Bill Clinton’s political adviser James Carville once said he’d like to be reincarnated as the bond market because it was the one thing more powerful than the president of the US.

Last week, President Jacob Zuma joined a long line of world leaders to have been disciplined by the bond market when SA’s largest local bond fund manager, Futuregrowth, said it would no longer buy bonds issued by state-owned enterprises (SOEs) due to governance concerns.

Whether a bond boycott is enough to force Zuma back from his apparent bid to "capture" all levers of state power (including the Reserve Bank and national treasury) depends on the extent of push-back from the market, civil society and the anti-corruption camp within government and the ANC.

In a week of high drama, South Africans got whiplash from watching the tit-for-tat battle between the two sides. Early indications are that the fight-back campaign may be gaining traction.

Treasury was first out of the blocks last Monday. It accused Eskom of lying to the public and of refusing to co-operate in treasury’s investigation into its coal contracts with Gupta-owned Tegeta Resources.

Gupta-aligned cabinet ministers, David Des van Rooyen of co-operative governance and Mosebenzi Zwane of mineral resources, aided by ANC deputy secretary-general Jessie Duarte, countered with a slew of public pronouncements, including the insistence that finance minister Pravin Gordhan bend his knee to the Hawks’ probe.

Duarte and Zwane widened the dragnet by launching an assault on the independence of the Reserve Bank, adding policy incoherence to the intense political infighting that threatens to derail the economy.

The week ended with ANC secretary-general Gwede Mantashe lamenting that SA’s cabinet had become dysfunctional and the DA labelling Zwane a "rogue minister" and calling for his axing.

"There has been a volley of fire from both sides," says Nomura economist Peter Attard Montalto. "There has been an effective fightback from ‘Team PG’, including the effective rallying of business and civil society."

The Helen Suzman Foundation and Freedom Under Law were among the nongovernmental organisations that piled on the pressure. They intend to interdict the Hawks this week from arresting Gordhan on "trumped-up, baseless charges".

Helen Suzman Foundation director Francis Antonie says the Hawks’ allegations are without foundation and the way they have conducted their investigation into Gordhan amounts to harassment and an infringements of his rights.

"Why is there this onslaught on treasury? Is it because it stands in the way of certain interests?" he asks. "This has got nothing to do with Mr Nene, Mr Gordhan or Mr Manuel. All South Africans should be very concerned with attempts to usurp its operational independence."

The DA is set to approach the Cape Town high court this week for an order to declare SAA chair Dudu Myeni’s re-appointment as invalid and against the law.

This follows cabinet’s release last Wednesday of an approved list of 12 new board members for the national airline, with Myeni at the top of the list. Opinion is divided on whether this marks a defeat for the anti-corruption camp since Gordhan had apparently wanted Myeni and her board to be replaced before treasury would provide any further bailouts. On the other hand, the list is dominated by private-sector heavyweights whose combined efforts should ensure that Myeni is contained.

Technically bankrupt and kept going only on the basis of government guarantees, SAA has used up virtually all of its R14.4bn in guarantees under Myeni’s leadership, while key executives have left or been purged under the weight of her interference.

It remains to be seen if the mounting resistance and public clamour will cause Zuma to backtrack on his apparent plan to oust Gordhan, in the same way it forced his retreat after he axed finance minister Nhlanhla Nene in December.

But judging from the brazen campaign being waged against Gordhan, treasury and now the Reserve Bank, it appears Zuma’s camp has become more resistant and is resigned to the prospect of SA being downgraded to junk status.

"We don’t see a market sell-off as an effective stopping force in the way it was during Nenegate," says Attard Montalto. "There are differences on the other side as well, however. We have already seen a much fuller, faster multilateral approach to defending Gordhan as well as national treasury being much more aggressive against SOEs. This ratcheting-up on both sides is why we think the end game may be approaching."

Only a few years ago, Zuma’s cabinet issued a strongly worded statement in which it noted that the Bank was "a crucial national institution" and pledged that "government would continue to ensure that this independence was not compromised".

Duarte made a mockery of that pledge when she suggested that private shareholders had somehow compromised the Bank’s ability to calm the rand, which had weakened by more than R1 against the dollar on news of Gordhan’s possibly imminent arrest.

If her and Zwane’s attempts to knock the Bank weren’t so amateurish they would be more worrisome, but they remain disturbing given that the Bank’s independence and credibility are among the last pillars supporting SA’s investment case.

