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Monday, 3 September 2007

The last stand?

The New York Times on Zimbabwe's desperate attempts to staunch inflation using price fixes and now the wage freeze. In the meantime the Financial Times reports that companies are starting to go local, while others simply pack up and leave.


  1. So while Olivine has been “indigenised” and now has majority ownership by black Zimbabwean shareholders, it has not been taken over by the state.


    - How come the FT reports on this AFTER The Herald reported on this?

    - Why are they emphatic that this is not the result of Black Empowerment, or that it is not a state takeover? Who owns the majority of shares in Cottco (I can't make it out from their website). The FT states that 23% of shares are owned by the state.

    It seems to me that, like usual, the MDC/LonRho tactics are starting to blow up in their faces. They are a highly amoral lot, who are trying to make a moral and ethical case for illegal regime change, and failing miserably.

  2. MrK,

    A Zimbabwean friend of mine is disputing that Zimbabwe is under any sanctions. Infact he says "There are no sanctions. Only 100 odd pepole have personal sanctions (overseas assets) and travel bans. Otherwise anyone can trade with Zimbabwe. In fact it still happens. Cottco (25% owned by govt) are still trading in cotton with america.."

    Where can I find definitive information on the extent of sanctions imposed on Zimbabwe?

  3. MrK,

    Sorry I should add that I am interesting in TRADE SANCTIONS which my friend primarily disputes not other restrictions. Are there TRADE restrictions on Zimbabwe? Not borrowing restrictions - just trade.

    An authoritative source on this would be good.

  4. Cho,

    Your friend speaks with forked tongue. :) Why is he parsing between 'trade sanctions' and what we are talking about, financial/economic sanctions?

    Zimbabwe is most definitely under sanctions.

    According to the Zimbabwe Democracy and Economic Recovery Act of 2001,

    This act bans:


    (c) MULTILATERAL FINANCING RESTRICTION- [...] the Secretary of the Treasury shall instruct the United States executive director to each international financial institution to oppose and vote against--

    (1) any extension by the respective institution of any loan, credit, or guarantee to the Government of Zimbabwe; or

    (2) any cancellation or reduction of indebtedness owed by the Government of Zimbabwe to the United States or any international financial institution.


    (Note that this specifically mentions the government of Zimbabwe, not president Mugabe, not ZANU-PF, not 'selected individuals' in the ruling elite, but the government of Zimbabwe. Also note that it includes ANY "loan, credit or guarantee" to "the Government of Zimbabwe".)

    This affects the following international financial institutions:


    (1) INTERNATIONAL FINANCIAL INSTITUTIONS- The term `international financial institutions' means the

    - multilateral development banks and the
    - International Monetary Fund.

    (2) MULTILATERAL DEVELOPMENT BANKS- The term `multilateral development banks' means the

    - International Bank for Reconstruction and Development, the
    - International Development Association, the
    - International Finance Corporation, the
    - Inter-American Development Bank, the
    - Asian Development Bank, the
    - Inter-American Investment Corporation, the
    - African Development Bank, the
    - African Development Fund, the
    - European Bank for Reconstruction and Development, and the
    - Multilateral Investment Guaranty Agency.



    Do these sound like 'travel restrictions'? Obviously, these are not only sanctions, but sanctions far more severe than anything that was enacted against Rhodesia.

    The only question is: why are the MDC and it's supporters still maintaining that there are 'no sanctions against Zimbabwe'?

    And how truthful and reliable does that make them? What does it say about their integrity, even before they rise to power?

    To quote SADC executive secretary Dr Tomaz Salamao in The Herald:

    "Zimbabwe's economy currently has no access to soft loans and lines of credit. They operate only on hard cash. You cannot run an economy that way", Mr Salamao said."

  5. Cho,

    Why does your friend want to talk about trade restrictions, when the government isn't allowed to borrow internationally?

    Restrictions on economic trade with Zimbabwe are minor, and they are not the reason Zimbabwe is suffering from hyperinflation - financial sanctions are.

    Nevertheless, there are trade restrictions on Zimbabwe:


    EU Council Regulation (EC) No. 314/2004 of 19 February 2004 revoked EU Council Regulation (EC) No. 310/2002 introduced a ban on technical assistance and the provision of finance relating to military activities and the sale, supply, transfer or export of equipment that might be used for internal repression in respect of Zimbabwe

    EU Council Regulation (EC) No. 314/2004 is published in OJ No. L55 of 24 February 2004.

