Zimbabwe: The IMF's culpability & Mugabe's destructive grip

[Mark]

Originally sent to the LegacyofColonialism Forum mailing list
Fri, April 25, 2008 7:53 pm


Mugabe, like Saddam Hussain, was pushed into a corner by the West,
biting the hand that not so much fed him but gave him their approval
in taking over from Ian Smith at independence in 1980 (Mugabe was
knighted by the Queen in 1994 on a state visit to the UK). Like Saddam, Mugabe had a history of brutally repressing "his" people, most notably in the Ndebele provinces of Matabeleland and the Midlands from 1982 to the late 1980s when the Zimbabwean Fifth Brigade, led by Perence Shiri, killed suspected members and supporters of the Zimbabwe African People's Union, murdering thousands of people.

Mugabe's assertion of pressing ahead with land reform in 2000 would have stood up to critical appraisal had it not been a process so woefully executed, with land disproportionately handed over to Mugabe's cronies. It would appear, however, that by virtue of the war-state the country had already been in for several years, such as through the intervention in the Congo, land was a bargaining chip which Mugabe was forced to give out to his main fighting force (including the war veterans). Time and again, Mugabe's socialist and anti-colonialist rhetoric doesn't stand up to what upon closer examination is nothing more than protection of patronage networks predominantly within the ruling Zanu PF party, the war veterans and disproportionately concentrated within amongst his support base
(mainly Shona).

Mugabe has been a callous, opportunistic dictator, who is one of the last in line of a whole list of military-backed leaders who assumed power through the wave of independence struggle throughout Afica from 1960s through to the early 1980s, some of whom were effectively toadies to western financial capital. In 1998 when the UK government started to exert a mandate of transparancy in the disposal of grant money in relation the distribution of funds for the land redistribution programme, in fear of the ending of financial appropriation of this money by Zanu PF's political elite, Mugabe then exploited the political capital out of resisting this arrangement when
his own domestic mandate was under threat.

Mugabe corrupted the land reform process by rushing it through,
appropriating major concentrations of land to his own supporters, while carrying out brutal supression of political opponents, abandoning the rule of law and free press, and corrupting the election counts and voting procedures of the 2002 presidential elections. In 2003, a particularly severe drought meant that thousands of people died from famine; however, Mugabe's blockading of food aid convoys to regions non-supportive of the regime was effectively akin to a Stalinist extermination policy.

Unenamoured as many of us in the North may be with Mugabe and Zanu PF's methods to hold onto power, it is clear that the source of their problems are 2 fold. One - already mentioned - is of their own making, namely their non-adherence to a not-outrageous set of principles in relation to the land redistribution financial assistance programme from Britain and other donors. Zimbabwe had agreed these principles (a commitment to poverty reduction and transparency in the selection of settlers by the Zimbabwean government) with the British government in 1998 to be carried out to ensure the programme's continuation (the assistance package from Britain plus other donors had expired in 1996 and the terms for this assistance were re-assessed to redress Zimbabwe's poor record on poverty alleviation and lack of transparency). Mugabe resistance to these arrangements meant the financial assistance programme was not recontinued.

The second and MAIN SOURCE OF THEIR PROBLEMS may go a long way to
explaining why Zanu PF and Mugabe decided not to heed instructions from their former colonial masters, seeing as the implementation of conditionality from the IMF partly undermined the principles the British government were seeking to exert. The source to which I refer were a particular set of neoliberal measures exerted by the IMF through it's conditionality in relation to loans given to Zimbabwe. The IMF's loan arrangment with Zimbabwe began in 1990.  The source of this histroic debt came originally from the intensification of conflict in the 1980s from Apartheid South Africa against liberated Zimbabwe as well as Angola, Mozambique and Zambia. Increased debt resulted as the government borrowed to finance the growing defence budget and more resources were needed to ensure that the influx of refugees fleeing from Apartheid wars in Mozambique were housed. 

For months, Mugabe sought finance elsewhere for Zimbabwe's balance of
payments deficit to avoid the outrageous demands of the IMF as the
economy was subject to a further worsening state of collapse. Other countries, such as Sudan and Zambia, had tried to ditch the IMF
before but found themselves reeling under plunging currencies,
burgeoning balance of payments deficits and desperate economic
conditions. They were later forced to restore ties with the IMF after
the West threatened to freeze aid. Mugabe too had to succumb.