"The only reason SA hasn’t yet lost its investment grade credit rating is the relative strength of its institutions," says Rand Merchant Bank chief economist Ettienne le Roux. "On this score, the independence of the central bank is as critically important as that of other autonomous institutions like the constitutional court, the public protector and treasury."

The constitution says the Bank "must perform its functions independently and without fear, favour or prejudice". There is no contradiction between this injunction and the fact that SA’s central bank is one of the few in the world that has private shareholders. The Reserve Bank Act has allowed for private shareholders since the Bank’s inception in 1921 on the premise that the more representative the Bank’s board is of the wider community, the more likely it is to gain the public’s support and trust.

Shareholders in the Bank do not enjoy the same rights as shareholders in an ordinary company: their interests are subservient to those of the general public and government. Dividends are also capped at 10c/share and 90% of the unallocated surplus must, by law, be returned to the fiscus.

So though the shareholders have an interest in the Bank, they do not own it nor do they have any influence over monetary policy decisions, financial regulation or the objectives of the Bank. Parliament reconfirmed this in 2010 in amending the act to reinforce the Bank’s independence. The amendments were passed expressly to thwart a real shareholder conspiracy.

At the time, a group of eight private family shareholder blocs, under the leadership of a German, Michael Duerr, was attempting to appoint directors of their own ilk to the Bank’s board and to profit from their shares by agitating for the Bank’s nationalisation.

The group’s objective was to force the state to compensate them for their shares at well above their R1 nominal value, or even their market value, in order to obtain a significant windfall on their investment.

Rather than do away with private shareholding, the act was amended to ensure that no private shareholder could use family or close associates to accumulate more than 10,000 of the 2m Bank shares in issue. Each shareholder is entitled to only one vote in respect of every 200 shares and dividends are capped at R1 000 per person a year.

The board has only ever had responsibility for governance issues. It has no input on, or prior knowledge of, monetary policy decisions. All this is well known, making Duarte’s "conspiracy theory" an obvious misrepresentation of institutional facts that are easy to establish, says Prof Stan du Plessis, Stellenbosch University’s dean of economic and management science.

Du Plessis also takes issue with Duarte’s suggestion that the Bank should be preventing the rand’s slide, pointing out that she fails to understand how limited the Bank’s capacity is to defend the rand during a concerted sell-off, or that targeting the rand would contravene the Bank’s policy mandate, which is to target inflation.

She also fails to appreciate that by suggesting this "hopeless defence" of the rand, she has contravened the independence given to the Bank by her own government regarding how it uses the monetary policy instruments at its disposal.

And he adds that instead of shouldering responsibility for the rand’s fall, which has been largely caused by the controversy surrounding Gordhan, "Duarte is now trying to evade responsibility by blaming the outcome on a shareholder conspiracy".

In response to Duarte’s assertions, former Bank governor Tito Mboweni let rip on Facebook with a lecture on the Bank’s history and functions.

"In short, before you open your mouth and shout crazy, ignorant things about the SA Reserve Bank, please read this and visit the SARB website for more literature," he said. "The ANC has long ago resolved these issues ... No leadership must act and look so stupid! At that level, we expect better!"

But his appeal fell on deaf ears. The next day, Zwane exposed even greater depths of ignorance when he called, in the name of cabinet, for a judicial inquiry into the conduct towards the Gupta family of the banking sector, the Reserve Bank and treasury.

Zwane had, since April, co-ordinated a cabinet interministerial committee (IMC) investigation into whether certain banks and financial institutions had acted improperly when they closed bank accounts or terminated contractual relationships with the Gupta company, Oakbay Investments.

The situation warranted close scrutiny because of the impact it would have on job losses and investor confidence, said Zwane (without any apparent irony) in a statement he released after a cabinet meeting last Thursday.

Zwane’s committee concluded that "all of the actions taken by the banks and financial institutions were as a result of innuendo and potentially reckless media statements", leaving Oakbay with little recourse to the law.

By failing to protect Oakbay, treasury was part of the problem, it inferred: "Evidence presented to the IMC suggested that all SA’s economic power vests in the hands of very specific institutions, institutions who have shown that their ability to act unilaterally is within their mandate and is protected. These institutions are owned by private shareholders and report to national treasury who in turn do [sic] not need to act on information provided to it".

