Stanley Uys has set the political scene for Zuma to consider his options (see here). George Palmer finds he only has one

The Zuma-led ANC alliance, now in power for six months, still has not enunciated a clearly different macro-economic policy for South Africa from the orthodox one followed by an otherwise discredited Mbeki regime.

Despite his long previous attachment to the SACP, Mbeki supported a broadly orthodox macro-economic approach, ably guided by Trevor Manuel at Finance and Tito Mbweni at the Reserve Bank: fiscal prudence; an inflation-targeting monetary policy; and GDP growth at a sustainable rate in a private-enterprise friendly environment.

In the global trade arena Mbeki favoured, with a few exceptions, continuation of a WTO-negotiated free-trade regime and the widely-supported scaling-down of trade barriers as part of a multilateral market-opening bargaining process.

By and large the corporate sector prospered under Mbeki & Co while Black entrepreneurs prospered mightily. Then in December 2007 at Polokwane came an epic struggle for ANC leadership. Mbeki was unseated by Jacob Zuma's supporters and was subsequently ejected from the presidency. Strongly backed by Cosatu and the SACP Zuma ascended to the presidency.

To ensure it won the general election by a wide margin the ANC promised a gullible --- and massively-unemployed electorate the earth.

For its part, the SACP advocated a radical shift leftwards towards greater central planning of the economy that would side-line the private sector. Its ultimate goal: a Soviet-style "hegemony of the working class".

In the face of a fast deteriorating economy and still rising unemployment, there is growing dissention among the faithful, widespread voter unhappiness, and as Stanley Uys observes, a mixture of hope and despair. Clearly the time has come for real politic. Going forward the ANC's previous strategy of being all things to all men badly needs replacing with clarity and candour because the ANC's super-charged election rhetoric and promise of "national transformation" have created a credibility gap that is rapidly undermining public confidence. So what are Zuma's options?

Option One: Demonstrate leadership! Communicate! Come Clean! And tell the truth!

After all, to secure an unquestioned majority, the ANC-SAPC-COSATU Alliance promised:

• To create 4 million job opportunities by 2014. And not only more jobs, but better ones. Then in his first major address to Parliament on June 3 Zuma told MPs that "the initial target of one million jobs has been achieved". Really? Zuma went on to say that between now and Christmas "we plan to create about 500,000 job opportunities". Incredible! Right now more jobs are being lost than created.
• Introduce a national health service.
• Make much-needed improvements in the delivery of essential public services including fixing deteriorating and health-endangering drinking water supplies especially in rural areas;
• Solve Eskom's on-again/off-again power supply problem
• Achieve a significant reduction in South Africa's horrendous crime rate
• Address the appalling AIDS epidemic inherited from Mbeki whose AID-denialism is estimated to have cost the lives of 365,000 South Africans between 1999 and 2005
• Implement a programme for stemming the alarming exit of underpaid doctors from the country's public hospitals whose patients are already at the mercy of under-trained and under-qualified nurses
• And, above all, ensure a more equitable distribution of wealth and income.

So Zuma urgently needs to level with the South African public and explain that:

• The country is entering a prolonged period of austerity that is unavoidable
• All election promises are therefore off the table for now except for essential outlays on improving health and education
• The government has no choice but to prune spending and reassess priorities in line with lower tax revenues. Covering bigger fiscal deficits by borrowing should be avoided because debts have to be serviced and interest obligations can be become a burden on future generations.

As far as monetary policy is concerned Zuma has made a good start by selecting Gill Marcus to succeed Mboweni when he exits the Reserve Bank in October. The worst thing for price stability would have been to yield to COSATU pressure to end inflation-targeting as the Bank's primary objective.

Zuma also needs to make it clear to Cosatu's leaders - and to trade unions generally - that the economy can only safely absorb modest wage increases not exceeding cost-of-living adjustments. Anything more risks sparking a destabilizing wage-cost spiral. In addition wildcat strikes would be embarrassingly disruptive at a time when South Africa needs to project an aura of calm, with all key public services operating normally ahead of the World Soccer Championships.

Zuma should also warn the leadership of the SACP, Cosatu and the ANCYL --- as well as ANC party leaders in Luthuli House --- that his government expects their support for economic stabilization measures. Unbridled public sniping will only undermine ANC cohesion with serious consequences for public morale during a difficult period for the country and particularly for its poorest citizens and the unemployed.

Zuma and his ministerial team need to understand they have created a credibility gap that needs to be addressed. For Zuma just to assure audiences he has "hit the ground running" simply won't wash. He should tell the public that the best he can offer is a period of "muddling through" until better times.

So Option One for Zuma is to take the public fully into his confidence and lay out what is going to be possible and what is not over the next couple of years.

Option Two?

There is no Option Two.

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