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UNCLAS SECTION 01 OF 07 PRETORIA 001118 
 
SIPDIS 
 
USTR FOR BILL JACKSON 
 
E.O. 12958: N/A 
TAGS: ECON EIND ETRD SF
SUBJECT: SCENESETTER FOR DUSTR MARANTIS VISIT TO SOUTH 
AFRICA JUNE 8-12 
 
PRETORIA 00001118  001.2 OF 007 
 
 
¶1.  (SBU) Charge La Lime warmly welcomes the visit of your 
delegation to South Africa.  The Mission stands ready to do 
everything it can to make your trip a success.  You are 
visiting South Africa at a particularly interesting time, 
following South Africa's fourth successful democratic 
election on April 22. 
 
¶2.  (SBU) South Africa remains an anchor country in 
U.S.-Africa policy.  The ANC-led South African Government 
(SAG) has made major progress toward establishing a vibrant 
democracy and market-based economy since the end of apartheid 
in 1994.  The SAG has focused on political and economic 
transformation, i.e., reducing the gap between the 
historically privileged and disadvantaged communities.  It 
has accomplished this primarily by delivering 
government-provided housing, electricity, and water to the 
poor, and by creating educational, skills development, 
employment and business opportunities for the previously 
disadvantaged. 
 
¶3.  (SBU) South Africa continues to face daunting challenges, 
including a lack of public sector capacity, a thirty percent 
shortfall in mid-to-upper-level public sector managers, 
skills shortages in all sectors, infrastructure bottlenecks, 
income inequality, less than adequate educational 
opportunities, massive unemployment, entrenched rural and 
urban poverty, violent and widespread crime, episodes of 
xenophobic riots, and a severe HIV/AIDS pandemic.  These 
intensify political tensions within the ruling coalition and 
with other political, civil society, and private sector 
groups. 
 
¶4.  (SBU) South Africa remains the continent's best prospect 
for establishing a successful democratic society with 
expanding prosperity despite its many challenges. 
Approximately 77 percent of registered voters participated in 
the April 22 national elections, indicating a popular will to 
build a democratic society.  South Africa is a leader of 
aid-recipient countries in their dialogue with donor nations. 
 It plays a key role in promoting peace and stability in 
Africa, and is an important voice on international finance, 
global trade, human rights, conflict resolution, and 
nonproliferation issues.  U.S.-South African relations are 
stable, as reflected by President Bush's July 2003 visit to 
South Africa and President Mbeki's June 2005 and December 
2006 trips to Washington.  ANC President and then-ANC 
presidential candidate Jacob Zuma visited the U.S. October 
19-28, 2008.  The most recent high-level visit was U.S. Trade 
Representative Ron Kirk, who represented President Obama at 
the inauguration of President Jacob Zuma in May 2009.  The 
USG shares common objectives with the SAG on the African 
continent and beyond, and the two governments work closely on 
many of them. 
 
--------------------------------------------- --- 
RECENT POLITICAL CHANGES INCREASE DOMESTIC FOCUS 
--------------------------------------------- --- 
 
¶5.  (SBU) The ANC dominates the political scene in South 
Africa but showed signs of internal strife in the last year. 
The strife led to a lessening of support from the electorate. 
 The ANC won 70 percent of the vote and 279 of 400 seats in 
the National Assembly in the 2004 election and 66 percent of 
the national vote in the 2006 municipal elections.  In the 
April 2009 national and provincial election, the ANC won 66 
percent of the vote and 264 National Assembly seats, earning 
the right to govern for the fourth consecutive time since 
Qthe right to govern for the fourth consecutive time since 
¶1994.  The opposition, meanwhile, has steadily benefited from 
ANC turmoil.  The Democratic Alliance (DA) is the largest of 
several small opposition parties in the National Assembly, 
winning 47 seats in 2004 and 67 seats in 2009.  In 2006, the 
DA joined an opposition coalition to govern the city of Cape 
Town.  There were multiple attempts by the ANC to unseat the 
DA-led, multi-party coalition, and each unsuccessful attempt 
increased the local stature of the DA.  In 2009, the DA 
earned 51 percent of the vote in the Western Cape to win an 
outright governing majority in the province.  A new 
opposition party that broke from the ANC, the Congress of the 
People (COPE), gained 30 seats in the National Assembly in 
the 2009 election and is now the third largest national party 
as well as the official opposition in three of the nine 
provinces. 
 
