Against the Current, No. 119, November/December 2005
From 9/11 to Katrina
— The Editors
- After Katrina
Bush to New Orleans Survivors: "You're On Your Own"
— Joanna Dubinsky
Surviving When the State Disappeared: Community vs. Katrina
— Suzi Weissman interviews Mike Davis
- Labor Under Attack
The Northwest Strike: Acid Test for Labor
— Malik Miah
The Northwest Airlines Strike: Where is Labor Going?
— Peter Rachleff
Hoffa Jr.: The Real Record
— Henry Phillips
- World of Struggle
Zimbabwe: Mbeki to Mugabe's Rescue
— Patrick Bond
A Commentary from Israel: Peace Camp - Dead or Alive?
— Michael Warschawski
Indigenous Resistance to Gold Mine Gains Momentum
— Cyril Mychalejko
Snapshots of the Bolivarian Revolution
— Dan La Botz
- Celebrating the Revolutionary Centenary
From 1905 to Our Time
— Sheila Cohen
John Brown, Abolitionist
— Jennifer Jopp
Background to Bush's Debacle: Iraq and the Empire
— Christopher Phelps
— Tony Smith
- In Memoriam
Little Milton and Clarence Brown
— George Fish
CONSIDER THESE WISE words from a leading African National Congress politician:
“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 hegemonize the discourse — both materially and in respect of how developmental processes are to be institutionalized and theorized. Among other things, they use such transnational governmental organizations as the International Monetary Fund (IMF), the World Bank and the World Trade Organization to shape the discourse within which policies are defined, the terms and concepts that circumscribe what can be thought and done.”
This quote, from an April speech, is worth keeping in mind; its author (revealed at the end of this article) knows well of what he speaks. In between we consider the main way in which the region’s dominant social and economic forces intend to hegemonize political transition in Zimbabwe. The objective seems to be to bring the IMF back into play, for the first time since 1999.
This is an important moment to assess the IMF’s power. Surprisingly, one of the most respected left economists in the United States, Mark Weisbrot of the Center for Economic and Policy Research, wrote an International Herald Tribune obituary for the IMF in late September:
“Great institutions lose power with a whimper rather than a bang. Such is the case of the IMF… The final blow to the fund came from the country that Anne Krueger, first deputy managing director of the Fund, reportedly calls “the A-word”: Argentina… Before Argentina’s showdown with the Fund, only failed or “pariah” states with nothing left to lose — like Congo or Iraq — had defaulted to the IMF. That’s because of the IMF’s power to cut off not only its own credit but also most loans from the larger World Bank, other multilateral lenders, the rich country governments and even much of the private sector.”
I really wish my friend Mark was right about the IMF’s whimpering decline, but he may not be, if the case of Zimbabwe teaches us anything. It may surprise some readers, but a decade ago Robert Mugabe’s regime was in fact a successful protégé of Washington financiers. In 1995, the World Bank gave his government the highest possible rating in its scorecard of neoliberal orthodoxy: “highly satisfactory.”
This followed 15 years of armtwisting by the Bank and IMF, leading to the Economic Structural Adjustment Program (ESAP). Things began to go badly wrong for Harare’s elites soon thereafter.
Attacking the People
From 1996-2000, a series of overlapping worker/peasant/student/war veteran rebellions became a serious threat to Robert Mugabe and his ruling ZANU-PF party (Zimbabwe African National Union — Patriotic Front). This in turn resulted in a zig-zag 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.
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 license 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 Movement for Democratic Change became a threatening electoral force.
The sticks we have learned much more about these past months. They don’t need recounting in detail, but include, in the words of South African Communist Party (SACP) general secretary Blade Nzimande, “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.”
Exhausted Nationalism and IMF Loans
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, never reach fruition.
After three decades of control over his ruling 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 spokesperson Jonathan Moyo and parliamentary speaker Emmerson Mnangagwa (2000s).
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 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 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 translated it as the “ZANUfication” of the African National Congress (he was hurriedly forced to apologize). In turn, this is why the vigorous debate now underway on lending to Mugabe is so revealing: It appears that South African President Thabo Mbeki and the IMF, to borrow the quote above, have successfully shaped the discourse within which policies are defined.
Indeed a proposed loan of $500 million from South Africa to Zimbabwe may circumscribe what can be thought and done. There is no better example than Pretoria spokesperson Joel Netshitenzhe’s comment that the loan could “benefit Zimbabwean people as a whole, within the context of their program of economic recovery and political normalization.”
