HARARE, Zimbabwe - Zimbabwe will drop 10 zeros from its hyper-inflated currency -- turning 10 billion dollars into one -- the country's reserve bank said Wednesday. President Robert Mugabe threatened a state of emergency if businesses profiteer from the country's economic and political unravelling.
The longtime ruler issued the warning in a televised address as South Africa's President Thabo Mbeki flew in to meet with him about stalled power-sharing talks.
Mbeki insisted Tuesday that the talks that started last Thursday were going well and had simply adjourned Monday.
But several officials said Mugabe's negotiators and opposition leader Morgan Tsvangirai left the venue of the talks in South Africa after they deadlocked over who would lead the "inclusive" government under negotiation.
In his address, Mugabe said "We are still negotiating, we want to succeed." Of the negotiations, he said "You find room for compromise but sometimes compromise is difficult."
Mugabe and Tsvangirai, bitter rivals, met for the first time in 10 years last week and agreed to have their negotiators hammer out a formula to share power and halt the southern African country's political and economic disaster.
It came after three months of state-sponsored electoral violence that killed more than 150 opposition activists, injured thousands of people and drove tens of thousands from torched homes.
Both men say they won elections this year and should lead the government.
A South African statement said Mbeki would meet with Mugabe and the leader of a breakaway opposition faction, Arthur Mutambara. It said Mbeki already had met Tuesday with Tsvangirai and his negotiators.
On Wednesday, central bank governor Gideon Gono announced he was dropping 10 zeros from the currency, to turn 10 billion dollars into one, effective Friday. That comes a week after he introduced a 100 billion-dollar note that was not enough to buy a loaf of bread.
Gono said high inflation was affecting operations of the country's computer systems. Inflation is officially running at 2.2 million per cent but independent economists say it's nearer 12.5 million per cent.
Computers, electronic calculators and automated teller machines at Zimbabwe's banks cannot handle basic transactions in billions and trillions of dollars.
Mugabe went on television immediately after Gono to warn against profiteering.
"Entrepreneurs across the board: Don't drive us further," he warned. "If you drive us even more we will impose emergency measures."
Mugabe has blamed profiteering and sanctions by the United States and the European Union for Zimbabwe's economic collapse.
Both Mugabe and Gono are targeted by the sanctions which impose travel bans and asset freezes on more than 170 people, companies and farms.
"The country is under illegal sanctions. These are intended to achieve regime change," Mugabe charged. "We must strengthen our will and resistance so we can go through this time of difficulty."
Shop shelves are empty and there are chronic shortages of everything including medication, food, fuel, power and water. Eighty per cent of the work force is unemployed and many with jobs do not earn enough to pay for bus fare to their work places.
