Towards the end of February 1998, the Zimbabwe Mirror, a newspaper relatively new on the market, and by no means unfriendly to the Zimbabwe African National Union (Patriotic Front) (ZANU-PF), carried a full-page headline: Power Struggle Looms in Zimbabwe. On its inside pages, it carried a brief analysis of the beginnings of a leadership debate being conducted in some parts of the ruling party, and then provided a political `form card' that summarised the prospects of several of the ministers and deputy ministers in the presidential succession stakes. At last, it seemed, the taboo had been violated and the issue was brought into the open, the whispering having grown in volume following the public consequences of a series of inept and ill-considered policy decisions on the part of President Mugabe, which have brought Zimbabwe to a state of unprecedented economic and political crisis. Fortunately for the editor of the Mirror, his is a newspaper outside the state-owned stable, or he might have shared the fate of Tommy Sithole of the Herald, whose mildly critical tone presumably led to his replacement as editor by President Mugabe's nephew, Charles Chikerema. Since Chikerema's appointment, the Herald has behaved much better, carrying the President's photograph and speeches on virtually every front page. Indeed, one such speech, reported under the headline Empire-building Leaders Blasted Publicly, rebuked senior members of the party for disloyalty and neglecting their duties in order to build up their personal power bases, a clear warning that President Mugabe does not intend to yield power just yet. Such a decision may not be his to make, however, the damage that his administration has recently inflicted upon the economic fabric of the state is deep and pervasive.

Although the problems of economic management and policy-making have a fairly long pedigree, they were still manageable until the last quarter of 1997. Similarly, in the field of government there was a sense that, although Mugabe's political touch was less sure than it once was, and his decisions more erratic, he could still look forward to complete his presidential term in 2002, when he would be 78 years old. The events of the last six months, however, may have altered the picture fundamentally.

The current realignment of political forces can be traced to the wave of strikes that began in 1996, eventually involving workers from virtually every sector of the economy. The civil servants' strike was perhaps the defining moment, for it signalled defiance by what the government legitimately might have regarded as clients in its patronage network. Despite the threat of extreme penalties and the surrender of their own leadership, the civil servants persisted and scored a remarkable victory in the most unpromising of circumstances. For the first time, Mugabe's administration had been faced down, and subsequently paid wage increases of 35 per cent.

This undoubtedly set the tone for what followed. In March 1997, after a series of revelations about fraudulent claims on the War Victims' Compensation Fund, the government abruptly suspended payments. It subsequently transpired that many of the culprits were highly placed members of party and government, and the total figure mentioned was in the region of Z$450 million, looted over a period of only eight months. War veterans now began to demonstrate for the reinstatement of the Fund, not perhaps always out of a sense of outrage at the fraud it was later shown that the leader of the Zimbabwe National Liberation War Veterans Association (ZNLWVA), Cherenji Hitler Hunzvi, also benefited from the Fund under dubious circumstances but out of concern that they were being excluded from the government's largesse. The veterans were enraged that, although the government constantly pleaded a lack of resources as the reason for its failure to address the plight of the destitute, it had succeeded in finding the means to satisfy the material wants and desires of its own leaders and their cohorts.

That the veterans should march in the streets normally counted among the party's staunchest loyalists, and the backbone of ZANU-PF's rural support was of symbolic significance, and also constituted a real threat to the public order, because of Mugabe's constant appeal to the public's memory of their heroic struggle against white domination.

By April 1997, Mugabe had announced the reinstatement of the Fund on a case-by-case basis, but still refused to meet the representatives of the veterans, even though he is the patron of ZNLWVA. The agitation now widened to include demands to know why the heroes of the struggle were living and dying in penury, while their erstwhile leaders enjoyed the material fruits of victory to the full. Demonstrations for meaningful compensation became violent and, in June, ministers sent by Mugabe to address the former combatants were held hostage, abused and forced to flee for their safety. In July, the veterans marched on the President's offices and residence to denounce his insensitivity.

