The Sunday Times UK newspaper has reported that the money Mugabe is using to pay for military loyalty and buy votes ahead of the elections later this month is being printed by a German company, Giesecke & Devrient (G & D). The report by writer and journalist Christina Lamb says that heavily guarded planeloads are flying into Harare almost every day, carrying 432,000 sheets of bank notes every week. The paper said it obtained documents that show that G&D are paid £382,000 a week. The notes are delivered to Fidelity Printers in Harare who then stamp them with a denomination value of Z$170 trillion a week.It is shocking that the government would spend so much badly needed foreign currency to print worthless local notes. Economist John Robertson described this as "irresponsible behavior" because they are printing money without any economic activity to back it up. He explained that this is the primary cause of inflation. It creates a lot of money for which there are very few products to buy. This raises the price of those few products and explains why Zimbabwe's economy is gripped by hyper-inflation.
The report quotes a Zimbabwean banker who said; "G&D are literally bankrolling the regime. These notes are being used to buy votes, to purchase foreign exchange to import electricity and vehicles to keep their regime going, and to fund the import of Chinese water cannons and police equipment to keep us intimidated."
The government increased the salaries of soldiers and police force this month. The move was criticized as a form of bribery, intended to keep them on sides during the crucial elections on 29th. But it also backfired because other civil servants are now demanding salary increases as well.
Mugabe's use of this German company is nothing new. The Sunday Times said they established that G&D has been printing the country's notes since the 1970s, when Britain declared sanctions against the Rhodesian regime of Ian Smith.
But it is an embarrassing revelation for the German government. Under Chancellor Angela Merkel, Germany has been one of the most vocal supporters of European Union sanctions against Mugabe and his cronies. Merkel made this clear in Lisbon at the EU-Africa summit last December. It remains to be seen whether Merkel will take any action against the printing company, now that G & D has been exposed.