The new Randlords

South Africa is booming. The economy is enjoying its biggest surge since the Second World War - and

United States of America Boulevard: there was a time when no self-respecting black-township resident would have wanted an address so redolent of US imperialism. Just a decade or so ago, Fidel Castro and Che Guevara were township street names of choice. One might have thought that Hugo Chávez would now be keeping South African sign-makers busy. No chance, or at least not in Cosmo City, a flashy new housing estate on the outskirts of Johannesburg. Here the US of A Boulevard is among the most sought-after addresses - as is Las Vegas Crescent - because it is here that members of the new, black middle class are flocking in droves, in search of mock-Tuscan villas and a share of the consumerist new South African dream.

When Nelson Mandela was released from prison in 1990, his first speech brimmed with vintage redistribution rhetoric. To be fair on the "old man", it had been forced upon him by anti-apartheid radicals, who feared he had gone soft behind bars, but not surprisingly the markets dived. Since then, however - indeed, since the very next morning - the economic policies of the African National Congress have moved to the right. Now, as South Africa celebrates the anniversary of Mandela's inauguration on 10 May, bigwigs in the ruling party are embracing capitalism with such relish that President Thabo Mbeki, the very man who unleashed this capitalist fervour, is expressing unease over some of his old comrades' pursuit of bling, and the long-quiescent unions are muttering that it is time to take "back" the party.

"This is banker heaven," one American banking executive told me recently, shortly after my return after nearly a decade away. He did not need to explain. All around us in a trendy Johannesburg mall were members of the "Black Economic Empowerment" (BEE) crowd, many no doubt celebrating deals to secure equity from historically white-run firms, a key part of the government's policy to level the economic playing field. I found the scene all the more riveting given that I had last visited that mall in 1993 when, as a newly arrived foreign correspondent come to cover the bloodbath threatening the transfer of power, I had been the only customer in an Italian restaurant. The proprietor was convinced that South Africa was heading for the abyss, and sold up. How wrong she was (on both counts).

Buoyed by the surge in global commodities prices, and steered by Mbeki's prudent fiscal policies, South Africa's econ omy is enjoying its most concerted spurt since the Second World War and Johannesburg is booming. For the past two years the economy has grown at about 5 per cent. This is not as high as it needs to be if unemployment is to come down, but to have ventured such a prediction at the start of my first stint would have led to widespread rolling of eyes. Yet now, consumer confidence is at a 25-year high; the Johannesburg Stock Exchange's top 40 index has gone up nearly 250 per cent in the past three years; house prices are up more than 125 per cent since 2003; new car sales soared by nearly 16 per cent to an astonishing 714,000 last year.

And for once in South Africa's history, it is not just white people who are prospering. Leaf through the pages of City Press, a Sunday newspaper aimed squarely at black South Africans. I remember it for its doughty political coverage, but not much else. Now it has a glitzy motoring section. "Two BMW 3-Series for the price of one", ran a typical headline two weeks ago. Beneath it was a story headlined: "Mercedes-Benz B200 pricey but quite nice". According to figures quoted by the business magazine Finance Week, the number of "super-rich" (those earning more than four million rand - £285,000 - a year) has risen by 50 per cent in the past five years. While blacks, Asians and people of mixed race accounted for less than 25 per cent of this category in 2001, they now account for 34 per cent; that figure is expected to rise to over 40 per cent by 2011.

So what happened to the idealism of the ANC cadres I knew back in the early Nineties? The cynical or simple answer is that many have been seduced by easy money. The Johannesburg of 2007 reminds me as much of Vladimir Putin's Moscow - a boom in construction and car sales and a flowering of oligarchs - as of the unhappy Joburg I knew in the early 1990s.

"We [black South Africans] must have business role models," says one of the better-known members of the ANC billionaire elite, who has had dozens of directorships handed to him on a plate primarily because of his "struggle" credentials. "Are you denying us the right to make money?" says another. They have a point. It is hypocritical for western commen tators to argue, as they often have, that the governments of newly independent African states have no idea how to run an economy - and then condemn their supporters when they prove rather canny capitalists.