¶6.  (SBU) Part of why the ANC has faced internal problems 
 
PRETORIA 00001118  002.2 OF 007 
 
 
stems from the fallout of the December 2007 ANC congress in 
Polokwane, Limpopo.  Zuma defeated incumbent Mbeki by a vote 
of 2,329 to 1,505 for the party presidency.  Zuma's allies 
swept the other top five ANC positions.  The Zuma camp 
dominated the elections for the ANC's 86-member National 
Executive Council (NEC) with sixteen Mbeki Cabinet members 
(out of 28) losing their NEC seats.  Zuma's victory 
positioned him to be the front-runner to become national 
President following the 2009 election.  The tense debate at 
the party's December 2007 ANC National Conference and defeat 
of incumbent Mbeki reflected the growing impatience with the 
pace of socio-economic change.  It was also in large part a 
reflection of the growing restlessness and dissatisfaction 
with the ANC's inability to deliver a better life for 
everyone.  Zuma's subsequent court challenge to his 2007 
indictment on corruption and fraud charges formed the pretext 
for the ANC decision to recall Mbeki as President in 
September 2008 before his five-year term expired.  In April 
2009, the National Prosecution Authority dropped all charges 
against Zuma, alleging official state interference in the 
proceedings, relieving him of this taint in the last month of 
the campaign for the 2009 election. 
 
¶7.  (SBU) It is too soon to tell whether the results of the 
2009 election will lead to changes in SAG policy.  Interim 
president Kgalema Motlanthe's seven month tenure ended with 
the May 2009 inauguration of Zuma, and the newly appointed 
Cabinet is only weeks old.   Zuma has stressed that as 
president he will not make radical policy changes and that he 
respects the party's previous policy consensus.  His Cabinet 
selections, particularly the re-appointment of former Health 
Minister Barbara Hogan as Minister of Public Enterprises and 
former Finance Minister Trevor Manuel as Minister of Planning 
in the Presidency, show that the ANC wants to improve policy 
implementation in certain areas without drastic overhauls. 
Despite such signals, many of the new Cabinet appointments -- 
and some of Zuma's strongest coalition supporters -- come 
from the left wing of South African politics.  The Congress 
of South African Trade Unions (COSATU) and the South African 
Communist Party (SACP) are members of the ANC-led tripartite 
alliance. These groups are pressuring Zuma to embrace more 
leftist or perhaps even populist positions in the interests 
of the working-class poor, and they supported the appointment 
of many of their members to the Cabinet.  On issues like 
HIV/AIDS and Zimbabwe, this could lead to SAG policies more 
closely in line with U.S. interests.  However, on other 
issues -- like fiscal management, nationalization of 
industry/resource sectors, and trade liberalization -- the 
shifts in policy might be less positive from a U.S. 
perspective. It seems likely that the new ANC leaders will be 
more focused on domestic rather than continental or global 
issues, which could reduce the SAG's activist role in 
international affairs. 
 
------------------------------------------ 
FOREIGN POLICY PROMOTING AFRICAN INTERESTS 
------------------------------------------ 
 
¶8.  (U) South Africa under Mbeki took a high-profile role 
promoting Africa's interests and he was successful in getting 
the African agenda on a host of multilateral agendas, 
including the G-20.  South Africa served as the first chair 
Qincluding the G-20.  South Africa served as the first chair 
of the African Union until July 2003 and helped establish 
continental institutions such as the Pan-African Parliament 
(which sits in South Africa) and the AU Peace and Security 
Council.  Mbeki was the driving force behind the New 
Partnership for Africa's Development (NEPAD), an 
African-developed program based on international best 
practices and continental peer review to strengthen economic 
and political governance across the continent.  NEPAD is also 
a framework for African partnerships with the international 
community.  These initiatives are still early in their 
evolution and have not yet become effective mechanisms for 
development. 
 
