ZIMBABWE:Mugabe's regime faces economic paralysis and, consequently, potential collapse, writes a Special Correspondent in Harare, Zimbabwe.
IT HAS come to this: Zimbabwe is about to run out of the paper to print money on.
Fidelity Printers Refiners, the state-owned company that tirelessly churns out bank notes for the Robert Mugabe regime, was thrown into a crisis early this month after a German company stopped supplying bank note paper because of concerns over Zimbabwe's presidential election.
The printing operation drastically slowed. Two-thirds of the 1,000-strong workforce was ordered to take leave, and two of the three printing shifts were cancelled. The result on the streets was an immediate cash crunch.
"If you think this currency shortage is bad, wait two weeks. By then it will be a disaster," said a senior Fidelity staffer. The paper will run out in two weeks, he said.
Fidelity Printers is Mugabe's lifeline. It prints the money to pay the police, soldiers and intelligence organs that keep the regime in power. If the regime can't pay the security forces, it would face economic paralysis - and potential collapse.
Zimbabwe's economic meltdown harks back to the collapse of its major export industry, commercial farming, after Mugabe's controversial land reform programme early in the decade. That left the nation starved of foreign exchange, but government spending went on, courtesy of the printing press. However, printing more and more money fuelled rampant hyperinflation.
As hyperinflation spiralled last year, Fidelity printed million-dollar notes, then five-million, 10-million, 25-million and 50-million. This year, it has been forced to print 100-million, 250-million and 500-million notes in rapid succession, all now practically worthless.
The highest denomination is now Zim$50 billion (worth US$1 on the street).
The price of the state-owned Herald newspaper leaped from Zim$200,000 early this month to Zim$25 billion now. Before the crunch, a beer at a bar in Harare, cost $15 billion. At 5pm on July 4th, it cost Zim$100 billion (US$4 at the time) in the same bar. An hour later, the price had gone up to Zim$150 billion (US$6).
The internal workings of Fidelity Printers have been one of the Mugabe regime's best-kept secrets for years. But as the government looks increasingly tenuous, institutions that were once impossible to penetrate are starting to show cracks.
Fidelity might be the beating heart of the regime, but the staffer revealed an institution under severe pressure.
The place pulsates with sound and smells of ink. The printing machines are old and frequently break down, requiring spare parts from Germany, which will no longer come. Workers are unhappy about salaries and fear for their jobs. "When the machines were operating 24 hours a day, there was so much pressure on the employees which they just could not take," he said.
"You couldn't take time off. Even weekends, people had to come in.
"People are aware that printing money is also one of the causes of the inflation. But you know, it's a job. You've got to do it."
Now that production has slowed, the pressure of working full-time had been replaced with the terror of being laid off, he said. The plant is planning to use paper from a local producer, but it has trouble meeting orders for paper for cheques.
As the currency shortage took hold on the streets this month, the capital's myriad currency dealers found it harder to make a profit.
Here's how the currency black market works: Dealers get local currency illegally through the back door of the reserve bank or from tellers who will provide cash in return for a pay-off. They sell it at a profit to locals with foreign currency acquired by trading in neighbouring countries or through remittances from Zimbabwe's huge diaspora.
On the first floor of a building in downtown Harare, the black market currency-dealing offices attract some of the city's best and brightest young graduates.
One office looks like something from a Chicago gangster movie. The boss, impeccably dressed, sits behind a desk. On his right, in a white cap and suit, sits one of the dealers. A Mugabe election poster is plastered on the wall. On a cabinet is a framed Zim$10 note - which arouses as much nostalgia as a much-loved but extinct fluffy mammal.
"That was real money," cracks the boss. Everyone laughs, although the joke is not funny.
For most Zimbabweans, the economic crisis boils down to one thing: how to put food on the table. It's a difficult trick when you have no job, or if the bus fare costs more than your pay, and the prices in shops keep going up.
"Everyone is struggling to keep up with this mounting pressure, day by day," John Robertson an independent economist, said. "It's a thing that gradually creeps up. Some people have already succumbed. Some factories have closed. More are likely to succumb as prices rise."
Another independent economist, Tony Hawkins, said Zimbabwe's economy was imploding so fast, some major factories were reporting that they had only weeks to go before they would be forced to shut down.
"The beer and Coke guys are saying they have only six to eight weeks before they will have to close," Hawkins said. "Some of the smaller banks are screaming. It's accelerating downhill. It's got its own momentum now. Just sit back and watch.
Everyone at Fidelity Printers knows the money printing is propping up Mugabe, the staffer said. Despite the threat to their jobs, some secretly hope for breakdowns and paper shortages, he said. "I'm happy about this crisis caused by the unavailability of paper," the staffer said. "Because maybe it might lead to a change of things in this country." - (LA Times-Washington Post service)