ANC and DA contemplate end of days

On the morning after the budget battle, neither the ANC nor the Democratic Alliance (DA) appeared readily able to find the will or a way to salvage the grand coalition they formed 10  months ago.

President Cyril Ramaphosa was contemplating the future of the government without the ANC’s biggest partner, while DA leaders were weighing the case for and against withdrawing from the post-election pact.

The party’s ranks were expecting a final announcement at the weekend, while some of the ANC’s staunchest proponents of working with the former opposition said they believed this was the end of the arrangement.

“What alternative is there after the events of the past days?” one asked.

Ramaphosa’s insistence on building that partnership into a broader, government of national unity (GNU) was always short-term insurance against a standoff such as the one that ensued over Finance Minister Enoch Godongwana’s unpopular VAT increase.

The DA’s refusal to back the first budget Godongwana prepared for tabling in February with a two percentage point increase did not sink the coalition because senior ANC ministers also did not support the hike. The ANC did not waste time hurling recriminations over the prior leaking of budget proposals because it did not believe the DA alone was to blame, such was the unease about the increase.

And there was a readiness to concede, at least among Ramaphosa’s closer allies in the party, that the time had come to make the budget process more transparent and consultative.

But senior ANC government officials view the DA’s revolt against the coalition line on Wednesday to vote against the reworked fiscal framework Godongwana tabled on 12  March as the final straw in a relationship that never settled into a one of reliable cooperation. 

Ramaphosa’s office summed up the state of play, moments after the National Assembly voted by 194 to 182 to approve the measure, by warning that it was not possible to be part of the government but reject the budget. 

His spokesperson Vincent Magwenya said it was hard to see how six DA cabinet ministers could implement a fiscal framework they had sought to block.

He added a reminder that Ramaphosa never took rushed decisions. The president had, in leaked remarks to the ANC caucus on the eve of the vote, reminded colleagues of his preference to allow opponents plenty of rope to hang themselves.

A DA strategist said the party would not act in “a rushed or rash fashion either”.

The decision is not made any easier for either by the country faces more economic trouble after US President Donald Trump on Wednesday announced he was imposing a 10% tariff on all imports to the US and additional reciprocal tariffs for dozens of countries, including 30% for South Africa.

The stability of the GNU has been a selling point for cabinet ministers trying to encourage foreign investment and find new trade partners after Trump declared diplomatic war on South Africa in February, signalling that exclusion from preferential trade under the African Growth and Opportunity Act would follow.

But the parties have lived at loggerheads over economic and foreign policy, aside from the wrangle over key health and land legislation, and the DA’s frustration was that the ANC refused to share power and let it influence policy where it mattered.

It recently took a decision to stop referring to these battles as red lines because, as one MP put it privately, “that has not worked out well for us a number of times now”.

The VAT increase in itself was not a real red line, as the DA had in negotiations agreed to accept the hike in return for an agreement that the ANC would agree to spending reforms and allowing the party to help shape the country’s economic agenda. 

It added further demands to the list in negotiations that stretched from last week to Tuesday’s meeting of parliament’s standing and select finance committees where, with the help of ActionSA, the ANC fudged a way out of the impasse.

These included that the deputy finance minister, Ashor Sarupen, be named as co-chair of Operation Vulindlela, the unit in the presidency that drives structural reforms, alongside his fellow deputy finance minister, David Masondo, as well as an amendment to the Expropriation Act.

The DA is challenging the law in court, as it will now do with the fiscal framework.

“At what stage will the DA realise it has to govern with us, not against us?” asked one ANC member of government, who added that after the events of this week there was no alternative to the party’s exit from the coalition.

“Former president Thabo Mbeki always urges leaders to deal with concrete reality when exercising their duties of leadership and to avoid dealing with an imagined reality. The DA is incapable of that.”

The ANC does not blame DA leader John Steenhuisen for the party’s hard line and believes he probably lost an internal battle “with people who found the GNU incompatible with their beliefs and agenda”.

That is code-speak for Helen Zille, the party’s federal chairperson, whom the ANC has, since the coalition negotiations last year, cast as the hardliner driving DA decision-making.

The reality is more nuanced but an influential DA member said on Thursday he believed that if Ramaphosa were to seek to repair the relationship by offering the DA some of the substantive policy concessions it had sought in return for supporting the fiscal framework, Steenhuisen would be amenable to staying in the coalition.

The real question, he said, was whither the economy, because it would determine how voters, and donors, judged its participation in the GNU. 

“The red lines all run along economic reservations,” the source said, adding that the DA’s foreign policy concerns spoke to the country’s economic fortunes.

“Our objective was to get the economy growing. Now, if we are not able to do so, if the ANC’s understanding of the GNU is a continuation of policies that were followed before, then it becomes really difficult either to achieve that change or to benefit politically from the decline of the ANC.”

He likened remaining in the coalition under present conditions to being a passenger on a sinking ship, and commanding the ministries of agriculture, basic education, communications, environment, home affairs and public works as “moving the deck chairs on the Titanic”.

There is considerable scepticism in the DA that the promise of concessions that came from Ramaphosa’s office to its negotiators were sincere. The suspicion of bad faith was inevitable because the ANC was also negotiating with the Economic Freedom Fighters and eventually ActionSA.

The latter, which is outside the coalition and holds six seats in the National Assembly, came through at little political cost by tabling a proposal to the finance committees to approve the fiscal framework, but add a recommendation that Godongwana find an alternative to the VAT increase and fiscal creep in the next 30 days. 

The compromise is not unlawful, as some MPs protested, but neither is it binding, and the committee report and subsequent vote paved the way for the tax increases to take effect on 1  May. There is too little time, even if there was the will, to undo the operation of section 7(4) of the VAT Act in respect of the fiscal framework.

“Maybe the president can backtrack and say there is space for compromise. If that is possible, it is certainly in the country’s interest to try and if it depends on the DA and it depends on John Steenhuisen, he would certainly be happy to try,” the DA member said.

DA founder Tony Leon noted that the agreement always rested on an understanding that “the DA would share power, not all power, but some power, in determining the economic weather of the country”.

He said the party, which has highly reliable in-house polling, would be weighing voter sentiment but also, again, whether it could forge a working relationship with the ANC that, although far from ideal, allowed it to conclude that staying in the government, and keeping out worse alternative ANC partners, was in the country’s interest.

“You will get a mixed picture. Some people will say leave immediately and others will say hang in at any price. These are imperfect choices that have to be made within not an inordinate amount of time as a whole range of crises descend on the country, some provoked by the ANC, some not of their choosing.”

Ramaphosa is mindful of the economic risk of letting the DA leave the coalition, but also faces pressure in his own party to call time on the arrangement. 

Leon suggested the president should consider whether he wanted to spend the remainder of his term not knowing whether the ANC can muster the necessary numbers on any key vote, noting that, had all uMkhonto weSizwe’s MPs made it to the house on Wednesday, the fiscal framework would not have been approved.

“Jean-Paul Sartre said: ‘If a victory is told in detail, one can no longer distinguish it from a defeat,’ he said, referring to the French philosopher.

“So the ANC has to say to itself: is this how we are going to govern the country, going from vote to vote uncertain whether we will get a ‘yes’ vote in parliament on anything from a motion of no confidence to future budgets and legislation, or do we want a stable coalition with reliable partners? 

“If the answer is the latter, they have to look at what kind of partnership it is.”