South Africa reshuffle opens door for nuclear-scale state capture

[Elisabeth Janaina]

South Africa reshuffle opens door for nuclear-scale state capture
By Alisha Patel
April 13, 2017
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Within hours of Gordhan’s removal, the controversial $70 billion deal
was back on the table.
President Jacob Zuma at Nuclear Energy Corporation of South Africa.

President Jacob Zuma visits the Nuclear Energy Corporation of South
Africa. Credit: DoC.

Widespread protests calling for the resignation of President Jacob
Zuma continue apace in South Africa in the wake of last month’s
removal of Finance Minister Pravin Gordhan. In a midnight reshuffle on
30 March – dubbed the “night of the long knives” – Zuma stealthily and
controversially replaced Gordhan along with his deputy and seven other
cabinet ministers.

Zuma’s purported justification for the reshuffle was to better pursue
“radical economic transformation”, which he says he will be the focus
for the rest of his term. For supporters, this means ending “white
monopoly capital” and South Africa’s subservience to the whims of
banks, international investors and rating agencies. For opponents, it
is a smokescreen for undermining democratic institutions to enable
“state capture” and personal enrichment for Zuma and his allies,
including the powerful Gupta family.

In response to the reshuffle, two ratings agencies downgraded South
Africa’s credit rating to junk status, while thousands have taken to
the streets calling on Zuma to step down.

The effects of the controversial reshuffle will be wide-ranging and
long-lasting, but one particular issue around which these struggles
will converge in the coming months is a huge and contentious nuclear
power deal.

This proposed scheme has generated much controversy over the past few
years, but its progress was held up by Gordhan and others in
government who opposed it. These critics have now been purged,
however, and plans for the titanic deal have gathered fresh momentum.
Behind closed doors

According to the government, South Africa will have to turn to nuclear
to generate an additional 9,600 megawatts of capacity and ease the
country’s reliance on ageing coal-fired plants. The nuclear deal it
has proposed to fill this gap is set to be the most expensive tender
in South African history and will last for at least 60 years. Although
credible government estimates have not yet been provided, it is
suggested the project could cost 1 trillion rand (approximately $70
billion).

The government’s support for nuclear comes despite the findings of the
Energy Department’s draft 2016 Integrated Resource Plan (IRP), which
was itself criticised for lacking independence, transparency and
adequate consultation. The report maintains that South Africa’s energy
needs will not need to come from nuclear until at least 2037, ten
years later the proposed timeframe. It instead encourages the use of
clean and/or renewable sources that South Africa has a comparative
advantage in, such as gas, solar and wind.

But these recommendations have not stopped Zuma from pursing a nuclear
agreement, largely out of the reach of public scrutiny. According to
inside sources, contracts have already been drawn up between South
Africa and Russia, personally brokered by the president as early as
2012 during a visit to Moscow.

These alleged agreements, made behind closed doors, would reportedly
allow for Russian involvement across the entire value-chain of the
project. And Russia would apparently have limited accountability in
the event of any serious incident. In response to these claims, the
South African government has remained coy, referring to a “strategic
partnership” between the two countries but offering few details.

Furthermore, in October 2016 Zuma announced that any nuclear deal
would no longer be funded by the Department of Energy but by the
already heavily-indebted state-owned power utility Eskom. This move
was widely perceived to be a strategy to further circumvent
parliamentary oversight, intensifying fears over the deal’s lack of
transparency and raising suspicions that the programme would bring
with it lucrative kickbacks.
Shuffling the pack

While he was at the helm of the treasury, Gordhan could effectively
veto the nuclear proposal from progressing. But that all changed
following the night of the long knives.

“This reshuffle seems to position pro-nuclear supporters in key
decision-making positions within government and seems to lay a strong
foundation which is aimed at pushing through nuclear, no matter the
cost to the people,” says human and environmental rights activist Kumi
Naidoo.

Indeed, in the reshuffle, Gordhan was replaced with the more compliant
Malusi Gigaba, while Mmamoloko “Nkhensani” Kubayi, widely seen as a
Zuma stooge, became the new Energy Minister.

At the same time, Matshela Koko, a nuclear energy proponent, is acting
CEO of Eskom. And his pro-nuclear predecessor, Brian Molefe – who is
alleged to have awarded the Gupta family lucrative coal contracts – is
now an MP for the ruling African National Congress (ANC).

On taking up his new appointment as Finance Minister last month, it
took Gigaba just a few hours to confirm that the multi-billion-dollar
nuclear deal was on, saying: “It is not a figment of imagination…it
was adopted by cabinet as a programme to implement as we diversify our
energy mix and bring on board environment friendly energy generation.”

Confidential documents revealed by the press on 9 April reported that
the formal tender process conducted by Eskom is to commence in June.
Is time running out?

Should the nuclear deal go ahead, it would not only be South Africa’s
largest tender to date, but also possibly the largest exercise of
state capture ever. Stopping the deal will provide a key test for
South Africa’s democratic institutions and political culture.

Pressure could come from an increasingly divided ANC as well as a
legal challenge against the bill, spearheaded by the NGOs Earthlife
Africa and the Southern African Faith Communities’ Environment
Institute (SAFCEI). Moreover, Eskom may struggle to raise finance for
such a project, despite political will, having suffered another credit
rating downgrade after the reshuffle. It now lies well into junk
territory, four notches below investment-grade status.

Street protests against Zuma also continue, while he is set to face a
no-confidence vote, though this has been delayed as the judiciary
decides whether a secret ballot is necessary. Having survived seven
votes of no confidence since coming to power, not to mention 783
charges of corruption, it would take significant defections within the
ANC to oust the embattled president, who has to date lived up to his
‘Teflon’ nickname.

More important perhaps will be the leadership battle within the ruling
ANC that will take shape at the party conference in December. This
race is far from over at this point, but Nkosazana Dlamini-Zuma, the
president’s ex-wife and favoured candidate, is looking like an
increasingly likely successor. She is presumed to be willing to
protect Zuma, which in turn will enable him to manage his succession
and provide continuity.

Nevertheless, some observers suggest that Zuma and his allies are
aware that their dominance over the direction of government may be in
danger of coming to an end. It is this, they say, that has led them to
accelerate their plans such as the nuclear deal.

According to a journalist who has investigated multiple reports of
corruption within South African parastatals, Zuma loyalists are
“increasingly determined to capture the state” but “time may be
running out for the patronage faction within the ANC”. The journalist,
who spoke on condition of anonymity, believes the group’s success in
pushing the nuclear deal “will depend on whether they manage to
capture the Treasury quickly enough, purging those officials and
bureaucrats committed to Gordhan’s cause”. Taking control of state
institutions in such a way would certainly not be unprecedented.

Whether those loyalists are successful on this front – and whether
those who oppose the deal will be able to mobilise in opposition –
will become apparent in the following weeks and months. One thing that
has already become clear by recent events, however, is that even the
boldest conspiracy theories in South Africa can be proven to be true,
underscoring the degree to which the state has already been captured.

[Elisabeth Janaina]