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Zimbabwe's authoritarian government is working with World Bank staff and external powers to get creditors to pay billions of arrears and restore loans. It is not the moment for the World Bank to renew its loans in Zimbabwe. The new government has made a long list of promises. They must deliver on these promises before the World Bank turns the tap back on. World Bank President Malpbad should ensure that the World Bank does not provide any loans to Zimbabwe for at least the next year as a probationary period to see if the government is delivering on its promises. Until now, the record is not encouraging.
High hopes surrounded Zimbabwe at independence in 1980 under the leadership of Robert Mugabe. Mugabe, who for decades headed the Zimbabwe Patriotic Front (ZANU-PF) and could have been Zimbabwe's George Washington, will be remembered as a tyrant who drove the country to the ground. Mugabe has put in place many poorly designed economic policies and has repressed the political opposition. Millions of Zimbabweans have fled, with their capital and resources, and the country has stagnated. Rich in diamonds, platinum, agricultural potential and many tourist attractions, Zimbabwe has not yet exploited its potential.
The People's Republic of China and the Soviet Union – who shared an ideology of state-planned socialism – supported Mugabe's independence movement in the 1970s. China and Zimbabwe have long had close ties to the world. security services of the two countries that have engaged in several joint ventures to exploit the mining sector. At the same time, Russia has bragged about its historical ties and has tried to do more in Zimbabwe, but given its own resources and capabilities, constraints have prevented any significant investment.
Zimbabwe's crackdown on the opposition and its disregard for the rule of law have prompted many countries (including Britain, the European Union, Canada, Australia and the United States) to impose targeted sanctions in the country. US sanctions, which came into force in 2003, have been postponed to the Obama administration and extended under President Trump. Congress has set conditions for debt relief and support through bipartite legislation updated last year and signed by President Trump.
There was hope for the country during the formation of a national unity government in 2009-13, when members of the opposition Movement for Democratic Change (MDC) ) joined the firm. Tendai Biti has been appointed Minister of Finance and the economy has rebounded sharply. But the recovery collapsed when the unity government ended and Mugabe stole another election.
In November 2017, Mugabe was removed from office after a bloodless stroke after trying to replace his wife, Grace, as his successor. The army has installed Emmerson Mnangagwa, a long-time Mugabe hand man, nicknamed "the crocodile", but that could easily be called "Vladimir Putin of Zimbabwe".
Eight months after the coup, the people of Zimbabwe were led in the general elections of July 2018 to elect a new president and new members of parliament. The competition took place between Mnangagwa and Nelson Chamisa of the MDC. ZANU-PF claimed a 50.8 percent victory in polls, despite numerous allegations of voter fraud and coercion, undermining the legitimacy of the electoral process. US observers said the elections "did not measure up". Public demonstrations were violent when the armed forces opened fire on them, killing at least six people. The MDC also initiated legal action, which resulted in the Zimbabwe Supreme Court's decision to uphold Mnangagwa's victory and declare him third country president.
Although Mnangagwa's legitimacy is highly debatable, its main promise is to revive a failing economy, and that is why it calls for the cancellation of billions of debt arrears and new financing at the World Bank. . However, under his leadership, the price of fuel in the country has risen to $ 12 a gallon, which has paralyzed the country's most basic and vital economic functions, with the closing of stores, schools and offices. . Although some measures have been taken to reduce the budget deficit, efforts to restore investor confidence have failed because of the failure to meet almost all promises. Unfortunately, the future is still darker.
In view of all the above, the World Bank seems to want to provide Zimbabwe with new loans to encourage them to reform. The work of the World Bank is to lend. The culture of the Bank is not to prevent loans to Member States. On the contrary, any pressure on staff is to increase lending. Some Bank shareholders are also calling for loan renewals in Zimbabwe, especially Zimbabwe's neighbors. (Europeans are divided, while Australia, Canada and the United States are the most skeptical).
The Zimbabwean government has threatened to give up the World Bank loan and "look east," that is, to seek funding from China and Russia. Despite their deep economic ties with China, it is clear that even Beijing's bureaucrats will move away from a high-risk country like Zimbabwe, which is unwilling to solve its problems. Given this strategic leverage effect currently enjoyed by the World Bank, it should wait at least the next 12 months to see whether the Mnangagwa government is making real progress in delivering on its promises.
In an alternative universe, Zimbabwe would be a full-fledged democracy with a growing economy, in which it could create jobs for the large number of young people it currently has. It would have Kenya tourism, Brazil's agricultural productivity, Botswana's well-managed mining sector and Panama's vibrant financial sector. It is to be hoped that one day Zimbabwe will join the community of free and prosperous nations. President Malpbad, for the moment, the prudent strategy of the World Bank is to slow down.
Daniel Runde is Senior Vice President and William A. Schreyer Chair in Global Analysis for the Center for Strategic and International Studies. Previously, he worked for the US Agency for International Development, the World Bank Group and Investment Banking, with experience in Africa, Asia, Europe, Latin America and the Middle East.
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