Locking us out of the global financial system controlled by the Multilaterals has far reaching consequences. These institutions were created after the Second World War to help countries manage their international finances. They were also designed to help developing counties like ours deal with serious problems and to manage debt.
The argument that these sanctions do not affect ordinary Zimbabweans is a complete fallacy. We cannot borrow money from the international system, every investor has to take such restrictions into account when they come here, it automatically increases the cost of all loan finance affected by a thing they call “Country Risk”.
The massive growth in the Chinese economy over the past 50 years has been due to three main elements: –
- Access to world financial markets without restrictions and this has enabled the Chinese to build up their national debt to 250 per cent of their GDP at very low interest rates.
- Access to world markets on a basis that has allowed China to become the industrial hub of the world with an infrastructure that is better than most developed countries due to the availability of low interest, long term finance.
- Access to technology which has allowed the Chinese to match or even better the quality and character of value added products. No country in the world has more students overseas at our Universities, and more Chinese study English than the rest of the world combined.
In addition to largely retaining their sanctions regime on us, the US has announced their formal withdrawal from the negotiations that have been going on over the past two years on debt relief. Our national debt is small by global standards and is less than half our GDP. Our fiscal regime is sound and we have a balance of payments surplus. There is no reason why we cannot manage our debt and even borrow more money for long term investment. The welfare of every Zimbabwean depends on this to a very large extent.
So where does that leave us? Firstly, I would point out that sanctions simply do not work. I was in the Rhodesian economy up to 1980 and for most of my working life nearly every transaction I was involved in was illegal under UN Sanctions imposed by the Security Council after UDI in 1965. It made no difference to our politics or our economy. In fact, some would say we thrived. We can say the same today, has sanctions changed how we manage our affairs – not one iota.
What would change our country would be prosperity and opportunity and building up our middle class, retaining our skilled workers and creating jobs. That would reverse the outpouring of migrants which now threatens all developed countries that offer a better life. That is why half our population now lives abroad. We are a tiny country, one of the smallest in the world, 60 per cent of our population is classified as living in extreme poverty. We struggle to fund even basic education for our children, we cannot give the great majority access to health care.
And instead of helping us meet these most basic of needs, the USA, the most powerful country in the world, isolates us and denies us the very opportunities that have transformed half the world. Does not make any sense to me.- By Eddie Cross
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