EDITORIAL: Zuma’s postcards from the fiscal edge
In Zuma’s wacky world, load-shedding is due to the fact that SA didn’t proceed with a nuclear deal that everyone knew was neither necessary nor cost-effective
It’s no tremendous revelation that during his nine years in office former president Jacob Zuma did not bother to acquaint himself with the nuts and bolts of economics or finance. But even within his own limitations, Zuma’s utterances last week about the mooted nuclear deal with Russia spoke of a peculiar detachment from common sense, a casual disdain for facts, and an antipathy towards expertise.
Take, for example, this gem of double-speak from his interview with a journalist in this media group: "Nuclear could solve our problems, once and for all. Now we are in deep [trouble], we are therefore increasing the debt of the country with no hope to bring it down."
In Zuma’s wacky world, load-shedding is due to the fact that SA didn’t proceed with a nuclear deal that everyone knew was neither necessary nor cost-effective. Perhaps the former president genuinely believed that nuclear power would have been available immediately — maybe flown over in barrels on an old Ilyushin from Lake Irkutsk — but the reality is, you wouldn’t have seen enough electricity from nuclear to power a lightbulb before 2023, at the earliest.
By then, the country would have been a fiscal basket case. The estimated R1.42-trillion price tag for nuclear would have led to a catastrophic ratings downgrades by all three ratings agencies to junk status (as it is, only Moody’s holds SA above investment grade). When Fitch downgraded SA to junk status in April 2017, it cited the fact that Eskom "could not absorb the nuclear programme with its current approved guarantees".
For this, of course, Zuma had an answer — as revealing as it was untethered to reality.
Asked what would happen had SA failed to pay the Russians for this nuclear work, Zuma said: "They would not come for us. They would understand … we know they will never sink us."
He then implies that the nuclear deal was a quid pro quo for the former Soviet Union’s support of the ANC during the years of apartheid. "The trust in Russia, who were people who looked after us and trained us, we knew exactly where they end in terms of saying: ‘We’ll die where you’ll be dying.’ I couldn’t, after freedom, forget that," he said.
This is a notable admission for various reasons. First, it shows crisply that the nuclear deal was not about energy security, but about politics, loyalty and nepotism. But then, Zuma’s allegiance was always to the party, not the country.
Second, Zuma displays a stunning naiveté about global markets, quite unfitting for the president of a modern nation. Does he really believe the mountains of contracts and the squadrons of lawyers are just there for show?
Does he honestly believe Russia would not follow the lead of China, which has no problem taking over state assets in lieu of a loan default?
As for Zuma’s notion that nuclear is the cheapest fuel, it goes against every expert opinion. As the Council for Scientific & Industrial Research put it: "Solar, wind and natural gas is the cheapest new-build mix for SA’s system."
And yet, Zuma thinks he has better information, based on what? Loony-tunes intelligence reports? Many people have struggled to grasp why Zuma installed craven lackeys with scant competence in key roles, which weakened the state and allowed the vultures to feast on the national coffers.
His comments this week provide some form of answer to that. This was a leader who had no idea what the stakes were and couldn’t care less about finding out. It illustrates, again, how distressingly close SA came to tumbling over the fiscal cliff, based on the casual whim of a political dilettante.