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I am up to my neck in it, trying to tease out the main implications and trends of the election – in a way that might be useful to investors in our financial markets.

As part of the process I read everything I can find that has been written about the elections. I have just read the Sunday Independent to see what the journalists and columnists had to say and I came across something that I felt I needed to share; and social media granted me immediate gratification.

Jeremy Cronin, deputy general secretary of the SACP, wrote a column assessing the election under the title “No room for complacency for ANC and alliance partners”.

Cronin is always good value and worth reading and today he was especially feisty.

Opposition emerging to the left of the ANC/SACP/Cosatu alliance is an important matter for anyone who has an interest in how South African politics will progress. And Cronin deals with this question as part of his election assessment.

Cronin’s tone reminds me of the sectarian and slightly Stalinist tendencies that I was very much part of throughout the 80’s … and I felt almost nostalgic when he characterised the threats from the left thusly:

Will a serious left challenge now come from outside the ANC alliance? It’s possible, but only if we in the ANC alliance are clumsy or arrogant. We need to distinguish the proto-fascist demagogy of Malema from the hybrid neo-Stalinist business unionism of Irvin Jim, from the ethnically-tinged vigilantism of the Amcu leadership, from the preachy capitalist philanthropy of Jay Naidoo and Mamphela Ramphele.

I wanted to follow that with a few exclamation marks. It’s funny and it has a certain poetic rolling cadence that left me smiling … for a few seconds.

Until I realised that the trick Cronin has pulled here is he has created a sort of ideological bestiary and placed within it every conceivable left critic of the ANC and the SACP.

If you are a left critic of the ANC, SACP, Cosatu alliance then you are either a  proto-fascist demagogue or a hybrid neo-Stalinist business unionist, or you might be an ethnically-tinged vigilante or even a preachy capitalist philanthropist. You certainly couldn’t be a principled socialist of some kind, because then you would be in the ANC/SACP /Cosatu. Dah!

“Clumsy or arrogant”?

The article is worth reading because it gives a mostly subtle and thoughtful assessment of the election from an insiders view, but is, as you can see from the excerpt, occasionally entertainingly clumsy and arrogant.

After fiddling around a bit, I found it at IOL.com. Read it, it is here.

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The appropriate comparison for J Arthur Brown’s visit to Khayelitsha yesterday is Jacob Zuma’s visit to Eldorado Park a few weeks ago – the president’s vist conducted ostensibly to free that neighborhood from the tyranny of crystal meth and tik.

Watching the visuals on eNCA (catch those here) of the white fraudster’s visit to the Cape township yesterday was surreal. Brown, louche, handsome and relaxed in tatty jeans and gelled hair being warmly welcomed by the community meeting; the elderly African audience in their Sunday best, anxious to please, respectful and sitting up straight in their seats. Brown lounging like a  rock star being interviewed by Rolling Stone.

Afterwards outside: the crowd greeting him with Amandla!  – everyone taking a turn to hug their last hope for the return of the money, the man who the state accused of stealing it in the first place.

Zuma’s trip to Eldorado Park is the same species of manipulation. It was supposedly prompted by an eloquent request by resident Dereleen James describing her desperate efforts to get her 17-year-old son off crystal meth. See that moving letter here.

Both these incidents have the classic elements of ‘big man’ politics and the worst features of populism.

What you do is take an issue that absolutely no-one could disagree with and then you march in as the good and heroic saviour. Even those who suspect your motivations are forced into silence. The poverty-stricken victims need all the help they can get, even if it is coming from people who are motivated by the need to repair their public image.

I don’t buy that, in exactly the same way as I don’t buy it when repressive governments argue that the internet needs censoring because of child pornography.

Anyone who argues against the populist measures is immediately cast as the villain: so what, are you in favour of drugs, child pornography and poverty? You are prepared to let these victims suffer just to satisfy some political principle of your own?

Julius Malema, Jacob Zuma and Winnie Mandela had one thing in common. They understood perfectly that you shouldn’t waste your time with actually solving the housing crisis, poverty, drug addiction (choose your perfect and sanctified issue.) All you need to do is go into the impoverished area and give someone a house. Do it with fanfare and praise singers. The community will come out, awed at your power and generosity, clear that you are the source of the goodies that make life possible, full of hope that their turn might come some time soon.

So maybe J Arthur Brown is going to stump up a few million rand, perhaps set up a fund for the people who have been robbed. Surely that is a good thing?

No, it’s not if it means that pressure is relieved on the more pervasive looting of pension and investment funds by people like J Arthur Brown.

How can we be anything but horrified when the fox volunteers to police the hen-house? Not for some vague political principal, but because our desire to save one chicken has endangered them all.

A few years ago it would have been the SACP and the ANC making these arguments and far more eloquently than I have here (catch an excellent interview with Jeremy Cronin several years ago doing precisely that  – push through till he gets to the ‘big man’ and populism bit, it will be worth your while).  Of the many things I regret about the present, the loss of that perspective from our politics is the one I feel most keenly.

Zuma’s visit to Eldorado Park is indistinguishable, in its deeper architectural structure, from J Arthur Brown’s visit to Khayelitsha. In both cases there will be immediate changes to local people’s lives, but changes that purely result in a displacement of the problems and temporary relief.  Like the distribution of food parcels by politicians just before elections the temporary relief provided the hungry does not balance the harm done the society by the successful hoodwinking of the electorate by the ‘big man’.

I am struggling to make up my mind whether there really is a small accumulation of good news, clearly visible against the looming night … or if I am just desperate. Today’s Business Day story by the always interesting Carol Paton looking at Manuel and Sisulu on a stern clean up the public service drive must be positive, surely?