Much of the debate in South Africa concerns whether Pretoria is putting sufficient — or indeed any — pressure on Harare to “normalize” or reform, as Netshitenzhe refuses to comment on speculation that both political and economic liberalization are conditions for the proposed loan.
Mbeki to the Rescue
Mugabe spokesperson George Charamba revealed the process on August 14: “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.”
According to the World Bank’s own press service, a Pretoria-based Bank economist, Lollete Kritzinger-van Niekerk, confirmed that her institution “is not ready to thaw relations with the ostracized Harare” — hence Mbeki’s backchannel.
A reported $160 million out of Pretoria’s proposed loan was meant to repay the IMF, with the rest earmarked for importing (from South Africa) agricultural inputs and petroleum. But in Zimbabwe there is, in reality, no “normalization” under way, if by this is meant any agreement to hold serious democratization talks with the Movement for Democratic Change (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-politicized 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. Mugabe himself publicly rejected even the idea of negotiating 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 carburetors, and to acquire essential medicines, spare parts, agricultural inputs and manufactured goods that are no longer made by local firms following the 1990s deindustrialization.)
For the impoverished Zimbabwean masses, 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 subimperialists of Pretoria, backed by a gullible media and superficially critical opposition parties, or both.
Squeezing Zimbabwe’s Poor
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.” As York University’s radical economist Colin Stoneman explained, “In encouraging borrowing, the IMF recognized that it had as yet no means of exerting leverage on Zimbabwean economic policy.”
What was that leverage? Five examples are illustrative:
* 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 (Zimbabwean) 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.”
* In late 1982, interest rates were raised dramatically, a move Chidzero pointed out with pride to the World Bank in private correspondence.
* 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.”
* By 1984, Zimbabwe was paying vast proportions of export earnings to cover foreign loans, in part because of apartheid destabilization of the region. As Stoneman put it, “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.”
* 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 defense, but the government has a way of overcoming this pressure.” Yet within a few years, Zimbabwe’s vaunted education program was indeed under threat as Bretton Woods cost-recovery policies gained momentum.
How Land Reform Failed
The Bretton Woods Institutions applied neoliberalism across a variety of sectors, and applied heavy pressure on Mugabe to continue his ineffectual “willing seller, willing buyer” rural land policy.
At last month’s land summit in South Africa, Mbeki told the audience that Zimbabwe’s failure to embark upon land redistribution prior to the chaotic takeovers of 4000 white-owned farms from February 2000, was because “They slowed down to get the negotiations in this country to succeed” — South Africa’s white farmers would be “frightened” about the transition to democracy.
In reality, Harare’s 1993 Land Designation Act was “shelved,” as ZANU-PF member of parliament Lazarus Nzarayebani 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.”
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 characterized by willing seller, willing buyer neoliberalism, now recognized as a failure.)
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, as the IMF’s $53 million loan in 1999 proved. That loan was, in turn, meant to release another $800 million from other lenders. The IMF’s Zimbabwe 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 secondly, 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.”
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.”
In short, the IMF gave permission to penalize 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 redistributive 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 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. Due to compound interest rates, barely a dent was made in the total foreign debt outstanding.
The Road to Default
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… privatization, civil service reform and trade liberalization,” according to the Herald 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.”
By 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 Gross Domestic Product in a given year.
Was Zimbabwe punished for failing to make most foreign debt payments since 1999? To almost everyone’s surprise, Mugabe was able to get away with the de facto default. No new long-term credit has been available, to be sure, but nor did the U.S. Marines or other hostile military forces invade so to collect collateral, as was the practice a century earlier against defaulting Latin American countries.
Instead, once Zimbabwe fell into deep arrears to the IMF, a convoluted official procedure began, culminating a few months ago in the threat of expulsion. From 2001, the Zimbabwean finance ministry scrounged $1.4 million each quarter to make token payments on the debt, but from mid-2003 through 2004 found $16.5 million to send the IMF. This was also the point at which Zimbabwe ran out of petrol and many other essential imports.
Hence by August 2005, Thabo Mbeki assumed that by offering Zimbabwe a $500 million credit, he could influence the course of an elite transition, aiming at installing a neoliberal, low-intensity democracy regime.
That model would slightly sideline Mugabe by 2008 at the latest, keep ZANU-PF in power through a technocratic president (former neoliberal finance minister Simba Makoni is usually tipped for the job), and open the now-closed economic borders to Johannesburg capital.
