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Hard winter in Harare
African Confidential
August 05, 2011

http://www.africa-confidential.com/article/id/4111/Hard_winter_in_Harare

ZANU-PF outpoint their opponents by taking over the diamond revenue and latching on to a popular national cause

As senior allies of President Robert Gabriel Mugabe concede through gritted teeth that there can be no national elections this year, they have moved the battleground to economic policy. Their main target is outspoken Finance Minister Tendai Biti, who is also Secretary General of the Movement for Democratic Change (MDC). President Mugabe, his allies say, clashed repeatedly with Biti at recent cabinet meetings over the payment of higher salaries to the country-s 200,000 civil servants.

The state payroll includes some 75,000 names which auditors Ernst and Young found were either entirely fictitious or of people 'not properly qualified-. Biti-s sarcastic speeches in Parliament targeted his opponents- view that 'money must be eaten- whatever the national consequences and referred to 'Dotito-, a remote corner of Mashonaland West which has become a byword for Mugabe-s patronage.Mugabe insists that the civil service pay awards go ahead but Biti forecasts that that will mean an unfunded deficit of some US$500 million this year on top of the government-s planned $2.7 billion budget. For once, Mugabe and his allies believe they have a nationally popular cause, as well as an economically convenient one. Higher civil service salaries could feed many family members. As Biti has reined in other forms of patronage controlled by Mugabe-s Zimbabwe African National Union-Patriotic Front, the payment of these salaries, especially to about 38,000 non-existent workers, has yielded much-needed revenue for the party and its supporters. Before the disputed 2008 elections, ZANU-PF ministers expanded the payroll to reward tens of thousands of party loyalists. Local civic activists say the state-funded National Youth Service programme is highly partisan, staffed mainly by ZANU-PF militia leaders and 'war veterans-.

One of the more strategic thinkers in Prime Minister Morgan Tsvangirai-s faction of the MDC, Biti stopped hyperinflation in 2009 and restarted a formal trading economy by replacing the valueless Zimbabwe dollar with the United States dollar and South African rand. The rapid improvement in conditions - commodities in the shops and some new jobs - initially made Biti extremely popular. He had also neutralised much of ZANU-PF-s economic power by sidelining its appointees in the Reserve Bank of Zimbabwe (RBZ) and cutting back ministerial and extra-budgetary spending plans.

Mugabe snookers Biti

Biti-s next task is much harder. The initial economic fillip has flattened since dollarisation and other reforms, while the intermittent political panics about election violence are holding back new enterprise. Without substantial new revenue from taxes, investors or credit from international financial institutions, Biti-s options are extremely limited.

ZANU-PF ministers are enjoying Biti-s discomfiture and Mugabe has led the charge in cabinet. For now, the President seems to have outmanoeuvred Biti on the use of revenue from the Marange diamond fields and is winning the argument over civil service pay. At a special cabinet meeting on 28 July, when Biti presented his mid-term fiscal policy statement, even his own MDC colleagues failed to back him convincingly. Biti has long insisted that all diamond revenue be lodged with the Treasury by the Zimbabwe Mining and Development Corporation (ZMDC), which has on paper been handling sales from Marange and other diamond fields. Marange alone has the potential to produce about $1 bn. Until these monies are lodged with the Treasury, Biti said he could not consider approving the civil service pay rise.

Civil servants were then surprised to receive the promised increase in their June pay packets. What had happened is that contrary to all usual procedures, the ZMDC had transferred $40 mn. directly to the Government Salaries Account, whence the pro-ZANU bureaucrats paid the increases directly. This highly irregular operation completely bypassed the Treasury. It shows that the higher reaches of the civil service will still act to placate the President and damn the consequences for an MDC minister.

Whether the trick can be repeated in July in spite of Biti-s objections will be a severe test for the Government of National Unity. Either way, Mugabe and his allies will look good. If the ZMDC cannot supply the shortfall, Biti and the MDC will inevitably be blamed for the return of salaries to earlier levels. Mugabe has effectively snookered Biti.

Wily crocodile

That manoeuvre - and the wooing of civil servants - then gave Mugabe cover to attack Biti-s efforts to rein in other sources of political patronage in his proposed fiscal review. Not only was there to be no supplementary mid-year budget to cover departmental overspending but Biti called for real spending cuts to the highly sensitive defence and security votes, as well as to the Zimbabwe Prison Service, the War Veterans- Administration Fund and official foreign travel.

