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This document is from the archive of the Africa Policy E-Journal, published by the Africa Policy Information Center (APIC) from 1995 to 2001 and by Africa Action from 2001 to 2003. APIC was merged into Africa Action in 2001. Please note that many outdated links in this archived document may not work.

Zimbabwe: Statements/Analysis, 2

Zimbabwe: Statements/Analysis, 2
Date distributed (ymd): 000514
Document reposted by APIC

+++++++++++++++++++++Document Profile+++++++++++++++++++++

Region: Southern Africa
Issue Areas: +political/rights+ +economy/development+ +security/peace+
Summary Contents:
This posting contains (1) on-line starting points for background and analysis on the current crisis in Zimbabwe, (2) an article by Patrick Bond on the history and political economy of the crisis, (3) a statement by the Congress of South African Trade Unions (COSATU), and (4) a brief update on the economic situation from the UN's Integrated Regional Information Network. Another posting sent out today contains statements on the crisis from the Advocacy Network for Africa (ADNA) and the African Studies faculty of Michigan State University.

+++++++++++++++++end profile++++++++++++++++++++++++++++++

Selected Web Links

E-Zim Current news and links
http://www.e-zim.com

Zimbabwe government
http://www.gta.gov.zw

Movement for Democratic Change
http://www.in2zw.com/mdc

Zimbabwe Mirror (SAPES)
http://www.africaonline.co.zw/mirror

BBC Background and News
http://news.bbc.co.uk/hi/english/in_depth/africa/2000/zimbabwe

Guardian Special Report
http://www.guardianunlimited.co.uk/zimbabwe

APIC/ECA Roundtable Panel
Zimbabwe's Farm Workers and the New Constitution http://www.africapolicy.org/rtable/ded0002.htm

Additional Newspaper and Background Links http://www.niza.nl/uk/press/zimcrisis.htm

Africa News
http://www.africanews.org/south/zimbabwe

Additional Sources
http://www.africapolicy.org/featdocs/southern.htm


Zimbabwe's Crisis Showcases Reasons for Bank/IMF Protest

by Patrick Bond

From ZNET Daily Commentaries, April 28, 2000 http://www.zmag.org

In Zimbabwe, President Robert Mugabe appears to have taken leave of his senses, potentially plunging his country of 12 million into civil war. What does this have to do with the mid-April protests against the World Bank and International Monetary Fund?

Confusingly, Mugabe excels in IMF-bashing, famously telling Fund staff to "Shut up!" late last year. Yet from independence in 1980 until quite recently, he followed their advice unfailingly. Indeed, just five years ago, Zimbabwe was Washington's newest African "success story," as Harare adopted economic policies promoted by Bank and IMF lenders, and even conducted joint military exercises with the Pentagon.

Things fell apart quickly. Southern African diplomats are shaking their heads in frustration at Mugabe's quick-shattering Good Friday promises--made to Thabo Mbeki and other local leaders--to tone down racial rhetoric, reverse land invasions of 1,000 white farms, and sort out financial matters with the Brits, IMF and donor governments.

Is Mugabe deranged, or instead playing out a tragic logic partially of his own making, but partially imposed from above? Under the very real threat of losing parliament to the labor-led Movement for Democratic Change in coming elections, he resorts to authoritarian populism: egging on a few thousand land invaders so as to restore memories of the 1965-80 struggle against Rhodesian colonialism, a period when his Zimbabwe African National Union (ZANU) truly represented a mass-popular movement dedicated to reversing settler-colonial land ownership.

Yet early on, perceptive ZANU watchers identified two major problems: the party's class character and its likely realignment towards foreign capital.

Political scientist Rudi Murapa (currently president of Africa University, Zimbabwe's second-largest) wrote in 1977 of an alliance between "a politically ambitious petit-bourgeois leadership, a dependent and desperate proletariat and a brutally exploited and basically uninitiated peasantry."

Forecast Murapa, "After national liberation, the petit-bourgeois leadership can abandon its alliance with the workers and peasants and emerge as the new ruling class by gaining certain concessions from both foreign and local capital and, in fact, forming a new alliance with these forces which they will need to stay in power. Of course, lip service commitment, a la Kenya, to the masses, will be made."

Accusations that ZANU "sold out" are justifiable, technically--given not only the steady rise in corruption, but the fact that most of the land and other wealth redistributed since 1980 has gone to cronies not the masses--yet are deeply unsatisfying. The same will be said of the African National Congress, as it was in Zambia of Kenneth Kaunda and likewise his successor Frederick Chiluba.

However, assailing petit-bourgeois acquisitiveness--which also motivated white Zimbabweans to loot their compatriots' land and labor beginning in 1890--risks downplaying the second factor: the role of global financial pressure.

Once anti-Rhodesia financial sanctions were lifted, Zimbabwe made bad policy choices and succumbed to armtwisting by Washington. Finance minister Bernard Chidzero (who later chaired the IMF/Bank Development Committee) borrowed massively at the outset, figuring that repayments--which required 16% of export earnings in 1983--would, he insisted, "decline sharply until we estimate it will be about 4% within the next few years."

