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Harare Warns of Recession
November 3, 2001
Posted to the web November 4, 2001
Harare
Zimbabwe's government Thursday unveiled the troubled nation's 2002 annual budget, seen as clearly populist, and admitted it had failed to salvage the crumbling economy.
Zimbabwe's finance minister Simba Makoni painted a bleak picture of Zimbabwe's economy, predicting another year of economic depression.
The economy is expected to shrink 7.3 percent by the end of the year, against original estimates of 2.8 percent, and is projected to decline another 5.3 percent in 2002, Makoni said.
President Robert Mugabe last month declared an end to market reforms and a return to socialism ahead of presidential polls next year.
From The Independent on Sunday (UK), 4 November
White farms under siege as famine looms
Harare - The looming risk of mass starvation in Zimbabwe worsened yesterday as militants moved on to more white-owned farms, beating one worker for refusing to shout ruling party slogans and forcing hundreds of others to stop work. Last night three white farming families were barricaded in their homes after hundreds of militant supporters of President Robert Mugabe's Zanu PF party, gathered on four farms in Guruve, 100 miles north of Harare. Despite a September deal signed in Nigeria to end such seizures, the occupiers told farm workers they had to make room for new black settlers on the land. The continuing violence threatens to worsen already critical food shortages in Zimbabwe. Farming experts have predicted a 40 per cent fall in agricultural output this year due to the communalisation of commercial farming. The country needs to import at least 700,000 tons of wheat and maize, but has no foreign currency to buy it. A recent report by the privately owned Financial Gazette said nearly three million villagers had registered for food aid with the government. The worst hit people had already started eating tree roots and leaves for lack of other food.
Conceding that three-quarters of Zimbabwe's 12.5 million people were now living in abject poverty, the Finance Minister, Simba Makoni, warned last week that the country urgently needed aid from abroad. But analysts say President Mugabe, who faces a crucial presidential election early next year, will remain the major hurdle to efforts by some of his more moderate ministers to normalise ties with the donor community. Mr Makoni warned that inflation had reached 83.6 per cent, which would be the average rate next year. But while he was urging ties with donors, the Foreign Minister, Stan Mudenge, a close ally of Mr Mugabe, was summoning British and EU diplomats in Harare to censure them for their stance on Zimbabwe. Mr Mudenge is said to have expressed dismay at the EU's "confrontational attitude" towards Zimbabwe. He also launched a broadside at Britain for violating the Abuja Accord on ending the land crisis. He claimed Britain was mobilising international sanctions against Zimbabwe. But, in private, Zimbabwe has asked the United Nations Development Programme to help mobilise food aid worth £200m. The president sent the Finance Minister to hold urgent private talks with Victor Angelo, the UNDP resident representative in Zimbabwe, reports said last week.
From The Sunday Telegraph, (UK), 4 November
Zimbabwe calls for aid to prevent famine
Harare - Robert Mugabe’s government has admitted for the first time that the country is facing a famine disaster as supplies of maize, the country's staple food, dry up and poor families search arid bushlands for edible tree roots to replace it. Zimbabwe's finance minister, Simba Makoni, last week warned parliament that the country faced "unprecedented hunger". While avoiding any reference to the government-backed farm invasions that have brought about Zimbabwe's food crisis, he called for huge international aid. Dr Makoni said: "Escalating prices and a high unemployment have eroded the quality of life, especially in rural areas. We now have 75 per cent of our people living below the poverty line and their per capita income has dropped to $381 a year (£260). This, with a chronic shortage of food, means that we have to appeal to the international community for assistance."
More than 1.4 million people in Matabeleland and Masvingo, where the poorest are grubbing in the bush for edible tree roots, have registered with the government for food aid. Dr Makoni has issued a warning, however, that government stocks have been depleted and that there is no money to import more. In Bulawayo, Zimbabwe's second city and capital of Matabeleland Province, the state-owned Grain Marketing Board's vast silos are empty. The Southern African Development Community's famine early warning system network (Fewsnet) says Zimbabwe must import 200,000 tons of food immediately if it is to avoid famine.
Altogether, it adds, Zimbabwe needs to import 846,000 ton of food by the middle of next year to see it through to the next harvest. President Mugabe's controversial fast-track resettlement programme has seen about 80 per cent of the country's commercial farms earmarked for state acquisition. More than 100,000 militant supporters, often armed, have invaded thousands of Zimbabwe's farms, preventing farmers planting their crops. As a result, the commercial maize crop has dropped by more than two thirds in the past two years, with many other crops suffering a similar fate.
