South Africa's ruling party not splitting: minister

By Phakamisa Ndzamela

PRETORIA (Reuters) - South Africa's ruling African National Congress is not splitting following the resignation of President Thabo Mbeki and almost a third of the cabinet, one of the outgoing ministers said on Wednesday.

Addressing a news conference after Mbeki's last cabinet meeting, one of his closest aides, outgoing Minister in the Presidency Essop Pahad, expressed bitterness at the way in which the party leadership had forced Mbeki out.

"In my view I think the decision was profoundly unjust. I ... feel very aggrieved," he said.

He dismissed rumors that the badly divided ANC was splitting because of the worst crisis since the end of apartheid 14 years ago.

"I am not aware of any discussions to create a split inside the ANC. Until such time that such a thing happens, it will remain in the realms of speculation and rumor mongering," Pahad said.

Some political analysts have said the resignation of Mbeki, 10 ministers and the deputy president would lead to the creation of a breakaway faction from the formerly monolithic ANC, challenging its iron hold on power in Africa's biggest economy.

The resignations, the climax of a power struggle between Mbeki and ANC leader Jacob Zuma, have led to fears of political instability that could disrupt South Africa's longest period of growth.

Mbeki announced his resignation on Sunday after the ANC withdrew its support following a judge's finding that he had interfered in a graft case against Zuma.

Almost one-third of the 30-strong cabinet followed suit on Tuesday, many of them Mbeki loyalists like Pahad.

NEW PRESIDENT

Parliament is expected on Thursday to appoint ANC deputy leader Kgalema Motlanthe as interim president until a general election next year, which Zuma is expected to win.

The resignations, which included Finance Minister Trevor Manuel, Defense Minister Mosiuoa Lekota and Public Enterprise Minister Alec Erwin, further rattled foreign investors worried by the departure of Mbeki.

Manuel's departure shook markets, but they partially recovered when he said he would be happy to serve under a new president.

Political analysts say that, while market nerves would be steadied if Manuel stayed on, investors will be closely watching to see if left-wing elements in the ANC put pressure on him to change economic policy.

Acute market sensitivity to Manuel's fate highlighted the challenge facing the ANC, which wants to reassure investors it can manage the economy while being pushed by radical and left-wing allies to do more to help the poor and unemployed.