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South Africa's Political Contradiction

Summary

South African President Thabo Mbeki's economic policies are coming
under fire - from his own party, the African National Congress.
Under pressure from a slow economy and upcoming elections, Mbeki
will likely retreat from his market-oriented stance. But a larger
issue remains - the deep ideological divide that may split the
African National Congress.

Analysis

Opposition is increasing to the market-oriented economic policies
of South African President Thabo Mbeki. But the resistance is
coming from the ruling African National Congress (ANC) - Mbeki's
own party. The ANC's general council met last week for a mid-term
soul-searching session and emerged with plans to wrest control from
the government's bureaucrats and technocrats, and therefore
increase its influence over economic policy. Facing a struggling
economy and eroding party, the ANC will likely force Mbeki to back
away from his free-market economic stance.

The African National Congress has been the dominant political force
in South Africa since the abolition of apartheid in 1991. It
controls just less than two-thirds of the seats in parliament and
has produced the last two presidents. Often called "The Party of
Mandela" the ANC has essentially run South Africa's government
since 1994.

But times are tough for the party. Its paid membership is down 50
percent from five years ago, local branches are beset with scandal,
and - by Mbeki's own admission - the party is becoming increasingly
alienated from voters. Bad news, since the party faces local
elections in November.
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The crisis within the ANC is occurring in the midst of South
Africa's continued economic malaise. The country is in the fourth
year of an economic program designed to encourage foreign
investment and stabilize South Africa's economy. The GEAR (Growth,
Employment, and Redistribution) policy has decreased government
spending, reduced inflation, cut tariffs and trimmed the national
debt. But it hasn't made things better for the average worker. In
fact, more than half a million jobs have been eliminated in the
last decade. South Africa's GDP is growing, but slowly, at about 3
percent this year. Unemployment is around 30 percent, and the
poverty rate is nearly double that.

The tough economic medicine prescribed by the government has always
been hard for ANC party leaders to accept. It spent most of the
apartheid years as a socialist political organization - and had
economic notions to match. Many of its top leadership were even
educated in Moscow. This ambivalence is reinforced by the ANC
political alliance with the South African Communist Party and the
Congress of South African Trade Unions (Cosatu) - South Africa's
powerful labor union. Both of these groups want the government to
focus on job creation and social spending, not investor climate.

Thus South Africa's political contradiction - technocrats,
appointed by the ANC, have overruled the ruling party's ideas about
economics.

But the ANC has begun reasserting itself against the technocrats.
It backed a Cosatu-organized national strike May 10 - a strike that
protested against job losses from the government's economic
program. In essence, the ruling party endorsed a protest against
the policies of its own government.
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For more on South Africa, see:
http://www.stratfor.com/MEAF/countries/SouthAfrica/default.htm
__________________________________________________________________

Besides pushing the government from the outside, the ANC has
apparently decided to increase its hold over the government from
the inside. In fact, this was a specific policy decision announced
by ANC Secretary-General Kgalema Motlanthe after last week's
council meeting, according to the Mail and Guardian, a South
African daily.

The party will apply pressure in at least two ways. It is setting
up a policy institute to breed ideas, stimulate debate and develop
talent - a small step, but useful in the long term. The ANC also
has plans to "redeploy" senior politicians, including Cabinet
ministers, from their current positions and into local governments.
Although touted as a means to revive the party at the grassroots,
the move smells like a purge.

President Mbeki is a pragmatist and will likely compromise under
concentrated pressure from his own party. He might be forced to
give up his hope for tax-free zones for foreign manufacturers, or
at least trade it for increased social spending and job creation.
In any event, South Africa's economic policy will shift away from
the free market doctrine it has embraced.

But a larger problem exists in the longer term. A fundamental
division exists within the ANC between free-traders, who occupy
many top government posts, and old socialists, who carry much
weight with the rank-and-file. This division is deep, ideological,
and unlikely to be bridged easily. It may be enough to split the
ANC.
_______________________________________________________________

For more on the Middle East & Africa, see:
http://www.stratfor.com/MEAF/default.htm
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