March 27, 2010

World Cup Knock-Out

South Africa to score big public debt in 2010

by Rachel Elfenbein

The Dominion - http://www.dominionpaper.ca

Former South African President Thabo Mbeki wrote in his country’s 2004 bid to host the 2010 World Cup: “We want to ensure that one day, historians will reflect upon the 2010 World Cup as a moment when Africa stood tall and resolutely turned the tide on poverty and conflict.” Contrary to Mbeki’s professed aim of unity and economic development, it seems the legacy of the 2010 World Cup in South Africa will be limited to a handful of multinational and national corporations making massive profits on the backs of a reserve army of labour and through the generation of massive public debt.

Who pays for a World Cup in South Africa? image by Laura Alvarez

VANCOUVER—While Canadian protesters throughout the 2010 Winter Olympic Games organized around the call, “Homes, Not Games!”, the same slogan could be shouted at the opposite end of the world, where this year South Africa will also be hosting a sport mega-event: the 2010 soccer World Cup.

In South Africa, over 13 per cent of the population lives in makeshift housing. In 2008—the year the food, energy, and financial crises simultaneously rocked the country—the rates of makeshift housing rose.

Twenty-nine per cent of the population of South Africa cannot afford to pay for water and almost eight per cent of households use bucket toilets, an apartheid leftover that successive democratic national governments have both pledged and failed to eradicate as an issue of immediate concern. According to Eddie Cottle, Coordinator of the Campaign for Decent Work Toward and Beyond 2010 in South Africa, the amount of South African public money being spent by the government on World Cup preparations “is equivalent to the amount the state spent on housing delivery over a ten-year period.”

Around the globe, the rhetoric employed by government leaders to exalt the potential of sport mega-events bears striking similarities. On October 30, 2009, British Columbia Premier Gordon Campbell announced at the Olympic Torch Relay Celebration that “the Olympics bring us together.” In South Africa, the government has announced that the World Cup is an unprecedented “unique opportunity” to build “unity and pride amongst South Africans.” Not only do South African government leaders present the World Cup as an opportunity to unite South Africans but also to unite and develop the African continent as a whole and “celebrate Africa’s humanity.”

UN Secretary General Ban-Ki Moon stated the South African World Cup is a “time to present a different story of the African continent, a story of peace, democracy and investment.” His statement was met by a unanimous resolution passed in the UN General Assembly to endorse the World Cup in South Africa as a “platform for social development and peace across the African continent.”

Are these mega-sporting events really opportunities to bridge divides and build unity amongst citizens within and across nations?

For a country like South Africa, which is not only adjusting to globalization, but also dealing with massive socio-economic inequalities and ideological differences around issues of gender, race, class, and culture produced by the combined legacy of colonialism and apartheid, what impact can South Africa expect from hosting the World Cup?

As Cottle points out, the costs of sport mega-event infrastructure, such as stadia, are substantially higher in countries of the Global South than countries of the Global North, where the infrastructure to host these events is already in place. On its World Cup in 1994, the US spent less than US $30 million (US $50 million today). France spent less than US $500 million in 1998, and South Korea spent US $2 billion in 2002. The South African government will be spending at least US $4.1 billion by the end of the World Cup. Since 2004, when South Africa won the bid to host the World Cup, the cost to the South African public of building the stadia (and the necessary electricity, communications, roads, parking, water and sanitation infrastructure) to host the event—the most expensive item in the public’s World Cup expenditure—increased by over 750 per cent from the original budget.

Danny Jordaan, CEO of the South African World Cup Local Organizing Committee, claims the benefits of spending this $4.1 billion in public money will trickle down to South Africans through job creation and the development of public infrastructure.

While World Cup construction has created 22,000 jobs, 70-80 per cent of these jobs are subcontracted positions typically lasting three months. Building and Wood Workers International (BWI) research uncovered construction workers working for as little as US $1 per hour. The net wages of an average construction worker in 2008 was approximately US $2 per hour.

