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Friday, 7 September, 2001, 16:19 GMT 17:19 UK
Zimbabwe's economic crisis
By BBC News Online's Jeremy Scott-Joynt
Zimbabwe's economic meltdown is the main trigger for President Robert Mugabe's decision to make a deal on land seizures.
"I believe that South Africa, and particularly Nigeria's President (Olusegun) Obasanjo, have realised that African leadership is needed," Peter Woicke, managing director of the World Bank and vice president of its private finance arm the International Finance Corporation, told BBC News Online.
And should the deal mean that Zimbabwe's economic mistakes begin to be corrected, the IFC is ready to go back in short order.
"We have always believed in the country," Mr Woicke said. "If there is a turnaround, we will reactivate our activities very quickly.
"We know there are a number of companies in South Africa which are interested in investing, and we would co-invest with them."
With this in mind, it is President Obasanjo, along with South African President Thabo Mbeki, who have been the main players in persuading President Mugabe to make a move.
And the trigger for their more active involvement is economic.
A success story undermined
Once the economic success story of Southern Africa, Zimbabwe was the only regional player to export food to Ethiopia during the drought in the 1980s.
Its economy was doing well, its people were well educated and richer than many of their regional peers.
But over the last five years things have got harder as urban areas ceased to create jobs and rural areas felt the pressure too.
Now, according to one Southern African economist, the country is "a financial basket case".
"The crop has been lost this year, production has been lost, earnings are gone," he said.
The International Monetary Fund ceased lending two years ago, along with almost all Zimbabwe's international aid.
Help offered recently by Libya with oil supplies can only fill a small part of the shortfall.
Even on a best case scenario, Zimbabwe's grain harvest, badly disrupted by the land seizures, is unlikely to support the country much beyond the end of the year, the UN Food and Agriculture Organisation has said.
Much of its manufacturing and other industries are in tatters, not least because businesses which are not supporters of the ruling Zanu-PF have frequently found their plants and employees attacked by either Zanu-PF activists or the so-called "war veterans".
Fuel is scarce, with much of what is available going to feed Zimbabwe's hugely unpopular involvement in the war in Congo.
Beggar your neighbour?
And now the side-effects are hitting its neighbours.
Zimbabwe is, after all, South Africa's biggest trading partner in Africa, and the collapse in its economy has had a severe effect on the trade balance - not to mention the millions of rand owed to South Africa by Zimbabwean businesses.
That, many people believe, has forced the hand of President Mbeki in particular.
"The situation has become economically so bad that leaders in Africa - Mr Mbeki and Mr Obasanjo - have probably realised that this reflects badly on the whole continent," said Mr Woicke.
And South Africa's clout over Zimbabwe has been increased by the grain shortage, since much of the grain Zimbabwe needs to import over the next few months will have to come by rail from South Africa.
"Till now it's been constructive engagement," one South African analyst said. "But all South Africa has to do is say that there's a problem with the rail link. If the trains stop, Zimbabwe starves."
On the ground
If Mr Mugabe's government holds to the deal - and it is contingent on funding coming from sources including the UK, which promised two decades ago at Lancaster House in London to underwrite land reforms - then the food crisis at least could be eased.
An aid programme to be run by the UN Development Programme is a part of the package agreed in Abuja.
But the devil, the officials say, is in the detail. And little can be done in the short term to help the Zimbabwean economy out of the huge hole in which it finds itself.
And it may not be until after presidential elections due next year that any substantial change comes.
"None of this alters the fact that the country is in an absolutely critical condition," one economist said.
"It looks like the downward spiral of self destruction has been arrested, at least for the moment," he said.
"But it doesn't remove the problem that Mugabe will have to go for Zimbabwe to have a chance of stabilising properly."
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