… and several points in my take on the political news in the English language weeklies from last week are postive:

Cabinet reshuffle

The Sunday Times says Jacob Zuma is planning to axe Dina Pule, Minister of Communications and Lulu Xingwana, Minister of Women, Children and People with Disabilities. Pule’s tenure has “limped from one scandal to another – including the questionable millions paid to her boyfriend from sponsorship money meant for the ICT Indaba last year” – Sunday Times.

So what?

The Department of Communications has failed to unbundle the local loop, missed innumerable opportunities with Telkom, under-resourced the regulator Icasa and generally failed to appoint/settle/keep senior management … and has had three ministers in 3 years. Fixing this is a priority area in the National Development Plan and one of the key ‘bottlenecks’ or ‘obstacles to economic growth’ that need to be removed. So Pule’s removal has (if it actually happens) to be seen as a good thing.

(Interesting – to me – speculation on the side is that Zuma might move Thulas Nxesi (Public Works) to replace Angie Motshekga (Basic Education) and have Motshekga replace Xingwana. This means that Jeremy Cronin (deputy minister in Public Works) might then replace Nxesi. But, as the Sunday Times says “there are concerns in the Zuma camp about whether he (Cronin) can be relied on to protect the president from the repercussions over the controversial R206-milliion Nkandla upgrade.”

Public service

Lindiwe Sisulu (Minister of Public Service and Administration) is quoted in the Sunday times about planned amendments to the Public Service Act setting in place ways of stopping senior administrators benefiting from government contracts. She also promised a “super-director-general’ who would ensure that all heads of department adhere to performances linked reward systems.

So what?

Cosatu’s Zwelinzima Vavi lauded Sisulu plans, saying this would stop the “looting” of public funds by government employees. “We can only say halala (congratulations) to that!” he is quoted in the Sunday Times. I have to agree with Vavi. The biggest political failure that is actually in control of government in South Africa is the poor performance and monitoring systems – and therefore delivery failure and corruption – in government and public sector institutions. Sisulu’s intentions are to be welcomed – and she probably has the steel to follow through. So another plus.

Ramphele wanted DA to be dissolved

The Sunday Times quoted several DA members essentially claiming that Mamphela Ramphele almost joined forces with the DA, but wanted the party to be dissolved first and for her to have an equal share of a new institution. “She wanted a new political party and not to join the DA … she came with nothing but wanted an equal share” said one unnamed source.

So What?

The week has been beset with rumours about the impending announcement by the respected academic and business person Mamphela Ramphele that she is to set up a new opposition party. Speculation reached a climax when it was announced that she had resigned as Chairperson of Goldfieds on Wednesday last week. Ramphele would make an excellent addition to opposition parliamentary politics in South Africa – but the idea that one person, with no party structure or obvious constituency in hand, will change the South African game is hopeful at best. However, on the balance, this is undoubtedly another positive. (That’s three in a row for those who are counting.)

Zimbabwe referendum

Several of the weeklies reported that Zimbabwe’s President Robert Mugabe issued an official proclamation on Friday setting March 16 as the date for a referendum on a draft constitution. Most expressed concern that local activists felt that that gave very little time to explain the draft constitution (it took 3 years of bickering to cobble together) to voters and that the draconian Public Order and Security Act would need to be suspended or repealed before campaigning for a ‘Yes’ or a ‘No’ vote could take place. All opposition parties have  called for a referendum ‘Yes’ vote to allow the constitution to be accepted and signed into law without any further changes.

So What?

Zimbabwe’s stability and growth prospects impact on South Africa in a myriad ways, for example in the floods of economic refugees and the shifting size of the export and investment markets in Zimbabwe. An interesting story in the Sunday Times by senior editor Mondli Makhanya argued that Zanu-PF is likely to benefit from opposition disarray and an improving economy. “With the elections just months away, Zanu-PF is smiling and looking forward to strolling to victory. After having brazenly stolen four parliamentary and presidential elections between 2000 and 2008 Zanu-PF will not have to resort to violence and skulduggery this time.” If Makhanya is correct (which he may well be) it is going to stick in a lot of craws that through a combination of looting, patronage networks, repression and the chasing of the urban poor into the arms of the South African informal economy and welfare system, Zanu-PF might remain in power.

New Iran claims hit MTN

The jailing of Iranian born US citizen Mohammad Hajian for supplying “sensitive and potentially dangerous equipment to MTN’s mobile network in Iran” (Mail & Guardian) deepens MTN’s woes in relation to its Iranian operations.

So what?                             

“The conviction is damning for the South African mobile giant, as it provides judicial corroboration that the company used sanctions-busting networks to beef up its technical infrastructure in Iran” (M&G).

State of the Nation Assessment

Most reviews pointed to the key absence of any binding theme in Jacob Zuma’s State of the Nation Address.

City Press probably had the best coverage.

  • It (CP) correctly points out that there was a specific “shift on land reform” –  with a move from “willing buyer, willing seller” to a “just and equitable” formulation.  This refers to the establishment of a “valuer-general who intervenes on behalf of the state … who then oversees land valuation …to keep the price … affordable for the state to redress” – CP quotes Gugile Nkwinti (Minister of Rural Development and Land Reform).
  • It argues that the youth wage subsidy has been swept aside and that government, business and labour in negotiations through Nedlac will announce a plan soon whereby “growth industries with young workforces will attract state support to hire the young and jobless … unskilled young people will also be offered a second chance to write their matric exams”. So no across-the-board subsidy … but a directed one, only in selected industries.
  • It picks away at the infrastructure programme and the various roles that will be played by Malusi Gigaba (Minister of Public Enterprises) and Ebrahim Patel (Minister of Economic Development). City Press interviewed the ‘up-and-coming’ Gigaba and asked him if Ebrahim Patel had left him much of a role to play. Gigaba replied: ““Economic Development is responsible for a broader plan. My department is responsible for three big infrastructure projects: the roll out of broadband, electricity infrastructure and logistics like rail. Other departments are responsible for roads, transport and dams.”

