Written evidence submitted by Professor E.A. Brett

 

Managing an Aid Relationship Under Political Stress

Facilitating a Return to Good Governance and Growth in Zimbabwe

 

A Briefing Paper for the International Development Committee,

House of Commons

December 2009

 

Professor E.A. Brett

Development Studies Institute

London School of Economics

 

The Situation

 

1 Ten years of political and economic mismanagement have turned Zimbabwe from a well run state to one that depends on remittances and aid for food and basic services. This decline began in the late 1990s when the ZANU government's political monopoly was challenged by radical civic organisations and the Movement for Democratic Change. It responded by using currency and financial market controls, the printing press, a grain and fuel marketing monopoly, and land seizures to transfer resources from efficient producers to political cronies, the security services, and war veterans that it relied on for support. It attacked and intimidated political opponents, forcibly destroyed the urban informal sector, manipulated elections and used its control over land, food and information to retain its majorities in rural constituencies. This enabled it to win elections, but destroyed the economic system, leading to fiscal, food, fuel, and foreign exchange crises.

 

2 These enabled the MDC to win majority support, and forced ZANU to negotiate a Global Political Agreement (GPA) brokered by the SADC that produced the current uneasy governing coalition. The MDC won clear majorities in Parliament and in the first round of the Presidential elections in 2008, but conceded the presidency because of state a managed programme of violence and intimidation. However ZANU is utterly opposed to this 'partnership with ideologically incompatible MDC Formations' (5th Party Congress Resolution D) and has retained control over the security apparatuses the Reserve Bank and Provincial governorships, and agriculture, and is using these to block attempts to introduce a viaible reconstruction programme,

 

3 The MDC has nevertheless introduced important economic and social reforms, and received greater support from the donor community. DFID and other donors now need to increase support to the MDC and other progressive civic organisations, and help them to increase their capacity to provide pro-poor services without reinforcing the ability of the politicians, officers and officials who dominated the old regime to retain control.

 

The Challenges

4 Zimbabweans and their supporters confront major political, economic and social challenges. They need to:

 

· neutralise the power of the ZANU elites that occupy key political and economic positions;

· depoliticise the security sector and judiciary;

· prepare a new constitution to guarantee fair elections under international supervision;

· restore monetary, fiscal, and financial discipline;

· rebuild state capacity and eliminate corruption;

· fund an emergency rehabilitation and reconstruction programme designed to repair infrastructure, rebuild productive capacity and provide basic services and safety nets;

· re-establish a legitimate property rights regime and transfer non-performing assets acquired through political influence to those able to use them effectively;

· address high levels of unemployment and exclusion by supporting rural and urban small business development in parallel with support for formal sector firms;

· strengthen the civic associations that provide essential services and increase social cohesion;

· negotiate agreements with neighbouring states to facilitate the phased return of illegal Zimbabwean economic migrants.

 

Political Issues

 

5 Donor-Government relationships are particularly difficult in Zimbabwe because the west imposed sanctions on the ZANU leadership and has denied it support for many years. Sanctions had no economic consequences, but the withdrawal of aid to government from the late 1990s, and use of NGOs to deliver humanitarian aid did intensify the crisis and force ZANU into the current agreement with the MDC. This changed the political situation and has presented the donor community with new opportunities and threats. The MDC is the only local political movement capable of mobilising the support and develop the programmes needed to resolve the current crisis, so the major political issue confronting donors is to strengthen its capacity to do so while neutralising opposition from ZANU.

 

6 The MDC has sustained its organisation and support since 1999 despite electoral fraud and violence. It has a policy agenda and the commitment needed to sustain a credible rehabilitation and reconstruction programme. Its partial control over economic and social services has enabled it to restore goods to the shops, end hyper-inflation, and reduce rent-extraction. However, it cannot address the agrarian crisis, and its representatives are still being systematically targeted by the security services. ZANU has not implemented most of the agreements in the GPA, and still intends to 'extricate itself' from it in order to 'retain its mantle as the only dominant and ascendant political party'. (Resolution D) It opposes donor support for the MDC, and its control over the Presidency enables it to block or destabilise many of their attempts to do so. This raises difficult political and strategic issues.

 

7 ZANU has just reaffirmed its hostility to external intervention by resolving that its 'national strategic objective ... shall be the checking, containment and ultimate defeat of the West's neo-colonial regime change agenda by securing a decisive and uncontested victory at the next Harmonised Elections'. (Congress, Resolution A1) Its main concern is to defend 'the gains of the Liberation Struggle' (D4), - in reality the asset transfers to its supporters through land seizures, black empowerment, and the rents generated by its former control over foreign exchange, credit, markets and the budget. These have created a ruthless security-business complex that depends on ZANU's continued rule, and controls violence and much of the formal economy. This has important political implications for donors during the years leading to the next election, the election campaign, and its aftermath.

