Sent: Saturday, April 22, 2000 12:35 AM

Subject: ZIMBABWE: The mess one man makes - Special Report from The Economist

THERE should have been military bands, synchronised gymnastics and lashings of cold Zambezi beer. But celebrations to mark the 20th anniversary of Zimbabwe’s independence, which fell on April 18th, were cancelled. The official reason was that the government thought it better to spend the money on the victims of the cyclone that drowned much of south-western Zimbabwe in February. A more likely explanation is that President Robert Mugabe is afraid to address a large crowd.

Rather than taking his usual podium at a packed football stadium, the president therefore spoke to the nation from the safety of a television studio. It was a wise move. Zimbabweans are increasingly sceptical of Mr Mugabe’s excuses for why the country is in such a mess. He blames the IMF, white racists, and a nebulous homosexual conspiracy led by Britain’s prime minister, Tony Blair. Zimbabweans reply: “IMF!”—It’s Mugabe’s Fault.

How times change. Twenty years ago, Mr Mugabe was a hero, praised in rebel songs for his courage. Zimbabweans hailed him as their liberator from the misery of colonial rule: from what Chenjerai Hove, a poet, described as

Now that Mr Mugabe has been in charge of Zimbabwe for two decades, his people harmonise to new lyrics. Thomas Mapfumo, a pop star once jailed by the old white regime and honoured by Mr Mugabe for his chimurenga (struggle) songs, now sings protest ballads about “the beautiful country that Mugabe has turned into hell”. The Zimbabwe Congress of Trade Unions (ZCTU), once an obedient puppy of the ruling party, is now the core of a strident opposition with a real chance of winning power. The rump of white Zimbabweans who stayed on after independence, once a quiet and apolitical minority, now openly march with the opposition Movement for Democratic Change (MDC). The violence unleashed on some MDC supporters—their farms invaded, their faces pulped with bricks, a few murdered—suggests the desperation of a despot who fears his time is up.

Why is Mr Mugabe so much less popular than he used to be? Zimbabweans have many reasons to resent him. Members of the minority Ndebele tribe cannot forget the massacre of perhaps 20,000 of their kinsfolk by Mr Mugabe’s troops in the early 1980s. White Zimbabweans do not like the way Mr Mugabe describes them as “the enemy of the state”, and Zimbabwean homosexuals are not exactly thrilled when he calls them “worse than dogs and pigs”.

The president calculates that baiting minorities gains him more votes than it loses. He is probably wrong. Few Zimbabweans still blame whites for their problems; there are, after all, more elephants (75,000) than whites (70,000) in Zimbabwe. And Mr Mugabe loses support by the cityful for his wretched handling of the economy.

In 1980, when he came to power, average income per person in Zimbabwe was $950, and a “Zim” dollar was worth more than an American one. Now the average Zimbabwean is one-third poorer, with GDP per person a wretched $600. It takes 38 Zim dollars to buy a greenback at the official exchange rate, and Zimbabweans find it all but impossible to lay their hands on hard currency. Fuel is scarce, and sporadic power cuts make homes gloomy and roads hazardous by night. Half the workforce is unemployed. The only ill that is not Mr Mugabe’s fault is HIV, the virus that causes AIDS, which afflicts a quarter of the adult population.

Mr Mugabe’s grasp of economics is shaky, his spending habits profligate. During the 1980s he ran up large budget deficits—partly for hospitals and schools, but partly for weapons—and saddled the economy with a plethora of controls. In 1990 he turned to the IMF for assistance and attempted half-heartedly to liberalise. Droughts, together with Mr Mugabe’s inability to rein in expenditure, derailed reform. After several policy flip-flops, the ruling party no longer stands for a coherent ideology. Instead, it is Mr Mugabe’s patronage machine.

Government finances, never frugal, went haywire in the mid-1990s. Mr Mugabe, caught between dwindling aid flows and rising anger at continuing poverty, tried to buy popularity. In 1997, he awarded hefty, unbudgeted pensions to veterans of the liberation war that brought him to power. He also threatened to expropriate, without compensation, land belonging to white commercial farmers, a prospect that scared off investors. The Zim dollar plunged.

