Zimbabwe’s relations with US hit new low after fresh sanctions

Zimbabwe’s relations with the United States have hit a new low after the Biden administration sanctioned Zimbabwe president Emmerson Mnangagwa and other top officials and accused his government of detaining and deporting USAID officials and contractors.

On 4 March the US Department of the Treasury’s Office of Foreign Assets Control designated 11 individuals, including Mnangagwa, and three entities “for their involvement in corruption or serious human rights abuses” in Zimbabwe.

“Emmerson Mnangagwa is the president of Zimbabwe and is involved in corrupt activities, in particular those relating to gold and diamond smuggling networks,” the Treasury alleged.

The new sanctions regime, under the US’s Global Magnitsky Sanctions programme, replaces a sanctions framework that had been in effect on Zimbabwe since 2003. Mnangagwa is the first head of state to be sanctioned under the programme.

The Zimbabwe Democracy and Economic Recovery Act (ZIDERA), imposed by the US Congress on predecessor Robert Mugabe in 2001 and amended in 2018, remains in place.

“These designations are part of a stronger, more targeted sanctions policy towards Zimbabwe the United States is implementing following president Biden’s approval of a new Executive Order terminating the Zimbabwe sanctions program that had been in effect since 2003,” said US Secretary of State Antony Blinken in a statement.

The deputy chief secretary in president Mnangagwa’s communications team, George Charamba, hit out at the move.

“We condemn these malicious statements as completely uncalled for, defamatory, provocative, and a continuation of wanton hostilities against Zimbabwe by the US government,” he said in a statement.

“We demand that the Biden administration provides evidence in support of these gratuitous accusations, failure to which the administration must, without any further delay, withdraw them unconditionally.”

Relations deteriorated further on 8 March when the Department of State accused Zimbabwean officials of “egregious, unjustified and unacceptable” treatment of USAID officials and contractors who they said had been detained and deported while conducting an assessment of the development and governance context in Zimbabwe.

The extension of sanctions suggests that Mnangagwa’s pledges to reset relations with the West, made shortly after he assumed power, have come to naught.

After replacing longstanding president Robert Mugabe in a military coup in November 2017, Mnangagwa initially sought to persuade the West that his administration would enact economic and political reforms.

However, during the most recent presidential elections, held in 2023, the US Department of State noted that “multiple observation missions have expressed deep concerns and stated that the country’s electoral process did not meet regional and international standards for credibility” and said that “these actions belie president Mnangagwa’s repeated pledges to respect [the] rule of law, transparency, and accountability.”

Sanctions’ impact on economy

The impact of sanctions on Zimbabwe’s economy and their effectiveness in forcing the government to undertake reforms have been fiercely contested.  

The Zimbabwean government has long argued that sanctions damage the economy, but the US has insisted that its sanctions are targeted at individuals and not ordinary citizens.

“The changes we are making today are intended to make clear what has always been true: our sanctions are not intended to target the people of Zimbabwe,” said deputy secretary of the Treasury Wally Adeyemo when announcing the new measures.

But while the direct impact of sanctions on growth will continue to be debated, there is little doubt that worsening relations with the US complicate Zimbabwe’s ability to raise money from multilateral lenders as it seeks to tackle its enormous debt challenges.

As of July 2023, Zimbabwe’s total consolidated debt amounts to $17.5bn with around $14bn owed to international creditors, according to the African Development Bank (AfDB).

In January, Elain French, chargé d’affaires at the US Embassy in Harare, told VOA Zimbabwe Service that the US had paused its participation in the Zimbabwe Structured Dialogue Platform on Debt Clearance with creditors and development partners following the government’s failure to conduct free, fair and credible elections last year.

The Zimbabwean government had hoped for progress through the dialogue, which had been led by former Mozambique president Joaquim Chissano and included the US and multilateral lenders such as the African Development Bank, International Monetary Fund and the World Bank.

Tony Hawkins, a Zimbabwean economist, says the withdrawal of the US from the debt talks is a big problem for the country.

“It will definitely slow the progress. Elections were criticised by African groups like SADC and African Union,” he says.

Victor Bhoroma, an economist based in Harare, says that hopes for a debt settlement still hinge on the implementation of various reforms by the government.

“One of the key issues is rule of law. Looking at it from the economic point of view you would want to see a situation where the supreme law of the land is what is applied to economic transactions. Obviously guarantees to property and investments as well capital movement,” he says.

Economic deterioration continues

Meanwhile, the Zimbabwean economy continues to lag. The IMF projects growth of 3.6% in 2024 compared to 4.1% last year.

Zimbabweans are facing a myriad of problems including a currency crisis, high inflation, and power shortages.

El Niño-induced droughts have led to low water levels in Lake Kariba, the location of the country’s main hydroelectric power generation facility, necessitating power cuts of up to 20 hours per day.

Power shortages cost the country a total of 6.1% of GDP per year, the World Bank estimated in a report released last year.

Furthermore, government figures show that 26% of the 15.1 million population is facing food insecurity between January and March 2024 because of the drought.

“Without addressing power generation, the Zimbabwean economy will not achieve consistent growth,” says Bhoroma. “The loss in generation output means prolonged power cuts. This is unsustainable for the local economy which is heavily skewed towards agro industry and mining that require uninterrupted power supply,” he says.

As the problems continue, Zimbabwe’s currency, introduced in 2019, has lost more than 60% of its value against the US dollar this year. The authorities said in February that plans were underway to introduce a gold-backed currency, the latest in a series of currency alterations that have repeatedly fail to solve the underlying problems in the economy.

Still, the World Bank says in a new report that foreign exchange reforms could help to ameliorate some of the country’s economic problems, including high inflation, macroeconomic instability, and shallow financial intermediation.

“In its current form, the FX system prevents investments in exports and productivity-enhancing equipment, perpetuating the stagnation of Zimbabwe’s economy,” reads part of the report.

The World Bank noted that reforms of the Reserve Bank of Zimbabwe’s quasi-fiscal operations are the most urgent measures to re-establish macroeconomic stability, adding that without such measures, efforts to tighten monetary and fiscal policy will not be effective.

But with productive debt talks unlikely to be quickly revived following the new US sanctions regime and wholesale political and economic reforms as distant as ever, there appears little chance of an impending economic renaissance.

– Farai Shawn Matiashe