Zimbabwe authorities mix charm with force in an attempt to shore up the world’s newest currency

HARARE, Zimbabwe (AP) — The introduction of the world's newest currency in April inspired a reggae artist to record a song praising the ZiG, or Zimbabwe Gold.

The catchy tune, titled “Zig Mari,” received generous play on state television and radio. The musician, Ras Caleb, received a car and $2,000 — ironically paid in greenbacks, not the new ZiGs — from a businessman with close ties to Zimbabwe's ruling party and President Emmerson Mnangagwa; he said he wanted to reward an act he considered “patriotic.”

Although money typically doesn't require publicity, Zimbabwe's sixth national currency in 15 years needs all the help it can get.

Desperate to halt a money crisis underlining the country’s economic troubles, the government launched the gold-backed ZiG, the latest attempt to replace the Zimbabwe dollar, which had been battered by depreciation and often outright rejection by people unwilling to put their faith in it.

Senior officials from the Reserve Bank of Zimbabwe and the ruling ZANU-PF party embarked on a flurry of public rallies and meetings to encourage the skeptical population to now embrace the ZiG ahead of the U.S. dollar — also legal tender in the southern African nation. Commercial jingles heralding the currency flooded the airwaves along with Caleb's single.

Yet despite the charm offensive, the ZiG is facing a familiar problem: public mistrust and structural barriers that have people still clamoring for U.S. dollars. Although the ZiG has largely held its value on the official market, it has tumbled on the black market, where $1 can be exchanged for up to 17 ZiGs.

Authorities are also using force to prop up the new banknotes. They have packed jail cells with dozens of street currency dealers, and frozen the accounts of businesses accused of undermining the ZiG.

Law enforcement agents have arrested more than 200 street currency dealers on allegations of flouting foreign currency exchange regulations, national police spokesman Paul Nyathi said. The government accuses them of undermining and devaluing the new currency by using exchange rates higher than the official one.

Twin brothers Tapiwa and Justice Nyamadzawo, 24, were arrested two weeks after the launch of the new currency after allegedly selling undercover detectives cellphone airtime worth $10 at a rate of 15 ZiGs per dollar, according to court papers. The official exchange rate was just over 13 ZiGs per dollar. Like other currency traders, the twins were denied bail and remain in pretrial detention on charges that carry a maximum prison term of 10 years.

The crackdown is incongruous, because Zimbabwe has a long history of street currency dealers whose unofficial rates often carry the day. Many shops and merchants also ignore the official rate and only accept the local currency at their own rates. And many vendors, particularly in the unlicensed sector that employs more than 80% of adult Zimbabweans, still only accept the dollar.

What's more, the government has allowed some businesses, such as gas stations, to refuse to accept the ZiG in favor of U.S. dollars. Some departments, like the office that issues and renews passports, also accept only greenbacks. Many others still list their fees in U.S. dollars, although they accept the equivalent in local currency.

The government has announced fines up to 200,000 ZiG or about $15,000, for businesses that fail to stick to the official exchange rate. Authorities have also frozen bank accounts of some businesses on accusations of rejecting the new currency or trading using exchange rates higher than the official rate. The Reserve Bank didn't name the affected businesses.

Zimbabwe has a long and tumultuous history of monetary instability. The ZiG is the sixth currency used following the spectacular 2009 collapse of the Zimbabwe dollar amid hyperinflation of 5 billion percent, one of the world’s worst currency crashes.

The government printed a 100-trillion Zimbabwe dollar banknote to keep up with spiraling prices that saw a loaf of bread going for more than 500 million Zimbabwe dollars.

John Mushayavanhu, the governor of Zimbabwe's central bank, has hyped the ZiG as a first step toward eventual de-dollarization. The U.S dollar accounts for more than 80% of transactions in the country, according to Mushayavanhu, who wants the ratio to be 50% by 2026.

But for now, the allure of the almighty dollar remains. Across Zimbabwe, it is widely used for paying rent, school fees and to buy groceries. Many citizens, including government workers, take their local currency earnings to the black market to trade for dollars.

The government has said it is working on mechanisms that include opening bureau de changes for individuals to access dollars “for small transactions.” Economists and business groups have warned, meanwhile, that the use of force is unlikely to lead to more confidence in the ZiG or halt the black market traders.

“They will work to ensure that the police do not catch them,” Sekai Kuvarika, the chief executive of the Zimbabwe National Chamber of Commerce, told a hearing of parliament’s finance and industry committees.

Street currency dealers holding wads of money and openly soliciting for clients were a feature of Zimbabwe's urban architecture for years. They have deserted their familiar spots since the crackdown began in April and appear to have taken their business underground.

Many now use social media and instant messaging platforms such as WhatsApp and Facebook to connect with customers.

Maxwell Chisanga, 28, a resident of the capital, Harare, said a shop where he works pays him in ZiGs, but he needs U.S. dollars for everyday transactions.

“My landlord needs her rent in dollars so I have no choice but to look for it on the black market,” Chisanga said.

Economist Prosper Chitambara said lack of faith in the local currency and demand for U.S. dollars will continue driving the black market despite the crackdown.

“The solution is to build public confidence in the local currency. Otherwise, arrests will not work as long as people are hungry for U.S. dollars, which they cannot get from official channels,” Chitambara said.