The IMF's Economic destruction of Zimbabwe: 
The present wretched situation in Zimbabwe is itself the product of
the IMF's structural adjustment programmes. Unlike other developing
countries, Zimbabwe was not suffering from an unsustainable foreign
debt crisis when it turned to the IMF for help with its budget deficit
in the early 1990s. But far from helping Zimbabwe's economic
development, the aim of the structural adjustment programme (SAP)
outlined in the Framework for Economic Reform (1991-95), written by
the IMF and World Bank, was to remake Zimbabwe's economy in the
interests of the transnational corporations.

Its first step was to insist that the government halve the fiscal
deficit to 5 percent by 1994 through cutting taxation. Between 1989
and 1995, the top rate of tax was reduced from 60 percent to 45
percent, and corporation taxes from 50 percent to 37 percent. Huge tax
breaks were given to the commercial farming sector producing for the
international market. The net result was to reduce government revenue
as a share of GDP by 5 percent—even more than envisaged in the
original targets.

The IMF's SAP has wrought untold havoc on economic and social
conditions in Zimbabwe. It struck at the very heart of the political
and economic programme followed by Mugabe's government since
independence. This was to expand social and public services while
leaving the white settler community's share of the country's land,
wealth and income intact. By cutting social provision, structural
adjustment removed the very limited safety net for the nation's people
at the same time as increasing the overall level of poverty.

By 1994, the cost of financial "liberalisation", devaluation, hikes in
interest rates and the other measures that come with SAPs, meant that
the cost of government debt more than doubled from 13 percent of
domestic revenue in 1989 to 27 percent in 1994. Since the payment of
this debt to the international banks could not be avoided, and tax
revenues had fallen, the burden of adjustment fell on non-debt
expenditure.

These factors taken together led to a massive contraction, equal to 15
percent of GDP between 1992 and 1995 in order to meet the IMF's fiscal
targets. In absolute terms, the fiscal deficit actually increased over
the period.

Impact on social conditions

The cuts in public expenditure triggered a collapse in public
investment and the disintegration of the basic infrastructure. By 1999, half the workforce was unemployed, children could not go to
school because their parents could not afford the charges, and roads, phone lines and the basic infrastructure were crumbling. Cholera had reached the outskirts of the capital Harare. 

The IMF's dismantling of Zimbabwe's Agricultural extension and rural-marketing support infrastructure:

As a result of the external debt of $5billion (incredibly paid off by
Mugabe in 2006), Zimbabwe came under severe pressure from the IMF to
implement the Economic Structural Adjustment Programme (the EASP
encouraged export-led large-scale agricultural enterprise to the almost complete exclusion of small scale or communal farming – a focus that almost exclusively benefited the many white farmers still in business in the country). The EASP concentrated upon reduction of government involvement in the production, distribution and marketing of agricultural inputs and commodities, which included the liberalisation of the Grain Marketing Board and grain prices in 1995.
  Liberalisation measures involved the dramatic reduction in the number of GMB collection points which a select number of slected GMB registered rural smallholders and farmers traditionally sold onto GMB depots, from where produce was distributed to retail outlets, with a reserve held as the country's Strategic Grain Reserve. As a result of the liberalisation measures, the GMB reduced the number of depots in rural areas to zero by 1996, which coincided with the setting up of a regional trading team in Harare by global Transnational Grain Corporation Cargill in the same year. This dismantling of an extensive marketing infrastructure cut right across the wisdom of the World Bank who had said in a report the previous year that "the establishment of a marketing infrastructure in rural areas was one of the major documented reasons for increased marketing of maize from the smallholder sector" (World Bank 1995). Even though the growth of private marketing channels brought wider choice to farmers about where and when to buy and sell their produce, the gains made in the 1980s in providing a guaranteed market for smallholder farmers were eroded in the reform period.

Other intricate features of Zimbabwe's sophisticated state support
mechanism for the country's agriculutural sector developed during the
1980s included it's research, training and extension services which had been targeted to the nation's smallholders sector, though it was largely geared only to wealthier smallholders.  The Mugabe government's expenditure on agricultural development, having increased at independence, declined during the second half of the 1980s. This was offset by greater private sector investment in research and extension, such as by Cargill's Hybrid Seeds.