 
¶9.  (SBU) South Africa under Mbeki believed it had a 
responsibility to lead African conflict resolution efforts 
and participate in peace support operations by virtue of its 
history and regional political, economic, and military clout. 
 South Africa plays a lead role in conflict resolution in 
Burundi and contributes troops to UN Peace Keeping missions 
in the Democratic Republic of Congo (DRC), Burundi, and 
Sudan.  South Africa has approximately 3,000 personnel 
 
PRETORIA 00001118  003.2 OF 007 
 
 
deployed in peace support operations in Africa and the U.S. 
has a strong interest in helping South Africa expand and 
enhance its peacekeeping and disaster assistance 
capabilities.  South Africa participates in the U.S. African 
Contingency Operations Training and Assistance program 
(ACOTA) to enhance the South African National Defense Force's 
(SANDF) capacity to participate in multilateral peace support 
operations.  The U.S. uses International Military Education 
and Training (IMET) funds to support professional military 
education and technical training of future military leaders. 
The January 2008 repeal of the American Servicemen's 
Protection Act (ASPA) prohibitions on provision of military 
assistance will permit the resumption of Foreign Military 
Financing (FMF) programs supporting the South African Air 
Force's C-130 fleet this is used to support South African 
troops deployed in the DRC, Sudan, and Burundi.  The first 
tranche of new FMF funding is expected to be available in 
FY2010  South African officials have been openly critical of 
U.S. Africa Command in the past and still refuse to meet with 
Africa Command officials, but the Embassy has been making 
progress in engaging with the SAG on this issue and continues 
to engage in a wide range of military-to-military activities. 
 Last year the U.S. completed the first visit by a U.S. Navy 
aircraft carrier to South Africa since 1967.  This marked a 
turning point in military-to-military relations. 
 
¶10.  (SBU) Zimbabwe remains a continuing challenge for South 
Africa.  SADC leaders appointed Mbeki in March 2007 as the 
mediator between Zimbabwean President Robert Mugabe and the 
opposition Movement for Democratic Change (MDC), with the 
goal of leveling the electoral field before the March 2008 
elections.  Negotiations made some progress, but human rights 
abuses against the opposition accelerated.  The MDC won a 
small majority of seats in the Parliament.  MDC leader Morgan 
Tsvangirai won a plurality of the vote (47 percent) but not 
enough to avoid a presidential runoff in the March 2008 
elections.  Presidential runoff elections planned for June 
27, 2008 were preceded by a campaign of state-sponsored 
violence and intimidation that undermined the atmosphere for 
a fair electoral contest.  Tsvangirai dropped out of the race 
on June 22 as a result of the political instability and the 
violence against MDC supporters.  A September 2008 
SADC-brokered power-sharing agreement was reconfigured as a 
power-sharing unity government and implemented in February 
¶2009.  The SAG and SADC asked former Mbeki to stay on in his 
role as SADC's chief Zimbabwe negotiator following his 
departure from office. 
 
¶11.  (SBU) Overall U.S.-South African relations are positive, 
but South Africa sometimes takes positions on global issues 
that run counter to U.S. interests.  As a recent 
non-permanent, UN Security Council member, and former chair 
of the G-77 and the Non-Aligned Movement (NAM), South Africa 
advocates for a greater voice for the "South" relative to the 
"North" in an expanded and reformed UN Security Council, in 
the governance of international financial institutions, 
increased development assistance, and lower trade barriers 
(for manufactured and agricultural exports to developed 
countries). 
 