 

8 ZANU's continued control over security, agriculture and the Reserve Bank is undermining MDC attempts to rehabilitate the economy, strengthen its own organisational capacity, and deliver the improvements that it needs to make to maintain its own support. ZANU's failure to implement its side of the GPA and intimidate MDC's members constantly tempts it to leave government. This would precipitate a major political crisis with consequences that we cannot guess at here and would change the whole political situation. However, assuming that agreement does hold, they should help the MDC to improve public services, increase its political support, and to create the conditions that will ensure that the next elections both free and fair. However this will not be easy.

9 Political instability is increasing rapidly as power struggles intensify within ZANU itself. ZANU is a patronage system based on spoils distributed by the President, Ministers, the security services and key officials. However, patronage has almost disappeared as a result of the crisis, because the MDC controls key economic and financial services; and because the state enterprises, farms and business controlled by the crony elite are virtually bankrupt. This has eroded the leadership's ability to manage intra-party conflicts, while the likelihood of his early retirement is intensifying competition between factions that support alternative successors. The recent Party Congress showed that this is pushing the organisation to breaking point. Mugabe publicly condemned the dissention inside the organisation, important factions were excluded from key positions, and accusations of treachery and betrayal filled the e-waves. These conflicts raise at least three potential scenarios:

 

· the collapse of ZANU and its ability to deliver rewards could lead breakaway groups to join a broad-based MDC coalition, even before the next election. This would intensify pressure on Mugabe, and increase the chance of an early election and MDC victory.

· a weakened ZANU under Mugabe or a new and disputed leader could suffer a major defeat at the next election enabling the MDC to take over undisputed control;

· the security and business elite, confronted with the loss of their assets and impunity for political crimes, could actively resist an MDC take-over. They could use violence again to control the elections, rule by force, or use their military and economic power to systematically disrupt the reconstruction process.

10 The first two outcomes would increase the policy options open to donors and enable them to provide a majority regime it with full support. A donor coalition led by the IFIs would negotiate policy agreements and finance a reconstruction programme, similar to the successful programme developed in Uganda under the National Resistance Movement since 1987. However, the NRM had destroyed the power of the old security apparatus and took undisputed control in 1986. This is the first best option for Zimbabwe, and the Uganda case, where the situation was far worse in 1986 than it is in Zimbabwe now, suggests that much of the damage suffered over the past decade could be repaired relatively quickly.

 

11 However, an electoral victory would not eliminate the security-business complex in Zimbabwe, so an MDC government would confront serious threats that could easily destabilise its reconstruction programme. Senior officers run the major parastatals and have acquired enormous amounts of land and business assets, as do senior party leaders, officials and judges. This transfer of assets creates serious political risks and policy challenges.

 

· A new government that attempted to retrieve these assets could even lead to a military take-over. Coups are out of fashion, but leading officers have claimed that they would not serve an MDC government. This threat is compounded by the possibility of organised rioting by unofficial ZANU youth militias and war-veterans who have been trained to use extreme violence to intimidate the civilian population.

· If the MDC were able to take over, their ability to restore economic discipline and a legitimate property rights regime would depend on their ability to either oblige the new security-business class to use its assets effectively or transfer them to legitimate national or foreign investors. Dealing with this issue under conditions of extreme scarcity would present the government and donors with their greatest challenges.

 

How should the donors and regional states respond?

 

12 The short-term threat posed by the security-business complex is very serious, but their ability to retain long-term control over their own economic assets and the state apparatus has been seriously compromised by the destructive effects of the predatory processes through which they acquired them. The parastatals and their farms and businesses are virtually bankrupt, the state can no longer tax and pay officials real salaries or illegitimate rents, while poor pay and conditions have eroded the loyalty of the rank and file and produced serious discontent and high desertion rates in the security services. Their immediate survival now depends on funding from donors which gives them the ability to defend the new regime and enable it to implement difficult reforms. These should bring rapid improvements to the mass of the population, increasing political support for the MDC that could be consolidated if it came to terms with carefully selected members of the old regime. The new regime should take over all unutilised assets, and adopting policies that force all owners to use their assets effectively or lose them.

 

13 Managing the reform process would raise difficult issues about impunity and the right to retain politically acquired assets. The security services and their political masters have been responsible for serious political crimes including the Matabeliland massacres in the 1980s, assassinations, illegal imprisonments and torture over the past decade and the illegal destruction of property during the Murambatsvina campaign in 2005. The threat of legal action had ZANU lost the last election explains the violence during the last stage of the 2008 elections, and will play a key role in the run up to the next one. Thus donors will need to decide whether to accept a political settlement that would allow the beneficiaries of these crimes to retire and enjoy their wealth. With impunity, they might leave the public sphere without a struggle; refused it, they could destabilise the political settlement.

