US embassy cable - 04PRETORIA4748

C O N F I D E N T I A L SECTION 01 OF 03 PRETORIA 004748 
 
SIPDIS 
 
DEPT PASS USTR FOR PCOLEMAN 
 
E.O. 12958: DECL: 10/28/2014 
TAGS: AO, ETRD, PREL, SF, EINV 
SUBJECT:  TRADE LINKAGES DRIVING SOUTH AFRICA'S BILATERAL 
RELATIONSHIP WITH ANGOLA 
 
 
Classified By: Ambassador Jendayi E. Frazer for reasons 1.4 (b & d) 
 
1.  (C)  Summary:  Conversations with several Angola watchers 
from government, business, and academia yielded the common 
theme that South Africa's relationship with Angola will over 
the coming years be defined by burgeoning trade linkages 
between the two.  South African firms are investing heavily 
in nearly all sectors of the Angolan economy, and no one sees 
signs of this abating.  Government-to-government relations 
are cordial and focused on facilitating increased economic 
integration, although underlying historical, cultural, and 
racial tensions will likely keep the two governments from 
cultivating close ties.   No contacts gave much credence to 
speculation of a growing political rivalry between the two 
countries, as Angola's inward focus and South Africa's desire 
to bolster its global and regional influence are markedly 
divergent priorities over at least the next 10 years.  End 
summary. 
 
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CHECKERED HISTORY STILL AFFECTS RELATIONSHIP 
-------------------------------------------- 
 
2.  (U)  South Africa's long and checkered history in 
Angola-particularly the pre-1994 apartheid government's 
attempts to undermine Angola's independence movement and, 
later, the MPLA government-still mars relations that are 
increasingly cordial but hampered by latent tensions.  The 
apartheid regime's involvement began in the mid-1960s, when 
Pretoria began seconding military assets to the Portuguese 
military to help it combat the insurgency that began in 1961. 
 After the MPLA took power after independence in 1975, South 
Africa swung its support to UNITA in an attempt to topple the 
communist-oriented government.  From 1975 until the early 
1990s, Pretoria plied UNITA with military assistance and, 
during the mid-1980s, sent South African forces to fight 
against Cuban troops backing the Angolan Government.  Many of 
the South African combatants came from the infamous 32 
"Buffalo" Battalion, which was mostly made up of native 
Angolan troops.  Several thousand 32 Battalion members and 
their families still live in South Africa today. 
 
3.  (C)  On the flip side, relations between the ANC in exile 
and the MPLA were never close.  The Angolan Government was 
always too occupied with its own troubles to play a 
meaningful role in assisting the ANC or pressuring the 
apartheid regime through international and regional forums, 
playing the role of "free rider" in SADCC and the Frontline 
States.  CEO of the South Africa-Angola Chamber of Commerce 
Roger Ballard-Tremeer also notes that underlying racial and 
ethnic tensions further undermined relations.  (Comment: 
Ballard-Tremeer is a former diplomat who served as South 
Africa's Ambassador to Angola from 1994 to 1996 and retired 
in 2001 after more than 25 years of DFA service.  He also 
serves as a private consultant to South African firms looking 
to invest in Angola.)  He said that after the accession of 
Jose Eduardo dos Santos to the presidency in 1979, there was 
an increasing perception by ANC members that mulatto Angolans 
were beginning to wield an inordinate amount of power in the 
Angolan Government, creating mistrust and a mutual dislike 
between the two sides.  These tensions have largely abated 
today.  However, Ballard-Tremeer said that his successor as 
Ambassador to Angola told elements of the South African 
Government in the late 1990s that Angola's black people "were 
not free," a story corroborated by Dr. Sehlare Makgetlaneng, 
the southern Africa director at the Africa Institute of South 
Africa.  Ballard-Tremeer also recounted an anecdote of how 
after the Angolan Government allowed the ANC's military arm, 
Umkhonto we Sizwe (MK), to open a camp on Angolan soil, the 
MK immediately surrounded the camp with landmines.  This was 
not done to protect the camp from UNITA or the South 
Africans, but rather to keep its MPLA "allies" from stealing 
supplies and equipment. 
 