Other IMF structural adjustment measures imposed upon Zimbabwe included the privatisation of the health delivery system. The IMF changes were largely all about remaking Zimbabwe's economy in the interests of the transnational corporations.

The World Bank and IMF halted aid to Zimbabwe following the announcement of extraordinary compensation for the `war veterans', amounting to some 3% of GDP, that disbursement of new IMF funds was put on hold. The Government of Zimbabwe agreed a Standby Arrangement (SBA) with the IMF in both June 1998 and August 1999, but on both occasions failed to meet agreed targets, resulting in a halt to disbursements (Zimbabwe troops were engaged in the conflict in Congo which had largely been instigated by US backing of Uganda and Tutsi-Rwandan rebel insurgency in the region in the mid-1990s
as part of a battle between US and French multinationals for control over the region's vast mineral wealth).

Zimbabwe - neocolonial pawn in a wider neocolonial war in Africa:

If the intervention in the Congo provides conclusive proof that Zimbabwe embarked upon a wider battleplan in battling neocolonial oppression, for reasons of self-preservation and political expediancy, Mugabe has manipulated this discourse for the benefit and patronage of his Shona minority ethnic clan. Clan politics is the heart of Mugabe's politics and his problem, as the war veterans portrayed themselves as the new chief custodians of the land.

For the first 20 years of independence, the Zanu PF government dithered on the issue of a comprehensive land reform and the pace of land redistribution was slow and land which was brought forward for redistribution was invaribly of marginal productivity (Munjoma). The
post-colonial policy of the UK bears some responsibility for this. Britain was anxious that large-scale land reform did not take place at
independence, and the constitution of Zimbabwe, inaugurated at the Lancaster House agreements in 1979, stipulated that deep-seated land
reform should be delayed for 10 years. This was partly through a fear of widespread instability should a massive land reform programme take place, a desire to protect the white farm sector in the country, and an insistence that land reform should follow commercial rules. The Lancaster House Agreement insisted on a "willing buyer, willing seller" policy, designed to ensure white farmers received adequate compensation for land sales – (a policy not formally overturned until Mugabe introduced a new Land Acquisition Act in 2000).

Grant money forthcoming from Britain (plus other donors) to foot the
compensation bill for this land redistribution programme since 1981
expired in 1996 (since independence, the UK has provided £44 million for land reform; and £500 million in bilateral support for development in Zimbabwe). The terms for this assistance were re-assessed to redress Zimbabwe's poor record on poverty alleviation and lack of transparency. This reassessment led to the Land Conference, held in Harare in September 1998, where Zimbabwe agreed a set of principles to be carried out to ensure the continuation of this financial assistance. These principles included a commitment to poverty
reduction and transparency in the selection of settlers by the Zimbabwean government. But the Zimbabwean Government failed to implement these principles.

As a result, Mugabe and ZANU-PF ruthlessly manipulated the central issue of land reform in order to entrench and maintain their own power. Pressure into making this change came from the war veterans who were increasingly getting impatient with Mugabe and Zanu PF to deliver land redistribution for their largely Shona ethnic constituency. The emergence of the MDC seriously challenging ZANU's hold on power was a major threat to Zanu PF, it's black bourgeois, largely Shona elite, Shona constituency and Zanu PF's knife-wielding powerbase - the war veterans. Kate Prendergast: "During the parliamentary elections in 2000, repressive state violence and overt poll rigging was perpetrated in order to ensure a Mugabe victory. Mugabe put a revised constitution to a referendum – and lost. From that moment on, ZANU-PF could no longer claim any political legitimacy as the ruling party, leaving Mugabe to hone the policy he has continued until today: the politicisation of land reform and a crack down on all legal opposition
to ZANU rule."


