Two recent reports over the South African Broadcasting Corporation. One report indicated that the unofficial rate of inflation in Zimbabwe may have reached an annualised rate of 100 000%. Another indicated that the dissident ZANU(PF) candidate standing against Mugabe in the forthcoming elections, former finance minister Simba Makoni, expressed his willingness to hand Mugabe over to the International Criminal Court at the Hague. Such things make one think.
How does one manage to get an inflation rate of 100 000% if one isn’t actually trying to do so? This is the unofficial rate, the rate governing what kind of paper you get when you change money on the street as opposed to at a bank. It’s ten times the last figure, which was given only a few months ago. What’s going on?
Inflation is the discrepancy between the amount of currency circulating and the actual value of production. So if I print a trillion rands and get them circulating, given that a trillion rands are intrinsically worth nothing (they are worth only what someone will give you in exchange for them — as paper they are only good for firelighters) then since there are only a few trillion rands around (probably less — the whole GDP is only about a trillion and a half) the value of the rand will drop because there is more currency around, in proportion to the goods to be exchanged.
Does this mean that someone in Zimbabwe is this year printing a thousand times as much money as there is value to provide for it? It seems difficult to believe. The problem is that Zimbabwean currency cannot be officially exchanged for any other currency. Show up at your local bank with a wheelbarrow laden with Zimbabwean million-dollar certificates and they will kick you down the steps.
It is possible to buy foreign currency with Zimbabwean currency inside Zimbabwe. You can go into the country with a bundle of rands, exchange them for Zimbabwean dollars at the current rate of something like a million to one, and have yourself a party. (The use-value of Zimbabwean dollars lags behind their exchange-value, so foreign currency constantly appreciates in value.) The point is that whoever bought your rands can then use them as hard currency. So far as it’s possible to tell, this is how Zimbabwe got it together to pay off its debt to the International Monetary Fund; it kept the printing-presses humming and swapped Zdollars for rands, USdollars, pounds, kwacha, euroes, yuan, yen and anything else they could scrape together until at last they had the moolah to hand over in a form that the IMF would accept. In doing this they pushed inflation up to the then-skyrocketing level of 600%, which back then, a couple of years ago, was the highest in the world.
But now it’s just plain silly. 600% is still inflation and you can imagine bringing it down. 100 000% and you don’t have a currency any more. This is along the lines of the hyper-inflation in Germany in the early 1920s, which seems to have been largely caused by a deliberate decision to make the mark worthless; all those billions of marks which Germany owed the Western Powers in the reparations clause of the Treaty of Versailles could happily be handed over under such conditions, because they would barely buy the Western Powers a pint of beer. How the hell did this happen in Zimbabwe?
Zimbabwe is, certainly, in a bad way economically. After it reneged on repaying its International Monetary Fund loan in 1997 (after the disastrous failure of the IMF’s Economic Structural Adjustment Programme under which the loan was granted) Zimbabwe couldn’t borrow money abroad (except maybe in South Africa, and at that time the interest rates in South Africa were ruinously high). Zimbabwe got a bit of foreign currency from the Congo war, in exchange for pouring out its soldiers’ blood — but far less than it expected, and in the long run Zimbabwe didn’t have the capacity to invest in the Congo to provide infrastructure required for economic development, so there, as in Mozambique, Zimbabwe paid the price and South Africa scooped the profit.
But then the internal problems for ZANU (PF) couldn’t be delayed any longer. The consequences of the IMF’s catastrophic plans drove prices through the roof and kept wages low; Morgan Tsvangirai became a national figure leading workers to struggle against these conditions. He then set up a political party, the Movement for Democratic Change, dedicated to bringing back the IMF’s catastrophic plans — as if the doctor should diagnose anaemia and recommend slitting the patient’s throat. It was apparent that Tsvangirai was in the pocket of rich Zimbabweans who had profited by the ESAP (it didn’t become clear until later how much he was also in the pocket of foreigners), but Tsvangirai was persuasive, had strong media support, and had no scruple about drawing on grievances such as the Matabele-Shona divide.
ZANU (PF) had a trump card to play; dislike of Zimbabwe’s whites united all black Zimbabweans, and dislike of the rich white farmers, especially. The long-standing unresolved land issue was brought into play; the government orchestrated land invasions to drive most of the white farmers off the commercial farms, paying derisory or nonexistent compensations. ZANU (PF) called this the “Third Chimurenga” (the First having been the war against Rhodes’s settlers in the 1890s and the Second, the war against Smith’s settlers in the 1970s). It was a famous victory.
