Wield big stick on greedy USD delinquents

14 May, 2023 - 00:05 0 Views
Wield big stick on greedy USD delinquents Bishop Lazarus - COMMUNION

The Sunday Mail

Hollywood — America’s film factory and an instrument of its soft power — always dramatises, mythifies and mysticises the Secret Service as a second-to-none valorous security detail charged with the onerous responsibility of protecting the President of the United States, whom, we are told, is always a marked man.

He is said to be targeted by “villains” from across the globe.

These securocrats are, however, known more for their tactical earpieces, white shirts and black suits, rather than their skills repertoire and exploits.

Protecting the currency

But when they were established by Abraham Lincoln on April 14, 1865, in the aftermath of the American Civil War (1861-1865), their raison d’etre was solely to snuff out illegal production and counterfeiting of the US dollar, which was threatening America’s nascent and fledgling economy.

At the time, close to a third or as much as half the currency in circulation in America was counterfeit. But, as fate would have it, Lincoln was incidentally assassinated on the same day he formed the Secret Service, and, after later assassinations of Presidents James Garfield (September 19, 1881) and William McKinley (September 6, 1901), the agency’s mandate was broadened to include protection of American presidents. However, even to this day, one of the Secret Service’s distinct national security missions is to investigate counterfeiting and other financial crimes.

America will do anything — everything! — to safeguard its national currency, the US dollar, whose health is critical for its prosperity and is the lifeblood of its economy.

By their very nature, currencies are not merely symbols of sovereignty, but are also carriers of a people’s hopes and aspirations, helping to shape and define the vitality of the economy by giving financial security and comfort to its citizens.

Far too many people have died and far too many countries, particularly in the Middle East, which Donald Trump infamously described in October 2019 as “blood-stained” lands, have been collapsed for the US dollar to maintain its dominance and for Washington to maintain its hegemonic dominion over the world. In Iraq, the Americans were prepared to ignore Saddam Hussein’s delinquencies up until a time when, incensed by being betrayed by Washington, he decided to ditch the greenback in November 2000 by selling his oil in euros.

He even converted Iraq’s US$10 billion reserve fund from US dollars to euros.

This turned out to be an unpardonable sin.

Writing in his book “The Ultimate Prize: Oil and Saddam’s Iraq”, India’s former ambassador to Iraq, Ranjit Singh Kalha, intimated that challenging the use of the US dollar was tantamount to declaring war on America.

“Although this act of Saddam was not of very great economic significance in overall terms, it represented for the United States a direct challenge to the use of the dollar as a currency for transactions,” he wrote, adding: “If most other Organisation of Petroleum Exporting Countries (OPEC) followed the Iraqi and Iranian example, the stability of the US dollar would be at stake . . .”

Three years later, in March 2003, America invaded Iraq, and the rest, as they say, is history. It is the same mistake that Libya’s Muammar Gaddafi was to repeat when he mulled avoiding transacting in the US dollar when selling the country’s oil.

He even broached pushing for a single African currency, the gold dinar, whose value would be anchored by gold.

In America’s view, these were egregious crimes punishable by death.

Suffice to say, these two men’s lives ended violently. They were hunted like vermin and ignominiously executed in a way unbefitting of sitting presidents.

Saddam was hanged, while Gaddafi was shot in the head. This shows the extent to which America is prepared to go to maintain the stability of the US dollar (petrodollar).

As Bishop Lazarus has argued before, the greenback, as a fiat currency, has no basic intrinsic value beyond its wider circulation and use as a reserve currency and unit of exchange in global trade.

We should do anything and everything to protect the Zimbabwe dollar

A Zimdollar under siege

Nowhere and no one knows of the malign impact of a volatile and precipitously declining currency better than Zimbabwe and Zimbabweans, whose currency has been under siege for the better part of the past 22 years.

You see, the whole design of the Zimbabwe Democracy and Economic Recovery Act (ZDERA), enacted by America on December 21, 2001, was premised on closing financial spigots from international finance institutions such as the International Monetary Fund (IMF) and the World Bank — where Washington holds overbearing sway — and make the Zimbabwe dollar increasingly vulnerable.

Shutting the window through which Harare could get balance of payment support ultimately meant Harare could not have a sufficient stock of US dollar reserves to effectively defend the value of the Zimbabwe dollar.

What made it even worse was the fact that even the private sector, which used to get financial support from multilateral institutions such as the International Finance Corporation — a member of the World Bank Group — was similarly affected, more so, when the direct correspondent banking relationships between Zimbabwe and foreign banks progressively collapsed. Without lines of credit and external financial support, Government and the private sector, therefore, had to scramble for the dwindling foreign currency on the local market, which ultimately increased vulnerability of the local currency. It was a full-on assault on the Zimbabwe dollar to make the “economy scream”, in the words of US Assistant Secretary of State Chester Crocker.

