Cape Town - The fortunes of the rand following the shock recall of Thabo Mbeki on Saturday will be determined by the outgoing president's statement on Sunday evening, say economists. They'll also be keeping an eye on how Mbeki is ejected and whether he tenders his voluntary resignation.
Certainly, the speed with which Mbeki's enemies moved, and the suspicion it was to protect Jacob Zuma from further legal woes, has been unsettling for investors, economists say.
But, this is balanced by the fact that Mbeki's position has been imperilled since the African National Congress's (ANC's) conference in Polokwane in December.
The ruling party is also likely to be given the benefit of the doubt following finance minister Trevor Manuel's indication that he will be staying on until a new general election.
Sources in the ANC's National Executive Committee also believe Manuel will stay on after next year's election - quite likely a Jacob Zuma cabinet - which will also lessen anxiety over the weekend's developments. That's because investors watch the new government's policy moves rather than the politics around them.
But, it may not be a case of Mbeki tendering his resignation and going quietly. The options for getting rid of a sitting state president come with different ramifications, says FW de Klerk Foundation's Paul Hoffman.
Mbeki said that he would step down "once all the constitutional requirements" had been met. This appears to suggest that he believes the ANC National Executive Committee has no authority to fire him because they did not hire him. It was parliament that appointed Mbeki; therefore, only parliament can unseat him.
According to the constitution there are three ways of getting rid of a state president: through the dissolution of parliament; impeachment by the national assembly (known as clause 89); or it can oust him through a motion of no confidence (section 102/2).
The impeachment option requires a two-thirds majority in the national assembly, a dominance the ANC currently enjoys. But impeachment also requires proof of serious misconduct or violation of the constitution.
It also requires a two-thirds majority support among MPs in parliament. So while ANC has a two-thirds majority in the national assembly, it's unclear if all MPs would indeed vote against Mbeki.
Furthermore, this option would mean Mbeki would lose all pension benefits and would not be allowed to hold public office again.
Impeachment would mean that the cabinet stays on and a caretaker president would be elected from MPs. But this caretaker could not be Zuma because he is not a member of parliament.
The motion of no-confidence vote requires a simple majority (50% plus 1) in parliament. Again, it is unclear whether all ANC MPs would oblige and vote against Mbeki.
A motion of no-confidence would also mean the entire cabinet, deputy ministers included, would have to go with Mbeki. This is what would not bode well for the civil service and could cause concern in the market and, therefore, impact negatively on the currency.
Hoffman does not believe the ANC thought through the options clearly and now find themselves in a potentially tricky position.
"From a business point-of-view, the reaction is going to be very different if the entire cabinet is fired compared to a move that just gets rid of the president and replaces him with a caretaker.
"If Mbeki has done his homework, he would have worked out how much support he has in the national assembly. Most of those MPs owe patronage to him," says Hoffman who does, however, concede that politicians have short memories and have a penchant for expediency.
Mbeki is expected to make his next move clear this evening after a special cabinet meeting.
- Fin24.com