--------------------------------------------- ------------ 
THE NEED TO ACCELERATE GROWTH IN A SLOWING GLOBAL ECONOMY 
QTHE NEED TO ACCELERATE GROWTH IN A SLOWING GLOBAL ECONOMY 
--------------------------------------------- ------------- 
 
¶12.  (SBU) South Africa is a middle-income, emerging market 
economy with purchasing power parity GNI per capita of $3,206 
(2008), akin to Chile, Malaysia, or Thailand.  The SAG has 
pursued prudent monetary and fiscal policies, which turned a 
fiscal deficit of 6 percent of GDP in 1994-05 to a small 
surplus of 0.9 percent of GDP in 2007-08.  However, the 
government announced in February 2009 a fiscal deficit of 3.9 
percent of GDP for 2009-10, citing the need for stimulus in 
the face of a deteriorating economic environment.  The South 
African Reserve Bank (SARB) is independent.  It targets an 
inflation rate of 3-6 percent, but is currently struggling 
with inflation of about 8.5 percent.  Inflation is expected 
to fall within the target band before the end of 2009, which 
gives SARB space to cut interest rates further in response to 
the global economic crisis.  Real GDP growth averaged 5 
percent per year between 2005 and 2007, but fell to 3.1 
percent in 2008 because of higher interest rates, power 
shortages and weakening commodities prices.  GDP contracted 
6.4 percent in the first quarter of 2009, owing to slumps in 
commodity prices and manufactured exports.  South Africa is 
 
PRETORIA 00001118  004.2 OF 007 
 
 
now in official recession, and analysts forecast negative 
growth of about 1.0 percent in 2009. 
 
¶13.  (SBU) South Africa's financial system has not been 
directly affected by recent turmoil in global financial 
markets.  The local banking system is well-capitalized and 
strictly-regulated, and banks and other financial 
institutions have relatively little exposure to sub-prime 
debt or other contagion.  Banks raise most of their capital 
domestically.  However, South Africa depends on portfolio 
inflows to finance its large current account deficit (about 8 
percent of GDP).  The global "flight to safety" in the second 
half of 2008 took a heavy toll on the Johannesburg Stock 
Exchange and the rand.  The rand has strengthened in recent 
months as a semblance of confidence has returned to global 
markets. 
 
¶14.  (SBU) South Africa's single greatest economic challenge 
is to accelerate growth in a slowing global economy in order 
to address widespread unemployment and reduce poverty.  The 
official unemployment rate, currently 23.5 percent, is 
significantly higher among black South Africans than among 
whites.  Income inequality between haves and have-nots 
remains one of the highest rates in the world.  Fifty-six 
percent of black South Africans, but only four percent of 
whites, live in poverty.  The lack of capacity and service 
delivery at the provincial and municipal levels fueled the 
recent xenophobic attacks on refugees from neighboring 
countries as South Africans from lower socioeconomic strata 
feared that jobs, houses, and other services were being given 
to non-South Africans.  Nearly 2.5 million low-cost homes 
have been built to provide shelter to 7.6 million people, 3.5 
million homes have been provided with electricity, and nine 
million people have been connected to clean water.  Almost 
13.4 million people were benefiting from social grants in 
2008 and this figure is projected to increase to 20 million 
in the next several years as benefits are extended to broader 
categories of recipients.  The SAG's broad-based Black 
Economic Empowerment (BEE) program provides ownership and 
employment opportunities to blacks and has helped the black 
middle class double in size to an estimated two million since 
¶1994. 
 
¶15.  (U) The success in preparing for and carrying off the 
FIFA 2010 Soccer World Cup to be held in South Africa in 
mid-June 2010 is regarded by many as a bellwether of the 
country's commitment to continued progress in a variety of 
social and economic areas, among these being the fight 
against crime, providing services, expanding and improving 
infrastructure, and developing tourism. 
 
