Friday, August 19, 2005

Letter from Zimbabwe: Eddie Cross

Here's a letter from Eddie Cross, top political and economic advisor to Morgan Tsvangirai the MDC leader

The Implosion Begins.

In 1997 the Zimbabwe economy was reasonably stable – showed real growth rates on average of about 5 per cent per annum and a healthy balance of payments situation. Exchange rates were about 12 to 1 against the US dollar and there was only a limited parallel market for foreign exchange.

Then came the fateful decisions to enter the war in the Congo on the side of Kabila (Senior) and his Tutsi allies and the decision to pay the veterans of the Zimbabwe civil war some US$350 million in unbudgeted reparations. Together these two decisions began the tumble from the heights held in 1997.

Since then the economy has shrunk by over 50 per cent, exports by two thirds and living standards have retreated to levels last seen in the mid fifties – half a century ago. Life expectancies have declined from a high of 59 years on average in 1990, to less than 34 years today. No other country in recent history has seen such a collapse in its economic fortunes in peacetime.

But despite the collapse, Zimbabwe has looked remarkably “normal”. Traffic has filled our streets, our supermarkets have been reasonably stocked and most goods available – albeit at rather high prices. Life went on, people tightened their belts and made do with less, rallied round to help those less fortunate and to the outsider, things did not look so bad. In fact visitors from war torn parts of the continent repeatedly said that we looked much better to them after the mayhem of the Sudan, Somalia and the Congo. Not much comfort in the comparison, but it is true – we looked better.

It is only when you get under the surface here that the real cost of the past 7 years of economic regression really shows. And to get the facts is not easy. Take a photo of a queue for bread, or sugar, or maize meal or fuel and you will find yourself in detention and your equipment confiscated. Make a statement you cannot substantiate and you will find yourself in Court and facing a heavy fine or imprisonment. Hard facts from reliable sources are impossible to come by and official government statistics tell you only what they want you to know.

But the real situation – human and economic is not hard to see. Cities surrounded by sprawling cemeteries, millions in flight from economic depravation and moving to anywhere where life is a little bit better. Statistics on child and maternal mortality that make the hair stand up on the back of your neck. The aching poverty that is evident everywhere – people in rags, the sense of despondency and the almost total absence of hope and vision.

Three weeks ago President Mbeki of South Africa moved to prop up the Zimbabwe regime and to try and prevent any further collapse. He warned as he did so that if South Africa did not help, that there was a very real threat that Zimbabwe would collapse to the detriment of the entire region. Those of us who live here ask ourselves how much more of this punishment can we take? We as a nation have “turned the other cheek” for so long – how much longer can we put up with this state of affairs?

Well we may be about to find out. On Friday last week, Mugabe rejected the South African offer of emergency funding – because it was conditional. He knows full well that any concessions to South Africa will signal the end of Zanu PF and the end of his own presidency and probably his own flight into exile for the rest of his life. He never was going to give in easily or to rational argument – he is not that sort of a character.

I told a South African journalist who was stunned by this rejection that South Africa had to understand what they were up against and that if they wanted to get the attention of Mr. Mugabe, they would have to hit him hard with a big stick!

And so the threatened implosion of the Zimbabwe economy begins. You cannot buy fuel for local currency anywhere; most basic necessities are in short supply. Our money, already virtually worthless, has halved in value in one month. Inflation in July was 47 per cent – month on month – over 2000 per cent per annum. Exchange rates in parallel markets have collapsed by at least 50 per cent in the past few weeks.

People cannot handle such conditions anymore – it is now beyond the capacity of our hard pressed community and businesses. In a statement last week, instead of addressing the fundamental problems in the economy, the Minister of Finance simply made things worse. He raised tax rates dramatically – we were already among the most highly taxed people on earth, he widened the net of those items we can now buy and trade freely to include wheat and maize in a desperate attempt to plug holes in the market place – this will simply increase demand for foreign exchange on the parallel market and drive up costs for everything else. In a vain attempt to halt inflation he placed a ceiling on wage increments of 120 per cent per annum – an impossible limit to maintain in our hyper inflationary environment.

At the same time the Minister continued to spout the fiction that the Zimbabwean economy is on the mend and that there will be growth in 2005. That is just a sick joke. By my calculations every sector of the economy is in retreat – agriculture, mining, industry, tourism. None show any signs of recovery, in fact conditions are now much worse than they were this time last year and I project even worse production data for agriculture even if we have a good or above average wet season.

Mugabe has in the past fortnight rejected offers of assistance from South Africa, rejected the UN report on operation “Murambatsvina” which they now euphemistically call “Operation Restore Order”. He has rejected the AU initiative to kick-start the process of national reconciliation and recovery and he has firmly ruled out any talks with the Movement for Democratic Change.

Quite frankly I am delighted with this hard line position. Our worst nightmare would be Mugabe working with Mbeki instead of against him in the resolution of our crisis. At least with the hard line position being taken by the Zimbabwe regime we can decide our future on the basis of principle rather than compromise. When the time comes, we can toss out the entire structures of Zanu PF, start afresh and purge our society of all those who have been responsible for our sad situation. In the meantime hold onto your life jacket – the next few months are going to be very tough.

Eddie Cross
Bulawayo, 19th August 2005

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