U.S Cato Institute Experts Unanimously Agree That Sanctions Are Hurting Zim And Must Be Removed But Blame ZANU PF For Economic Collapse
17 April 2019
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Cato institute experts including RTHK Washington Correspondent, Barry Wood in session.

WASHINGTON — Experts in Washington, discussing whether or not Zimbabwe is a source of shame or opportunity for Africa, were unanimous in their position that targeted sanctions were hurtful to the country, and must be removed, but equally held the government and the ruling Zanu-PF party accountable for the poor state of the economy and overall decline.

Organized by the Washington-based think-tank Cato Institute, on Monday, panelists of the discussion, titled ‘Zimbabwe: Africa’s Shame and Opportunity’, challenged the United States and members of the international community such as the European Union, all of which recently extended sanctions on Zimbabwe, citing lack of reforms under the newly-elected government of President Emmerson Mnangagwa, to drop them.

Zimbabwe has been calling for the removal of what it terms illegal sanctions, since their imposition almost two decades ago, and have blamed them for the country’s economic demise.

ZANU PF supporters demonstrating against sanctions

In particular, the government of Zimbabwe has chided the U.S. over the Zimbabwe Economic and Recovery Act of 2001 (ZIDERA), which despite noting some improvements in Zimbabwe, was recently extended by U.S. President Donald Trump.

Panelist and RTHK Washington Correspondent, Barry Wood, who was recently in Zimbabwe, sided with critics of the sanctions who argue the sanctions hurt the ordinary citizens, and not the intended target of high level officials, which include Mnangagwa and his predecessor Robert Mugabe.

“Certainly ZIDERA which is still in the books and has been extended by President Trump – do they hurt the poor more than the ruling elite? There is a strong case that the sanctions do hurt the poor more than they hurt the ruling elite, which through corruption gets around the sanctions,” said Wood.

Echoing that point was fellow panelist and longtime critic of the Zimbabwe’s government, Professor Steve Hanke of Johns Hopkins University, who, while maintaining that the government and its ruling party officials, operate “like an organized criminal syndicate or crime syndicate,” submitted that the sanctions have failed to make the government accountable.

“Sanctions should be dropped immediately. Sanctions don’t work,” argued Hanke, adding that “the history of economic and financial sanctions is one failure after another, the production of all kinds of negative, unintended consequences,” said Hanke.

Hanke advised the U.S. and the international community to adopt a different strategy that excludes sanctions and foreign aid, which he said, also doesn’t help.

“So step one, unilaterally the US and the international community, to the extent the international communities involved should drop sanctions, and encourage, of course, the adoption of the ‘Singapore Strategy’ and stop talking about foreign aid. Foreign aid is not going to rescue Zimbabwe,” said Hanke.

Visiting fellow, W. Gyude Moore of the Center for Global Development, who was also on the panel, reinforced the point that sanctions don’t work.

“Sanctions that target the people of Zimbabwe ordinarily is not going to work and in the long term is not going to help resolve the issues in Zimbabwe,” Moore said.

Though the panelist appeared to back Zimbabwe’s position on the ineffectiveness of the sanctions, they didn’t spare the government blame for the country’s state of the economy.

Hanke shared his observation. “So how did Zimbabwe plunge to these tremendously low levels?” queried Hanke, before offering his assessment.

“We have property rights, number one. Two, money. Three, there’s no hard budget constraints in Zimbabwe, a situation where you have no discipline, very weak institutions, no one is in control of fiscal affairs.

“When you have a soft budget and no hard budget constraint, and anything goes basically in the fiscal sphere. In the fourth item … the dominant political party, Zanu-PF is a party which operates much like an organized criminal syndicate or crime syndicate,” Hanke said.

Wood laid the blame directly on Zimbabwe’s Finance Minister Mthuli Ncube, who was among the audience at the discussion.

“Zanu-PF at its core opposes market-based reform which is championed, I might say, and it’s certainly true, by Mr. Ncube. So, we don’t know what’s really going on. The government is incompetent and divided, and the reforms won’t be implemented,” he concluded.

Ncube, who was in Washington for the International Monetary Fund/World Bank Annual Spring Meetings, defended his government’s effort to address the issues raised by the panelists, and said, contrary to the belief that the world was still closed to Zimbabwe, things were changing, especially with the International Monetary Fund.

Zimbabwe has been unable to secure lines of credit from many financial institutions, due to unpaid debt, amounting to close to US$10 billion.

Ncube said his meetings with IMF and World Bank officials were encouraging and they are appreciating the country’s commitment to what he called the Economic Reform Agenda.

“We reached an agreement on the Staff Monitoring Program with the IMF which will help us on the road map towards arrears clearance. We need the debt to be cleared so that we can access credit loans for our private sector really, we are looking for private sector support,” said Ncube.

To Hanke’s criticism about Zimbabwe’s lack of regard to property rights, Ncube said the government has shown regard for property rights through its recent decision to compensate white farmers forcibly removed in 2000. Ncube set aside the equivalent of US$S17 million to compensate farmers.

“If you look at the issue of compensation, that’s a recognition of property rights. We are going to do that in line with the constitution and there’s a commitment from the government and from the President (Mnangagwa) as well,” said Ncube.

Ncube added that the government is also staying true to its mantra that it’s open for business, and has established the Zimbabwe Investment Development Agency (ZITA) to vet and process investor applications quickly.

In addition, he said, the government has revised its controversial indigenization law, which restricted foreigner from owning more than 50% of a company.

“The indigenization rule has been largely waved except for the diamond sector so far, and eventually you can be sure that everything will be allowed in terms of foreign investors owning 100% of companies,” said Ncube.

Regarding the targeted sanctions, Professor Ncube welcomed the position by the panelists, saying it validates the government point that the sanctions are hurting the ordinary person.

With Zimbabwe’s 39th Independence Day anniversary approaching, the question of how much progress the country has made, particularly following the resignation of former president Mugabe in 2017, has been a topic of much debate.

Attendants at the event in Washington DC, who included the diplomatic corps, members of the Zimbabwean diaspora and several others groups, challenged the government of Zimbabwe to work on the reforms that would place Zimbabwe back on good footing with the international community, so as to help revive the economy, and be the beacon of hope it was at independence, in 1980.