/ 15 April 2011

Crackdown may result in sanctions

Crackdown May Result In Sanctions

The Swazi government’s heavy-handed reaction to this week’s protest marches could lead to international trade sanctions which would compound the country’s financial crisis.

Because of its poor labour-relations record Swaziland is on an International Labour Organisation “special paragraph”, meaning that it is a step away from sanctions, potentially threatening its membership of Agoa (the African Growth and Opportunity Act) and trade with the United States.

Two-thirds of Swazis already live in poverty, while one in four adults is HIV-positive and unemployment stands at 40%.

Vic van Vuuren, the ILO’s Pretoria director, said: “We’ve been following the protests closely and we’re concerned that union members were apparently arrested and detained. But we don’t yet have all the facts to know if the government has acted out of line. We’re waiting for more information from the unions and the Swazi labour ministry, which we haven’t been able to contact for several days.”

Van Vuuren said that if the reports were true, “sanctions could kick in”. He said: “If Agoa stopped, it would have a serious impact on Swaziland. At least 20 000 jobs would go.”

The Swaziland Coalition of Concerned Civic Organisations also pointed out that European Union funding relied on “respect for human rights in general and workers’ rights in particular”.

Swaziland faces an unprecedented financial crisis triggered by a 40% drop in transfers from the Southern Africa Customs Union and one of the highest state wage bills in the region, consuming nearly half of its gross expenditure.

‘Letter of comfort’
An unbudgeted 4,5% wage increase for public servants and politicians last April and a supplementary budget allocation of R350-million to finance overspending on a controversial new airport, have added to the squeeze.

The crisis has led to a freeze on pension payments, public buses grinding to a halt, hospitals without medicine and the withdrawal of overtime pay, fuelling the anger of public-sector workers.

The government has also been accused of failing to pay bills from small businesses and cutting procurement contracts.

Last week it accepted the International Monetary Fund’s (IMF) offer of a six-month staff-monitored programme. If it meets the IMF’s demands — which include cutting the state wage bill by 5% a year, improving the business and investment climate, increasing fiscal transparency and overhauling revenue and expenditure management — it could become eligible for financial support.

African Development Bank has offered Swaziland a $145-million loan to plug its budget deficit, though this depends on the IMF issuing a “letter of comfort” stating that it is happy with the country’s progress.

The letter, expected to arrive by the end of the month, could be used by Swaziland to seek donor support from other groups, such as the European Union. However, the development-bank cash, expected to come in three tranches, will not be issued until June.

Swaziland’s unions have criticised the proposed cutting of the state wage bill and have used the resulting discontent to mobilise members to participate in pro-democracy protests.