confiscation instrument” but rather a constitutionally mandated legal process that aims to ensure public access to land in an equitable and just manner guided by the constitution. Following the South African presidency’s statement on “X”, Elon Musk then responded with the following question as a reply on the presidency statement “Why do you have openly racist ownership laws?” as the sticking point for the US administration remains the “with nil compensation” as written in the newly signed EWC act.

One might wonder why Musk asked this question as the “diplomatic storm” only seems to be related the land and EWC issue at hand, but in reality, it was asked in a much broader sense, in particular to Musk’s Starlink business. Musk’s Starlink business seems unable to attain a licence from ICASA and the South African government to operate in South Africa as Musk refuses to budge on the 30% BEE/DEI requirement that the South African government demand from Starlink before granting a licence to operate in South Africa and, THIS opened the proverbial “can of worms” that runs deeper than just the EWC and land issue that started it all off.

The EWC act seems to have started a “storm” as the US administration doesn’t view the current law as only relating to fixed properties but could also include other forms of property specifically NOT mentioned in the law, such as pension funds, company stocks, private firearms and much more. Protection of and guarantee of private property rights also remains a cornerstone for any country’s participation in the Agoa agreement which South Africa is currently part of and a law like the EWC doesn’t fulfil this requirement to start off with.

The US administration is also acutely aware of the possibility that an act such as this can easily be weaponised against citizens and dissenting voices, to the detriment and collapse of the domestic economy as seen in cases like that of Venezuela, Cuba and other socialist and Marxist countries. There is also the notion that new laws such as the EWC act cannot only be viewed from the vantage point of “the good intentions and outcomes” it possibly can yield but, rather the idea that the law should rather be viewed from a point where the worst atrocities are brought to mind that new law potentially can have within the market or economy it is implemented in.

Further to the points on South Africa’s fraught foreign policy stance as described with Iran and friends, the newly signed EWC act itself, and the BEE/DEI requirements as seen in the Starlink licence saga already creates a powder keg itself. To add insult to injury, add the work of active pressures or lobby groups from South Africa in Washington DC regarding the number of “race laws” in South Africa post 94’ that are now outnumbering similar laws in the previous regime and you have a dangerous and volatile diplomatic storm at hand coupled possibility of barred access to the US market and/or potentially losing the benefits South Africa receives by being participants in the Agoa agreement.

As seen by the points mentioned above, the South African government is in a very precarious position and will have to tread with utmost care and will have to use all their diplomatic cunning in this case, particularly if the US’s handling of the Columbian refugee planes and tariffs are anything to go by. The current US administration seems to be serious about their US first and MAGA agenda and willing to use all levers of power to “get things done” much to the same way as their current president. South Africa remains a small open economy and “trade war” with the US will only damage the South African economy in the end, and so when all is said and done all we can say, tread carefully and don’t rush in where angels fear to tread.