[Marxism] IMF Payment Shames West (Zimbabwe Herald)

Patrick Bond pbond at mail.ngo.za
Mon Nov 7 07:34:37 MST 2005


There's such a lot of nonsense in The Herald's reporting, it's hard to know 
where to start. Last month I spent a week in Harare with Zim Social Forum 
comrades; they were still in shock that Mugabe had blown $135 million on 
repaying the IMF, for no good reason. I wrote up something for the Review of 
African Political Economy (December 2005 issue), of which half is below, in 
case anyone thinks that Mugabe - hot rhetoric aside - is actually an 
anti-imperialist...

----- Original Message ----- 
From: "Calvin Broadbent" <calvinbroadbent at hotmail.com>
> www.zimbabweherald.com/index.php?id=47473&pubdate=2005-10-03
...
> When the payment was made against all odds, the detractors were devastated 
> as they had hoped that desperation would force the Government to 
> compromise the nation's sovereignty by letting outsiders not only pay our 
> debts but also dictate the direction of our national politics.
>
> In fact had the payment been made from borrowed funds, the same forces 
> would have had a field day alleging that Zimbabwe had proved nothing by 
> paying using borrowed funds.
>
> This is why the mobilisation of local resources was critical as it sent a 
> clear message that, even though some westerners keep pushing the country 
> under the water, it has the capacity to rise to meet its obligations.

Zimbabwe's Hide & Seek with the IMF: Imperialism, Nationalism & the South 
African Proxy
Patrick Bond

Zimbabwean president Robert Mugabe's 2005 fight with the International 
Monetary Fund illustrates adverse power relations in which financial 
pressure is specifically applied in the interests of economic (not 
political) liberalisation. However, whereas the IMF has no confessed 
interest in human rights and political freedom (and demonstrated as much in 
late 1990s Zimbabwe), Pretoria's discourses do include good governance 
rhetoric. Combining pro-market and (surface-level) pro-democracy arguments 
allows Thabo Mbeki to serve as proxy for the IMF, which above all wants 
repayment on vast arrears, but which also insists on the full range of 
Washington consensus policy changes. To make those changes would undercut 
Mugabe's patronage system, and might also generate popular unrest.
For South Africa, meanwhile, the objective appears to be an elite transition 
that keeps Mugabe's Zimbabwe African National Union/Patriotic Front 
(Zanu/PF) party in power after his retirement, maintains the splintering 
Movement for Democratic Change (MDC) as a token opposition, and imposes 
severe cuts in the social wage on the citizenry while opening the door for 
bargain sales of Zimbabwean assets to South African bargain basement 
shoppers. Yet contradictions in these projects occasionally appear, and it 
remains for the beleaguered left social forces to take advantage of the 
extraordinary opportunity to press home the critique of both international 
finance and regional sub-imperialism.
In southern Africa, the Bretton Woods Institutions have become sufficiently 
notorious within the political intelligentsia as to attract these words from 
leading African National Congress official Sidney Mufamadi (2005):
As we speak, the neoliberal orthodoxy sits as a tyrant on the throne of 
political-economic policymaking. The dominant social and economic forces are 
doing their utmost to hegemonise the discourse - both materially and in 
respect of how developmental processes are to be institutionalised and 
theorised. Among other things, they use such transnational governmental 
organisations as the International Monetary Fund (IMF), the World Bank and 
the World Trade Organisation to shape the discourse within which policies 
are defined, the terms and concepts that circumscribe what can be thought 
and done.
This quote is worth keeping in mind, in part because of its author's own 
close comprehension of World Bank activity in South Africa. That point we 
return to in the conclusion, but it serves to introduce the question of how 
the region's dominant social and economic forces intend to hegemonise 
political transition in Zimbabwe. One objective is to bring the IMF back 
into play as a policy determinant, for the first time since 1999. Indeed, 
recall that a decade ago, Robert Mugabe's regime was a successful protégé of 
Washington financiers. The World Bank (1995:23) gave his government the 
highest possible rating in its scorecard of neoliberal orthodoxy: 'highly 
satisfactory'.