So What?

The State of the Nation address is always over-anticipated and usually bitterly lamented as not having been specific or visionary enough. This year, not unexpectedly, Zuma enumerated the successes of government and hyped the plans.  Much of what Zuma and his government will do and say in the next while will be focused on the national election in 2014 – and expectations likely to be disappointed.

Bits and Pieces

  • City Press reports that the department of fisheries, headed by Tina Joemat Pettersson is in “total free fall” – raising serious concerns about government’s ability to conduct research required to determine quotas of ‘allowable catch’ for key species.
  • Sunday Times business section reports that industrial unrest and violence at the Medupi construction site make the “chances of the R91bn power station feeding power into South Africa’s overstretched grid by the end of this year … slim”.
  • Sunday Times reports Harmony Gold made history by making individual workers at its Kusasulethu mine sign a treaty with the company in order to lock individual workers into a contract with the company. “This is quite a revolutionary move … (it) means that individual workers can now be taken to task when stepping over the line” says Peter Major, Cadiz mining analyst. Major argues, according to the report, that if similar agreements had been put in place a year ago when trouble first started brewing on the mines at Impala Platinum, a “Marikana” might have been prevented.

(Added as an afterthought: I realise I haven’t made any kind of conclusion given that the opening paragraph suggests I was going to indicate either that I am more positive than negative or vice versa. Frankly, I can’t make up my mind. Which probably makes me a fairly bog standard South African.)

Has the South African state become an instrument in the hands of the class of predators that dominate our politics?

Think a crowbar or a 9mm automatic and think of the Nkandla or Limpopo crews using that tool to rip or rob huge sections of  provincial and national budgets.

Cosatu is clearly suspicious of the ANC dominated state, but believes that the struggle is not over.

Corruption Watch, launched by Zwelinzima Vavi Thursday last week is premised on, and shaped by, the assumption that the state is contested terrain; that if you put enough pressure on it you can slow the process of it becoming an “instrument” or a “tool” in the hands of the bad guys .. and perhaps reverse that process.

On the same day that Cosatu launched its initiative – Thursday last week –  the SACP journal Umsebenzi Online published a “Red Alert” by deputy secretary general Jeremy Cronin critiquing

the liberal notion of society as being constituted by two realms – the “state” on the one hand, and a distinct “civil society”, on the other.

and, in particular

This anti-majoritarian liberalism (that) treats rights almost entirely as rights of citizens/civil society AGAINST the state – and not, for instance, the right of a democratic state (and the right of a democratic majority to actively HELP that state) to vigorously implement an electoral mandate in the face of equally vigorous opposition from powerful class forces lurking behind the fig-leave (obviously he means “leaf” – NB)  of “civil society”.

Thus the SACP is deeply and supportively engaged with government and the state – indeed Jeremy Cronin is Deputy Minister of Transport – and appears to be directly backing Jacob Zuma for re-election at Mangaung in December. Clearly the SACP has made a practical estimation that Zuma is the better of some bad options.

Cosatu is also, ultimately, engaged with the state and government – and appears to have also given support to Zuma’s re-election – but in a far more conditional and ambiguous way than the more open-ended support offered by the communists.

Corruption Watch is indelibly stamped as a ‘civil society’ initiative – and one that has individuals in its leadership that skirt close to Cronin’s faintly Stalinist definition of “anti-majoritarian liberalism (that) treats rights almost entirely as rights of citizens/civil society AGAINST the state.”

Explore Corruption Watch’s website here  – and decide if you are going to sign the pledge.

The Executive Director is David Lewis – ex-independent trade union movement in the 1970’s, constructor of SA’s competition framework and until recently chairperson of the Competition Tribunal.

The Chairperson Vuyiseka Dubula is also the Secretary General of that bastion of civil society and thorn in the ANC government’s flesh, the Treatment Action Campaign.  She is  also Chairperson of the board of directors in the AIDS Law Project.

Vuyiseka Dubula - civil society multitasker and luminary: TAC Chairperson; Corruption Watch Secretary General and Chairperson of the board of the AIDS Law Project

The list of board members includes Bobby Godsell, Mary Metcalfe Supreme Court judge Kate O’Regan and Archbishop Njongonkulu Ndungane – just to give a sense that the initiative is likely to be a constant source of criticism of the spread of corruption in the ANC and government.

Cronin directly warns against some of the features of Cosatu’s previous “civil society” conference that caused so much anxiety in the ANC and the SACP last year (and I put the quote in full here because it speaks to the heart of the differences of emphasis between Cosatu and the SACP):

Obviously, the SACP expressed support for COSATU`s right to convene a conference that mobilized a range of social movements and NGOs to address, amongst other things, corruption in the state. However, we believed then, and we still believe now, that it was a mistake to exclude COSATU`s own party political alliance partners – as if there were something inherently pure about supposedly non-political “civil society” formations, and something inherently predatory about those more directly engaged with the state. It was a confusion that reflects the hegemony within our society of the liberal “civil society vs. the state” paradigm.

It is probably useful to read the full text of Cronin’s intervention, which you can see here.

As it happens ANC heavyweight and Minister of Justice Jeff Radebe spoke at the launch of Corruption Watch alongside thorn-in-the-ANC’s-flesh Public Protector Thuli Madonsela – thus tentatively addressing some of Jeremy Cronin’s and the SACP’s insecurity about Cosatu taking more and more oppositional stances in relation to the ANC and government.

The two main organisations within the ruling alliance to the left of the ANC appear to be launching something of a rescue bid to stop the ruling party slipping more unambiguously into the hands of a predatory political elite – although the SACP appears more concerned that the rescue bid stays out of the hands of “anti-majoritarian liberals” than it does about the success or otherwise of the endeavour.

