South Africa to the Rescue

The Guardian reported this morning that faced with worsening hyperinflation, Zimbabwe may be turning to big brother South Africa yet again for support. The central bank of South Africa may include Zimbabwe in the Rand monetary union, which already includes South Africa, Namibia, Lesotho and Swaziland. By pegging the Zimbabwe Dollar to the South African Rand and thus relinquishing Zimbabwe’s monetary authority to the central bank of South Africa, there are hopes of bringing some stability to the country’s ever-weakening currency. In return for this, President Mugabe would have to agree to certain “political concessions” at the behest of South African President Mbeki. There was no word of what these concessions would be.

On the one hand, this sounds like good news for the citizens of Zimbabwe. With currency controls in place, ordinary citizens could save money without fear of it becoming essentially worthless the moment after they cash their paychecks. On the other hand, maybe the spiraling inflation would have proven to be the catalyst needed to incite the people to overthrow the oppressive Mugabe regime. Many African scholars were predicting a significant political shake-up in Zimbabwe in the near term as a result of the worsening hyper-inflation. If South Africa bails Mugabe out, yet again, there may be no real change in the country for some time to come. Mugabe’s already in his early 80s, but from what I understand, he’s in excellent health. Despite his age, he isn’t expected to be going anywhere anytime soon.

However, I can see where Mbeki is coming from. Stability along South Africa’s borders may be his most strategically important goal in this regard. An abrupt breakdown of the Mugabe administration could lead to great civil unrest in the country that could cause violence and refugees to spill over the border into South Africa. South Africa’s got enough problems to deal with. They don’t need to import new ones from Zimbabwe. In this world of global institutionalism, Realism is far from dead. The integrity and security of the state is still of paramount importance. It’s easy to advocate revolution remotely from the secure position of the US, but it’s quite a different story when that revolution may be taking place right next door.

The Demise of Doha?

It was just reported about an hour ago that the Group of 4 meetings in Germany, which were tasked with trying to save the Doha Round of WTO negotiations, have just collapsed. While this is not surprising, it is nonetheless disappointing. After the suspension of talks a year ago, this was seen as a last-ditch effort to revive this round of WTO negotiations, which was touted as the round intended to bring the benefits of liberalized trade to the developing world. As has been the case all along, agricultural protectionism was the hurdle that the participating nations – US, EU, Brazil and India – were not able to overcome. Now one can only expect the blame game to ensue, in which each nation points its finger at the others’ perceived lack of willingness to cut agricultural subsidies.

So all of you who were holding on to the hope that Doha talks would finally get back on track, it’s not looking too good.

In a very well-timed piece in the Washington Post, it was reported yesterday that US farm subsidies, unsurprisingly, tend to only benefit large, white-owned farms, while small farms (many of which are black-owned) receive none of the largess. The idea behind farm subsides is to help farmers who need assistance in coping with detrimental shifts in the agricultural economy, such as changes in weather and world food prices, but in reality they are going to large commercial farms that can probably deal with such factors on their own and those who are most vulnerable receive no support.

Although I don’t know this first-hand, I suspect that small farmers in Mississippi don’t have well-paid lobbyists in Washington, but I’m sure that the large commercial farmers do.