Ixtab
02-08-2007, 12:39 AM
Economic Free Fall In Zimbabwe
Michael Wines, International Herald Tribune, Feb. 6, 2007
For close to seven years, Zimbabwe’s economy and quality of life have been in slow, uninterrupted decline. They are still declining this year, people there say, with one notable difference: The pace is no longer so slow.
{snip}
In recent weeks, the national power authority has warned of a collapse of electrical service. A breakdown in water treatment has set off a new outbreak of cholera in the capital, Harare. All public services were cut off in Marondera, a regional capital of 50,000 in eastern Zimbabwe, after the city ran out of money to fix broken equipment. In Chitungwiza, just south of Harare, electricity is supplied but four days a week.
The government awarded all civil servants a 300 percent raise just two weeks ago. But the increase is only a fraction of the inflation rate, so the nation’s 110,000 teachers are staging a work slowdown for more money; measured by the black-market value of Zimbabwe’s ragtag currency, even their new salaries total less than $60 a month.
Doctors and nurses have been on strike for five weeks, seeking a mammoth pay increase, and health care is all but nonexistent. Harare’s police chief warned in a recently leaked memo that if officers did not get a substantial raise, they might riot.
In the past eight months, “there’s been a huge collapse in living standards,” Iden Wetherell, an editor of the weekly Zimbabwe Independent, said in a telephone interview, “and also a deterioration in the infrastructure—in standards of health care, in education. There’s a sort of sense that things are plunging.”
Mugabe’s fortunes appear to have dimmed as well. In December, the ruling party that has traditionally bowed to his will, the Zimbabwe African National Union-Patriotic Front, balked at supporting a constitutional amendment that would have extended his term of office by two years, to 2010. That unprecedented rebuff exposed a fissure in the party, known as ZANU- PF, between Mugabe’s hard-line backers and the so-called moderates who fear he has brought their nation to the brink of collapse.
{snip}
Soaring costs have made it impossible for both national and local governments to meet budgets and for businesses to afford raw materials, while subsidies for basic commodities have drained the government treasury and promoted corruption.
Seeking to revive farm production, for example, the government sells gasoline to farmers at a deep discount of 330 Zimbabwe dollars, or about $1.27, per liter—and farmers promptly resell it on the black market for 10 times as much, leaving their fields idle.
Mugabe, who blames a Western plot against him for Zimbabwe’s problems, has rejected all calls for economic reform. The government refuses to devalue Zimbabwe’s dollar, which fetches only 5 to 10 percent of its official value on the thriving black market, so foreign exchange to buy crucial imported goods like spare parts and fertilizer has effectively dried up.
{snip}
The central bank’s latest response to these problems, announced this week, was to declare inflation illegal. From March 1 to June 30, anyone who increases prices or wages will be arrested and punished. Only a “firm social contract” to end corruption and restructure the economy will bring an end to the crisis, said the reserve bank governor Gideon Gono.
The speech by Gono, a favorite of Mugabe, was broadcast nationally. In central Harare, the last half was blacked out by a power failure.
{snip}
That growing loss of control is apparent. The black market, which already flourishes beyond the reach of tax collectors and regulators, is likely to grab an even larger share of the economy when the government freezes prices in March, because stores will be unable to make a profit selling products at government-fixed prices.
Problems with water and power supplies have already become acute because of a lack of foreign exchange and salaries for workers; a wave of blackouts hit the nation early last month when 100 electrical workers walked out to protest low pay.
Zimbabwe’s political opposition has never staged an effective work stoppage to protest living conditions. But public workers, the bedrock of government support, have begun this year to walk off the job because there is no longer enough money to pay them a living wage.
{snip}
The growing number of strikes has also emboldened the Zimbabwe Congress of Trade Unions, a center of public support and of opposition to Mugabe, to make its own plans for a general work stoppage.
{snip}
Many experts now believe that Zimbabwe faces a political showdown within months, as the governing bodies of ZANU-PF wrangle over whether to grant Mugabe an extended term or to put less-radical members of the ruling party in power. Few expect a democratic revolution; the one rival party, the Movement for Democratic Change, is riven by splits and lacks a competent leader.
{snip}
For the government, “the big problem about Zimbabwe is that the one thing you can’t rig is the economy,” said one Harare political analyst, who spoke on the condition of anonymity for fear of being persecuted.