Cosatu is the “bad cop” and the SACP is the “good cop” (vis-à-vis the ANC) but they are both operating under the assumption that there is something still worth saving in the state and the ruling party.

If the rescue bid fails and the ANC and government pass some abstract point of no return Cosatu is poised to give up on them first.

The SACP is likely to stick with its ally to the bitter and awful end.

Jeremy Cronin’s criticism of Cosatu’s  recent hosting of a “Civil Society Conference” is impossible to understand without understanding his – and the SACP’s – assumptions about the world and South Africa in November 2010.

Cronin’s premise is that “an enemy” is attempting to make the public debate about the future of South Africa focus on minor issues where “the enemy” believes it can score a victory over the ‘progressive forces’ (of which Cronin assumes he and his organisation and his government are a part).

Cronin and the SACP accept some version of the following as a true and accurate reflection of reality (although Cronin himself would probably not phrase things so crudely, mechanistically and deterministically, it amounts to the same story):

Global capitalism and its local allies are securing their ability to continue to accumulate wealth

The bad guys in Cronin’s universe are a complicated (and brilliantly disguised) set of global business interests linked to and by the interests of powerful Western countries, especially the USA and the UK. What this enemy wants and needs is a world in which it can make loads and loads of money – especially by paying the lowest possible wages and taking resources and wealth from the Third World and packing these tightly around themselves in the playgrounds and fortresses of the First World.

Any change in any society that puts checks and balances on its ability to make money must be opposed – destroyed even before it takes root. Thus, thoroughgoing transformation of South Africa would strengthen the hand of the poor and dispossessed relative the the global capitalist/imperialist elite and must, therefore, be stopped.

Global capital/imperialism are constrained from arguing directly in favour of the oppressive political systems and unequal economic arrangements required to support their ability to extract wealth.

Instead they weaken the existing popular governments in the Third World, encourage the spread of corruption and (crucially for our purposes here) divert real debates about change that would benefit the poor and marginalised into light-weight debates about the individual rights and freedoms of the small group of citizens who have moved on from being concerned about the basic conditions of survival. And they do this by hoodwinking essentially good people and organisations who have a weak understanding of the world.

If this is the enemy, who’s on Cronin’s side?

In this version of the universe the African National Congress, the South African Communist Party and the Congress of South African Trade Unions are the structural expressions of ordinary people’s struggles to be free and fed.

Because Cronin is constructing this version of the world wearing his South African Communist Party beret, we must understand that Cronin assumes himself and his organisation to be part of a long-term plan that will overthrow the global yoke of capitalism and imperialism and construct a society based on human imperatives other than profit.

So what’s wrong with that?

Communists like Jeremy Cronin are not misguided in fearing and distrusting global corporations of private enterprise. Left to their own devices humans will extract as much from each other – or from groups other than the group to which they feel they belong – as is possible.

They will take until they are stopped. This is reflected in every business cycle and it is reflected in every attempt to re-regulate markets after bubbles (always caused by a feeding frenzy) have burst.

Additionally big global corporations will spend billions of dollars sucking up to politicians especially in the most powerful nations on earth – or more directly manipulating the political process.

However, there are two significant things  wrong with Jeremy Cronin’s (and the SACP’s) version of the world:

Firstly, the communists’ (and all tight party organisations and religious groups’) vision is obscured by their need to see the world as completely structured by two big gangs that are at war – the white hats and the black hats, the good and the evil, the oppressor and the victims.

There are more complex political choices to make than just to pick a side and back it to the hilt and defend its doctrines against all comers.

Global markets and trade and international relations are structured by hugely complex forces, not the least of which are government and supra-governmental organisations attempting to regulate various forms of behaviour. i.e democratic political processes attempting to subdue, moderate and direct the functioning of human fear and greed.

“Picking sides” in such a complex world is no easy matter.

Secondly, the communists fail to see that they and their organisations are subject to the same raging impulses of greed and terror that structure global capitalism – in fact they are structured into it, (only subject to no shareholder and less accountable and regulated than your standard global business).

The conference that Cronin criticises was precisely an attempt to discuss the best ways to regulate those impulses because they appear to have become the dominant impulses within government and the ruling party.

It is fine for Cronin to dispute this, but it is not fine for him to argue that his allies accept the functioning of criminal greed in his government and organisation because his government and organisation is struggling to combat these matters at a higher level.

We do not live in a simple world. It is my belief that the enemy is not out there in his serried ranks on the plains, he is in here with us, in our homes, in our families and in our beds. The enemy is right inside us, in our own hearts and in our own heads.

Until we realise this our best politicians will continue this Quixotic tilting at windmills.

Umsebenzi Online has just (yesterday) published a stern warning to Cosatu from SACP deputy secretary general Jeremy Cronin about the trade union federation’s recent “Civil Society Conference”.

Cronin’s “intervention” (his word) is torn between warning:

  1. that the conference plays into the hands of “anti-transformation”, “anti-majoritarian” “right-wing liberals” and
  2. the fact that leading members of Cosatu’s partner organisations in the endeavour “share an activist history going back to the 1980s when they were involved in the “Marxist Workers’ Tendency” – a left-wing entryist formation that sought to transform the ANC into a workers’ party”.

So if you want the crude summary Cronin thinks Cosatu (and especially its secretary general Zwelinzima Vavi) is either misguidedly or deliberately serving the agenda of:

  1. those who would like to see Apartheid  survive  and US imperialism rule forever, and
  2. the same old anti-Soviet Trots who hated the SACP in the old days and still want to win the workers away from the party today.

I think both these reasons for warning Cosatu off are wrong-headed, but Cronin’s interventions are always interesting and are especially instructive for those prepared to poke around in the fermenting and bubbling interstices of his argument.