 

14 A new MDC regime could only overcome these threats if it won an undisputed majority at the next election, and had the full support of its neighbours, and especially South Africa, when it took over. A new dispensation would require a new constitution that reduced the excessive power of the Presidency and the ZANU party apparatus, and that guaranteed effective procedures for supervising the elections to prevent the use of fraud and force. These issues are addressed in the GPA, but ZANU is actively resisting all MDC attempts to address them and is a leading exponent of electoral manipulation and intimidation. Donors should make their views known on these issues, but should also invoke the support of Zimbabwe's neighbours in doing so since they are far better placed than they are to influence events, but have done very little to improve matters over the past decade.

 

15 SADC and South Africa are seen as legitimate interlocutors by both parties, but the MDC and civic organisations claim, with some justice, that their explicit or implicit support for ZANU over the past decade enabled it to manipulate elections, retain political power and destroy the economy. They did help to broker the GPA but have failed to oblige ZANU to honour its agreements. However, they have been forced to deal with the MDC since the 2008 victory, and do recognise the need for a viable solution to reduce the heavy costs that the crisis has imposed on the region. The UK should attempt to strengthen SADC's attempts to oblige ZANU to implement the GPA, to support Zimbabwe's attempts to rebuild its economy and repatriate its economic migrants, and ensure that the constitutional and electoral arrangements adopted before the next election guarantee a free and fair result.

 

 

 

 

Economic and Social Issues

 

16 A new regime will have to recapitalise a bankrupted economy, restore private property rights, and make some form of restitution to those that have lost their assets and savings. Detailed plans would need to be drawn up to address these issues that we can merely outline here. They would include an acceptable solution to the land problem, the restoration of state capacity and reconstitution of state-owned utilities, rebuilding industrial and export capacity, recapitalising the financial sector, a new investment regime for legitimate local and foreign investors, and removing the impediments to and supporting the activities of the small-business sector. The state controls over currency, credit, the printing press and grain markets that enabled ZANU to transfer assets to its supporters would have to be reformed. Substantial donor/state managed transfers to overcome the foreign exchange and budget crises will be essential. The MDC has produced sophisticated policy programmes to deal with these issues, and can also refer to the successful programmes reconstruction programmes in Uganda and Ghana. We conclude by identifying some of the particularly complex problems generated by Zimbabwe's distinctive recent history.

 

17 Commercial Agriculture. The land-seizures that began in 2001 have removed most of the best commercial farmers from their land and replaced them with small-holders operating at little more than subsistence level, and political cronies on large farms that they cannot run effectively. The most cost-effective way to restore the productivity of this land would be to encourage as many of the previous owners to return, but this would be politically difficult given the sensitivity of the ownership issue and the residual power of the military-business complex. However, the disastrous outcome of the land seizures in terms of food shortages lost exports and employment may well have discredited the whole programme and enable the regime and donors to restore unproductive land to former owners willing to return, provide the inputs and markets needed to restore the productivity of the large and small-scale farmers who remain.

 

18 Communal Agriculture. This raises fewer political issues and provides many more people with their food and income. Donors should support a major programme to restore the infrastructure, credit, input-supplies that sustain it, and to remove the regressive state controls over prices and marketing that have prevailed during the past ten years. They could find ways of overcoming many of these constraints by supporting both commercial and NGO based suppliers of inputs, credits, and marketing facilities.

 

19 Poverty Reduction. Political and economic mismanagement has destroyed jobs and livelihoods, disrupted health and education, and turned a large proportion of the population into economic migrants. Restoring the productivity of the formal sector will be essential, but difficult, given the availability of cheap imports. However, the formal sector has always been capital intensive and generated relatively few jobs. Hence donors need to support the creation of a strong small and medium enterprise sector. This has always played a key role in poverty alleviation, but often been discouraged by the state and suffered devastating losses during the Murambatsvina campaign in 2005 when most small urban businesses were destroyed because of the support they gave to the MDC.

 

Social Services. Economic and political breakdown intensified by the Aids pandemic, food shortages, the systematic destruction of urban housing and livelihoods, and the collapse of social provision has almost halved life expectancy over the past decade. Donors have hitherto focused most of their resources on these sectors, but have used NGOs rather than the state to deliver resources. They should be able to not only sustain provision through NGOs once the political situation improves, but also support public sector reform programmes designed to increase the resources at the disposal of the state, and strengthen the incentive systems that guarantee its efficiency and ability to serve the poor as well as the rich.