An letter to Against the Current

Patrick Bond pbond at wn.apc.org
Tue May 22 01:36:41 MDT 2001


> Date:          Tue, 22 May 2001 01:06:53 -0400
> From:          Nestor Miguel Gorojovsky <gorojovsky at arnet.com.ar>
> But what does IMPERIALISM think of him?

I promised myself not to go on and on... but here's a last reminder
of what we're up against in Robert Mugabe: a Bad Nationalist who
was soft on white capital from 1980, who followed all manner of
WB/IMF advice during the 1980s, who went profoundly neoliberal
from 1990-97, who won the deep gratitude of imperialism (especially
by 1995 when his policy was considered "highly successful" by a WB
evaluation team), and then when structural adjustment ("Esap")
failed, who zigzagged left a bit while imposing a more brutal mode of
political authoritarianism, including world-class homophobia and
retraction of hard-won women's rights by the way.

I sent you this offlist a short while ago, Nestor, so pardon me
sending it again. Ironically, though, I've been having precisely the
same debate with the main neolib ideologue in Zim, who I have to
continually remind, joined Imperialism in backing Mugabe during the
neolib phase. Here's a recent instalment:

                         It was better, pre-Esap

by Patrick Bond

AGAINST all evidence, Eric Bloch (Independent, 2
February) continues to insist that the 1991-95 Economic
Structural Adjustment Programme (Esap) was necessary
because of "the devastatingly shattered state of the
economy then prevailing."

Bloch starts by disputing my first round of figures--
higher growth from 1980-90, and much lower from 1991-95-
-because "averages can distort" especially in light of
"substantial growth in the years immediately after
Independence."

Right then, let's consider the period 1985-90, to factor
out droughts following the 1979-82 economic upturn.
Gross domestic product rose from $17.1 to $20.9 billion
(correcting for inflation, using 1990 prices) but then,
using the same measure, fell from $22.7 to $22.3 billion
from 1991 to 1995. Inequality increased dramatically
during the latter years as well, transferring most pain
from GDP declines to the poor, especially rural women,
children and the aged.

Why was the economy "shattered"? Bloch claims that
"economic policies from 1982-90 were increasingly
destructive." How so? "The economic decline accelerated
as government progressively pursued Marxist-Leninist
economic policies with increasing vigour."

In reality, the alleged "Marxist" policies were nowhere
near as state-interventionist as the Rhodesian Front's
1962-79 exchange controls, directed investment,
parastatal expansion, rigid import/export system, etc.
The "Marxist" Zanu PF government deregulated in
virtually all areas of economic activity from the
outset, with the exception of a very few (irrelevant)
new state investments (e.g., Zimbank) and institutions,
which changed nothing by way of overall corporate
behaviour.

A 1982 US AID report concluded that Zanu PF "has adopted
a generally pragmatic, free-market approach... and this
approach has the full support of the US AID."
Liberalisation only stalled occasionally, e.g. 1984,
when there was a forex crisis.

But even that year, finance minister Bernard Chidzero
confirmed that Zimbabwe was the IMF's "blue-eyed boy."
By 1990, Deloitte and Touche praised Zimbabwe's monetary
and financial policies as "pragmatic and conservative."

Was Zanu PF more "Marxist-Leninist" during the late
1980s, leading to a "devastatingly shattered" economy
just before Esap was implemented? No and no.

Bloch accuses me of ignoring "increases in unemployment
in the first decade of independence" as well as "the
magnitude of the depreciation of the Zimbabwe dollar in
the 1982-90 period, and... the then horrific lack of
foreign exchange." Let's take these in turn.

Total formal-sector jobs (including agricultural) rose from
just under a million at independence to 1.244 million in
1991 and then remained flat. More importantly, urban
employment (not commercial farmwork) rose from 454,000
in early 1980 to 620,000 in 1991 before falling back to
590,000 by year-end 1995. So the unemployment rate grew
faster during Esap than before.

And between 1980 and 1990, the Zimbabwe dollar lost 70%
of its value against the US$; between 1991 and 1996, it
lost 67%. During which period was average annual
devaluation twice as rapid--pre-Esap or Esap?

Interestingly, the Zimdollar's early-1990s slide is
explained by the combination of exploding inflation (as
price controls were lifted in mid-1991) and massive
growth in foreign debt (which as a percent of GDP rose
from 8.4% to 21.8% from 1991-96). The new debt was
mainly taken on to pay for imports (which were double
the volume anticipated by planners).

