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1 June 2005

President Mbeki: We had intended to hold this meeting with President Bush earlier this year but it became a bit difficult to find common dates. The principal reason we thought it was necessary to meet is to look at the African challenges, in particular the possible outcomes of the G-8 summit. So we have been speaking to all of the G-8 heads of government, indicating in the first instance that our view is that this particular session must be very much results-oriented because we have a commonly agreed set of priorities reflected in the NEPAD program but also in the G-8 Africa Action Plan, and that, since the G-8 Africa plan was agreed as a consequence of the NEPAD program, a lot of work has been done with regard to elaborating specific projects to do with infrastructure of all sorts, to do with agricultural development, debt, international trade and so on. Therefore, our view has been that it is important that the G-8 summit this year should then come up with the specific decisions for the implementation of the Africa Action Plan. And as you know Jeffrey Sachs was asked by the United Nations Secretary-General to look at what needs to be done practically.

Prime Minister Blair put together the African Commission focused on the same matter. So this has really been the principal focus of our discussion with President Bush. We agree that it is necessary to find resources to strengthen the capacity of the African Union to carry out its responsibilities with regard to matters of peace, stability and so on. And I think all of us have seen what has happened around the Darfur issue, deployment issues that have attached to deploying African troops in Darfur, maintaining them there, giving them operational capacity and so on. It has shown the need to strengthen the institutional capacities of the African Union with regard to that.

There are these other issues. There is general agreement, you see it reflected, for instance, in the G-8 Africa Action Plan to move a little bit more decisively on the issue of debt as it relates to development issues and the debt question, so we are canvassing for some specific decisions to take this debt matter beyond the HIPC initiative, and as I say, we are discussing it with all of the G-8 to say let's have a practical outcome to this.

We are discussing with them the issue of the outcomes of the WTO. It is clear that trade matters regarding the African continent, beyond AGOA for instance, a lot of the issues are matters being dealt within the context of the WTO. But as Africans we are interested that the G-8 should take some firm positions within the context of the WTO negotiations, a determination for instance to deal with the matter of agricultural subsidies. So that's a matter we are discussing with all of them. On the African continent we've made a lot of progress with regard to identifying specific programs that are fundable whether they have to do with agricultural development, or infrastructure development of various kinds.

We must make sure the resources are there to be able to fund those programs so that we translate them into actual programs. That requires dedicated funds. It includes the issue of larger commitments with regard to development assistance by the G-8 and so we are talking to all of them to say they must set a program to increase the development assistance so that the funds are then available to finance these programs that we are talking about.

So during the next two weeks, we are going to be raising the same issues in detail with all of the G-8. We've alerted all of them that we are coming with practical suggestions in order to get practical outcomes out of the Gleneagles summit. So I am saying that over the next two weeks we are going to be saying to all of them: here is a set of proposals, can these constitute the outcomes that are going to come out of the Gleneagles? I must say that President Bush has responded extremely positively to all of the suggestions and is himself very concerned - I think he said that this would be the fifth summit of the G-8 he would be attending including African leaders and he is very keen that at the end of it we shouldn't make general statements but should have some practical outcomes. So he has responded very positively and I think this gives us a basis in terms of our further interaction with the others to say to them we've got this commitment from the United States to find practical outcomes. And I think from all of the interactions I've had with the other G-8 leaders, everybody is saying the same thing that we need to come out of there with these practical outcomes. And I think that the meeting we have just had with President Bush sends out a very strongly positive note in favour of those practical outcomes.

allafrica.com: Would you please address the question of absorption of capacity because one of frequently hears officials, particularly here in the United States, when asked about a targets, say that there simply isn't the absorption of capacity to meet the kinds of objectives that have been advanced. It's an important issue, would you address it from your perspective.