In 1998, Mr Mugabe sent 6,000 troops to Congo, a country in which Zimbabwe had no strategic interest, to defend the feeble Congolese government against rebels. The Zimbabwean force has since expanded to 11,000 and has cost an estimated $500m, equivalent to one-third of Zimbabwe’s total budget for 1999. The war gives Zimbabwean generals a chance to loot Congo’s diamond mines, but brings no benefit to Zimbabwe. During February’s floods, there were few helicopters to rescue stranded families because they were in Congo.

This year, Mr Mugabe handed out pay rises of 60-90% to the civil service and the army. He himself received an even bigger rise and, by a remarkable coincidence, won a lottery organised by the state-owned Zimbank. The annual budget deficit is now at least 10% of GDP. Inflation peaked at 70% in October, and is expected to average over 50% this year. Buy a basket of groceries in Harare, and the change comes in ominously crisp, newly printed banknotes. A failure to tighten fiscal and monetary policy in the second half of this year could result in hyperinflation, according to Tony Hawkins, an economist at the University of Zimbabwe. The achievements of Mr Mugabe’s early years—better education and health care for poor Zimbabweans—have been eroded by his economic incompetence.

Mr Mugabe denies ordering the farm invasions, but the invaders arrive in ZANU-PF vehicles and are given food, money and instructions by officials with mobile telephones. About 1,000 farms, almost a quarter of the total, have been occupied. Veterans have beaten farmers and their employees with whips and golf clubs, sometimes binding them first with wire. Farmers known to support the MDC are singled out. At least six people have been killed. Mr Mugabe refuses to condemn the murders, though he used the word “regrettably” in his speech on independence day. The courts have ruled the farm invasions illegal and have ordered the invaders to leave. Mr Mugabe has told the police not to intervene.

The president promises to return to black Zimbabweans the land that was stolen from their forefathers by British colonialists. It is an emotive issue. White farmers own about 70% of the most fertile farmland in Zimbabwe. They employ 350,000 (mainly black) workers who, in turn, support about 1.6m family members, according to the Commercial Farmers’ Union (CFU). The rest of the rural population is crammed on to marginal plots or shares communal pastures. Mr Mugabe hopes that the land-hungry will vote for ZANU-PF in the expectation of free land. Some, doubtless, trust him. But Mr Mugabe has been promising redistribution for 20 years, without delivering much.

He blames Britain for not bankrolling his programme. But Britain forked out £44m ($102m) for land reform after independence. Some 70,000 poor families were resettled on land bought at market rates. Free at last to work for themselves, many enjoyed a rapid rise in incomes. Donor funds dried up only when it appeared that much of the land—270 farms in a single year, by a recent report—had been given or leased at trifling rents to Mr Mugabe’s cronies.

The land invasions are not merely a lousy way of tackling rural poverty. They also hurt the rest of the economy. Agriculture, obviously, is suffering. Fear of invasion makes farmers hesitate to plant new crops, let alone invest in new machinery. They cannot get credit, either. No bank will accept as collateral land that may be overrun or seized without compensation. Tobacco farmers, who earn a third of Zimbabwe’s export revenues, are reluctant to sell this year’s crop until the currency is devalued. Commercial banks, which have yielded to government pressure since January last year to freeze the exchange rate, say they will soon unfreeze it. But will Mr Mugabe, who does not want a devaluation just before an election, allow this to happen?

A few white farmers have signed over their property to the invaders and fled to Harare. But most are sitting tight, praying for a change of government and swapping grim jokes. What’s the worst way to abuse your children? Leave them your farm in your will.

Surgimed, a maker and distributor of medical equipment in Harare, used to supply public hospitals, but Danny Meyer, its managing director, grew frustrated with crooked tendering procedures and late payments. “We delivered 15 anaesthetic machines at about £15,000 [$24,000] each. The government took a year and a half to pay us. With interest rates at 70%, this nearly sank us. From then on, we stopped dealing with the government.”