Certainly there were forex shortages during the 1980s,
but whose fault was that? Bloch should recall the role
of Washington loan-pushers. The World Bank alone
unloaded US$700 million on Chidzero during the 1980s.

In early 1983, Chidzero reckoned that the foreign debt
repayment burden--which required 16% of export earnings
that year--would "decline sharply until we estimate it
will be about 4% within the next few years."

Astonishingly, the Bank concurred: "The debt service
ratios should begin to decline after 1984 even with
large amounts of additional external borrowing." In
reality, Zimbabwe's foreign debt servicing spiralled up
to an untenable 35% of export earnings by 1987.

Forex crises were inevitable thanks to such impressive
miscalculations, for which in any serious profession
malpractice and disbarment would result. Instead, the
very same people--in the finance ministry in Harare, and
at 18th and H Sts in Washington--went on to design Esap,
where their record was similarly destructive.

Here's another point about the 1980s and 1990s that
Bloch won't touch: social policy was much more generous
prior to Esap, and especially prior to the 1985 IMF loan
conditions which included education and health spending
cuts. Tellingly, nowhere in Bloch's defense of Esap is
the worsening plight of the vast majority of Zimbabweans
raised, much less defended.

Instead, Bloch goes to the other end of the spectrum,
accusing me of disregarding "the immensity of the import
and exchange controls that prevailed prior to Esap and,
more importantly, the resultant massive shortages which
impacted negatively upon every facet of the economy and
upon every aspect of daily life." In contrast, says
Bloch, under Esap "those shortages disappeared."

True, but here's a translation: my rich friends and I
couldn't get enough luxury goods before import controls
were relaxed. Just to take some examples, the import of
TVs and VCRs rose by 45% (after adjusting for inflation)
from year-end 1990 to 1995; passenger car imports were
up by 258%, and imported yachts and pleasure boats rose
by 243%.

Life under Esap was nice, if you could afford it. If you
worked in one of many local industries that was quickly
swamped by South African products and folded as a
result, or if ending price controls shrunk your basket
of purchases, tough luck.

More excuses from Bloch: "In the first three years, Esap
was embarked upon most half-heartedly, with
consequential inadequate contribution to economic growth
and moreover, Zimbabwe was afflicted in 1991-92 with the
worst-ever drought that it had experienced."

What, then, was Esap's record prior to the 1991-92
drought, which formally began when the rainy season
failed (November 1991)? Was Esap working when, from
early 1991, trade and financial liberalisation
intensified, monetary policy was tightened, the currency
was devalued by 35% and key price controls were dropped?

According to the Zimbabwe Congress of Trade Unions book
*Beyond Esap*, "exports fell by over 3% in 1991 before
any impact of the drought could be felt, whereas in the
comparable drought year of 1987 they had actually
risen."

Inflation began to roar (quickly doubling average 1980s
levels). IMF/WB teams were by then running all over
Harare, and on September 5 persuaded the Reserve Bank to
let short-term interest rates soar from 27.5% to 44%.

Immediate results included a massive credit crunch
(e.g., no home mortgages were available), a sustained
property market downturn, disastrous pension fund
returns, major corporate financial crises, and a sudden
30% crash of the Zimbabwe Stock Exchange.

All this happened *before* the onset of the 1991-92
drought.

What was the record after Zanu PF allegedly began taking
Esap seriously (1994-95 in Bloch's story)? From year-end
1993 to year-end 1995, per person GDP did rise (by $30,
from $1910 to $1940 in 1990 currency values). But over
those two years, manufacturing's contribution to GDP
fell from 18.3% to 16.7% (while output from
finance/insurance, including accountancy, rose from 7.5%
to 7.7%).

Any way you disaggregate the statistics, it's hard to
contemplate how Esap could be considered "highly
satisfactory"--the highest grade given by the World
Bank.

Wait, Bloch rebuts, "the World Bank assessment was in
1995, when for over two years Zimbabwe had at last
applied some commitment to the implementation of Esap.
I believe a very different assessment would have been
forthcoming in 1991-92, or again in 1998-99!"

Wrong, the Bank's project completion evaluations
assessed Esap in its entirety, for the years 1991-95.