I will, therefore, be examining bits and pieces of what he has to say during the course of the day.

I occasionally publish slides that I have used for clients as part of my attempt to examine political and investment risks to them.

Below are 3 from a presentation I delivered soon after the ANC NGC.

See if you can identify all the people concerned – a sort of politics general knowledge test ( you know the ones: if you score 10 you are probably a CIA/MI5 agent; if you score 9, then get a life and stop obsessing about politics …. if you score 2 you are living in a special care facility etc.)

As an aid here is a link to Stalking horses at the NGC – the blog I posted at the time. To help refresh your memory ‘the NOM’ was meant to describe the group that had coalesced around the ANC Youth League’s call for the nationalisation of mines.

I have been sickly and trying to pay the bills.

All my ‘paid for’ commentary on the NGC is done and I can finally get back to home ground where I feel more comfortable to make some wild accusations – and I will, finally, be more explicit in this post about who I think the bad guys are and who I think the less bad guys are.

At the outset, forgive me; this is long and requires a degree of effort to plough through. I believe your efforts will be rewarded in the end – but I would think that, wouldn’t I?

The NGC, just like the world itself,  becomes a cacophony, impossible to follow and impossible to interpret, without a guiding theory or a framing shape to look through.

The “theory” I am going to use here is that the NGC was the terrain on which two broad factions in the ruling alliance clashed. How you slice-and-dice a thing, conceptually, is always important for what you conclude, so much of what appears below is an attempt to unpick what and who those ‘factions’ consist of.

To think that what was happening at the NGC was “about” the nationalisation of mines call will lead to ‘error’ (you can see Lenin in my heritage when I use terms like that). Instead the NGC was “about” a more fundamental and complex power struggle.

The picture is additionally complicated when we consider that there were over 2000 delegates at the NGC (1500 from branches, 500 from the leagues/Cosatu/SACP/SANCO/PECs and 800 deployees/non-NEC ministers/DGs/premiers/CEO’s of SOE’s) and the interplay was vast and varied.

So instead of trying to cover everything I am going to look through the prism of an alleged power struggle between two broad factions or groups of interest.  This will ultimately be another attempt to “follow the money”.

Here then is the prism through which I believe it is most useful to look:

  1. The ‘nationalisation of mines’ (NOM) call was always a “stalking horse”. The term “stalking horse”  refers originally to  “a horse behind which a hunter hides while stalking game” (WordNet) and is defined in Wikipedia as “a person who tests a concept with someone or mounts a challenge against them on behalf of an anonymous third-party … if the idea proves viable and/or popular, the anonymous figure can then declare their interest and advance the concept with little risk of failure … if the concept fails, the anonymous party will not be tainted by association and can either drop the idea completely or bide their time and wait until a better moment for launching an attack.”  Oh yes, I love the language.
  2. The ‘nationalisation of mines’ call (hereafter called NOM because in fact, it has less do with policy and more to do with power) is best understood as the political platform of a particular alliance of groups and individuals and interests that has as its objective the winning  to power in the commanding heights of the ANC and the South African State. The NOM is therefore something more (and less) than a policy proposal. It is a contingent strategy for winning power – and getting the ANC to nationalise the mines would be a desirable side-affect for some of the participants.
  3. The first part of the NOM is the Youth League’s own specific ambitions, which have most obviously been expressed as a campaign to elevate Fikile Mbalula to the position of Secretary General of the ANC – the position currently occupied by Gwede Mantashe. Mantashe is despised by the League for a number of reasons, but mainly because he is part of those who believe the ANC Youth League is part of an ambitious rent seeking agenda. The League considers itself to be a “king maker” in ANC electoral processes and the organisation has energy and mobility and time to move quickly around the country to influence decisions at a branch and provincial level – a feature it demonstrated successfully at and in the lead-up to Polokwane.
  4. The second part of the NOM are those mining tycoons who want their BEE deals bailed out by the taxpayer. Who could have failed to notice the unified voices of those gleaming billionaire siblings Patrice Motsepe and Bridget Radebe as well as Minister of Housing Tokyo Sexwale backing the NOM in the lead-up to the NGC or at the conference itself?
  5. The third part of the NOM is the election campaign of Tokyo Sexwale to succeed Jacob Zuma. Has he specifically funded and backed the ANC Youth League so that it can be deployed in its traditional role of “king-maker” on his behalf – or because he wants his BEE deals bailed out … or both? It is impossible to prove – either that he has passed money/business/tenders the way of the League or why he might have done so – but that he has done so – with the intention of becoming president – is clearly the view of most of “the left” in the tripartite alliance.
  6. The clearest unifying principle behind the NOM and the most distinct characteristics of its participants is that they are first in the queue to gouge a rent out of the ANC’s economic transformation agenda. The nationalisation of mines call is tailor-made for the broader agenda of the NOM:  there are real material benefits for the backers, it allows the policy bereft Youth League to appear radical and pro-poor – and anti-white capitalist – to its potential supporters; it forces the current top leadership under Zuma (for the sake of investment and economic stability) to deploy itself to defend against something that would naturally appeal to the rank-and- file’s populist instincts.
  7. So who is the NOM challenging? Essentially “the incumbents”, which at one level just means Jacob Zuma, but at another level means everyone who has assumed a leadership role in government, party and the Tripartite Alliance as a consequence of Jacob Zuma’s elevation as well as the ideas and policies that have come to be crafted by that incumbent group.
  8. The “incumbents” should also be conceived of as including all those tenderprenuers, Nkandla hangers-on and Zuma family members whose fortunes are linked to the fortunes of the incumbent leadership.
  9. Do the members of the NOM even know who they are or what they are part of? Mostly they do – because there is an increasingly bitter conflict, for example, between the ANC Youth League and the SACP. When powerful factions clash, they strengthen themselves, make themselves more defined; they force anyone and any issue into the framework of their clash. We saw this in the Cold War, but more recently and specific to the groups here, we saw this in the struggle to stop Mbeki and elevate Zuma. eventually everyone knew whether they were “for” or “against” the motion. Attempts to stay sane, principled and above the fray are inevitably MIA in this kind of overblown factional dispute.

