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One Size Fits None—U.S. Reform Dilemmas in South Africa

One reform to fix them all. What could be more ideal than this? Unfortunately, such a dream will forever lie beyond the reach of policymakers. The potential reality of the matter is that each problem is the unique culmination of various challenges and difficulties, which in turn requires an equally unique solution for true resolution.

USAID Visual Identity with Logo and Brandmark (2004) U.S. Government | Wikimedia
USAID Visual Identity with Logo and Brandmark (2004) U.S. Government | Wikimedia

In this “moment” in U.S. diplomatic history, we see that this is particularly evident in the case of South Africa towards the end of the twentieth century, an area that Robert S. Brent worked on very closely during the early stages of his career with the U.S. Agency for International Development (USAID). Even on the matter of apartheid, Brent witnessed the dissonances of domestic opinions tear Assistant Secretary Chester Crocker apart as his policy of constructivist engagement was repeatedly challenged on both sides of the political spectrum.

On the other hand, and perhaps more importantly, were the perceptions of policy when it came to subsequent economic reform. Indeed, although Brent spent a significant amount of time reflecting on the applicability of the East Asian model of economic reform, the closest that USAID ever got was encouraging private sector development; even though such policy worked well in Korea, Taiwan, and Japan before, there was resistance from South Africa. Not only because the host country officials did not want to follow such a route, but also—as Brent describes in detail—the prerequisite conditions did not necessarily match such an approach well enough to be truly effective. At one point, Brent finds himself asking, “What is the role of foreign aid?” But based on his experiences, perhaps we should be asking ourselves a different question: “Does our infrastructure have ample flexibility to successfully address any dilemma?”

Prior to joining USAID in 1986, Brent served in the U.S. Navy for six years. He has additionally worked in Egypt as a USAID Human Resources Associate Mission Director, as well as in the United States as the Director of the Center for Development Information and Evaluation at USAID. Following his retirement from the organization, Brent has taken up a position as a Professor at the National Defense University in Washington D.C. teaching Chinese Economics.

Robert Stephen Brent’s interview was conducted by Carol Peasley on July 9, 2018.

Read Robert Stephen Brent’s full oral history HERE.

Drafted by: Will Shao

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Excerpts:

“And the main conclusion I came away with was: they are willing to liberalize within limits, but they are absolutely not going to accept a full (or close to full) political transition.”

Domestic Conflicts: As the Chair of the Africa Subcommittee of the Foreign Relations Committee, Senator Kassebaum thought something might be coming. She wanted somebody to complement Phil Christensen, who was the committee staffer. So, I was hired on her personal staff, but focused almost totally on Africa issues. In the summer of ’86, Soweto blew up and South Africa was on the TVs in the U.S. That summer, South Africa was a main issue in the public and on the Hill.

Q: In the beginning of the Reagan Administration, Chester Crocker was the Assistant Secretary for Africa at State Department, and the policy was constructive engagement.

BRENT: Yes. Chet’s policy was constructive engagement. The idea was: the best way to get change was to work with the National Party-led government and try to encourage their reformism. That was Chet’s domestic thesis, but he was also trying to do a Kissinger-style negotiated settlement in Namibia and Mozambique at the same time. It took him his full term to get a settlement in Namibia. Senator Kassebaum had been supporting him in that effort. It took a long time, but finally happened.

Q: So, the regional dimension actually really added to the complexity of any policy towards South Africa.

BRENT: The State Department was actually, in the shorter run, more focused on stabilizing the region. It was events in South Africa that thrust the domestic issues there to the fore. But otherwise, Chet was more focused on regional settlements. The Administration wanted to get the Cubans out of Angola.
Q: Right. And then Mozambique had Samora Machel—

BRENT: Yes, Machel. Chet was trying his best in both Mozambique and Angola. But on these issues, conservative Republicans were killing him for not being hard enough on supporting so-called freedom fighters.

Q: Right. But when we’re looking at it objectively, our policies in Angola and Mozambique were sort of 180 degrees different from one another. In one, we supported Machel, who was a socialist. And then we supported Savimbi, but the conservatives probably weren’t happy with this.

BRENT: They wanted a stronger anticommunist position across the board. So, Chet was caught in that. His whole thesis of constructive engagement had been about internal South Africa issues, but he took a lot of flak over the regional issues. When South Africa blew up, he got even more flak, this time from the liberal side. The internal South Africa issue functioned on the belief that incremental change would work. That view took a bit hit in the summer of ’86, when President P.W. Botha—and I can still remember this, I was in Senator Kassebaum’s office, we were all sitting there watching the TV—said, “we will never cross the Rubicon.”

We looked at each other and said, “Okay, that’s where he is. Now where are we going to be?” This seemed to pull the feet out from under constructive engagement. I had come to that same personal conclusion a couple of years earlier when I visited South Africa as part of my academic work; I had a grant from the Ford Foundation that paid for a month-long trip out there. And the main conclusion I came away with was: they are willing to liberalize within limits, but they are absolutely not going to accept a full (or close to full) political transition.

Q: Did your thesis also come to that conclusion as well?

