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UNCLAS SECTION 01 OF 05 PRETORIA 002271 
 
SENSITIVE BUT UNCLASSIFIED 
SIPDIS 
 
FOR AMBASSADOR JENKINS FROM AMBASSADOR GIPS 
 
E.O. 12958: N/A 
TAGS: PREL MNUC PARM KNNP TBIO SF
SUBJECT: SCENESETTER FOR AMBASSADOR BONNIE JENKINS' 
INTERAGENCY TEAM VISIT TO SOUTH AFRICA, NOVEMBER 8-11, 2009 
 
REF: A. STATE 097420 
     ¶B. STATE 100237 
 
PRETORIA 00002271  001.2 OF 005 
 
 
(SBU) I warmly welcome your visit to South Africa.  The 
Mission stands ready to do everything it can to make your 
trip a success.  The control officer in Johannesburg/Pretoria 
will be Deputy Political Counselor Madeline Seidenstricker, 
who can be reached at 27-12-431-4173. Assisting in scheduling 
technical meetings will be Energy-Minerals Officer David 
Young and Transportation/ICT Officer Daleya Uddin.  They can 
be reached at 27-12-431-4681 and 4344 respectively. 
 
¶2. (SBU) You are visiting South Africa at a time of 
possibility and promise, following Presidents Obama and 
Zuma's agreement on the margins of the G-8 Summit in July to 
increase dialogue on international security and arms control, 
Secretary Clinton's visit on August 6-9, and Special Advisor 
Einhorn's visit on August 24-31. The Secretary called for 
greater bilateral engagement on a wide range of issues, 
including nonproliferation. Special Advisor Einhorn's visit 
extended and deepened the pledge to work with South Africa as 
a partner in global security and energy issues and paved the 
way for the signing in Vienna of a nuclear R & D agreement in 
September.  I look forward to your visit as the next chapter 
in a promising, enhanced dialogue, and am optimistic that 
your South African interlocutors will welcome your message on 
possibilities for U.S. programmatic partnerships with South 
Africa to address the global threats our two countries face. 
 
¶3.  (SBU) The African National Congress-led (ANC) South 
African Government (SAG) has made great progress 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 remains committed to delivering government-provided 
housing, electricity, and water to the poor, and creating 
educational, skills development, employment, and business 
opportunities for the previously disadvantaged. 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, enormous income 
inequality, inadequate educational opportunities, massive 
unemployment, entrenched rural and urban poverty, violent and 
widespread crime, xenophobia, and a severe HIV/AIDS pandemic. 
South Africa remains committed to 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. 
 
---------------------------------- 
The Political Landscape Under Zuma 
---------------------------------- 
 
¶4.  (SBU) The ANC dominates the political scene in South 
Africa.  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 1994.  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 
Qthe 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. Meanwhile, the 
non-ANC opposition parties have 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 2009, the 
DA earned 51 percent of the vote in the Western Cape to win 
an outright governing majority in the province. 
 
¶5.  (SBU)   President Zuma's 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 populist or 
 
PRETORIA 00002271  002.3 OF 005 
 
 
leftist positions in the interests of the working-class poor, 
and they supported the appointment of many of their members 
to the Cabinet.  In the face of growing dissatisfaction with 
government's ability to deliver services to the poor, ANC 
leaders will be more focused on domestic rather than 
continental or global issues. 
 
¶6.  (SBU) U.S.-South Africa bilateral relations are positive 
overall, but South Africa has taken positions in multilateral 
fora that run counter to U.S. interests.  South Africa 
advocates for a greater voice for the "South" relative to the 
"North" in an expanded UN security Council and in the 
governance of financial institutions, along with increased 
development assistance and lower trade barriers.  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 down-sized its forces in Burundi to a small 
100-man security force and is due to withdraw all of its 
troops by the end of 2009. 
 
¶7. (SBU) South Africa has approximately 3,000 personnel 
deployed in peace support operations in Africa (DRC and 
Sudan) 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 
(ACOTA) program to enhance the South African National Defense 
Force's (SANDF) capacity to participate in multilateral peace 
support operations. Motivated, in part, by lingering 
suspicions of the U.S. dating to the cold war, South African 
defense officials have been openly critical of U.S. Africa 
Command in the past, 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. 
In 2008, 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, though 
occasional hiccups still occur. 
 
¶8.  (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 
current recession has cut deeply into tax revenues, causing 
Finance Minister Gordhan to project a fiscal deficit of 7.7 
percent of GDP in 2009/10.  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 
6.4 percent. GDP contracted 6.4 percent and 3 percent in the 
first and second quarters of 2009, respectively, owing to 
slumps in commodity prices and manufactured exports.   South 
Africa is now in official recession, and analysts forecast a 
fall in GDP of about 2.0 percent in 2009. 
 
¶9.  (SBU) South Africa's financial system has not been 
directly affected by recent turmoil in global financial 
Qdirectly 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). 
 
¶10.  (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 African immigrants. Other obstacles exacerbating 
South Africa's economic growth and service delivery problems 
 
PRETORIA 00002271  003.2 OF 005 
 
 
are skill shortages, a brain and skills drain, and education 
system weaknesses. 
 
¶11.  (U) South Africa's ability to prepare for and carry off 
the FIFA 2010 Soccer World Cup (to be held in South Africa 
between June 11 and July 11, 2010) is regarded by many as a 
bellwether of the country's commitment to continued progress 
in a variety of social and economic areas, including 
providing services, expanding and improving infrastructure, 
developing tourism, and pursuing the fight against crime. 
South Africa's successful hosting of the FIFA Confederations 
Cup in June 2009 strengthened confidence that the World Cup 
in 2010 will also be managed effectively. 
 
--------------------------------------------- ------ 
THE RECENT GROWTH OF U.S.-S.A. TRADE AND INVESTMENT 
--------------------------------------------- ------ 
 
¶12.  (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 
Opportunity Act (AGOA) in 2008.  The U.S. was South Africa's 
largest 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. 
 
¶13.  (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 aQ 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.  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. 
 
¶14.  (SBU) The U.S. and the Southern African Customs Union 
Q14.  (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 
Forum 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 Forum in August. 
 
----------------Q------------------ 
ONGOING U.S. SUPPORT FOR SOUTH AFRICA 
------------------------------------- 
 
¶15.  (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, 
 
PRETORIA 00002271  004.2 OF 005 
 
 
$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'Q 
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). 
 
¶16.  (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 provide regional services to other U.S. 
embassies in Africa.  The Mission has embarked on an 
ambitious program to build safe office facilities.  The 
Mission completed the new consulate compound in Cape Town in 
2005 and a new consulate building in Johannesburg in April 
¶2009.  Future projects include construction of a new annex 
for USAID and CDC.  The construction of this much-needed, 
155-desk office annex on the Embassy compound in Pretoria was 
deferred by the Office of Buildings Operations (OBO) from 
2009 to 2022. 
 
--------------------------------------------- ----------- 
HIV/AIDS AND RELATED ILLNESSES CONSTITUTE A GROWING CRISIS 
--------------------------------------------- ----------- 
 
¶17.  (U) The PEPFAR program in South Africa is the largest 
recipient of PEPFAR resources world-wide to date, having 
received a total of $2.0 billion, including $551 million in 
FY2009.  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 dQh.  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. 
 
¶18.  (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 younger.  An estimated 18.8 percent 
of adults between 15 and 49 are HIV-infected and women in the 
Qof 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. 
 
¶19.  (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 
 
PRETORIA 00002271  005.2 OF 005 
 
 
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. 
 
¶20.  (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 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. 
 
¶21.  (U) 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 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. 
 
GIPS