Trump Leaps Into South Africa’s Racially Charged Land Debate

(Bloomberg) -- With legal questions mounting at home, U.S. President Donald Trump waded into South Africa's racially charged debate about land reform, triggering a selloff in the rand.

Trump said in a tweet that he's asked U.S. Secretary of State Mike Pompeo to “closely study the South Africa land and farm seizures and expropriations.” He was intervening in a controversy about whether South Africa should implement a policy of seizing land without paying for it in a bid to address inequalities built up during apartheid and colonial rule.

The comment raised concern that the U.S. could punish South Africa economically, having already sanctioned Turkey. South Africa is the biggest beneficiary of the African Growth & Opportunity Act, which grants many of its products duty-free access to U.S. markets.

@SecPompeo to closely study the South Africa land and farm seizures and expropriations and the large scale killing of farmers. “South African Government is now seizing land from white farmers.” @TuckerCarlson @FoxNews

Donald J. Trump@realDonaldTrump

I have asked Secretary of State @SecPompeo to closely study the South Africa land and farm seizures and expropriations and the large scale killing of farmers. “South African Government is now seizing land from white farmers.” @TuckerCarlson @FoxNews

Sent via Twitter for iPhone.

View original tweet.

Click here to read a backgrounder about the land debate in South Africa

The rand slumped as much as 1.9 percent against the dollar and was 0.8 percent weaker at 14.2768 by 11:51 a.m. in Johannesburg. Yields on benchmark 2026 government bonds rose 3 basis points to 8.96 percent.

“Emerging-market currencies in general have been under downward pressure since early morning in Asia amid a rebound in the dollar and Trump's tweet further added pressure on the South African currency,” Hironori Sannami, an emerging-market currency trader at Mizuho Bank.

Trump's tweet about a region that has never been on his radar suggested a distraction tactic: This week, his former campaign chairman, Paul Manafort, was convicted in a federal court of tax and bank fraud, and his one-time lawyer, Michael Cohen, pleaded guilty to campaign-finance crimes.

Embassy Meeting

South African President Cyril Ramaphosa -- who took office after his predecessor, Jacob Zuma, was forced out amid a whirlwind of corruption investigations and scandals -- has embraced land seizures without compensation as a means to achieve equality and racial justice -- and as the ruling African National Congress faces growing opposition before elections in 2018. The state hasn't taken any property yet, and a planned amendment to the constitution is still work in progress.

South Africa's Department of International Relations and Cooperation said it will meet with the U.S. embassy Thursday “to seek clarification on the matter.” Trump's comments were “unfortunate” and based on false information, it said in a statement. The government earlier tweeted that it “totally rejects this narrow perception which only seeks to divide our nation.”

Claims that white farmers are facing an onslaught are “far from the truth” and shouldn't be used to distort the government's land-reform measures, South African Deputy President David Mabuza told farmers at a meeting near Bela Bela, in Limpopo province north of Johannesburg on Thursday. Land restitution “will be done within the confines of our constitutional framework,” he said.

Racial Lines

Communications Minister Nomvula Mokonyane said the ongoing land-reform process was aimed at bolstering agriculture and shouldn't impact on trade deals, and that Trump's tweet hasn't affected South Africa's current or future relationship with the U.S.

“It is unfortunate that the first citizen of the U.S. can just say we have changed our constitution,” she told reporters in Cape Town.

White farmers own almost three-quarters of South Africa's agricultural land, according to an audit by farmers' lobby group Agri SA published last year. Access to land is one of the symbols of inequality in the nation of about 56 million where wealth and poverty are largely divided along racial lines.

South Africa's high crime rate has affected rural areas, with some farmers killed in attacks. Statistics released in May by Agri SA found that farm murders decreased to 47 in the 12 months through March, less than one-third of the highs in the late-1990s, although other groups argue attacks have recently increased.

In February, lawmakers began a process to change the constitution to allow for expropriation without compensation.

Ramaphosa told lawmakers in Cape Town on Wednesday that land reform would be done in an orderly fashion and individual property rights will be strengthened. The planned constitutional amendments will provide greater certainty to both those who want and own land, and promote growth, stability and food production, he said.

--With assistance from Rene Vollgraaff, Sam Mkokeli and Yumi Teso.

To contact the reporters on this story: John Harney in Washington at jharney2@bloomberg.net;Colleen Goko in Johannesburg at cgoko2@bloomberg.net

To contact the editors responsible for this story: Michael Shepard at mshepard7@bloomberg.net, ;Antony Sguazzin at asguazzin@bloomberg.net, ;Karl Maier at kmaier2@bloomberg.net, Paul Richardson, John Viljoen

©2018 Bloomberg L.P.

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