Fears of Decline in Foreign Investment One Potential Reason Mbeki Resisted AIDS Emergency Declaration
The Washington Post reports in a front-page story today that South African President Thabo Mbeki's refusal yesterday to declare an AIDS national emergency, which would have enabled the government under World Trade Organization rules to "override" foreign AIDS drug patents in order to import or manufacture generic drugs, may have been prompted by fears that the move would "scare off needed foreign investment or raise questions about [the country's] commitment to free markets." Although the government passed the 1997 Medicines Control Act, which would allow the health minister to ignore drug patents to provide cheaper generic versions of the drugs, the law is "narrower in scope" than the WTO rule that "allows member countries to suspend patents in cases of extreme national urgency, without the patent-holders' consent." However, South Africa's law is being challenged in court by 39 pharmaceutical companies, which prompted the opposition party, labor unions and human rights and AIDS activists to ask the government to declare a state of emergency to avoid a "protracted legal ordeal."
A 'Difficult Balance'
The Post reports that "Mbeki and other government officials apparently fear that while invoking the WTO measure could alleviate the AIDS crisis, it could also worsen South Africa's broader social and economic woes by scaring away foreign investors just as the country is trying to catch up with a fast-moving global economy." If a national emergency provision were invoked, property rights in South Africa would be "temporarily suspended," raising concern among the country's business community over what type of signal that would send to foreign investors. According to the Post, foreign investment in South Africa declined by 50% last year; surveys show that foreign business executives often confuse the country with neighboring Zimbabwe, "where the government all but encourages black peasants to illegally occupy land owned by white farmers." South African officials expressed concern that declaring an emergency might "dry up investment altogether just as they are trying to right the economy following years of sanctions and mismanagement by the white-minority apartheid government." In addition, with South Africa's economy the "most robust ... of any country that is led by a mostly black government, Mbeki and other officials are sensitive to criticism -- real or imagined -- that they are not up to the job," the Post reports. "It really is a very difficult balance," South African Institute of International Affairs Executive Director Greg Mills said, adding, "On the one hand, we face a massive AIDS crisis. But on the other hand, if we declare a state of emergency, we run the risk of looking like another unstable player in an unstable region" (Jeter, Washington Post, 3/15).