--------------------------------------------- ------ 
THE RECENT GROWTH OF U.S.-S.A. TRADE AND INVESTMENT 
--------------------------------------------- ------- 
 
¶16.  (SBU) The U.S. is South Africa's third-largest trading 
partner, after Germany and China.  U.S.-South Africa trade 
grew 12 percent in 2008, totaling $16.1 billion.  U.S. 
exports rose 18 percent to $6.2 billion, while South African 
exports to the United States increased 9 percent to $9.9 
billion.  South Africa was the third largest beneficiary of 
total exports (after Nigeria and Angola) and the largest 
beneficiary of non-oil exports under the African Growth and 
Opportunity Act (AGOA) in 2008.  The U.S. was South Africa's 
largest export market in 2007 and an impressive 98.1 percent 
Qlargest export market in 2007 and an impressive 98.1 percent 
of South Africa's exports entered the U.S. with zero import 
duties in 2007 as a result of normal trading relations (NTR), 
GSP, AGOA and other benefits.  Japan displaced the U.S. as 
South Africa's largest export market in 2008. 
 
¶17.  (SBU) Over 600 U.S. firms have a presence in South 
Africa, with 85 percent using the country as a regional 
center.  South Africa's stable government, sound fiscal and 
monetary policies, transportation infrastructure, 
sophisticated financial sector, and, by African standards, 
large market are the primary attractions for U.S. businesses. 
Nevertheless, South Africa has failed to attract a 
proportionate share of global foreign direct investment since 
¶1994.  Reasons include a volatile exchange rate, distance 
from developed country markets, high unit labor costs, strong 
unions, skills shortages, crime, HIV/AIDS, regulatory 
uncertainty, and the impact of Black Economic Empowerment 
policies such as the mandatory sale of equity to previously 
disadvantaged persons, many of whom are connected to the ANC. 
 
PRETORIA 00001118  005.2 OF 007 
 
 
 The U.S. was the largest portfolio investor and the second 
largest foreign direct investor in South Africa after the 
U.K. ($6.6 billion at year-end 2007).  General Motors, Ford, 
and Timken are among the top industrial investors in South 
Africa.  Teletech recently opened a large call center in Cape 
Town and has plans to open smaller centers in other parts of 
the country.  Westinghouse is competing for a $60 billion 
dollar contract to build a fleet of AP1000 nuclear reactors 
in the Western and Eastern Cape provinces.  Lockheed recently 
signed a contract with state-owned aviation manufacturer and 
services provider Denel for Denel to open a licensed service 
center to repair, maintain and overhaul Lockheed C-130s from 
Africa and the Middle East. 
 
¶18.  (SBU) The U.S. and the Southern African Customs Union 
(SACU:  South Africa, Botswana, Lesotho, Namibia, and 
Swaziland) suspended free trade agreement negotiations after 
three years and six rounds of negotiations in April 2006. 
Negotiators agreed to pursue a Trade, Investment and 
Development Cooperative Agreement (TIDCA) in an effort to 
preserve some of the progress made in the FTA talks.  A 
framework agreement for the TIDCA was signed at the AGOA 
Summit in Washington on July 14, 2008.  South Africa has 
recently expressed interest in stepping up the pace on TIDCA, 
and negotiators may begin work soon on agreements to promote 
private sector contacts and reduce existing barriers to 
bilateral trade.  There may be movement on TIDCA in the 
run-up to the AGOA Summit in August. 
 