“When it fails, it fails. And that can have unpredictable effects.”http://www.iht.com/articles/2007/02/06/news/zim.php
Michael Wines, International Herald Tribune, Feb. 6, 2007
For close to seven years, Zimbabwe’s economy and quality of life have been in slow, uninterrupted decline. They are still declining this year, people there say, with one notable difference: The pace is no longer so slow.
{snip}
In recent weeks, the national power authority has warned of a collapse of electrical service. A breakdown in water treatment has set off a new outbreak of cholera in the capital, Harare. All public services were cut off in Marondera, a regional capital of 50,000 in eastern Zimbabwe, after the city ran out of money to fix broken equipment. In Chitungwiza, just south of Harare, electricity is supplied but four days a week.
The government awarded all civil servants a 300 percent raise just two weeks ago. But the increase is only a fraction of the inflation rate, so the nation’s 110,000 teachers are staging a work slowdown for more money; measured by the black-market value of Zimbabwe’s ragtag currency, even their new salaries total less than $60 a month.
Doctors and nurses have been on strike for five weeks, seeking a mammoth pay increase, and health care is all but nonexistent. Harare’s police chief warned in a recently leaked memo that if officers did not get a substantial raise, they might riot.
In the past eight months, “there’s been a huge collapse in living standards,” Iden Wetherell, an editor of the weekly Zimbabwe Independent, said in a telephone interview, “and also a deterioration in the infrastructure—in standards of health care, in education. There’s a sort of sense that things are plunging.”
Mugabe’s fortunes appear to have dimmed as well. In December, the ruling party that has traditionally bowed to his will, the Zimbabwe African National Union-Patriotic Front, balked at supporting a constitutional amendment that would have extended his term of office by two years, to 2010. That unprecedented rebuff exposed a fissure in the party, known as ZANU- PF, between Mugabe’s hard-line backers and the so-called moderates who fear he has brought their nation to the brink of collapse.
{snip}
Soaring costs have made it impossible for both national and local governments to meet budgets and for businesses to afford raw materials, while subsidies for basic commodities have drained the government treasury and promoted corruption.
Seeking to revive farm production, for example, the government sells gasoline to farmers at a deep discount of 330 Zimbabwe dollars, or about $1.27, per liter—and farmers promptly resell it on the black market for 10 times as much, leaving their fields idle.
Mugabe, who blames a Western plot against him for Zimbabwe’s problems, has rejected all calls for economic reform. The government refuses to devalue Zimbabwe’s dollar, which fetches only 5 to 10 percent of its official value on the thriving black market, so foreign exchange to buy crucial imported goods like spare parts and fertilizer has effectively dried up.
{snip}
The central bank’s latest response to these problems, announced this week, was to declare inflation illegal. From March 1 to June 30, anyone who increases prices or wages will be arrested and punished. Only a “firm social contract” to end corruption and restructure the economy will bring an end to the crisis, said the reserve bank governor Gideon Gono.
The speech by Gono, a favorite of Mugabe, was broadcast nationally. In central Harare, the last half was blacked out by a power failure.
{snip}
That growing loss of control is apparent. The black market, which already flourishes beyond the reach of tax collectors and regulators, is likely to grab an even larger share of the economy when the government freezes prices in March, because stores will be unable to make a profit selling products at government-fixed prices.
Problems with water and power supplies have already become acute because of a lack of foreign exchange and salaries for workers; a wave of blackouts hit the nation early last month when 100 electrical workers walked out to protest low pay.
Zimbabwe’s political opposition has never staged an effective work stoppage to protest living conditions. But public workers, the bedrock of government support, have begun this year to walk off the job because there is no longer enough money to pay them a living wage.
{snip}
The growing number of strikes has also emboldened the Zimbabwe Congress of Trade Unions, a center of public support and of opposition to Mugabe, to make its own plans for a general work stoppage.
{snip}
Many experts now believe that Zimbabwe faces a political showdown within months, as the governing bodies of ZANU-PF wrangle over whether to grant Mugabe an extended term or to put less-radical members of the ruling party in power. Few expect a democratic revolution; the one rival party, the Movement for Democratic Change, is riven by splits and lacks a competent leader.
{snip}
For the government, “the big problem about Zimbabwe is that the one thing you can’t rig is the economy,” said one Harare political analyst, who spoke on the condition of anonymity for fear of being persecuted.
“When it fails, it fails. And that can have unpredictable effects.”http://www.iht.com/articles/2007/02/06/news/zim.php