Recent sanctions imposed by European nations are poised to sound the death knell for Zimbabwe’s crippled economy, and have the potential to seriously undermine Robert Mugabe’s grip on power.
A severe shortage of banknotes has meant that government officials now face the significant possibility of being unable to pay the salaries of key workers and, more importantly, the military.
The dearth of paper money is directly attributable to the country’s rampant levels of inflation, currently estimated to be around 40,000,000%. The increasingly exponential levels of demand have led to State-run printing presses, previously running up to 24 hours a day, see supplies of paper evaporate. In a move indicative of the desperation within the economy, the Zimbabwean central bank issued a bank of Z$100 billion; it’s highest to date. Even so, the increasingly surreal levels of inflation mean that even this kind of monetary denomination will likely be surpassed into worthlessness within a matter of days.
The deepening financial squeeze inflicted on the economy may represent a significant change to the stability of the ZANU-PF regime. Mr Mugabe had emerged triumphant from the unopposed electoral run-off earlier this month, amidst international outcry regarding the legitimacy of the vote. Having prosecuted a campaign against his political opponents that was heavily reliant on violence and intimidation, western governments have called for solidarity within the international community in an attempt to turn Mugabe’s political victory into a personally pyrrhic one.
This multilateral decision appears to be slowly taking effect. Following pressure from Berlin Giesecke & Devrient, the German based paper firm who produce the material necessary in the printing of currency, has ceased its exports to Zimbabwe. Whilst this alone may not fully halt the government’s printing process (Zimbabwe is already looking to Malaysia as an alternative source of paper), Mugabe’s regime faces further obstacles. Jura JSP, an Austro-Hungarian based company, has a monopoly on the computer software that prints paper currency. By withholding this license Jura JSP could deny Harare access to technology required in the production of it’s Dollar.
The implicit ramifications of any delay or outright inability to print fresh bank notes (and by extension pay wages) would expose Mugabe to the risk of losing military and police support, the very state apparatus that has thus far sustained his political survival. It could also prove to be the final straw amongst ordinary Zimbabwean’s. Under current laws Zimbabweans are permitted a daily allowance of Z$100 billion to be withdrawn from bank accounts, approximately half the cost of a loaf of bread.
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Tim Tonkin, 
Zimbabwe
Mugabe
Hyperinflation