BRENT: I had the conclusion that they were not going to accept big political change, but I did not go so far as to advocate full sanctions—I said the threat of sanctions was going to have to play a central role. I sort of waffled, because the politics of sanctions were quite sensitive at this time. You had a Reagan administration that was completely against anything that put pressure on the National Party.
So, we had an Administration that didn’t want to do anything and was even to the right of Chet on internal South Africa issues. Then, you had the Democrats that wanted to implement full sanctions, and a few liberal Republicans like Senator Matthias who agreed. But when Kassebaum shifted, that turned out to be a big deal, because she had been in the center and had good credibility. She shifted incrementally, only supporting a limit on new investment, but it was a sanction and that was what counted. Very shortly thereafter, Senator Lugar, Chairman of the full SFRC, went even further and supported broader economic pressures. This shift of the Republican moderates is what altered the balance of power in the Senate and allowed the Comprehensive Anti-Apartheid Act to be passed overwhelmingly.

“In my view, economic reform is a fine thing, but it’s not the way countries make essential changes. They make essential changes by committing to a growth path, and reforms are a means to that end.”

Former U.S. Senator Nancy Kassebaum (2014) Americus55 | Wikimedia
Former U.S. Senator Nancy Kassebaum (2014) Americus55 | Wikimedia

The “Winners” Take it All: Sam and I went to Africa for a visit to look at private sector development, and I wrote Scott a paper, which was the first time I began to articulate these ideas of the East Asian model—Korea, Taiwan, etc. I read into the literature and didn’t fully understand it, but began to sense that it was not the conventional wisdom. I dove into East Asian economics—how did the Tigers do what they did. It wasn’t democracy—these were not democracies in the short run. It wasn’t really classic economic reform, although that was the way some people perceived it.

It turned out their economic policies were business oriented, but not ideal from the perspective of neoliberal economics. The governments were much more interventionary than the Western model. It also wasn’t quite the same as private sector development, which is another theme that took off about this same time along with democracy. None of that really explained Korea, which was more about industrial policies and export-led growth.

We never really found a way to integrate this into USAID programs. The closest we came was support for private sector development, which to this day tends to be a theme that Republicans embrace. Private sector development is related, but it’s not the same thing as East Asian development states and neo-mercantilist promotion of manufactured exports, à la Korea or Taiwan. That was really the model, and people had trouble understanding it. The World Bank misinterpreted it systematically, and wrote an ill-informed report in 1993 that said it was all free market reforms, which it wasn’t.

Q: Yeah. It was much more industrial policy. People were a bit resistant to the concept of industrial policy—

BRENT: Yes, very unpopular at the time and still unpopular.

Q: —and trying to pick winners and losers.

BRENT: Yes, exactly. Americans, and particularly conservatives, hate the idea of industrial policy. But the USG supported it in Korea and Taiwan, and those two countries are the cases that get cited as great USAID successes. How you square this whole thing has been an ongoing issue in my mind ever since, and in the last five years, I have become obsessed with how this is working in China.

. . .

There was an attempt to rank countries by how well they looked in terms of quality of their economic policies. One of the things I remember was that David Gordon, who was in the field, didn’t agree with Washington’s rankings. He thought they got some of the countries wrong.

Q: David was the democracy/governance adviser—

BRENT: He was an adviser in Kenya, and he was running all over East and Southern Africa assessing where these countries stand in terms of political economy. And he said, “I don’t like your numbers. You people might think that this is the number one country, but that’s not how I see it.” But this question of what is a “good” country continues: from an East Asian perspective, some of the more promising countries might be Rwanda and Ethiopia. Rwanda doesn’t pass anybody’s indicators; it’s not an MCC [Millennium Challenge Corporation] country, but there’s a little bit of East Asia planted down there. So, this debate has gone on and on and on: what criteria do you use? What is a good performer?
Now, in theory, a good performer should be somebody that’s growing fast with equity, right? No, a good performer is somebody that scores well on the indicators we give them. We rank them, and we tell them whether they’re a good performer or not. And you can do that, but does your model suggest that they are suddenly going to become good institutions in absolute terms? Of course not. So that’s the dilemma, and that tension still exists in the Millennium Challenge Account, which defines good performers very explicitly in terms of input indicators.

In my view, economic reform is a fine thing, but it’s not the way countries make essential changes. They make essential changes by committing to a growth path, and reforms are a means to that end. We seem to want people to become perfect reform cases first and then expect that somehow business development just happens. It’s very Adam Smith— all that is requisite is peace, easy taxes, and a tolerable administration of justice. All else follows naturally. Business development, however, does not happen naturally; governments have to help build it.

Q: You talked about the debates within USAID on these issues. Are you aware of countries themselves having that debate? Or of cases where the U.S. has tried to foster that debate, to support it, and to encourage countries to come to their own conclusions on this?