Though Gordhan was a member of the IMC, he did not participate in its meetings. Zwane was emphatic, however, that the committee’s recommendations had the force of cabinet resolutions.

Cabinet had resolved, he said, to recommend to the president that he establish a judicial inquiry to ascertain whether the various financial institutions as well as the Reserve Bank and national treasury had complied with the Financial Intelligence Centre Act and the Prevention of Combating of Corrupt Activities Act in relation to Oakbay.

The judicial inquiry would also have to "re-consider SA’s clearing bank provisions to allow for new banking licences to be issued ... to create a free-market economy".

Moreover, "careful attention" would need to be given to why the Bank seemed reluctant to issue new banking licences.

There was reportedly also discussion in cabinet about shifting responsibility for licensing banks from the Reserve Bank to treasury as well as moving responsibility for bank compliance away from the Financial Intelligence Centre (which monitors suspicious and large transactions) to the security cluster.

All this seems to have been proposed because one politically connected family and its companies had been frustrated by SA’s world-class banking regulatory system.

The EFF was incredulous. "If there is a family that should be investigated and subjected to a judicial commission of inquiry‚ it is the parasitic and corrupt Gupta family‚ which continues to callously loot SA government resources‚" it said.

In the first major climb-down from Zuma since the assault on treasury began, the presidency issued a remarkable statement late last Friday saying it "deeply regretted" the "unfortunate contents" of Zwane’s statement.

It denied that the statement reflected the views of cabinet, the presidency or government — or even of Zwane’s task team.

Presumably, the presidency had been alerted to the conflict of interest Zwane’s recommendations created for Zuma, given that one of his sons, Duduzane, is a shareholder in Oakbay Investments, not to mention "the impact that it would have on investor confidence" about which Zwane was so concerned.

"The presidency wishes to assure the public, the banking sector as well as domestic and international investors of government’s unwavering commitment to the letter and spirit of the country’s constitution as well as in the sound fiscal and economic fundamentals that underpin our economy," Zuma’s statement concluded.

But with SA’s credibility in shreds and the future clouded with uncertainty, it is going to take more than a few platitudes to restore investor and business confidence.

The economist John Maynard Keynes observed that "human nature is such that, at certain levels of uncertainty, it stands back and becomes passive".

In SA, persistently high levels of policy and political uncertainty have fuelled anxiety about the future, unnerved investors and suppressed business activity.

The effects are visible in the steep slowdown in fixed investment, GDP growth and job creation over the past year.

In short, the problem of uncertainty explains a large part of SA’s economic underperformance.

"It’s like choosing between black and red on a roulette table," says Le Roux.

"We could have a complete collapse in confidence or, if things turn around, complete euphoria; that’s how finely balanced this is. And what will corporates do in this environment? They won’t do anything — and that’s a problem."

Trying to predict the end game in this environment is not easy. Some feel the bad guys have already won because they don’t play by the rules, so can use any number of underhand tactics to further their cause; whereas the good guys are limited to invoking the constitution and appealing to the courts. By the time they have a ruling, the fox will have pillaged the hen house.

The default option is a shaky compromise in which SA continues to stagger along as it has done for much of the past year, with Gordhan remaining in his post, fighting for reform, even as Myeni and Zuma’s other mandarins cling to theirs, using every trick in the book to block reform and outflank Gordhan.

While this outcome would avoid triggering the kind of market shock that would be caused by Gordhan’s arrest and subsequent axing, it offers no solution: the economy would continue its steady descent into junk status due to the absence of growth and genuine reform.

Many commentators concur that for positive change to happen the ANC will have to undergo wholesale leadership renewal, removing Zuma and his cohort from positions of power, through an elective conference from which a strong, reforming president emerges victorious.

If not, SA can expect at least three more years of decay, followed by another process of between five and 10 years of rebuilding damaged institutions and edging towards economic reform before the country emerges from its current low-growth trap.

With the economy set to show no growth this year, it isn’t hard to paint a scenario where SA experiences just how far below zero and how deep into junk territory a country can go when it is consistently mismanaged.

To quote political analyst RW Johnson: "We thus have a period of rough water ahead of us — which could be quite prolonged. It will be a time for vasbyt ... [but] the country has come through far worse times during the Anglo-Boer War, during the Depression of the 1930s, during World War 2 and during apartheid. It is a resilient country in which it is rational to be an optimist."