Politics & Policy

Zimbabwe’s Tipping Point?

Regime change may be only a few weeks away.

As I write, a few Zimbabweans are at the polls, some brought forcibly, to vote in a meaningless election with only one candidate, dictator Robert Mugabe. Mugabe’s party, ZANU PF, is vainly keeping up the pretence that democracy exists in Zimbabwe — a fiction that not even neighboring states are still willing to believe. The normally vacillating UN has condemned Mugabe’s attempts to rig another election now that Zimbabwe’s trading partners, Russia and China, have been persuaded to add their voices; the Mugabe regime probably only has weeks left.

On Wednesday, three members of the Southern African Development Community (SADC), Swaziland, Angola, and Tanzania, urged Zimbabwe to postpone today’s election, acknowledging that conditions in the country would not permit it to be free and fair. Even the previously silent South African ruling party, the African National Congress, issued a statement noting that given “the ugly incidents and scenes that have been visited on the people of Zimbabwe . . . a run-off presidential election offers no solution to Zimbabwe’s crisis.” While he did not mention Mugabe by name, former South African president Nelson Mandela, speaking at a private dinner in London, cited the “tragic failure of leadership” in Zimbabwe.

Mugabe’s downfall is long overdue, but he may also take down South Africa’s president in the process. Thabo Mbeki’s inability to put any pressure on Mugabe over the past eight years of election rigging and violence has left his reputation in tatters. Dubbed Thabo “What Crisis?” Mbeki, he seems to have lost any hope of the international-diplomacy role he desired upon retiring as South African president next April.

The fallout for those doing business with the regime is already starting, too. Angry protestors are today gathering in Munich outside the headquarters of Giesecke and Devrient, the company which is printing the money used to prop up Mugabe’s regime. G&D printed trillions of Zimbabwean dollars in February and March (432,000 sheets of banknotes were sent to the government-controlled Reserve Bank of Zimbabwe each week, equivalent to nearly Z$173 trillion (U.S. $32 million).

Cato Institute analyst Stephen Hanke says that the Zimbabwean government was “financing most of its spending” through money printed and lent by the RBZ. As inflation deepened and tax revenues dried up, the government demanded that RBZ print more and more money. G&D enabled this to happen. This money was used to bribe the army prior to the March election. The German Minister for Development, Heidemarie Wieczorek-Zeul, told German radio this morning that she was demanding that the company stop doing business with the Mugabe regime.

In Britain, pressure is building on Barclays Bank, which has affiliate offices in Zimbabwe, to shut down operations there. According to a UK treasury official, the bank has received hundreds of complaints and is losing numerous valuable bank accounts. Furthermore, Anglo American — the South African–British mining firm — which has new platinum investments in Zimbabwe, was told by the British Government that it was being monitored for any breach of existing sanctions. Like many businesses, Anglo American argues (with little justification) that its involvement benefits the Zimbabwean people. It may employ local people, but all the revenue goes to the treasury — which provides hard currency for the regime.

Most importantly, the Zimbabwean opposition Movement for Democratic Change (MDC) has warned EU firms that licenses permitting foreign companies to operate would be “revisited” when Mugabe is finally overthrown. Roy Bennett, the MDC Treasurer, who spent many months in jail for pushing a ZANU PF politician in 2006, says that all “companies need to be careful because their rights will be scrutinized.” He also warned that a future MDC government would not repay recent loans to the Mugabe regime — a veiled threat to the Chinese, North Koreans, and Malaysians who have financed weaponry and military training for Mugabe’s army.

Universal Tobacco of Richmond, Virginia, also operates subsidiaries in Zimbabwe. Like many businesses, they have faced difficult decisions about remaining in the country, citing the employment of hundreds of local people (in a country with 80 percent unemployment) as a key reason not to leave. Unlike Anglo American, they employ many locals and more of their activities reach the poor. When I interviewed company officials some time ago about their tobacco processing operations in Zimbabwe, the company defended its role — but said that they were closely monitoring the situation. If the company wants to operate in Zimbabwe, they’d better talk with opposition leaders soon — waiting till Mugabe goes will be too late. The opposition wants companies like Anglo American, Barclays, and Universal Tobacco to pull out now — to remove the few solvent parts of a collapsing economy, driving Mugabe to sue for a political resolution — and if the companies don’t, they will be punished by a future MDC Government.

The saying, “It’s always darkest before the dawn” is applicable to today’s Zimbabwe. For the millions suffering the privations of Mugabe’s kleptocracy, it is as gloomy as it could be — but their prospects could brighten in only a matter of weeks. It is up to regional leaders and business leaders to ensure that is the case.

– Roger Bate is a resident fellow at the American Enterprise Institute.

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