Over a thousand years ago, according to ancient English tradition, King Canute set his throne on the shore and ordered the tide to stop rising. Just over a month ago, President Robert Mugabe of Zimbabwe took an equally bold stand, ordering inflation to stop forthwith or else he?d send those responsible to jail.
Canute ended up with the waves sloshing round his knees, but at least he had the satisfaction of teaching his courtiers a lesson on the limits of royal power (for he didn?t really think that his words could stop the tide). Mugabe will end up drowning in the inflation his own policies have created, but it will probably come as a great surprise to him, for he doesn?t seem to understand that he can?t just order it to stop.
?I believe inflation will hit 1,500,000 percent by the end of 2007 if not before,? said Christopher Dell, the US ambassador to Zimbabwe, in an interview with the ?Guardian? in late June. ?Prices are going up twice a day, in some cases doubling several times a week. It destabilises everything. People have completely lost faith in the currency and that means they have lost faith in the government that issues it. By carrying out disastrous economic policies, the Mugabe government is committing regime change upon itself.?
It was a succinct if undiplomatic summary of the state of play in Zimbabwe in late June, when there was still some hope that a sane solution to the crisis could be found. Zimbabwe?s neighbours in southern Africa, almost all competently led democratic countries whose economies are flourishing, are desperate not to be dragged down by the one conspicuous failure in their midst.
The governments of the Southern African Development Community are already struggling with a wave of economic refugees from Zimbabwe, and they are well aware that the Masters of the Universe in far-away stock markets cannot tell the difference between one African country and another. If Zimbabwe dissolves into chaos, they will all pay a heavy price in terms of lost foreign investment and higher interest rates on foreign loans.
By early last month, South Africa was putting together a proposal to stop the hyper-inflation by pegging the Zimbabwean dollar to its own currency, the rand. Its huge foreign currency reserves would enable Zimbabwe to go on importing essential goods, the flow of economic refugees into South Africa would not become a tsunami, and gradually the internal situation might stabilise. The price, however, was agreement by Mugabe to key reforms that would restore democracy in the country.
But that would ultimately mean surrendering power, something that is inconceivable to the 83-year-old autocrat who has ruled Zimbabwe for the past 27 years. Indeed, the country?s rapid descent into poverty and chaos only began when Mugabe?s rule was challenged. For the first two decades after the end of white minority rule, the Zimbabwean economy grew steadily: children went to school, people ate well, and the future seemed bright. But then, to Mugabe?s horror, Zimbabweans voted no in a 2000 referendum that would have given all government and military officials amnesty for crimes committed while in office.
He felt threatened, so he came up with a policy that rewarded his closest supporters and kept them loyal. In 2000, he began confiscating the white-owned farms whose crops earned 80 percent of the country?s foreign exchange, handing most of them over to his own political and military cronies — who had no idea how to run them.
Inevitably, the economy went into a steep decline, so Mugabe started printing money to bridge the gap in state revenues, and inflation took off. The economy has shrunk by half in the past seven years, and by last month the Zimbabwean dollar (official rate 250 to the US dollar) was trading on the black market at 300,000 to the US dollar.
Three and a half million of Zimbabwe?s twelve million people have fled abroad to seek work, mostly in South Africa. The money they send home is the only reason most Zimbabweans eat at all, since un Zimbabwe Meltdownemployment at home is 80 percent. The average lifespan in the country has halved in fifteen years. But the most urgent problem for Mugabe is that his own security forces cannot feed their families because their huge pay rises still cannot keep up with inflation.
If the security forces turn against him, he is finished, so early last month he decreed deep price cuts for all consumer goods and sent the troops out to enforce them. The idea that you cannot simply impose lower prices, he scoffed, is mere ?bookish economics.? But if it costs more for bakers to make bread than they get for selling it, then they stop baking.
A month later, the shelves are bare of staple foods like sugar, flour and cooking oil throughout Zimbabwe. Rural people, most of whom fell out of the cash economy some time ago, can scrape by somehow, but people in the urban areas are getting truly desperate.
Mugabe has played his last card, and he will probably be gone by the end of the year. The pity is that the prosperous country he built in his first twenty years of power, when he could win the elections more or less honestly, is already gone. It will be hard to bring it back.