    On the 'targeted' sanctions which are restricted to 200 individuals in the government and ZANU-PF.

    The European Union recently extended its travel ban on ruling members of the Zimbabwean regime from 79 individuals to 95. The EU sanctions also include the freezing of these individuals' assets in countries that are members of the Union. The United States government has imposed a blanket ban on more than 200 Zimbabwean officials linked to the ruling Zanu-PF, freezing the assets of such high-ranking government officials as Information Minister Jonathan Moyo. According to a report in the state-owned Herald newspaper, Moyo dismissed the new US sanctions, telling the 'imperialists' to 'go to hell'.

    When these 'selected individuals' number 200, aren't they just putting a ban on the government of Zimbabwe? I imagine that would include the president, all ministers, all permanent secretaries, etc?

    200 people is a lot of people to call 'selected' or 'targeted'.

    From the same article:

    Many argue that turning off the electricity supply would be far more effective than banning Mugabe and his allies from travelling to Europe or freezing their assets (if they can be found) in the United States, particularly since reports of the elite's shopping trips to the Far East appear in news reports with disconcerting regularity.

    Odd that they are against shopping trips to the far east by the elite in Zimbabwe, but not the elite in Zambia. Selective indignation is just another form of hypocrisy. These people are not the representatives of the ordinary people of Zimbabwe, and they know it.

    Even New Zimbabwe has articles against sanctions and the MDC's role in them:

    MDC must renounce Zimbabwe sanctions
    By Masiiwa T. Shwere Chisango
    Last updated: Fri, 06 Apr 2007 20:32:00 GMT

    NOTHING but the economic sanctions imposed on Zimbabwe by the Western world, with the complicity of the MDC, accounts for the economic decline that we have witnessed.

    As such, the MDC’s connivance with the West to ferment the economic collapse takes away their legitimacy as a Zimbabwean political party. The MDC may legitimately and credibly be against Zanu PF, but when they deliberately, or unwittingly courted Western sanctions that now render the living conditions of an ordinary Zimbabwe at Machipisa insufferable, they downgraded to a much lower and sinister plane where they can never claim any legal, political or moral right: being anti-Zimbabwe. Read more...

    From the same article:

    The European Union denies that it has imposed trade sanctions on Zimbabwe. At the same time, some evidence at least points to the fact that the EU has withdrawn its sugar export quota it had for Zimbabwe. If these are not trade sanctions, then what the hell are they?

    This is an extensive article on the matter, from a usually anti-ZANU-PF source, and I think it should be read by all.

  6. I think the point he is making, and I agree with him after careful scrutiny of the material, is that Zimbabwe has only light restrictions.

    The fact that Zimbabwe is able to trade with other nations is a big plus which the Harare Government should try and do its utmost to exploit.

    It does now appear to me that whilst credit restrictions place great burden on any nation, there are not as tough as trade sanctions. If a country was given a choice between credit restrictions and trade sanctions most would choose the former.

  7. I think the point he is making, and I agree with him after careful scrutiny of the material, is that Zimbabwe has only light restrictions.


    Since when are only trade sanctions sanctions? Since when are financial sanctions not sanctions?

    Your friend said that Zimbabwe is not under sanctions - it is.

    Zimbabwe has a serious balance of payment crisis because of ZDERA - while the opposition wants to make everyone believe that it is land reform and government policies that are to blame.

    Financial sanctions are sanctions, and that is not even looking at the 200 'targeted individuals', which.

  8. The question is on the severity of the financial restrictions relative to traditional blockades / trade sanctions.

    I have been trying to get my head around this. And I am currently looking through the literature and asking experts on the subject.

    Part of my soul searching is the question - If someone told me that I cannot sell all my products to anyone abroad (only my own people i.e. I become autarky or the equality of 100% protection on exports and imports), but I can borrow and pay back freely - what would I choose?

    I think I would chose to trade freely and accept the credit restrictions. But I have no immediate evidence to show you, except the standard approach to the gains from trade. However, those assume perfect access to credit and so forth.

    I will need dig further on this, but the more I think about, the more I am convinced that that Zimbabwe has light restrictions. Things could be much tougher. The question that follows then, is why things are so bad?


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