Publication: Noseweek Issued: Date: 2003-01-01 Reporter: Editor:

Arms and the Debt Trap


Publication  Noseweek
Date Dec-Jan 2003
Web Link


In April 1980, when Robert Mugabe became its president, Zimbabwe had a foreign debt of only US$300 million.

At the Lancaster House independence talks, the UK and US promised US$2bn for the development of a fairytale Zimbabwe.

Today Zimbabwe is in social and economic chaos with foreign debt of nearly US$8bn! What happened to the fairytale?

It's not difficult to suggest an answer. Mugabe's two closest allies, General Rex Nhongo (head of Zanla) and Edgar Tekere, Zanu's secretary general, emerged from the Mozambique bush penniless.

"Nhongo" reverted to his real name, Solomon Mujuru, and became defence minister. Instead of using its new supply of foreign funds for housing, education and economic development, Zimbabwe decided on an arms procurement programme. It bought weapons (mostly obsolete) from Brazil and Britain.

The first minister of finance was Zanu treasurer Enos Nkala. After 10 years in prison he bravely preached reconciliation.

The IMF persuaded him to lift exchange controls (as a condition for more loans). In no time, Lonrho, Anglo American and Old Mutual had withdrawn most of their capital from Zimbabwe, funding their operations with locally borrowed money instead.

A year later a humiliated Nkala was forced to reintroduce exchange controls and was transferred to become minister of police.

Bernard Chidzero, a Canadian citizen and former IMF employee, became finance minister. In 1983 he launched the first Five Year Plan with IMF money. Most was spent on arms. By 1985 Defence Minister Mujuru (Nhongo) owned several huge farms and had other assets worth Z$7m.

Not unexpectedly he featured prominently in Willowgate, an exposť of bribery and corruption at the Willowvale car plant.

His friend Tekere, who was a drunk, but not corrupt, remained poor. He earned his exit visa from Mugabe's circle in 1988 when at a cabinet meeting he threw his briefcase across the table at his colleagues, shouting "who are all these corrupt people?"

By this stage payments on foreign debt were exceeding foreign earnings. To meet the resulting shortfalls, the IMF required Zimbabwe to go in for "structural adjustments" such as a wage freeze, cuts in education subsidies, and even a cut in food subsidies. (Maize used to be subsidised). The poverty that followed led to food riots.

Zambabwean farmers were encouraged to abandon growing staple food crops and to cultivate luxury cash crops for export to earn the foreign currency needed to repay the foreign debt and interest. Cheap maize was imported from the US.

Next the IMF insisted Zimbabwe lift import restrictions, destroying local industries such as the once flourishing textile industry in Harare.

By 1997 the country was bankrupt and could not service its foreign debt. In a final splurge to save his party from armed rebellion, Mugabe paid the "war veterans" US$2500 each, plus US$100 a month. The Zim dollar collapsed, interest rates shot up to 45% and inflation rocketed. On the streets the slogan became "when will independence be over so we can have shoes again?"

Now Mugabe started talking about "African socialism" - which had little to do with socialism, but much to do with the survival of his corrupt political elite, who have moved on to better things, as a recent UN report on criminal networks in the Democratic Republic of Congo reveals.

Never have there been so many luxury 4x4s on Harare's roads, so many booming restaurants, so much ostentatious wealth. All paid for with the elite's ill-gotten gains from the Congo.

The rest of the population is starving. As a distraction, Mugabe feeds Shona nationalism with yet another programme of genocide in Matabeleland.

Now you know why we have strong views on our arms programme. It is a betrayal of the people. Now you know why we think Maria Ramos should take the job she was offered at the IMF - and that Trevor should do the honourable thing and follow her there.

And why, in the New Year we intend telling you the exact terms of the foreign loans he arranged to fund the deal (and so desperately wants to keep secret). We are confident we'll be able to demonstrate the public interest in that to any judge.

Meantime, over the holidays fire a cracker and imagine it's under Manuel's arse. Then join us in a good rest.

With acknowledgements to Noseweek.