------------------------------------- 
ONGOING U.S. SUPPORT FOR SOUTH AFRICA 
------------------------------------- 
 
¶19.  (U) The USG has contributed approximately $1.9 billion 
toward South Africa's development, including $250 million in 
credit guarantees, since 1994, and $100 million in education, 
$120 million in economic growth, and $88 million in democracy 
and governance since 1998.  Our current development 
assistance program focuses on: supporting South Africa's 
response to HIV/AIDS and TB through the U.S. President's 
Emergency Plan for AIDS Relief (PEPFAR); addressing 
unemployment through financing and business development 
services for SMEs, job-skills training and education; 
reducing gender-based violence as part of the  President's 
Women's Justice and Empowerment Initiative (WJEI); enhancing 
the quality of education through teacher training; and 
partnering with the SAG in third countries engaged in 
post-conflict rebuilding.  South African NGOs have also 
received Trafficking in Persons (TIP) grants over the past 
few years to assist in the global fight against trafficking 
in persons.  A wide range of U.S. private foundations and 
NGOs are also at work in South Africa.  Among them are the 
Gates Foundation (HIV/AIDS), the Ford Foundation (higher 
education), the Rockefeller Foundation (adult education), and 
the Clinton Foundation (HIV/AIDS and Climate Change). 
 
¶20.  (U) Twenty-eight U.S. government entities are 
represented at the U.S. Mission in South Africa (Embassy 
Pretoria and the three Consulates in Johannesburg, Cape Town 
and Durban).  The Mission has 292 Direct Hire (USDH) 
positions and 608 local employees.  More than 40 percent of 
Mission staff provides regional services to other U.S. 
embassies in Africa. 
 
--------------------------------------------- ------------- 
HIV/AIDS AND RELATED ILLNESSES CONSTITUTE A GROWING CRISIS 
QHIV/AIDS AND RELATED ILLNESSES CONSTITUTE A GROWING CRISIS 
--------------------------------------------- -------------- 
 
¶21.  (U) The PEPFAR program in South Africa is the largest 
recipient of PEPFAR resources to date, having received a 
total of $1.45 billion, including $591 million in FY2008. 
South Africa has the largest number of HIV-infected citizens 
in the world.  HIV/AIDS-related illnesses, particularly due 
to HIV/tuberculosis (TB) co-infection, are the country's 
leading cause of death.  Despite South Africa's overall 
wealth, life expectancy at birth has decreased from 67 to 52, 
the regional average, due to HIV/AIDS and HIV/TB 
co-infection. Under-five mortality, with the Millennium 
Development Goal (MDG) of 24 per 1,000 in 2015, has increased 
from 60 to 67 per 1,000 between 1990 and 2006.  Achieving the 
MDGs is the SAG's highest priority, but South Africa is 
moving further away from these goals in both child and 
maternal mortality as a result of HIV/AIDS. 
 
 
PRETORIA 00001118  006.2 OF 007 
 
 
¶22.  (U) An estimated 5.4 million South Africans are 
HIV-positive including 2.7 million women and about 300,000 
children 14 years old or less.  An estimated 18.8 percent of 
adults between 15 and 49 are HIV-infected and women in the 
age group of 25-29, the most seriously affected, have 
prevalence rates of up to 40 percent in some areas.  An 
estimated 530,000 new infections occur annually. In 2006, 
350,000 adults and children died from AIDS; an estimated 1.8 
million deaths have occurred since the start of the epidemic; 
and 71 percent of all deaths in 15 to 41-year-olds are due to 
AIDS.  In the last few years, there is an indication that 
prevalence may be starting to decline.  Prevalence in 
antenatal care fell from 29 percent in 2005 to 28 percent in 
¶2008.  At least 1.6 million children, approximately 10 
percent of South Africa's youth, have had at least one parent 
die and 66 percent of these have been orphaned by AIDS. 
Continuing AIDS-related mortality will create millions of new 
orphans and generate additional social and economic 
disruption, in part due to orphans being raised by extended 
families or in child-headed households. 
 
