Mugabe backs down on threat to grab white land keep farms

The plan by President Robert Mugabe of Zimbabwe to confiscate 1,400 white-owned farms has been halted - probably indefinitely - by conditions imposed on new loans by the World Bank and the European Union.

For months Mr Mugabe, whose government's popularity has slumped to an all-time low, had been threatening a mass land-grab after the May harvest, with little or no compensation for owners.

In Zimbabwe, 18 years after independence from Britain, commercial farms remain in white hands while poor blacks are still landless. Reform is admittedly long overdue but Mr Mugabe has been using the issue as a smokescreen for the political and economic failures which have sparked unprecedented mass protests in the past few months.

Even the most ardent land reformers said the crude measures proposed by Mr Mugabe - takeover by force and redistribution to landless peasants - would spell economic disaster for the country. The government has no funds to invest in machinery or to train black farmers, who generally have no experience of anything other than subsistence farming.

It appears rhetoric finally gave way to hard economic realities at the weekend, when the beleaguered government persuaded the World Bank to release $60m (pounds 36.5m) and the European Union to release $20m of frozen budget support.

In return, the government pledged to respect the constitution, which guarantees compensation to those affected by land reform.

The promise contradicts Mr Mugabe's recent threats to ignore the constitution on the issue. Crucially, the government has also promised not to push the budget deficit beyond 8.2 per cent of the gross national product, an undertaking which also seems to torpedo the land grab.

Mr Mugabe was caught between a rock and a hard place. Zimbabwe badly needs outside investment. The Zimbabwe dollar is in freefall; its difficulties are at least partly due to the uncertainty surrounding the land threats.

Implications of the loan conditions became public as more than a thousand people again took to the streets of Harare yesterday in protest at price rises. As riot police tear-gassed and baton-charged the people, the government blamed whites for the country's problems.