Economic sanctions undermine Zimbabwe's economy
Many in the world place the blame on Robert Mugabe, the country’s President
Among the issues usually cited are Mugabe’s land policies, endemic corruption, Zimbabwe’s involvement in the DRC war, absence of the rule of law, and other ill-conceived economic policies.
It is also argued that Mugabe’s political intolerance, electoral fraud and gross human rights abuses have contributed to the country’s economic malaise.
Indeed, it is true that each one of these often cited factors has contributed, or provides an explanation to Zimbabwe’s current economic problems. However, western countries and media almost collectively ignore one other significant factor responsible for the country’s economic collapse: economic sanctions imposed by the US, the EU, and Australia against Zimbabwe.
Given that Mugabe’s often cited and main transgression, which has given rise to the country’s international isolation, was his forcible expropriation of farmland owned by the country’s white farmers, and the implications of his actions for the respect of private property rights and investments in the region, this collective amnesia is hardly surprising.
It is often argued that the sanctions in place against Zimbabwe are not economic in nature; rather, the argument goes, there is in existence a regime of smart sanctions, which targets specific ZANU PF loyalists.
This is not true.
Zimbabwe’s economic woes are the direct result of a concerted and systematic campaign to effect regime change through an economic implosion.
Zimbabwe has a critical shortage of foreign currency. However for the past four years or so, Zimbabwe has been unable to obtain finance or credit facilities from international lenders to inject into the economy. And this is a direct consequence of a sanctions regime imposed against the Zimbabwe by particularly the US, and the EU.
That Mugabe is an evil, brutal, dictator that needs to be removed from office is not in doubt. It is however immoral to cause the removal of Mugabe from office by precipitating the collapse of a developing, only recently independent, now famine-ravished African country through an economic sanctions regime.
The US introduced economic sanctions on Zimbabwe through the Zimbabwe Democracy and Economic Recovery Act, 2001. (ZIDERA) Through this enactment Zimbabwe’s access to finance and credit facilities was effectively incinerated.
ZIDERA empowers the US to use its voting rights and influence (as the main donor) in multilateral lending agencies, such as the IMF, World Bank, and the African Development Bank to veto any applications by Zimbabwe for finance, credit facilities, loan rescheduling, and international debt cancellation. The US cites Zimbabwe’s human rights record, political intolerance and absence of rule of law as the main reasons for the imposition of sanctions. The ZIDERA also suggests that if Zimbabwe acts to correct these ills, then the sanctions will be removed and economic support measures are suggested.
Simply put, owing to the size of the US vote and influence in these institutions, neither the IMF, World Bank nor the African Development Bank will lend to Zimbabwe, or offer it credit facilities. Therefore, needless to say, as a direct result of the US 2001 Act, Zimbabwe’s relationship with these multilateral lending agencies was immediately and severely affected.
In addition, Zimbabwe’s ability to reschedule its loan payments and to apply for debt cancellations in times of severe financial crisis was severely affected.
And once the IMF and World Bank stopped doing business with Zimbabwe, this had an immediate and adverse impact on Zimbabwe’s credit and investment rating. And with a drop in investment rating went the dream of low cost capital on the international markets.
ZIDERA was a masterstroke. At the stroke of a pen, Zimbabwe’s access to international credit markets was blocked. And relying purely on barter trade, and trade, mining, agricultural concessions, and on exports-generated foreign currency, Zimbabwe’s economy has been slowly but surely asphyxiated.
And the consequent foreign currency crisis has resulted in the continued devaluation of the domestic currency, rapid inflation, and all else that has manifested itself in the current Zimbabwe economic crisis.
In addition, both the US and the EU have frozen financial and other assets of persons, or companies linked to ZANU PF. It is alleged that such companies sustain the ZANU PF government. There may be a grain of truth in that observation. However, what is often ignored in the race to rid Zimbabwe of Mugabe is that companies operating in Zimbabwe provide a livelihood to thousands of families, and contribute to the development of the country.
Australia is reported to have denied Reserve Bank of Zimbabwe officials’ business visas to travel to Australia. And the US is putting in place a raft of measures aimed at specified ZANU PF linked individuals, their families, and companies.
It is apparent therefore some of the most powerful countries in the world have put in place measures to bring about the downfall of Mr. Mugabe by orchestrating the economic collapse of Zimbabwe. It is wrong to conflate Zimbabwe with the personality of Mugabe. They are two distinct entities. It cannot be right to say that economic support will be provided to the country once its leader is out of power. As Zimbabwe, all too dearly knows following the Lancester House Agreement of 1979 on the land question, such promises are impossible to enforce.
No matter how evil a dictator Mugabe is, it cannot be right to force his downfall by killing off the country’s fledgling economy, by erasing the gains made after 1980, and worsening the AIDS, and unemployment crisis.
Those championing the imposition of the economic sanctions often retort that Zimbabwe’s ability to borrow from the IMF and World Bank was restricted in any event because it had fallen foul of its agreements with the IMF. This argument is however disingenuous. It ignores the other more vicious consequences of ZIDERA on the Zimbabwean economy.
In addition, the suggestion that what is in existence is a regime of symbolic travel bans and some asset freezes is far from the truth.
It is correct that Zimbabwe must be made to pay its debts, including money that it owes the IMF. However, in the circumstances of Zimbabwe, going through a financial crisis, it is immoral for the IMF to insist on the payment of over US$175 million on pain of expulsion from the institution for non payment.
Zimbabwe recently managed to stave its expulsion from the IMF by reportedly paying £150 million towards its debt obligations to the institution. It was all too obvious however that Zimbabwe paid the money out of desperation. The country cannot afford the payment it made. Zimbabwe paid the money because, owing to US influence among others, it was unable to formally reschedule its IMF loan payments. Amidst all this, it is reported that the country has critical foreign currency shortages, has run dry of fuel and other essentials, has record high unemployment levels, and now has crippling inflation rates. In addition, the UN suggests Zimbabwe is suffering from famine.
The suggestion that Zimbabwe’s economy is what it is because of mismanagement is partly true but misleading. What Mugabe has done is to mismanage the endemic crisis caused by the country’s inability to access capital, which in turn are the result of a raft of economic sanctions in place against the country.
There are no doubt other reasons why Zimbabwe’s economy is in the doldrums; chief of which are myopic, ill-advised ZANU PF government policies and corruption. But one cannot ignore the damaging effect the sanctions have had on the economy and how the country and its economy are being slowly asphyxiated by the blockade on access to international capital markets.
The question has to be asked: are the US, EU, Australia, and the MDC, any closer to removing Mugabe from power because of the economic sanctions currently in place? Is it not true that an economically independent people are much more likely to vote or rebel against a brutal dictator?
Yes, Mugabe must
be removed from power, as must the institutions he has created to bolster
his political power. However, this is likely to remain a pipe dream
for as long as the prevailing philosophy supports the destruction of
the country’s economy.
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