Hopes on minister’s newly found strength and muscle — Tony Leon

IN FOUR days of market turmoil, political crisis and apocalyptic moments, there were ironies aplenty, alongside a lot of gallows humour. Born-again Finance Minister Pravin Gordhan personifies the greatest of them.

In a matter of days, he has replaced the shortest-lived and weakest finance minister in the country’s history, Desmond van Rooyen, to become the strongest in living memory. He gave a command performance in Pretoria on Monday. He played the media and a grateful nation rescued by his hasty appointment from a near-death financial experience with the assurance of Joshua Bell playing his Stradivarius violin.

Actually, he could have as easily read out the weather report and that would have calmed the market turmoil, simply knowing there was a grown-up and competent and credible official back in charge of public finances. That he went further and spoke up for fiscal discipline, took aim at the looting of state-owned enterprises and reminded the man who appointed him that credibility was earned by trust, not conferred by title, is a bonus. It gives some hope that from the wreckage of recent events, some real good can emerge.

But Gordhan’s newly found strength is not just in his person and his aura of reassurance. It lies in the naked weakness of the man who, in panic and haste, had to recall Gordhan to the fiscus, Jacob Zuma. The four-day former minister of finance, Van Rooyen, owed his continuance in office entirely to Zuma. Gordhan, not given to grand gestures, it is true, must know that Zuma’s continuance in office depends on the new/old finance minister staying the course and continuing in office. SA almost fell off the cliff last week when it went through two finance ministers. The fall of the third could be fatal.

This gives Gordhan great strength to resist the pillaging and the reckless record of recent times, and South Africans at home and investors abroad must nurture new hope that he will use this muscle.

The second great irony, perhaps the greatest and perhaps the saddest, is that the power of the markets and the “electronic herd” (to borrow Thomas Friedman’s phrase) that drives its behaviour proved a more potent check on the excesses and outrages of Zuma than the Constitution, which has proved to be less of a roadblock to unfettered presidential power and the abuses of it.

There is at least a double paradox within this irony. Gordhan was, and perhaps still is, a communist. And, as anyone present at Codesa can attest, he played an outsize and key role in settling the interim Constitution. But in his constitution-making and more recently in the shark tank of public finances he is, at least, a smooth pragmatist.

The other half of this double is the high improbability that Zuma, Gordhan or anyone else in the government is an admirer of Margaret Thatcher. Yet it is her immortal throwaway line that explains the turmoil that forced Zuma to uncharacteristically reverse course so drastically on Sunday night. The Iron Lady once declared, “You can’t buck the markets.”

South Africans painfully learnt this in recent days. And you certainly can’t defy the laws of economic gravity when you have a current account deficit that needs bond purchases of R4bn every week to finance it.

Last Wednesday night when Zuma went for broke in a move that shattered investor confidence, spiked bond yields and battered the rand into a pulp, he also inadvertently converted the gloomy Cassandra, author RW Johnson, into an optimist.

Earlier this year, after Johnson published his book How Long Will South Africa Survive? The Looming Crisis, he was asked how long he believed it would take for the country to go cap in hand to the International Monetary Fund for a bail-out. “Around two years,” he reckoned. Nhlanhla Nene’s axing seemed to move the date much closer. Gordhan’s restoration moves it further away, one hopes.

In 2009, the veteran American journalist and close confidante of Thabo Mbeki, Charlayne Hunter-Gault, wrote a perceptive article in The New Yorker on newly installed President Zuma entitled, The Third Man. The most arresting quote was an off-therecord comment by an African National Congress insider, who declared: “The difference between Mbeki and Zuma is that Mbeki decides and never consults, and Zuma consults and never decides.”

Until last week, this seemed a reasonable description of aspects of the Zuma presidency. He might have inflicted huge damage on the constitutional settlement with a lot of willing party accomplices but he appeared to buy into one settled item of country and party consensus.

Now, more than two decades in the making, the settled wisdom was that the Treasury was the equivalent of a Ming vase. The minister in charge of it might sit in a Cabinet of curiosities and worse, but the finance minister, like Caesar’s wife, needed to be beyond reproach and possessed of competence. On Wednesday evening, Zuma drove a truck through that consensus and smashed the Ming vase to smithereens.

Even the original announcement was unadorned by any credible explanation for dropping the country’s fiscal pilot at a moment of national economic peril. And when, some two days after a currency and market bloodbath, an explanation of sorts was offered, it utterly lacked conviction given that the messenger, the Presidency, had shed the last vestiges of credibility. Zuma’s later retreat was proof of this.

The clue to the president’s original thinking was given when, in the phrase of arch chronicler Rian Malan, he went for the “full Mugabe” in a speech that night.

Zuma’s speech was full of pain and bathos. It was also studded with some startling inaccuracies. His grasp of geography, when he described Africa as the biggest continent in the world, will unsettle his Chinese friends, at least, given that the continent of Asia is many times larger in both physical size and population.

But his grip on economics was even worse. Channelling his inner Economic Freedom Fighters’ sympathies on the subject he declared: “I (rebel ) against it that the determining value of a commodity is the law of supply and demand. I define it differently. It is the necessary labour time that is what defines the value of a commodity.”

On Planet Zuma the world of work might seem to be so aligned. But here in the real world of the Uberisation of everything, Zuma might wish to pause and read the recent Oxford study that of all current jobs, 47% will soon be fully automated.

And that irritating law of supply and demand is the essential reason a country such as the one Zuma leads with a big current account deficit is so crucially dependent every week on the demand of investors for its bonds to be bought and its equities to be purchased. That, more than any postcolonial pain, is what — until Wednesday night at least — the minister and his Treasury team understood and tried to practise. Gordhan must now restore it.

The story so far might yet have a better ending . But whether Zuma himself will still be giggling and laughing at the end of it, and where exactly he will be when it ends, remains to be seen.

The power of the markets proved a more potent check on the excesses of Zuma than the Constitution