Zimbabwe’s political settlement will not lead to an immediate transfusion of Western economic assistance — the MDC’s main lever in the settlement talks.
Despite promises of significant aid from the European Union and the United States once a deal was signed, they are now cautious about committing themselves.
Political players in Zimbabwe have discussed the sourcing of credit on global financial markets but, given the current world market turmoil, there is limited appetite for new risk.
The International Monetary Fund’s Dominique Strauss-Kahn said this week the fund was ready to talk to Zimbabwe, but aid from this quarter will be slow in coming.
US sanctions against Zimbabwe are underpinned by the Zimbabwe Democracy and Economic Recovery Act, which bars US representatives on financial institutions from voting for financial support to Zimbabwe and prohibits any American company from doing business with it.
The Confederation of Zimbabwe Industries estimated this week that the country would need $5-billion to kick-start the economy by stabilising the Zimbabwe dollar and shoring up business confidence.
Diplomats ”conservatively” estimated that about R255-billion was available in Europe to fuel recovery. More could be supplied if the European leaders were satisfied that it would not be used to prop up Robert Mugabe.
European Union heads of state are due to meet next month to discuss an aid programme and its conditions, but they are taking a ”wait and see” attitude.
Speaking in Brussels this week British foreign secretary David Milliband said: ”What matters now is not the words of the agreement but the way it functions and the actions the new government takes on the ground.
”We hope the new government will now reverse the tragic policies and decline of recent years.”
The EU funds Zimbabwe to the tune of €200-million a year for distribution among NGOs.
A survey released in July showed industry was operating at 19% of capacity and that only 2% of Zimbabwean business people believed a short-term recovery is possible.
The future of the Zimbabwean dollar was under discussion in political circles before negotiations started, but no decision has been taken on whether it will remain the official currency.
Zimbabwean sources say South Africa has offered R2-billion to help reconstruction, but this could not be confirmed.
This week has seen intense debate in Zimbabwe over the future of Gideon Gono, the country’s Reserve Bank governor. Under Gono the bank became central to Mugabe’s power by bankrolling Zanu-PF’s expansive patronage system.
Mugabe also strengthened his authority over economic policy, sidelining the treasury.
The MDC made Reserve Bank reform a major campaign issue in March, pledging to sack Gono and give the bank more autonomy.
But any radical reform plan is likely to spark conflict in the new government as agreeing to let Gono go will be a major concession for Mugabe.
In his trade union days Morgan Tsvangirai called the IMF and the World Bank ”devils”. He has since warmed to international capital, saying on Tuesday that the assistance of the two multilateral lenders will be key to economic recovery.
However, his top advisers have cautioned him against rushing to take on fresh debt. Zimbabwe’s foreign debt stands at $4-billion and there are plans to push for debt relief as a preliminary measure.
With the economy’s heavy reliance on agriculture there is also intense discussion of how the unity deal approaches the emotive land issue.
Despite the hopes of foreign diplomats that confiscated land will be returned, the settlement provides only for an audit to block ownership of multiple farms.
The large size of the new government may also weigh down recovery. If each of the 46 ministers receives the standard trappings of office, including luxury vehicles and hefty allowances, potential donors are likely to hang back.
With three million citizens having emigrated, recovery will be slowed by a lack of critical skills. Many expatriates will be eager to return, but only if the fragile coalition holds for long enough to achieve sustained stability.
Foreign capital has been sniffing around Zimbabwe even while the crisis has deepened.
Through its Citi Venture Capital International Citigroup, the world’s largest bank by assets, recently invested $25-million in locally owned bank ABC Holdings. The International Finance Corporation, an arm of the World Bank, also increased its stake in ABC.
British investor Lonrho announced it had raised $100-million from private investors to fund investments through a special purpose vehicle, LonZim. Russian investors, represented by British fund Renaissance Capital, last year acquired a stake previously held by Absa in CBZ, one of Zimbabwe’s biggest banks.
The Mail & Guardian understands that South Africa’s Peregrine Capital, Investec and Nedbank Capital have explored possible investments on the Zimbabwe stock exchange, which is valued at $7-billion.
A product of painful compromise
Zimbabwe’s powerÂÂsharing document
Who signed it:
Robert Mugabe
Morgan Tsvangirai
Arthur Mutambara
Thabo Mbeki (facilitator)
What it says:
(1)
Mugabe remains head of
army and chair of Cabinet
and the new national security
council. May declare war,
grant pardons, proclaim
martial law, accredit diplomatic agents
and appoint independent commissions
(2)
All blame for the political
crisis is placed on the
international community,
particularly Britain
(3)
A land audit will take place but
distributed land will not be returned
(4)
Sanctions must be lifted
(5)
A referendum on the Constitution must be held in 18 months
(6)
A mechanism for national healing must be set up
(7)
No outsiders may call for regime change
(8)
Army to be retrained in human rights
(9)
National youthÂÂtraining programme to be established
(10)
No byÂÂelections for a year
(11)
Public media must provide fair and balanced reporting
(12)
Government will immediately process journalists¹ applications to work in Zimbabwe
(13)
ForeignÂÂfunded radio stations should be discouraged
(14)
Expats to be encouraged to return
(15)
Gender parity must prevail in all spheres of government, especially Cabinet
Source: ZIMBABWE AGREEMENT