Zimbabwe price crackdown moves to Mugabe heartland

[frigidmagi]

Rueters

HARARE (Reuters) - Zimbabwe has sent crack police to enforce price freezes in the rural strongholds of President Robert Mugabe, where businesses have failed to heed measures aimed at reining in inflation and halting economic collapse.

Mugabe's government, grappling with inflation of 4,500 percent, ordered businesses last month to roll back and freeze prices on petrol, bread, milk, cooking oil and other key consumer items after a sharp increase in their prices.

The move has prompted panic buying, leading to empty store shelves and long lines at petrol stations, and pushed the economically depressed southern African nation closer to breaking point.

"We have started deploying many officers to rural areas to make sure there is compliance, and we are saying we are not going to stop until we are satisfied that there is total compliance," police spokesman Oliver Mandipaka told Reuters.

Mandipaka said many businesses in rural areas -- where the majority of Zimbabwe's population lives and where Mugabe's ruling ZANU-PF party enjoys strong support -- had failed to follow the government's directive on prices.

So far, the crackdown has been concentrated in the capital Harare and other urban areas where workers have borne the brunt of the severe economic crisis. It has led to arrests and fines for 1,768 executives and companies.

The chief executive of Zimbabwe's largest supermarket chain has been arrested and faces 41 charges of defying the price freeze, while police on Wednesday seized 49 commuter buses and detained the drivers for overcharging, Mandipaka said.

Public commuter operators have grounded their fleets, citing fuel shortages and a forced 60-percent reduction in fares, leaving thousands of commuters stranded.

The rollback program was extended to rural areas after the government accused some businesses of diverting goods to rural shops were the price freeze had not been enforced Zimbabwe, once one of Africa's most prosperous countries, is in the eighth year of a deep recession, marked by chronic shortages of food and fuel, soaring unemployment and poverty and the world's highest inflation rate.

RURAL AREAS SUFFER

Rural Zimbabweans, who have been forced to engage in informal trading and open small shops to supplement what they make from subsistence farming, are increasingly feeling the pinch of the government's price controls.

"Can you imagine someone who is running a little store and told to reduce his prices ... he has no insurance and will not only have to take the loss but will go out of business," said John Robertson, a leading private economist in Zimbabwe.

Mugabe, who blames the economic problems on sabotage by Western nations upset over his seizure of thousands of white-owned farms, has threatened to nationalize companies who hike prices without cause.

The 83-year-old Zimbabwean leader, in power since independence from Britain in 1980, has said that those resisting the new economic measures are part of a Western plot to topple his government.

While the price crackdown has brought relief to hard-pressed consumers who can find goods in the stores, basic foodstuffs, such as maize-meal, sugar and cooking oil, have disappeared from shops.

Economic analysts warn that many businesses could shut their doors rather than continue producing at a loss.

Industry and International Trade Minister Obert Mpofu dismissed reports that the government also planned to cut workers' salaries, the official Herald newspaper reported on Thursday.

I got a question, has price controls ever worked?