But the arguments of the new black "Randlords" are a little lame. Their talk of having been "deployed" into business may be true, but it is also a convenient euphemism for the acquisition of serious money.

Overtaken by greed

The simpler truth is that many "struggle" veterans have appreciated that after years of fighting the good fight they do not need to stay poor. What is more, it is rather easy to become rich, given the desperation of white businesses to prove their commitment to the new era by finding a black partner, and, in many cases, any old black partner.

The rise and fall of the "Queen of BEE", South Africa's most prominent black businesswoman, who had to resign in disgrace recently from more than a dozen boards because of a huge conflict of interest, was a reminder of the perils of the new culture. Mbeki himself has taken to bemoaning the "money, money, money" way. Last year he used the annual Nelson Mandela Lecture to castigate those for whom "success and fulfilment means personal enrichment at all costs and the most theatrical and striking public display of that wealth".

The good news, however, for those who fret from afar that its new elite have been overtaken by greed, is that there is more to South Africa's revolution than just conspicuous consumption. Day by day the country is becoming more "normal".

Society remains, of course, in many ways unthinkingly racist. How is it that so many whites still talk of their gardeners as "garden boys" when they are referring to adult men? Yet, despite Mbeki's Africanist insistence, aired in his weekly online columns, and repeated to me in person, that racism still poisons society, my impression is that race relations have improved vastly. It is far rarer now, as a white man, to be met with the pre-emptive cringe that used to be the hallmark of so many interracial encounters. I remember, soon after my arrival in 1993, hearing of the experience of a black American colleague. She was queuing in Thrupps, the Fortnum & Mason of Johannesburg, and a white woman looked over her shoulder at the French cheeses in her basket and said: "Oh, what good taste your madam has." "I am the madam," my friend replied. That encounter is impossible to imagine now.

The country is also no longer so out of date. In the Nineties many whites, and not just Pretoria civil servants with their beehive hairdos and floral print dresses, or their shapeless suits and grey shoes, dressed as if in a Fifties sitcom. Black South Africans were by and large no more contemporary: township style was a scruffy T-shirt and jeans. I remember Dali Tambo, the designer and chat-show-host son of the late ANC leader, shaking his head in despair over South Africans' dress sense. Since then there has been a collective make-over. Go to one of the half-dozen malls that have opened in Soweto in the past year or so. They are little different from the malls in Johannesburg's suburbs - or, indeed, the rest of the world.

What's getting worse?

So where is the catch? My second morning back, I was reflecting on my impressions of the "new normal" when I met up with a former senior government official and ANC stalwart. What should I keep my eyes on, apart from the boom, I asked? "Corruption, incompetence, unemployment and crime," he said. "They are all getting worse."

South Africa has between 20 and 40 per cent unemployment. Trevor Manuel, the well-regarded finance minister, who has just overseen South Africa's first budget surplus in recorded history, concedes that this keeps him awake at night. After dithering, the ANC is rolling out vast infrastructure projects, in particular for the 2010 World Cup. But 5 per cent growth will not make inroads into unemployment.

Manuel shrugs off the charge that he could have been bolder in seeking higher growth. Speaking to me before he delivered his budget speech, he also rejected the idea that a surplus was an "embarrassment of riches". Rather, he suggests it is an insurance policy against harder times. But he is also the first to rail against the incompetence of swaths of the government which are unable to spend his bumper revenues. He bemoans the lack of a skilled workforce, and concedes that credit levels are dangerously high, because South Africans, particularly members of the black middle class, borrow to the hilt.

"The situation reminds me of Bolivia or Peru," says one businessman. This is not, as you might think, the caustic one-liner of a disillusioned "whitey". Rather, it is the view of Moeletsi Mbeki, the president's younger brother, one of the government's more trenchant critics. In particular he is appalled by the Black Economic Empowerment policy. It is, he says, just a cosy arrangement between white business and the black elite that will return to haunt South Africa.

