Turmoil in the ANC, 'State Capture' and the deepening crisis of South African Capitalism

The clashes among the South African ruling class which erupted into the open last December have now turned into open war. The revelations that the Gupta family have offered cabinet posts to various people on behalf of president Jacob Zuma have thrown the ANC government into disarray. This indicates the extent to which corruption has extended itself to the executive branch of government and to the heart of the ANC itself. The fact that private families can decide who serve as ministers in the cabinet shines a spotlight on the rottenness of the scandal-prone Zuma presidency.

The current crisis started on 8 March when the Financial Times claimed that two weeks before President Zuma fired finance minister Nhlanhla Nene in December last year, replacing him with backbencher David van Rooyen, the Gupta family had met with deputy minister of finance, Mcebisi Jonas, and had offered him Nene’s job. This claim was repeated a few days later when the Sunday Times dropped a bomb by providing even more details about the meeting between the Gupta family and deputy minister Jonas. According to the paper Zuma’s son, Duduzane, was involved at the meeting on 27 November where the Gupta brothers offered Jonas the post as finance minister on condition that he push through a controversial R1-trillion nuclear power deal in which the Guptas stand to benefit and which Nene was opposing.

Floodgates

The confirmation by Jonas a few days later regarding these allegations plunged the ANC into turmoil and opened the floodgates to other similar allegations. ANC secretary-general, Gwede Mantashe, a sensitive barometer of the mood inside the ANC, called on people with similar experiences to come forward. He said that if the situation was not “tackled” soon the country “would become a mafia state where all what the state will be doing is to nurse interests of family businesses.” Mantashe belongs to the the rival ANC faction which is closer to big business and which totally distrusts Zuma and see him as a liability.

Gwede MantasheFormer ANC MP and former chairperson of the portfolio committee on public works, Vytjie Mentor, described in detail how members of the Gupta family had offered her the job of public enterprises minister in 2010, replacing Barbara Hogan, on condition that she drop the South African Airways route to India and give it to Jet Airways, an Indian airliner with links to the Guptas. Mentor claimed that Zuma was in another room at the Gupta mansion in Saxonwold in Johannesburg when the Gupta brothers offered her the job and Zuma eventually walked her to a car after she declined their offer.

In turn, Barbara Hogan, a leading ANC member and wife of anti-apartheid stalwart Ahmed Kathrada, revealed that as public enterprises minister she was constantly under pressure to meet officials from Jet Airways: “I cannot tell you how much pressure I was put under to meet with Jet Airways. I was always aware while I was minister that there were forces [working] behind my back”, she told Radio 702.

Jet Airways is the same airline which landed an aircraft at Waterkloof Airforce base in 2013, bringing wedding guests of the Gupta family from India. At the time this was a major scandal because the airbase is used exclusively for military purposes and to receive heads of states.

Since Jonas and Mentor came out with their revelations other cases have also started to emerge. Former mineral resources minister, Ngoako Ramatlhodi revealed that he was summoned to Saxonwold to meet with the Guptas but that he refused. He was later replaced as minister by Mosebenzi Zwane who is close to the Gupta family via Free State province premier Ace Magashule. One of his first tasks was to travel to Switzerland to clinch a deal with Glencore officials as part of a delegation from Tegeta Exploration & Resources, a Gupta owned company, to buy Optimum Colliery which supply coal to state owned electricity company ESKOM. Former ESKOM chairperson Zola Tsotsi joined the anti-Gupta chorus by claiming that he was forced to resign because he did not want to give contracts to Gupta-linked businesses.

The National Executive Committee of the ANC decided over the weekend to conduct an investigation into the matter with secretary-general Mantashe steering it. The NEC made a call on all members with information to contact Mantashe. This is significant because Mantashe is in the big business faction which opposes Zuma. He had strong words for pro-Zuma members of the ANC Youth League and the ANC Women’s League, calling them “ill-disciplined”. All of this indicates that the dynamics of the ANC are changing and that Zuma’s grip on the ANC is slipping.

Mantashe also lashed out at the Gupta-owned media outlets: “The NEC expressed its utmost disgust at the arrogance, disrespect and reckless journalism displayed by the New Age Newspaper, ANN7 News Channel and representatives of the Gupta family”, he said

From clashes to open war

Zuma’s humiliating about-turn in Pravin GordhanDecember when he was forced to appoint Pravin Gordhan, a big business representative as finance minister was a heavy blow to the junior wing of Capital led by the Guptas. But after that defeat the pro-Zuma wing have regrouped. The war for control of the treasury has resumed anew and has in fact escalated to new levels.