As Maytome Tachi, a construction worker at Ellis Park Stadium in Johannesburg notes: “the World Cup creates jobs, but not better working conditions.” Two construction workers have lost their lives at World Cup construction sites. Workers at one of the hallmark sites, Moses Mabhida Stadium in Durban, embarked on an 11-day strike in 2007 in part due to unsafe working conditions.

The Durban strike was not unique. Throughout South Africa, World Cup stadia have been plagued not only by poor working conditions; they have also been sites of resistance for workers and their organizations, who have organized 26 strikes throughout the country since World Cup construction began. In July 2009, 70,000 workers embarked on a national strike—the first of its kind in a fragmented sector represented by different labour organizations—to demand a 13 per cent wage increase. In the end, because of inflation rates of 10-15 per cent, the subsequent agreement of 12 per cent did not amount to a substantial increase, let alone a living wage for the average construction worker.

If workers on World Cup projects are struggling to make a living and taxpayers are footing the cost of an ever-expanding bill, who is benefiting from this massive public expenditure?

According to BWI, “construction company annual reports for 2009 indicate mega-profits being made despite the downturn taking place internationally and in the local economy.” The largest South African construction companies report before-tax profits of 58 to 142 per cent. The average CEO of such a company contracted for the World Cup earns around 245 times the income of the average construction worker.

Whereas South African construction companies have been forced to address workers’ demands to a certain extent, as Cottle notes, Federation Internationale de Football Association (FIFA) is guaranteed to make money, regardless of what happens in labour disputes. Thus, the biggest winner from South Africa’s hosting of the World Cup appears not to be a South African business or shareholder, but FIFA. The South African government passed legislation in 2006 treating FIFA and its subsidiaries “as diplomatic missions” and thereby creating a “tax-free bubble” around all their economic activities. With its tax-exempt status and before the World Cup has even begun, FIFA has already reported profits of US $3.2 billion from the 2010 World Cup– the largest profit it has ever made in pre-Cup economic activities.

While FIFA repatriates record profits from the World Cup, construction companies have secured the largest international venue to showcase their world-class stadia and thereby future opportunities for expansion. The South African public, however, will be left footing the bill for World Cup-related costs incurred even after 2010. According to Cottle, there is no way the stadia will generate enough revenue to be self-sustaining. The costs of sustaining them will therefore be offloaded onto municipalities, many of which are already cash-strapped and resorting to increasing fees for public services such as water and electricity.

As a result of its World Cup expenditures and its loss in revenue due to the world economic crisis, the South African government recently announced it is entering into deficit spending and will be borrowing over US $1 billion from international financial institutions. Meanwhile, predicting that World Cup-related travel will not reach the levels originally anticipated, FIFA’s official accommodation agent recently relinquished its rights to around half a million bed nights it had reserved at local hotels. South African corporate analysts then warned that the once-projected massive boost to the South African economy from the World Cup will be “muted.”

As public resources are diverted toward select national and transnational corporations that are profiting from the World Cup being hosted in South Africa, the very same South African public that will be indebted because of the event has had to be mobilized in support of it. Government and big business secured public support for the World Cup by promising that public revenue generated from the event would far exceed the costs of hosting it, and that over 500,000 jobs would be created. To guarantee this continued support, the South African government has spent over US$2.5 million in events to “mobilize communities and create awareness and enthusiasm for the World Cup.” And while the government mobilizes communities in the name of nation-building and “psychological readiness” for the event, it is spending close to US$100 million in security equipment and deploying a dedicated police force of 41,000 officers to contain the same public during the event.

Thus, while the government states it will “leave nothing to chance in securing the event,” it leaves the security of its citizens to chance as it bequeaths them with debt, and millions remain in need of stable housing, water, sanitation, and safe, secure jobs.

On opposite sides of the globe, 2010 in both Canada and South Africa has shown that hosting mega-sport events is actually widening the gap between rich and poor in host countries. The unifying potential of sport is ideologically employed, obscuring class tensions that these mega events in fact reproduce and exacerbate.

Rachel Elfenbein is a PhD student at SFU and Chair of the Teaching Support Staff Union. Before moving to Canada, she conducted popular education and research with civil society organizations in southern Africa. An original version of this article was published by the Vancouver Media Co-op.

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