With talks in South Africa set to resume this weekend on Zimbabwe‘s impasse, strongman Robert Mugabe has suddenly rediscovered his nation’s disastrous economy. Not that Mr. Mugabe has applied the right lessons. On Wednesday, the regime rolled out an old classic in government economic illiteracy — a new zim dollar that simply knocks 10 digits off the old currency’s denomination. So, a loaf of bread that previously cost Z$50 billion now costs either $50 billion of the old zim dollars, or $5 in new ones.
Zimbabwe’s annual inflation rate, which topped 1 million percent in May, is expected to rise to 5 million percent by the fall. A loaf of bread costs what 12 new cars did a decade ago. It hard even to make such comparisons anymore. They continually change. The inflation rate has accelerated to the point where the currency is meaningless.
If, as Einstein said, insanity consists of doing the same thing over again and expecting different results, this policy is truly insane. It has been tried before, and failed. The “second dollar” was introduced in 2005 in an effort to combat spiraling inflation. The Zimbabwean dollar was redenominated in August 2006 at a 1,000-to-1 ratio. Since then, inflation has raced forward even faster. Evidently the regime now figures that a 10-digit reduction will do the trick.
This, of course, presumes that the redenomination is a good-faith effort. Likelier it is Mr. Mugabe’s pretext to continue to govern in a state of emergency. This would increase his leverage during negotiations with opposition leader Morgan Tsvangirai. Why else would he rediscover ZImbabwe’s disastrous economy at a critical moment in the negotiations?
Whatever the motive, the markets will deliver the same judgment as always unless this regime’s arbitrary, confiscatory and repressive governance somehow ceases. This is a country where, two years ago, the government made refugees of approximately 1.5 million of its citizens in “Operation Clear the Trash.” It bulldozed “unlawful” towns and cities in a vicious payback to the political opposition. This is a country where potatoes are a “strategic crop.”
The cruel combination of poverty, repression and nearly unparalleled governing irresponsibility must come to an end.