On 11 August 1997, Zimbabwe held its most solemn public occasion the Heroes' Day Commemoration. Television audiences were treated to the sight of hundreds of war veterans heckling and booing the President as he made a very abbreviated speech. Any challenge to the myth of the liberation war constitutes an attack on the legitimacy of the Mugabe administration. Mugabe's explanation of the protests laid down the government's traditional defence. He described it as a "reflection of the economic difficulties that exist in the country, where economic benefits have remained in the hands of a minority and not accrued to the majority." Certainly, the historical imbalances in the distribution of wealth and property have remained largely untouched since independence. However, as the Zimbabwe Independent pointed out, this is partly because the government has failed to create a climate and legal framework conducive to black economic empowerment. Indeed, there is a school of thought that contends that the Mugabe administration is reluctant to see the emergence of a politically independent black entrepreneurial class, since this would constitute a threat to its hold on power and the apparatus of patronage. It has also become increasingly apparent that, for all the rhetoric about indigenisation and black economic empowerment, only those enjoying the favour of the ruling élite have any real chance of gaining a significant share in the national wealth. The saga of Strive Masiyiwa's struggle to win a licence for a cellular telephone network is public evidence of this truth. The only exceptions to this rule are those who make it worthwhile for the government to buy their loyalty.

Ironically, Mugabe's analysis of the underlying reasons for the protests may have been close to the truth in a way he could hardly have intended. Certainly, the population at large have been growing increasingly uneasy at the wealth finding its way into the pockets of the political élite and their clients. It was soon to become apparent, even to the President, that the veterans' anger, and that of other volatile interest groups, was focused very sharply on the party and the government, and that this would be deflected with difficulty.

Evidently provoked by the virulent and insulting criticisms of the veterans by senior party officials following the Heroes' Day protests, members of ZNLWVA invaded and vandalised the ZANU-PF headquarters in Harare, while police looked on helplessly. On 21 August, veterans' representatives finally succeeded in gaining an audience with Mugabe, from which the international media was excluded. By all accounts, however, the interview was one-sided, but unusual in that it was the President who did the listening. The veterans threatened that if the government failed to give them land by July 1998, they would take the law into their own hands and occupy white-owned farms. Clearly intimidated by this show of strength, Mugabe immediately conceded that each war veteran should receive a gratuity of Z$50 000 and a tax-free monthly pension of Z$2 000. Subsequently, there was a brief attempt to limit the pension payments to those not formally employed, but this condition was quickly withdrawn, possibly because many of those affected were serving members of the armed forces and police. As matters progressed, it also became apparent that estimates of the number of former combatants had erred on the conservative side and that instead of 32 000 there were perhaps 70 000 claimants, a total that may expand still further as former detainees and auxiliaries seek to press their cases.

Where the money for this sudden generosity was to be found was another question. Estimates of the total amount required by the end of the year amounted to some Z$5,3 billion. Economists were quick to point out that were this amount borrowed on the domestic market, it would increase the budget deficit to 12,5 per cent of gross domestic product (GDP), well above the official target of 8,9 per cent. In September, the World Bank announced the suspension of US $62,5 million in balance of payments support pending an explanation from the Zimbabwe government of how it intended to fund the veterans' payouts. This was barely a month after the Bank had approved the release of support withheld in mid-1995 following Harare's failure to implement promised cost-cutting measures. Now the International Monetary Fund (IMF) was insisting that the government raise additional taxes to pay the war veterans' gratuities.

Finance Minister Murerwa indicated that he would achieve savings in the published budget by reducing certain welfare expenditures, by improved tax collection and by domestic borrowing to the tune of some Z$2 billion.

By the beginning of October, the Zimbabwe dollar had begun a slow decline in strength, to $12.35 to the US dollar.

It was against this background that President Mugabe resuscitated the land reform and redistribution issue, instructing the Agriculture Ministry to identify some 1 500 farms in the commercial sector for designation and nationalisation.

In mid-October, Mugabe announced that if dispossessed white farmers were to be compensated, it would be up to Britain to provide the cash. The Zimbabwe government would pay for improvements on the farms but not for the land itself, since this had originally been seized from the indigenous peoples by white settlers. That most of Zimbabwe's white commercial farmers had actually purchased the land they farmed never entered the debate. Mugabe insisted that the land question be finalised by the end of 1997, with the initial designation of 5,5 million hectares of white-owned farms for expropriation. He warned that any attempt to challenge this decision in the courts would be bypassed, if necessary by the all-to-common gambit of amending the Constitution.