And it did scream.

Hyperinflation wiped out lifetime pension savings, industries closed, unemployment increased, poverty became pervasive and the Zimbabwe dollar floundered and ultimately collapsed in 2008, before it was eventually demonitised in June 2015 — a good 14 years after ZDERA.We live with scars from this traumatic episode up to this day.

The wording of this extraterritorial and illegal coercive law even makes it explicit that only when Zimbabwe complies with America’s expectations (read reversal of the land reform programme) will Washington be prepared to facilitate “financial and technical support for Zimbabwe, especially support that is intended to promote Zimbabwe’s economic recovery and development, (and) the stabilisation of the Zimbabwean dollar”.

This is instructive.

Dollar will make you high

Indeed, the multicurrency system that ran from 2009 to 2013 provided welcome relief through a modicum of stability in the economy. However, as Bishop Lazi always argues, the US dollar, as an adopted currency, will not take you higher, but, like morphine, it will only make you high. Kikikiki.

During the Inclusive Government, Zimbabwe became a huge supermarket that only sold goods from elsewhere.

Importers flourished and exporters suffered. The local industry inevitably lost its capacity to compete, while production unsurprisingly markedly declined as importing became relatively more viable than producing.

Maize production, for example, could not rise above one million tonnes annually (650 000 tonnes in 2009; one million tonnes in 2010 and 2011; 999 000 tonnes in 2012; and 857 tonnes in 2013), while wheat output embarrassingly dropped to as low as 34 000 tonnes in 2012.

Pathetic!

Show the Bishop any two big infrastructure projects that were completed during the Inclusive Government and the Bishop will show you a pig that can fly. Kikikiki.

Overall, without adequate financial controls, Zimbabwe haemorrhaged its forex through importing everything, including toothpicks, potato chips and ex-Japs.

The result was predictable: A serious foreign currency crunch that spawned a virtual surrogate currency that became known as the RTGS.

Vision and wisdom

So, never give audience to anyone who will tell you that the US dollar or dollarisation will heal this land.

Never!

Jeremiah 23:16 counsels: “This is what the Lord Almighty says: ‘Do not listen to what the prophets are prophesying to you; they fill you with false hopes. They speak visions from their own minds, not from the mouth of the Lord’.”

Proverbs 29:18 also adds: “Where there is no revelation, people cast off restraint; but blessed is the one who heeds wisdom’s instruction.”

This is why ED, in his wisdom, decided to resurrect the Zimbabwe dollar in November 2019 after a 10-year hiatus.

And it has worked wonders.

Production has demonstrably recovered.

Zimbabwe is now food secure and production has improved. About 80 percent of goods in local supermarkets are locally manufactured. There are big infrastructure projects underway in every corner of the country.

The Beitbridge-Harare highway that is nearing completion, the two major dams — Kunzvi and Lake Gwayi-Shangani that will support Harare and Bulawayo, respectively — and the new Parliament building in Mt Hampden are some of the many enduring infrastructure projects that will define this epoch.

Wield the stick

So, we necessarily need to defend the Zimbabwe dollar. The episodic volatility of the local currency seriously undermines our ambitions and presents a real threat to our aspirations. We know that some greedy holders of huge Zimbabwe dollar cash balances, such as Government contractors, are the ones who are causing aberrations in the market through hoarding of the greenback for their own selfish ends.

Even where Government is sometimes paying the contractors up to 80 percent in foreign currency, they still convert the balance regardless. Persistence Gwanyanya, a member of the central bank’s Monetary Policy Committee, made this point clear in an article he wrote on April 30.

“The wholesale segment of the market comprises high-value corporates and individuals who hold significant Zimbabwe dollars, such as Government contractors.

“The velocity of money is high for this constituency of the market and every time they receive the Zimbabwe dollar, they tend to offload it into US dollars and drive the depreciation of the local unit. This is our main problem as a country, not excessive money supply growth rates, as many analysts believe.”

And their actions have a far-reaching impact on pensioners, workers, policyholders, industry and commerce.

It is high time we go after them.

An inter-agency approach that is capable of extending its tentacles in the nooks and crannies of the financial markets where this malfeasance originates would be helpful in apprehending these currently nameless and faceless delinquents, who have to receive the proportionate punishment they deserve.

While we build up reserves to defend the Zimbabwe dollar, our delicate local unit has to be anchored by discipline against unwitting and witting attacks.Mindful of the fact that financial markets are hyper-sensitive, we need to speak softly but carry a big stick.

We should do anything — everything! — to protect the Zimbabwe dollar.

Bishop out!

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