Mbeki: It is an important issue. Our own view is that we shouldn't exaggerate it. We want to proceed on the basis, as I was saying, of actual programs to the point of business plans. So where we say it is possible with regard to agriculture to deal with issues of irrigation in this particular region in the following way, we are quite certain that the region will be able to absorb the funds that it would need in order to develop that kind of irrigation. We are not asking for funds to be committed for general purposes. They are funds that should be capable of being expended in particular programs, and we don't think there is a problem of absorption in that sense. The problem of absorption is more apparent and it is a matter of appearance rather than reality when you deal with the matters globally. If we are saying infrastructure requires modernisation and so on of a number of important ports around the African continent in order to be able to service imports and exports into whole regions, you would never find problems of absorption. If you've got to strengthen the port of Dakar because the port of Dakar is important in the region and it needs new cranes and dredging and so on, of course there is capacity to absorb resources in order to modernise the port of Dakar like that. So I don't think there is, in terms of the programs we are talking about, the problem of absorption.

Washington Times: Did you discuss the question of Zimbabwe with President Bush and as a man who grew up under an oppressive government what do you say to the people of Zimbabwe...

Mbeki: Sure, we discussed the issue of Zimbabwe. What I said to the president is that both the ruling party and the opposition at the end of the elections, these last elections at the end of March, said it was important that they address issues which have got to do with the constitutional (inaudible), that they need to look at that and change whatever, a constitution making process in a Zimbabwe. Both of them have said that publicly, and we agree with that, that therefore they need to focus on that and to deal with all of the issues that have been in contention between them which would relate to the electoral system for instance insuring that you've got an independent electoral commission and so on, issues that have got to do with the enforceability of the constitution and therefore the establishment of a constitutional court. There is a whole range of issues that they have both raised, the major political parties in Zimbabwe, and as I was saying, they both of them that made the statement at the end of the elections, that this must be a principal point of focus, constitution making, amending the constitution of Zimbabwe so that they deal with these various issues. So as I say we agree with them and what we will do is encourage them indeed then to deal with these issues so that they produce a political constitutional system in Zimbabwe that would help them address the problems that they've been facing.

Reuters: Do you think the United States is doing enough for South Africa and Africa in general and did you get any specific on how the United States could help, any concrete suggestions?

Mbeki: As I was saying, we have to talk to the G-8, and we have got to get a common, practical commitment by all the G-8. I am absolutely certain that President Bush is committed to contributing whatever the United States has to contribute with regard to the common outcomes. Take for instance, a matter that is important to us as Africans, these issues of market access that are dealt with by the WTO and the issue of agricultural subsidies. We want the United States to move on this matter, but we also want to the Europeans to move on the matter. So it's an issue that must be of common concern. I didn't think we could ask either one of those parties to move without the other. So when we say to President Bush we have to move on this matter of agricultural subsidies, he says okay I agree. Now we need to say to the Europeans, we need to move on this matter of agricultural subsidies, and hopefully they are going to say we agree.

Reuters: But did President Bush indicate he would put pressure on his partners in Europe?

Mbeki: Sure, yes, he would certainly indicate the commitment of the US to move so that indeed we would get these practical outcomes that I'm talking about.

New York Times: One area where the United States and President Bush have differed from their G-8 partners, particularly in public, is over gold and debt relief. The United States has been the odd country out on that. Did President Bush give you any commitment that he would be willing to sell gold in the IMF plan or that he would be willing to go along on debt relief at the G-8 in Scotland?

Mbeki: The principal matter we are focusing on is indeed a commitment to move on the debt relief issue. First of all we need everybody to agree: let's go for cancellation of debt for at least the least developed countries. And the US government has raised a second important element with regard to that, that in terms of future financing for health, education and so on it would be incorrect to build up a new debt and therefore, the World Bank for instance, needs to be given the resources to finance development in areas of education and health without rebuilding debt. We agree with that – a combination of things, that is debt cancellation and grant financing for certain kinds of social and economic development. Now the issue that therefore has to be addressed is how you finance it. Now it is not necessarily so that the gold thing is the only way. So the point we are making to all of them is let all of us find a common mechanism to finance that debt relief. And indeed there is a discussion that is going on now among the G-8, again so that by the time we get to the Gleneagles, this matter of how you finance debt relief is resolved.

New York Times: To follow up, Mr. Wolfensohn, in his last press conference the day before he left the World Bank said that, in fact, he disagreed with you; that's because there is no common agreement, he doubts the very much, that debt relief will be resolved at Glen Eagles.

