Trump Vows to Punish S. Africa Over Expropriation Law
(Bloomberg) -- President Donald Trump said the US would halt all future funding to South Africa because of its new land-expropriation law. The rand slumped.
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South African President Cyril Ramaphosa announced last month that he had signed a law that allows the state to seize private land in the public interest, in some cases without compensation. While the law isn’t aimed at addressing apartheid’s legacy or seizing land from White people, Trump has criticized Pretoria’s land policy before and his top billionaire backer — South African-born Elon Musk — has spread the baseless conspiracy theory that there’s a “genocide” against White farmers in the country.
“South Africa is confiscating land, and treating certain classes of people VERY BADLY,” Trump said in a post on his Truth Social platform on Sunday. “I will be cutting off all future funding to South Africa until a full investigation of this situation has been completed!”
South Africa hasn’t confiscated any land, Ramaphosa said in a statement on Monday. His foreign minister defended the new law, which he said is similar to the eminent domain principles in the US and the UK.
“We trust that President Trump’s advisers will utilize the investigative period to gain a comprehensive understanding of South Africa’s policies as a constitutional democracy,” International Relations and Cooperation Minister Ronald Lamola said by phone. “This will ensure a well-informed perspective that respects and acknowledges our nation’s commitment to democratic principles and governance.”
The rand weakened as much as 2% against the dollar after Trump’s comments, before recovering some losses to trade 1.5% weaker at 18.94 per dollar by 1:27 p.m. in Johannesburg. Trump following through with a threat to impose tariffs on countries including China and Mexico also weighed on emerging-market currencies.
“It is best to not be a country on Donald Trump’s mind,” said Andrew Dowse, a portfolio manager at Merchant West Investments Ltd. “The fact that we are already there is not good.”
The US provided more than $8 billion in bilateral aid to South Africa over the past two decades, according to a 2023 report from the Congressional Research Service, the nonpartisan office that advises Congress. Much of those funds went to fighting AIDS and other development projects, CRS said.
With the exception of disbursements that cover 17% of South Africa’s AIDS program, there is “no other significant funding that is provided by the United States in South Africa,” Ramaphosa said.
America is South Africa’s second-biggest trading partner, after China, with total trade of $23.7 billion in 2023, Bloomberg data shows. Some US lawmakers have called for a review of the two nations’ trade ties over South Africa’s increasingly close ties with China and its refusal to condemn Russia’s invasion of Ukraine.
The Expropriation Act replaces legislation from 1975 — the height of the apartheid era that resulted in vast racial wealth inequality that persists today. White South Africans still own almost three-quarters of farmland, while making up about only 7% of the population.
While Trump appears to have taken the view that the act is draconian, he either hasn’t read it or doesn’t understand it, said Khaya Sithole, an independent South African political analyst.
“South Africa’s obviously always had an expropriation act, but yet again, like most laws that predated apartheid, it hasn’t kept up with the time and with the type of issues that it ought to address,” he said.
The Democratic Alliance, the second-biggest party in South Africa’s coalition government, has argued the Expropriation Act is unconstitutional and will undermine property rights because of the clause that provides for the government to seize land without paying for it in certain instances. It hasn’t challenged the policy in court.
Trump has also threatened South Africa with other economic punishment. The country is the ‘S’ in the BRICS bloc of nations, which Trump in December threatened with a 100% tariff if the group seeks to establish a rival currency to the US dollar.
During his first term, Trump asked then-Secretary of State Mike Pompeo to study land seizures and expropriation in the country, claiming without evidence that there was “large scale killing of farmers.”
South Africa holds the chairmanship of the Group of 20 this year and Trump, as US president, would be expected to attend.
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(Corrects attribution in seventh paragraph of story originally published on Feb. 3.)
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