Stung by his ruling party’s worst electoral performance since the end of apartheid, President Jacob Zuma is going for broke in a battle to maintain his grip on power. The first casualties have been the rand and bonds.

First came Monday’s announcement that he plans to run a committee that will oversee the nation’s state-owned companies.

Then finance minister Pravin Gordhan, with whom Zuma has had fractious relationship, said he’d received “correspondence” from the Hawks.

The Daily Maverick website said he may face charges over allegations he oversaw an illicit unit to spy on politicians when he ran the state tax agency.

Gordhan is determined to stay in his position, a person familiar with the situation said.

“Zuma’s response to the election setback and the response of many around him has been to dig in deeper and basically go on a mission of revenge,” Daryl Glaser, a politics professor at the University of Witwatersrand in Johannesburg, said Wednesday by phone.

Gordhan, 67, has tried to keep the rand bears at bay and avoid a credit-rating downgrade since he was named finance minister in December after Zuma roiled markets by firing Nhlanhla Nene from the position and replacing him with a little-known lawmaker.

He’s said Zuma’s plans to add 9,6GW of nuclear energy to the national grid can only go ahead if they’re affordable and demanded the dismissal of the management of South African Airways, the loss-making national airline, and tax chief Tom Moyane, whom he accused of insubordination.

Zuma’s response to the election setback and the response of many around him has been to dig in deeper and basically go on a mission of revenge

With Zuma, 74, scheduled to step down as leader of the ANC late next year and as the nation’s president in 2019, the president and his allies are looking after their own economic interests and see Gordhan as an obstacle, according to Peter Attard Montalto, Nomura International’s senior emerging markets strategist.

“The national treasury needs to be onside and not a roadblock as it is now,” Montalto said by e-mail. “They need guarantees for SAA, they need a sign-off on nuclear and they need the national treasury to stop blocking tenders and contracts.”

Both the treasury and the presidency said they would issue statement later on Wednesday. Gordhan’s lawyers referred comments to the treasury.

Rand woes

The rand declined by as much as 1,2% on Wednesday before trading 0,2% weaker at R14,03/US$ by 11.29am in Johannesburg, extending Tuesday’s 3,1% plunge and heading for the weakest level since 28 June. Yields on benchmark government bonds due in December 2026 surged 42 basis points to 8,94%, the most since Zuma fired Nene in December.

“Zuma has little to lose after the ANC’s unprecedented losses in the local elections,” said Anne Fruhauf, vice-president at New York-based risk adviser Teneo Intelligence. “The president will be keen to protect his interests even if it means risking major market fallout.”

The Sunday Times reported in May that Gordhan may face dismissal and arrest on espionage charges for setting up the South African Revenue Service’s National Research Group to spy on politicians including Zuma.

Gordhan denied any wrongdoing and said he was being harassed by people intent on manipulating the justice system for political gain. At the time, the presidency and the Hawks denied reports that Gordhan would be arrested or replaced.

The only thing stopping Gordhan throwing in the towel is the fear that the financial fallout would be severe

Zuma, the ANC’s former head of intelligence, wields influence over the Hawks through his justice minister who appoints the head of the unit. Gordhan alleged in May that the unit was being manipulated for political reasons but didn’t specify that Zuma was involved. Hawks spokesman Hangwani Mulaudzi declined to comment.

“The Hawks and other arms of the state that do Zuma’s bidding are claiming to be doing so entirely independently,” Glaser said. “But if you look at the total picture, people who are competent in doing the best job possible seem to be getting harassed and persecuted by people who have things to hide and are on the make. It’s difficult to resist the interpretation that what is going on is high-level political interference.”

While the ANC lost control of key municipalities including the capital, Pretoria, and Johannesburg, the nation’s economic hub, in 3 August local elections, Zuma continues to have support from the party’s decision-making national executive committee, which is stacked with his allies.

“After the thrashing it received in the local elections, you’d think the ANC’s leadership would do its utmost to restore unity in the party,” Nicholas Spiro, a partner at London-based Lauressa Advisory, which advises asset managers, said by e-mail. “This is patently not the case. The only thing stopping Gordhan throwing in the towel is the fear that the financial fallout would be severe.” — (c) 2016 Bloomberg LP