Insight: Fate of Zimbabwe central bank governor key to aid

Western donors who see the removal of Zimbabwe’s central bank governor as a key condition for resuming aid can expect a messy power struggle that could further delay moves to rescue the ruined country.
The new unity administration will depend heavily on foreign cash to rebuild an economy that critics says President Robert Mugabe and his central bank governor, Gideon Gono (pictured), have brought to its knees through reckless policies.

Western countries are looking for signs that Prime Minister Morgan Tsvangirai, Mugabe’s old foe, has managed to put control of the economy under new Finance Minister Tendai Biti, also from the opposition, before letting funds flow, Reuters says.
“A prior condition is of course Tendai Biti getting rid of Gideon Gono and creating economic space for this to happen,” said one senior Western diplomat. “As and when it does happen we will help.”

Gono’s term has spanned the collapse of once-prosperous Zimbabwe, now short of basic goods and with an inflation rate of 231 000 000% — according to the last published figures but believed to be far higher.

Tsvangirai has said it would cost as much as $5 billion to repair the economy.

Mugabe’s very close ally is unlikely to go without a fight, however, especially as the president manoeuvres to gain an upper hand for his ZANU-PF party in the new government. Mugabe re-appointed Gono last November for another five-year term.
“I think pushing Gono out will be difficult, as the move would significantly undermine a pillar of ZANU-PF’s staying power,” said Mark Schroeder, southern Africa analyst at global intelligence company Stratfor.
“Control over the reserve bank provides the Mugabe regime access to their own revenue streams and crucial foreign exchange.”

Western donors want the creation of a democratic government and bold economic reforms such as reversing nationalisation policies before making any serious financial commitments.

Other demands include guarantees of human rights, the release of political prisoners and a free press.

Dealing with Gono’s fate may be far more sensitive because ZANU-PF hardliners and army generals have a big interest in keeping him, analysts say.

Control over the man with the purse strings is crucial to their survival, especially if Mugabe decides to moderate his position to get the new coalition moving — something that could itself take a long time to happen judging by the political war of attrition before the power-sharing deal last September.
“If money is going to be going in suitcases direct from the reserve bank to various Mugabe loyalists, bypassing the Ministry of Finance, then the deal does not have any substance. Gono is absolutely critical,” said Ross Herbert, senior Africa researcher at the South African Institute of International Affairs.

Knox Chitiyo, head of the Africa programme at the Royal United Services Institute in London, said investors may be able to live with Gono for now, under the right circumstances.
“I don’t think it’s cut and dried that Gono has to go before investors come over. I think people would like him to go,” he said.
“But if there is evidence that there is a working relationship and that it’s the finance minister who is in charge of Zimbabwe’s finances, even the Western countries, from what we hear on the ground, would be willing to engage.”

But personal animosity could worsen the struggle between Finance Minister Biti and Gono, who often quotes the Bible in his policy speeches. Biti and other critics have called Gono an “economic terrorist”.

Tensions within the coalition government have already arisen over the arrest of a senior official in Tsvangirai’s MDC, seen by many analysts as an early attempt by Mugabe to see how far he can push Tsvangirai.

Mugabe shows no sign of being ready to relax a hold on power he has held since independence from Britain in 1980.
“Mugabe is going to try to hold onto his man (Gono) as much as he can because I don’t think he wants to create an impression that the men and women who have been with him through thick and thin are expendable,” said John Makumbe, a Harare political commentator and outspoken Mugabe critic.

Some analysts said that the answer could be a face-saving formula that keeps Gono in place but with limited powers. But that would depend very much on the relationship between Tsvangirai and Mugabe.
“He said to me once you know Mugabe is like his father. He is intractable. He is old. He is grumpy. Everything has to be done a certain way,” said Tsvangirai biographer Sarah Hudleston. “I think they may be beginning to understand each other more….I think he would rather try to get Mugabe on his side. Because Mugabe on his side is much better than having him on the other side of the fence.”