Eric Bloch Column

That, Mr Minister, is not economic sanctions

By Eric Bloch

THE Zimbabwe National Chamber of Commerce (ZNCC) held its annual congress last week, and while there were inevitably some facets of disappointment, there were se

veral very positive ones.


First and foremost was that, despite the very immense hardships confronting most of Zimbabwe’s business community, nevertheless there were about 180 participants — albeit that a small portion of that number were from the government in general and the Central Intelligence Organisation in particular.


The second, very major, positive that evidenced itself at the congress was the immense extent to which the private sector participants were willing to voice their concerns at the distressed state of the economy, at the extent that the causes of the economic malaise is attributable to the government’s rigid and obdurate adherence to failed policies, and at its dogmatic disregard for economic fundamentals.


But equally positive was that the delegates did not only castigate the government for its near-destruction of the economy and its false attribution of blame to third parties. They also sought to suggest constructive solutions to the economic crises, and not to succumb to near-justifiable despondency, but to have a determination to persevere until the very long-awaited economic turnaround eventually happens.


An equally important positive was that the government was in attendance, albeit that unforeseen circumstances (including the death of the Information and Publicity minister) did reduce the numbers of ministers and their deputies from the very significant number that had originally intimated that they would be attending. Those who were present laid very great emphasis upon the government’s desire for private sector input in general, and on the National Economic Development Priority Programme in particular.


However, despite their protestations of intense desire for substantive consultation by the government with the private sector, many of the political hierarchy present showed very little ability to modify pre-determined conceptions and policies. Many of the delegates were left with the impression that, in reality, as distinct from its contentions, the government only welcomes advice when it accords with what the government wishes, and that the consultation process is naught but the state being able to claim that policies are formulated on the basis of wide-ranging private sector consultations.


To a major extent the impression given to the private sector is that the government pretends at consultation so that, if and when things go wrong, it can disclaim culpability, and can attribute the fault to the private sector. Whether that impression is well-founded, or misguided, will evidence itself over the next few months, including in the forthcoming mid-year fiscal review statement.


As has been the case for an extended period of time, the government does not only blame the private sector, and acts of nature, for the Zimbabwean economic morass. It has long contended that fault very extensively lies at the feet of the European Union (EU) in general, and the United Kingdom in particular, as also USA and most Commonwealth countries outside of the continent of Africa. In order to deflect blame from itself, the government will blame whomsoever else it can, even if devoid of substance.


It was in this context that, yet again, ministers were scathingly bitter in their continuing, ill-based claims that much of Zimbabwe’s economic woes are due to economic sanctions imposed by Western countries. Although the facts conclusively belie the allegation, the government persists in it, and the ministers present at the congress outspokenly argued that economic sanctions do exist, and are a very major fuellant of the abysmal state of the economy.


As previously stated in this column, and emphatically addressed in recent months by the EU ambassador to Zimbabwe, Xavier Marchall, Swedish ambassador Sten Rylander and many other diplomats, only targeted sanctions against less than 100 of the upper echelon of Zanu PF and its supporters have been applied. Those targeted sanctions restrict the travel of the targeted persons, and their possession of assets in the countries imposing the sanctions, but they are not applied against the populace in general, or against Zimbabwean economy.


However, because the ministers are the targets, they are resentful, and therefore misrepresent the actualities, while also using the allegation of economic sanctions to conceal the real causes of the endless governmental mismanagement of the economy.


The facts speak for themselves, but the government does not hear them, for there are none so deaf as those who will not hear! In 2005 the EU imported Zimbabwean products to a value of 391 million euro, and sold to Zimbabwe goods to a value of 130 million euro, resulting in a net favourable trade surplus in Zimbabwe’s favour of 261 million euro.


Zimbabwe exported goods to the USA in 2005 to the value of US$94,3 million, being an increase of 24% over the exports to the USA in 2004, and approximately 95% of those goods entered the USA free of any import duties. Zimbabwe’s imports from the USA in 2005 amounted to US$44,7 million, according Zimbabwe a net trade surplus of US$49,6 million.


In addition, both the EU and the USA continued to provide Zimbabwe with very substantial humanitarian aid, with especial reference to food supply, healthcare and education.


If all this constitutes economic sanctions, then clearly economic sanctions are beneficial to the Zimbabwean economy, in contradistinction to causing collapse. But, no matter how greatly the government may contend the contrary, there are no economic sanctions, as irrefutably demonstrated by those facts.


However, some of Zimbabwe’s political leaders are not prepared to accept these facts, and this was very apparent at the ZNCC congress. One deputy minister cited the USA’s Zimbabwe Democracy and Economic Recovery Act as evidence that economic sanctions exist, but did not explain how the USA’s continued willingness to trade with Zimbabwe, to an extent as accords Zimbabwe a substantial trade surplus, is a result of economic sanctions!


Another minister sought to prove the existence of economic sanctions by contending that the EU and the USA caution their citizens against investment in Zimbabwe. But is it not the obligation of any country to protect its citizens by advising them if legitimate doubts exist as to investment security?


And, in the case of Zimbabwe, such doubts must exist. For five years Zimbabwe has rigidly denied liability under Bilateral Investment Protection and Promotion Agreements that it had entered into. Zimbabwe had allowed such a breach of agreements to destroy investor confidence.


Recently it compounded that erosion of investor confidence with statements by ministers and the president of imminent mandatory governmental and/or other indigenous participation in the mining sector, without assurance of equitable compensation. The resultant perception of international investors was: “First they took the farms, now they’re taking the mines. Next they’ll take the industries, then the hotels, then the banks, and all else.”


In such circumstances, other countries would be remiss in caring for their nationals if they did not highlight possible risks of investment in Zimbabwe, exacerbated by the absence of market-force economic influences. But they have not legislated against investment in Zimbabwe. They have only advised their exercise of caution.
 
That, Mr Minister, is not economic sanctions!

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