Prime Minister Robert Mugabe is administering a heavy dose of bitter economic medicine to cure the country's seriously ailing economy.
Major social welfare programs have been slashed, an income tax imposed on previously exempt workers near the bottom of the salary scale and government subsidies cut by two-thirds, causing overnight price rises of 14 to 50 percent on many foodstuffs.
It is an ambitious strategy that seeks to spread the economic pain among all segments of society and one that Mugabe, a Marxist, will undoubtedly stress in his appeals for more U.S. aid and investment during his visit this week to Washington.
The austerity program already has won grudging applause from most of the predominantly white business community, which has listened with alarm to the government's socialist rhetoric during the three years since the black majority came to power. Many whites believe the government has come around to economic realities.
At the same time, the new strategy risks alienating those at the very base of the government's support--the growing black urban middle class that faces higher prices and taxes while coping with a government-imposed wage freeze, and the poor, whose expectations since independence have far exceeded their incomes. Some of these supporters fear the new austerity means that Zimbabwe may permanently stray from Mugabe's stated goal of socialist transformation.
The man behind the policy, Finance Minister Bernard Chidzero, insists that the government has not altered its goals of socialism and economic justice.
"It may take longer to get there, but we're still heading in the same direction," he told reporters last week. But he also has conceded the risks, calling Zimbabwe "a nation on trial."
In fact, as the contrast between the office buildings of Harare and the one-room, thatch-roofed huts just a few miles from town suggests, Zimbabwe appears to be two nations: a modern capitalist economy that is black Africa's most industrialized and diversified, and a subsistence-level peasant economy that is desperately poor and almost feudal in its methods.
The struggle to bring prosperity to the poor without bankrupting the private sector is Mugabe's biggest challenge. Many analysts believe this conflict animates racial and tribal tensions and will determine Zimbabwe's success or failure as a nation.
"This dualism is the critical tension in this society," says Roger Riddell, economist for the Confederation of Zimbabwean Industries. "If it continues, then poverty in the rural areas will worsen and that could have enormous political implications. At the same time, if the government moves too fast, there will be a significant drop in private investment and that will cause its own political problems."
Riddell sees Zimbabwe's economic conflict not as between black and white as much as between the growing black urban middle class and its poorer rural brethren. The government will be hard-pressed to satisfy both--higher food prices, for example, put more money in farmers' pockets but hit urban dwellers hard.
At first, it looked like there would be enough for everyone. With the coming of black rule and the end of international sanctions, Zimbabwe's economy took off, recording phenomenal growth rates adjusted for inflation of 15 percent in 1980 and 13 percent in 1981. Spurred by this growth, the government undertook an ambitious program of socialist reconstruction, including a massive resettlement plan to provide arable farmland for peasants and the purchase of several major companies formerly in private hands.
But economic euphoria died abruptly last year, when the world recession and punishing drought slashed the growth rate to 2 percent.
Manufacturing has declined more than 2 percent, the country's balance of payments deficit leaped to $550 million, the government has been forced to borrow $440 million overseas and the 40,000 new jobs created since independence have been wiped out.
To set things right, Chidzero, with Mugabe's blessing, has embarked on an austerity campaign that makes recent budget-cutting drives under Ronald Reagan in the United States and Margaret Thatcher in Britain seem like child's play. Government spending on new housing has been slashed by two-thirds, on land resettlement by half and on new construction by 40 percent. The cuts are even more drastic when adjusted for Zimbabwe's 17 percent inflation rate.
Chidzero also slashed government food subsidies by two-thirds.
He increased corporate taxes and duties on imported goods, raised Zimbabwe's sales tax on most consumer items to 23 percent and slapped a 2 percent income tax on all wage earners making more than $100 per month--a move that will add 450,000 people, mostly blacks, to income tax rolls now listing only 90,000 taxpayers, most of them white.
This last move was particularly welcomed by the white community. "I was extremely worried until the recent budget, which cheered me up no end because it showed government is willing to grapple with the problem and tax its own people," said Anthony Upfill-Brown, head of Sagit Trust, one of the country's largest financial management firms.
There are some dissenting voices, black and white, from the chorus of praise. A distinguished black economist, who insisted on anonymity, called it "a cover-up" for government officials to continue to talk of socialist transformation while practicing the politics of austerity.
"They can get away with this at present because workers and peasants are not organized," he said. "But it will catch up with them eventually."
John Robertson, chief economist for Ral Merchant Bank here, believes the austerity plan doesn't go far enough and that government- imposed minimum wages and price controls could undermine economic recovery. "We've shot ourselves in the foot," says Robertson. "We're hobbling around with wage levels that don't reflect labor productivity and price controls that don't reflect the cost of doing business and that don't allow companies to grow."
Other businessmen are less pessimistic. They were heartened especially by two recent meetings between Mugabe and business leaders held behind closed doors and never publicly acknowledged.
No promises were reported, but one participant found the sessions "tremendously encouraging."