4.  (C)  After South Africa's 1994 transition to majority 
rule and Angola's 1994-98 cessation of hostilities, relations 
improved beyond outright hostility but still remained cool. 
Ballard-Tremeer noted that the only substantive involvement 
of South Africa in Angola in the 1994-2002 period was in 
attempting to mediate between UNITA and the government, often 
sending a South African envoy (usually former general 
Constand Viljoen) to meet Savimbi secretly.  Luanda knew of 
these meetings and was not happy about them.  Dr. 
Makgetlaneng of the Africa Institute of South Africa also 
noted that Luanda thought Pretoria was not doing enough 
during this time to rein in Anglo-American's dealings with 
UNITA, while Angola's involvement in the Democratic Republic 
of Congo was another bone of contention in the bilateral 
relationship.  Nonetheless, relations during this time were 
characterized more by benign neglect than outright 
bitterness.  Ballard-Tremeer noted, for example, that limited 
visits by senior South African officials-notably Mandela and 
former Foreign Minister Alfred Nzo-were the result of health 
and security concerns rather than any anti-Angola agenda. 
 
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BUSINESS TIES BOOMING SINCE SAVIMBI'S DEMISE 
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5.  (SBU)  The February 2002 death of UNITA leader Jonas 
Savimbi marked a turning point in bilateral relations between 
Angola and South Africa, with the desire of South African 
firms to gain access to the untapped Angolan market spurring 
increased bilateral cooperation.  Ballard-Tremeer said that 
South African entrepreneurs started looking seriously at 
Angola almost immediately after Savimbi's death, and in March 
2003 Ballard-Tremeer founded the Angola-South Africa Chamber 
of Commerce to facilitate greater South African investment. 
F.J. Lourenco Fernandes, Angola's Trade Representative in 
South Africa, echoed similar sentiments.  He said that he 
opened Angola's trade office in Johannesburg in 1996 but that 
there was virtually no interest in Angola until 2002.  Since 
that time, the previously one-man operation has taken on six 
staff members to cope with the demands of liaising with the 
South African Government and local businesses.  He also noted 
that the daily flight between Johannesburg and Luanda is 
nearly 
 always full, mostly with businessmen. 
 
6.  (SBU)  In terms of areas of investment, every contact 
points to nearly endless possibilities.  Fernandes and 
Ballard-Tremeer laid out a laundry list of sectors about 
which they have had discussions with South African firms: 
 
--Infrastructure is probably the preeminent area for South 
African investment, with companies showing interest in 
rehabilitating buildings, roads, and railroads.  Fernandes 
said five South African firms are working on rehab projects 
at the moment and that there were ongoing discussions on 
rehabilitation of the Benguela corridor. 
 
--Fernandes said his government is keen to rejuvenate the 
long dormant tourist industry, and he said a South African 
company is at the moment rebuilding two hotels in Lobito. 
 
--In agriculture, a South African firm has signed an 
agreement to cultivate sugar cane in Benguela, and he has had 
discussions with South African companies about investing in 
cotton, sunflowers, beans, and nuts. 
 
--Fernandes also pointed to the mining industry, particularly 
the diamond sector, as an area ripe for South African 
investment. 
 
--Ballard-Tremeer said there is extensive interest by South 
African businessmen, including heavyweights like Tokyo 
Sexwale, in Angola's booming oil and gas sector, although 
little has of yet resulted.  Pipeline reconstruction is 
another area of interest. 
 