This judgment followed fifteen years of arm-twisting by the Bank and IMF, 
culminating in the 1990-95 Economic Structural Adjustment Programme (ESAP) 
and a crash of both manufacturing and the social wage. As a result mainly of 
popular resistance, things began to go badly wrong for Harare's elites soon 
thereafter. From 1996 to 2000, a series of overlapping 
worker/peasant/student/war veteran rebellions became a serious threat to the 
ruling Zanu (PF) party. Mugabe adopted a zig-zag political-economic 'policy' 
based on a mix of carrots and sticks, combining frontal attacks on poor and 
working-class urban Zimbabweans with fiery anti-imperialist rhetoric.1
At the heart of Harare's fiscal crisis are Mugabe's expensive carrots to 
disgruntled sections of society: large new pensions for tens of thousands of 
Liberation War vets (previously ignored or repressed) from September 1997; 
periodic payolas of various kinds to the army and police, including licence 
to loot the Democratic Republic of the Congo during the late 1990s civil 
war; on-again/off-again price controls from 1998 in order to prevent further 
'IMF Riots' (which had broken out periodically during the 1990s); occasional 
gifts to key constituents during the early 2000s, such as very inexpensive 
rural electricity; and state-
sponsored land invasions immediately following Mugabe's defeat in a 
constitutional referendum in February 2000, as the opposition MDC became a 
threatening electoral force. The sticks from 1999-2004 included 128 
documented murders, more than 3500 cases of torture, more than 2000 arrests 
and detentions, 712 assaults and many other attacks on opposition political 
and civil society activists. We learned much more about the way sticks were 
used against ordinary people during 2005; they don't need recounting in 
detail, but include, in the words of South African Communist Party (SACP) 
general secretary Blade Nzimande (2005):
'the wanton destruction of homes and community facilities' for more than a 
million of the urban poor, and 'anti-democratic legislation, including 
legislation directed against the right to assembly and against media freedom'.
Durable Nationalism
Mugabe's alliances have generally been maintained the past five years, and 
both external and internecine rebellions have been crushed. Regular 
predictions that the ruling party will fragment - mainly due to ethnic 
factionalism - have never reached fruition. After three decades of control 
over Zanu (PF) and six years' experience harassing a strong opposition 
party, Mugabe has an even stronger grip on his politburo. Evidence of his 
dominance during this period includes the expulsion, demotion or jailing of 
figures with substantial regional or sectoral powerbases, such as the giant 
old stalwarts Ndabaningi Sithole, Joshua Nkomo and Enos Nkala (1980s); 
failed party reformers Edgar Tekere, Eddison Zvobgo and Margaret Dongo 
(1990s); and tycoon Philip Chiyangwa, finance minister Chris Kuruneri, chief 
spokesman Jonathan Moyo and parliamentary speaker Emmerson Mnangagwa 
(2000s).
However, with Mugabe apparently now unable to raise basic hard currency for 
importing petrol, food and other vital necessities, the time is ripe for the 
next stage of what might be termed 'exhausted nationalism'. When Simba 
Manyanya and I began using this phrase in 2002 (in Zimbabwe's Plunge), as 
shorthand for Mugabe's incapacity to deliver a higher standard of living, it 
was not clear that the nationalist project could be reinvigorated, at least 
in a manner the masses would find compelling. We cited Frantz Fanon's 
(1963:204) Wretched of the Earth:
A bourgeoisie that provides nationalism alone as food for the masses fails 
in its mission and gets caught up in a whole series of mishaps. But if 
nationalism is not made explicit, if it is not enriched and deepened by a 
very rapid transformation into a consciousness of social and political 
needs, in other words into humanism, it leads up a blind alley. The 
bourgeois leaders of underdeveloped countries imprison national 
consciousness in sterile formalism.
