The International Crisis Group launched a report on the 6th June called Zimbabwe’s Continuing Self-Destruction, highlighting the dire situation the country is in.

In April 2006, inflation officially topped 1,000 per cent, helped by the decision to print $230 million worth of Zimbabwean currency to pay international debts and sustain operations. Unemployment is over 85 per cent, poverty over 90 per cent, and foreign reserves are almost depleted. Over four million persons are in desperate need of food. HIV/AIDS and malnutrition kill thousands every month. Agriculture, the major source of foreign currency earnings, has been particularly hard hit. There are severe shortages of basic consumer items, and the prices of fuel and food are beyond the reach of many. The 2005 “Operation Murambatsvina” to clear urban slums forcibly deprived more than 18 per cent of the population of homes or livelihoods and badly damaged the informal sector, the lifeline for many urban poor.

The overview I’ve linked to above gives a good example of how complicated the situation is, with in-fighting within the opposition as well as within Zanu-PF. South Africa is trying to help by facilitating talks, but got caught out by Mugabe:

South Africa has tried to use financial leverage, in the form of a credit line, to press for new inter-party constitutional talks, repeal of repressive laws and an economic recovery plan. Mugabe sidestepped the initiative by printing enough currency to repay debts to the International Monetary Fund (IMF) in February 2006.

You can read the entire 20 page PDF report freely available online.