Price blitz like Iraq war: Gono
- From: "Zvakanaka" <lalapansi@xxxxxxxxx>
- Date: Fri, 13 Jul 2007 06:05:38 +0200
Gono's only problem is that he seems to have forgotten that in Africa, the
political imperative to stay in power completely over-rides the economic
imperative to remain prosperous. That is why Africa's leadership over the
past 40 years has impoverished Africa. There is no other way to put it. This
current free-for-all in Zimbabwe attacking business is just one excellent
example of short term thinking. Mugabe literally transfers profit to the
consumer and things that business can go on forever running at a loss. His
reasoning is that if government can run a deficit, so can business. He knows
that inflation will kill his chances of re-election even in a rigged
election. So this is his answer. his problem is that he has shot himslef in
the foot. By election time, unless there is outside intervention in the form
of assistance, Zimbabwe is finished. No doubt the do-gooders will come in
with food-aid, and you can bank on this, and this will help him use food as
a political weapon simply because AID agencied are not allowed to distribute
the food they bring in.
------
Price blitz like Iraq war: Gono
By Dumisani Muleya
RESERVE Bank governor Gideon Gono has escalated his fight against government
's price reduction blitz which has left shops empty and the economy
crumbling as divisions within President Robert Mugabe's embattled regime
widen.
Gono intensified his unprecedented resistance to the blitz this week,
warning the authorities the crackdown could lead to "unintended
consequences" such as the collapse of businesses, worsening economic decline
and suffering of the poor.
Gono likened the state-sponsored crackdown to the United States' invasion of
Iraq in which a military campaign was launched into a dangerous territory
without an exit strategy. He further said government must avoid creating a
scenario similar to the biblical situation in which the Israelites ended up
thinking it was better to go back to Egypt during their long journey to the
promised land.
After telling the government and Zanu PF early last week that their campaign
was ill-advised, Gono last Friday warned the Cabinet Taskforce on Price
Monitoring and Stabilisation that while the price-slashing policy might have
been well-intentioned, it has inadvertently created problems that have
worsened the situation. Gono again put his thoughts in writing this week,
raising the political stakes in the crackdown clearly designed to win votes
in next year's parliamentary and presidential elections.
Zanu PF officials fear defeat at the polls because of the economic crisis
and a crippling power struggle currently rocking their party.
Mugabe has been saying the price blitz was triggered by his regime's fears
that business wanted to use economic pressure to ensure his defeat at the
elections.
The crackdown was apparently driven by the Joint Operations Command (JOC),
which comprises the army, intelligence, prisons, and police. Sources said
JOC, which was accused of being the architect of Operation Murambatsvina
that displaced at least 700 000 people in 2005, was anxious that unless the
government did something dramatic to change the situation, Mugabe would lose
next year's elections, leading to the collapse of his regime and his 28-year
rule.
Gono warned the government this week that authorities must guard against
"the law of unintended consequences" via which the blitz could lead to
economic implosion and attendant problems such as further political
instability and social dislocation.
"Let's avoid the law of unintended consequences in the action government has
taken which will leave the country in a worse-off position than now; avoid
the trap of temporary victory and instant gratification that backfires with
consuming return-fire from both the business community and consumers alike,"
Gono said.
"It is critical that urgent steps be taken to, once and for all, deal with
the supply side imperatives without which, or failure of which, will leave
the country in a worse-off situation."
He said authorities risked fulfilling doomsday prophecies like "government
will collapse within six months" through such policies as the prices
crackdown.
"Let's avoid the 'take me back to Egypt syndrome' as done by the Israelites
when they suddenly developed disillusionment during their arduous journey to
the promised land," Gono said.
"Soon they started thinking that it was better where they were coming from;
and us we risk having the same mentality when suddenly our shops become
empty, with foreign exchange inflows into the central bank drying up, among
many other backlashes, leading us to needlessly draw spears against each
other."
Gono also said government must avoid getting bogged down in the current
situation like the US in Iraq by choosing wrong policy strategies that can
easily backfire.
"Let's avoid what in contemporary strategy has become known as the US/Iraq
syndrome where the US, backed by its allies, went into Iraq without an exit
strategy," Gono said. "We need to define clearly at what point we will exit
from the current blitz. Alongside the exit strategy, there is also a
mechanism that needs to be put in place: monitoring the monitors. This is
particularly so against a background of reported cases of corruption,
looting and general waywardness by some stakeholders."
Gono said a holistic package of measures which include the need to reduce
government expenditure, reduce the budget deficit and ensure fiscal
discipline were needed to reduce inflation, not just a blitz. He said price
controls without production do not work. Gono made recommendations on the
protection of property rights and how to attract investment to revive the
economy.
He said everyone was battling for survival and government must not make the
situation worse for everybody, including itself.
"Our backs are against the wall and to survive as a people (labour and
consumers) we must survive, as the business community they have to, and
survive as a government we also must," he said. Gono said government would
still be able to implement its policies without threatening the survival of
business, the economy, the people and itself.
.
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