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Sanctions are real but… (Part 2)

By Prosper Chitambara

Development economics is filled with case studies of countries that have successfully busted economic sanctions and trade embargoes. For instances, following the Unilateral Declaration of Independence (UDI) by Ian Smith on 11 November 1965 Great Britain immediately announced the imposition of sanctions, including the freezing of Rhodesian assets. Shortly thereafter, the UN passed a resolution urging member states to withhold recognition of the new regime, break economic relations, and embargo oil exports. Eventually, the sanctions were broadened, culminating in a 1968 UN resolution requiring mandatory sanctions against Rhodesia.

This economic embargo ran from 1965 to 1979. A study by the Harvard Center for International Affairs, reveals that between 1965 and 1974 Rhodesia’s real output actually increased 6 percent per year “despite the depressing effect of sanctions”; the value of exports more than doubled between 1968 and 1974 and continued to rise afterwards, although much more slowly.

The embargo did have important effects on the Rhodesian economy, of course. It led mainly to Rhodesia becoming more self-sufficient through import substitution industrialization (ISI) strategy. In the decade from 1965 to 1975, the Rhodesian economy was transformed from virtually total dependence on the importation of manufactured goods in exchange for raw materials to a remarkable degree of self-sufficiency in most areas except oil and industrial plant and machinery. The Rhodesian sanctions were far more comprehensive and punitive than the targeted sanctions that Zimbabwe is currently under. More importantly, the Rhodesian sanctions even had the blessings of the United Nations. In 1980, at independence, Zimbabwe inherited one of the strongest economies in Sub-Saharan Africa (SSA) and a currency that was stronger than the US$.

Another interesting and inspiring case study is that of Apartheid South Africa when in September 1985 the European Community (EC) initially imposed a set of very limited trade and financial sanctions on South Africa. The Commonwealth countries followed suit and adopted similar restrictive measures in October of the same year. In the fall of 1986, the second and more significant round of sanctions followed.

In September of 1986, the EC banned imports of iron, steel, gold coins from and new investments in South Africa. Japan passed similar sanctions shortly thereafter, although omitting iron ore. In the United States, Congress passed the Comprehensive Anti-Apartheid Act (CAAA) in October 1986. The CAAA severely restricted lending to South Africa and imposed import bans on iron, steel, coal, uranium, textiles, and agricultural goods. Strategic materials, diamonds, and most forms of gold were omitted.

The direct impact of the trade sanctions was limited. South Africa developed extensive measures to circumvent the sanctions. South Africans also were able to transship through countries that were not participating in the embargoes. Overall, from 1985 to 1989, export volumes rose by 26 percent, although terms of trade suffered. One estimate of the marginal cost to South Africa of the mid-1980s trade sanctions 0.5 percent of GNP. They, therefore, had a small economic impact on the South African economy and again these sanctions were more comprehensive than out own targeted sanctions.

Cuba has also suffered from a more serious trade, economic and financial embargo by the US government for more than half a century. The United States embargo against Cuba was partially imposed on Cuba in October 1960. It was enacted after Cuba nationalized the properties of United States citizens and corporations and it was strengthened to a near-total embargo since February 7 1962. The embargo marked the suspension of trade and other commercial relations between the two countries. The embargo has definitely had a severe negative impact on the Cuban economic and social fabric. However, in spite of this, the United States is the fifth largest exporter to Cuba (6.6% of Cuba’s imports are from the US).

Today, the Cuban economy is kept afloat by a buoyant tourism sector and about $1 billion in remittances from the U.S. / Cuban “mafia,” that is, remittances from Cubans living in the U.S. In spite of the sanctions Cuba has also developed a comprehensive and quite successful public health, education and social protection system. Zimbabwe like most other African countries has tremendously benefited from Cuban doctors and Cuban trained medical practitioners.

In the case of Zimbabwe, the USA promulgated a law called the Zimbabwe Democracy and Economic Recovery Act (ZDERA) in November 2001. That enactment empowered the US President to instruct US representatives on the multilateral lending agencies – such as the IMF, World Bank and Africa Development Bank, among others – to vote against credit facilities (in all their various forms) to Zimbabwe. ZDERA was largely a response to the wrong things that we perpetrated as a nation against each other, the violence, the abuses, the killings. All these acts were a form of internally generated sanctions that attracted ZDERA. Moreover, Zimbabwe had already stopped receiving any support from the Bretton Woods Institutions (BWIs) in 1998 owing to arrears.

While support from the International Financial Institutions (IFIs) is crucial, however, no country has ever developed on the basis of IMF loans and donor aid. Development has to be internally driven and auto-centric. The East Asian tigers, China, India and Vietnam demonstrate this economic truism. What these loans have done in most developing countries is to perpetuate the dependency syndrome and further in debt those countries. We have a lot of resources that we could leverage to create fiscal space for development. All countries that have developed have taken responsibility for their actions.

Around 2005 or thereabouts Government launched the Look East Policy as a way of busting sanctions amid much pomp and fanfare. However, to date, nothing much has come out of it in spite of the fact that China is now the second-biggest economy in the world after the US and may soon overtake the US. Indeed, the balance of economic power and leverage is gradually tilting to the East. In fact, even the West is now looking East. Zimbabwe has failed to maximally benefit from the Look East Strategy. In fact, in some cases, Chinese investments have led to deindustrialization and loss of jobs such as the textiles and clothing sector.

More importantly, Zimbabwe is endowed with huge untapped natural and human resources. The country has huge coal deposits that will approximately last the next 200 years at a production output of 5,000 tons per annum. The coal reserves could be used as feedstock for coal-fired thermal power stations. The Zambezi River which runs along the Zimbabwe-Zambia border has the hydro potential of 5400 MW of which only about 750 MW is currently being utilized. Furthermore, Zimbabwe has copper and ferrochrome deposits, which can be used in pylon and cable manufacture and maintenance. The country also boasts huge reserves of platinum, diamonds, gold and iron ore. Zimbabwe also has one of “the best climate on earth” and a highly educated workforce some who have gone into the diaspora. We could leverage the huge diaspora to finance investment and development back home.

Instead, we have wasted too much time murmuring and complaining about sanctions without taking responsibility for actions. We are like the children of Israel in the wilderness who complained against God and for as long as they murmured they wandered in the wilderness for forty years a journey that should have taken them eleven days. So by complaining, we have perpetuated our misery like the Israelites. The sooner we appreciate that our destiny is in our own hands and not in the hands of the West or the IMF or World Bank the better. We are our own liberators, just like in the liberation struggle. It is high time we begin to do the right things and not continue doing the wrong things. We should transparently leverage our natural resources for the welfare of our people and for the general good. We should also invest in building people and not destroying people. We have wasted time fighting each other and destroying each other.  As a nation, we should also have a clearly defined and enunciated national version. The Bible says “…A people without a vision perish.” Zimbabwe belongs to all of us. We have a duty to develop this country. Let us invest in infrastructure. We should not murmur and complain about sanctions. Our destiny is in our own hands.

Prosper Chitambara is a Development Economist. He writes in his personal capacity.

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Daniel Chigundu

Daniel Chigundu is the news editor for OpenParlyZW an online platform that covers Parliament of Zimbabwe activities using social media (Twitter and Facebook). He is currently the secretary-general of the Zimbabwe Parliamentary Journalists Forum and a board member of Digital Communication Network.

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