Unfortunately it was a victory over itself. The commercial farms had provided Zimbabwe with its meat and its surplus grain, as well as with the tobacco which was Zimbabwe’s big foreign exchange earner. With the farms split up into small subsistence plots at best, or at worst seized by politicians or businessmen and held fallow for future exploitation, no tobacco, no commercially-available meat and very little surplus grain was available. The commercial farms had also provided employment which no longer existed (stopping an injection of cash into the economy) and had assisted neighbouring subsistence farms when times were tough. All this vanished.
Suddenly Zimbabwe had lost about half its saleable agricultural crop (and had also shattered all hope of seeing any investment in agriculture; luxury crops like cut flowers and pepperdews disappeared, the market taken up by South Africans in Limpopo instead). Furthermore, because of the decline in grain and meat production, Zimbabwe could barely feed itself; most of the time it had to import food to keep the cities alive, but unfortunately the loss of export revenue meant that it couldn’t afford to pay for the imported food. Half the time it couldn’t afford to import fuel for its vehicles or electricity for its cities, or even spare parts for its machinery and medicines for its hospitals. Everything deteriorated.
Just to add to the problem, Zimbabwe’s tourism industry depended almost entirely on white South Africans and white Britons. The British government, however, declared Zimbabwe a kind of international public enemy, making a huge fuss about the stolen 2000 Presidential election (which would have been more credible had they also broken relations with the United States’ government, but never mind cheap shots). They whipped up fear of Zimbabwe, and British tourism to Zimbabwe collapsed. Much the same happened in South Africa (where the media, largely controlled by British and Irish businessmen, followed the British line) and where the country was flooded with new white Zimbabwean exiles with sad stories to tell; again, tourism collapsed as people feared going into the country; it’s never hard to arouse racism amongst white South Africans. Zimbabwe’s foreign currency reserves suffered.
So, it’s easy to see how Zimbabwe’s economy should face a crisis of inflation. On the one hand, since the value of the gross domestic product fell steeply, and since there were shortages, there was a discrepancy between the value and the amount of money around. Prices therefore shot up, accelerated by speculation. To keep things looking normal, Zimbabwe printed more money, which kept the economy functioning but made inflation even worse. The collapse of the Zimbabwe dollar made it even harder to import things even from neighbouring states; what could you pay with, when Zimbabwe needed its coal for electricity and its grain to feed its cities?
Speculators, especially within the government, began hoarding foreign currency, further fuelling inflation. The rural population, unable to feed itself in bad times, could no longer receive food from a benevolent government which had no reserves, and there were no rich white farmers to distribute largesse, so they flooded to the cities, overstraining the infrastructure (and there was no money to reconstruct it). Eventually the government resorted to forced removals along the lines of the old South African apartheid government’s policies (the West condemned these removals much more stiffly than they had done over the apartheid removals).
All this is pretty bad. And yet . . . why 100 000% inflation? The economy has certainly weakened, but it is not falling to a thousandth of its value in the course of a year. Nor is the Zimbabwean government printing a thousand times the currency this year that it printed last year. Economically it makes no clear-cut sense. The Ivory Coast has suffered calamities on a comparable scale, and over a comparable period, to Zimbabwe’s — split in two by a civil war with a demagogic President demanding pogroms against his enemies while the infrastructure collapses from lack of investment. Burkina Faso doesn’t have any of Zimbabwe’s advantages. The DRC and the Republic of the Congo barely exist as states. Why don’t these countries have economic problems anything like the economic problems of Zimbabwe? Is the Zimbabwean government uniquely evil and corrupt in Africa? Surely not.
One thinks, first, of Morgan Tsvangirai and his death-defying double-somersault from populist to neoliberal propagandist. One notices the way he was worshipped in the West and worshipped the West in return, shunning the ANC in South Africa and instead chumming with the white DA, and the way in which a very particular, narrow, West-friendly press evolved at the same time as his rise to power, under Trevor Ncube. Was this accidental? Then one notices the good Mr. Makoni, who previously strove to resolve the economic problems of the country, but now wants to ship the President he served so faithfully off to suffer the corrupt whims of the International Criminal Court, the judicial arm of international neoliberalism. Why should he mention that? One thing Zimbabweans are suspicious of, and that’s right-wing white foreigners with questionable agendas. Obviously Makoni isn’t trying to win support in Gweru. He’s talking to London and Washington. Is he seeking backing there, or does he already have it?
In which case, as in the case of the MDC, it seems likely that Western interference in Zimbabwe is continuing. Now, if there’s one thing which the West has with which to interfere, it is money. It would probably be possible to mess with the Zimbabwean economy quite effectively, especially given an unofficial exchange rate which would theoretically allow a quite modest US dollar millionaire to buy up the whole country. Is something going on there? Is the West deliberately damaging the Zimbabwean economy in order to bring down the ZANU (PF) government and install one or other of its clients in charge of the country.
Heavens, no, the West wouldn’t do a thing like that, would they?