The problem of 'exhausted nationalism' also applies to South Africa, where 
SACP deputy secretary Jeremy Cronin once famously translated it as the 
'Zanu-fication' of the ANC (he was hurriedly forced to apologise) (Sheehan, 
2002). In turn, this is why the vigorous debate now underway on lending to 
Mugabe is so revealing. For it appears that Mbeki and the IMF have, to 
borrow the quote above, successfully shaped the discourse within which 
policies are defined, and indeed a proposed loan of $500 million from South 
Africa to Zimbabwe may circumscribe what can be thought and done. A reported 
$160 million of that was originally earmarked to repay the IMF, with the 
rest ostensibly for importing (from South Africa) agricultural inputs and 
petroleum. According to Pretoria spokesperson Joel Netshitenzhe, the loan 
could 'benefit Zimbabwean people as a whole, within the context of their 
program of economic recovery and political normalisation' (SAPA 2005a). Much 
of the debate in South Africa concerns whether Pretoria is putting 
sufficient - or indeed any - pressure on Harare to reform, as Netshitenzhe 
refused to clarify speculation that both political and economic 
liberalisation would be conditions for the proposed loan.
Mugabe spokesperson George Charamba revealed the process on 14 August:
We never asked for any money from South Africa. It was the World Bank that 
approached Mbeki and said please help Zimbabwe. They then offered to help us 
(Mberi, 2005).
A Pretoria-based Bank economist, Lollete Kritzinger-van Niekerk, confirmed 
that her institution 'is not ready to thaw relations with the ostracised 
Harare' (Njini, 2005). Other reports - in the usually unreliable but 
consistently pro-government Herald - claimed that a top IMF official and a 
US diplomat also needed a backchannel. According to the IMF's own Press 
Clips news service (18 August 2005):
The issue of the proposed loan from South Africa to Zimbabwe has taken a new 
twist amid revelations that the US government approached South African 
president Thabo Mbeki to bail out Zimbabwe, The Herald (Zimbabwe) reported 
yesterday. A highly-placed Western diplomat in South Africa, who is closely 
following the deal, told that IMF deputy managing director Anne O. Krueger 
approached President Mbeki and asked him to advance financial support to 
Zimbabwe ahead of the IMF summit set for next month, The Herald (Zimbabwe) 
reported yesterday.
The diplomat said Ms. Krueger made her move in the run-up to the African 
Union summit in Sirte, Libya, which was held from July 4 to 6. Ms Krueger is 
reported to have told President Mbeki that a South African loan would enable 
Harare to pay its dues to the IMF and, in so doing, strengthen the case 
against Zimbabwe's expulsion from the institution. President Mbeki, the 
source said, was surprised that a high-ranking IMF official could make a 
case for Zimbabwe. However, Ms Krueger is reported to have pointed out that 
South Africa would lose more from Zimbabwe's expulsion since no other 
country would want to assist Zimbabwe after that, and this would have a 
negative effect on the South African economy.
Notwithstanding some mildly adverse impacts on investor confidence and 
refugees, whether Zimbabwe's ongoing economic crash is entirely negative to 
South Africa remains disputed. As Dale Mckinley (2004) has pointed out, a 
weakened Zimbabwe has merits for both Johannesburg capital and Pretoria 
politicians. In October 2005, Fitch ratings director Veroncia Kalema 
remarked to the Financial Mail that Zimbabwe 'is a small economy. It could 
collapse and South Africa would be fine.' The same article quoted 
Harare-based business economist Tony Hawkins on the 'upside', namely, that:
South Africa has gained market share in exports, tourism and services. SA's 
share of investment in Zimbabwe has also risen as there has been an element 
of bargain-basement buying by some mining and industrial groups. SA is also 
taking significant skills from the country, especially scarce black skills 
in health, education, banking, engineering and IT. It would be too much to 
say that SA has benefited in net terms, but there is a good deal of evidence 
to suggest that it is securing some gains from the crisis (Bisseker & Ryan, 
2005).
