US Halts Funding to South Africa Over Land-Expropriation Law
President Donald Trump has announced that the United States will cease all future funding to South Africa due to its recently passed land-expropriation law. The Rand currency has depreciated in response to the news.
Background
South African President Cyril Ramaphosa signed the law into effect last month, authorizing the state to acquire private land in the public interest, potentially without compensation. The law is not specifically targeted at addressing apartheid-era land disparities or seizing land from White individuals.
Trump's Criticism
Trump has previously criticized South Africa's land policy, and his influential billionaire supporter Elon Musk has disseminated unsubstantiated claims of a "genocide" against White farmers. In a post on his Truth Social platform, Trump stated, "South Africa is confiscating land, and treating certain classes of people VERY BADLY... I will be cutting off all future funding to South Africa until a full investigation of this situation has been completed!"
South Africa's Response
Ramaphosa refuted Trump's claims, emphasizing that South Africa has not confiscated any land. The foreign minister justified the new law by comparing it to eminent domain principles in the US and UK. He expressed confidence that Trump's advisors would gain a comprehensive understanding of South Africa's constitutional democracy.
Market Impact
The Rand weakened against the dollar following Trump's comments but later recovered some losses. The threat of tariffs against countries including South Africa also influenced emerging market currencies adversely.
US Aid and Trade
The US has provided over $8 billion in bilateral aid to South Africa over the past two decades, primarily for AIDS prevention and other development projects. South Africa is the second-largest US trading partner after China.
Political Analysis
South African political analyst Khaya Sithole believes that Trump either has not read the Expropriation Act or does not understand it. He asserts that South Africa has always had such a law but that it has not adequately addressed contemporary issues. The Democratic Alliance, the second-largest party in the coalition government, has deemed the act unconstitutional but has not yet challenged it in court.
Wider Implications
Trump's threat of economic punishment comes amid his December warning to the BRICS bloc (which includes South Africa) of a 100% tariff if they attempt to create a currency rivaling the US dollar. South Africa's chairmanship of the G20 this year could have impacted Trump's attendance if he were still president.