Economy Staggers : Liberia--The Specter of Collapse

The 190-room Ducor Palace Hotel had 22 guests on a recent afternoon, no working phone lines, mismatched towels, rooms that reeked of mildew, air conditioners that exhaled hot air, a telex machine that had been out of order for at least 10 months--and more than a dozen employees with nothing much to do.

The once-grand Ducor, perched atop the highest point in Monrovia, has fallen on desperately hard times.

Its $70-a-night rooms, though, still offer sweeping views of the Atlantic and, at the far end of town, of the fortified mansion of Samuel Kanyon Doe, master sergeant-turned-president who drives around in a new, $146,000 silver Mercedes limousine, while trying to convince world lenders that he is moving toward fiscal responsibility.

No Takers for Businesses

Doe has put the Ducor and a dozen other poorly managed state-run businesses up for sale. So far, there have been no takers.

No one has snapped up Air Liberia, either. The national airline has 160 employees but only two small planes. A Boeing 707 that broke down four years ago still stands idle, its paint peeling.

Liberia’s effort to unload the hotel, its airline, its phone company, its power company and other firms is part of a broad attempt to regain the confidence of the International Monetary Fund and the United States. But it is also a sign of just how far Liberia has slid economically since Doe took power in a bloody 1980 coup--and since he was elected president in October after a vote count that was widely viewed as fraudulent.

Liberia’s economy is “at death’s door,” says an analyst close to the situation. Unemployment is about 50% in Monrovia, the seacoast capital of 400,000 people. Prices have risen sharply in recent weeks, and more merchants, lacking the foreign exchange to import goods, have closed.

High Taxes, Big Debt

Liberia’s treasury is in poor shape, too. The country’s taxes are among the highest in Africa, economic analysts say, and even a person earning as little as $2,000 a year pays more than 10% of it in taxes.

Yet the country owes world lenders so much money, $1.2 billion, that the interest payments alone would gobble up the country’s total annual revenues--would, that is, if Liberia were paying its creditors. It is not.

The International Monetary Fund has suspended assistance to Liberia, and the U.S. State Department is withholding $28 million in aid until the country comes up with a bona fide recovery plan.

Liberia’s domestic spending continues to outstrip revenues. The government is two months behind in salaries for teachers and other civil servants and owes $100 million to local creditors, including $386,000 to a local car dealer for 16 Mercedes-Benz automobiles that it bought after the October election. The bill for Doe’s limousine was paid, however.

“The culture here dictates that if you have access to public resources, you are obligated to take some of the money and spread it around to your friends,” an economic analyst said. “People don’t consider that a bad thing here.”

The U.S. government, which has spent more per capita in Liberia than in any other country in sub-Saharan Africa, has been putting pressure on Doe to get this economic mess straightened out. Within weeks of a visit last April by Chester A. Crocker, the assistant secretary of state for African affairs, Doe went on television with his budget message.

“Bold and urgent actions are required” to avoid economic collapse, he said. And he admitted that his “policy failures in some instances have contributed to the present crisis.”

He asked for technical assistance from the West, promised government workers that payment of their salaries would be brought up to date by June and appointed Robert C. Tubman, a graduate of Harvard Law School and the London School of Economics, as finance minister.

Tubman is the nephew of President William V.S. Tubman, who led Liberia from 1944 until his death in 1971.

Leading Opponent Freed

Doe also released Ellen Johnson-Sirleaf, the only political opponent still held of the dozens who went to prison after an abortive military coup a month after the election last October. And the president offered to sit down with his opponents and discuss reconciliation.

It all sounded good, but so far nothing has worked out very well.

Tubman, the finance minister, went to Washington last month to plead for money, arguing that the country has a sound program for recovery. As evidence, he said, the $8 million in overdue salaries was being paid.

But back in Monrovia, Tubman’s deputy, a Doe appointee and ally, was using the money earmarked for salaries to pay bills owed to merchants who, several sources here said, were willing to pay a fee in exchange. Such kickbacks have been common practice in awarding contracts under Doe’s government, political observers say.