BRENT: This gets into the essence of the model. Part of the East Asian model is land reform. The reason land reform is so important is that you have to break the back of the elite landowners—which the Philippines has never done, but Korea, Taiwan, and Japan did. Now students argue that that was due to very special historical circumstances: Japan’s land reform was pressed by the United States; Korea’s was partly the same thing; and Taiwan had its own dynamics with the people coming over from China. But the point is that there are political prerequisites. The government has to free itself from the old elites and be willing to support new industrial development policies. But let’s just take one second on this idea of picking winners.

General Park did not pick winners. General Park gave subsidies to all companies that met export quotas, and if they didn’t, he cut them off. He was using an export market test, and his strength was that he was willing to cut you off for non-performance. He was also willing to make big investments. But it’s hard to go to El Salvador and say, “You know, what would it take for you to do a Korea?” I brought this up with the South Africans when I was there, with ANC people, and they said, “We don’t want to do an East Asian low-wage strategy here. We want to make this economy work for black South Africans.” I said, “Okay, but you’re going to have a lot of unemployment.” So yeah, it’s talked about, but it’s kind of a thing where you either have to go full bore or you don’t go at all.

And most countries don’t go at all because they’re somewhere like the Philippines: they can never overthrow the elites. Different leaders come in, and who stays? The landowning elites. Never changes, hard to get business going. The Philippines started as the richest country in the region; now it’s in the middle of the pack, and these other ones have taken off. So, it is a hard prescription to apply. It’s certainly not one that can be pushed in from outside, and it’s very hard to tell when a country is on a course to do that.

“We should have set up and given money to the Wits public policy program, and maybe had a long-term linkage with the Harvard Business School and/or the Kennedy School.”

Flag of South Africa (1994) | Wikimedia
Flag of South Africa (1994) | Wikimedia

The Achilles Heel: What somebody should have done is probably bring in some outside economists to help them figure out their economic policy, because that ended up being their Achilles’ heel. Trevor Manuel was a great guy, did everything a finance minister can do. But they could have used help on basic economic, business policy and trade. It would have been hard to do: you’d have to have had the ambassador and everybody else involved; you would have had to bring in some big names. It didn’t occur to me. I did talk to people about a growth path for South Africa, but not at a senior level.
I wrote an article in Foreign Affairs called “South Africa: Tough Road to Prosperity,” which laid out an East Asia argument for South Africa, suggesting they follow policies similar to what Malaysia had done (combining growth with affirmative action for the bumiputra).

Q: When did you do that? Was that during that period?

BRENT: That was 1996. I published it while I was over there. Wayne Fredericks helped me get it considered. I said, “Look, Malaysia had a problem with a suppressed majority population. This is what they did. This is how you could apply that model to South Africa.” In hindsight, if I had it to do again, I would have tried to do something bigger on this issue.

Q: This would have been something for a Gore-Mbeki Commission to have focused on, as opposed to having all those environmental stuff.

BRENT: Yes, we could have done that. We could have gotten them some top economic advisors and said, “You guys come over here, and you’re going to go back and forth for two years. You’re going to do work for these people and give them some proposals. You’re going to become their technical advisors.”
Q: You know, it’s interesting because, in a sense, Steve Radelet played that role in Liberia with Ellen Johnson Sirleaf. He did a little bit in Malawi with Joyce Banda as well, but in South Africa we didn’t even attempt that.

BRENT: Could have been Radelet, but we didn’t think of that. This is part of the thing: AID runs programs in bureaucratic boxes. It’s hard to step back and look at the big picture. Mission Directors have 9,000 things they’re trying to deal with.

Q: It’s more of a Washington thing, I think. I remember when Cap came in with the new country strategy, just before Aaron was going out as the mission director. Aaron sat in on the meetings in Washington and the only issue I remember that we pushed the mission on, with that strategy, was HIV and AIDs. Because we said, “You’re not paying enough attention to it.” We were right to push on that, but we should have been pushing more broadly.

BRENT: We should have pushed on two things, Carol. We should have set up and given money to the Wits public policy program, and maybe had a long-term linkage with the Harvard Business School and/or the Kennedy School. Get them an on-going source of technical expertise, while doing the consulting on shorter-term industrial and employment policies. Those kinds of things might have made a big difference.

Q: I was just reading something the other day and I don’t know if it was true or not, but in Korea, the Korea Institute of Science and Technology—one of the ideas in creating it was to attract back Koreans who were working in the United States.

BRENT: That would have been another thing we could have done. In fact, I’m trying to think… There were some South Africans at the World Bank. Probably others in academia or business in various countries. Helping to bring some of the South Africans back could also have helped a lot.
Q: I think it’s important to step back, because there’s never going to be a South Africa situation again. But even in post conflict situations where increasingly AID is involved, it’s important to step back and think of these bigger issues that tend to not be addressed.

TABLE OF CONTENTS HIGHLIGHTS

Education
BA in Economics, Duke University ~1965–1969
U.S. Navy ~1970–1976
Ph.D in Public Policy, Harvard University 1978–1985
Joined USAID 1986
Washington, D.C.—USAID Africa Bureau 1986–1992
South Africa—USAID 1992–1999
Washington, D.C.—USAID, Director of Center for Development, Information, and Evaluation 2003–2006