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Source: Zimbabwe’s Threadbare Theatre of Reform | International Crisis Group 29 July 2016
Zimbabweans are slowly rediscovering the courage to speak out as Zimbabwe’s much-vaunted reform process is consumed by insincerity, slow-burn crisis, and infighting over the succession to 92-year-old President Robert Mugabe.
Complementing growing opposition activity, recent weeks have seen a rash of spirited and well organised protest campaigns, most notably #Tajamuka and #ThisFlag, and a widely observed “stay-away” from work, adding further pressure on a bankrupt government, whose efforts to pilot a much needed recovery look increasingly artificial due to political infighting within the ruling Zimbabwe African National Union-Patriotic Front (ZANU-PF).
A recent public attack on Mugabe and ZANU-PF from his former main allies in the leadership of the Zimbabwe National Liberation War Veterans Association (ZNLWVA), and the bellicose response from Mugabe and other government leaders, signal a further fragmentation and heightening of tensions.
The security services are reportedly on high alert, and some fear the state will employ its customary iron fist if confronted. But loyalties are being tested; many senior ranking officers retain sympathy for the war veterans. The government has tried to keep the security services onside, prioritising their pay packets, promoting some officers and privileging specialist units. But it is struggling to do the same for the rank and file, delaying civil service and armed forces salaries in June and July.
In February, Crisis Group’s report “Zimbabwe: Stranded in Stasis” called for international and regional actors to seek common ground and action that address the sensitive political climate. They should support the government’s reform and re-engagement process with international financial institutions and bilateral creditors, but on condition Harare demonstrates a genuine commitment to an inclusive, transparent and accountable process. This is essential to build the necessary confidence required for underwriting Zimbabwe’s recovery.
An Economic Precipice
Zimbabwe’s economy rebounded after 2009, when the Zimbabwe dollar was replaced by multiple foreign currencies, but GDP growth has fallen sharply since 2012. Government expenditure now far outstrips revenue. This is due largely to a massive wage bill (over 80 per cent of the budget) that reflects unchecked recruitment after the 2013 elections, up from 315,000 to 554,000 civil servants. To finance this, Harare ran up deficits that have now led to insolvency. The ensuing liquidity crisis has been exacerbated by a wide trade deficit and shrinking financial sector. The government has been trying to drum up foreign investment, new loans and fresh lines of credit. It has won some significant Chinese investments, but it has been unable to reverse the decline in confidence or revive the economy.
A bankrupt, corrupt and increasingly predatory state is now squeezing what’s left of productive pockets in both the formal and informal sectors. This compounds social and political challenges that feed back into and reinforce the deterioration. Official corruption is rampant. In March, President Mugabe revealed that the government lost billions in diamond-mining revenue since 2008 because of “looting” and corruption. Most surface-mined diamond fields are now depleted. To make matters worse, depressed commodity prices show little sign of significant recovery and the worst drought in two decades has left one third of the country in need of food aid.
The resulting liquidity crisis is coupled with a growing crisis of confidence in the country’s economic management. In early May, the Reserve Bank of Zimbabwe announced that the government would introduce bond notes to help ease liquidity and give incentives to exporters. Normally, such measures might bring relief, but it was a public relations disaster since the Reserve Bank leadership had apparently not consulted anyone, including the International Monetary Fund, which two days prior had given Zimbabwe a positive report on its reform program progress. The government subsequently announced bond notes will be introduced in late 2016, but this will not have a significant impact on the broader structural challenges facing the economy.
All this has forced ZANU-PF to re-engage with its traditional multilateral and bilateral funders. The government is seeking balance of payments support and investment from Western partners, the same parties it publicly blames for the genesis of its economic and financial crisis when they cut lines of credit as the government reneged on most of its debt payments in the early 2000s. In fact, Zimbabwe would have to repay $1.8 billion in debt arrears to have a chance of new funding, without knowing if credit is available or what its economic and political conditions might be.
Until God Calls
It is unlikely the government and ruling party will enthusiastically embrace austerity reforms that would block their current populist policies. Any meaningful economic reform process is further hampered by internal factionalism within ZANU-PF over who will succeed President Mugabe.
Fault lines are hardening fast; in early June, Mugabe signalled to ZANU-PF’s Central Committee that he is siding with opponents of his vice president, Emmerson Mnangagwa. This boosted the faction referred to as the Generation 40 (G40), which dominates the party’s youth and women’s structures and importantly has First Lady Grace Mugabe’s support. It was the G40 that put as many as 200,000 people on Harare’s streets for ZANU-PF’s Million Man March in May, a major display of the party’s organisational capacity, despite severe resource constraints.
G40 leaders are now calling for an extraordinary ZANU-PF congress, which they would use to isolate Mnangagwa further, even remove him from the vice presidency, as well as reaffirm Mugabe as party candidate for the 2018 polls. Although it is not physiologically feasible for Mugabe to carry on much longer – in February he said he will stay on “until God calls” – the mythology of his candidacy buys time and cover for the G40 to consolidate is position. It’s a high risk strategy that gives little attention to the challenges of the economic and political reform agenda.
