By Jon Herskovitz and Peroshni Govender
DURBAN (Reuters) - South African President Jacob Zuma tried on Monday to mend strained relations with his trade union allies who helped him to power, promising to get tough on corruption and create more jobs in Africa's largest economy.
Zuma, who is striving to shore up his authority, rejected suggestions that his governing alliance with the COSATU labour federation was in trouble.
But he failed to embrace calls from his labour allies for nationalisation of some mines and a weaker currency, when he delivered a keynote address at a major policy event for his ruling African National Congress.
"All the bold headlines about the imminent death of the alliance are a waste of time and ink because the alliance will live for a long time to come," Zuma said at the ANC's National General Council, a weeklong event in the coastal city of Durban.
Zuma, already seen by analysts as an ineffective leader, could leave the ANC's most important meetings in years in a weakened position if he fails to hold on to old allies, who want left-leaning economic policies, or to win over some new ones.
One of Zuma's main tasks is to mend ties with the powerful COSATU federation, strained by a three-week state workers' that was suspended earlier this month, and union accusations of cronyism and corruption in his government.
Zuma promised to take on the concerns of the labour federation about growing corruption, but offered them little in terms of embracing their economic policies. "We must eradicate corruption as well as perceptions of corruption," Zuma said.
ZUMA FIRM ON RAND
One big headache for the export-reliant country is the rand, which rose 30 percent last year and is up 5 percent so far in 2010 versus the dollar as foreign investors pile into the country's bond markets.
COSATU has called for a reversal of steps to relax currency controls on the rand, which is also up 13 percent against the euro this year, eroding export competitiveness.
But Zuma showed that he would not bow to some of COSATU's demands by saying he wanted to keep the rand, now at 2-1/2 year highs, "stable and competitive" and criticising aspects of the state workers' strike, led by COSATU-affiliated unions.
One analyst said COSATU, through its active support for the public sector strike, had embarrassed Zuma and the government.
"It would be fair to expect the president not to just take that on the chin. He will not chase them away but he may also look to strengthen his position by broadening the alliance that has brought him into power," said Roland Henwood, the acting director of the Institute for Strategic and Political Affairs at the University of Pretoria.
Former backers have indicated they may not support him for re-election when his term as president ends in 2014, while economic growth looks set to slow.
Finance Minister Pravin Gordhan told delegates to the conference that the country has lost billions of rand through corruption. "It's a cancer. If you don't catch it early enough and if you don't tackle it early enough, it will become the end," he said in a speech.
Zuma will also need to fend off various rivals in the splintered ANC who are lining up to challenge him at the next ANC leadership election in 2012. Due to the ANC's electoral dominance, that person is likely to be South Africa's next president.
Speaking on the sidelines of the conference, Gordhan told Reuters that "nationalisation is not government policy."
The calls for mine nationalisation by COSATU and the ANC's Youth League are not likely to lead to any major change for a sector that accounts for about 6-7 percent of GDP, analysts said.
Mine nationalisation would place an enormous financial burden on the country. The Mail and Guardian newspaper cited cost estimates of at least 2 trillion rand ($280 billion), more than double the annual state budget.
The Durban meeting lasts until Friday. The next major event on the ANC calendar is the National Policy Council, including the leadership election, in 2012.
(Editing by Marius Bosch and David Stamp)
