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Zimbabwe, subtracting zeros, adds to discontent
Michael Wines, The New York Times
August 08, 2006

http://www.zwnews.com/issuefull.cfm?ArticleID=14937

Johannesburg - For years, ordinary Zimbabweans have stoically accepted the convolutions of government economic policies that, most experts agree, have led to quadruple-digit inflation and impoverishment. Zimbabwe’s moneyed classes, however, may not be so agreeable. Only days after the government devalued its currency last week, the suburban Harare plantation of Gideon Gono, the chief of Zimbabwe’s reserve bank, suddenly went up in flames on Friday. Mr. Gono is the public face of the drastic new policies imposed last week and a close adviser to President Robert G. Mugabe, Zimbabwe’s leader since the nation became independent in 1980. The fire, which the police have called suspicious, is seen as one sign of the bitter opposition to the latest economic moves among the wealthy - who, uncharacteristically, have much to lose this time. The most visible change announced last week was a revaluation of Zimbabwe’s currency, which has been rendered almost worthless by years of inflation that now exceeds 1,200 percent a year. The revaluation knocked three zeroes off the bank notes, changing the $20,000 Zimbabwe bill into a $20 bill, for example. The bill’s actual value - 10 American cents at official rates, less than 3 cents at current black-market rates - remains unchanged.

Weary Zimbabweans, who must lug satchels of money to make even ordinary purchases, might applaud the move, which would lessen their burden. But Mr. Gono gave holders of the old bank notes only three weeks to exchange them for new ones. And he placed draconian limits on the amount they could trade: individuals can exchange less than $150 a day at black-market rates, and companies are limited to a bit over $7,000. That struck directly at those who hoard large stacks of bank notes - principally, the wealthy who have benefited hugely from trading in Zimbabwe’s black market in currency and other goods, and who cannot expose their riches by placing them in banks. Since the policy change last week, according to news reports, Zimbabwe has seen an explosion in purchases of automobiles, appliances and other luxuries as hoarders seek to convert their dollars into hard goods. The police have confiscated billions of dollars at roadblocks set up outside Harare and other big cities, and scores of people have been arrested for violating currency laws. Border guards were reported to have confiscated more than $100 billion in old currency being smuggled back into the country.

But the greatest fallout, perhaps, has been political. Stunned members of Mr. Mugabe’s cabinet, many of them wealthy by Zimbabwean standards, were reported to have sat on their hands when Mr. Gono announced the new currency policies in a July 31 speech. Zimbabwe’s few independent newspapers have reported bitter infighting in Mr. Mugabe’s inner circle between supporters of Mr. Gono and opponents who suspect that the new policies, dubbed "Operation Sunrise," are aimed at crippling them financially and politically. "It has aroused much bitterness and resistance in the upper classes," said Eldred Masunugure, the chairman of the political science department at the University of Zimbabwe in Harare. There is talk, he said, that Mr. Gono "may be strategically locating himself for succession to President Mugabe," who is scheduled to retire in 20 months. Mr. Mugabe has made clear his support for Mr. Gono’s policies. His state security minister, Didymus Mutasa, warned this week that anyone who attempted to harm Mr. Gono would be "acting against the interests of the government and its people," and would be brought to justice. Once one of Africa’s richest nations, Zimbabwe was recently nominated by a panel of United Nations experts for the status of a "least developed country," a badge of economic failure. John Robertson, a Harare economist, said the currency change was mostly cosmetic. "You might say we’ve moved from millimeters to meters," he said, referring to the 1,000-to-one revaluation. "But the rest of the world is still using kilometers. We have a long way to go."

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