Zuma will not be forced out without a destructive fight

21 December 2015

It is possible, though unlikely, that the recent finance minister fiasco will spur meaningful changes. 

SA is truly an outlier. When a national economy is seriously stressing, waves of financial repression typically begin with consumer and corporate defaults bringing down banks followed by a sovereign debt default. Frequently, the IMF then negotiates the structural reforms that politicians resisted when their government could still borrow in the international capital markets. 

SA’s reliance on foreign debt is not yet extreme and domestic pension funds can be forced to buy government debt. Unlike the country’s consumers, SA’s bankers are exceptionally skilled at credit management – leading to much wealth flowing from consumers to lenders with profoundly negative transformation consequences. The core problems is that SA still has not produced a political dispensation which can sustain adequate economic transformation and growth. Electoral pressures have been weak with the next general election a long while off. 

The ANC has favoured policies designed to avoid accountability. This helps to explain why an interventionist state has not borrowed more than it has and why, in flagrant repudiation of economic development fundamentals, African Bank was rescued. Banking crises provoke much scrutiny and a sovereign debt default would trigger IMF demands hostile to patronage-inducing policies.

Zuma’s bad week was never likely to provoke a recall. His senior cronies and rural support base are not going to abandon him for offending wealthy investors. He has many cards to play whereas those opposed to him and his policies have divergent views and interests. SA’s business leaders and investors do not have mandates to challenge the country’s elected leadership. The two primary opposition parties are themselves opposites.

Protests can serve as tripwires but they tend to be less meaningful in countries that have elections. In both a technical and a practical sense, Zuma is not accountable to voters. Taking him on from outside the party would demonstrate that the broad economy is much more vulnerable to event risks and general decay than he and his entrenched comrades are. 

The range of plausible scenarios for SA between now and the next general election is very broad. If protests begin to play a much larger role in defining SA’s political economy, Zuma’s quick decision to employ troops in response to the xenophobic attacks could prove to have been a precursor to a much larger domestic deployment. It is not reasonable to assume that Zuma can be forced from office without a brutal showdown. He and many of his supporters would be exceedingly motivated to resist a forced ouster as they are vulnerable to severe legal repercussions.

The electoral time table makes the constitution a Zuma ally. Conversely, the country’s deep economic shortcomings must be confronted urgently. Zuma’s economic policies are an unmitigated disaster but it is not as if big business and the opposition parties have developed adequate alternatives. The economic debates have been slow and shallow while exceptionally robust sets of solutions are now urgently required. Plummeting commodity prices were not anticipated and their repercussions alongside a plethora of ill-conceived policies now threaten the foundations of SA’s political economy. Nonetheless, expecting Zuma to fall reflects wishful-schadenfreude more than objective analysis.

That Zuma has been so personally successful despite his modest schooling speaks to his courage and cunning. He will not leave office without an aggressive fight unless he is offered amnesty. Objective analyses point to how Zuma never focused on the country’s problems; rather he has succeeded in making his problems the country’s problems. Malema is spot-on, Zuma’s focus has always been on staying out of jail.

The most promising way forward is for senior ANC pragmatists to craft an amnesty arrangement. The precedent would be less egregious if it was endorsed by the DA and perhaps the EFF. Negotiating the terms need not be hectically difficult but investing the required political capital would be resisted in the absence of an immediate crisis of profound proportions. Thus it is ironically unfortunate that SA’s political economy is steadily deteriorating without triggering correction-inducing circuit breakers like a full-blown banking crisis.

DA leaders and many others would no doubt be highly opposed to the ethics of an amnesty deal. But at critical junctures ethics-based compasses and effective leadership often point in divergent directions. Kissinger had to deal with the impact of a US soldier in Vietnam famously saying, “we had to destroy the village to save it”. Mandela and de Klerk also calculated that the risks of pursuing victory were just too extreme. All three were awarded Nobel Peace Prizes as they sought peace ahead of moral purity. 

Courses on ethics invariably invoke the ancient Greeks as resolution of some issues are so elusive. Plato had it that ethics were like the concept of a triangle, universal and immutable. Aristotle maintained that ethics would need to reflect the chosen political structure. While it is best to invoke Plato’s views when raising children, SA’s leaders have little choice but to embrace Aristotle’s more pragmatic wisdom.

A constitutional democracy relies on various pillars to prevent capture of the state by a patronage machine. The willingness of voters to hold political parties accountable being the most critical line of defense. It is asking a lot to expect apartheid victims to trust in constitutional protections ahead of party loyalties aligned with community traditions. SA’s economics are being twisted by global shifts while its difficult history and commodity wealth encourage patronage and the erosion of constitutional protections. Thus, there is no moral high ground. Pragmatic considerations must take precedence.

Patronage machines are extremely difficult for resource based economies to constrain. China’s enormous fixed asset build-out blurred the larger underlying trend of the global economy shifting in ways which permanently diminish reliance on natural resources. As China is now re-balancing its economy, patronage systems in resource based countries will cease to be viable just as aristocracies were swept away when European nations transitioned from farming to industrial based economies. NB: Those transitions were long and extremely bloody.

SA’s political parties will remain focused on the upcoming municipal elections. While event risks will remain high, they are not likely to lead to a crisis sufficient to dislodge the incumbent. In six months, democratic forces will damage the Zuma patronage machine. Yet prospects to overwhelm it are modest.

SA’s constitution and economy have both been hobbled by patronage politics. Zuma and his senior cronies are well positioned – and well-motivated - to negotiate a “fresh start” type of amnesty deal. Their big risk is that at some point events spin out of control and they are ousted amid rampant violence and vindictiveness. Such scenarios could easily correspond with opposition parties dislodging next generation ANC leaders in key municipalities leading to much divisiveness within the party. By late next year, an amnesty deal will look all the more appealing for everyone. 

By itself such a second negotiated political settlement will only do what the first did which is to buy time. Geological wealth, and the patronage it inspires, are inherently in opposition to transformation. Shifts in the global economy mean those blockages will fade while economic challenges intensify. What will then become all too apparent is how little expertise, and how few tools, SA has developed for simultaneously advancing transformation and growth.

Shawn Hagedorn is an independent strategy adviser. He can be found on Twitter@shawnhagedorn

This article first appeared on BizNews – see here.