South Africa P.I.G.: EU

<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiJ50481sMgGDA5kX5SLVjRlGoV6Y5qW_JaP5v3WyyMKpP8D4No6rh1MHA7Sbjninap7YryViN-BbtnpbL8JhltOasNAO7InczdhZY3vihsYgjrJ9HIgeQ69lr27K7irdfMpEF6uJehykg/s1600-h/zim-flag.jpg"><img alt="" border="0" id="BLOGGER_PHOTO_ID_5306132776159934050" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiJ50481sMgGDA5kX5SLVjRlGoV6Y5qW_JaP5v3WyyMKpP8D4No6rh1MHA7Sbjninap7YryViN-BbtnpbL8JhltOasNAO7InczdhZY3vihsYgjrJ9HIgeQ69lr27K7irdfMpEF6uJehykg/s400/zim-flag.jpg" style="FLOAT: left; MARGIN: 0px 10px 10px 0px; WIDTH: 300px; CURSOR: hand; HEIGHT: 200px" /></a> <a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhsXB5fQCyF7hJ5vMeCYagdboIhnkjZvkUKdrrYL6ubW1JmuytBXyRA4l8WjHQgsUrfNBa24DTL3H1or8jx1WLMkZ7jw1tvEXgQoKk6D77NBek47Kh2glrrv7KortjjCGqat3MgGbLtIdg/s1600-h/Tsvangirai-morgan.jpg"></a>Zimbabwean Prime Minister Morgan Tsvangirai is expected on Friday to ask President Kgalema Motlanthe for at least $600-million (R6-billion) in the form of a rescue package to fund salaries for Zimbabwe's civil servants and to meet other essential services expenditure in the next six months. Tsvangirai, together with his new finance minister, Tendai Biti, and economic planning minister Elton Mangoma, is scheduled to meet Motlanthe, finance minister Trevor Manuel and foreign minister Nkosazana Dlamini-Zuma in Cape Town on Friday. On Thursday, SA foreign affairs director-general Ayanda Ntsaluba said the two teams would be discussing the reconstruction of Zimbabwe, but he had no more information because the meeting had been requested by Tsvangirai. Authoritative sources said Tsvangirai, in his first visit to South Africa as prime minister, would plead with Motlanthe for the rescue package, which he wants as a loan to be repaid when "the new government gets Zimbabwe's revenue system re-established". If South Africa cannot afford the package on its own, Tsvangirai will ask Motlanthe to help get other Southern African Development Community countries to contribute. In addition to the rescue package, Tsvangirai will also ask South Africa to open new lines of credit to Zimbabwe's beleaguered private sector. The sources, who did not want to be quoted before Tsvangirai actually met Motlanthe, said the new government would face an uphill struggle in meeting its promises unless South Africa helped. At his inauguration last week, Tsvangirai promised to start paying professionals in foreign currency immediately. They are now paid in worthless Zimbabwean dollars. The United States and several European countries have already said they will not help fund the new government until a number of benchmarks about restoring the rule of law and democracy are met. See <a href="http://southafrica-pig.blogspot.com/2009/02/wary-world-leaders-greet-new-look.html">Will power sharing in Zimbabwe work, and is it time to lift sanctions?</a> The EU and the US are also worried about the continued influence of Reserve Bank of Zimbabwe governor Gideon Gono, who has facilitated the salting away of millions of dollars from the bankrupt treasury for Mugabe and his family. Any help that has come into the country, including the R300-million in farming aid from South Africa, has seemingly been abused by the ruling elite at the expense of the poor. SADC executive secretary Tomaz Salamao has announced a fact-finding mission to determine how the inputs were distributed. Biti has reportedly already asked Gono to resign, but observers consider it unlikely that Mugabe will agree to let him go. The disagreement could provoke a major showdown in the new government. Mugabe reappointed Gono for another five-year term before the unity government was installed. The move incensed the MDC because the unity agreement that both parties signed barred Mugabe from making senior appointments unilaterally until the new government had been formed. The figure of R6-billion is based on a mini-budget of R1-billion monthly to pay civil servants' salaries and to meet other essential humanitarian costs.<a __eventidglow991033457="105" href="http://news.bbc.co.uk/2/hi/business/7885343.stm">Beyond repair? </a><a __eventidglow991033457="104" href="http://news.bbc.co.uk/2/hi/business/7885343.stm">Can Tsvangirai fix Zimbabwe's basket-case economy? </a><a __eventidglow533561333="108" href="http://news.bbc.co.uk/2/hi/africa/7901909.stm">Zimbabwe recovery costs 'massive' </a> No assistance Unlike many other African nations which receive aid from wealthy nations, Zimbabwe saw the International Monetary Fund turn off the taps a decade ago. Donors, led by the US and the European Union (EU), have said they will neither ease economic sanctions nor provide development assistance until it is clear that Mr Tsvangirai has truly managed to wrestle power from President Robert Mugabe. First, the EU would want to see "tangible signs of respect for human rights, the rule of