Whatever the net benefits of SA-Zimbabwe economic relations, there is 
obviously no political 'normalisation' under way, if by which is meant 
Mugabe's agreement to hold serious democratisation talks with the MDC, to 
run genuinely free and fair elections, to unban the media and revoke 
extremist laws, to recall fascistic security forces to the barracks, and to 
provide emergency food and shelter in a non-politicised manner to the 
millions who urgently require it. In any case, Mbeki has repeatedly shown 
that these objectives are unimportant: by propping up Mugabe in the United 
Nations Human Rights Commission, by public commentary downplaying repression 
and vote theft, by silence at key junctures and by sending biased 
observation teams to monitor elections (Bond, 2004). Mugabe himself publicly 
rejected even the idea of negotiating seriously with the MDC.
Setting the fake 'reform' rhetoric aside, what is instead revealed by the 
current crisis is another of Fanon's insights, namely that Zanu (PF's) 
sterile formalism now sharply contradicts further capital accumulation by 
Zimbabwe's parasitical ruling class, a key faction of which desperately 
requires foreign exchange. (All Zimbabweans need foreign exchange, of 
course, just to spark their bone-dry carburettors, and to acquire essential 
medicines, spare parts, agricultural inputs, and manufactured goods that are 
no longer made by local firms following the 1990s de-industrialisation.) For 
the impoverished Zimbabwean masses, the povo, there is no economic bailout 
on the horizon, much less democratic leverage, only a choice of which 
financiers will worsen austerity in future years: the predictable money 
mandarins of Washington, or the new sub-imperialists of Pretoria, backed by 
a gullible media and superficially critical opposition parties, or both.
The IMF & Zimbabwe's Povo
Consider the first lot, the Bretton Woods Institutions. Beginning in 
September 1980, when Zimbabwe formally joined, the role of the IMF was never 
to benefit 'Zimbabwean people as a whole'. Five examples are illustrative 
(details are in Bond 1998):
1) By early 1982, finance minister Bernard Chidzero - later to head the 
IMF/Bank Development Committee - denied that 'the IMF would impose any 
conditions as Zimbabwe was already restructuring its economy.' Though it was 
'a sensitive issue not for public debate,' Chidzero made statements to 
Parliament claiming 'devaluation of the dollar is not imminent and is not 
being contemplated.' Less than three months later, Chidzero announced a 20% 
decline in the currency, admitting it 'had been under consideration for some 
months.'
2) In late 1982, interest rates were raised dramatically, a move Chidzero 
pointed out with pride to the World Bank in private correspondence.
3) In March 1983, an editorial by the government-owned Herald observed that 
'Zimbabwe has a democratically elected people's government and therefore, 
the people, its supporters have the right to know what the IMF asked of this 
country.'
4) By 1984, Zimbabwe was paying vast proportions of export earnings to cover 
foreign loans, in part because of apartheid destabilisation of the region. 
As University of York economist Colin Stone-man (1985, 10) put it at the 
time: 'there can be no doubt that Zimbabwe's payments crisis was partly 
caused by South Africa, and that this was the means whereby the IMF gained a 
lever on Zimbabwean economic policy'.
5) The IMF soon terminated its $315 million line of credit due to Harare's 
budget overruns, forcing more painful austerity. By early 1985, Mugabe 
complained of 'pressure from the IMF to cut government spending on education 
and defence but the government has a way of overcoming this pressure'. Yet 
within a few years, Zimbabwe's vaunted education programme was indeed under 
threat as Bretton Woods cost-recovery policies gained momentum.
The Bretton Woods Institutions applied neoliberalism across a variety of 
sectors, and maintained heavy pressure on Mugabe to continue the ineffectual 
'willing seller, willing buyer' rural land policy. At a July 2005 land 
conference in South Africa, Mbeki told the audience that Zimbabwe's failure 
to embark upon land redistribution prior to the chaotic takeovers of 4,000 
white-owned farms from February 2000, was because 'They slowed down to get 
the negotiations in this country to succeed' since South Africa's white 
farmers would be 'frightened' about the transition to democracy (News24.com 
2005).
