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Tanzania: drifting back to capitalism? Donor nations hope new leader will turn economy around

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As Tanzanian President Julius Nyerere prepares to relinquish power, a key question is being asked in international circles: Will fresh leadership of this East African country mark a turning away from what many analysts call the third world's longest and most spectacular failure in exercising socialist doctrines?

Nations that have been providing aid to Tanzania are quietly hoping the next president will somehow manage to reverse the country's economic downslide.

A spate of recent policy adjustments may indicate a drift back toward the capitalist fold. In May, for example, President Nyerere appeared to have some doubts about past economic philosophy when he offered a dozen sisal farms to the private sector.

``If I called back the British to look at their estates, they would laugh at us because we've ruined them,'' he confessed.

At the same time the nation's vast bureaucracy was given a jolt when the parastatals (companies partially owned by the government) that administer every aspect of the economy were told they would be allowed to collapse rather than to run at a loss.

Nyerere also called for private investment to revitalize the stagnant export sector. In early July exporters were told they would soon be allowed to retain 15 percent of their foreign exchange earnings for expenditures abroad. The same day producer prices on eight cash crops were hiked in a bid to boost output.

Nyerere encouraged Tanzanians to construct houses for sale on the property market, despite a law that nationalized private property.

The problem, experts say, is that Nyerere's past efforts to introduce a socialistic doctrine ran contrary to what is an essentially entrepreneurial electorate. For the past 20 years agrarian reforms supposed to bring national self-reliance and economic equality instead annoyed the country's 20 million people, 90 percent of whom are peasant farmers.

In some areas most of the maize and rice crop is sold on the black market at prices that outstrip official prices.

``The peasants are squeezing the state after the state has been squeezing the peasants for 15 years. It's working the other way around now,'' said David Throup, an East African historian from Cambridge University.

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