The Zimbabwean economy, which has shrunk by 7.3 per cent this year, is expected to decline further. The finance minister predicts that it will shrink by at least another five per cent next year. Already Zimbabwe's supermarket shelves are emptying as food shortages and unworkable price controls take effect. Traditionally the country has been an exporter of food, able to feed itself and most of its southern African neighbours, but officials from the World Food Programme say they are considering moving 40,000 ton of maize from neighbouring Mozambique, one of the world's poorest countries, to stave off imminent disaster in Zimbabwe. So serious are the food shortages that they could damage Mr Mugabe's prospects of re-election next year.
From News24 (SA), 43 November
Zim FM summons envoys
Harare - Zimbabwe's foreign minister has summoned a group of European ambassadors in Harare after the European Union took steps to impose sanctions on Zimbabwe over rights abuses, the state-run Herald reported on Saturday. Foreign Minister Stan Mudenge wanted to question the diplomats from Britain, Spain and Belgium and the European Union's head of mission about Britain's role in the decision taken by EU foreign ministers on Monday to move towards imposing sanctions on the southern African nation, the paper said. He also questioned Britain's commitment to the Abuja agreement, a Commonwealth-brokered deal reached two months ago in which Zimbabwe agreed to curb political violence in exchange for British financing of its land reforms. British ambassador Brian Donnelly reportedly said he would inform his government of Zimbabwe's concerns.
On Monday, EU foreign ministers agreed to invoke Article 96 of the Cotonou agreement that governs relations between the European Union and its African, Caribbean and Pacific partners. That means Zimbabwe will be sent a formal letter by the 15-nation EU asking for consultations within 15 days on five contentious issues: ending political violence, election monitoring, press freedom, judicial independence, and a halt to illegal occupations of white-owned farms. Once the consultations are completed, the European Union will have up to 60 days to decide what action to take. It is widely expected any such action will include sanctions aimed at isolating President Robert Mugabe's regime. The EU decision followed Zimbabwe's refusal to accept European election observers, as the southern African state gears up for a presidential vote due by April next year. It also followed a Commonwealth delegation's appeal in Harare one week ago for Mugabe's government to respect its own laws and investigate reports of widespread rights violations.
From The Zimbabwe Independent, 2 November
EU rejects claims of British arm-twisting
Britain does not have the power to recommend the imposition of sanctions on Zimbabwe by the European Union; such a decision has to be agreed to by all member-states, the new European Commission head of delegation in Zimbabwe, Francesca Mosca, told the Zimbabwe Independent this week. Mosca said the issue of sanctions was not a one state mandate. "The EU is made up of 15 members so it is impossible for a single nation to take a leading role in the inception of resolutions without the consent of other member-states," she said. Government functionaries have claimed that the British government is mobilising the EU impose sanctions on Zimbabwe. Mosca said the position of the EU was to engage in talks with government concerning pertinent issues which have created the tensions between EU nations and Zimbabwe. The EU, she said, was still optimistic that Zimbabwe would allow the trading bloc’s observers to monitor the presidential poll next year. "The EU is concerned about violence in Zimbabwe," said Mosca. "One of the major priorities of our organ has been primarily focused on the presidential election next year. It is our mission that there should be free and fair elections," she said. Zimbabwe last week refused to admit European Union observers saying this was a violation of the country’s sovereignty. EU ministers of foreign affairs held a meeting on Monday under the auspices of the General Affairs Council where they noted there had been no progress in regard to ending violence or violations of human rights in the country.
The meeting, largely viewed as the beginning of the process to impose sanctions on President Mugabe’s rogue regime, focused on reviewing the situation in Zimbabwe. Issues like an end to political violence, facilitation of electoral monitoring, freedom of the media, independence of the judiciary as well as an end to the illegal occupation of properties came under scrutiny. Mosca said the council reiterated the EU’s readiness to assist Zimbabwe in preparing for and holding the election. She said she hoped the country would respond rapidly to the EU’s offer to send an exploratory mission for that purpose and then invite it to send EU observers to monitor the election itself. Last year’s parliamentary election held in June was characterised by a wave of political violence which resulted in at least 35 deaths. Mosca said the EU was not allied to opposition political parties as suggested in some political circles. The grouping was involved in a broad dialogue to foster relationships with all parties. "We have been involved with the government, non-governmental organisations, civic societies and the other political parties in the context of a broader exchange of views," she said. Mosca said the EU indirectly assisted the electorate through assistance in the purchase of ballot boxes, election observer support and other electoral concerns.
