Sunday, February 25, 2007

Venezuela: Zimbabwe Redux?

Now that the Venezuelan petroleum industry, broadcast media and soon the food retail enterprises are to be controlled by the future President-for-life Hugo Chávez, will the once prosperous South American nation follow the pattern of other cleptocracies such as Zimbabwe?
The collapse of Zimbabwe's economy has finally taken its toll on President Robert Mugabe's regime. It is facing a disintegrating army and police, a wave of strikes, power black-outs and the breakdown of every essential service.

With inflation running at 1,281 per cent – the highest rate in the world — Mr Mugabe finds himself locked in a vicious circle. Zimbabwean children have stopped going to school because of a steep rise in fees

It takes only a few weeks for the value of every pay rise given to civil servants to be wiped out. But the bankrupt regime can only cover the cost of further wage rises by printing money – which fuels inflation still further and creates pressure for yet more pay increases.

Tension on the streets of the capital, Harare, is mounting as people scavenge to earn extra money for food and transport. Some of those fortunate enough to have jobs cannot even afford bus fares.

In what was once one of Africa's most prosperous economies, a 35-year-old primary school teacher with six years' service earns $26 a month.

The woman, who wished to remain anonymous, said: "My take-home pay is not enough for transport to work, so I am not going to school this week."

She is not on strike, although many of the 110,000 state teachers have started a "go slow" and are absent from classrooms. This has left parents to fill in as home-teachers.

Zimbabwe's four largest hospitals are crippled by a seven-week strike among junior doctors, who earn only $12 a month after deductions. All civil servants received a 300 per cent pay rise in January – but inflation has already eroded this gain.

Cholera has broken out in Harare because the water treatment plants are collapsing. Power black-outs are increasing and one town, Chitungwiza, gets only four days of electricity a week.

Mr Mugabe responded by saying that any protests "will not be tolerated".

But he relies on the army and police to suppress challenges. Sources in the army say that soldiers – while far better paid than teachers or nurses – are still enduring "desperate" conditions. Most of those below the rank of colonel earn less than $1 per day – the international measure for absolute poverty.

"There is plenty of indiscipline because we are hungry," said one captain.

Mr Mugabe's elite Presidential Guard, which has extra perks and higher salaries, is also disgruntled, according to the military source.

But the economic collapse has created opportunities for the corrupt elite around Mr Mugabe, who have already benefited from the seizure of white-owned farms.

Senior figures in the ruling Zanu-PF party can buy US dollars from the Reserve Bank at the meaningless official exchange rate – and then sell them on the parallel market at a 2,000 per cent profit. They can buy fuel from the state at one twelfth of the market price. This gives a powerful core of Zanu-PF figures a vested interest in keeping Mr Mugabe in power.

The president, who turns 83 later this month, gambles that by keeping this wealthy handful happy, he can survive the economic collapse and extend his 27-year rule.

Splits in the opposition Movement for Democratic Change have made Mr Mugabe's task easier. But continuing this balancing act indefinitely may not be possible, especially if discontent spreads in the vitally important army and police force.

"I have never seen a crisis of this depth before," said John Robertson, an independent economist in Harare. "There seems to be no solution in sight." Daniel Ndlela, another economist, said: "This is an unsaveable situation. It is by far the worst since independence.

"It will collapse, as the government will talk a lot but it won't change its ways. When and how this collapse will happen, that is the question."

It has taken 27 years for Mugabe to destroy the country's economy and political infrastructure and he had no oil resources to rely on. Hugo Chávez has considerable oil resources and is ginning up fear of "Yanqui Imperialism". Place your bets. Today's "official" exchange rate: USD $1= ZD 250,000.00


Francis W. Porretto said...

It is not possible to ascribe these political detonations of two national economies to sheer ignorance of the consequences of socialism. At some point -- and I maintain that the point arrived some time ago -- one must infer actual malice: the desire to oppress, enslave, and impoverish others for its own sake.

That such men can rise to the pinnacles of nation-states says a lot about politics in our time -- and none of it good.

Fred said...

And it says a lot especially since the rise of Mugabe- and the similar mess created in South Africa- was supported by western powers that be.

ΛΕΟΝΙΔΑΣ said...

It would be hard to place blame for Chávez' rise to power on Western Powers. Unless of course you are referring to the collectivists in the US including the Kennedy Klan

Fred said...

Sorry. I was a bit off the mark. I was only referring to Rhodesia...uh... I mean Zimbabwe, and South Africa.

Rose said...

Chavez, in particular, is celebrated by the Bush-haters in this country. They seem to be willing to overlook anything and everything in indulging their hatred of Bush. It's beyond weird. It's incomprehensible.

ΛΕΟΝΙΔΑΣ said...

I would agree that no recent example of BDS (Bush derangement syndrome) exists. It will be interesting to observe what develops after January 2009.