But Mugabe didn’t play along. Showing 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, according to the Sunday Independent, Mugabe built an alliance of other leaders to defeat a South African tactical move to win two permanent seats for Africa on the United Nations Security Council.
Mugabe, Egypt and others spoke out against a compromise deal which South Africa had helped forge between the AU and the so-called G4, a coalition of four other nations seeking permanent seats on the Counci — Germany, Japan, India and Brazil.
The paper reported:
“Mbeki argued strongly at the AU summit in Addis Ababa in favour of the compromise as the only realistic way to get Africa permanent seats. But the Mugabe camp prevailed. The summit rejected the compromise deal that AU and G4 foreign ministers, including SA’s Nkosazana Dlamini-Zuma, agreed on at a meeting in London last week…Mugabe and others argued against this, saying the lack of a veto would relegate African permanent members to ‘second-class status.'”
During apartheid, differential voting power was always the basis for African National Congress and other democrats’ traditional insistence on “one person, one vote in a unitary state,” and rejection of gimmicks such as the 1983 “TriCameral Parliament” (which reduced Indians and Coloured people to second class observer status and left out Africans entirely).
Mbeki has periodically spoken out against what he terms “global Apartheid,” yet often accepts unprincipled global reforms. Fortunately, the second-class citizenship he sought on the UN Security Council was not offered at the September heads of state summit. Hence a more serious fight can be waged at some stage instead of legitimizing a UN under Washington’s thumb.
This brings us back, though, to Mbeki’s vision that the IMF can be a vehicle for normalization.
Mugabe’s Ego, Pretoria’s Ambition
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 he paid the IMF a substantial down payment, enough to earn a six-month reprieve on the expulsion threat. Mugabe promised $50 million more by March, 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 insane gesture. Even the white business spokespeople who are most aggrieved by Mugabe’s dirigisme (speending policy) were opposed to the payment. The only explanation is Mugabe’s ego: It is so gargantuan that, under pressure from Pretoria, he ignored the extraordinary sacrifices being made by his citizens these past months, with every commodity in short supply, simply to massage his pride at repaying the IMF.
South African government officials were also surprised, and continue to maintain that negotiations for the additional $500 million are on track, merely delayed a bit. The Cabinet had made one other similar loan to a country, so as to repay the IMF, three years earlier. It was to 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. Those debts should be declared “odious” in international law, but their payment by Pretoria gained Kabila a new IMF credit at the cdost of renewed IMF control over the Congolese people.
The extent of Mbeki’s own commitment to getting the IMF back into Zimbabwe was revealed on October 15. Addressing a forum of African editors, he explained:
“We had indeed said that we were ready to assist, and the reason we wanted to assist was because we understood the implications of Zimbabwe’s expulsion from the IMF. What it would mean, among other things, is that everybody who is owed something by Zimbabwe would demand immedfiately to be paid. You would even get to a situation where they would seize anything that was being exported out of Zimbabwe because of that debt.”
This is utter nonsense, as the IMF has never acquired or used such power. Many creditors presently dealing with Zimbabwe have various forms of security, because the government’s likelihood of nonpayment has been demonstrated for six years already.
Returning to our opening quote: It was Pretoria’s local government minister, Sidney Mufamadi, who in April this year warned that the IMF molds “the discourse within which policies are defined, the terms and concepts that circumscribe what can be thought and done.”
But let’s also pause to consider Mufamadi’s own borrowing from the World Bank, in a loan that directly places Bretton Woods advisors in dozens of municipalities. The World Bank website gives away Mufamadi’s game:
“The Municipal Financial Management Technical Assistance Project, totaling $15 million, is the only active World Bank loan to South Africa. It supports the building of financial management capacity in more than 40 key municipalities around the country. The World Bank country office is also supporting the government in…[its] oversight role in municipal public/private partnerships.”
On the same site, the Bank brags about its “support to Johannesburg’s iGoli” (the city’s privatization policy), allegedly a “model” for South Africa. In reality, Africa’s largest water corporatization quickly became a world-renowned site of brutal disconnections, prepaid meters and substandard sanitation (hence its popular nickname, “E-coli”) for low-income townships — as well as heroic resistance by the Anti-Privatization Forum and Jubilee South Africa, which combined to protest Paul Wolfowitz’s Johannesburg visit in July.
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.
ATC 119, November-December 2005