In a shouting match in cabinet, Mugabe warned 'this young man- that he had gone too far and 'would be dealt with decisively-. Perhaps stunned by the ferocity of the attack, we hear that Biti-s MDC colleagues - Nelson Chamisa (Information) Theresa Makone (Home Affairs) and Tapiwa Mashakada (Economic Development) - sided with ZANU-PF heavyweights Vice-President Joice Mujuru, Defence Minister Emmerson Mnangagwa and State Security Minister Sydney Sekeramayi in rejecting plans for swingeing cutbacks this year. Although his proposed cuts were a first draft, Biti was surprised to meet such wide-ranging opposition and left the meeting to draw up a revised report.

Ministers variously described Mugabe-s outburst as 'bad-, 'scary- and 'terrifying-. Biti-s economic analysis is hard to fault: he says the Treasury is overspending by some $40 mn. a month and could run out of cash entirely by October. So a sort of mini-USA style budget feud has ensued, with Biti looking even more beleaguered than US President Barack Obama.

ZANU-PF ministers claim Biti was proposing cuts in line with advice given during the International Monetary Fund-s recent Article IV assessment visit. Fund officials argued strongly that political confrontation in the ruling coalition was fuelling economic uncertainty, that growth would slow to about 5.5% this year while inflation would edge up to 7% by December. They also raised questions about how the government intended to finance an expected fiscal deficit of at least 4% of national income.

More problematically, IMF experts argue that the best way to reverse the slowdown in growth is to cut back on recurrent spending on state salaries, which is pushing up the deficit, and focus on investment in infrastructure and social provision for the poorest people.

Such prescriptions infuriated Mugabe, who sees the IMF as an agent for regime change and the proposed cuts in the army, intelligence organisation and his foreign travel as a direct political attack. This is part of a much bigger argument about how - and even whether - to reform the security services before the next elections. The MDC receives most unprovoked attacks from the ZANU-PF-supporting militia, while the official security organisations are either unconcerned or complicit. The party is yet to develop a coherent counterstrategy.

Both wings of the MDC - Tsvangirai-s and Welshman Ncube-s - say there must be reform of the security establishment and clear guarantees against those who might want to derail a political transition to an MDC government. Without being explicit, both Tsvangirai and Ncube see a need to get the top ZANU-PF securocrats to accept such a transition by offering them some role in it.

In the short term, turf battles abound. Tsvangirai is fuming that, without consulting him, Mugabe appointed Aaron Daniel Tonde Nhepera as Deputy Director General of the Central Intelligence Organisation. In the War Victims Compensation Fund scandals of the mid-1990s, Nhepera was assessed as 98% disabled and walked off with a very handsome package. Another appointment fracas is brewing over a new provincial governor for Harare after the death of David Karimanzira. Harare was earmarked for the MDC but in yet another unilateral move, Mugabe is toying with ZANU-PF stalwarts Amos Midzi or Tendai Savanhu.

In the meantime, the parliamentary outreach programme on human rights has run into difficulties. A Human Rights Commission was established last year, chaired by law professor Reg Austin (one of few white people to have been a ZANU-PF Central Committee member and a one-time United Nations election advisor in Afghanistan and Iraq). Justice Minister Patrick Chinamasa has, however, been dragging his feet. Although a generally acceptable set of commissioners has been named, there was little movement towards a budget allocation or offices, let alone an establishing act in Parliament, despite offers of financial assistance from the likes of the UN Development Programme and the UN Commission on Human Rights.

Disruption campaign

A bill has finally been drafted and is out for public consultation. ZANU-PF activists in some areas have been instructed to oppose, through threats and disruption, other parties- inputs in much the same way as they did with the constitutional consultation at the beginning of the year. The disruption campaign has so far been only partly successful. In the provincial capitals of Masvingo and Manicaland (Mutare), the process had to be abandoned. The army has targeted these two largely rural provinces to claw back the seats the MDC won in 2008 (a majority in both provinces). The smiling presence of Senator Josiah Hungwe (former Masvingo Governor) left little doubt as to the instigators.

The most violent of the disruptions was in Harare. The hearings were to be held in the Parliament buildings. The ZANU-PF mob forced its way in, manhandled the Chairman out to the street for a roughing up and attacked journalists and members of parliament, including one from ZANU-PF. The police were not in sufficient force to quell the disturbances and reinforcements were slow in coming. This has led to calls for the resignation of Police Commissioner General Augustine Chihuri.

The main worry for ZANU-PF is the period to be covered by the bill. They would infinitely prefer that there was no bill or at least that nothing going back further than 2009 should be covered. Naturally, the MDC wants it to cover election violence since 2000. In Matebeleland, people want to go back to 1980, so that the Gukurahundi massacres can be probed

*AC Vol 45 No 23, Gunning for Number 2

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