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STILL
STANDING: The economic, political and security situation in Zimbabwe
2006 and implications for the SADC region
Prof Tony Hawkins
May 04, 2006
This paper
was presented at a Conference with the theme SECURITY 2006 at The
Institute for Strategic Studies, University of Pretoria UP Conference
Centre, University of Pretoria
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STILL STANDING
- Eight years
into economic decline that has cut GDP by 40% and halved income
per head, Zimbabwe is still standing
- The oft-predicted
collapse, implosion, meltdown has yet to happen
- Highlighting
the yawning chasm that separates economic decline and political
change in Africa
- Eight years
into economic decline that has cut GDP by 40% and halved income
per head, Zimbabwe is still standing
- The oft-predicted
collapse, implosion, meltdown has yet to happen
- Highlighting
the yawning chasm that separates economic decline and political
change in Africa
WHY NO POLITICAL
REACTION?
- In political
democracies precipitous and prolonged economic decline almost
always sparks political change, through the ballot box or more
radical confrontation on the streets as in Ukraine or Georgia
- But there
are few instances of this in Africa where governments have perfected
the art of self-preservation
UNSURPRISING
This is not
surprising
- African economies
– like old soldiers – do not die, do not collapse, but fade away
- In the process,
a yawning chasm opens up between the haves and have-nots
MARKET SEGMENT
SHIFT
- A privileged
elite consolidates its position to the point where its interests
are best served by maintaining the status quo
- A feature
of Zimbabwe’s decline has been the shift in income and wealth
from poor to rich and the associated near-elimination of the middle
class
BRAIN DRAIN
- The middle-class
– professionals, teachers, doctors, nurses, public servants, parastatal
managers – has been forced by inflation EITHER into the low-income
group, OR into emigration
- The brain-drain
will have serious long-term implications for the country and the
economy
- A growing
proportion of income is going to the relatively small well-to-do
members of the community while the middle-class has been squeezed
- Many have
emigrated, many others have fallen into the low income segment
that now comprises 80% to 90% of the population
POINT OF
NO RETURN
- In this fade-away
process, economies eventually pass the point of no return
- No return
without massive outside assistance
- Inevitably,
the donor community comes to the country’s rescue – often in too
little, too late, mode
SELF-INFLICTED
CRISIS
- Indeed the
donors are there to rescue countries even where the socio-economic
crisis has been engineered by the government as in the DRC or
Cote d’Ivoire
- Zimbabwe’s
unnecessary, easily avoidable and self-inflicted crisis has become
one more cross for the international community to bear
TIP OF THE
ICEBERG
- In recent
years, Zimbabwe has relied on the international community to help
feed a country that 7 years ago was a substantial net exporter
of food and agricultural produce
- This is merely
the tip of the iceberg – the start of a protracted process of
donor dependence that will last for decades
WHY?
- What ought
to be one of the most diverse and strongest regional economies
will soon join the list of highly indebted poor countries, dependent
on donor largesse
- Such irrational
conduct is hard to explain - what motivated the Mugabe government
to jump off the cliff?
POLITICS
ARE PARAMOUNT
- All explanations
have one theme in common – the paramountcy of political survival
- There is
no mileage in being an opposition political leader in Africa
- Not only
is there no status and no wealth, but there is also no job security
MISMATCH
- In Zimbabwe
too, as elsewhere in Africa, there is a striking mismatch between
government’s demonstrable economic, managerial and administrative
incompetence, and its
ability to maintain an iron grip in respect of security and selectively
applied law and order
Four critical
aspects of this mismatch stand out:
State capture
1. Zimbabwe
today is a classic "captured" state.
- Captured
by a political elite determined to hold on to power regardless
of the cost to the economy and to the population
2. Secondly,
the system, the economy works for the elite.
- It is a milch
cow – the means to the end of power retention
- The economy’s
function is to finance the state’s unwieldy, costly and increasingly
inefficient bureaucracy.
- While simultaneously
providing opportunities for rent-seeking – access for the elite
to free land, to cheap fuel, to subsidized bank loans and foreign
exchange
- Like many
economies in the throes of steep decline, the poorer the economy
the greater the number of SUVs. Mercs and BMWs
Cronyism
3.
Thirdly,
state capture goes hand in hand with dependency.
- The infrastructure
of the "command economy" is creating a patronage system
- Whereby it
is increasingly difficult to survive - and prosper - in business
without the right connections.
Co-option
- Farmers,
industrialists, miners and shopkeepers are co-opted
- The white
farmer with a 99-year lease knows full well that if he fails to
ensure his workers vote for the ruling party, or
- fails to
contribute to party funds, his lease could well be terminated
Worthless
contracts
- In any event
what is the commercial value of a 99-year lease?
- Or a mining
concession, or business contract?
- Where the
rule of law no longer applies, and
- Where property
rights are disregarded?
The leadership
vacuum
4. The fourth
element to the mismatch is that between a government led by strong
leaders on the one hand and a leaderless vacuum in opposition politics,
in business, agriculture and mining, on the other.