And while I know of no prior Bank documents evaluating
Esap, World Bank resident representative Christiaan
Poortman did announce at a November 1991 Paris Club
meeting that Esap was "on course." By June 1993, a
frustrated Iden Wetherell commented in the Fingaz that
Poortman's "emollient statements over the past 18 months
reflect the devotion of a faith unmoved by facts."

Worse, by 1998-99, the Bank and IMF were sufficiently
satisfied with Zanu PF's performance that they continued
to offer new loans!

So why, I wonder next, is it so crucial that a leading
accountant so desperately defend Esap and its Washington
authors, to the point of making so many errors himself?

Bloch is not ignorant of how people can cook the
economic books. Does his futile defense of Esap imply,
by any chance, that Zimbabwe's economic policy-making
should again revert to Washington?

Should loss of economic policy-making sovereignty also
characterise the MDC's first term in government
beginning next year?

If yes to both, it is reasonable to ask whether Bloch's
interests now divert so sharply from those of Zimbabwe
as a whole--that he should no longer be taken seriously
as a commentator?

I would dispute such a pessimistic conclusion. Bloch's
interests are tightly aligned to those of Zimbabwe's
business elites, and Bloch is good at articulating the
contemporary, immediate class consciousness of his
crowd. This remains helpful, at one level.

But he simply can't be trusted when looking backwards,
starry-eyed, to the 1994-95 days of unlimited luxury
imports (paid for by future generations' debt servicing
responsibility).

To conclude my side of this correspondence, I admit to
being a faithful reader of Bloch's turgid 1990s columns.
And I do recall, to be fair, at least one moment when
Bloch was motivated to criticise Esap's free-market,
cost-recovery logic.

That was when, in the Fingaz of 14 July 1994, he whinged
at suffering a nearly 2,000% fee increase (from 10c to
Z$2) to enter the pub at the Bulawayo airport.