There are many places in South Africa where the Bolivia/ Peru analogy rings all too true. There is not much bling in Boikhutso, a down-at-heel township in the old Western Transvaal. The main road is at last tarred and more houses have electricity than in the old days. But life is still grim, with unemployment over 50 per cent. It is places like this that spew out the young men who feed the crime wave, possibly the main disincentive to investors as they choose between South Africa and other developing markets.

Crime was appalling ten years ago when I left after my first stint. Now, anecdotally at least, it is just as bad. Take the 24 hours before I wrote this article: the family of a prominent regional politician was held up by a gang at gunpoint at the family house in northern Joburg; millions of rand were stolen in a raid on a military base in Pretoria; a Capetonian I met had been bound with his family and frogmarched through a wood by gun-wielding thugs, expecting to be killed.

The greatest threat to Mbeki's legacy is not crime, however, but a backlash against bling. This is the tussle that will come to a head in December at the ANC's five-yearly conference, when radicals have vowed to take on the centrists, including Thabo Mbeki. I accompanied him recently to Soweto on one of his rare township tours. Bridget Ngeleza, an unemployed secretary, watched his progress from the garden of her shoebox bungalow. She was far from starry-eyed, but thought his embrace of capitalism was right.

"He wants people to help themselves," she said. "He doesn't like to spoon-feed people." My guess is that she reflects the bedrock of the party. It may be ugly, but the era of bling has some years to run yet.

Alec Russell is the southern Africa correspondent of the Financial Times

South Africa’s wealth by numbers

16% increase in number of dollar millionaires in 2005

$11,000 average annual income, compared to $1,750 for the rest of sub-Saharan Africa

25% rise in demand for credit in 2006

3 number of South African billionaires on Forbes's 2007 Rich List

55 number of BMW dealerships in the country (plus one Rolls-Royce and two Porsche showrooms)

Research by Shabeeh Abbas and Jonathan Pearson

This article first appeared in the 07 May 2007 issue of the New Statesman, Blair: The reckoning

Photo: STEFAN BONESS/PANOS
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What Britain needs to understand about the profound and ancient divisions in Germany

As Angela Merkel campaigns for re-election, the balance of power in Europe is changing.

On 24 September, Angela Merkel will be re-elected chancellor of Germany and that, we might think, will be that. With Merkel and France’s Emmanuel Macron in control of the European project, populism will surely be vanquished and the old Franco-German core of the EU restored. Yet things are changing, and if western Europe wants Germany to keep singing “Ode to Joy” as enthusiastically as “Deutschlandlied”, it will have some work to do. Our Brexit negotiators need to see how important this is to Macron, to other European leaders and, above all, to thinking Germans.

For we may all soon miss the old, self-effacing Germany. Despite having such economic power, it always seemed to have no greater wish than to exist as part of a larger whole. Konrad Adenauer, its first postwar chancellor and founding father, made Westbindung (“binding to the West”) the heart of West German politics. Adenauer came from the deeply Catholic Rhineland, “amid the vineyards” as he put it, “where Germany’s windows are open to the West”. His instinctive cultural sympathy was with France, but he knew that West Germany’s existence depended on keeping America in Europe. France he courted out of profound conviction, the US out of clear-eyed necessity, and he was worried that after him this twin course might be abandoned. His demands for reassurance during his final year in office led to John F Kennedy’s “Ich bin ein Berliner” speech of 1963. Every West German knew about that, and about the Berlin Airlift: these became locations of national memory from which West Germany triangulated its sense of self.

There were some Germans for whom this was too much. Anti-Americanism was ingrained among West Germany’s hard left, the early Green Party and the tiny hard right. But even Germans who were suspicious of America had no fear of tying themselves closer to Europe. On the contrary, that was exactly what they wanted. The standard explanation of this is guilt. West Germans, in this argument, felt so remorseful about the horrors of the Second World War that they wanted to make amends. This idea fitted with others’ belief that Germany did indeed have much to feel guilty about.

A nuanced version of this held that the western Germans thought they had somehow “got away with it”, compared with their brethren in the east, who had felt the weight of Soviet vengeance: rape, pillage, occupation. Accordingly, Germany’s willingness to subsume itself so thoroughly, even as it footed the bills for the European Economic Community and later the European Union, was accepted with little gratitude, almost as an ongoing war debt repayment.