Zimbabwe has sizeable deposits of gold, coal and base metals. But Mr Mugabe’s unpredictability deters mining firms from sinking the necessary long-term investments into the Zimbabwean rock. In hard-currency terms, mining output has declined by a third over the past five years. Last year, BHP, an Australian mining group, pulled the plug on the largest single private investment in Zimbabwe since independence, the $585m Hartley platinum mine. The mine made huge losses, partly because BHP misjudged the local geology, but also because of obstruction by the government, which would not, for example, allow the firm to hire enough technically skilled expatriates. BHP’s withdrawal meant the loss of 3,500 jobs.

Mr Mugabe frightens tourists, too. Television pictures of elderly demonstrators drenched in blood deter all but the hardiest of travellers. In fact, the country’s main attractions, such as Victoria Falls, have not seen political violence. Tourists are probably safe, so long as they do not visit farms or attend political rallies. But many are choosing to visit Botswana or Kenya instead.

For the first time since independence, a change of government now looks plausible. Until recently, most Zimbabweans had not heard of the MDC. Now they have, mainly because Mr Mugabe devotes long televised speeches to denouncing it. The party was founded last year by a trade-union boss, Morgan Tsvangirai. Mr Tsvangirai rose to prominence in the late 1990s, leading strikes to protest against excessive taxation, inflation and corruption. The MDC was the principal campaigner for the No vote in the referendum, and the main organiser of a peaceful demonstration that was broken up by ZANU-PF thugs on April 1st. The ruling party recognises the threat that the MDC poses. The state media accuse Mr Tsvangirai of conspiring with white South Africans to impose apartheid on Zimbabwe. His driver was murdered with a petrol bomb on April 15th, and there has been at least one attempt on his own life.

The MDC’s manifesto is sensible. If he wins control of parliament, Mr Tsvangirai promises to impose a 100-day, IMF-style stabilisation programme. The civil service will be purged of crooks, the army pulled out of Congo, the central bank given autonomy, and all state-owned companies privatised within two years. The MDC also promises a complete restructuring of government.

Since the party has no record in office, it is impossible to know whether Mr Tsvangirai can do all this. Mr Mugabe does not face re-election as executive president until 2002, and can be relied upon to obstruct reform. Neighbouring Zambia, too, provides a cautionary precedent. There, a popular trade-union leader, Frederick Chiluba, defeated an ageing autocrat, Kenneth Kaunda, in 1991; but Mr Chiluba’s government is now generally acknowledged to be as corrupt as Mr Kaunda’s was, and Zambia is no better off.

By law, Zimbabwe must hold an election within the next three months. Can the MDC win it? Mr Mugabe’s heroic image has not wholly faded. An opinion poll in February found that he enjoys the solid support of about one-third of the voters, mainly in rural areas. Almost two-thirds of Zimbabweans want a new government, but only one-fifth say that they support Mr Tsvangirai. The rest are undecided, or favour minor politicians. The election will hang on the don’t-knows, as well as on how effectively Mr Mugabe rigs the poll.

He holds several levers. ZANU-PF receives state funds and the adulation of the state-owned media. The ruling party mans the polling booths, too. During the referendum, campaigners for a No vote found that they did better in constituencies where they were able to sleep with the ballot box to prevent it being stuffed. The electoral roll is so old that about a quarter of the registered voters are dead. Since the dead are conservative, voting without exception for the ruling party, it will be a disaster for the opposition if their names are not removed. The register is being updated, but will probably not be accurate in time for the election.

Constituencies are also gerrymandered to favour Mr Mugabe’s own Shona group, and the president directly appoints a fifth of the 150 seats in parliament. If, despite all these advantages, Mr Mugabe still fears that his party will lose, he can declare a state of emergency and postpone the election.

If the election is held, and ZANU-PF wins, it will be a calamity for Zimbabwe. If the MDC wins, relations between the executive president and the legislature will be stormy. The veterans have threatened a civil war if ZANU-PF loses. They probably could not wage one, but what of the army?

Several generals owe their crooked fortunes to Mr Mugabe’s patronage, and might not stand by if he lost control. But there are signs that many within the ruling party are fed up with him. A few have asked when he will retire. Some ministers have called for an end to farm invasions, only to be overruled.

Given the state to which Mr Mugabe has reduced the country, a palace coup is possible. That would be an awful outcome. But if Mr Mugabe goes peacefully, there will be a surge of international goodwill and aid. Zimbabwe has terrific potential. The country only needs a better leader to unleash it.