Addendum

Relevant updates on my most recent postings:

News has come in from Zimbabwe that Mugabe is planning on forming the next government with or without Tsvangirai. No surprise here really. A more potent force than Mbeki was needed to guide these talks if they were to arrive at any real compromise.

Pakistani news outlets are reporting that Musharraf has agreed, in principle, to step down and possibly leave the country. This may be seen as a step in the right direction, but unless the government exerts its new found strength and imposes civilian rule on the military and intelligence communities then the end result will be an even greater power vacuum than presently exists...and that, my friends, is a scary thought.

(Hat tip: FP Passport)

Talking points

The BBC is reporting today that negotiations on a power sharing deal in Zimbabwe are being adjourned, though not abandoned. According to the original agreement, the talks must reach an agreement by the end of this week.

I've said before that these talks were too timid. Such a response to the terror and chaos Mugabe has imposed on Zimbabwe is irresponsible and proving ineffective. Mugabe will not become a "figurehead"; more importantly, the generals who have become rich and powerful during his rule will not cease to cast long shadows on the country's development even if he does. Zimbabwe requires a lot of help and even if Tsvangirai is handed the reins, the country will need a vast and coordinated international effort to stem any further decline.

It would be encouraging to see a pro-active response to an African crisis that does not involve peacekeepers. Though Mbeki does not offer much hope as an impartial mediator, he will likely keep violence from returning. He will not be able to fully dispel Mugabe (though I doubt anyone would) but it is in his interest to see Tsvangirai in power. If he can get Mugabe on lesser footing, Western aid will sink into Zimbabwe likely stopping the flow of refugees and homeless into South Africa. This, and the resultant economic upswing, would have political benefits for him at home.

It may not be ideal but if Mugabe can be convinced or canoodled into any lesser role, the result will be an improvement. Let's hope that Mbeki can deliver.

Inflation woes

The Central Bank of Zimbabwe is set to lop some more zeroes off the Zimbabwe dollar. They knocked off three back in 2006, and this round is set to see another 3-6 zeroes get the chop. Excuse this humble commentator for his cynicism, but when the annual rate of inflation is above 2.2 million per cent, this isn't going to help much. It will likely improve transaction efficiency for a short period of time, but unless Zimbabwe takes some concrete steps to rein in inflation, sooner than later the currency will be just as worthless as it is today.

Venezuela tried this trick last year, when it introduced the Strong Bolivar, which President Hugo Chavez promised would help curb inflation. A 'Strong' Bolivar is essentially just a normal Bolivar, Venezuela's unit of currency, with three zeroes lopped off. Unfortunately, Venezuelan inflation has actually gotten worse since then, reaching 32% in Caracas in the month of June.

I wrote last month about how inflation is fast becoming a major financial worry. This is especially true in developing countries and emerging markets . As painful as the medicine may be, now is the time when such countries should be prioritizing inflation control over economic growth. The short term losses are undesirable, but the long term dangers are too real to ignore. Keynes said it best:

As inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundations of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.

It's troubling when there exists such chronic financial mismanagement in economies like Venezuela and Zimbabwe, which could both be in much better shape than they are. But they're not, and unfortunately it is the citizens of those countries who pay the highest price for that.

African missteps

The African Union was busy today ignoring human rights and political freedom.

Their request to the UN Security Council to drop war crime charges against Sudan's President Bashir was actually a good step. The ICC's decision to charge Bashir was a misguided one. The blood shed in Darfur is on the hands of many, not just Bashir. Hated as he may be, his removal would create a power vacuum that would simply jeopardize any future attempts at peace.

The AU decision to back South African reconciliation efforts was a meek and tepid attempt to avoid criticism. Relegating such responsibility to South African President Mbeki, an implicit Mugabe supporter, was an irresponsible move and Tsvangirai should have demanded more from the African and international community. 

The situation in Zimbabwe was much more severe than Kenya and as such requires a stronger resolution than a power-sharing agreement. Kenya's violence, though country-wide and intense, was not as extreme as Mugabe's methodical extermination. The people of Zimbabwe deserve better and the international and African institutions responsible should give it to them.