Zimbabwe: Corporate collaboration lets Mugabe continue abuses

Corporate cash continues to feed Mugabe's rule.

By Patrick Bond, Zimbabwe

August 15, 2012 – Links International Journal of Socialist Renewal – Zimbabwe’s political-economic crisis continues because dislodging decades of malgovernance has not been achieved by the Government of National Unity that began in early 2009, civil society activism or international pressure, including this week’s Maputo summit of the main body charged with sorting out democratisation, the Southern African Development Community (SADC). With a new draft constitution nearly ready for a referendum vote, followed by presidential and parliamentary elections by next April, the period immediately ahead is critical.

Many examples of chaos appeared over the last week (much of which I spent in a rural area northwest of the capital of Harare). On Monday, for example, 44 activists were arrested in the Gays and Lesbians of Zimbabwe office at a project launching documentation of the repeated violations of their human rights. Though released, it reminded the society of the power of dictatorship mixed with homophobic social values.

Since the draft constitution was released on July 18, leaders of Robert Mugabe’s Zimbabwe African National Union-Patriotic Front (ZANU-PF) have repeatedly rejected crucial text within a document that its own negotiators had hammered out this year and issued last month. Amid the “3 per cent” that ZANU-PF leaders object to, one hang-up is that wording about presidential running mates complicates the fragile balance of power given how ill the 88-year-old Mugabe has been with prostate cancer, according to his close associates.

If a referendum goes ahead with the current text, some in civil society – especially the National Constitutional Assembly, probably to be joined by students and the left-leaning faction of the Zimbabwe Congress of Trade Unions – are likely to promote a “No” vote, and ZANU-PF might well make the same choice. Nevertheless it is likely that the Movement for Democratic Change led by former trade unionist Morgan Tsvangirai (known as the MDC-T) would win approval.

Although central powers have been weakened in the new constitution, according to critics in the NGO Sokwanele, “There remains no age limit for Presidential office, immunity from prosecution remains, and the executive remains in control of defence forces.”

Constitution confirms land redistribution

There are other important markers of the society’s balance of power in the draft constitution. For example, heeding ZANU-PF’s wishes, it specifically prohibits that monetary compensation for land will be given to the 4000 whites whose farms were invaded from 2000-08, although improvements (buildings, irrigation and the like, worth around $3 billion) can be compensated, according to the text, while any land reimbursement should be made by the colonial power, Britain.

There is certainly very important anti-imperialist symbolism at stake here, and from this kind of compensation to the need for long-overdue colonial reparations is not too far a conceptual leap. But recall that Mugabe’s jambanja (chaotic, violent) land reform was driven partly by his increasingly unpopular ruling party’s need to retain power after a prior constitutional draft was rejected 55-45 per cent in February 2000. Another reason was the immense rural pressures building up from below that were craftily channeled into land invasions of the country’s best land, which white settlers had originally stolen during the 60 years or so after Cecil Rhodes’ “Pioneer Column” invaded in 1890.

Attempts to redress the land question after independence in 1980 failed due to lack of political will and an incorrect technicist assumption that if instead of land redistribution, rural credit was extended to impoverished small farmers, they would be boosted into the mainstream economy (in reality, four out of five had defaulted on their debts by 1988 because the markets were unattractive).

The MDC-T position is that the post-2000 land redistribution is now “irreversible” so white farmers have no basis for confidence they can return, if Tsvangirai wins the presidency. Debate also continues over whether the land redistribution “worked” for the estimated 10 per cent of Zimbabweans who directly benefited: 146,000 households who were the main small-farmer beneficiaries of jambanja, and the 16,000 farmers who got access to much larger plots including the most productive commercial farms, according to 2009 government data.

Tragically, as rains failed again this year, 1.6 million Zimbabweans – about 12 per cent of the population – will be in need of food aid, the World Food Programme estimates. The country’s best land, with irrigated agriculture that would permit a return to food security, isn’t yet in the hands of the masses, as cronyism on good farmland means a new era of land reform will be needed.

Still, argues Sam Moyo of the African Institute for Agrarian Studies, “Only about 15 per cent of the land beneficiaries could be considered ‘elites’, including high-level employees and businesspeople who are connected to Government and the ruling ZANU-PF. By far, the largest number of beneficiaries are people who have a relatively low social status and limited political or financial-commercial connections, although some of these may have important local connections and influence.”

Aside from periodic drought, Moyo cites inadequate input supply – fertiliser, pesticides, credit – as the main reason for the failed small resettled farmers, but one in five also suffer “land conflicts, including their lack of ‘title’ and fear of eviction as factors which limit their social reproduction and/or production”. Nevertheless, according to Sussex University researcher Ian Scoones and his colleagues, huge increases in output have been registered by resettled farmers in one central district, especially in small grains, edible dry beans, cotton and tobacco.

