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Wheels (and tyres) come off Mugabe's economy
Dumisani Muleya, Business Day (SA)
October 12, 2005

http://www.zwnews.com/issuefull.cfm?ArticleID=12943

The International Monetary Fund (IMF) painted a grim picture last week of the Zimbabwean economic situation, warning the economy would shrink 7% this year and take a long time to recover due to extended periods of mismanagement. It seems the die is cast. Zimbabwe is irrevocably hurtling towards the precipice and will crash to become a failed, rogue state. With President Robert Mugabe locked in his own convoluted succession crisis, he is barely doing anything constructive to reverse the damage caused by his regime’s failed policies. The situation is worsened by the effective rule by the securocrats behind the scenes. Last week it emerged that Zimbabwe’s state security agency engineered the disastrous demolition of shanties and informal businesses. This shows clearly that Mugabe is hostage to his increasingly brash security apparatus - army, intelligence and police - which is pulling the strings and using Gestapo tactics. This will ensure that Zimbabwe not only becomes a failed, rogue state, but also a police state, where those in control use force - via the police, the intelligence services and the military - to maintain power. It is also clear the country will become chillingly repressive as the economic and social conditions deteriorate. The diplomatic disengagement by SA and the international community offers further room for Mugabe to ratchet up repression.

Mugabe’s economic recovery programme, which is more wishful thinking than reality, has failed to turn around the crisis his regime’s incompetence has created. Mugabe’s legacy will be devastating political and economic collapse, characterised by poverty and social instability. The IMF economic statistics on Zimbabwe were nerve-wracking to digest. The IMF said the economy would contract 7% this year, after shrinking 4% last year and 10,5% in 2003. The contraction will be due to continued difficulties in agriculture, rising inflation and foreign exchange shortages, particularly for fuel imports and other essentials. Inflation would rise to more than 400%, the IMF said. Official figures released on Monday showed year-on-year inflation rising dramatically, from 265% to 359% last month. Inflation, described by government as the "number one enemy of the state", could soon top last year’s record 623%. Central bank governor Gideon Gono, however, is clinging to claims that inflation will be between 50% and 80% in December. He also thinks the economy will grow between 2% and 2,5% this year. This shows how discredited Mugabe’s point man on the economy has become. No one believes his projections any more.

Mugabe’s regime is losing the war against inflation and this could well become its political grave in the end. It is economic failure that will finally bring down the Harare administration. There are other factors showing the economy is fast vanishing down the tubes. Only last week, Dunlop Tyres, Zimbabwe’s sole tyre maker, shut down due to foreign exchange shortages, throwing 820 workers on to the streets. MD Phil Whitehead said: "We stopped production last week, and workers are at home. This is a huge disaster. You cannot run an economy without tyres." Dunlop is one of thousands of companies that have closed down in the past five years. In addition, a new wave of farm invasions and seizures is sweeping across the country. The Commercial Farmers Union said last week that the government had ordered 25 of the few remaining whites farmers to vacate their land by the end of this month. Such Stalinist measures will be the final nail in the coffin of Zimbabwe’s economy - and that will be Mugabe’s undoing.

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