Re: Zimbabwe post election

["Patrick Bond" <pbond@xxxxxxxxxx>]

> From:          Chris Burford <cburford@xxxxxxxxxx>
> Interesting to see Patrick Bond tonight in a heavily clipped interview on
> BBC 2 Newsnight about the Zimbabwe elections. Patrick was suggesting, if I
> got the point correctly, that Morgan Tsvangirai was boxing Mugabe in by
> offering some sort of compromise with the implicit risk in the background
> that if Mugabe imposed a more open dictatorship he would suffer the
> probable fate of other dictatorial opponents of the world bank. Perhaps I
> got that wrong.

It's been a strange few days duelling with the bourgeois media,
trying to make difficult arguments in soundbites. Too hard for me.
The NYT even requested the following piece from me, but then just
decided not to run it. Maybe it sets up the context a bit better,
Chris... and I'll be doing some reporting for Red Pepper next week on
struggles within the struggle (over the MDC's heart and mind)...

***

Post-Election Zimbabwe Showcases
Power of World Bank/IMF

HARARE--Now comes financial crunch time for
Robert Mugabe. The barest of parliamentary
election victories--against the newly-formed
Movement for Democratic Change, led by a
popular trade unionist--sets the stage for what are
likely two more years of political bickering, social
strife and economic decline, before the next
presidential election.

Four harsh months of brutally populist
campaigning are behind him, and Mugabe must
now bite several bullets at once. He upped the
rhetorical stakes with threats to redistribute 804
white-owned commercial farms (many occupied by
several thousand liberation war veterans), and
indeed vowed to confiscate all white-held land and
even white-owned mining companies.

With a nod and a wink, Thabo Mbeki stood by
him, alone amongst respected world leaders. One
carrot the South African president dangled to
persuade Mugabe to lift his paramilitary-style
intimidation blanket in the days preceding last
weekend's election was another bite at the
IMF/World Bank apple, probably when an IMF
team visits in early August. Mbeki's "softly-softly"
diplomacy may have worked, for political violence
declined dramatically last week (though not
entirely).

Access to Bretton Woods funds, just a few months
after Zimbabwe's first major default on World
Bank credits, would be an offer Mugabe shouldn't
logically refuse. There is practically no foreign
exchange in the Reserve Bank's coffers. As a
result, the economy is periodically paralysed by
fuel and imported energy shortages, a semi-official
black market in hard currency with a 50% spread,
the highest nominal interest rates ever, and even a
bread shortage looming by year-end.

Ironically, just five years ago, Zimbabwe was
Washington's newest African "success story," as
Harare embraced macroeconomic policies
promoted by Bank and IMF lenders, and even
conducted joint military exercises with the
Pentagon. But will taking on new loans--plus the
standard menu of harsh conditions--require the
psyche of a political chameleon less conceited than
Mugabe? Mugabe excels in IMF-bashing, after all,
famously telling Fund staff to "Shut up!" late last
year.

In reality, though, from independence in 1980 until
quite recently, he followed their advice unfailingly.
And that is a large part of the problem Mugabe
faces today.

>From the outset, Zimbabwe made bad policy
choices and succumbed to armtwisting by
Washington. Finance minister Bernard Chidzero,
who was head of the IMF/Bank Development
Committee during the late 1980s, borrowed
massively, figuring that repayments--which
required 16% of export earnings in 1983--would
"decline sharply until we estimate it will be about
4% within the next few years."

The main lender, the World Bank, fully concurred
with the prediction. Instead, however, Zimbabwe's
debt servicing spiralled up to an untenable 37% of
export earnings by 1987.

Meantime, the IMF began imposing fiscal
constraints, forcing cuts in education/health
spending and food subsidies. Also in the mid-
1980s, the World Bank showered peasants with
unaffordable micro-loans, as a substitute for
genuine land reform.

Hampered by "willing-buyer, willing-seller"
constraints on land and without structural change
in agricultural markets, the Bank strategy
floundered. Fully 80% of borrowers defaulted by
1989 and the best farms continued to fall under
white control whenever they came on the market.
(The few good farms redistributed went to
powerful Mugabe cronies.)

Chidzero then persuaded Mugabe to ditch controls
on prices, trade and 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.

Reacting to growing unpopularity and two urban
food riots, Mugabe not only allied with war
veterans--whose shock-troop, forced-march tactics
are being partially credited for ZANU(PF)'s rural-
led victory--but also 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.

But the IMF and donors explicitly withheld hard
currency until these three policies were reversed.
The Fund okayed Mugabe's for-profit military
adventure in the Democratic Republic of the
Congo, so long as the army budget came from
other state pockets.

Food then became unaffordable to most
Zimbabweans, and hard currency was wasted,
leaving Mugabe to peg the Zimbabwe dollar's
value, in turn generating debilitating forex
shortages. In the heat of the campaign, he then
threatened a new round of price and exchange
controls, which the IMF will no doubt prohibit.

What lessons from two decades of Zimbabwean
independence? Evade hard-selling foreign bankers.
More aggressively--and honestly--redistribute
wealth and land. Avoid structural adjustment
policies that worsen inequality, stagnation and
vulnerability.

What lessons for Washington? Because of the
rhetorical gimmicks Mugabe has invoked to stay in
power, it may take a second glance. But add
Zimbabwe to the list of economic disasters--
Indonesia, Brazil, Russia, etc--caused by Bretton
Woods policies, which are as in dire need of
radical reform as is Zimbabwe's government.

(Patrick Bond teaches at Wits University,
Johannesburg and authored Uneven Zimbabwe: A
Study of Finance, Development and
Underdevelopment, which was published by Africa
World Press in 1998.)