This guilt thesis is based on a misunderstanding of German history, especially of the experience of western Germans. The most graphic illustration of this comes from Adenauer. In 1955, he privately informed the British that while he was obliged to act in public as though he wished for reunification, he intended to devote his remaining years to blocking it. In 1961, he secretly proposed to the Americans that they offer the Russians a swap: they and he should, he said, give up West Berlin in return for Thuringia (the region containing Leipzig and Weimar). He wanted, in effect, to make the River Elbe the eastern border of Germany.

Why did Adenauer dislike the eastern Germans, think Berlin was expendable and consider the River Elbe to be the natural frontier? Simple: he knew that the Elbe was Germany’s Mason-Dixon line. Beyond it lay the flat, grim Prussian heartlands, which until 1945 stretched into present-day Russia. This vast region was known to Germans as “Ostelbien” – East Elbia. Adenauer viewed the “unification” of Germany in 1871 as East Elbia’s annexation of the west. That’s why in 1919, as mayor of Cologne, and again in 1923, he tried to get Britain and France to back a breakaway western German state. Having failed, he is said to have muttered, “Here we go, Asia again,” and closed the blinds every time his train crossed east over the Elbe.

Prussia was a different country. The victorious Allies agreed. On 25 February 1947, they declared: “The Prussian state, which from early days has been a bearer of militarism and reaction in Germany… together with its central government and all its agencies are abolished.” The name Prussia was eradicated. The Prussian hegemony of 1871-1945, an anomaly in the two millennia of German history, was over.

If we understand this, we understand what West Germany really was and why it acted as it did; why the “reunification” of 1990 – or, at least, the way it was handled – was such a mistake; why we may all have to stop taking Germany quite so much for granted now that East Elbia is back; and why our Brexit negotiators are on a hiding to nothing if they believe that the Germans have no more urgent business to consider than their car exports to us. Far more important to liberal Germans is keeping safe the western soul of Germany.

***

West Germany was anything but an artificial construct. It was the historical Germany, being almost geographically identical to what was, for almost 1,200 years, the only Germany. Julius Caesar named the land, together with its people, in 58 BC; 49 years later, Drusus, the greatest commander of the infant Roman empire, is said to have been supernaturally advised that after defeating every tribe he met in Germania, he should halt at the River Elbe. By 100 AD, Roman rule was shown by a fortified border, the Limes Germanicus. You can still walk large stretches of it; it encompasses most of the richest land in modern Germany and all of the great cities except Hamburg, Berlin and the 19th-century industrial monocultures of the Ruhr. Even these last were born as trading posts or forward bases within what archaeologists call the “market region” of Germania – the lands beyond the limes where commerce with the Roman empire defined the whole culture. Southern and western Germany’s cultural roots are almost as Roman as France’s.

But what about 9 AD and the destruction of three Roman legions by the German tribes under Arminius? There is a popular myth that this kept all Germany free and different. We owe this idea to Martin Luther and his supporters: Luther claimed from 1520 onwards to be a German, anti-Roman hero and identified himself with the newly rediscovered tale of Arminius. More decisively, the events of 9 AD were an obsession of later Prussian historians, who had an interest in claiming that the real Germany was one that was pure and un-Romanised. Yet the reverse is true. Under the Romans, then the Merovingians, then the Franks, the Rhine/Danube super-region of Germany remained politically and culturally a part of western Europe. After Charlemagne, a Rhineland German, “restored the Roman empire” (as his seals put it) in 800 AD, western Germany was the very centre of things. It was never a nation state, but always the key part of a greater whole, the Holy Roman empire.

Along the Elbe, things were different. Charlemagne extracted tribute from the pagan Slavs across the river, and his successors tried to build on this, but the German conquest and settlement of East Elbia only really began with the Wendish Crusade of 1147, the northern arm of the Second Crusade. Three centuries later, the entire region was still hotly disputed by Balts and Slavs, with German supremacy threatened by major defeats at Tannenberg (1410) and in the Hussite Wars (1419-34).