The main lender, the World Bank, concurred: "The debt service ratios should begin to decline after 1984 even with large amounts of additional external borrowing." This was the economic equivalent of a sucker-punch, for in reality, Zimbabwe's debt servicing spiralled up to an untenable 37% of export earnings by 1987. Loan conditions quickly emerged. By 1985, the IMF pressured Mugabe to cut education spending, and in 1986 food subsidies fell to two-thirds of 1981 levels.

Similarly, genuine land reform was stymied not only by the "willing-seller, willing-buyer" compromise with Ian Smith's Rhodesians at Lancaster House, but by the World Bank's alternative: showering peasants with unaffordable micro-loans. From a tiny base in 1980, the Bank's main partner agency granted 94 000 loans by 1987. But without structural change in agricultural markets, the Bank strategy floundered, as 80% of borrowers defaulted in 1988 notwithstanding good rains.

Analyst Ibbo Mandaza lamented in 1986, "International finance capital has, since the Lancaster House Agreement, been the major factor in the internal and external policies of the state in Zimbabwe."

Agreed Thandike Mkandawire, head of the Geneva-based United Nations Research Institute for Social Development, "It seems the government was too anxious to establish its credentials with the financial world."

The macroeconomic situation worsened when Chidzero persuaded Mugabe to ditch Rhodesian-era regulatory controls on prices and foreign trade/financial flows, liberalizing the economy through an Economic Structural Adjustment Programme (ESAP) in 1991. ESAP was supposedly "homegrown," but World Bank staff drafted much of the document, which was substantively identical to those imposed across Africa during the 1980s-90s.

ESAP brought immediate, unprecedented increases in interest rates and inflation, which were exacerbated (but not caused) by droughts in 1992 and 1995. As money drained from the country, the stock market plummeted by 65% in late 1991 and manufacturing output declined by 40% over the subsequent four years. Amazingly, the Bank's 1995 evaluation of ESAP declared it "highly satisfactory" (the highest mark possible).

More vulnerable than ever before, Zimbabwe's currency then came under fierce attack during the 1997 East Asian crisis, falling 74% during one four-hour raid after Mugabe joined the DRC conflict and paid generous pensions to protesting liberation war vets.

Reacting to growing unpopularity and two Harare food riots, Mugabe finally invoked three pro-poor policies in 1997-98: reimposition of price controls on staple foods, conversion of corporate foreign exchange accounts to local currency, and steep luxury import taxes. (He also foolishly cemented the Zimbabwe dollar's value too high.)

The IMF and donors are explicitly withholding hard currency until these three policies are reversed. So Zimbabwe spends its hard currency repaying foreign lenders, and can't afford to import petrol. The harder the economic pressure bites, the more Mugabe staggers politically.

What lessons from Harare? Evade hard-selling foreign bankers. More aggressively--and honestly--redistribute wealth and land. And avoid structural adjustment policies that worsen inequality, stagnation and vulnerability. Will leaders in the Movement for Democratic Change, and for that matter also in Pretoria, take heed?

Regardless, more protesters--including Harare's church-based, anti-debt activists--are joining the global campaign to shut the IMF and World Bank, precisely because of mounting evidence of this kind, from Zimbabwe and across the Third World.

  • Johannesburg-based academic Patrick Bond is active in the Jubilee 2000 movement, and authored *Uneven Zimbabwe: A Study of Finance, Development and Underdevelopment* (Africa World Press, 1998) and *Elite Transition: From Apartheid to Neoliberalism in South Africa* (Pluto Press, 2000).

Patrick Bond
email: pbond@wn.apc.org * phone: 2711-614-8088 home: 51 Somerset Road, Kensington 2094 South Africa work: University of the Witwatersrand Graduate School of Public and Development Management PO Box 601, Wits 2050, South Africa email: bondp@zeus.mgmt.wits.ac.za
phone: 2711-488-5917 * fax: 2711-484-2729


COSATU (Congress of South African Trade Unions)
http://www.cosatu.org.za

COSATU statement on crisis in Zimbabwe.

COSATU has been monitoring the events in Zimbabwe over the past few weeks with growing concern. It is crucial, both for that country and the entire Southern African region, that stability and the rule of law is installed in Zimbabwe.

We are once again distressed at the kind of coverage these events have got in the South African media. It seems that our journalists and editors are bent on covering this issue as purely a race issue. White farmers who have been attacked and killed have had a lot of coverage in our media, while we hear very little about black farm workers and black members of the MDC who have also been attacked and killed. We are not convinced this is purely a race issue. Do whites own all farms? Have any black farmers been attacked? What does the unity of white farm owners and black farm workers say about racism in that country?

Moreover, there has been little attempt to analyse why these events have started now, just before the Zimbabwe elections. Only a few journalists have looked at class issues surrounding these events. For example, what happens to the workers if farms are confiscated or occupied. Has there been any attempt to redress the land question and create tenure security for those who have lived and worked on these farms for a long time. Why has the land redistribution programme not been implemented after all these years?