- Businesses
are locked into the system
INFLATING
TO SURVIVE
- Paradoxically,
in surviving, business strengthens a system which cannot work.
- When business
sees the government printing Z$21 trillion (U$210 million) to
repay the IMF,
- Z$70 trillion
to finance civil service and security force pay hikes, and
- Trillions
more to subsidise gold, tobacco, maize, fuel interest rates
END IN TEARS
- They must
surely know that it can only end in tears?
- Yet other
than closing down altogether, they have no option but to try and
make the system work
EMPEROR’S
NEW CLOTHES
- It is the
classic Emperor’s new clothes syndrome
- Each new
economic recovery programme – there have been five since 1999
– is greeted with respectful applause by business leaders.
- Yet they
must know the plans cannot – will not – succeed
THE
FUTURE
THE END
OF SELF RELIANCE
- Serious
economists know full well that Zimbabwe will not – cannot –
recover on its own
- Economic
recovery depends on political change either within the country
itself, OR
- On the
part of those in the West who will determine if, when and how
much economic aid will be forthcoming
SCEPTICAL
DONORS
- It is unlikely
that the donor community will come to Zimbabwe’s aid unless
and until political change occurs
- For some
in the West – and for South Africa – President Mugabe’s retirement
would be enough to justify a return to business as normal
A NEW POLITICAL
ORDER
- But others,
and especially the US and UK, will demand internationally supervised
elections in the expectation that this would deliver a new political
order
- In the
absence of sufficient international pressure to achieve this
– of which there is no sign – political change in Zimbabwe looks
remote
NO AGREED
SUCCESSOR
- Although
the ruling party is deeply split over the succession to President
Robert Mugabe when he retires – presumably in 2008 –
- ZANU-PF
knows it must hang together or the factions risk hanging separately
- When it
comes to the crunch party unity will be paramount
NO CONSTITUENCY
FOR CHANGE
Although:
- Living
standards have halved,
- Inflation
is on the brink of passing 1000%,
- Unemployment
exceeds 50%,
- and Two
thirds of the population live in poverty on less than US$1 a
day
NO TIPPING
POINT
- There is
no apparent "tipping point"
- No willingness
to lead – let alone follow – a campaign of protest
- Morgan
Tsvangirai, at the head of a deeply split, demoralized, underresourced,
poorly led and badly organized opposition MDC has once again
promised to organize a campaign of passive resistance
TIME TO
DELIVER
- Because
on several previous occasions he has promised mass action and
even "a final push"
- His credibility
is on the line
- This time
he really must deliver or risk political oblivion
NOT UKRAINE
OR GEORGIA
- But Zimbabwe
is not Eastern Europe or Latin America
- Despite
the dramatic descent in living standards and associated deprivation
and suffering
- The opposition
has been simply unable to mobilise the population.
TWO ELEMENTS
Two factors
determine political stability in a country:
- The capacity
of the political leadership to implement stated policies – like
land reform in Zimbabwe, and
- the leadership’s
ability to do this without generating shocks that undermine
political stability
SHOCKS
AND INSTABILITY
- A country
that posses both capabilities will be more stable than one that
has neither or only one of them
- Shocks
themselves are NOT a sign of instability – they may be purely
external like the Asian Tsunami
- What is
crucial is the government’s capacity to manage and overcome
the shocks
MANAGING
SHOCKS
- A good
example is how in Zimbabwe a contested election result led to
minor unrest and stayaways, but in Georgia and Ukraine contested
election results led to street protests and eventually to the
collapse of the government
- The implication
is that the Zimbabwe government managed the shocks far more
effectively than in Ukraine and Georgia
IMPACT
OF TRANSITION
- Some countries
are stable because they have open, transparent political systems,
a free media, etc.
- Zimbabwe’s
stability – in the face of a precipitous descent economically
– flows from the fact that it is a closed, repressive political
system
CLEARCUT
CHOICE
- Going forward,
the leadership either reverses the current trend eventually
heading towards openness and greater stability, rejoining the
international community in the process, OR
- The state
becomes more repressed and potentially highly unstable
- Recent
developments suggest the latter course is the more likely:
- The
increasing militarization of government
- Last
week’s announced 300% pay award for public servants, including
the security forces
- Threats
to use force against any demonstrations by the opposition
- Plans
to recruit an extra 5 000 soldiers
- Proposed
legislation to intercept and monitor email traffic
- It is hardly
surprising therefore that there is no appetite within the opposition
for head-on confrontation on the streets with a ruthless security
force machine
- Especially
given a strategy of systematic disinformation via the electronic
and most of the print media under state control.
