Zimbabwe Zimbabwe at a Glance: 2001-02

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Zimbabwe Zimbabwe at a Glance: 2001-02 COUNTRY REPORT Zimbabwe Zimbabwe at a glance: 2001-02 OVERVIEW Zimbabwe is in a rapidly escalating economic and political crisis that will continue until at least the presidential election, expected to be held in April 2002. If President Robert Mugabe wins he is likely to moderate some of his more controversial policies such as land reform and his opposition to devaluation and economic reform. If he loses, as is possible, then the real question is whether he will accept defeat or whether the country will be dragged into a constitutional crisis, only to be resolved by military intervention. Although the economy is in a steep decline, current economic policy will ensure that a total collapse does not occur prior to the presidential election. While economic reform will be gradually introduced after the election regardless of who wins, the negative impact of the current strategy will serve as a major drag on the economy for years to come. Key changes from last month Political outlook • The Zimbabwe African National Union-Patriotic Front (ZANU-PF) candidate, Elliot Manyika, won the Bindura parliamentary by-election. Violence and intimidation towards supporters of both the opposition Movement for Democratic Change (MDC), and the ZANU-PF, clearly highlights the strategy of intimidation that Mr Mugabe will continue to use up to the presidential election in 2002. • Another High Court judge has resigned. Three pro-Mugabe judges have been appointed to the Supreme Court as the government steps up its pressure on the judiciary. Economic policy outlook • Private trade in maize has been banned as Zimbabwe faces both a maize and wheat deficit and will need to import supplies in coming months. • Simba Makoni, the finance minister, seems increasingly isolated as he stresses the need for devaluation, as the cabinet has rejected his advice. Economic forecast • Driven by the increase in domestic fuel prices in early June, the year-on- year inflation rate increased sharply in June, to 64.4%. August 2001 The Economist Intelligence Unit 15 Regent St, London SW1Y 4LR United Kingdom The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 50 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The EIU delivers its information in four ways: through our digital portfolio, where our latest analysis is updated daily; through printed subscription products ranging from newsletters to annual reference works; through research reports; and by organising seminars and presentations. The firm is a member of The Economist Group. London New York Hong Kong The Economist Intelligence Unit The Economist Intelligence Unit The Economist Intelligence Unit 15 Regent St The Economist Building 60/F, Central Plaza London 111 West 57th Street 18 Harbour Road SW1Y 4LR New York Wanchai United Kingdom NY 10019, US Hong Kong Tel: (44.20) 7830 1007 Tel: (1.212) 554 0600 Tel: (852) 2585 3888 Fax: (44.20) 7830 1023 Fax: (1.212) 586 0248 Fax: (852) 2802 7638 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected] Website: www.eiu.com Electronic delivery This publication can be viewed by subscribing online at www.store.eiu.com Reports are also available in various other electronic formats, such as CD-ROM, Lotus Notes, online databases and as direct feeds to corporate intranets. For further information, please contact your nearest Economist Intelligence Unit office Copyright © 2001 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited. All information in this report is verified to the best of the author's and the publisher's ability. However, the EIU does not accept responsibility for any loss arising from reliance on it. ISSN 1350-7095 Symbols for tables “n/a” means not available; “–” means not applicable Printed and distributed by Patersons Dartford, Questor Trade Park, 151 Avery Way, Dartford, Kent DA1 1JS, UK. Zimbabwe 1 Outlook for 2001-02 Political outlook Domestic politics State-sponsored political violence will continue to be the central element of President Robert Mugabe’s strategy to try to win the forthcoming presidential election, likely to be held in April 2002. Despite violent intimidation of the opposition, and possible vote rigging by Mr Mugabe and his party, the Zimbabwe African National Union-Patriotic Front (ZANU-PF), the Economist Intelligence Unit believes that Morgan Tsvangirai, the leader of the opposition Movement for Democratic Change (MDC), may win the election. If this happens, the question remains whether Mr Mugabe and his supporters will accept defeat. The main feature of the election campaign will be the ZANU-PF’s policy of suppressing all forms of opposition to Mr Mugabe’s rule and of intimidating its own supporters, especially in rural areas. This