On my first day in Zimbabwe, a cryptic message was whispered to me: "Tell Mike, Kathy's got a lot of butter." At first I thought it was some kind of code to foil President Robert Mugabe's all-pervasive intelligence apparatus. But it turned out that this is a typical conversation these days in Harare, where everyone seems to have a sideline, and butter is now a scarce commodity. So are bread, meat, milk, flour and sugar.

Petrol must be the cheapest in the world at the equivalent of just 4p a litre, but you won't find it at any petrol station. Instead, the main purveyors are the rose sellers who used to wander restaurants pressing stems on couples enjoying a romantic dinner, but now keep funnels in their flower baskets. Nor is it easy to find banknotes to pay for the fuel, as the country has run out of foreign exchange to buy the paper. But there's always the woman upstairs at Zimbank who has a drawerful of Zimdollars that she will swap for pounds on the "parallel" - around 30 times the official rate. As for "female sanitary products", at a brunch for white Harareans this month, more than half an hour was devoted to the difficulty of obtaining such items.

These are the lucky people. Travelling to the southern lowveld on rose-scented fuel, I saw children hunting for a frog or a sparrow to roast on fires. Mothers led me into their one-roomed huts to show me sacks almost empty of the staple maize meal. A Nigerian once told me that a land without road signs is a land without hope, and nowhere is that truer than today's Zimbabwe. The signs have all been stolen and melted down to make coffin-handles for the 2,500 people who die of hunger and Aids each week.

Welcome to the mad, mad world of Mugabe, whose land reform programme has left seven million of the country's 12 million people facing starvation, and whose thugs roam the countryside beating, torturing and raping the womenfolk of anyone who dares oppose him. No one is exempt - the other day, a senior judge was arrested for allowing an opposition member to go free.

Yet on lazy summer afternoons at Harare Sports Club, amid the clink of teacups, you might think that all is well. While the world focuses on one evil dictator who kills his own people, another co-hosts the Cricket World Cup. While Saddam allows in foreign journalists, Mugabe bans them, forcing them to sneak in as tourists. It is just round the corner from the sports club, under the slow-moving ceiling fans of Court A of the Harare high court, that the opposition leader Morgan Tsvangirai and two of his colleagues face charges of plotting to assassinate Mugabe. The evidence is an inaudible videotape of a meeting with a Canadian PR man called Ari Ben Menashe, who has been paid by Mugabe; the penalty is the death sentence.

In Zimbabwe, where the government has withheld food aid from areas sympathetic to the opposition as well as committing numerous human rights abuses (including administering severe electrical shocks to genitals and assaults with axes and barbed wire), ministers have spoken openly about reducing the population. According to a report from a group of religious and human rights organisations, the ruling Zanu-PF's use of torture is so widespread that the country is "primed for genocide" similar to that which tore apart Rwanda in 1994.

Drive away from the lush green lawns and frangipani-lined avenues of Harare, through Christmas Pass, to rural areas such as Manicaland in the east, and you can already see a population living in terror. I first went there last September to interview girls who had been raped because their fathers were opposition activists. One 15-year-old recounted being raped by five Zanu-PF thugs while her mother and sister were forced to watch and sing songs praising Mugabe.

Since then the government has introduced an even more sinister programme of thought control. School leavers must all do national youth service in camps where they are fed government propaganda and instructed to spy on their communities. There have even been reports of them being drugged with a kind of political Prozac. "The training scheme produces mindless thugs who will not hesitate to resort to any degree of violence in compliance with orders," said a spokesman for the Bulawayo-based Christians Together for Justice and Peace. "It is all part of the grand design of the ruling party to secure the blind and unquestioning allegiance of all sectors of society."

When the school year restarted last month, Mugabe had come up with yet another innovation. Not only had European history been replaced on the syllabus by "current history", a kind of glorification of the Mugabe years, but hundreds of teachers found themselves whisked off to three-week camps for "reorientation" - basically brainwashing. Woken at 3am every morning to go on 15-mile runs, they were then subjected to hours of classes in patriotism which started with chants of "Forward with Mugabe" and "Down with Tsvangirai" and "Down with Tony Blair".

One teacher, Myheart Muusha, who fled and now lives in hiding, told me about lessons which taught that Colonel Gaddafi, Comrade Mugabe and Comrade Fidel Castro were heroes and that Blair was responsible for most of the evils in the world. "You've got to be a real idiot if you think you can steal someone's mind," says Roy Bennett, a white opposition MP whose constituency, Chimanimani, is one of the areas from where teachers have been taken. "Such an anger and hatred is developing that when it breaks people will go berserk."

Yet Mugabe keeps getting away with it. It is exactly three years since the first farm invasion and those of us who covered that assumed it was some temporary madness. But since then all but 500 of the country's 4,300 commercial farmers have been ejected from their land. Far from being turned into communes for the landless, most of the farms lie derelict. Settlers have been given no seed or fertiliser and in many cases have been thrown off for fat cats such as the war veteran Stalin Mao Mao, senior military officials or ministers in Mugabe's cabinet.

Meanwhile, the country that used to export food can no longer feed itself. The farmers' organisation Justice for Agriculture estimates a maize crop this year of just 75,000 tonnes, compared to the 1.8 million tonnes needed. Many of the expelled white farmers have given up hope and moved to Australia or South Africa. Others rent houses in Harare, talk about setting up farming schemes in Angola or the Congo, and recall the days when Zimbabwe had the world's highest yield for cotton and wheat. One young farmer, Marcus Hale, now uses his farm trucks to transport food aid.

And what is the international response? The suspension of Zimbabwe from the Commonwealth and an EU travel ban on leading members of the regime so that Mugabe's young wife, Grace, and his ministers can no longer go on shopping trips to Harrods. The French, who have gone all moral over Iraq, managed to get an exemption to the ban so that Mugabe could be the guest of Jacques Chirac at this month's Franco-African Summit. "What more," asks Ian Foulds, a former rose farmer, "can Mugabe do to show he's a bad man? We just feel that maybe this suits the international community. American farmers need somewhere to dump their surplus."

Zimbabweans hope for an internal coup by members of Mugabe's own party fed up with all the shortages. There has been no denial of a recent leak that Mugabe's protege Emmerson Mnangagwa and the army chief, Lieutenant-General Vitalis Zvinavashe, were trying to broker a deal that would see Comrade Bob exiled to Malaysia, one of the few countries where he is still welcome. But the former agriculture minister Denis Norman told the Cape Town Press Club the other day that he had personally encouraged Mugabe to retire gracefully "many times". The president had replied that politicians do not retire. "He is a loner," said Norman. "Power is his meat and drink."

Christina Lamb is a Sunday Times foreign correspondent