If Mandela's Coalition Crumbles, South Africa Could Follow

After reveling in the euphoria of Nelson Mandela's metamorphosis from political prisoner to President, South Africa's ruling African National Congress is in a shambles. Political gridlock now risks dashing the earlier high hopes of an equitable and prosperous post-apartheid society.

Problem No.1 for Mandela is that the crucial alliance between the ANC, the South African Communist Party, and the Congress of South African Trade Unions (COSATU) is at the breaking point. Inside the ANC, there is rift between socialist-style stalwarts and pro-market converts. An ANC Congress in December--due to confirm Thabo Mbeki as Mandela's successor--may determine whether the alliance can survive. "If the glue doesn't hold, there's every possibility that we will end up with a hung Parliament," warns Tony Twine, director of Johannesburg's Econometrix economic consultancy.

Since coming to power in 1994, Mandela's government has used its overwhelming 62% parliamentary majority to cozy up to business. But his policies haven't been bold enough to really get the economy moving. Foreign investment is slow to come, growth is lackluster at about 2%, and unemployment is stuck at 40%. Meanwhile, crime, corruption, and labor unrest are growing, and the ANC's leftist allies are seething. Popular support for the ANC has dwindled by 10 points, to 53%, since 1994, according to a recent poll. Meantime, Mandela is focusing more on his place in history, by trying to broker peace in Sudan and Zaire, and on pushing Cape Town's candidacy for the 2004 Summer Olympics, while avoiding thorny domestic issues.

Part of the problem is the lack of a strong parliamentary opposition. Former President F.W. de Klerk resigned on Aug. 26 as leader of the right-wing National Party, while Chief Mangosuthu Buthulezi's Inkatha Freedom Party emerged weakened from provincial elections last year. So, with no other outlet, protest has moved to the streets.

COSATU, with nearly 2 million members, is pouring oil on the flames. It threatens to stage paralyzing strikes unless the government meets its demands, including a 40-hour workweek phased in over five years. COSATU already shut down many industries with mid-August regional strikes to protest legislation that would cut workweeks to 45 hours immediately from up to 60 hours now.

The core conflict is over government economic strategy. Labor leaders wanted to emphasize subsidized job programs. But the government has followed the advice of business--that only growth will create more jobs.

PROTEST-HAPPY? Now, labor militancy is widespread. Recently, occupational groups from teachers to textile workers have struck, as have workers at companies such as Nissan Africa Ltd. Worried about the impact on foreign investors, Adrian du Plessis, negotiator for the Business South Africa employers' federation, warns: "The perception is that South Africa is strike-prone and protest-happy."

The government has other worries. In July, five ANC members were shot and killed in an apparent resurgence of political violence in KwaZulu-Natal province. Mobs protesting utility shutoffs for nonpayment of bills torched vehicles in clashes with police in Johannesburg in August.

Meanwhile, many of Mandela's campaign pledges are falling by the wayside. Decent housing has failed to materialize for most. Land reforms, to return land expropriated by whites under the apartheid regime, have stalled.

Mandela and Mbeki will not be able to deal with them, or much else either, unless they can reassemble a focused alliance. If they fail, South Africa may be unable to escape more chaos.

Before it's here, it's on the Bloomberg Terminal.