Long-contested frontier lands breed a special kind of society. The German incomers cowed the natives, such as the pagan Pruscie from whom they ultimately borrowed their name, through brute force. Where they couldn’t, they had to make armed deals with local elites. In this new sort-of-Germany, the Junkers, an aggressive landowning caste, lorded it over the Slavs and Balts – as well as poorer Germans, who knew that the locals would cut their throats if the Junker castles fell, so were loyal and subservient to their masters. East Prussia remained like this within living memory.

In 1525, Prussia named itself and declared itself the first Protestant state. From then on, it had absolute rulers, the Hohenzollern dynasty, backed by a quiescent Lutheran state church. The Junkers swore loyalty in return for exclusive access to all officer-level jobs in the army and the administration. By the mid-18th century, Voltaire quipped that while other states had armies, the Prussian army had a state. The overriding strategic concern of Prussia was always with the east. In his 1758-59 campaigns, Frederick the Great was shocked to find the Russians extremely hard to beat. He bequeathed to his successors a policy of keeping the tsars onside. Partitioning Poland between them was the sticking plaster that masked this Russian-Prussian rivalry, right until 1941.

This thoroughly east-facing power was, by the normal standards of European statehood – history, social structures, religion, geography – a different country from the Rhineland, Swabia or Bavaria. It defeated them all in 1866, laying the ground for the “unification” of 1871. The Prussian empire (for that is what it was) could now enlist the wealth, industry and manpower of Germany in pursuit of its ancient goal: hegemony over north-eastern Europe. By 1887, the future imperial chancellor Bernhard von Bülow was already musing on how to destroy Russia “for a generation”, cleanse Prussia of its Poles, set up a puppet Ukrainian state and take the Prussian armies to the banks of the Volga. This is the bloody Prussian – not German – thread that leads directly to the Nazi onslaught of 1941. In 1945, that centuries-long struggle was settled, in almost inconceivable violence. Half of East Elbia was ruthlessly stripped of Germans and handed over to Poles or Russians; the rump became the German Democratic Republic (GDR), a mere satrap of the Red Army.

So while it is easy and comfortable to say that the otherness of eastern Germany today is the result of that 40-year Soviet occupation, history says otherwise. East Elbia has always been different. Take the voting patterns: from 1871 to 1933, East Elbia outside Berlin (always a left-liberal political island) was the main electoral reservoir for the authoritarian right. The Prussian Conservative Party under the empire, the Deutschnationale Volkspartei until 1928 and the Nazis from 1930 depended on rural and small-town East Elbian voters. It was they who (just) swung things in 1933, by going 50-60 per cent for the “Hitler coalition”. Had all Germany voted like the Rhineland or Bavaria, Hitler and his Junker allies would have got nowhere close to a majority. Small wonder that Adenauer didn’t want East Elbia back and was secretly delighted to have it safely fenced off behind the Iron Curtain.

***

West Germany (1949-90) – Germany shorn of Prussia – was, then, no historical fluke, and nor was the supra­national way it acted. This was the real Germany. But the hasty reunification of 1990 (there was no referendum or election on the issue) changed things. Why should the inhabitants of the former GDR, rather than Poles and Czechs, get immediate access to the wealth and benefits of the West? Because they were Germans. With that, the chancellor Helmut Kohl embraced the notion that being German overrode all considerations of social, economic or historical difference. He also subliminally revived the idea, common to the Second Empire and the Third Reich, that East Elbia was special and needed subsidising by the rich west of Germany. The director of the Bundesbank, Germany’s central bank, resigned in 1991 over this abandoning of economic sanity for political nationalism.

Since 1990, the former East Germany has received more than €2trn from the old West Germany, for a fast-ageing, shrinking and disproportionately male population of only 16 million, including Berlin. That’s the equivalent of a Greek bailout every year since 1990, and as a straight gift, not a loan. This represents a huge shift in financial priorities, overshadowing Germany’s annual net EU budget contribution (currently €15.5bn). In 1990, Kohl promised that western German aid would soon turn the new states into “blooming” areas, but they have become, instead, proof that age-old differences resist even the most gigantic subsidies.

