Oct 26, 2009

JOHANNESBURG (Reuters) - South African opposition party COPE accused the government on Monday of bowing to pressure from left-leaning unions and shifting economic policy towards more socialist agendas.

Mvume Dandala, parliamentary leader of the Congress of the People, formed by dissident members of the African National Congress (ANC) last year, said COPE was worried about recent changes by President Jacob Zuma to his cabinet structure.

The party, which won 7.42 percent of votes in April's general election and has 30 seats in South Africa's 400-seat parliament, was also concerned about the resignation of a senior policy maker from government and the end of central bank Governor Tito Mboweni's contract, Dandala said.

"The discontinuation of Tito Mboweni's contract as Reserve Bank governor and the resignation of the head of government's policy, Joel Netshitenze, is a growing concern," Dandala said in a statement.

"And it is another indication of this continuing trend by the alliance partners to suffocate the free-market system and replace it with socialism."

The resignation of Netshitenzhe, an architect of policy since the end of apartheid, added to investor concerns that Zuma may be bowing to labour and communists, who are allied with the ANC and helped bring him to power.

Zuma announced new cabinet clusters last week, tasked with planning and decision-making, leaving out former finance minister Trevor Manuel -- who was widely respected by markets and now heads a new planning commission -- after pressure from influential unions and the South African Communist Party (SACP).

Manuel, who steered South Africa's economy through its longest period of recorded growth, is loathed by powerful unions, who saw him as a champion of business-friendly economic policies under former President Thabo Mbeki.

"We are alarmed that Trevor Manuel has been edged out of the economic planning cluster," Dandala told reporters at a media briefing.

South African opposition parties have long criticised the ANC for being swayed by leftist allies on policy decisions.

Zuma, in office since May, has been under pressure from COSATU and the SACP to move economic policy to the left to help the millions of poor people in Africa's biggest economy.

They want more government spending on welfare and job creation, lower taxes for the poor and for the central bank to be brought under state control.