COSATU deplores blackmail by credit rating agencies

The Congress of South African Trade Unions deplores the attempts by ‘ratings agencies' to influence and manipulate the South African government's policies, by threatening to downgrade the country's credit rating.

The latest example is Wednesday's statement by Standard & Poor's (S&P), following others by Moody's and Fitch.

S&P argue that there is "scope for a downgrade of SA's credit ratings if South Africa's economic disparities and social development needs persist, with the economy increasingly failing to generate the jobs required by an expanding labour force. Rising external or fiscal pressures could also lead to a downgrade, particularly if public sector wages or debt service costs increase above expectations."

They say however that they "could affirm the ratings at the current levels and revise the outlook to stable... if fiscal consolidation is supported by keeping public sector wage increases gradual and moderate."

These self-appointed economic and political ‘experts' add that they think that "looming economic and social pressures could gradually affect the country's policy framework. In the run-up to the 2014 elections, the ANC's centrist wing may make gradual concessions to the more populist expectations from within and without the party".

The big danger is that such warnings can influence a country's interest rates and levels of business confidence and therefore affect foreign firms' decisions on whether to invest in that country. S&P's statement sent the rand into its biggest drop against the dollar in two weeks, weakening as much as 1, 4% to its lowest against the greenback since the middle of the month.

These warnings are completely unacceptable attempts by a foreign, unelected capitalist institution to try to dictate to a sovereign, democratic government what policies it should adopt.

Of particular concern is the reference to the level of public-sector wages, which is a matter to be decided by collective bargaining between government and the unions and not by this self-appointed external agency.

Equally worrisome is S&P's warning of the ANC government making "gradual concessions to the more populist expectations from within and without the party." What right do these people have to try to try to instruct the ANC government or the delegates to the ANC policy and elective conference later this year what policies they should or should not adopt? They have every right to adopt ‘populist' policies if they improve the lives of the people and advance our national democratic revolution.

COSATU agrees fully with the SA Treasury statement that "political debate and a vigorous exchange of ideas on policy options are part and parcel ... of a democratic dispensation" which "cannot be construed as political instability," and that "the South African government will continue to place higher economic growth and job creation at the core of its economic policy, within a transparent investment and sustainable fiscal framework."

South Africa is a democratic and sovereign state, which must always base its policy decisions on the will of the people. We will not tolerate attempts to blackmail government into adopting business-friendly policies under the threat of cuts in credit ratings. They would turn our elected government into a surrogate for international capitalism and make a mockery of our democracy. They must not succeed!

Statement issued by Patrick Craven, COSATU national spokesperson, March 29 2012

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