Sources:
- "FARMS, FASCISM AND FAMINE: LAND REFORM AND THE POLITICS
OF DISINTERGRATION IN ZIMBABWE", by Kate Prendergast
Taken from Corporate-Watch Newsletter (Issue 14 July-August 2003)
Ref: http://www.corporatewatch.org.uk/newsletter/issue14/part5.htm

- "Zimbabwe Foreign Office - Country Profile", by the Network for
Education and Academic Rights
http://www.nearinternational.org/campaigns/zimbabwe/education_in_crisis/countryp\
rofile_foreignofficecountryprofile_66d4ad.php

- IMF tightens the screws on Zimbabwe
By Jean Shaoul, Date: 18 August 1999
Ref: www.wsws.org/articles/1999/aug1999/zimb-a18.shtml

- ZIMBABWE LIBERALISATION OF AGRICULTURAL MARKETS, by SAPRI
Ref: http://www.saprin.org/zimbabwe/research/zim_agriculture.pdf

- "This Land of Africa", by Thomas Munjoma, University of Aberdeen, 2000




Taken from: www.wsws.org/articles/1999/aug1999/zimb-a18.shtml
IMF tightens the screws on Zimbabwe
By Jean Shaoul
Date: 18 August 1999


For months, Mugabe sought finance elsewhere for Zimbabwe's balance of
payments deficit to avoid the outrageous demands of the IMF as the
economy was subject to a further worsening state of collapse. By 1999, half the workforce was unemployed, children could not go to
school because their parents could not afford the charges, and roads, phone lines and the basic infrastructure were crumbling. Cholera had reached the outskirts of the capital Harare.

Other countries, such as Sudan and Zambia, had tried to ditch the IMF
before but found themselves reeling under plunging currencies,
burgeoning balance of payments deficits and desperate economic
conditions. They were later forced to restore ties with the IMF after
the West threatened to freeze aid. Mugabe too had to succumb.

Organisations such as the European Union, the European Investment
Bank, the African Development Bank, the PTA Bank, and other important
financial institutions work closely with the IMF. If a government
breaks with the IMF, it finds that all the other banks slam their
doors in its face.

Economic destruction of Zimbabwe

The present wretched situation in Zimbabwe is itself the product of
the IMF's structural adjustment programmes. Unlike other developing
countries, Zimbabwe was not suffering from an unsustainable foreign
debt crisis when it turned to the IMF for help with its budget deficit
in the early 1990s. But far from helping Zimbabwe's economic
development, the aim of the structural adjustment programme (SAP)
outlined in the Framework for Economic Reform (1991-95), written by
the IMF and World Bank, was to remake Zimbabwe's economy in the
interests of the transnational corporations.

Its first step was to insist that the government halve the fiscal
deficit to 5 percent by 1994 through cutting taxation. Between 1989
and 1995, the top rate of tax was reduced from 60 percent to 45
percent, and corporation taxes from 50 percent to 37 percent. Huge tax
breaks were given to the commercial farming sector producing for the
international market. The net result was to reduce government revenue
as a share of GDP by 5 percent—even more than envisaged in the
original targets.

The IMF's SAP has wrought untold havoc on economic and social
conditions in Zimbabwe. It struck at the very heart of the political
and economic programme followed by Mugabe's government since
independence. This was to expand social and public services while
leaving the white settler community's share of the country's land,
wealth and income intact. By cutting social provision, structural
adjustment removed the very limited safety net for the nation's people
at the same time as increasing the overall level of poverty.

By 1994, the cost of financial "liberalisation", devaluation, hikes in
interest rates and the other measures that come with SAPs, meant that
the cost of government debt more than doubled from 13 percent of
domestic revenue in 1989 to 27 percent in 1994. Since the payment of
this debt to the international banks could not be avoided, and tax
revenues had fallen, the burden of adjustment fell on non-debt
expenditure.

These factors taken together led to a massive contraction, equal to 15
percent of GDP between 1992 and 1995 in order to meet the IMF's fiscal
targets. In absolute terms, the fiscal deficit actually increased over
the period.

Impact on social conditions

The cuts in public expenditure triggered a collapse in public
investment and the disintegration of the basic infrastructure. It has
led to the re-emergence of diseases such as cholera, malaria and
yellow fever, and the spread of new ones such as HIV/AIDS. With 25
percent of those aged 15 to 49 infected with the HIV virus, Zimbabwe
is the worst affected country in Africa.

