Online Reporter
FOR almost a quarter century, the United States has imposed a range of sanctions against Zimbabwe and some Zimbabweans under legislation known as the Zimbabwe Democracy and Economic Recovery Act of 2001 (ZDERA), with a range of reasons given for this measure but US opposition to the radical land reform at the turn of the century being considered the main reason.
Now, as part of a general clean up of the American law governing much of that country’s foreign affairs, it has been proposed that the US Congress dumps ZDERA in return for a strong Zimbabwean commitment to implement the Global Compensation Deed negotiated by the Second Republic with the former landowners displaced by land reform.
This agreement, a home-grown deal, commits the Government to paying out full compensation for all improvements on the land made by the former owners, as required by the Constitution, although there will be no compensation for the actual land itself.
This satisfied a large majority of the former owners since as a practical measure they recognised that it was the improvements that gave value, and that a farm just held as a speculative block of land was near valueless.
So there is no discernible gap between what the new legislative proposal in the US requires and what the Government has already committed itself to doing.
One of the more important points will be in timing, as full implementation of the Global Compensation Deed will require some borrowing, but since land reform is a legitimate reason for lending this is practically possible.
At the same time Zimbabwe’s major effort working with all lenders to sort out our arrears, a process that inevitably involves some rescheduling with an agreed payment plan, will open the door to new lending, so long as there is not much opposition to that, and a retreat by the United States to move to, at the very least, abstention will be enough.
Over the years there has been some retreat on some of the most severe of the ZDERA measures, especially what were labelled the “targeted sanctions” against Zimbabwean political and economic leaders and against Zimbabwean firms.
While those had never been, in themselves, particularly potent, they had far more serious collateral damage, since American banks and companies were reluctant quite often to deal with Zimbabwean entities that were not listed for sanctions as they would still have to make extensive checks to ensure that there was not some banned connection.
Often the costs of these checks would be higher than potential profits, so the American partner backed off.
But the really serious sanctions were always the requirement in ZDERA for the American representatives in global financial institutions, such as the International Monetary Fund and the World Bank, to use their large voting strength to block any support for Zimbabwe.
This was not just new loans, but also measures such as rescheduling loans and other debt relief.
While the US shareholding in these institutions is gradually decreasing, it is still easily the largest shareholder voting almost 20 percent of the shares and was able, through diplomatic channels, to get other major shareholders from Europe and the West generally to create a majority vote.
Major improvements in the diplomatic climate with the European Union under the Second Republic have seen the end of all practical sanctions by European countries against Zimbabwe along with the general improvement in relations, trade and investment all round.
So it is quite unlikely that should the US back off from its hardline stance that the European countries would continue wanting to block access to global financial institutions.
The only negative vote against both a deal to implement an agreed path for Zimbabwe to clear arrears and for new financing had been reduced to the legal requirement imposed on the US administration, although there were temporary options to by-pass that, although not permanently.
One of the most positive aspects of the new American proposal put forward by a legislator of the majority Republican caucus in the House of Representatives is the recognition it gives to the deal signed by the former landholders and the Zimbabwean Government, in other words our home-grown solution.
The proposal basically wants Zimbabwe and the former farmers to implement what they have agreed with no extra conditions in place.
Already some payments are being made out of the budget each year to implement this deal, although everyone recognises that these are largely to show the willingness of the Government to implement what it has agreed, with the main payments coming once Zimbabwe has access to the global financial markets again.
In many respects, the deal is one of those arrears that Zimbabwe acknowledges, and which it wishes to sort out by fulfilling what it has already promised.