Between 30 and 40 per cent of voters in East Elbia have declared over the past two years that at the general election, they intend to support either Alternative für Deutschland (Germany’s Ukip), Die Linke (heirs to the old East German Communist Party) or the all but openly neo-Nazi National Democratic Party (the NPD, currently represented in the Mecklenburg-Vorpommern state parliament). Though theoretical enemies, these three parties are united by cultural affinities: all despise economic liberalism, oppose Nato and the EU and want closer relations with Russia.

East Elbia no longer has the population to swing the entire German electorate of more than 61 million but many liberal western Germans are nervous. They recoil at the sight of anti-asylum-seeker attacks, which are proportionally far more common in East Elbia than in the west, or when they see Merkel heckled by right-wingers. They call East Elbia Dunkeldeutschland (“Dark Germany”) and joke bitterly that if Britain can have a Brexit, why can’t the old East Germans, whom they lump together under the name of Saxons, have a “Säxit”? But it’s no laughing matter. They know there are those only too aware of any anti-western drift in Germany and eager to give succour to it.

Alexander Saldostanov, the rabid leader of Russia’s “Night Wolves” bikers and a public friend of Vladimir Putin, recently told Germany’s bestselling daily, Bild, that he dreams of a grand union between Germany and Russia: “We have so much in common. You simply have to free yourself at last from America, that scourge of humanity. Together, we can, should and must take power.”

There’s no danger of that, but there is a sense in which eastern Europe is, to Germans, no longer “the other”. It’s the place whence natural gas flows from Russia, where labour is cheap but skilled and where the people are keen to work with Germany on setting up new sites of joint national memory. From Kaliningrad to Prague, museums and projects are springing up in which the horrors of the past are neither denied nor used as ammunition in today’s negotiations. In eastern Europe, perhaps because Russia is so close, the Germans are rarely made to feel guilty for their grandfathers’ sins. Meanwhile in the west, from Greece to Britain, people can’t resist mentioning the war whenever the Germans don’t act as desired.

***

Germany’s resources are not infinite. Nor is the patience of the 40 per cent of Germans who “have net worths of essentially zero”, as Die Welt reported last year – largely because German home ownership rates are the lowest in the EU. They are disproportionately concentrated in the old east, the region that never had supranational, western European connections. From them come ever-louder voices saying that Germany’s EU contribution is too high. And with Britain out, the maths will look even worse to such voters. If south-western Germany’s taxes have to keep bailing out the country’s east, while also helping out the old and new EU lands, what is left for, say, the post-industrial Ruhr, which has financial and social problems of its own? There are tough choices ahead, and it’s not hard to imagine a day when Germany decides to aim its subsidies and investments where they seem most welcome. The old idea of Mitteleuropa – a multi-ethnic, German-centred Middle Europe, neither of the West nor of the East – no longer seems so antiquarian. Nothing would gladden Putin’s heart more.

So, yes, Merkel will win the election and will have a chance to revive the EU’s Franco-­German core. Yet the relative strengths of France and Germany are different now. As for their leaders, while Adenauer was a devoted Catholic Rhinelander, Merkel is a Lutheran vicar’s daughter from the east. Bonn was physically close to Paris, Brussels, The Hague, even London; Berlin is closer to Prague and Warsaw.

With Donald Trump’s wavering on Nato and his noisy anti-German protectionism, along with Brexit, the West may no longer seem vital to Germany’s future. During Merkel’s election debate with her main challenger, Martin Schulz, on 3 September, Brexit was not even mentioned. The old EU core will have to work to keep Germany anchored, resisting any new call from the east. Macron and German liberals know that; that’s why there will be no Franco-German split over Brexit just to sell us a few more Audis. The sooner David Davis and Liam Fox realise that the Germans have far bigger issues to deal with, the better.

James Hawes is the author of “The Shortest History of Germany” (Old Street Publishing)

This article first appeared in the 07 May 2007 issue of the New Statesman, Blair: The reckoning