Given that framework, what actually happened?

NOM preparation

Firstly, the NOM did extensive (but insufficient) spade work around the policy that fronts their agenda. Julius Malema and Floyd Shivambu have been on an extended road trip, selling the idea for over a year. They have written for newspapers and addressed conferences. Malema threatened to withdraw Youth League support from any leader who did not support the call. The Youth League attended all provincial preparation conferences for the NGC and was successful in getting its view represented in every delegation from every part of the country. There are extensive reports that members were instructed to infiltrate ANC branches and emerge later as NGC delegates. The style associated with “winning” this view at various conferences was a combination of exclusive focus on the issue and heckling, booing and threatening any opposition – in the now time-honoured traditions of the League and its members.

What the financial backers of the NOM and members of the broader NOM agenda were doing in the lead-up to the NGC should not be underestimated. Individual backers of the NOM have extremely extensive resources. Such wealth and power gives individuals the ability to reach people and process far from themselves – and snap them like a twig.

Incumbent preparation

It is difficult to say how much work the incumbents did. I have made the assumption that securing the Tripartite Alliance was key to the incumbents preparing for the onslaught they knew was coming at the NGC. In this context the brokering of the ending of the public sector strike and the carefully worded apology from Cosatu to the Zuma/government for the language workers and their leaders had used during the strike was, in part, an attempt to establish the ground for a united front against the NOM agenda at the NGC. Comprises and certain concession were probably made to “the left” – but I will discuss this in the conclusion.

The NGC opening – political and organisational reports

Jacob Zuma’s Political Report and Gwede Mantashe’s organisational report were interesting for a number of important reasons but what is relevant for this post is both reports were correctly interpreted as a significant shot across the bows of the NOM. We can all delight in the fact that Winnie Mandela had to physically comfort the distraught Julius Malema after the dressing down he received during Jacob Zuma’s opening Political Report and take to heart her now immortal words ” … every parent is allowed to talk to their children … Every organisation is like a parent.”

Commission 5 victory and then plenary defeat

The sighs of relief ‘the incumbents’ might have breathed after the NOM’s early humiliation were soon replaced by anxiety when the NOM decided to put all of its eggs in one basket (this is one time that cliché is justified) by sending 45 of the Youth League’s 66 delegates to the Wednesday economic transformation commission. It appears that all supporters of the NOM including Tokyo Sexwale and several other BEE mining tycoons flooded the commission to ensure a particular outcome. The best article in the public domain I have seen about the commission is by Moipone Malefane and Caiphus Kgosana in The Sunday Times of September 26 – catch it here.

Joel Netshitezhe , Lesetja Kganyago  (DG in the Treasury),Trevor Manuel, Enoch Godongwana (Deputy Minister Public Enterprises) and old stalwart on this issue, Jeremy Cronin, were amongst the key ANC intellectual and economic thinkers who tried to hold the line at the meeting. Their appeal for thoughtfulness and care around an issue likely to costs government hundreds of billions of Rand were reportedly overwhelmed with bullying, heckling and unthinking repetition of the demand: adopt the call, as we have defined it, as policy!

Without having seen the exact statement that emerged from this commission it is clear that the Youth League (and everyone else present) was under the impression that they had scored a clear victory and the inner cabal reportedly headed off to the Hilton Hotel to celebrate victory in the style to which they had become accustomed.

The ANC Youth League’s (and the NOM’s) celebration was premature. The next day at the plenary session of the NGC Minister Geoff Radebe (husband of Patrice Motsepe’s sister, Bridget, and someone who had expressed support for the basic premise of NOM earlier) delivered a watered down version of the results of Commission 5 – and the ANC Youth League leaders exploded, ultimately sealing their fate by appearing to storm the stage in an aggressive manner.

Conclusion

Ultimately, through the support of delegates from across the alliance at the plenary, a watered down version of Commission 5 carried – essentially calling for thorough cross-country comparison and analysis of nationalisation as part of government’s ability to influence economic growth patterns in favour of the poor and unemployed. This study was mandated to report back to the 2012 Bloemfontein/Mangaung 100th centenary elective National Conference.

In the end it was not ‘the incumbents’ that were overwhelmed by the “shock and awe” campaign of the NOM. In the end it was the NOM that lost the skirmish – they overestimated the efficacy of their own preparation and they underestimated the coherency of the opposition – as well as degree of anger that is now widespread towards the ANC YL and its leaders.

The paucity of facts in the public domain does not relieve us of the obligation to think about what may be going on and develop a view as to the potential risks involved in any situation. Wile E Coyote might have said ‘what we don’t know can’t hurt us’, as he wandered over another cliff, but in the real world what we don’t know can sometimes be deeply threatening. So the explanations I have given here are my best attempts to muster an explanation for as much of the story as possible. I am sure that at some point in the future some of the guesswork and necessary assumptions might prove misguided – but that is life in the threat analysis business.

Three final points;

Firstly, it is okay to delight in the set-back of a particularly voracious self-enrichment agenda at the ANC NGC. But it is important not forget that the conference left unscathed similar agendas in many other places in ANC and affiliated ranks, including in the Zuma family itself.

Secondly, the defeat of the NOM is a tactical, tangential issue. Like the Governator, they’ll be back.