On the other hand, the overcrowded “Communal Areas” where Rhodesians forced blacks to live until 1980 appear not to have become decongested, and nor did Mugabe’s Operation Murambatsvina – the violent displacement of 700,000 urban residents in 2005 – make the land question any easier to answer. The charge that cronyism allowed Mugabe’s allies to cherry pick the very best farms closest to big cities remains intact, characterised by multiple farm holdings by leading elite members. Along with persistent food aid required annually since 2000, this problem will continue to mar Mugabe’s reputation, as he and his family remain prime cases of abuse.

Gripping to political power requires greedy corporate cash

In another indication of ongoing political manipulation last week, Mugabe’s army initially threatened to derail the official census count, scheduled from August 17-28. It is desperately needed not just for socio-economic planning but also future election districting. The army tried to place 10,000 of its troops among 30,000 teachers being trained for census taking, and some beat those civil servants who objected.

Until they were finally reigned in this week, why were army troops intent on intervention? Explains Claris Madhuku of the Platform for Youth Development, “As they go through the process of counting, they want to provide some form of intimidation so that the community in the next election, they must vote for ZANU-PF or else.” A victim of such intimidation, Madhuku was arrested last April and after seven court appearances acquitted simply for holding a community meeting to air grievances against a biofuel corporation which was grabbing small-farmer landholdings.

Such experiences drive the desire for a less repressive government. In a free and fair election, Tsvangirai would probably win hands down; in March 2008 he trounced Mugabe in the first round by nearly 10 per cent before withdrawing in protest from a run-off vote several weeks later, because meanwhile hundreds of his supporters were killed, tortured or injured by desperate ZANU-PF political thugs.

For Mugabe to retain power in what was a financially broke government in 2008 also required an infusion of enormous financial resources, and as a Mail&Guardian investigation last week revealed, when Mugabe was running out of funds during the election campaign, his regime was bolstered by a $100 million loan from New York-based Och-Ziff Capital Management Group. Ironically, the firm’s financier founder, billionaire Daniel Ochs, is also vice-chair of New York City’s “Robin Hood” Foundation, which according to Fortune magazine, “was a pioneer in what is now called venture philanthropy, or charity that embraces free-market forces”.

Och’s loan was made possible thanks to intermediation by London-based Central African Mining and Exploration Company (Camec), run by famous former English cricket spin bowler and businessperson Phil Edmonds, and by Anglo American Platinum, whose gifting of a quarter of its platinum assets to Mugabe’s regime was the basis for securing the deal. The Mail&Guardian reported, “Anglo was granted empowerment credits and foreign exchange indulgences that would allow it to develop a valuable remaining concession”. Zimbabwe slipped further into foreign debt.

When Edmonds was accused of funding Mugabe in 2008 in the context of a business alliance with the notorious Zimbabwean businessperson Billy Rautenbach, The Telegraph remarked, “In the boardroom and on the African sub-continent, the two places where Edmonds now conducts most of his business, he is said to have a similar presence, capable of charming and terrifying business rivals at the same time.”

According to The Telegraph, Zimbabwe mining has been profitable, for “It was with Rautenbach's help that the fortunes of Edmonds and Camec rose beyond anyone's expectations in 2006. The company's share price increased by more than 700 per cent in just a year, drawing in blue-chip investors eager to cash in on the boom in mining stocks.”

It is in this context that the “sanctions” critique offered by United Nations Human Rights Commission Navi Pillay in May needs revising. “There seems little doubt that the existence of the sanctions regimes has, at the very least, acted as a serious disincentive to overseas banks and investors”, she said while visiting Mugabe. Yet “sanctions”, which are limited to the personal affairs of 112 elite members close to Mugabe, were obviously sufficiently porous to allow the Och-Ziff/Camec/Anglo deal.

Diamonds

So who will pay Mugabe’s campaign bill in 2013? The next greedy mining house is Anjin, a diamond mining company co-owned by Beijing investors and Zimbabwe’s ministry of defence, whose leaders have said they will never accept rule by Tsvangirai’s party. Anjin is the main beneficiary of what is probably the world’s largest diamond field at Marange, near Mutare in eastern Zimbabwe, where hundreds of informal miners were killed by the army in November 2008.

Abuses continue at Marange. Two weeks ago, Anjin fired 1500 workers who, desperate for decent pay, launched their eighth strike since 2010. Diamond watchdog Farai Maguwu, director of the Mutare-based Centre for Research and Development, termed Anjin’s move “a gross violation of the right of workers to engage in industrial action if their working conditions are appalling”.

Another Marange diamond firm, Mbada, is chaired by Mugabe’s former helicopter pilot Robert Mhlanga, who recently purchased $23 million worth of properties in the highest-priced suburbs of Johannesburg and Durban (Sandton, Umhlanga and Zimbali).