We believe these are some of the crucial issues which should be raised in the media. We hope that journalists investigate these crucial topics, and refrain from creating a red herring leading us to believe the issue is narrowly one of black people attacking white people in Zimbabwe.

In the meantime COSATU condemns any acts of violence and unlawfullness. We call on the government of Zimbabwe to install peace and the rule of law to that country. We hope the issue will be speedily resolved.


ZIMBABWE: IRIN Focus on a grim economic outlook

IRIN-SA - Tel: +2711 880 4633; Fax: +2711 447 5472; e-mail: irin-sa@irin.org.za

[This item is delivered in the English service of the UN's Integrated Regional Information Network humanitarian information unit, but may not necessarily reflect the views of the United Nations. For further information, free subscriptions, or to change your keywords, contact e-mail: irin@ocha.unon.org or Web: http://www.reliefweb.int/IRIN . If you re-print, copy, archive or re-post this item, please retain this credit and disclaimer.]

JOHANNESBURG, 3 May (IRIN) - As Zimbabwe's foreign payment arrears climb to an estimated US $400 million, economists told IRIN on Wednesday the economic outlook for the country remained poor in coming months.

Meanwhile, the Bankers Association of Zimbabwe met on Wednesday to find a way to enable an "unofficial" devaluation of the Zimbabwe dollar so that growers of tobacco, the country's key foreign exchange earner, will be able to make some profits.

Although they declined immediate comment on the outcome of the meeting, commercial bankers have said they realised that tobacco profitability had been seriously affected by the pegged rate of 38 Zimbabwe dollars to the American dollar. Zimbabwe is the world's third largest producer of tobacco

An easing of the exchange rate for tobacco

When the annual tobacco auctions opened last week, farm occupations, political violence and the exchange rate saw volumes of tobacco delivered for sale drop by over 60 percent, according to the Zimbabwe Tobacco Association (ZTA).

"This is also an issue which was discussed at yesterday's cabinet meeting on the current political situation," said Eric Bloch, a leading economist in Zimbabwe. "My view is that they want to get the tobacco floors to pay the farmers at the parallel rate of roughly 46 to 48 Zimbabwe dollars to the American dollar, so that the profit will go to the growers."

The official pegged rate, in force for 15 months, has been a source of complaint in all sectors of the economy, while bankers have said that they have been powerless to go against the wishes of the government.

Debt default

Bankers and economists have warned that the foreign payment arrears raises the prospect of Zimbabwe defaulting on its external debt of approximately US $4 billion.

"Although our import bill has been held back quite a bit in the last four or five months," said another Zimbabwe-based economist, John Robertson, "we might have to default. A devaluation is very necessary and it will cause inflation, now close to 60 percent, to rise." He said the official exchange rate had also had a negative impact on other key foreign exchange earners such as gold and ferro-chrome.

The danger of rising unemployment

"Zimbabwe is facing a very, very serious economic situation," he said. Robertson said the impact of the economic crisis on the industrial sector was bound to push up unemployment, currently at 55 percent, quite soon. "At this level it is dangerous and unemployment levels will become more dangerous if we allow this to continue. This is a very anxious time indeed."

The economists also cited concern that Zimbabwe could find itself unable to finance fuel imports agreed last month. In March, the state-owned national oil company of Zimbabwe owed foreign suppliers US $60 million, South Africa said its national electricity utility, Eskom was owed US $16 million.

Economic crisis likely to worsen in coming months

Bloch said the economic situation was likely to grow worse over the next three months until after the parliamentary elections when a new government, whether or not Mugabe's ruling ZANU-PF maintains its 20-year grip on power, will follow a more pragmatic programme.

"Instead of talking about recovery, a new government will have to concentrate on implementing an economic rescue package. That is what I hear lately from politicians of all shades, both in ZANU-PF and the opposition Movement for Democratic Change (MDC)," he said.

A road to recovery

They believed, he said, the road to economic recovery lay firstly in an end to Zimbabwe's expensive military intervention in the Democratic Republic of Congo (DRC); a cut in government spending by at least 25 percent; the privatisation of parastatal companies; incentives for expatriate business; investment incentives and a relaxation of expatriate employment rights, and an end to tight exchange rate controls.

"We would then see IMF payment support, a lifting of the World Bank's suspensions, as well as an end to the Danish and Dutch freeze on aid programmes," Bloch said. "Gradually lines of foreign credit could be renewed so that eventually we can get out of the foreign exchange trap we are in. Only then, after at least 18 months, will the international community begin to consider debt relief."


This material is being reposted for wider distribution by the Africa Policy Information Center (APIC). APIC provides accessible information and analysis in order to promote U.S. and international policies toward Africa that advance economic, political and social justice and human and cultural rights.

URL for this file: http://www.africafocus.org/docs00/zim0005b.php