Finally, the victory was bought at the expense of some kind of compromise with “the left”. I expect the upcoming Cabinet review of a New Growth Path to be more sympathetic to a host of issues traditionally seen as part of an SACP or Cosatu platform (including Rand policy, inflation targeting, downward pressure on interest rates, nationalisation of the SARB, tax on short-term capital flows, industrial policy, National Health Insurance and the establishment of a state-owned bank.) The consensus within “the incumbents” is inexorably moving towards a rejection of some of the basic tenants of the Growth, Employment and Redistribution Macro-Economic Policy as defined by Mbeki and Manuel.

Our future is full of as yet undefined state intervention. I wouldn’t feel so bad about this if I didn’t agree with Cosatu that this state, in this place and time, is rapidly becoming a predator.

No-one can take serious issue with the leopard for pouncing down on the neck of a wayward sheep and dragging the carcass back up the rocky outcrop to her cubs for a leisurely feed. It’s what leopards do.

Engaging the leopard in any special pleading about the benefits of keeping this particular sheep alive is, well, it’s just silly, isn’t it?

The gathering wave of strikes means the scent of blood is thick in the air and Cosatu’s haunches are bunching and its tail is twitching.

The trade union federation is sniffing the scent of blood. As the strike season gains momentum the coincidence with the Fifa World Cup is causing Sipho and Sally Normal deep anxiety.

“How can Cosatu hold the World Cup to ransom?” I hear our good citizens gasp.

But the real question should be: ‘how could Cosatu not seize this once in a lifetime opportunity?’

The trade union movement has leverage right now – and for a limited time only – like it has never had before.

Our politicians have inevitably embedded themselves with the Fifa invasion – with about as much moral fortitude as those journalists who embed themselves with superior invaders in other kinds of wars.

Cosatu member unions already had the extra leverage they derived from having backed the right gang in the Polokwane Putsch, but it is the potential to disrupt the Fifa World Cup that gives its voice a new continent cracking resonance.

You want a settlement three times the inflation rate? You’ve  got it, baby –  just don’t take the focus away from a moment as potentially rich as that perfect Zidane head-butt.

When management and unions stare each other down, a thousand considerations come into play – and while much hinges on the price of the package that will be paid for labour this is not the only consideration.

Management might accept a higher settlement if labour agrees to lock in an acceptable rate of increase in the years ahead – and vice versa. Or the parties can shift bits of the package around so that either management or labour feel that they are getting a better deal.

But there are other and more complicated influences on the bargaining process and one of them consists of getting a fat guy to lean on the other side for you.

If this was the USA 70 years ago organised crime might have lent a hand to one side or another, depending on the interests of some business oligarch, a connected Senator or a union boss playing the field. In South Africa the fat guy is the state and for a variety of reasons he is likely to lean on management and business owners.

When striking Transnet workers marched on parliament last week to insist that Minister S’bu Ndebele back their demands, the politicians sent Mawethu Vilana, a former Cosatu researcher out to speak to the angry workers. This from The Sowetan

Vilana said the government took the strike very seriously and that Deputy Transport Minister Jeremy Cronin and Deputy Public Enterprises Minister Enoch Godongwana were “involved” in trying to find a resolution.

The strike against Transnet appears to be close to resolution, but a larger national strike against the electricity price increase is gathering its skirts in the wings.

Cosatu is led by the kind of people whose instincts are to think of Fifa and the astonishingly named Sepp Blatter as just another gang peddling products that ensnare the user with false promises of bliss. But Cosatu also represents a constituency that loves the Beautiful Game and like a small boy is having to sit on its hands it is so excited about the coming festivities.

So Cosatu is not without limits on its behaviour and nor are its member unions. Cosatu has increasingly failed in the last several years to win over the “ordinary citizen” or ‘the middle ground’ when its strikes have spilled over into public protests. Just one too many image of groups of fat people dancing down a road with sticks, turning over rubbish bins and breaking shop windows has meant that anyone who is not a Cosatu member is less likely to stand as firm as those fabled Apartheid oppressed communities that stopped buying Fatti’s and Moni’s pasta to support the brave workers and their leaders who eventually went on to form Cosatu and drive the revolution itself.

The heroes always live long ago and their legend gleams more with time. But it is difficult to imagine a world in which Cosatu’s leveraging the World Cup for narrow financial gain is celebrated as a blow struck for transformation and liberation.

But in the same breath it is important to remind ourselves that Cosatu is just doing what it must do. It’s purpose is to ruthlessly fight for the advantage of its members over both the vested interests of the powerful, the collective interests of the nation and/or the desperate interests of the weak and downtrodden. In truth, the leopard really has no choice and cannot change its spots.

Herewith a note I wrote a week ago for a South African client concerning a recent whip around the London fund management industry

Foreign fund managers perceptions of South African political risk

I recently had an opportunity to interact with a few London-based global emerging market fund managers. These were generally from long-only equity funds, but included a smattering of everything else.

The main lessons I learned were

  • not to be overwhelmed by the negative news flow;
  • always think in relative terms – a negative and obsessive focus on South Africa is meaningless without realistic peer comparisons.

This was brought home to me again as the weekend news of the brutal killing of Eugene Terre’Blanche hit the local and international press. The media focus alone seemed to suggest that this was a potentially destabilising event. However the story has quickly descended into the squalid domestic tale it really is, and the over-the-top alarmism should be faintly embarrassing to those who trumpeted it over the holiday weekend.

Here are the main questions I raised in London and the main responses I received*:

The news explosion around Jacob Zuma’s latest romantic and similar engagements does not drive capital flows

This point did not need emphasising with the fund managers I saw. If anything they were faintly puzzled as to why I would bother to raise it. For them the emerging market universe has much colourful (and sometimes ugly) personal behaviour by the political leadership and other powerful members of society. Zuma’s polygamy and latest love child are way down the list of “transgressions” in that universe.