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Street cleaners walk past people waiting in a bank queue in Harare, Zimbabwe, Thursday, April 25, 2024. Zimbabwe introduced the world's newest currency in April introduced the world's newest currency in April, the ZiG, or Zimbabwe Gold. (AP Photo/Tsvangirayi Mukwazhi)

Street vendors hold the new currency note called the ZiG, in Harare, Zimbabwe, Tuesday, April 30, 2024. Authorities in Zimbabwe are resorting to force to defend the new currency, including packing jail cells with dozens of street currency dealers and freezing accounts of hordes of businesses accused of undermining the value of the ZiG. (AP Photo/Tsvangirayi Mukwazhi)

An elderly man waits to withdraw cash from a bank in Harare, Zimbabwe, Tuesday April 30, 2024. Zimbabwe introduced the world's newest currency in April introduced the world's newest currency in April, the ZiG, or Zimbabwe Gold. (AP Photo/Tsvangirayi Mukwazhi)

Street currency dealers cover their faces while making a court appearance at the magistrates courts in Harare, Zimbabwe, Thursday, April 25, 2024. Authorities in Zimbabwe are resorting to force to defend the new currency, including packing jail cells with dozens of street currency dealers and freezing accounts of hordes of businesses accused of undermining the value of the ZiG. (AP Photo/Tsvangirayi Mukwazhi)

Street currency dealers make a court appearance at the magistrates courts in Harare, Zimbabwe, Thursday, April 25, 2024. Authorities in Zimbabwe are resorting to force to defend the new currency, including packing jail cells with dozens of street currency dealers and freezing accounts of hordes of businesses accused of undermining the value of the ZiG. (AP Photo/Tsvangirayi Mukwazhi)

MOSCOW (AP) — The espionage trial in Russia of Wall Street Journal reporter Evan Gershkovich will begin on June 26 and will be held behind closed doors, a statement from the court that will hear the case said Monday.

Gershkovich, a U.S. citizen, has been behind bars since his March 2023 arrest and faces 20 years in prison if convicted.

The trial is to be held in the Sverdlovsky Regional Court in Yekaterinburg, Russia's fourth-largest city, where he was arrested. Gershkovich has since been held in Moscow’s Lefortovo prison, about 1,400 kilometers (870 miles) to the west.

The court said trial will be closed to the public, as is usual in espionage cases.

Gershkovich, 32, is accused of “gathering secret information” on orders from the CIA about Uralvagonzavod, a facility that produces and repairs military equipment, the Prosecutor General’s office said last week in the first details of the accusations against him.

The reporter, his employer and the U.S. government have denied the allegations, and Washington designated him as wrongfully detained.

Russia’s Federal Security Service alleged that Gershkovich was acting on U.S. orders to collect state secrets but provided no evidence to back up the accusations.

“Evan has done nothing wrong. He should never have been arrested in the first place. Journalism is not a crime,” U.S. State Department spokesman Matthew Miller said last week. “The charges against him are false. And the Russian government knows that they’re false. He should be released immediately.”

The Biden administration has sought to negotiate Gershkovich's release, but Russia’s Foreign Ministry said Moscow would consider a prisoner swap only after a trial verdict.

Uralvagonzavod, a state tank and railroad car factory in the city of Nizhny Tagil, about 100 kilometers (60 miles) north of Yekaterinburg, became known in 2011-12 as a bedrock of support for President Vladimir Putin.

Plant foreman Igor Kholmanskih appeared on Putin’s annual phone-in program in December 2011 and denounced mass protests occurring in Moscow at the time as a threat to “stability,” proposing that he and his colleagues travel to the Russian capital to help suppress the unrest. A week later, Putin appointed Kholmanskikh to be his envoy in the region.

Putin has said he believes a deal could be reached to free Gershkovich, hinting he would be open to swapping him for a Russian national imprisoned in Germany. That appeared to be Vadim Krasikov, who is serving a life sentence for the 2019 killing in Berlin of a Georgian citizen of Chechen descent.

Asked by The Associated Press about Gershkovich, Putin said the U.S. is “taking energetic steps” to secure his release. He told international news agencies at an economic forum in St. Petersburg in early June that any such releases “aren’t decided via mass media” but through a “discreet, calm and professional approach.”

“And they certainly should be decided only on the basis of reciprocity,” he added, in an allusion to a potential prisoner swap.

Gershkovich was the first U.S. journalist taken into custody on espionage charges since Nicholas Daniloff in 1986 at the height of the Cold War. Gershkovich’s arrest shocked foreign journalists in Russia, even though the country had enacted increasingly repressive laws on freedom of speech after sending troops into Ukraine.

Alsu Kurmasheva, a reporter for U.S.-funded Radio Liberty/Radio Free Europe with dual U.S.-Russian citizenship, has been jailed since October awaiting trial on charges of failing to register as a foreign agent while collecting information about the Russian military.

The son of Soviet emigres who settled in New Jersey, Gershkovich is fluent in Russian and moved to the country in 2017 to work for The Moscow Times newspaper before being hired by the Journal in 2022.

U.S. Ambassador Lynne Tracy, who regularly visited Gershkovich in prison and attended his court hearings, has called the charges against him “fiction” and said that Russia is “using American citizens as pawns to achieve political ends.”

Separately, U.S. soldier Gordon Black is on trial in Vladivostok on charges of theft and threatening murder in a dispute with a Russian woman. Black, who was stationed in South Korea but visiting the Pacific Coast city, on Monday told a court that he denied the allegation of threatening murder but “partially” admitted to theft, according to the state news agency RIA-Novosti.

The trial of a US reporter charged with espionage in Russia is to begin June 26

The trial of a US reporter charged with espionage in Russia is to begin June 26

FILE - Wall Street Journal reporter Evan Gershkovich stands in a glass cage in a courtroom at the First Appeals Court of General Jurisdiction in Moscow, Russia, April 23, 2024. Gershkovich, who has been jailed for over a year in Russia on espionage charges, will stand trial in the city of Yekaterinburg, authorities said Thursday June 13, 2024. (AP Photo/Alexander Zemlianichenko, File)