In this issue:

Zimbabwe Opens to Private Enterprise as Economic Crisis Deepens

U.S. Sanctions Against Zimbabwe Contribute to Economic Collapse

Zimbabwe Opens to Private Enterprise as Economic Crisis Deepens

Zimbabwe is now allowing private companies to import and sell fuel, formerly a monopoly of the government-owned National Oil Company of Zimbabwe (Noczim); the government has also opened up trade in maize and wheat to private firms, and they will not have to pay duty on their imports. The government also hopes to attract private firms' bids for hydroelectric projects.

Energy in Africa Aug. 1 reported that the fuel crisis "has reached such critical levels that even essential security and health services had reportedly run out of fuel, according to a report in the Standard [a Zimbabwe Sunday newspaper]. Even the ruling Zanu-PF party is said to be demanding fuel from private importers because ... Noczim's depots were dry. Security services are now drawing their fuel from strategic reserves."

Zimbabwe News July 19 quotes Innocent Makwiramiti, CEO of the National Chamber of Commerce: "Bread ... is in short supply because some major bakeries depend on fuel for production and distribution."

The government began allowing private firms to sell fuel at regulated prices in mid-July, and opened the grain trade Aug. 16.

In an effort to acquire foreign exchange to import oil, Noczim launched a pilot project Aug. 16 to sell fuel (from strategic reserves?) to those who can pay in certain foreign currencies. The price is US$1 per liter.

There are also other factors behind the economic crisis:

* Finance Minister Herbert Murerwa told Parliament Aug. 16, "The situation has been made worse by large-scale crop failure."

* President Mugabe's land reform gave land to many Africans, but without titles or leases; as a result, they have been unable to obtain bank loans for seed, fertilizers, and tractors. Murerwa says the government will now give 99-year leases to African farmers on land seized from white commercial farmers.

* African farm laborers on the commercial farms were thrown out of work by the land reform. Some of them—and many others from rural areas—built shantytowns around Harare, which became hotbeds of crime and anti-government sentiment. The government has just bulldozed some of these shantytowns (press accounts—invariably hostile to the government—claim 700,000 homeless).

Much of the workforce has left the country over the last five years (one press report claims two-thirds have left), entering neighboring countries illegally, especially South Africa.

President Mugabe has appealed for help from China and South Africa. China has responded with a small amount of help. Mugabe asked South Africa for a loan of $1 billion, $280 million of it to be used to make an overdue payment to the IMF. South Africa has agreed to help, but says it cannot manage nearly as much as $1 billion; and there will be conditions.

U.S. Sanctions Against Zimbabwe Contribute to Economic Collapse

The U.S. Department of the Treasury on Aug. 3 applied sanctions against Zimbabwe, under Executive Order 13288, to an additional 24 commercial farms and two businesses. The sanctions impose heavy fines and imprisonment on U.S. nationals and firms that do business with key individuals in the government of President Robert Mugabe and the farms and firms in which they have an interest. The Bush Administration claims that these are not sanctions against Zimbabwe, and that they "financially isolate" only those working with Mugabe to "destabilize Zimbabwe."

In fact, because the leading figures in the Zimbabwe government have also taken ownership of a significant portion of the economy, the imposition of sanctions—against commercial farms, agricultural cooperatives, a transport equipment manufacturing company, and a bus transport company—are an attack on the economy.

The Anglo-American foreign policy establishment saw no problem when a relative handful of British-heritage families controlled the economy, and the International Monetary Fund's policies were functioning, which destabilized Zimbabwe in the 1990s.