From Independent Online. Story by Peter Fabricius.

South Africa is holding quiet talks with Zimbabwe to try to persuade it to adopt the rand as its official currency, as the only way out of its growing economic and political crisis.

The crisis has been sparked by Zimbabwe’s dire shortages of U.S. dollars which it chose as its chief currency after its own Zimbabwean dollar collapsed seven years ago amid runaway inflation.

Saving scarce U.S. dollars appears to have been the real motive for Zimbabwe’s decision to ban imports of several products from South Africa two weeks ago. That sparked violence at the Beitbridge border post as Zimbabwe’s growing army of informal importers lost business.

Lack of dollars also provoked unrest and strikes in Zimbabwe this week as the government was unable to pay civil servants.

Zimbabwe’s reserve bank governor John Mangudya and Finance Minister Patrick Chinamasa said that joining the Common Monetary Area — a monetary union linking South Africa, Namibia, Lesotho and Swaziland in alliance with the Southern African Customs Union — is the only solution to Zimbabwe’s mounting economic problems.

Though their currencies have different names, they are all pegged to the rand and so essentially fall under the South African Reserve Bank’s monetary policy direction.

This has helped maintain financial and economic stability in these small countries – but at the expense of financial autonomy. Officials said South Africa offered Zimbabwe membership of the Common Monetary Area when the Zimbabwe dollar collapsed in 2009 but Zimbabwe chose instead to use several currencies including the U.S. dollar, the rand, and the Botswana pula.

Zimbabweans increasingly resorted to the stronger dollar because of the fall in the value of the rand. Official sources said that policy failed. Zimbabwe cannot print its own money again as it would have no credibility.

Switching to the rand would boost Zimbabwe’s exports as the U.S. dollar made its exports too expensive on international markets. This could revive Zimbabwe’s flagging manufacturing sector. The sources said that if Zimbabwe switched to the rand, Pretoria would encourage its state-owned enterprises already in the country, such as the Development Bank of Southern Africa, the Industrial Development Corporation, and the Public Investment Corporation, to inject more money into the Zimbabwean economy.

This would be easier for them to do in rands than in U.S. dollars.

Pretoria believes the current unrest in Zimbabwe is not yet presenting a threat to the survival of the Mugabe regime but they acknowledged that for the first time the Zimbabwean people are standing up to their government. Many Zimbabweans have told journalists they have at last found the courage to do so because they are desperate and have nothing left to lose.

South African officials insist they are not trying to prop up the Mugabe and Zanu-PF regime.

“It is in South Africa’s strategic interests to help Zimbabwe to recover economically so it can contribute to the economic integration of the Southern African region,” one said.

Mugabe has so far resisted a switch to the rand as this would effectively cede Zimbabwe’s financial authority to South Africa. But he may be running out of options as the dire economic crisis is triggering political upheaval which might threaten his hold on power.

Read more at Independent Online.