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Zimbabwe Government Arrests, Fines Create Chaos Among Businesses


Zimbabwe police have arrested, charged and fined more than 1300 business owners and managers since the government ordered prices to be cut in half two weeks ago. VOA's Delia Robertson reports from our southern Africa bureau in Johannesburg.

The government price crackdown is aimed at trying to arrest the rapid decline in the country's economy.

Economist Tony Hawkins says that with inflation running well over the current official rate of 4,000 percent, business owners are torn between obeying the law and making enough to continue operating.

"And we are at that point at the moment where the government is making these increasingly strident, shrill demands," he noted. "And the business people are trying to keep themselves out of jail on the one hand, because that is the threat that if you break the price laws you get incarcerated; and so they are trying to avoid that, but at the same time putting across the reality that the foreign exchange is not available. And if the foreign exchange is available, it is very expensive and they cannot operate at the kind of prices the government wants them to operate at."

The crackdown has left businesses unable to replace stock, and reports from Zimbabwe say that basic goods, such as bread, milk and the staple maize meal, are rapidly disappearing from store shelves. The same is occurring in the business sector with basic products such as building cement, no longer available.

Professor Hawkins, of the University of Zimbabwe's Graduate School of Management, says the current state of the economy defies logic.

"It is a very, very chaotic situation, it defies any logical assessment or analysis or interpretation," he said. "And anyone who thinks they can put [forward] a logical assessment of it, is fooling themselves."

South Africa's Business Day newspaper reports that the crackdown on prices was ordered by President Robert Mugabe in defiance of advice to the contrary from Central Bank Governor Gideon Gono. The newspaper says Gono's job is now at risk.

In a related development, the South African Sunday Independent newspaper reported the South African Development Community is considering propping up the Zimbabwe economy by pegging that country's currency to the South African Rand.

The newspaper says the deal will be offered at talks in South Africa this week between the ruling ZANU-PF and the factions of the opposition Movement for Democratic Change. The newspaper reports that the deal will be contingent on Mr. Mugabe agreeing to fundamental political changes at the talks.

If correct, the deal would be the second major financial bail-out offered to Zimbabwe by South Africa subject to conditions. The last, in 2005, was rejected by the Zimbabwean leader.

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