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Eric Bloch Column

Sanctions not the cause of economic decline

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By Eric Bloch

Finance minister Herbert Murerwa is one of the very few ministers in the Zimbabwean government who deservedly should be the subject of high regard, notwithstanding his inability to turn around Zimbabwe’s increasingly distressed economy, or even to halt its decline. That inability is not because he does not know what to do, but because that which is necessary is in outright conflict with the ideologies and precepts of the ruling party, Zanu PF, in general, and those of President Robert Mugabe in particular.

Regrettably, either Murerwa is unable to convince his cabinet colleagues and the president to “bite the bullet” by recognising realities and enabling him to take the drastic steps necessary for economic recovery, concurrently with their collective action to create an economically conducive environment, or he is unwilling even to attempt to do so. The latter is probably the case, for in all probability the minister is reluctant to pursue a path which is likely to lead him to the precipice of dismissal from office, which must be seen as the most probable reaction of the president to anyone’s endeavours to motivate change to the policies so long espoused by him.

Murerwa’s critics focus solely upon the catastrophic extent of Zimbabwe’s economic decline, holding him responsible for not taking the measures recognised by most as prerequisites for economic recovery. They fail to take note of the reasons why he does not do so, first and foremost of which must undoubtedly be that he is not allowed to do so. That his capability is underestimated is demonstrated by the quality of his representation of Zimbabwe when he was High Commissioner to London, and is evidenced by the very constructive manner in which he has, at various times, served as Minister of Tourism and the Environment, Minister of Commerce and Industry, and as Minister of Higher Education. His performance in those offices is clear proof that he is a man of significant ability, and yet that ability does not reflect in his current field of high responsibility. It must, therefore, be assumed that that is due to him being restrained from doing that which is necessary, and being unable or unwilling to shake off the constraining shackles.

However, his opening remarks upon presenting his 2004 budget statement to parliament last week were exceptionally disappointing. In acknowledging that “the country has once more experienced another year of severe socio-economic hardships”, he attributed blame to the international community. He said that “the sanctions imposed on the country have worsened the economic environment”.

That has long been the excuse resorted to by the president, by Zanu PF apologists, and by other cabinet ministers, but it is an excuse which is baseless and specious. Although it cannot be denied that certain sanctions have been applied on Zimbabwe, and are currently in force, their nature is in the main not of an economic nature, and have little economic impact. They are almost wholly sanctions which are targeted against those wielding political control in Zimbabwe.

The facts are that no economic sanctions have been imposed upon Zimbabwe by any of the international community, other than that some have withdrawn aid which they previously provided for Zimbabwean developmental purposes. Even those who have withdrawn that aid have continued to provide humanitarian aid such as the provision of food and of funding to combat HIV/Aids. But none have discontinued or barred trade with Zimbabwe, and the few who have imposed constraints upon investment in Zimbabwe have only done so notionally, for the current Zimbabwean economic circumstance renders Zimbabwe an unattractive investment destination and, therefore, with or without sanctions, little investment is, or will be, forthcoming.

Of economic consequence is that Zimbabwe has been suspended by the International Monetary Fund (IMF), and is no longer a recipient of development funding from the World Bank. But that is not due to politically motivated sanctions. Suspension by the IMF is as a direct result of Zimbabwean default in debt-servicing. Similarly, funding is not forthcoming from the World Bank because its constitution bars it from providing funding to any country whose arrears with the bank exceed stipulated limits.

The only sanctions imposed upon Zimbabwe are that its membership has been suspended in the Commonwealth, precluding Zimbabwean participation in its deliberations such as those shortly to be conducted at Chogm in Abuja, Nigeria, and that the European Union and the United States have imposed sanctions which are targeted at specified individuals. To all intents and purposes those targeted sanctions preclude the hierarchy of the Zimbabwean government and of Zanu PF, and members of their families, from travelling to the European Union and to the United States, and also that any funds of such persons as can be located be frozen.

No other sanctions have been imposed, and hence it is wholly spurious for sanctions to be alleged as the cause, or worsening, of the economic environment. In contradistinction, the very countries that are attacked by Zimbabwe’s politicians for having imposed targeted sanctions are foremost in supplying aid for humanitarian purposes, and that aid has effectively supplied Zimbabwe with significant inflows of foreign exchange or of imported requirements and have therefore effectively contributed to the economy and relieved the state’s fiscal burden.

By way of illustration, it is relevant to note the continuing support of the US, notwithstanding it being a focal point for Zimbabwean government ire and criticism. Not only has the US continued to give assistance to Zimbabwe, for humanitarian purposes, but it has markedly increased that assistance. In 2000, the extent of assistance was US$13,6 million, which increased to US$21,3 million in 2001, and then increased dramatically in 2002 to US$148,3 million, whilst 2003 commitments are only marginally less, at US$138,4 million.

Much of that assistance (which at currently prevailing parallel market exchange rates equates, in 2003, to nearly $828 billion!) has been directed at providing food to Zimbabwe, which food support would not have been necessary had government not destroyed Zimbabwean agriculture (even if government pretends that the food shortages are due to drought). Much else of the significant financial assistance given by the US is to combat the HIV/Aids epidemic. Over the last two years the US has provided 380 000 metric tonnes of food aid, at a value of US$235 million, making the United States government the largest single donor of food relief to Zimbabwe, equating to over 40% of total international contributions to the World Food Programme (WFP) for Zimbabwean food relief.

Most of the other 60% of WFP’s magnificent support for the millions of starving Zimbabweans emanates from the member states of the European Union (EU), as does considerable aid in the fields of health and education. Thus, whilst the USA and the EU have imposed sanctions upon Zimbabweans, they are of minimal economic consequence, and it is therefore very distressing that Murerwa has joined the bandwagon who try, without credibility, to blame sanctions for the state of the economy. Minister Olivia Muchena emulated Murerwa in making that unfounded allegation on the day following the budget presentation. That state of the economy was summed up in the budget statement as being “rising inflation, erosion of real incomes, critical foreign exchange shortages, decline in savings and investment, capacity under-utilisation, company closures and high unemployment”.

The minister has correctly identified the symptoms, but has misdiagnosed the causes. Those causes are the acts of commission and of omission of the Zimbabwean government. Those acts include a near-total failure to impose and maintain law and order, disregard for the fundamental principles of democracy, alienation of cordial international relations, destruction of agriculture, imposition of a command economy, with regulation being the order of the day, widespread nepotism, pronounced corruption, absence of fiscal disciplines, and creation of racial divides. As long as those causes of economic decline are entrenched and rigidly adhered to, no economic measures as government may resort to can succeed in achieving economic recovery.

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