strategy was clearly evident in the Bindura by-election in July, and will continue to be used in the series of parliamentary by-elections that are due in the coming nine months. The government will also seek to undermine Mr Tsvangirai’s candidacy by continuing with his trial, on terrorism charges, and by using the state media to portray the MDC as a violent party. In addition, the government will attempt to win back urban voters through the militant activities of the Zimbabwe Federation of Trade Unions, created by the ZANU-PF in opposition to the Zimbabwe Congress of Trade Unions, which supports the MDC. The government will seek to suppress the independent news media and the judiciary, and will be afforded a powerful voice by its dominance of the daily newspaper market and monopoly on broadcasting. The MDC will continue to discourage its supporters from openly confronting the government, for fear of provoking the suppression of all public opposition. There is also fear that any civil unrest would give Mr Mugabe an excuse to impose a state of emergency and to rule by decree. Given the political climate in which the election will be conducted, it is likely that the MDC will hold few mass rallies and marches during the campaign. Instead, it will conduct something resembling an underground campaign, relying on small meetings, pamphlet distribution and word of mouth to convey its message. This will probably work quite effectively, especially as the climate of repression is likely to harden voters’ attitudes against the government. However, there are several factors that may alter this scenario considerably and lead to a rapid escalation of the current political crisis. The National Constitutional Assembly has stated that it will hold mass demonstrations if the government does not accept its proposed changes to the constitution. With shortfalls in the maize and wheat crops, food riots are also possible unless the government manages to import these staple grains—the minister of finance recently appealed to the international community for food aid. Other potential flashpoints include parliamentary by-elections, and the court cases (or possible EIU Country Report August 2001 © The Economist Intelligence Unit Limited 2001 2 Zimbabwe jail sentences) of Morgan Tsvangirai and other MDC leaders, charged with treason and inciting violence. Election watch If Mr Mugabe wins the April 2002 presidential poll he will continue to repress opposition to his government. However, he is also likely to moderate some of his more extreme policies, most notably the violent seizure of land and other examples of the breakdown of the rule of law, in order to win back donor support to help halt Zimbabwe’s economic decline. If Mr Tsvangirai manages to win the presidential race, it is not certain that Mr Mugabe will accept the result; the outcome may then be decided by the military and the police. Optimists claim that the army is professional and will support whoever wins the vote, but to date it has strongly supported the Mugabe regime and may refuse to accept Mr Tsvangirai as president—top ZANU-PF officials have openly stated that they would go “back to the bush” if Mr Mugabe lost the election. If that happens, widespread unrest may ensue. However, if Mr Tsvangirai wins and this result is accepted by Mr Mugabe and the army, considerable changes can be expected, notably a new parliamentary election and a return to even- handed enforcement of the rule of law. Unfortunately, Mr Mugabe’s history suggests that he will retain power through the use of force, although this will be only a temporary solution, delaying a more dramatic, potentially violent change of power in the future. International relations Since the assassination of Laurent Kabila, the president of the Democratic Republic of Congo (DRC), on January 16th 2001, the Zimbabwean government has sought to protect its own interests in the DRC and to establish its influence over Mr Kabila’s son and successor, Joseph Kabila. At present we do not expect Zimbabwe to withdraw the majority of its forces from the DRC until a comprehensive peace agreement, along the lines proposed in the 1999 Lusaka Accord, is implemented. However, the number of Zimbabwean troops in the DRC is likely to be reduced to about 13,000 by the end of 2001. Economic policy outlook Policy trends The government is committed to reviving an updated version of its New Millennium Economic Policy in the second half of 2001, to help tackle the country’s deepening economic crisis. However, this is unlikely to have any real impact, and policy will instead continue to be driven by ad-hoc crisis management, which, despite producing some odd outcomes, should stave off economic collapse prior to the presidential election, due in April 2002.
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