In reality, Harare's 1993 Land Designation Act was 'shelved,' as Zanu (PF) 
member of parliament Lazarus Nzaraye-bani complained in late 1994, because 
'it is not in conformity with the World Bank and IMF' and instead served 
government only 'to save its face' (Financial Gazette, 9 February 1995). In 
fact, South Africa's first ANC land minister, Derek Hanekom, invited the 
same World Bank team that was preventing Zimbabwe's land reform during the 
early 1990s, led by Robert Christenson, to guide post-apartheid policy. 
(That policy was also characterised by willing seller, willing buyer 
neoliberalism, and was publicly recognised as a failure at the 
state-sponsored land summit.) What of the last batch of IMF credits to 
Zimbabwe? Did these contribute to the welfare of all Zimbabweans and promote 
peace and democracy? The opposite conclusion is more logical. The IMF's $53 
million loan in 1999 was meant to release another $800 million from other 
lenders. The IMF's stated objectives were straightforward: reversal of both 
the luxury import tax and price controls on staple foods. Details were 
confirmed in a March 1999 statement by leading IMF negotiator Michael Nowak:
There are two issues outstanding and these have stopped the IMF from making 
the standby credit available to the country. These issues are, one, we want 
the government to reduce the tariffs slapped on luxury goods last September, 
and second, we also want the government to give us a clear timetable as to 
when and how they will remove the price controls they have imposed on some 
goods (Financial Gazette, 12 March 1999).
Five months later, the IMF agreed to increase the loan amount to $200 
million, but two more conditions were reportedly added: access to classified 
Democratic Republic of Congo war information and a commitment to pay new war 
expenditure from the existing budget. According to an IMF official,
The Zimbabweans felt offended, shocked, but they all the same agreed to give 
us the information, we got all the clarification we wanted. They had no 
choice . We have had assurances [that] if there is budgetary overspending, 
there will be cuts in other budget sectors (SAPA, 1999).
In sum, the IMF gave permission to penalise health, education and other 
badly-defended sectors on behalf of Mugabe's military adventures and 
business cronies, and also ordered Mugabe to immediately reverse the only 
re-
distributive policies he had adopted in a long time: a) a ban on holding 
foreign exchange accounts in local banks (which immediately halted the 
easiest form of capital flight by the country's elites); b) a 100% customs 
tax on imported luxury goods; and c) price controls on staple foods in the 
wake of several urban riots. That deal quickly fell apart, however, when 
fiscal targets were missed. Harare was, quite simply, broke. The previous 
year, Mugabe had spent an historically-unprecedented 38% of export earnings 
on servicing foreign loans, exceeded that year only by Brazil and Burundi. 
With foreign debt at $4.92 billion, fully $980 million was repaid to foreign 
creditors, while donor aid fell from its 1995 peak of $310 million to just 
$150 million. But due to compound interest rates, barely a dent was made in 
the total foreign debt outstanding.
The IMF continued giving advice to impose austerity, both from its Harare 
office and via periodic high-level missions from Washington. The 2000 
mission called for 'tight monetary and wage policies . privatisation, civil 
service reform and trade liberalisation,' according to the Herald (9 
December 2000) newspaper. By mid-2001, finance minister Simba Makoni 
confessed to the Southern Africa regional session of the World Economic 
Forum in Durban:
We are committed to fulfilling these obligations, but it's clear that our 
economy is in no state to generate sufficient funds to clear these arrears 
(Financial Gazette, 14 June 2001).
As a result, by mid-2005, Mugabe had run up repayment arrears of $295 
million to the IMF, and more than $1 billion to other lenders, including the 
World Bank and African Development Bank. The total foreign debt that is 
either in arrears or will come due in the next decade is $4.5 billion, far 
more than the national GDP in a given year. 





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