On the land issue, the EU envoy said the organisation recognised the inequities of Zimbabwe’s agrarian structure, its historical origins and the need to redress the imbalance. She said that the EU agreed that land reform could contribute to poverty reduction and was essential for stability. "The EU will therefore support land reform, including non-governmental initiatives, provided that these are implemented in a transparent, fair and sustainable manner, with respect for the law, broadened stakeholder and beneficiary participation and the inclusion of community-based land redistribution initiatives," she said. Asked to comment on the flow of aid to the country by EU member states, Mosca said that the issue depended on individual nations.
From The Zimbabwe Independent, 2 November
Govt builds fuel stocks
Zimbabwe is building up large fuel stocks to face international sanctions and provide for campaigning for the presidential election next year. Government sources said Zimbabwe was taking advantage of the concessionary arrangement with the government of Libya, which in August provided a US$90 million line of credit to import huge stocks of all oil products. The Zimbabwe Independent understands that a Libyan business delegation met President Mugabe at his Munhumutapa offices on Tuesday for almost four hours to discuss investment opportunities in Zimbabwe. The Libyan fuel is being paid for in local currency which is deposited at the Jewel Bank. The Libyans would like to use the proceeds from the sale of fuel to invest in agriculture, tourism and fuel industry.
The Independent has been told that Libyan investors were in Mashonaland West and Mashonaland East inspecting farms on Tuesday. The respective governors Peter Chanetsa and David Karimanzira accompanied the investors on the trips. As Libyan investors continue to explore business opportunities here it is not clear whether Zimbabwe has started to pay for the fuel and, if so, how much has been imported. Fuel industry sources this week said Zimbabwe was importing almost one-and-a-half times its normal monthly consumption in a bid to build stocks which had been virtually wiped out in the last 20 months of critical foreign currency shortages. Zimbabwe’s current monthly consumption is around 60 million litres but as much as 90 million litres are being pumped through the pipeline from Beira, with over a third of all imports going into the reserves.
"The idea is to build between six months and a year’s reserves of all products before the expiry of the deal with the Libyans," a source in the industry said. "Before the shortages started almost two years ago, Zimbabwe used to have six months reserves but the truth of the matter is that other than the Libyans, no one is prepared to go into a big deal with Zimbabwe because of the country’s high risk factor. Zimbabwe would rather make hay while the sun shines," the source said. The industry sources said Zimbabwe had enough storage facilities such as the underground tanks in Mabvuku and Msasa, which can store up to 700 million litres of fuel. This is enough to supply the country for 10 months. Zimbabwe consumes two million litre of fuel per day. There are however other storage facilities at Birmingham Road in Harare, Beitbridge, Bulawayo, Gweru, Mutare and the smaller urban centres. These have a combined capacity of over 500 million litres.
From The Sunday Independent (SA), 4 November
Bin Laden link with war gems shocks De Beers
Sierra Leone and De Beers, the South African-based global diamond giant, have reacted with alarm to a United States media report that terror suspect Osama bin Laden's Al-Qaeda network had made millions by trading in smuggled diamonds from the west African country. The Al-Qaeda network has collected millions of dollars in the past three years from the illicit sale of diamonds mined by rebels in Sierra Leone, The Washington Post reported on Friday. Quoting unnamed US and European intelligence officials and two sources with direct knowledge of the diamond sales, the newspaper described an operation that has helped finance the Al-Qaeda network, which the US blames for the September 11 attacks on New York and Washington.
The newspaper said diamond dealers, working with men identified by the FBI as important Al-Qaeda figures, bought diamonds from the Revolutionary United Front (RUF) rebels at below-market prices and sold them for big profits in Europe. The Post quoted unnamed sources as saying that since July, these diamond dealers had bought far more diamonds than usual, paying premium prices for them. The newspaper said investigators believe this suggests that Al-Qaeda, perhaps anticipating its accounts would be frozen after September 11, strove to protect its money by sinking it into diamonds, which can be easily hidden, hold their value and are hard to trace. "I now believe that to cut off Al-Qaeda funds and laundering activities, you have to cut off the diamond pipeline," the Post quoted an unnamed European investigator as saying. "We are talking about millions and maybe tens of millions of dollars in profits and laundering."