President Mugabe’s penchant for playing one faction off against the other continues, but his dexterity and options are waning. Over the last six months, he has been increasingly critical of war veterans and the security forces, who are more closely aligned with Mnangagwa. War veterans clashed with police in a showdown earlier this year that forced Mugabe to convene an unprecedented meeting with them in early April. They vented their anger about economic and political developments, voiced their support for the July strike and stay-away.
The expulsion on 6 July from ZANU-PF of Chris Mutsvangwa (the recently dismissed minister for war veterans, who remains chairman of the ZNLWVA), and other allies of Mnangagwa, is the latest development in what senior political analyst Eldred Masungure describes as Zimbabwe’s “pendulum politics”. Mnangagwa’s albeit tempered public criticism of his own allies for taking these steps has reinforced perceptions that he has been outmanoeuvred, and may be pushed out without much of a fight, as Joice Mujuru was in December 2014.
Mugabe still needs Mnangagwa and the security services; they remain central guarantors of ZANU-PF’s continued hegemony. But his ability to manage this relationship presents an ever-greater challenge.
A widening credibility gap
A well-rehearsed yet selective narrative about progress toward clearing debt arrears and economic revival was first presented to international creditors in Lima, Peru in October 2015. Reform and re-engagement is championed by key Mnangagwa ally, Finance Minister Patrick Chinamasa, supported by Reserve Bank Governor John Mangudya. Both were in Berlin and London in July to make the case that Zimbabwe was politically stable and open for investment. ZANU-PF does not speak in one resolute voice about the reform program it is ostensibly trying to promote.
The overall strategy theoretically has the full support of President Mugabe and senior party members. But ZANU-PF feels humiliation at putting its hand back out so publicly for help from those outside powers it still describes as its enemies. In practice, Mugabe has been unenthusiastic and has allowed sharp criticism to emerge from ZANU-PF. Blaming “the West” for burgeoning dissent undermines those seeking genuine re-engagement, and emboldens those who seek political capital from opposing the broader reform agenda.
For critical Zimbabweans, the efforts look increasingly bogus. Claims from the government that it has clarified its position around controversial issues such as its indigenisation policy, property rights and compensation for land seizures are not supported by objective realities on the ground.
To date, the reform and re-engagement process has also been a largely exclusive, even secretive, affair; the “Lima Strategy Document”, the government’s primary plan for clearing its arrears, was only officially made public after it was leaked in February 2016. It set out a broad roadmap, but with little detail. It is unclear what, if anything, was subsequently agreed with creditors.
The government avoids or denies challenges that it has lost public trust. But most opposition parties, and a host of civil society actors representing important constituencies, have little or no confidence in the economic reform process or the government’s commitment to honouring the new constitution. They want more detail on the overall reform plan’s promises of better governance, transparency, institutional accountability, and human rights. These all remain key benchmarks of tangible progress: for now, the government appears to be backsliding, only selectively amending old laws to align them with the reformed 2013 constitution. This has provoked growing calls from civil society and opposition political parties for Mugabe to be replaced by a National Transitional Authority, a demand ZANU-PF is likely to dismiss with contempt at this juncture.
International actors promoting a more robust re-engagement with Zimbabwe are caught in an invidious position. They seek to encourage reform, and recognise that incremental progress requires compromises, especially in a context of challenging economic headwinds. But they also know that the reform plan tends to address only the symptoms of the economic malaise, not its core structural and systemic causes, like politicised state institutions and systematic corruption and patronage.
External actors understandably want to help Zimbabwe; a failed state serves nobody’s interests. But to do so without enabling continued authoritarianism, economic mismanagement and outright theft of public resources presents a significant challenge. They also have to explain their positions and policies to Zimbabweans better. ZANU-PF can react badly to criticism; Finance Minister Chinamasa warned a recent gathering at Chatham House in London that a harder line would push his party “back into the trenches”.
Politicking and brinkmanship are likely to characterise any move ZANU-PF makes; notwithstanding competing priorities, the international community, and in particular regional actors, such as the Southern African Development Community must retain vigilance and can play a greater role in assisting Zimbabwe in this situation. But they should do so within the context of a clearer engagement framework, which must promote an inclusive approach that is structured around building confidence with local and foreign actors.
Zimbabwe still has the potential and technical capacity to chart its economic recovery; but serious reservations remain that ZANU-PF is able to implement a credible plan. This is compounded by a narrative that routinely seeks to shift responsibility for the economic crisis on others, including the central myth that sanctions are the primary reason for the country’s current quandary.
While external factors like depressed commodity prices, the dominance of an appreciated U.S. dollar in its multicurrency regime undoubtedly constrict Zimbabwe’s economic options, the country’s financial delinquency is legendary. The new reform policy implicitly recognises the need for more rigour, but implementing it will never be popular. If Zimbabwe’s government is to move beyond the theatre of reform, and avert further worsening of the political, social and economic crisis, it must “walk the talk” toward a more inclusive, transparent and accountable process.