Even the most starry-eyed of optimists must have realised the impossibility of seizing a third of the country's most profitable farms and giving it to people who have been practising subsistence agriculture. The donors' reaction to any plan to expropriate without adequate compensation was entirely predictable, especially given the historical record of the Zimbabwe government in this regard.

The British government immediately indicated that it would not be party to any land expropriation, nor offer assistance for any land reform and resettlement programme that failed to address the needs of the landless poor. It was pointed out that Zimbabwe's much-vaunted resettlement programme launched at independence had still failed to resettle more than 60 000 out of the original modest target of 152 000, and that the state had consistently underestimated the difficulties of resettling landless peasants and subsistence farmers on commercial or undeveloped farmland. As a consequence, much of the land already acquired by the Zimbabwe government was either lying fallow, had reverted to bush or had been overrun by squatters. Other land had been leased to senior politicians and officials, who had proved to be the principal beneficiaries of earlier attempts at `land reform'. London also pointed out that it would hardly benefit the poor if, in the process, Zimbabwe's agricultural sector were to be undermined along with investor confidence.

At no point did anyone opposing the government's plans question the need for a more equitable distribution of land. In moral, economic and social terms it made good sense. But initially, the government seemed intent on rejecting all talk of compromise and effective discussion. This created doubts about the real motive behind the reform programme: was it really intended to address the needs of the landless poor of the overcrowded communal lands, or was it a political ploy to shore up ZANU-PF's waning support in the countryside and to provide the wherewithal to expand the government's patronage network and secure the compliance of wavering political allies? In the latter case, a negotiated approach would fail to secure the desired political ends, which implicitly required a confrontational stance on the part of government. Some analysts suggest that Mugabe realised all along what would happen and that he would maintain his radical rhetoric to the last minute before blaming the ultimate failure to mount a full-scale `land-grab' on factors beyond his control. It was also noted that the land debate reached a crescendo a few days before the ZANU-PF annual party conference in Mutare. The 1996 conference had been remarkable for the severity of attacks on the government for failing to address the land problem. In Mutare, the land question would dominate the conference, deflecting attention from other potentially embarrassing problems.

The practical implications of the prospective land-grab also began to sink in. Once farms had been acquired, they would have to be vacated within four months. No provision was made or mentioned of technical assistance for the new farmers. Food production, therefore, could be expected to plummet. The Commercial Farmers Union (CFU) noted that, contrary to the assumption that government would designate only farms that were underutilised or in the ownership of absentee landlords and speculators, many of the farms on the list were among the most productive in the country. The CFU calculated that the expropriation of these farms would reduce the value of Zimbabwe's exported farm production from Z$10 billion to Z$6,6 billion, and reduce the number of jobs on the farms from 327 000 to 180 000. Overall farm production would fall from Z$14 billion to Z$8,3 billion. The secondary impact on the agricultural input industry would increase the damage to GDP to ten per cent. In addition, even were the government to go ahead with its threat to compensate only for improvements, excluding the price of the land, the bill would come to Z$6 billion.

Once again, government ministers were unable to provide any convincing explanation of where this money would be found.

Under a law promulgated in 1992, once a farm has been designated for purchase, the farmer effectively loses title and the right to sell it to a third party or use it for collateral. The potential consequences of this soon dawned on the banking sector, which was suddenly confronted with the prospect of a book of unsecured loans worth Z$4,8 billion. Local economists also indicated that the government itself was already so heavily in debt that simply providing for debt servicing and civil service salaries accounted for ninety per cent of state revenue, and that additional debt of the size contemplated to deal with the war veterans and compensation for farm nationalisation would account for the remaining ten per cent, leaving nothing with which to operate the administration or provide services.

Suddenly, on 14 November, the Zimbabwe dollar plunged to $26 to the US dollar, then staged a recovery after the Reserve Bank intervened massively in the market with US$20 million. All corporate foreign currency account holders were immediately compelled to sell their US dollars for local currency, and the Bank raised the discount rate by three per cent to 28,5 per cent. Eventually, the Zimbabwe dollar stabilised at $14,5 to the US dollar.

On 17 November, Finance Minister Murerwa's analysis of the currency's collapse blamed speculators, completely ignoring the turmoil created by what passed for macro-economic policy, and the likely effects these events would have on domestic prices.

