Pride at the root of it all?

PATRICK BOND concludes his analysis of the Zimbabwe-South Africa-IMF loan debacle. By August 2005, Mbeki assumed that his offer of a $500 million credit could influence the course of an elite transition, aiming at installing a neo-liberal, low-intensity democracy regime. That model would slightly si

deline Mugabe by 2008 at the latest; permit Zanu(PF) to retain power – possibly in a government of unity by co-opting MDC leaders – with the friendlier face of a technocratic president (the neoliberal former finance minister Makoni is usually tipped for the job) even if Mugabe still controlled the ruling party itself; and then open the economic borders up much more to Johannesburg capital. But Mugabe didn’t play along. Showing an impressive resilience and desire to hold on to maximum power at all cost, he visited China in August and then snubbed Mbeki in a brutal diplomatic manner at an African Union (AU) meeting in Addis Ababa. And then Mugabe pulled a card from his sleeve no one thought he had: in September he came up with $135 million from having scrounged all foreign currency available, and paid the IMF a substantial down payment, enough to earn a six-month reprieve on the expulsion threat (after the September payments, outstanding IMF debt was $160 million). Mugabe promised $50 million more by March 2006, and vowed to repay the full amount. (No one outside Pretoria really believes the IMF would expel Zimbabwe, given that China and many African regimes would oppose this in the IMF executive, where 15% of the vote would be enough to veto such a move.) By all accounts, this was an irrational and costly gesture. Even high-profile business spokespersons who are ordinarily most aggrieved by Mugabe’s dirigisme were opposed to the payment, in part because rumours suggest the Reserve Bank raided Harare capital’s foreign exchange accounts. Conservative economic commentator John Robertson complained, ‘This is just diverting foreign currency from exporters to the IMF at an enormous cost. We are starving local producers of hard currency and this is exacerbating the problem.’ Former Confederation of Zimbabwe Industries leader Eddie Cross explained: You have the spectre of this smashed and abused country – like a mugged man lying in the street and being run over by the passing traffic – actually paying money to the IMF. Money taken from private schools and NGO’s, food agencies and exporters. $50,000 here, a million there. Money critically required for food, drugs, fuel – all basic necessities and the IMF has the audacity to welcome the payments! Shown the source of the funds they express shock and promise to investigate – but they still bank the cheques. I wrote to the Fund and said send the money back – we need the stuff more than you do to keep life and limb together – not even the courtesy of a reply- Why is the IMF debt so important? The reality is that it is not that important. Paying our arrears to the Fund would not change our status one iota – we could not expect IMF support for any sort of stabilisation programme for some considerable time after the issue of the arrears has been dealt with and a workable recovery programme put in place. No, the reason why the IMF threat was finally treated with such deference is mainly political. African leaders – struggling with their image abroad and with economic and financial problems at home, did not want to see an African State expelled for misbehaviour- And so we have the spectre of the Zanu (PF) regime contradicting itself with respect to the IMF issue. One minute they do not matter and can ‘go to hell’. The next we are scouring the country for our last remaining sources of foreign exchange to make a meaningless payment to the Fund which will ensure that we are not expelled but are then left with insufficient resources to import essentials like food. To make sense of Harare’s willingness to pay the IMF, peer pressure from Mbeki was certainly a factor, but the initial refusal of Pretoria’s $500 million loan suggests that Mugabe’s ego is so large, that he ignored the extraordinary sacrifices being made by his citizens over the prior months (with nearly every basic commodity in short supply), simply to massage his pride at repaying the IMF. Yet that pride also required repetition of the requisite anti-imperialist sentiments, including this statement during a visit to Havana a few days after making the first ($120 million) payment: ‘We have never been friends of the IMF and we shall never be friends of the IMF. The IMF is never of real assistance to developing countries. It is wielded by the big powers. It is the big powers which dictate what it should do.’ Meanwhile, on the same day Mugabe spoke out against the IMF in Cuba, the Movement for Democratic Change issued a pro-IMF statement. The MDC argument not only unveiled residual neoliberal influences at Harvest House headquarters, but also suggests that the opposition party – which in late October split in half over whether to participate in the November senate elections – does indeed desire a Pretoria-mediated elite transition (notwithstanding the overwhelming lack of evidence for Mbeki’s bona fides): As the Mugabe regime gets more and more desperate, its economic and political positions get increasingly incoherent. Having in the past been brazenly disdainful of the IMF, it is now suddenly desperate to remain a respectable fee-paying member. This objective could have been facilitated by accepting the economic lifeline on offer from South Africa, but that would have required political compromises to be made. The regime’s desperation is greatest in the political realm, as evidenced by its spurning outside assistance and opting instead to squander the country’s extremely scarce foreign currency resources to repay a large chunk of the arrears owed to the IMF. It is like a badly behaved schoolboy offering his pocket money to a rich uncle, rather than improve his schoolwork- South African government officials were also surprised by Mugabe’s payment, and over the subsequent weeks continued to maintain that negotiations for the additional $500 million were on track, merely delayed. The Cabinet had made one other similar loan to a country primarily so as to repay the IMF, three years earlier. It was Joseph Kabila’s unelected regime in the Democratic Republic of the Congo, and the $45 million loan by Pretoria allowed Kabila to clear enough of the old Mobutu arrears that a new IMF mission could enter Kinshasa and impose further liberalisation, in turn disproportionately benefiting South African capital. The Mobuto debts should be declared ‘Odious’ in international law, but their payment by Pretoria gained Kabila a new IMF credit, at the cost of renewed IMF control over the Congolese people. In contrast to activists, the key politicians prefer to ‘talk left, walk right’. Once we dispense with the rhetoric, this surreal financial game of hide-and-seek from the IMF unveils imperial/subimperial/dictatorial power relations uniting Washington, Pretoria and Harare. It remains for critics of the regimes to pursue a democratic, anti-neoliberal strategy – and too, for international protest against the Bretton Woods Institutions to now intensify. – First published in Review of African Political Economy and Monthly Review. Patrick Bond directs the University of KwaZulu-Natal Centre for Civil Society: http://www.ukzn.ac.za/ccs.

IMF - 'stealing money from a starving beggar'
Gold production drops

Post published in: Economy

Leave a Reply

Your email address will not be published. Required fields are marked *