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Gary Younge
Harvest burns as economy goes up in smoke

Mark Impey, the auctioneer, walks from bail to bail with sellers in tow and buyers keeping pace opposite. Amid his fluent, lyrical patter you can make out the prices he is quoting for each bail. Meanwhile the buyers keep one eye on the tobacco leaves, rubbing them between their fingers and then thrashing them against the rest of the bail. The best leaves are orange and have the feel of soft leather.

Their other eye is on Mr Impey. Without interrupting his banter he seeks a flicker of recognition from the buyers. One nods; Impey nods back. The deal is done.

The opening of the auctions should be one of the highlights of the country's economic calender. But the marketing manager of the tobacco sales floor says she is depressed.

"We are geared for business but it's almost a charade of normality," she says. Tobacco is vital to the economy. The industry is Zimbabwe's largest employer and provides its most important export, earning a third of its foreign currency.

Yet the scene yesterday was pitiful. The volume of tobacco coming into the capital is a third down on last year and the price is down by a fifth.

Political instability and a feeble economy has kept many farmers and buyers away. Many of those who should have been selling their wares yesterday have not been able to return to their farms to prepare for the auction since they were chased away by squatters.

Others have had their crops burned. With 70% interest rates on the loans they have taken out against their crops, farmers say they need a devaluation of the exchange rate, which has been kept artificially high for 15 months, if they are going to stay competitive.

This is bad news for an economy which is desperately in need of foreign currency as it haemorrhages around £600,000 a day through its involvement in the war in the Congo.

And tobacco is not the country's only problem and tobacco farmers are not those most in need. White farmers employ 65% of the workforce - it is their labourers, among the poorest paid, who will be hit hardest.

The picture of staff in the entrance of the auction room illustrates just how much of Rhodesia's racial power structure remains in place in the economy. Whites make up less than 1% of the population. But they dominate the upper echelons of the tobacco industry. The receptionists and ticket markers are all black.

Both inflation and unemployment stand at more than 50%. Tourism has been seriously affected by the images of violence beamed into homes across the globe. Tourism at Victoria Falls is down by a half on this time last year.

Only the goodwill of Zimbabwe's stable neighbour, South Africa, is keeping the country in electricity. President Mugabe cannot pay the bill.

If the South African president, Thabo Mbeki, loses patience with Mr Mugabe's reluctance to restore law and order he could turn the lights out.

But that could trigger even greater instability throughout the region. The South African rand hit a 20-month low against the US dollar last week.

Zimbabwe's other neighbours such as Zambia and Mozambique, which have far more fragile economies, could be even more adversely affected.

The parlous state of the economy provides the backdrop for much of the political violence. While voters were queueing at the polls to vote in a referendum on the constitution last month, drivers were queueing at petrol stations because of a fuel shortage.

Mr Mugabe lost - his first significant political defeat in 20 years. First economic problems helped spark political chaos; now the political turmoil is compounding economic woes.

As Rian Le Roux, head of economic research at the leading investment house in South Africa, warned: "The risk is that the political crisis will result in full-scale economic collapse."

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