7.  (SBU)  Despite the extensive interest and an improved 
business environment, Ballard-Tremeer notes that South 
African firms still encounter many problems when getting 
involved in Angola, particularly because they still do not 
have the proper understanding of Angola's business culture. 
The Angolans have a "Mediterranean" attitude toward business, 
based around the development of personal relationships, and 
Ballard-Tremeer notes that it is not uncommon for an Angolan 
minister to host an "open house" for businessmen that begins 
at 11PM and lasts until dawn.  These customs are quite 
foreign to South African businessmen, who, by contrast, work 
hard to establish contacts but are poor at maintaining them. 
Another difficulty is the fact that Angolans generally speak 
poor English, although this is changing among the younger 
generation, and South Africans speak even less Portuguese. 
 
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INVESTMENT DRIVING POLITICAL RELATIONSHIP 
----------------------------------------- 
8.  (C)  Every contact Poloff spoke with described the 
political relationship as much better since 2002.  Deputy 
President Jacob Zuma has visited Angola twice since 2002, 
most recently in May, while Angolan Foreign Minister Joao de 
Miranda visited Pretoria in 2003.  Cecilia Baptista, 
Political Minister Counselor at the Angolan Embassy in 
Pretoria, waxed enthusiastic about the state of bilateral 
ties in the past two years, noting that the two countries 
have signed agreements dealing with agriculture, education, 
and health.  She said Pretoria has been extremely helpful in 
the health arena, providing extensive training for health 
care professionals.  Baptista also noted that a reciprocal 
promotion of investment agreement was on the verge of being 
signed, an act that Ballard-Tremeer and others thought would 
prove a major boon to trade expansion.   DFA Angola Desk 
Officer Willie de Groot (who has been on the desk for six 
years) shared similar sentiments about the stark improvement 
since 2002.  He said this was helped in part by the attempts 
of current Angolan Ambassador Isaac Maria dos Anjos to 
cultivate bilateral ties, whereas his predecessor distrusted 
Pretoria.  Nonetheless, de Groot still described Angola as 
"corrupt as hell," though he noted that pressure from the IMF 
and United States was changing this.  (Comment: The American 
Chamber of Commerce in South Africa, based in Johannesburg, 
is also considering organizing a visit of interested members 
to Angola in 2005 in pursuit of commercial opportunities.) 
 
9.  (C)  Dr. Makgetlaneng's view of these improved ties was 
that the business "tail" was wagging the political "dog."  He 
opined that Pretoria's foreign policy is a delicate balancing 
act between not playing a domineering role in the region and 
also trying to open up regional markets for South African 
firms.  In the case of Angola, the potential for business 
investment is so great that Pretoria treats Luanda with kid 
gloves, especially in the political arena, because it does 
not want to jeopardize these potential business ties. 
Further complicating the political and business relationship, 
he noted, is the fact that many firms interested in Angola 
are Black Economic Empowerment concerns, headed by 
businessmen with close ties to the ANC. 
 
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REGIONAL POLITICAL RIVALRY PROBABLY NOT IN THE CARDS 
--------------------------------------------- ------- 
 
10.  (C)  Some analysts have pointed to Angola's amazing 
economic potential, newfound political stability, and 
powerful military as factors that could lead it to play a 
more prominent political role in the region, possibly even 
challenging South Africa's regional hegemony some day.  No 
one Poloff spoke with gave this hypothesis any credence, with 
most contacts noting that Angola has shown no greater 
interest in engaging in international, pan-African, or 
regional forums since 2002.  Ballard-Tremeer said that 
Angolan representatives still are often absent or 
non-participatory in multilateral meetings, while de Groot 
described Angola's ongoing tenure on the United Nations 
Security Council as a non-event from a South African 
standpoint.  The only grouping in which Angola seemed to show 
much interest was in PALOP, the African lusophone union. 
Overall, contacts believed that Angola would continue to be 
motivated above all else by self-enrichment, avoiding greater 
multilateral commitments unless they made economic sense. 
Hence, South Africa's role as the regional superpower seems 
secure for the foreseeable future. 
FRAZER