Mbeki: Well, if he... he might be talking about getting a particular message from members of the G-8, from the leaders of the G-8, I don't know. The matter that we have discussed with Jim Wolfensohn before, for a long time, was on this issue, not so much about the willingness to move on debt forgiveness; the issue that has always been outstanding is how do you finance it. And he was concerned not that people were against - that it was impossible to resolve the matter of forgiving the debt. The issue that had to be sorted out was then how do you finance it so that, for instance, when the World Bank says we forgive our debt you don't bankrupt the World Bank so that it closes down. You've got to do some refinancing. So I'm saying that that is precisely what is being discussed among the G-8 now: given that we agree you should move on the debt issue, how then do we deal with the refinancing. I would be confident that it is possible to resolve this matter in the next four to five weeks. Jim Wolfensohn may maintain otherwise and he may be proved correct...

New York Times: Did President Bush give you a commitment that it would be (resolved)?

Mbeki: Now I am saying that there is currently a process going on, consultation among the G-8, to say given the that we all agree we need to move on this debt issue, let's therefore solve the second question, how then do you finance it. That process is going on. It includes the United States.

Voice of America: On the issue of Darfur, you know the US has declared the situation a genocide, and reports say that killings are going on there every day and rapes. What is the position of African leaders and what are you telling the leaders of Sudan in Khartoum?

Mbeki: Well, you know that on the 10th of this month, negotiations between the Sudanese government and rebel movements, SLM and JEM, in Darfur, will resume in Abuja. We are all hoping that those negotiations will provide the political settlement of the Darfur issue. As you know, that has been quite a long break in terms of those negotiations, but lots of things have been happening in between to try to prepare for the success of those negotiations. And so we are all hoping that the negotiations as they resume in Abuja on the 10th of June will produce this political outcome that we want.

Voice of America: What has made African leaders hesitant to declare this situation a genocide so that they could marshal the necessary finances and help they need from the international community?

Mbeki: What the African Union is doing is to say that let’s ensure that the peace agreement that was concluded in Chad, that that peace agreement is observed, the cease-fire and all that, and that therefore let's deploy in the manner that the African Union is deploying, and that to the extent to we need assistance let's get assistance from the rest of the world, including NATO and so on, so that the killing stops and all of that stops. Let's find the political settlement so that fundamentally then we resolve the problem as a whole. That's what we've got to do as the African continent. You see, it might be fine that for somebody in the United States to be making all sorts of statements; we are saying that you have got to work with the Sudanese government, for instance, so that it becomes part of the solution; we've got to work with the rebel movements in Darfur so that they become parties to this solution there, so that the outcome we get is a stable political settlement, an end to the violence, a return of all the people of Darfur to their homes and villages. That's what we've got to do. To the extent that there has not been a sufficient response in terms of resources, I do not think it is because we have not spoken about genocide. But I'm saying in the end if you denounce, let us say, the government of Sudan as genocidal, what's next? Then don't you have to arrest the president? We’re looking for a solution to the problem, and the solution doesn't lie in making radical statements, not for us as Africans. The solution lies in mobilising all of the people who must contribute to a solution, mobilising them so to contribute as to find solutions.

Bloomberg: How concerned are you about a strong rand and its impact the South African manufacturing sector and other sectors that are losing jobs, and what steps are you prepared to take with regard to your strengthening currency?

