Analysis: Zuma's backers seek concessions for second term

JOHANNESBURG Fri Jul 1, 2011 8:55am EDT

South Africa's President Jacob Zuma attends the 20th World Economic Forum on Africa in Tanzania's commercial capital Dar es Salaam, May 7, 2010. The forum runs from May 5-7. REUTERS/Thomas Mukoya

South Africa's President Jacob Zuma attends the 20th World Economic Forum on Africa in Tanzania's commercial capital Dar es Salaam, May 7, 2010. The forum runs from May 5-7.

Credit: Reuters/Thomas Mukoya

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JOHANNESBURG (Reuters) - South African President Jacob Zuma's trade union and party youth supporters are seeking concessions in return for backing him for a second term, fanning investor fears over the future of Africa's biggest economy.

The COSATU labor federation expressed frustration at a strategy meeting this week at being marginalized by Zuma, despite having helped him win leadership of the African National Congress and the presidency, held by the ANC since 1994.

"Help us help you. We don't like the space we are in now," COSATU's general secretary Zwelinzima Vavi said on the sidelines of the meeting.

"We don't like the politics of this moment."

Despite his leftist credentials, Zuma's economic policies have largely remained pro-business, driven by the treasury and central bank -- easing investor concerns of a radical shift to the left.

With an ANC leadership election due next year and a presidential election in 2014, the labor federation and fellow political heavyweights the ANC Youth League are stepping up the pressure, although as yet no direct challenger has emerged.

COSATU, which represents 2 million workers, wants more labor friendly legislation that would drive up costs for employers and severely weaken the rand. It is also demanding a crackdown on corruption, which has broad support both locally and internationally.

The ANC Youth League led by the populist Julius Malema who once said he would "kill" for Zuma, is also now at odds with him. It has called for the nationalization of mines and a huge land seizure, plans analysts say would bankrupt the country.

TREASURY DICTATES POLICY, NOT ZUMA

Investors are worried Zuma might make concessions to one or both sides, although disagreements between them could work in his favor.

The 30-year-old Malema, who appears to have his eye on the presidency, has the support of millions of poor and young disillusioned blacks who have been excluded from economic gains made after the end of apartheid 17 years ago.

It is unlikely that he can pose a direct challenge to Zuma at the ANC's next elective conference but his grassroots support could set him up as a presidential hopeful in the next decade.

"A lot of leadership discussions are being cast in terms of whether Malema is the future president and is the raft of policies he represents, the raft of policies that are waiting in our future," our future," said analyst Nic Borain.

Zuma has made it clear that the youth league's proposal to nationalize mines is not government policy but has created a committee to investigate its viability.

COSATU is concerned about Malema's rising influence, saying he is backed by what it calls a "predatory elite" of businessmen set on lining their pockets, allegations Malema denies.

The unions have called on Zuma to reprimand Malema and with 18 months to go before the leadership race, Vavi said Zuma had a "chance" to appease them. Analysts said in the end they would probably stick with him.

"COSATU will try to get concessions and push for greater influence in government but at the end of the day they know that if they want to fight off Malema, they need Zuma," political analyst Sipho Seepe said.

"They have made it clear they don't want another president who is business friendly and backing Zuma is the only way."

(Editing by Jon Herskovitz and Philippa Fletcher)

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