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Reform agenda crucial: EU

EUROPEAN Union (EU) ambassador to Zimbabwe Timo Olkkonen (TO, pictured), who presented his credentials to President Emmerson Mnangagwa last week, this week had a chat with Zimbabwe Independent news editor Owen Gagare and political reporter Nyasha Chingono (ZI). Olkkonen emphasised that Zimbabwe’s international partners are waiting to see the concrete steps the country will take on the reform agenda. He also shared his thoughts on Zimbabwe’s debt clearance plan and the commission of inquiry into the August 1 shooting of civilians by the army, among other issues. Below are excerpts of the interview:

ZI: First of all, we would like to know what your mandate is.

TO: My mandate obviously is to be the Head of Delegation of the European Union in Zimbabwe. This means I have the role of representing the European institutions here.

ZI: What would you say is the state of relations between Zimbabwe and the EU at the moment?

TO: Well, the relationship is improving. I think we have gone through difficult times in the past since 2000 and onwards. We are very much interested in the EU about how Zimbabwe is going forward after the events that happened a year ago and the recent elections. Obviously, Zimbabwe is going through tough times but EU has always been there to support Zimbabwe through development cooperation and other measures. We have a free trade agreement with Zimbabwe; we don’t have that with all African nations. So building on this basis, we are there to help and support Zimbabwe.

ZI: What kind of conversation are you having with the Zimbabwean government?

TO: I have just started and my first contact with the Zimbabwean government was when I presented my credentials to the President last Thursday. But we are clearly looking forward to a meeting with government representatives and civil society. We have a lot of pressing issues to be discussed about our development cooperation, but clearly the main issues that we want to discuss is how government can take forward the reform agenda both on the economic side and the political side.

ZI: The EU Election Observer Mission recently released its report on the 2018 elections and it did not exactly give the elections a clean bill of health. There are 23 recommendations from the mission. How important are those recommendations?
TO: Those recommendations are very important to us. They are basically a guide book for our further engagement with government. It is important to note that sending a fully-fledged election observation mission is not a small thing, is not a mean thing, it’s quite an expensive exercise. There were 140 observers included in that mission and top quality experts also. So the expectation is that when you have this kind of an investment then you don’t drop the ball after the commission leaves, but you need to make use of what the mission observed and particularly the recommendations it gave.

ZI: Some of those recommendations are not really new. Ahead of the 2013 elections and previous elections, the government was encouraged to implement them. What happens if they are ignored?

TO: Like I said, it’s entirely up to the government to implement the recommendations that pertain to it. There is no way we can impose our will on them. What has been very encouraging is that the recommendations very much tally with other international observers and also local observers. We hope that they will be welcome and be implemented.

ZI: Do you feel that the Zimbabwean government should be more proactive, especially at this time it is saying it has made a clean break with the past? Shouldn’t there be more vigour in implementing reforms?

TO: That would definitely improve the country’s perception in Europe if quick action is taken both on the political reform agenda side and also on economic side. What we have seen now, for example when talking about the TSP, is that there is a positive agenda that has been set on paper and we would like to see those to be translated into action. The same applies to the political agenda.

ZI: What is the perception right now in Europe, towards the Zimbabwean government? Is there a feeling that this government is moving in the right direction and at the right pace?

TO: I think everybody wants Zimbabwe to be a success story. We want Zimbabwe to a success in turning a new page in its history and take its rightful place in the region and Africa because it would be for the benefit of the region if Zimbabwe rises and takes the place that belongs to it. The aftermath of the elections, the violence that then ensued and particularly the unfortunate deaths in August were a disappointment and had a negative influence on the perception.

ZI: There is also a general feeling among some Zimbabweans that the international community, the EU included, really wants Zimbabwe to move forward such that some are prepared to ignore shortcomings just to encourage this process. Do you feel that is what is happening?

TO: I would not say that. No. Zimbabwe needs the international community to be supporting the country, for example the issue about the debt restructuring and those kinds of issues. I think it’s clear that many of the international partners are waiting to see what concrete steps Zimbabwe will take on the reform agenda to engage more closely, for example in terms of the debt restructuring agenda.
ZI: You assisted Zec (Zimbabwe Electoral Commission) to the tune of US$16 million in this year’s election, but some diplomats we talk to feel that it was a wasted investment because Zec did not show signs of reform. Is that the case?

