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Last Word: Bailouts and begging in Harare and Athens

By Charles Rukuni in Bulawayo
Posted on Friday, 2 October 2015 09:17

Greece and Zimbabwe both missed payments to their international creditors.

Zimbabwe has been facing an economic crisis for the past 15 years, but it has not received a bailout.

The biggest difference between Greece and Zimbabwe is no one seems to care if Zimbabwe collapses. But no one wants Greece to collapse

The International Monetary Fund insists that it must first pay its arrears of $150m.

Looking at the amounts doled out to Greece, $150m looks like a very small amount. But it is a lot for Zimbabwe, which has been living from hand to mouth for more than a decade, at one time printing money resulting in record inflation where one united states (US) dollar fetched Z$35 quadrillion.

In Greece and Zimbabwe, politics cannot be separated from economics.

The government of Zimbabwe’s president, Robert Mugabe, insists that the us and European Union (EU) exacerbated the crisis by imposing sanctions on the country’s leadership.

He says the West is against his regime because of its stripping of land from many white farmers and its other indigenisation policies.

The west argues that the Zimbabwe crisis is due to Mugabe’s bad management and autocratic government.

Some critics of Germany said that regime change – getting rid of a radical and anti-austerity leftist government – was its ultimate goal in negotiating with Athens.

Likewise, there was great hope when Zimbabwe formed an inclusive government in 2009 following the disputed 2008 elections.

The opposition held the key posts of prime minister and finance minister, but finance minister Tendai Biti failed to secure a bailout even though he was voted the best finance minister in Africa that year.

Biti was not even trusted to handle aid money from the West, as it channeled funds through non-governmental and United Nations organisations.

Zimbabwe needed $10bn, which was quite a lot considering the size of its gross domestic product, but it did not get the money – most probably because the West believed that the change in government was cosmetic.

Mugabe was still in control. Greece, on the other hand, was granted a bailout of €110bn ($126) on 2 May 2010, only nine days after it asked for one.

The rescue package was supposed to be for three years but things did not work out like that.

The Greek government received another €130bn less than two years later. In August of this year, it negotiated a third bailout worth €86bn.

The biggest difference between Greece and Zimbabwe, however, is no one seems to care if Zimbabwe collapses, except perhaps South Africa and Botswana, which would see an influx of Zimbabweans looking for jobs. But no one wants Greece to collapse.

The Greek crisis rocked the entire world. Markets in Hong Kong, Tokyo, New York, London and Johannesburg yo-yoed on news about the Greek bailout.

The world’s richest countries put the Greek rescue on their agenda at their June G7 meeting in Germany.

Greece is too important for the EU to ignore, but the financial markets ultimately priced in a Greek exit from the eurozone and shrugged that Berlin was able to force such harsh terms on Athens.

The rescue came at a high cost. Finance minister Yanis Varoufakis, who was against more austerity and had already hatched a plan for a Greek exit, lost his job.

Prime minister Alexis Tsipras lost the support of his party and resigned, calling a snap election for 30 september after accepting a bailout deal that will see Greece mortgaging its national assets, despite a referendum result that gave him a mandate to reject the EU’s tough austerity deal.

If Tsipras had been from Zimbabwe, people would have labelled him a sellout – a curse that was a death sentence during the liberation struggle. But he had very little choice.

The message was clear and simple: you cannot do what you want with other people’s money.

This is a stark lesson for Zimbabwe. It will have to accept the bitter medicine prescribed by the west if it wants a bailout. And there is no ‘Plan B’ because even China – Harare’s all-weather friend – now insists that there are no more free lunches. Business is business.

Like Nyerere said, Zimbabwe will have to accept that it is too expensive to be poor. Beggars cannot be choosers.

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