Alliance under pressure
Just a couple of months into his
presidency, Thabo Mbeki is facing a crisis over job losses and
associated labour unrest. Suddenly the whole direction of the economy
and the ANC’s alliance with the South African Communist Party (SACP)
and the Congress of South African Trade Union (Cosatu) is on the line.
The news that a summit of the ANC and its alliance partners, scheduled
for earlier this month, has been postponed indefinitely, is a sign of
the strain the alliance is under.
Having failed to shore up the gold price with appeals to the
left-of-centre governments and trade unions of Britain, France and
Germany, Mbeki’s options are all extremely tough, particularly since he
is committed to a programme of privatisation which, initially at least,
is bound to result in further job losses. Already the SACP leader,
Blade Nzimande, has demanded an immediate moratorium on all
retrenchments to stop the “job loss blood bath”, a stand supported by
Cosatu’s acting general secretary, Zwelenzima Vavi (also an SACP
member).
The July/August issue of the SACP’s paper, Umsebenzi is demanding “an
aggressive state-led developmental programme”. It wants to see the
market rolled back, state subsidies extended and an acceptance that
“capitalism constitutes one of the biggest threats to our fledgling
democracy”. Democracy and social advance, it warns, are “threatened by
the dominance of the profit motive and the fact that the bulk of the
wealth of this country still remains in private hands.” In order to
push through this advance towards socialism the SACP must strengthen
its presence at mass level by taking up “the key question of jobs,
focusing on job creation, fighting retrenchments, seeking
worker-friendly labour market reforms”.
“The very forces that voted for the ANC — notably the working class,
the urban and rural poor — need to be mobilised at the centre of the
transformation process”. One need look no further for an explanation of
the current wave of strikes, marches and protests. Irrespective of the
rationality or otherwise of particular wage or job demands, the SACP
and Cosatu are attempting to position themselves, as Umsebenzi puts it,
“to play an effective role in the acceleration of change”. Or, to put
it another way, to try to ensure that they achieve a virtual necklock
on the new government, exercising maximum pressure for the adoption of
its programme right along the line.
Mbeki does not wish to accept this agenda, but neither does he wish to
reject it outright at this point. So his first option is to give in to
union pressure and attempt to save jobs by increasing state subsidies
to loss-making industries. Given the key role the SACP and Cosatu
played in securing his election victory last month this option cannot
be dismissed but it would leave his economic policy in ruins. It would
also make nonsense of his exhortations to the Organisation of African
Unity that Africa must adapt itself to the global marketplace. But if
he takes the second option, bites the bullet and accepts the job
losses, the political damage will be severe and could exercise
intolerable strains on the ANC alliance. Mbeki is carefully saying
absolutely nothing about which way he will jump: this will have to be
gradually deconstructed and decoded over time.
The probability is that the president will attempt to fudge the
choice. He will try to save some jobs here and there, deflecting
pressures by the cunning use of patronage wherever he can and trying in
what public utterances he makes to balance the different wings of the
movement in the general cause of maintaining its unity. The decision to
demonise the Democratic Party by labelling it “neo-Nazi” and
“neo-fascist” in part derives from this need for unity. All sections of
the ANC can enjoy this new form of blood sport, thus providing a
bonding experience at a time when real unity is under unparalleled
pressure.
Mbeki’s third option is to cut interest rates sharply producing a
devaluation of the Rand. Devaluation reduces mine costs in dollar terms
and can thus restore mines to profitability at a stroke. However it
will not prevent job losses in textiles, the railways or the civil
service and it can hardly be seen as a long-run solution. And the fact
that the Rand has already fallen by half in the ANC’s first five years
weighs heavily upon the government and Mbeki is known to want a
stronger currency. Lower interest rates would also make South Africa a
far less attractive place in which to park short-term hot money and a
gaping hole will open up in the current account balance — unless a far
greater amount of direct foreign investment can be secured.
A strong flow of inward investment is the one factor that could waft
away all these problems. The great miscalculation of the Mandela years
was the idea that this could be achieved simply by sending the great
man abroad to ask for it. “The more I heard him say we deserve your
money”, one major foreign investor confided, “the more I knew that he
simply didn’t understand capitalism. Mandela’s a fine man but I don’t
invest in countries like that.” Secondly, Mbeki and Mandela seem to
have believed that simply by announcing Gear in 1996 they could turn on
the investment tap. But in practice the market wants deeds not
words.
And this is the nub of the matter. The market is demanding not just
that the government moves briskly ahead with privatisation, abolishes
exchange controls and repeals the crazy labour laws, though that would
be a good start. In addition, strong measures have to be taken to stop
the brain drain — indeed to reverse it — and to make it as easy as
possible for highly skilled foreigners to settle here. If Mbeki is to
win the holy grail of large-scale foreign investment he not only has to
junk a large part of his programme but he is going to have to do it up
front and publicly, slamming hard into those parts of the alliance
which want to stop him. It cannot be done by stealth.