The End of The Affair.(Nations to Watch)(South Africa)

Byline: Scott Johnson; With Karen MacGregor in Durban And Kim Gurney in Johannesburg

Like a number of hot emerging markets, South Africa's made great progress in recent years -- but its leadership is faltering dangerously.

In late November, at a high-levelof South Africa's ruling African National Congress (ANC), a senior strategist named Joel Netshitenzhe delivered a blistering assessment of the state of his country. In a confidential document, Netshitenzhe warned that crime had become a "scourge," HIV was exacting a "devastating" toll, income equality was worsening and millions of South Africans remained mired in poverty.

True, in the 13 years since the country emerged peacefully from the grip of apartheid -- one of the most inspiring episodes of the 1990s -- its government had boosted the economy, turning it into an attractive emerging market; promoted racial reconciliation; prevented massive brain drain and helped rebuild this deeply scarred society. But the country nonetheless faces a profound crisis. "The issues may be uncomfortable to entertain," Netshitenzhe wrote. "But we cannot avoid dealing with them."

He was right. Many South Africans have started to feel that their country -- recently an exemplar of democracy and enlightened leadership -- is gradually tilting in the wrong direction. During the 1990s, the nation's AIDS epidemic was serious but no worse than that suffered by much of Africa. The same for violent crime. Today the AIDS crisis -- which kills upwards of 900 South Africans a day -- has become one of the world's worst. And crime is so bad that South Africa is starting to resemble Sierra Leone or Colombia. In fact, the country suffered more violent deaths per capita in 2007 than Afghanistan -- the supposed front line in the war on terror.

There's a pervading sense, moreover, that the benefits of democracy have not flowed freely enough. Despite economic growth, income inequality among blacks, especially, is getting worse. So is corruption. And President Thabo Mbeki -- who is required to step down in 2009 -- has grown increasingly authoritarian. As a result, as the ANC gathered to pick its next leader (who is virtually guaranteed to be the next president) in late December -- a contest in which Mbeki's main rival was his former deputy Jacob Zuma -- many here were grappling with a troubling question: has South Africa fallen prey to the same malaise that has brought down so many independent African states? "There is a moment when many African liberation movements stumble," says William Gumede, a political analyst and author of a forthcoming book on the ANC. For South Africa, that moment seems to have arrived. "There is a sense that something uncontrollable is happening," Gumede says.

The roots of this unease can be traced back to the ANC, which helped win the country its freedom in 1994 and has governed it ever since. For generations after its founding in 1912, the ANC stood out as virtually the only African liberation movement that was progressive, tolerant of dissent and relatively democratic and uncorrupt. Today, however, the movement's leading lights -- the generation that led it from prison cells on Robben Island and exile in Zambia and England -- are slowly disappearing. Inspirational figures such as Nelson Mandela and Mac Maharaj have retired, while others, like Walter Sisulu and Oliver Tambo, have died of old age. "It is a massive change," says Gumede. "There is real panic inside the ANC about what is happening in the party and in South Africa."