Zimbabwe launched the world's largest denomination bank note, worth Z$10m, as talks to resolve the southern African country's crisis effectively collapsed this week.
President Thabo Mbeki of South Africa left Harare, empty-handed after the Zimbabwean leader, Robert Mugabe, flatly rejected appeals to postpone March elections until a formula can be reached that is agreeable to all sides.
The crisis, in what was a relatively affluent country at independence in 1980, has produced crippling superinflation of 150,000 per cent and seen at least four million people flee to neighbouring countries. The Z$10m note is the latest indication of economic meltdown. Prices change by the hour and plastic bags full of banknotes are needed to pay for basic goods.
Mr Mbeki flew to the Zimbabwean capital on Thursday, the second visit in two months, to try to save the negotiations after it became clear that Mr Mugabe would renege on commitments to free and fair elections. Sources close to the talks said that unless the South African President was prepared to abandon his "quiet diplomacy" then his ageing counterpart, 84 next month, would proceed with elections under the same conditions that have produced discredited results in the past.
The opposition says it will boycott the polls unless Mr Mugabe concedes to its demands to change the constitution.
"The extent to which Mbeki kowtows to this man [Mugabe] is totally incomprehensible," said one frustrated official close to the talks, who added that the only option left for the divided opposition was violent Kenya-style street protests.
The South African President, who recently lost the leadership of his own party to Jacob Zuma, was mandated to mediate in the Zimbabwe crisis by the Southern Africa Development Community (SADC) in March last year. The talks should have been concluded by July but Mr Mugabe's negotiators failed to turn up for key meetings.
An agreement on a "transitional constitution" that would have drastically reformed Zimbabwe's uneven electoral playing field was eventually reached. The opposition demanded the implementation of the agreement before any elections are held but Mr Mugabe has rejected that, ensuring another victory for the ruling party, Zanu.
Mr Mugabe handpicks loyal army officers and police to run and rig the elections for him, claims the opposition. The proposed "transitional constitution" would have removed all uniformed officers from the electoral process.
The opposition feels hard done by because it supported earlier constitutional reforms, on the advice of Mr Mbeki. He told the MDC to accept Mr Mugabe's proposals as a confidence-building measure.
The opposition group now stands at a great disadvantage as the piecemeal reforms it supported last year, including expanding the size of parliament by 60 seats to 210, will only benefit the current regime. Most of the new parliamentary seats have already been created in Zanu strongholds in the three Mashonaland provinces.