ONGOING
STALEMATE
- It is just
conceivable that intense economic pressure will eventually force
the government to change course
- But I am
not holding my breath and if the past is any guide the most
likely scenario is one of continuing stalemate
THE MYANMAR
OPTION
- Zimbabwe
risks becoming another Myanmar – a pariah state, outside the
mainstream of business activity
- With a
potentially lucrative and hugely skewed playing field for those
– especially from the Far East, the Middle East and the former
Soviet Union – prepared to build crony networks with politicians,
officials and businesspeople
THE
REGIONAL PERSPECTIVE
NO REGIONAL
THREAT
- Despite
many claims to the contrary, there is very little evidence that
the regional economy has been destabilised
- Indeed,
as Zimbabwe plunges deeper into recession, Angola has become
one of the world’s fastest growing economies, Mozambique is
booming, Zambia has emerged from a 25 year recession, while
SA is growing faster than it has for 25 years
CASHING
IN
- Not only
are almost all the regional economies doing far better now than
before the Zimbabwe crisis, mostly due to global and policy
influences, but some are actually benefitting from, and even
exploiting, Zimbabwe’s decline
- They are
taking market share and attracting some of the best and the
brightest brains
DECLINING
IMPORTANCE
- Zimbabwe
is no longer the player it once was – its share of SADC’s GDP
has slumped from 3.6% ten years ago to 1.4% today
- Until 2002
it was the second largest economy in SADC after South Africa,
but now it is ranked 10th
GOING THE
WRONG WAY
- Only three
SADC economies are smaller – Lesotho, Malawi and Swaziland
- Between
1995 and 2000 – before the Zimbabwe crisis – the SADC
region (excluding SA) grew less than 4% a year
- Since 2000
it has grown over 11% annually underlining Zimbabwe’s relative
insignificance
LOSING
SHARE
- In industry
upon industry, Zimbabwe is losing market share – mostly, of
course, to South Africa
- Tobacco
and horticulture business has shifted to Zambia and Mozambique
and some horticulture to SA
- Manufacturing
has lost share mostly to SA but also to Botswana
- Tourism
has lost out mostly to Zambia (the Victoria Falls)
- There is
a serious brain drain of skills – again mostly to SA but also
to Botswana and Zambia
- It is certainly
true that the flood of unskilled illegals to SA (also Botswana)
has caused social problems – crime, HIV/AIDS, etc in these countries
- But this
is not a refugee problem on the scale of those experienced in
West or East Africa
- Far from
suffering from Zimbabwe’s decline, SADC states – and others
– are cashing in
- Economically
it is an opportunity for vultures to pick the bones
- South African
and other corporates are buying assets at bargain basement prices
- Others
are queuing up to invest as the economy declines further
- This vulture
syndrome is far from being confined to the just a regional phenomenon
- Asian countries,
especially China, but also India, are also exploiting the opportunity
- But this
pattern of trade with Asia – under Mr Mugabe’s Look East policy
– is damaging Zimbabwe
- Zimbabwe,
along with other African countries, are being promoted as suppliers
of raw materials – especially oil and minerals
- In return
their markets are being flooded with cheap, poor quality Chinese
goods and also Chinese exports manufactured by Western multinationals
in China
- There are
temporary – short-term – benefits for Africa in this Chinese
growth model
- But over
the medium term these are likely to be more than outweighed
by the drawbacks
- Africa’s
path to structural change, to becoming more industrialised is
being systematically blocked off by Asian imports
- Increasingly,
Zimbabwe – and other African states – will find themselves locked
into this pattern of raw material dependence with limited industrial
growth
MARRIAGE
OF CONVENIENCE
- Politically,
such a growth model suits both sides
- There are
no lectures from China, Asia or Russia about human rights, good
governance and democracy
- More to
the point they are used to a an opaque non-transparent system
that enables those in power – the rent-seekers and their cronies
– to operate the system to their own advantage
CONCLUSION
– WHERE TO NOW?
- Zimbabwe
is not going to change unless and until there is a broad constituency
for change and reform
- In several
recent cases – but not in Africa – such broadly based constituencies
for change have emerged very rapidly, usually in response to the
two conditions that characterize the current situation in Zimbabwe
PRECONDITIONS
- Rapid and
steep economic decline, and
- Repressive
authoritarian policies on the part of an unpopular and manifestly
incompetent government
SIMPLE CHOICE
- All of which
means that the preconditions for change are there
- Those in
power will have – sooner rather than later – to choose between
- Democracy,
pluralism, openness, stability and economic recovery, and
- Even
greater repression and
its associated instability and ongoing economic decline
- No-one can
put a time-frame on how and when the choice will be made
- It could
be part of what is likely to be an increasingly messy struggle
within the ruling Zanu-PF to succeed Robert Mugabe
- Or it could
come when the Zimbabwean people eventually decide it is time to
take control of their own destiny and not wait for South Africa,
SADC or the international community to take the initiative
NO EASY TRANSITION
- But it will
not be an easy transition
- The social
and economic damage in instances – certainly to agriculture and
manufacturing – is not just long-term but permanent
- It will take
at least a dozen years to regain the living standards of the 1990s
- Many in the
diaspora are not going to return any time soon, if at all.
- There will
be a heavy price to pay in terms of neglected investment in infrastructure
and social services, not to mention the ravages of hyperinflation
and massive domestic and international debt burdens
- The price
to be paid by future generations for the follies of their forefathers
will be a heavy one
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