avatar
Zimbabwe’s Crisis Showcases Reasons for Bank/IMF Protest


Patrick Bond

In

Zimbabwe, President Robert Mugabe appears to have taken leave of his senses,

potentially plunging his country of 12 million into civil war. What does this

have to do with the mid-April protests against the World Bank and International

Monetary Fund?

Confusingly,

Mugabe excels in IMF-bashing, famously telling Fund staff to "Shut

up!" late last year. Yet from independence in 1980 until quite recently, he

followed their advice unfailingly. Indeed, just five years ago, Zimbabwe was

Washington’s newest African "success story," as Harare adopted

economic policies promoted by Bank and IMF lenders, and even conducted joint

military exercises with the Pentagon.

Things

fell apart quickly. Southern African diplomats are shaking their heads in

frustration at Mugabe’s quick-shattering Good Friday promises–made to Thabo

Mbeki and other local leaders–to tone down racial rhetoric, reverse land

invasions of 1,000 white farms, and sort out financial matters with the Brits,

IMF and donor governments.

Is

Mugabe deranged, or instead playing out a tragic logic partially of his own

making, but partially imposed from above? Under the very real threat of losing

parliament to the labor-led Movement for Democratic Change in coming elections,

he resorts to authoritarian populism: egging on a few thousand land invaders so

as to restore memories of the 1965-80 struggle against Rhodesian colonialism, a

period when his Zimbabwe African National Union (ZANU) truly represented a mass-

popular movement dedicated to reversing settler-colonial land ownership.

Yet

early on, perceptive ZANU watchers identified two major problems: the party’s

class character and its likely realignment towards foreign capital.

Political

scientist Rudi Murapa (currently president of Africa University, Zimbabwe’s

second-largest) wrote in 1977 of an alliance between "a politically

ambitious petit-bourgeois leadership, a dependent and desperate proletariat and

a brutally exploited and basically uninitiated peasantry."

Forecast

Murapa, "After national liberation, the petit-bourgeois leadership can

abandon its alliance with the workers and peasants and emerge as the new ruling

class by gaining certain concessions from both foreign and local capital and, in

fact, forming a new alliance with these forces which they will need to stay in

power. Of course, lip service commitment, a la Kenya, to the masses, will be

made."

Accusations

that ZANU "sold out" are justifiable, technically–given not only the

steady rise in corruption, but the fact that most of the land and other wealth

redistributed since 1980 has gone to cronies not the masses–yet are deeply

unsatisfying. The same will be said of the African National Congress, as it was

in Zambia of Kenneth Kaunda and likewise his successor Frederick Chiluba.

However,

assailing petit-bourgeois acquisitiveness– which also motivated white

Zimbabweans to loot their compatriots’ land and labor beginning in 1890–risks

downplaying the second factor: the role of global financial pressure.

Once

anti-Rhodesia financial sanctions were lifted, Zimbabwe made bad policy choices

and succumbed to armtwisting by Washington. Finance minister Bernard Chidzero

(who later chaired the IMF/Bank Development Committee) borrowed massively at the

outset, figuring that repayments–which required 16% of export earnings in

1983–would, he insisted, "decline sharply until we estimate it will be

about 4% within the next few years."

The

main lender, the World Bank, concurred: "The debt service ratios should

begin to decline after 1984 even with large amounts of additional external

borrowing." This was the economic equivalent of a sucker-punch, for in

reality, Zimbabwe’s debt servicing spiralled up to an untenable 37% of export

earnings by 1987.

Loan

conditions quickly emerged. By 1985, the IMF pressured Mugabe to cut education

spending, and in 1986 food subsidies fell to two-thirds of 1981 levels.

Similarly,

genuine land reform was stymied not only by the "willing-seller,

willing-buyer" compromise with Ian Smith’s Rhodesians at Lancaster House,

but by the World Bank’s alternative: showering peasants with unaffordable

micro-loans. From a tiny base in 1980, the Bank’s main partner agency granted 94

000 loans by 1987. But without structural change in agricultural markets, the

Bank strategy floundered, as 80% of borrowers defaulted in 1988 notwithstanding

good rains.

Analyst

Ibbo Mandaza lamented in 1986, "International finance capital has, since

the Lancaster House Agreement, been the major factor in the internal and

external policies of the state in Zimbabwe."

Agreed

Thandike Mkandawire, head of the Geneva-based United Nations Research Institute

for Social Development, "It seems the government was too anxious to

establish its credentials with the financial world."

The

macroeconomic situation worsened when Chidzero persuaded Mugabe to ditch

Rhodesian-era regulatory controls on prices and foreign trade/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 after

Mugabe joined the DRC conflict and paid generous pensions to protesting

liberation war vets.

Reacting

to growing unpopularity and two Harare food riots, Mugabe 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. (He also foolishly cemented the Zimbabwe dollar’s value too

high.)

The

IMF and donors are explicitly withholding hard currency until these three

policies are reversed. So Zimbabwe spends its hard currency repaying foreign

lenders, and can’t afford to import petrol. The harder the economic pressure

bites, the more Mugabe staggers politically.

What

lessons from Harare? Evade hard-selling foreign bankers. More aggressively–and

honestly–redistribute wealth and land. And avoid structural adjustment policies

that worsen inequality, stagnation and vulnerability. Will leaders in the

Movement for Democratic Change, and for that matter also in Pretoria, take heed?

Regardless,

more protesters–including Harare’s church-based, anti-debt activists–are

joining the global campaign to shut the IMF and World Bank, precisely because of

mounting evidence of this kind, from Zimbabwe and across the Third World.

Johannesburg-based

academic Patrick Bond is active in the Jubilee 2000 movement, and authored

Uneven Zimbabwe: A Study of Finance, Development and Underdevelopment (Africa

World Press, 1998) and Elite Transition: From Apartheid to Neoliberalism in

South Africa (Pluto Press, 2000).

Patrick

Bond email: [email protected] phone: 2711-614-8088 home: 51 Somerset Road,

Kensington 2094 South Africa work: University of the Witwatersrand Graduate

School of Public and Development Management PO Box 601, Wits 2050, South

Africa email: [email protected] phone: 2711-488-5917 fax:

2711-484-2729