¶23.  (U) The epidemics of HIV and TB are interlinked.  TB is 
the most common infectious disease in sub-Saharan Africa and 
approximately 50 percent of HIV patients in South Africa also 
have TB.  A high overall prevalence rate of HIV, HIV/TB 
co-infection, and lack of continuity in treatment contribute 
to the increasing incidence of active TB, including multi-and 
extensive-drug-resistant TB strains (MDR- and XDR-TB).  The 
piloting of an SAG-approved rapid test for MDR-TB may allow 
more rapid identification and initiation of appropriate 
treatment, but staff shortages and skills challenges impede 
an effective response to TB.  Failure to adequately control 
and treat TB may undo all the gains South Africa has made in 
HIV care and treatment thus far. 
 
¶24.  (U) The South African National Strategic Plan for HIV & 
AIDS and Sexually Transmitted Infections 2007-2011 (NSP) 
provides a road map for responding to this crisis and sets 
out goals of reducing new HIV infections by 50 percent by 
2011 and increasing access to anti-retroviral treatment 
(ART).  The appointment of Hogan as Health Minister under 
Motlanthe signaled new initiatives in health, particularly 
pertaining to HIV and TB.  Hogan was outspoken in affirming 
the link between HIV and AIDS and galvanized support from 
government and non-governmental organizations (NGOs) to reach 
the NSP targets.  The South African public health system has 
a need for: expanded clinical and laboratory facilities; 
strengthened health care infrastructure, particularly for 
chronic disease, which includes HIV and TB; increased 
coverage of HIV treatment; HIV prevention; and TB control and 
treatment.  The country has made impressive progress towards 
expanding access to ART, but the current number of people on 
ART is less than 30 percent of those who need it.  The number 
of new infections also greatly exceeds the number of new 
people placed on ART. 
 
¶25.  (U) The U.S. President's Emergency Plan for AIDS Relief 
(PEPFAR) is in its fifth year of implementation and has 
recently been re-authorized for a second five-year period. 
PEPFAR is implemented in South Africa by five USG agencies: 
the U.S. Agency for International Development (USAID); the 
U.S. Department of Health and Human Services (HHS), which 
QU.S. Department of Health and Human Services (HHS), which 
includes the Centers for Disease Control and Prevention 
(CDC); the U.S. Department of State; the U.S. Department of 
Defense; and the Peace Corps.  PEPFAR and its implementing 
agencies work with the public and private sector to deliver 
programs for HIV prevention, care, and treatment.  In doing 
this, PEPFAR and its implementing agencies align their goals 
with that of the NSP. PEPFAR directly supported 305,356 
people on ART through programs in all nine provinces as of 
March 2008.  The South African military has expanded HIV 
prevention, care, and treatment programs with PEPFAR funding, 
and collaborates with the U.S. military and the National 
Institutes of Health (NIH) on HIV/AIDS and TB research. 
 
¶26.  (U) South Africa has the strongest research and training 
capacity of any country in the region, making it 
an important partner in HIV/AIDS and TB efforts.  USG 
agencies work with national and provincial health 
departments, the South Africa military, universities, and 
NGOs to strengthen primary health care, disease surveillance, 
and research.  NIH provides approximately $300 million in 
funding to South African researchers per year, with 90 
percent of this focused on HIV/AIDS and TB research.  The 
 
PRETORIA 00001118  007.2 OF 007 
 
 
U.S. Mission has prepared a five-year strategic plan in 
coordination with the SAG for HIV prevention, care, and 
treatment for not only adults, but also for orphans and other 
vulnerable children (OVCs).  The USG team will work with the 
SAG to develop a Partnership Compact outlining a joint 
five-year strategy on mutual financial, operational, and 
programmatic commitments. South Africa is moving into a 
transition phase with an expected 75 percent budget reduction 
in PEPFAR funding during the next three years (from $591 
million in FY2008 to $150 million in FY2011.  This reduction 
will correspond with increased emphasis on technical 
assistance and human capacity development coupled with 
greater funding and program implementation by the SAG. 
Although Hogan did not retain the Health portfolio, Post 
expects to work cooperatively with new Health Minister Aaron 
Motsoaledi on the development and implementation of this 
five-year strategy and collaboration. 
 
LA LIME