- Created: Friday, 19 April 2019 10:42
- Written by Charles Chinweizu
Tropical Cyclone Idai, which tore through southern Africa in March, is the worst climate-related tragedy to ever affect the region, with flooding and devastation caused by 150 km/h winds. Millions of people have been affected and at least 446 people have died in Mozambique, 259 in Zimbabwe and 56 in Malawi. With many regions still unreachable as we go to press, those figures are likely to rise.
This disaster comes as Zimbabwe experiences its worst economic crisis since 2008-2009, when hyperinflation officially reached up to 79bn per cent. Inflation is rising and living standards falling, with shortages of basic necessities. Millions survive in the informal economy, characterised by low wages, poor working conditions and little or no social security. In January 2019 Zimbabwe increased fuel prices by 150%, leading to three days of protests. Security forces responded with brutality, killing 17 people, and committing acts of sexual abuse, abductions, assaults and hundreds of arrests.
Zimbabwe is liberalising its economy, implementing austerity measures and abandoning Mugabe-era indigenisation policies which led to sanctions from the US, EU and Britain in 2002. In November 2017, long-time leader Robert Mugabe was removed from power in a widely supported military coup. New ZANU-PF leader Emmerson Mnangagwa was elected president in July 2018 on a 70% turnout, defeating the seven-party MDC Alliance by 50.8% to 44.3%.
However there has been no improvement in the economic situation as imperialist sanctions continue to stymie foreign investment and any potential economic development. In March 2019, US President Donald Trump extended illegal ‘targeted’ sanctions against Zimbabwe by a year, claiming ridiculously that the country’s policies posed an ‘unusual and extraordinary’ threat to the US. At the heart of the sanctions lies a demand that Zimbabwe compensate white farmers for land seized in a botched fast-track land reform programme in 2001 – at a cost of $30bn.
Zimbabwe has introduced the so-called Transitional Stabilization Programme, a series of austerity measures to liberalise the economy, as well as limited reforms such as inviting international observers to elections. In 2009, it abandoned the Zim dollar and adopted the US dollar. Foreign traders were refusing to accept bond notes as legal tender, resulting in payment problems for companies and exacerbating shortages of raw materials. Manufacturers are suspending production and putting workers on indefinite leave.
In February, Zimbabwe introduced a new domestic electronic currency for exports, remittances and Foreign Direct Investment (FDI). The country’s reserves barely cover two weeks of imports. But in the absence of adequate foreign currency reserves and meaningful FDI, the RTGS dollar will always be under pressure, and has already lost value against the US dollar. There is no way out of this mess using capitalist solutions.
Zimbabwe, formerly known as Rhodesia, was a British colony. Following a century of struggle against colonial rule and a decade of war of national liberation led by Mugabe’s ZANU-PF and by ZAPU, Zimbabwe gained independence in 1980. ZANU intended to build a socialist nation and undertake developmental policies to benefit the black majority. Zimbabwe maintained positive economic growth throughout the 1980s and 1990s, but declined from 1999–2009 by 6.1% annually. Economic decline was caused primarily by the catastrophic adoption in 1991-1996 of the IMF/World Bank Economic Structural Adjustment Programme, which reversed the gains of the first decade of independence, destroyed agriculture and impoverished the masses. Following the collapse of the Soviet Union, by 1991 ZANU had abandoned any socialist ideology and now emphasised ‘growth’ over development.
The process of succumbing to the IMF/World Bank was gradual; following economic downturn in 1982, Zimbabwe secured an 18-month IMF credit of Z$375m in return for removing subsidies, development projects and devaluation of its currency. In 1985, it secured US$75m from the World Bank which subsequently made trade liberalisation a condition of any extension, which Zimbabwe refused at that time. But by 1989-1990, Zimbabwe loosened restrictions on foreign investments, signed two international investment protocols it had previously resisted, eased price controls, ‘de-emphasised expenditure on social services’, loosened import controls and foreign currency allocations, and reduced the size of the civil service. By 1991, it was in the clutches of the IMF/World Bank.
In 1998, Zimbabwe joined the war in Democratic Republic of Congo (DRC) on the side of then president Laurent Kabila against the invaders, Rwanda and Uganda, who were secretly backed by Britain and the US. DRC has the second largest copper reserves and half the cobalt reserves in the world, key components in computer chips, mobile phones and lithium-ion batteries that power electric vehicles. These and other resources were the prize British and US imperialism sought to control. They were foiled by, among others, Zimbabwe.
In 2008, Mugabe introduced the Indigenisation and Economic Empowerment Act through which black Zimbabweans got the right to take over and control many foreign-owned companies. This law, as well as the botched land redistribution policy and intervention in DRC, earned Zimbabwe the ire of British and US imperialism. The imperialists supported the coup that eventually ended Mugabe’s grip on power.
Weak, quisling opposition
Western media like to focus on ZANU-PF corruption and so-called ‘vote rigging’. The example of DRC is instructive: in 2014, repatriated mining profits were $7bn, exceeding foreign investment at $2bn; the net loss caused by repatriated profits was three times the losses represented by corruption. There’s no reason to suppose that Zimbabwe would be any different. Zimbabwe holds the world’s second-largest known reserves of platinum-group metals after South Africa, plus substantial deposits of gold, diamonds, lithium, iron-ore, coal, chrome and nickel.
Meanwhile, there is no evidence that either the 2018 or 2013 elections were ‘rigged’ as such. The massive scale of the MDC Alliance’s defeats since a high of 2008 points to deeper reasons, such as the MDC’s embrace of neoliberal policies which attack the poor. Like Mnangagwa, MDC leader Nelson Chamisa has promised to employ the Rwanda model of economic development – making Zimbabwe ‘open for business’.
Impact of sanctions
While government mismanagement and brazen corruption are factors in the economic crisis, sanctions make it impossible for Zimbabwe to access funding or debt relief from any multilateral finance institution where the US has influence. State enterprises account for 14% of Zimbabwe’s GDP; one such firm, Industrial Development Corporation, lost over $20m to seizures by the US Treasury’s Office of Foreign Assets Control (OFAC). Corporations generally steer clear of Zimbabwe, which is cut off from the global banking system, partly because of fear of OFAC penalties. Barclays was fined $2.5m after processing $3.4m for IDC from 2008-2013. Sanctions have certainly affected the rescue efforts over Cyclone Idai: inaccessible areas can only be reached by helicopter and many are grounded due to lack of spare parts from the US.
End the illegal sanctions on Zimbabwe!
Fight Racism! Fight Imperialism! 269 April/May 2019