In relative respite for now, the markets should not think the local roiling is over. By this time next year Finance Minister Trevor Manuel will most likely not be in office. A proponent of globalisation and of market-based reforms to secure South Africa’s place in the world economy, he will face either implementing a set of policies to which he is implacably opposed or he will leave. My bet is on him leaving.
The October 17 economic policy summit is likely to form the backdrop to the next big fight in the ruling alliance. With the legal heat off ANC president Jacob Zuma and Thabo Mbeki out of office, the fire is now on Manuel. The pay-off for the left’s unstinting and powerful support for Zuma is a new set of economic policies, which it believes will unlock the ”better life for all” promised in 1994 — to deal more decisively with poverty and unemployment, which Manuel’s policies have failed to structurally alter. In fact, South Africa’s wealth gap has grown in the past 13 years as the middle classes have benefited because of superior skills and opportunities.
For poor South Africans life is still lived in the margins and, but for the grants system, things would be much worse. The conundrum has been hard for Manuel because his policies delivered the record-breaking revenues that enabled him to build the safety net that has kept the wolf from the door.
The left’s argument now is that the wolf must be slain and the doors opened. Since the victory in Polokwane Cosatu has been working on a series of policy plans likely to form the future of economic policy. It’s called ”Walking through doors”, a name that signals a wholesale policy shift is imminent as a new leadership plans its walk through the doors of the Union Buildings. This is despite the soothing promises of President Kgalema Motlanthe and of Zuma.
Someone’s lying about economic policy and chances are that it is the two men who must soothe the markets, which showed how ruthless they can be. Last week about R50-billion in wealth was wiped from the JSE in the hours following Manuel’s resignation before he explained that it was merely ”procedural”. They barely moved when Mbeki’s axing was announced. Watch them next year when the minister decides he cannot possibly be party to the economic populism likely to replace his fiscal sense and sensitivity.
The policies likely to be implemented are a blend of the redistributionist policies contained in the Reconstruction and Development Programme. We can expect a return to the ideologies of statism and nationalisation that have been given new impetus by the success of the pink tide in Latin America, where leaders such as Venezuelan President Hugo Chavez have returned them to centre stage. Of course, we have no oil to play Chavista games, but the South African Communist Party has put the nationalisation of Sasol and Mittal back on the agenda.
Why might the agenda work this time when it failed under the inaugural cabinet of founding president Nelson Mandela? The SACP is arguably stronger than at any other time in post-apartheid history; it’s enjoying a zenith it has not known since the Sixties.
As the Mail & Guardian reported, many MPs hold dual membership of the ANC and SACP and, freed from the control of Mbeki and his parliamentary acolytes, they are likely to be more assertive, starting this month when Manuel tables his medium-term budget policy statement. Previously, with Mbeki’s protection, Manuel sailed his budgets through Parliament’s calm seas. Watch on October 21 when he is likely to face stormy waters. Already, the left’s battering ram, Youth League president Julius Malema, has said it wants to see a more expansionist stance from Manuel. He didn’t say it because he doesn’t have to, but the clear subtext was: ”Or else —”
The street-fighting minister is not as malleable in the face of the Youth League’s threats as the top six leaders of the post-Polokwane ANC. But, as a supporter of business, Manuel will be hurt by the slate of policies on the left’s agenda if he has to implement them.
They will be welcomed by manufacturers and industries that require protection, including auto-assembly, clothing and textiles, and those who are struggling with South Africa’s accelerated integration into a global economy. In addition, there are proposals for state mining houses as well as banks and other parastatals. Manuel has for years fought off former public enterprises minister Alec Erwin’s penchant for publicly funded bling projects and he has battled protectionism.
But those with exposure, such as banks, multinationals and exporters, are not going to be happy with the protectionist ethic and tightened regulation portended by Cosatu and the communists’ policies. In general the policies likely to hold sway at the economic policy summit are deeply anti-globalisation, as are those of many of the world’s labour-led governments. Our left plans to erect tariff barriers to protect sunrise and sunset industries, to enhance labour laws (how they can get any better one can’t see) and to regulate or ”discipline capital” as union federation leader Zwelinzima Vavi so delicately put in on these pages last month.
Business is fooling itself if it believes that it will be business as usual come 2009. This week ANC secretary general Gwede Mantashe, who also chairs the SACP, told The Sunday Independent there would be continuity but there would also be change. There will be more change than continuity next year and, if that happens, Manuel is likely to resign not out of loyalty to Mbeki, as others have done in the past week, but out of principle. Someone best warn the markets.