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Unity government going nowhere slowly
IRIN News
March 24, 2009

http://www.irinnews.org/Report.aspx?ReportId=83616

A cold reality is dawning on Zimbabwe's inclusive government that those able to give money for the country's reconstruction will not give it, and those wanting to give money just do not have it.

After a political deal brokered by the Southern African Development Community (SADC), Morgan Tsvangirai was inaugurated as prime minister on 11 February 2009, while President Robert Mugabe maintained the post he had held since independence from Britain in 1980.

SADC heralded the deal as a new beginning for the once prosperous state, but the country's main donors - the US and the European Union (EU) - have adopted a wait-and-see approach before releasing any funds for economic reconstruction.

Since 11 February, US President Barack Obama's administration has publicly refused to lift targeted sanctions against Mugabe and his ZANU-PF elite, a position also held by the EU.

Tony Hawkins, an economics professor based in the capital, Harare, told IRIN: "There are no signs at this stage that Zimbabwe will get the much needed funds that are central for an economic turnaround."

In a 2008 report the UN Development Programme (UNDP) estimated that about US$5 billion would be required to kick-start the economy and rescue the country from its financial morass.

Zimbabwe's government stopped counting the inflation rate in July 2008, when it reached 231 million percent; infrastructure has collapsed and seven million people, or more than half the population, depend on food aid; a cholera epidemic has killed more than 4,000 people and infected over 90,000 in just over six months.

Donor dependent region

Economic recovery is predicated on a substantial rescue package, but Mugabe's grip on the reins of power has deterred Western governments, and the onus has fallen on SADC to come up with some form of financial assistance.

SADC has pledged US$2 billion for Zimbabwe's reconstruction, but a question mark hangs over where it will find the money. The organization will meet on 30 March to make a final decision on the package.

"When you look at those countries that make up SADC there is virtually no reason to trust that they can raise the amount of money required for Zimbabwe's economic turnaround, even though there is no doubt that the political will to save the inclusive government is there," Hawkins said.

"The economies in most of them are largely dependent on donor funding and it would not be possible to take out from what is donated to them.

"Zambia, Mozambique and Malawi belong to this category, while Botswana's GDP [gross domestic product] is going down, Angola has been affected by [falling] oil prices, and South Africa is having economic problems of its own, leaving it having to depend on acquiring lines of credit from the corporate world in the country," Hawkins told IRIN.

The unity government's finance minister and a leading light in Tsvangirai's party, the Movement for Democratic Change (MDC), Tendai Biti slashed this year's revenue target from US$1.7 billion to US$1 billion recently.

"The reality of the matter is that at this stage no country is prepared to support us directly, other than through traditional humanitarian aid being channelled through the United Nations Development Programme," Biti said.

Hawkins said there was "no chance" of help in the immediate future from the African Development Bank, the World Bank or the International Monetary Fund, which recently sent a delegation to Zimbabwe but said the country should first pay its debt before it could be considered for further financial assistance.

The US, EU and other potential donors, such as Japan, "are saying it's too early to come in at this stage," Hawkins said.

Mugabe recently implored the US and EU to lift targeted sanctions against him and his ZANU-PF ruling party, claiming the sanctions were responsible for the country's economic demise.

Mugabe remains an obstruction

The EU and the US maintain that decades of misrule, corruption and a complete disregard for democratic norms by Mugabe's ZANU-PF are responsible for the country's predicament.

"As long as Mugabe is demonstrably holding influence in the inclusive government it will be an uphill task to convince the West to chip in and help," Hawkins commented.

Yet the Sunday Mail, a weekly Zimbabwean newspaper sponsored by the government, claimed the country would "soon receive a host of co-operating partners".

Priscilla Misihairambwi-Mushonga, the unity government's international co-operation minister and a member of the MDC, told the newspaper: "In our opinion, [the removal of sanctions] will be a process, but what is interesting is that, as an inclusive government, we are already seeing a lot of interest from a lot of co-operating parties who would want to re-engage, and who would want to enter into dialogue."

Zimbabwe's local businesses have been crippled by the economic malaise, while multinational companies have remained unwilling to invest because they were not convinced that the economic environment was viable, Hawkins said.

"The global recession is so deep that not many companies are running around with lots of money at the moment. Add to that the existing pessimism among potential investors from outside, who consider Zimbabwe a high-cost, inefficient economy, and you will see that it will be a while before something tangible comes out."

Another wave of illegal farm invasions by high-ranking government officials since 11 February has also dented the confidence of foreign investors that private property rights will be guaranteed.

Hawkins said the country's recovery prospects had been worsened by a decade-long absence of financial aid. "Even though you would not expect the current global financial crisis to affect aid to a country, because donors release support up to five years in advance, Zimbabwe has not been in that cycle for a long time."

The UNDP report published in September 2008 said it would take about 12 years for Zimbabwe's economy to be restored to its 1998 levels, but according to Hawkins this estimate was based on a growth rate of six percent.

The global recession will affect Zimbabwe's growth rate, even if money is found to kick-start the economy, lengthening the road to recovery.

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