In early December, the Zimbabwe Congress of Trade Unions (ZCTU) entered the picture, mounting street protests against tax increases and levies designed to meet the war veterans' bill. These were partially successful and government was forced to rescind certain measures. Attention then shifted to the prices of basic goods which, following an effective devaluation that stabilised at around fifty per cent, had increased by about the same margin. All this occurred in the context of a country in which the average Zimbabwean had seen his real earnings decline by sixty per cent since 1991.

From 19 to 21 January 1998, Harare and its dormitory townships were victim to food riots on a scale unprecedented in Zimbabwe. The inability of the police to cope with the situation led to the deployment of armed soldiers, who were given permission to use live ammunition. The January food riots left as many as eight people dead, and raised questions about how far the military would be prepared to go if the repression of popular protest involved the use of force against the families of fellow soldiers.

Once again, it took the eruption of a crisis to provoke the government into belated action. Mugabe immediately ordered the state marketing board to cut the wholesale price of maize, allowing the millers to reverse their latest price hike of 21 per cent. This also involved the halving of emergency grain stocks, which is not an exercise that can be repeated indefinitely, especially during a season when the adverse effects of El Nino are experienced.

Either incapable of understanding the logic of the impersonal forces of the marketplace, or unwilling to confront the disastrous cumulative effects of ill-considered policy decisions, the government and its spokespersons now sought scapegoats for the unrest. Mugabe went on record insisting that the riots had been engineered to destabilise his government by political opponents and white business leaders seeking to punish his administration for its policy of land reform.

In February, the ZCTU mounted a national stay-away to protest the remaining tax increases. The unions also demanded a long term solution to the problem of repeated increases in the price of basic foodstuffs, some of which had increased by as much as seventy per cent over the previous three months.

The government consequently instructed the state-owned media to completely ignore all statements emanating from the trade union movement, and shortly embarked upon an attempt to have the ZCTU de-registered as the umbrella body for the country's union movement. That Mugabe and the state-owned press have dedicated so much energy on attacking the trade union movement and its leadership would certainly suggest that they are worried by the similarity of the events that led to Kenneth Kaunda's downfall in neighbouring Zambia. There the trade unions led a successful assault on the incumbent regime at the head of a coalition of unionists, businessmen and disgruntled politicians.

The adversarial position adopted by Mugabe towards the unions does nothing to reduce the tensions, however, and also signals that, without a substantial change at the top, the impasse is set to continue.

The administration is now left with very little room for manoeuvre. Its land reform programme has been effectively thwarted by the IMF and the World Bank, whose assistance is desperately needed to ward off a balance of payments crisis and a further subsidence in the value of Zimbabwe's currency, with all the implications this would have for domestic stability. As it is, the price of maize, the country's staple food, can hardly be pegged for much longer, and an increase in the fuel price is only delayed at the cost of a subsidy of some Z$10 million a day. With interest rates nearing forty per cent, even the small flow of productive investment has ceased, and the uncertainty generated in the markets by macro-economic instability and the threat of further social unrest shows little sign of disappearing. Given the situation of the state's finances and a shrinking tax base, any administration would find its options severely constrained.

The current signs are that Mugabe intends to take a strong line with dissidents, both within and outside the party. The reaction of the donor community, whose role becomes ever more important, may be crucial. On the one hand, dispassionate observers have seen an increasingly self-serving and ineffective administration steadily isolating itself from reality and rejecting the old adage that politics is the art of the possible. On the other hand, there is substantial doubt whether Zimbabwe's political system is capable of regeneration, under the present circumstances. There are signs that leading elements within the ruling party are seeking ways to displace the current presidential coterie. There are also clear indications that Mugabe is aware of the threat and is reacting most notably by counter-attacking the more prominent supporters of Eddison Zvobgo, currently Minister Without Portfolio, widely regarded as a potential future leader, especially in his Masvingo fiefdom.

Given the nature of the system, it would indeed require a seismic shift in the balance of political forces to effect a leadership change. Considering the scale of the upheavals of the last few months, and the nature of the pressures generated and thus far barely contained, a shift of such magnitude is no longer beyond the bounds of possibility.