TO: I don’t think it’s a waste. One has to appreciate that there is a remarkable improvement when you compare the 2018 election with what happened in 2013 or 2008. I wish people would read the report for themselves because at the end of the day you will find out that, yes, the report is quite critical, but there are both positive and negative elements. There were some positive steps taken, like the BVR (biometric voter registration). Despite the flaws that were there, there were significant improvements in the electoral process.

ZI: What role does the EU see itself playing as Zimbabwe reengages the international community, including international financial institutions (IFIs) and members of the Paris Club?

TO: We want to play a constructive role in that regard. It has to be recognised that the world’s most important bilateral creditors to Zimbabwe are some of our member states of the EU, who will obviously form their own opinion on the way forward. Also, one of the creditors to Zimbabwe is the European Investment Bank, with whom we have close contact about these issues and debt restructuring. We want to be there, we want to offer solutions. It has to be understood that Zimbabwe does not operate in a vacuum; there is a history on loans and debt. There is a history, for example, with the HIPC (Heavily-Indebted Poor Countries) initiative. And not all the experiences post-HIPC have been positive; many of the countries have fallen back into the debt trap. Whatever way we then proceed, it must be sustainable.

ZI: Zimbabwe says it hopes to clear its debt with the World Bank and African Development Bank sometime next year. We know the government has tried to look for commercial loans but this has been resisted by some creditors. What is the EU’s position?

TO: I know that government is looking at different options together with the IFIs to solve this conundrum where Zimbabwe has gotten into. I know that there is apprehension of having a commercial loan, because then the question is: what are the terms to access such a loan? What are the payback conditions and possible collateral for that kind of loan? From my past experience, when you have a creditor who is ready forgive their debt, they don’t want another creditor who might have harsher terms to be the beneficiary. They don’t want the debt relief not to help the country itself and particularly the poor of the country. It’s something that needs to be studied carefully, especially in terms of long-term sustainability and how it would contribute to the economy and fighting poverty.

ZI: While this is happening and models are being discussed, captains of industry feel Zimbabwe needs an urgent cash injection. Isn’t there a feeling that the longer the discussion takes, the further the country goes down a slippery slope?

TO: We are hoping that won’t happen and I understand why the focus right now is the short-term because of the situation with the cash and so forth. But that shouldn’t happen at the expense of looking at the longer term impact because what is on the line here is years and years of mismanagement which has brought the situation where it is.

There is need to address structural issues that are behind the problems. If the problem is shortage of foreign exchange, the conventional economist’s answer will be that you need exports to promote forex generation.

Therefore, you need reforms that would be for the benefit of the export sector, business climate, positive investment climate and those kinds of issues. I understand the short-term measures but I do hope that those will not be taken at the expense of the longer term needs of the country. When you have a macroeconomic imbalance, you don’t just look at the taxes but also at the expenditure side. What is the reasonable expenditure? How big should public expenditure be? Those are issues all countries need to tackle and in Zimbabwe obviously it’s quite urgent.

ZI: Do you see Zimbabwe getting any meaningful credit lines in the short term?

TO: Talking about public loans from public institutions to Zimbabwe, there is obviously the issue of the country being in arrears. That’s why you can’t get public support before the debt issue has been addressed. So that is the bottleneck.

ZI: Zimbabwe presented its plan to in Bali, Indenesia, two weeks ago. Were the creditors impressed?

TO: What I heard is that the agenda that was presented included many positive elements for reforms on the economic side. But what I understand to be the expectation is to see the concrete steps that follow from those policy declarations. Therefore, we are very keenly waiting for the budget that will be presented to see what kind of action will be taken including austerity measures because you need also to tackle the expenditure side.

ZI: We understand quite a number of investors are concerned about regulations which allow government to retain up to 70% of export earnings, in some cases. Is it a big concern and there any discussions around that issue?

TO: I have also heard those concerns; that it makes their situation more complicated if they don’t have access to US dollars. I hear also from European investors, there is quite a lot of interest into Zimbabwe but some of those issues are holding them back. One of the issues is the repatriation of funds; these organisations are not charities—they need to make profit.

ZI: What would the EU want to come out of the August 1 shootings?

TO: Obviously, it’s a very good move that the inquiry was set up and that indeed that there is transparency. We hope that all voices will be heard during this investigation. I understand that doors are open for the witnesses to have a chance to have their say. What Zimbabweans would want is for the truth to come out as to what really happened and also to bring justice to the families and friends of those who died and suffered.

ZI: Should such a commission result in culprits being brought to book?

TO: I think if people were killed, the normal expectations will be to find who was guilty.

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