This is the kind of company ZANU-PF keeps, notwithstanding rhetoric regularly hostile to foreign capital. For example, at this week’s Heroes Day ceremony, Mugabe intoned, “We should join hands to resist the unjustified pander of our resources by undeserving foreign forces that come to us like friends in the name of democracy and globalisation, yet they have sinister ulterior motives.”

Mugabe has perfected this talk left, walk right gimmickry; his support for the Marange looting represents one of Africa’s most extreme resource curse problems.

For the next election, probably in March, we can expect another tactic – “indigenisation” (giving local people a share in white- or foreign-run corporations) – familiar to those who witnessed Mugabe’s 2000 campaign, explains Bulawayo writer Mary Ndlovu: “The indigenisation agenda ZANU-PF is pushing has now replaced the land issue as a programme to simultaneously win support from a new constituency and frustrate the opposition. It seems dishonestly designed to further enrich themselves, consolidate their patronage lines and prevent the MDC getting credit for increased investment, rather than honestly redistributing wealth to the people.”

The first two multinational corporations to play the game of diluting local holdings so as to hold onto immensely valuable resources are platinum exporters Rio Tinto of London and Johannesburg-based Implats. There is no evidence yet that the ordinary Zimbabwean is benefiting, although a new extreme-nationalist ZANU-PF political tendency is emerging around 41-year-old Savior Kasukuwere – the minister in charge of indigenisation – that may one day threaten the party’s two other core factions, run by potential Mugabe successors Joice Mujuru (now vice-president) and Emerson Mnangagwa (defence minister).

Financial and fiscal failings

Another source of crony capitalism is the financial sector, through which disgraced Reserve Bank governor Gideon Gono and his allies arranged lucrative illicit foreign exchange takeovers prior to the Zimbabwe dollar’s collapse in 2009. Bankers close to ZANU-PF made dubious loans which now require the kinds of bailouts that Wall Street and the City of London received from their own purchased politicians in 2008-09.

This is the main reason for Zimbabwe’s banking crisis, and recently compelled Gono to issue a directive that $100 million be kept in capital reserves to prevent a devastating run on the banks. Out of two dozen, only six or so – nearly all foreign headquartered – will survive that degree of regulatory restructuring (the rest must be merged or closed). The adverse impact on credit availability, already hampered by the world’s highest real interest rates, will be devastating.

On top of that is next month’s IMF and World Bank meeting in Washington where Zimbabwe’s nearly $11 billion in unrepayable foreign debt is up for negotiation, not to mention a looming public workers’ strike which will be uncomfortable for the MDC-T, the party of labour but also under pressure to impose austerity after the state budget was cut from a planned $4 billion to $3.4 billion by finance minister Tendai Biti, known in his youth as the country’s leading leftist lawyer.

The main reason for budget cuts is the failure of the mining ministry to collect taxes on diamonds, which continue to be smuggled out of Zimbabwe on flights from Marange to sites including Israel, India, Dubai, Kazakhstan and China.

Confirms Maguwu, “Revenue is not being accounted for and a faction of ZANU-PF is controlling the diamonds. This was exactly the situation when the Kimberley Process [KP] was formed in 2003 with the financing of rebel wars through diamond revenues in West Africa.”

According to Maguwu, “The KP suffered huge credibility problems because of allowing Marange diamonds to circulate at their last meeting in Kinshasa last November. At the next summit in Washington this November, where ‘diamonds for development’ is a slogan against the ‘Resource Curse’, the KP can only regain credibility by ensuring that there is revenue transparency, otherwise Zimbabwe’s next round of election chaos can be blamed on diamond revenues.”

Maguwu insists, “South African President Jacob Zuma is SADC’s lead mediator and his team led by Lindiwe Zulu must put this on their agenda. Regional civil society should also be putting pressure on SADC to ensure that Marange diamonds do not sponsor political violence during the coming elections in Zimbabwe and trigger regional instability.”

While economic growth may technically still top 5 per cent this year, the underlying crises are now being amplified, as the bulk of proceeds from Zimbabwe’s 2012 output of diamonds ($3 billion), platinum ($600 million), gold ($150 million) and nickel ($140 million) disappear into ZANU-PF and multinational corporate pockets, with only crumbs left over for the povo (people). With a $3 billion trade deficit and only $500 million in donor aid anticipated in 2012, the untenable economics of a modified Mugabe tyranny still don’t add up.

Whether a free and fair election is possible in coming months, or instead ZANU-PF loyalists use military might, ill gotten wealth and crony capitalism to maintain illegitimate power, is too difficult to call. But by the end of this week, SADC regional leaders could have their fingerprints on Zimbabwe’s coming corpse if once again, they turn away from compelling at least the minimal conditions for democracy: insistence on the constitutional referendum and preparations for the country’s first genuine vote in a dozen years.

[Patrick Bond directs the UKZN Centre for Civil Society in Durban, South Africa.]