The Zuma faction have launched a major assault against Gordhan using the state security agencies like the Directorate for Priority Crime Investigations, commonly known as the Hawks. Just days before delivering his budget speech, the Hawks sent the minister a list of 27 questions about his alleged involvement in setting up an alleged “rogue spy unit” when he was the commissioner of the revenue service. But whether or not there is any veracity to these claims, the fact is that the Hawks have been hounding him and have used every dirty trick in the book in their so-called “investigation”, including intimidation, threats and leaks to newspapers.

Gwede Mantashe came out publicly against the Hawks, calling their actions part of a “destabilising plan’’ against Gordhan and that it is “unfortunate that there are now initiatives that are intended to undermine this work, reverse the gains our economy has made and have a destabilising effect in the long term... The timing of these questions indicates clearly that there was intention to distract the minister during this important time. It is even more disconcerting that these questions were leaked to the media. In our view this is a well-calculated destabilisation plan with all the elements of disinformation, falsehoods and exaggerated facts”, Mantashe said.

The statement by Mantashe allowed Gordhan some space to travel to London and New York to brief investors about the state of the falling economy. Upon his return however the hostilities resumed anew with the Hawks being assisted by the ministers of police and state security.

Destabilisation

All these events have now further undermined the governing party, as Mantashe admits: “Such actions can have no place in the ANC or its government as they have the potential to undermine and erode the credibility and confidence of our people in the leadership of their organisation, the ANC and its government”, he said.

The South African Communist Party, which now finds itself fighting for the big business camp, claimed that a “Gupta-inspired” cabinet reshuffle was imminent. The first target according to the party is Rob Davies, SACP member and trade and industry minister. However given the divisions in the ANC, it is entirely possible that a wider reshuffle is possible which could target ministers belonging to the SACP. Such a scenario could have wider implications as it could lead to the further unravelling of the tripartite alliance.

The ANC is now entangled in a web of contradictions. If the ANC decides to recall Zuma as state president in the short term, it would also have to hold a special congress since the policy of the party as it stands is that the ANC president should also be the state president. But such a congress would be different to the 2007 Polokwane Conference where a clear leftwing had emerged. In this case the factions are between two wings of the ruling class. In such a scenario it is unclear which faction would be able to win the most support at such congress.

In any event, it is a gamble which the anti-Zuma faction is not willing to take. On the other hand, efforts by them to curtail Gupta’s influence on Zuma will be met with fierce resistance. We have already seen how certain sections of the Youth League and Women’s League have positioned themselves in favour of Zuma before the NEC meeting. This means that the ANC is stuck in a prolonged political quagmire.

The end of an era

The raging war between the two wings of the ruling class represents nothing less than the breakdown of the power sharing agreement between the white capitalists class and the black elite which was struck at the CODESA negotiations of the early 1990s. This so-called “elite pact” is the basis upon which the ruling class have governed the country for the last two decades.The fear of losing everything in a socialist revolution forced big business at the time to give nominal state power to the petit-bourgeois leadership of the liberation movement. In turn, the established wing of capital kept firm ownership of the R4-trillion economy. This deal also contained an understanding that the ministry of finance would always be in the hands of big business and that the Reserve Bank would remain “independent”, i.e, dependent on big capital.

Jacob ZumaBut the crisis of capitalism is cutting across all of this. In response to the slowdown in the economy, the treasury is putting in place a severe austerity programme. This poses a direct threat to the Guptas and the junior wing of Capital. Being locked out of the mainstream economy, the only option open to the upstart capitalists is to use their proximity to state power as a tool to amass wealth by plundering state resources through the tender system. Cutbacks in state expenditure will severely curtail this.

All of these methods are now reaching their limits. The deepening crisis in the economy now has the added effect that it is forcing the junior wing of the bourgeoisie to look for other sources of profits in the mainstream economy. This puts them in direct conflict with big business which is also being squeezed by the crisis of capitalism. This explains the battles around the position of finance minister. Their limited access to the broader economy inhibits the expansion of their business interests. Now the economic decline is forcing the department of finance to oppose big projects like the R1-trillion nuclear power proposal. The threat to the likes of the Guptas is that it risks cutting off their lifeblood. This therefore represents a life and death struggle from their point of view. Without a bridge to the broader economy and the threat of being shut off from government contracts by the finance department, they risk being squeezed out altogether. This explains why the Guptas are so desperate to get their hands on the treasury and a compliant minister.