***

> Zimbabwe Independent
> Fri, 02 Feb 2001
>
> Eric Bloch Column
>
> IN Cutting Edge (Independent, January 26) Patrick Bond takes me to
> task for my recent contentions that those who blame Zimbabwe's
> economic ills upon Esap do so in disregard of fact and, in particular,
> of four key factors.
>
> In reading his contrary views and his criticisms of my arguments I had
> some sense of satisfaction, for the primary purpose of my writings is
> to stimulate dialogue. It is exchanges of perspectives, free debate,
> interchanges of thoughts and ideas that enable society to evolve
> policies and develop them.
>
> But my satisfaction that my column had provoked debate was rapidly
> dispelled as I became progressively aware that the damning analysis
> was founded upon misconstruction of my present and past writings and
> of my perceptions, an abuse of statistics, and a disregard of
> realities. Most of all, many of my statements are taken out of context
> or are misconstrued.
>
> That this is so is probably not the fault of Patrick Bond, but mine,
> having regard to the length of my sentences, which he understandably
> and justifiably dislikes (although he manages a 57-word sentence in
> his fourth paragraph   only nine words less than my sentence as cited
> by him; and in his eleventh paragraph his 67-word sentence beats mine
> by one!).
>
> So, although probably again unsuccessfully, I attempt just once more
> to set out my views upon Esap in the context of Zimbabwe, and
> especially so insofar as the creditability or otherwise of attributing
> Zim- babwe's economic woes to Esap is concerned.
>
> First of all, I stated that government was motivated to consider Esap
> (in theory, for initially it did not do so with conviction) because of
> "the devastatingly shattered state of the economy" then prevailing.
> Bond's attempt, with some selected statistics, to rebut this reminds
> me of the statement that "statistics are like a bikini ....very, very
> revealing but they conceal the essential".
>
> Firstly, he quotes GDP growth and inflation rates, and annual
> earnings, founded upon averages for the period 1980 - 1990, comparing
> those averages with the averages for 1990 - 1995. In doing so, he
> disregards the extent that averages can distort.
>
> In the former period, the Zimbabwean economy enjoyed substantial
> growth in the years immediately after Independence, enhanced in
> percentage terms by the very low commencement base.
>
> The economic decline accelerated as government progressively pursued
> Marxist-Leninist economic policies with increasing vigour, despite the
> failure of those policies where so ever they were applied. In the
> latter period, only two relatively progressive economic growth years
> occurred, being 1994 and 1995, when government belatedly developed
> some commitment to Esap.
>
> In the first three years, Esap was embarked upon most half-heartedly,
> with consequential inadequate contribution to economic growth and
> moreover, Zimbabwe was afflicted in 1991 - 1992 with the worst ever
> drought that it had experienced. It is little wonder therefore, that
> the 1990 - 1995 statistics compare unfavourably to those for 1980 -
> 1990, but not because of Esap.
>
> Secondly, his comparative measures are conveniently selective. He
> fails to focus upon the increases in unemployment in the first decade
> of Independence. He disregards the decline in foreign direct
> investment (FDI) after the first few dynamic post-UDI years.
>
> He ignores the magnitude of the depreciation of the Zimbabwe dollar in
> the 1982 - 1990 period, and takes no notice of the then horrific lack
> of foreign exchange. No consideration is given to the immensity of the
> import and exchange controls that prevailed prior to Esap and, more
> importantly, to the resultant massive shortages which impacted
> negatively upon every facet of the economy and upon every aspect of
> daily life. But, under Esap (and especially once some genuine
> implementation of its policies occurre Bond tries to turn my own
> arguments against me, quoting my comments of January 5, 1995 of many
> economic improvements as evidence of Esap achievements, as being proof
> that Esap was well implemented.
>
> But I assert that during the first three years of Esap, government was
> very selective as to which of Esap's measures should be implemented,
> and which should not, with a result that the economic recovery in
> those years was not what it could have been (I acknowledge, the
> drought also contributed significantly to the inadequacy of the
> recovery).
>
> Then, from 1993, government pursued Esap more positively, and economic
> recovery accelerated. But, by 1997 government started abandoning much
> of Esap and, combined with a diverse range of other negative policies
> and actions, that abandonment reversed the belated Esap implementation
> achievements.
>
> Esap was to have been followed in 1996 - 2000, by "the son of Esap",
> known as Zimprest. That hardly happened.
>
> Instead, government embarked upon state spending vastly beyond
> available means, inclusive of billions of dollars to mostly
> undeserving war veterans and, to a considerable degree, imposters
> pretending to be ex-combatants and many billions more on an
> unproductive and unjusti- fied war. Instead of encouraging economic
> growth, it undermined the stability of the largest economic sector,
> agriculture.
>
> It did so with confrontation, aggression, abuse, and repudiation of
> justice. And unnecessarily so, for it could have achieved its
> objectives through other measures without adverse results, if it had
> not allowed arrogance, obduracy and politics, coupled with racial
> hatred and xeno- phobia to reign supreme.
>
> Whilst Esap was found-ed upon economic liberalisation and upon
> market-forces as economic drivers, government started to reverse the
> processes.
>
> It "stole" foreign currency accounts, reneging upon undertakings given
> to exporters. It raised numerous, almost insur- mountable, obstacles
> to expatriate employment by new investors. It withdrew tax and other
> incentives. It threatened the reimposition of price controls. As
> government increasingly retreated from the Esap policies, which it had
> always abhorred, and on which it had only progressed dilatorily and
> reluctantly, except from 1993 to early 1997 (during which time Esap
> succeeded) the economy sank into ever-greater decline.
>
>
> But government, and other ideological opponents of Esap, supported by
> antagonists of the Bretton Woods institutions (the International
> Monetary Fund and the World Bank), needed to blame that economic
> decline upon something other than government and its policies. Attack
> being the best defence, Esap itself was the perfect target for that
> blame, and many claimed that Esap was the cause of Zimbabwe's economic
> ills.
>
> Bond also seeks to counter my arguments by "reminding" me that the
> World Bank itself stated that government's implementation of Esap was
> "satisfactory", and that Zimbabwe's Esap was "highly satisfactory".
>
> That is so, but the World Bank assessment was in 1995, when for over
> two years Zimbabwe had at last applied some commitment to the impleme-
> ntation of Esap. I believe a very different assessment would have been
> forthcoming in 1991 - 1992, or again in 1998 - 1999!
>
> I do not say that Esap was a magical, cure-all elixir. I do say that
> Zimbabwe's economic policies from 1982 - 1990 were increasingly
> destructive, and that when Esap was eventually partially progressed
> with some determination, positive results were forthcoming. I also say
> that when that determination dissipated, economic reversal set in.
> Hence, I remain of the view that it is fallacious to lay the blame for
> the state of the economy at the feet of Esap.




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