By Marius Bosch
JOHANNESBURG (Reuters) - Clashes between youth members of the ruling ANC and police this week are signs that millions of unemployed young South Africans do not believe their aging leaders' promises to lift them out of poverty.
Unless President Jacob Zuma and his government move fast to create more jobs for young people, there could be further violence which will scare off investors and deal a blow to the already sluggish economy.
The disciplinary hearing the African National Congress is holding to examine charges that popular party Youth League leader Julius Malema has sown division in the party has acted as a catalyst for the deep frustrations of the young.
In scenes reminiscent of the apartheid era, thousands of Malema's supporters rioted in Johannesburg when the hearing began on Tuesday, hurling rocks and bottles at riot police who responded with stun grenades and water cannon.
The disciplinary action against the youth league firebrand is a high-stakes gamble for both Zuma and Malema. One outcome could be the suspension from the ANC of Malema, 30, derailing his political career. If he is exonerated, Zuma could be plunged into a fight for his political survival.
On Friday the ANC said it had rejected Malema's request to dismiss the charges and would resume the hearing on September 5.
Beneath this week's violence lies a deep-rooted frustration at the failure of current leaders to improve the lives of young people nearly two decades after the end of apartheid.
"The tension within the party now really centers around the fact that the vast majority of the ANC's rank and file still remain largely poor and under-employed -- if at all," said Sebastian Spio-Garbrah, chief analyst of African frontier markets at risk and advisory group DaMina Advisors.
"They are increasingly disconnected from their ideologically moderate, millionaire and billionaire ANC ministers, leaders and Black Economic Empowerment (BEE) minted business tycoons."
Unemployment is officially around 25 percent. Millions still live in squalid shack settlements clustered around big cities.
But youth unemployment is about 50 percent, and a study by the South African Institute of Race Relations said about half of current 25- to 34-year-olds will never find work.
"If we do not deal with the unemployment crisis among young people we may see what is happening in the Middle East erupting here in our own country," said Buti Manamela, an ANC member of parliament.
Within the ruling party, there appears to be a widening gap between the anti-apartheid veterans and those looking to make money from the BEE empowerment program set up to give blacks a bigger slice of the economic pie.
The BEE has been accused of enriching a few well-connected individuals while few benefits filter down to ordinary people.
"We want what is rightfully ours so we can be like white people and not be poor, so we can have a better life," said a woman giving her name only as Noxolisa, who said she struggles to make a living as a contract cleaner. "It's not right to turn on your elders, but they must go on and challenge the elders as it's no longer the ANC of (Nelson) Mandela," she said.
Many of Zuma's cabinet ministers are veterans of the anti-apartheid struggle, seen as too moderate by more militant ANC factions and out of touch with the younger generation.
Young ANC members have embraced Malema's calls for nationalization of the gold and platinum mines and the takeover of white-owned farmland, but his plan for "economic freedom in our lifetime" has unnerved investors.
"If the nationalization debate grinds on for many more months, there will be fewer new businesses, fewer new jobs, more poverty and less development for decades to come," Sim Tshabala, CEO of Standard Bank South Africa, wrote in July.
PRESSURE FOR CHANGE
Zuma has so far held off demands for more egalitarian economic policies but this may change.
"Zuma's ability to keep such pressures in check is already diminishing given the country's persistently high unemployment, relatively low growth rates and thus greater pressure from within the ANC to enact a change of course on economic policy," Eurasia Group said in recent research note.
The government estimates the economy will have to grow at 7 percent a year for 20 years to reduce unemployment significantly. It is currently growing at just over 3 percent.
Analysts said Malema and his followers would use the huge gap in living standards as a launch pad for their political aspirations.
"I think he sees this as the possibility of ... ultimately seizing control of the patronage network that is controlled by the ruling party..." said independent political analyst Nic Borain.
Zuma came to power with the backing of the Youth League, labor and the Communist Party, but the youth wing now appears to be backing Deputy President Kgalema Motlanthe to replace Zuma at the next ANC leadership election in December 2012.
Young South Africans are increasingly lining up with Malema,
distancing themselves from ANC idealism and embracing the idea of putting cash in their pockets.
"He always talks the truth, he is young but talks about big issues," said Chief Ramaphosa, an unemployed man living in a shack in Tembisa township outside Johannesburg.
"We are South African but we don't have our own homes, if you ask me what is freedom, freedom is economic, we are still renting freedom."
(Additional reporting by Mmathabo Tladi and Jon Herskovitz; Editing by Tim Pearce)