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By Dumisani Muleya

RESERVE Bank governor Gideon Gono has escalated his fight against government’s price reduction blitz which has left shops empty and the economy crumbling as divisions within President Robert Mugabe’s embattled regime widen.

Gono intensified his unprecedented resistance to the blitz this week, warning the authorities the crackdown could lead to "unintended consequences" such as the collapse of businesses, worsening economic decline and suffering of the poor.

Gono likened the state-sponsored crackdown to the United States’ invasion of Iraq in which a military campaign was launched into a dangerous territory without an exit strategy.

He further said government must avoid creating a scenario similar to the biblical situation in which the Israelites ended up thinking it was better to go back to Egypt during their long journey to the promised land.

After telling the government and Zanu PF early last week that their campaign was ill-advised, Gono last Friday warned the Cabinet Taskforce on Price Monitoring and Stabilisation that while the price-slashing policy might have been well-intentioned, it has inadvertently created problems that have worsened the situation.

Gono again put his thoughts in writing this week, raising the political stakes in the crackdown clearly designed to win votes in next year’s parliamentary and presidential elections.

Zanu PF officials fear defeat at the polls because of the economic crisis and a crippling power struggle currently rocking their party.

Mugabe has been saying the price blitz was triggered by his regime’s fears that business wanted to use economic pressure to ensure his defeat at the elections.

The crackdown was apparently driven by the Joint Operations Command (JOC), which comprises the army, intelligence, prisons, and police. Sources said JOC, which was accused of being the architect of Operation Murambatsvina that displaced at least 700 000 people in 2005, was anxious that unless the government did something dramatic to change the situation, Mugabe would lose next year’s elections, leading to the collapse of his regime and his 28-year rule.

Gono warned the government this week that authorities must guard against "the law of unintended consequences" via which the blitz could lead to economic implosion and attendant problems such as further political instability and social dislocation.

"Let’s avoid the law of unintended consequences in the action government has taken which will leave the country in a worse-off position than now; avoid the trap of temporary victory and instant gratification that backfires with consuming return-fire from both the business community and consumers alike," Gono said.

"It is critical that urgent steps be taken to, once and for all, deal with the supply side imperatives without which, or failure of which, will leave the country in a worse-off situation."

He said authorities risked fulfilling doomsday prophecies like "government will collapse within six months" through such policies as the prices crackdown.

"Let’s avoid the ‘take me back to Egypt syndrome’ as done by the Israelites when they suddenly developed disillusionment during their arduous journey to the promised land," Gono said.

"Soon they started thinking that it was better where they were coming from; and us we risk having the same mentality when suddenly our shops become empty, with foreign exchange inflows into the central bank drying up, among many other backlashes, leading us to needlessly draw spears against each other."

Gono also said government must avoid getting bogged down in the current situation like the US in Iraq by choosing wrong policy strategies that can easily backfire.

"Let’s avoid what in contemporary strategy has become known as the US/Iraq syndrome where the US, backed by its allies, went into Iraq without an exit strategy," Gono said.

"We need to define clearly at what point we will exit from the current blitz. Alongside the exit strategy, there is also a mechanism that needs to be put in place: monitoring the monitors. This is particularly so against a background of reported cases of corruption, looting and general waywardness by some stakeholders."

Gono said a holistic package of measures which include the need to reduce government expenditure, reduce the budget deficit and ensure fiscal discipline were needed to reduce inflation, not just a blitz.

He said price controls without production do not work. Gono made recommendations on the protection of property rights and how to attract investment to revive the economy.

He said everyone was battling for survival and government must not make the situation worse for everybody, including itself.

"Our backs are against the wall and to survive as a people (labour and consumers) we must survive, as the business community they have to, and survive as a government we also must," he said.

Gono said government would still be able to implement its policies without threatening the survival of business, the economy, the people and itself. - Zimbabwe Independent

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