Tubman now promises to bring the payroll up to date this month.

For nearly two months, Doe did hold talks with his political opponents. But a few weeks ago he broke off the negotiations.

The Liberian Council of Churches, which sponsored the talks, had proposed that half to two-thirds of the seats in the House and Senate be declared vacant and that new elections be held--with candidates from Doe’s party, which has all the seats at present, not eligible to run.

Doe said he did not need the council’s help anymore, and would pursue reconciliation with his opponents on his own. But so far he has done nothing.

Press Freedom Erodes

Meanwhile, press freedom has eroded since the election. The city’s largest newspaper, Footprints Today, stopped publishing in March when its printer, reportedly under pressure from the government, refused to print the paper.

Another newspaper, the Daily Observer, closed by the government for more than a year, prepared to resume operations in March. But on publication night a fire broke out in the newsroom. The cause of the fire has not yet been discovered and the paper has yet to reappear.

S. Momolu Getaweh, the minister of information, spoke recently of the “role the press should play as a watchdog of our society,” and of the press freedom “guaranteed by the constitution.”

But he added that “while the government guarantees press freedom, there should be no perverse criticism of government that would tend to frustrate government’s efforts in bringing about national development.”

Bad publicity has not hindered national development, but slack demand and falling prices for Liberia’s major exports--iron ore and rubber--have been damaging.

Foreign Money in Demand

Doe has insisted that Liberian dollars be traded on a par with U.S. dollars. But with merchants and others in need of foreign exchange, a black market has come to life and the Liberian dollar is being traded at 30% less than the U.S. dollar.

The demand for so-called offshore dollars is widely evident. For example, Ashi’s grocery store, which sells goods imported from the Middle East and Europe, offers customers a 10% discount if they pay with a check drawn on an overseas bank.

Bankers forced to trade U.S. dollars one-to-one for Liberian dollars have resorted to processing fees eight times higher than those charged in other countries. They are refusing to issue letters of credit because of the unsettled monetary situation, making it almost impossible for businesses to buy goods abroad unless they resort, as some have, to carrying suitcases stuffed with foreign currency out of Liberia.

Doe has been a source of embarrassment for the United States, which has supported his government since it came to power in April, 1980, after President William R. Tolbert Jr. was assassinated and 13 of his ministers were publicly executed on a Monrovia beach.

Founded by Freed Slaves

Liberia, on the west coast of Africa, was founded in 1847 by freed American slaves and has always had close ties with the United States. Monrovia is a curious mixture of America and Africa. Women in traditional dress carry Coleman coolers on their heads, and the national flag has red and white stripes and one white star on a field of blue.

Many Liberians have gone to college in America, and several thousand have fled to the United States since Doe came to power. About three-fourths of the 2 million people are descendants of the original ethnic groups, such as Doe’s Krahn tribe, and are subsistence farmers living inland.

About 4,000 Americans live in Liberia, mostly in or near Monrovia, where the Voice of America has powerful radio transmitters and a U.S. government communications system links diplomatic missions in Africa.

Since 1980, American aid to Liberia has steadily increased. The United States hoped to encourage Doe to honor his early pledge to step down in favor of an elected civilian government, but he decided to run. Early returns last October indicated that Doe had lost the election, but his handpicked elections commissioner turned the counting process over to a panel packed with Doe’s supporters, which determined that Doe had won 51% of the vote. Analysts estimate that his actual total was about 25%.

Military Coup Failed

Two weeks later, Doe survived an attempted military coup. According to U.S. officials, 400 people died in the aftermath. Another 400 Liberians, primarily political opponents and journalists, were thrown into jail without charges. By June, all were free.

One hears less talk about unseating Doe these days in Monrovia, and more about trying to work with him.

“People are about resigned to the fact that Doe will be in office another five years,” the remainder of the presidential term, one political observer said.

Doe obviously believes it. Last week, the government put new photographs of the president and vice president on sale. Businesses are required to replace their old pictures of Doe with new pictures showing the president with a new, shorter hair style.

The photographs of Doe cost $60, with a gold-leaf frame.