Mbeki: Well, as you know, the value of the rand is really, basically determined by the market, and generally we have said we want to maintain that position - it has defined its value in terms of the market. We certainly are not thinking in any way of finding huge resources to keep the value of the currency at a particular rate. We don't have them; there is no way we can find billions of dollars to compete with the market to set the value of the currency after particular point. That's the first point. The second point, of course, is that with regard to monetary policy, we've set the inflation targets as government, and it's a matter for the reserve bank to handle the rest in terms of interest rate policy and so on, and again that is an independent institution, and they set that. So, in truth, the capacity off the government to intervene, to say that the currency should be at such and such an exchange rate, is very limited. And also the value of the currency actually represents the strength of the South African economy. To some extent it doesn't make sense for us to say let us weaken the economy so that we weaken the currency so that the exporters...and so on. It doesn't make sense. You know very well that for commodity-producing countries like ourselves, like Australia and so on, there are two elements that are very important with regard to the determination of the value of the currency. One is the price of commodities. So long as you have good prices for gold, and platinum and this kind of thing, that strengthens the currency, and that's beyond our control. We don't determine these prices in global markets. And the other matter of course is the value of the dollar and that again is something that we don't influence. So you see that when the commodity prices move in a positive direction and the dollar weakens, then the rand strengthens. There is nothing we can do about those sorts of movements in the global markets on the dollar and commodity prices. Indeed, we express concern that we can see that in certain circumstances, like, for instance, in mining and mining in South Africa is gold, its gold mining that is suffering as a result of the strength of the rand. It's gold in particular. It's because of the nature of the South African mines, the depth of mining and that kind of thing. So we speak, and we say that we think the currency is too strong, but the instruments to address that practically are very limited.

SABC: On the issue of the G-8, and given that President Bush has just said that the International Finance Facility is not part of the congressional budget processes, does this not pose a threat of confrontation in the G-8 (paraphrase)

Mbeki: The matter that is of interest to us as Africans is generating the resources that are required in order to fund of these programs that we have been talking about, that's what we are interested in. Now, the British government has said that they believe the International Financing Facility that they have proposed is the best route to take. So that's fine, and indeed I don't think there is anybody standing in the way of the British government going the route of the International Financing Facility. As you know, President Chirac has raised the question of some a new international taxes to generate these funds, and the matter has now been taken up by the European Union. Again, that is fine if the EU believes that the way to generate those funds is that route. What we're interested in is that they must generate the funds. The United States has spoken about the Millennium Challenge Account and what we are saying to the United States, and to President Bush today, is that they've got to make sure that that Millennium Challenge Account generates the resources that are necessary for development. Fine, he accepts that. So, the end results for us as Africans are the resources. If somebody wants to raise those resources by way of the International Financing Facility, okay. If another one wants to raise those resources by way of international taxes, that's fine. If it's going to mean more allocations with the Millennium Challenge Account, that's okay. The end result for us is to make sure that the resources are there. So I do not believe that whatever debate that might be among the G-8 about the International Financing Facility would affect this outcome. And certainly if other countries, more than the UK, believe the financing facility is the correct way to go, we would encourage that. We are interested in the end result.

NPR: There were some violent protests in Cape Town this past weekend over a lack of housing. How concerned are you, just over a decade after the end of apartheid, about people who feel that has been to slow a pace about moving towards economic empowerment, particularly for the poorest members of South African society?

Mbeki: Yes, of course, we are concerned about that, and understand very well that somebody who has been, who says I have been living in a shack for the past 10 years, my situation has not changed -- indeed we would be concerned about that. The practical reality about that, of course, is that it is not possible to solve the housing problem of South Africa in a period of 10 years. In this period, in terms of public housing, we have built nearly now 1 1/2 million homes. That's a lot of homes. But because all of the backlog that you had, it is absolutely impossible to wipe out that backlog in this period. So I think what is important with regard to these communities who are raising a legitimate point -- whatever has happened to my neighbour, I can see my neighbour has got a house, but I don't have -- it's a legitimate complaint to make. I think the important point is better engagement, particularly by the municipalities, the mayors and councillors and so on, better engagement with these communities so that they themselves can get a better understanding of what's possible and what's not possible. I can give a lecture on the housing situation in the United States and you could see that any pretence that you could eradicate slums in South Africa in 10 years would be a pretence -- can't be done. It is necessary that the communities must get a better understanding of what is possible. And you see in some of these demonstrations that have taken place, an important element in the demonstrations, even the demands that people are making: the mayor has not spoken to us and councillors here who represent our ward, this councillor, we have not seen this councillor for the last three years -- it's a major complaint from the community and I think a better engagement by the government structures, a better engagement of the people would help to address this and to communicate an honest message, that however miraculous South Africa is, it is not possible to have sorted out the housing backlogs that there are in South Africa in 10 years. It just can't be done. We continue to work at it.

Issued by: The Presidency
1 June 2005