Social services suffered deep cuts. A recent Oxfam report, Education
No —Break the Cycle of Poverty, showed that the effects on education
were catastrophic. Over the period 1990-94, there was a 20 percent
decline in real spending on primary education. Taking into account
increased enrolment, real expenditure per pupil fell by about 40
percent. Teachers saw their jobs, wages and conditions go. School fees
were introduced in 1992 for all urban primary schools. Although rural
schools were supposedly exempt, in practice even before the SAP
schools were resorting to all sorts of charges for uniforms, books and
levies for building funds. In 1992, the average cost of sending a
child to a rural school was $11 per pupil per annum. The more school
budgets came under pressure, the more the charges rose.

Not surprisingly, there was a 5 percent drop in primary school
completion rates in the early 1990s. The transition rate for girls
into secondary education fell by 30 percent, with the dropout rate
increasing by the same amount. Less than 4 percent of pupils entering
secondary schools now graduate with a leaving certificate.

The deterioration in social provision and rising costs went along with
increasing poverty, especially in rural areas. Even before the 1991-92
drought, one of the worst in recent history, an estimated 2.6 million
out of a population of just over 10 million could not meet their basic
needs. Communal farm areas accounted for over 75 percent of this poverty.

During the first half of the 1990s, poverty increased dramatically in
rural areas. At the same time, urban poverty intensified as real wages
fell by one third due to raging inflation. Remittances to rural areas,
an important source of income for the rural poor, dropped sharply. The
misery this created is reflected in child malnutrition rates of 30
percent.

None of this was acknowledged in the IMF's Policy Framework Paper or
the World Bank's Country Assistance Strategy. Yet the IMF tacitly
conceded, even before the implementation of Zimbabwe's SAP, that its
policies do not promote economic growth.

"Although there have been a number of studies on the subject over the
last decade, one cannot say with certainty whether 'programs' have
worked or not.... On the basis of existing studies, one certainly
cannot say whether the adoption of programs supported by the Fund led
to an improvement in inflation and growth performance. In fact it is
often found that programs are associated with a rise in inflation and
a fall in growth rate" (Mohsin Kahn, The Macroeconomic Effects of Fund
Supported Adjustment Programs, IMF staff papers, vol. 37, no. 2, 1990,
pp. 196 and 122, emphasis added).

Mounting political unrest

Growing poverty has given rise to mounting political protests and
strike action, as wages fail to keep up with inflation and only 11
percent of the population are formally employed. Real incomes are now
lower than they were 20 years ago. Last year, food price increases
sparked off the worst riots in Harare since independence.

Mugabe has illegally arrested, jailed and tortured journalists,
imposed bans on the media, outlawed strikes and "stay-aways", and
allowed the military and Central Intelligence Organisation to arrest
and detain civilians. He has openly flouted court orders. The
government's brutal suppression of any opposition, the war in the
Congo and the failure to distribute land to the rural poor, has
brought it into conflict with all sections of society.

At the height of the economic and political crisis at the beginning of
the year, the Zimbabwe Congress of Trade Unions (ZCTU), itself closely
allied to the Mugabe government, stepped into the breach. It announced
the formation of a new political party, the Movement for Democratic
Change (MDC), as a political safety valve. There had been growing
calls from business, the press, members of the ruling ZANU-PF party
and parliament for a "strategic change" in economic and political
direction.

Far from proposing any alternative programme to resolve the economic
and social problems facing workers and the rural poor, this "strategic
change" is nothing more than a call for the implementation of the
IMF's structural adjustment programme. According to MDC General
Secretary Morgan Tsvangirai, the problem is that "we are not living
within our means".

Despite their opposition to the colonial order, and their present
demagogic denunciations of the IMF, Mugabe and his ZANU-PF party that
had fought for independence are organically incapable of carrying out
the most basic measures to satisfy the needs of the oppressed masses.
Mugabe has been forced over the years to abandon his own national
program—the protection of Zimbabwe's domestic economy—go cap in hand
to the IMF and deliver the country up to the international banks and
corporations.

The evolution of ZANU-PF demonstrates the incapacity of the bourgeois
national liberation movements to exert the slightest independence.
Operating in a world capitalist economy characterised by global
integration and transnational production, these movements have been
transformed into the direct instruments of finance capital.




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