Solomon Berewa, the Sierra Leone justice minister, said on Friday that Freetown would do its best to stop the alleged diamond trade between Al-Qaeda and the RUF. "The RUF have been dealing in diamonds as far back as the start of their campaign, but we never would have imagined this connection," Berewa said. Tom Tweedy, speaking for De Beers, expressed shock on Saturday at the news of Al-Qaeda having bought gems from the Sierra Leonean rebels. He said he had not been aware of Bin Laden's involvement with "blood stones", but that "anything is possible". De Beers has not had any presence in Sierra Leone for more than 15 years, he said, last buying from that country in about 1985. De Beers has been at pains in recent years to co-operate with international efforts to cut off the supplies of diamonds that feed regional conflicts such as the one in Sierra Leone. "Diamonds are a high value, low volume item," Tweedy said. "Where there is not a regulated diamond industry, it's open to abuse." He said that the United Nations had, with the Sierra Leone government, put in place structures to stop dealing in conflict diamonds, which accounts for two percent of the gem market. Tweedy said the UN had done a "magnificent job" of putting in place processes for fraud-free certificate systems which ensured that diamonds carried proof of having come from legitimate mines. Tweedy said De Beers "encouraged every authority to nail and smash" conflict diamond dealing.
Reuters reports that the diamond industry edged closer on Thursday to agreeing on ways to curb illegal exports of so-called "blood diamonds" from war-torn Africa, but reservations by the US still hung over a possible deal. Officials and industry experts from 25 countries ended their latest round of talks known as the Kimberley Process in the Angolan capital of Luanda with broad agreement on a certification scheme to ensure that exported diamonds carried proof that they came from legitimate mines. Under the proposed scheme, certificates to verify the origin of each package's contents would accompany each shipment of stones, with additional certificates from each country traversed, delegates said. But the US - the world's biggest jewellery market - raised concerns that the proposed certificates could be incompatible with World Trade Organisation rules.
Sierra Leone's Berewa said there had been reports of Bin Laden links in local tabloid papers, but that the report in the Washington Post was in a different league. "We dismissed those with a wave of the hand, but if the Washington Post reports this, we will take action," he said. "We and the international community will take action to find out what's happening and do our best to stop it, if it's true." Foday Sankoh, Sierra Leone's controversial former vice-president and leader of the RUF, who has been in jail since his arrest last May, paid a mysterious visit to South Africa in February last year. Sankoh, who was subject to a UN travel ban because of suspected human rights abuses, left the country when his presence was exposed, apparently due to a bungle in the South African department of foreign affairs.
Shortly before Sankoh was arrested, Berewa, then the attorney-general in Sierra Leone, emerged from Sankoh's house following an earlier shootout, brandishing papers that he said proved Sankoh was enriching himself by dishing out diamond concessions to various parties, including South Africa. Sankoh's rebels controlled much of Sierra Leone's diamond fields during the bloody civil war during which Sankoh's forces stand accused of mutilating about 10 000 civilians and using drugged child soldiers to spearhead a reign of terror. Sankoh later struck a deal in July 1999 with the government whereby he became vice-president and minister of mines in a government of national unity, thus formalising his influence over the country's highly lucrative diamond industry. Liberian leader Charles Taylor, who headed a ruthless rebel group that seized power in that country, was considered a close ally of Sankoh. Libyan leader Muammar Gaddafi was a supporter of Taylor, and through him of Sankoh, and is believed to have benefited from the rich pickings in Sierra Leone's diamond fields. Sankoh was jailed in May last year after being held by the militia of Johnny-Paul Koroma and handed over to the government. In March this year the Sierra Leone government said that it had no plans yet to put Sankoh on trial.
The top diamond trade body in Antwerp, Europe's prime centre for the stones, said on Friday it was "very, very surprised" at press reports saying that the Bin Laden network had made millions from trading in diamonds. "This is completely new. We are very, very surprised," said Youri Steverlynck, speaking for the Antwerp high diamond council. Steverlynck said his organisation had never heard of Islamic terror organisations being funded via the diamond trade, which he insisted was now very strictly controlled, with no more than 1 to 1,5 percent of output being smuggled. He said that two Lebanese traders named in the Washington Post article as key Antwerp figures in the alleged trading "are not registered in Belgium, either as members of a diamond market or as diamond traders". The high diamond council "does not know them", he said. Steverlynck suggested that the Washington Post article might be referring to a "previous situation", as in recent years diamond trading circuits had been tightened considerably. "It is impossible to organise a totally clandestine diamond trading operation on a large scale," he said. "But perhaps there is trafficking on a small scale."