Conflict over economic policy making the investment and operating environment difficult

The point I was making was that Pravin Gordhan’s budget speech differed in important ways from both the DTI’s Rob Davies’ Industrial Policy Action Plan II and Ebrahim Patel’s Two Year Strategic Plan. My issue with this was that Jacob Zuma had not settled important policy conflicts within his cabinet.

The different emphases could be summarised as follows:

  • Pravin Gordhan supported fiscal restraint, inflation targeting, a segmented labour market and a competitive and unprotected manufacturing sector – and for this he was heavily criticised by Cosatu.
  • The policies espoused in IPAP 2 and the Two Year Strategic Plan from the Department of Economic Development implicitly called for monetary easing, a weaker currency and a vigorous programme of interventions into the domestic economy through the use of tariffs and taxes – policies strongly supported by Cosatu.

Several of the fund managers that I interacted with had recently (within the last few months) met with all the ministers concerned either as part of a marketing tour led by Jacob Zuma or while in South Africa themselves. The detailed interactions with all these departments had convinced them that the policies of government were the policies as espoused by Pravin Gordhan and further that the more activist policies from Patel and Davies were not uncommon in emerging markets and at least did not include new capital controls.

I am not convinced the policy confusion is ‘investment neutral’ – although I do not think is catastrophic. Cosatu and the SACP clearly believe they have a chance to set policy – including monetary and industrial policy – through the DTI and the new Department of Economic Development. Thus Jacob Zuma seems to be clearer and more decisive about these issues in front of foreign fund managers than he ever is in front of a domestic audience. He will reap high resistance and anger from Cosatu and “the left” when they realise they have been lied to again. I think it is clear we are seeing the first signs of this realisation – in, for example, the threatened strikes during the World Cup against Eskom increases.

Julius Malema and the Nationalisation of the Mines

Julius Malema provokes a lot of reaction wherever he is discussed. Not many fund managers take him seriously and again it is because they have met and dealt with senior government and party officials who have spoken of Malema with patronising indulgence and a touch of exasperation.

Susan Shabangu, Minister of Mining, has done good work in assuring fund managers throughout the world that there is no possibility that the South African government will consider the nationalisation of mines as a serious policy option; and I came across several people who had met her and been convinced by her assurances.

Cronyism and tenderpreneurial flair – the threat to service delivery, stability, the functioning of the parastatals

Continuing on the theme of Jacob Zuma’s inability to solve the big conflicts in his government I argued that cronyism, nepotism and tender abuse are:

  • important contributing reasons for the poor functioning of the State Owned Enterprises – the Eskom example reveals that enrichment agendas in tendering and the appointment of senior personnel damages the utility’s ability to do the job;
  • key to understanding the failures of local government and hence the ongoing violence of the service delivery protests.

There were few fund managers I met who disagreed with this assessment, although some, yet again, argued that in the universe that includes Russia, the Middle East and Brazil, South Africa stands out less than we would imagine.

The World Cup and the waiting Hangover

It is perverse to argue that the downside of the World Cup includes:

  • it could become the focus terrorist attacks;
  • it could be targeted by organised labour and taxi operators to strengthen their hand against government or employers;
  • it will inevitably entail a let-down or ‘hangover” period.

This would be a little like arguing that the downside of life is death and that it should therefore be avoided.

I never met a fund manager in London, or elsewhere for that matter, who disagreed.


*Please note that this is a subjective process, over determined by my own interpretation and by a selection processes out of my control. Any real collation of “the views” of fund managers must theoretically translate into their holdings and the prices at which they buy and sell.

As promised another occasional slide that illustrates a major theme of the moment. I have put the meat into the caption – note the reversion to some traditional Marxist theory … fractions of capital and the working class fighting to wield the state?  Was that Althusser or Nicos Poulantzas … hmm, no, for them the state was a site of struggle and not an instrument …. gosh, I’ve forgotten more than I ever knew.

This slide illustrates discussion about the “real” conflict shaping our future – I use the Eskom saga and the nationalisation debate to illustrate how an alliance of the most  productive classes (the industrial working class and capital) is involved in a struggle with lumpen elements of the comprador bourgeoisie and ‘fugitives from justice’ over who gets to wield the state and to what ends
Absent from the slide itself are Zwelinzima Vavi and Bobby Godsell. Here they are wearing their respective  hats as, in Vavi’s case, a leader of the industrial working class; and in Godsell’s case Chairman of Eskom (but more revealingly Chairman of the World Gold Council). They are up against the ANCYL and the Black Management Forum.
The costs of defeat and the prize of victory concern the fate of Eskom: will it be looted or will it be used as an engine of economic growth and job creation?

Aside from the most satisfying stitching up of the ANC Youth League president there were two other excellent bits floating up through the dross of the weekend news; both from the excellent www.timeslive.co.za.

Firstly, Ray Hartley (editor of The Times and the Times Live website and author of the exceptional blog The Wild Frontier) interviewed Jeremy Cronin about, amongst other things, the dangers of populism. Cronin talks with clarity of the clear and present danger of a form of fascism that is taking root – and being encouraged to take root – in the mass of 18 – 25 year olds who are unemployed and not in any form of tertiary education in South African. Listen to him speak of “big man” authoritarian politicians dealing in patronage and claiming a shared victim-hood with under-serviced poor; and listen to him warn of the similarities of our present to both 1930’s Germany and present-day Zimbabwe. There is no question in my mind that the red finger of his accusation is pointing at the likes of Julius Malema and his crew. I highly recommend the interview; catch it here.

The second piece is from Ray’s colleague Mondli Makhanya,  editor of the Sunday Times. He warns that the current ANC leadership is airbrushing both Thabo Mbeki and FW de Klerk out of history in much the same way as Stalin erased the image of Trotsky. It is an interesting point and, now that he mentions it, clearly true. Catch it here.

I am an independent political analyst focusing on Southern Africa and I specialise in examining political and policy risks for financial markets.

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