This is in stark contradiction to the interests of the big business wing. Africa’s most industrialised economy is in the midst of a deep financial crisis. The World Bank forecasts that the economy will grow by less than 0.8% this year. Last year gross domestic product grew by just 1.3% which was the slowest growth since the 2009 recession. At the same time inflation has shot up to 7%, posing the nightmare of stagflation. The slowdown in the Chinese economy, the fall of commodity prices and the effects of a severe drought act as a further drain on the fiscus. The finance minister’s response is to to cut government spending, reduce the budget deficit, open the door to privatisation and to stabilize public debt. But on a capitalist basis there is no solution for this. All that is being achieved is an even greater cut in demand, which will only lead to a downward spiral.

The two wings of the capitalist class, unable to resolve the crisis, are therefore pitched against each other in a war from which neither can escape. In the process they will use every weapon available to them, including the machinery of state in the case of the Guptas and ownership of the economy in the case of big business. In turn, this will only aggravate the crisis of South African capitalism and pull it into a vicious downward spiral.

“State Capture”?

Over the last two decades the masses of working class people have participated in elections with the belief that they are voting for their government. Each time, the ANC government received huge majorities from the masses with the expectation that they were giving the government a mandate to improve their lives. But as Marxists have always explained, it is impossible to serve the interests of the working class while keeping the capitalist system intact. In a capitalist democracy, the government, no matter who it is, must abide by the laws of capitalism. This was clearly explained by Marx and Engels in the Communist Manifesto when they wrote that “the executive of the modern state is nothing but a committee for managing the common affairs of the whole bourgeoisie.”

The so-called attempt at “state capture” by the Guptas is not anything new. As Marx and Lenin have explained, in a capitalist democracy the state is not a democratic apparatus which serves the interests of the oppressed. The appearance of “democracy” is only a figleaf, as Lenin explained in The State and Revolution: “‘In a democratic republic,’ Engels continues, ‘wealth exercises its power indirectly, but all the more surely,’ first, by means of the ‘direct corruption of officials’ (America); secondly, by means of an ‘alliance of the government and the Stock Exchange’ (France and America).”

In South Africa the capitalists have long ago “captured” the state. The big established capitalists like Johann Rupert, Michiel Le Roux, Markus Jooste, Paul Harris, Nicky Oppenheimer, Jannie Mouton, Koos Bekker, Christo Wiese, Gerrit Ferreira, and Lauritz Dippenaar, through their giant corporations and their imperialist backers, are tied by a thousand strings to the state and the economy. What we are witnessing, therefore, is the attempt by a certain wing of the capitalist class to wrest control of the treasury away from another section of their class.

But big business have long ago learned the all the subtle ways with which to exercise their power. The Guptas, on the other hand, by landing a private jet at a sensitive military installation, demanding a blue light escort for their motorcades, summoning people to Saxonwold, and informing people directly that they will be appointed to cabinet, have through their arrogance, stupidity, and recklessness clearly revealed to the masses how South African society is truly being ruled behind the scenes. In a society with such sharp social contradictions, their amateurish ways are therefore a danger to the capitalists as a whole. It is in line with the actions of their political arm in the Zuma administration, which stumbles from one corruption scandal to another. Whereas their corruption previously “greased” the runnings of the system, it is now a major liability threatening to destabilise it, which is another important reason why the wider bourgeois are turning on them.

Revolutionary Consequences

The latest events come at the time when the student protests which have erupted late last year have reached new levels of militancy. It has become a truly countrywide movement. In fact, it is also now an avenue through which some layers of workers are moving, particularly those who are involved in the struggle against outsourcing at universities. This is the latest layer of the working class to have joined in struggle.

Large layers of the working class have already joined the struggle over the previous period. Through their own struggles, and on the basis of the big events which have rocked South African capitalism over the last period, large sections of the working class and the youth are drawing far-reaching consequences. The experience that the government is beholden to capitalist interests, and not to the working class people, will have a profound effect on their collective consciousness. This will have revolutionary consequences in the future.

These events clearly reveal that in a bourgeois democracy the state serves the interests of the bourgeoisie. It is a thoroughly bankrupt, rotten, and undemocratic machine for the oppression of the working class. No amount of investigations into this or that capitalist will change this. In fact, some of the capitalists will be all too eager for measures which could discipline the more reckless elements as a means to save the system as a whole.

What is required is for the working class to overthrow this corrupt and rotten capitalist state and replace it with a democratic workers’ state. The answer to this nightmare from a working class point of view is to overthrow the capitalist system which is the root cause of all of this.