law, and macro-economic stabilisation", it said in a statement. "We'll just have to wait and see," agreed US State Department spokesman Robert Wood, calling for evidence of "good governance and particularly real, true power-sharing on the part of Robert Mugabe". Direct investment into Zimbabwe from abroad has also all but collapsed, which leaves the government with just one way to get hold of foreign currency, namely exporting. In the recent past, more than half its export earnings have been generated by its platinum, gold, ferrochrome and nickel mines. In recent months, these earnings have plummeted as global prices for precious metals have slumped, with some mining companies mothballing operations till demand picks up again. "The impact on Zimbabwe has been particularly severe, " according to the Economist Intelligence Unit. "All four sectors are in serious trouble, partly because of the global downturn but also the collapse of basic infrastructure, especially electricity and water supplies." Zimbabwe's other foreign currency earner, agriculture, is a shadow of its former self after the wholesale looting of farms by Mr Mugabe's cronies during the early 2000s, when productive and profitable farms were either actively wrecked or left to rot. These days they do not even produce enough to feed the country's starving population. "Seven million people are in need of food aid"," says Mr Tsvangirai, so it is clear that significant export earnings from agriculture are out of the question. The country no longer has a tourism industry to speak of, and it could take years before visitor numbers pick up. Indeed, to make Zimbabwe attractive to tourists, the country's deadly HIV/Aids and cholera epidemics will need to be tackled and the rule of law must be re-established. With little scope for raising sufficient foreign currency from exports, another solution has been put forward. Zimbabwe should adopt the South African rand as its currency, South African President Kgalema Motlanthe has suggested. But there are plenty of sceptics. "It would mean that Zimbabwe would have to follow very different policies than what they've followed up to now," says Rudolph Gouws, chief economist at Rand Merchant Bank. "This would require Zimbabwe to give up its monetary and exchange rate policy sovereignty," observes Alide Dasnois, economist with the Governance of Africa's Resources Programme of the South African Institute of International Affairs. Such a move would also leave Zimbabwe with "a very tight fiscal space in which to manoeuvre and pull itself out of its misery", he reasons in an article in the Cape Times. And as the rand would be overvalued relative to Zimbabwe's situation it would "destroy the competitiveness of its exports" and hence remove any chance of an export-led recovery, he continues. As such, adopting the rand would "paint Zimbabwe into a corner in its bid to revive its economy", though this is not the main reason why it is an unlikely scenario. "It would not work unless Zimbabwe accepted that South Africa would control its economy, which would make it virtually a province of South Africa," adds Azar Jammine, senior economist at Econometrix. Mr Mugabe in particular would resist any dilution of Zimbabwe's sovereignty, while Mr Tsvangirai would see it as "an attempt by South Africa to be party to the agreement via the back door", Mr Lwanda reasons, insisting that adopting the rand would be "unhelpful and politically unacceptable" to Zimbabwe. An economic solution to Zimbabwe's woes is clearly not forthcoming at this stage, so expect Mr Tsvangirai to focus on his political battles. He will have to fight on two fronts. At home he will need to make the power sharing agreement with Mr Mugabe work. While on the international arena he will need to convince both government leaders and investors that he has truly established himself as the nation's genuine leader. Only then will sanctions be lifted and both aid money and inward investment begin to flow. Without such input from the international community, there is little hope that Zimbabwe's economy can begin to recover and the country's humanitarian crisis be brought to an end. See also <a class="readlink" href="http://www.theaustralian.news.com.au/story/0,25197,25059868-12335,00.html">Full News Article</a> : Australia pledges $5m cholera aid to Zimbabwe<a href="http://www.theaustralian.news.com.au/story/0,25197,25057842-32682,00.html">Despot's wife shops for investments</a> <a href="http://www.theaustralian.news.com.au/">THE AUSTRALIAN</a>

South Africa's bailout of Robert Mugabe : Zim to ask SA for R6bn

Zimbabwean Prime Minister Morgan Tsvangirai is expected on Friday to ask President Kgalema Motlanthe for at least $600-million (R6-billion) ...

South Africa P.I.G.

South Africa's bailout of Robert Mugabe : Zim to ask SA for R6bn

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