International and regional governmental engagement does not guarantee the success of long-term reform, but continued isolation will almost certainly lead to the failure of reforms to take hold.
Summary and Recommendations
- Zimbabwe is at a watershed, faced with its most serious economic crisis since 2008. A ‘triple whammy’ of deflation, stagnation and low productivity is exacerbated by low commodity prices, weak regional currencies and drought, in the context of a legacy of poor policy and a political succession battle over who will eventually succeed 92-year-old President Robert Mugabe.
- The gravity of the economic situation has forced the Zimbabwean government into a process of re-engagement with the West. Re-engagement is primarily aimed at attracting new revenue to ease the crisis of liquidity and fiscal deficit. The focus is on improving business confidence and an intensified re-engagement of the international financial institutions (IFIs). However, while there has been some progress in economic reform, there has been little governance and human rights reform.
- Government reforms have taken advantage of ‘low-hanging fruit’, and some limited progress has been made in critical areas such public finance management. The government must now commit to a long-term strategy that includes political reform to buttress economic advances. Confidence will be built on delivery, not on rhetoric.
- The domestic context is one of increasingly vocal popular discontent, ruling party factionalism and succession disputes spurred by concerns over Mugabe’s age and state of health, and the prospect of national elections due in 2018. There is a heightened threat of intra- and inter-party violence in the run-up to the polls, with the emergence of new parties and protest groups adding to the uncertainty. Time is of the essence, and ZANU-PF needs to demonstrate that it can embrace both reform and compromise, and deliver economic growth and development for all Zimbabweans.
- Successful reform requires unified and sustained commitment on the part of the government. The severity of this crisis means that ‘muddling through’ is not a long-term option, particularly as international partners could walk away if they sense that ZANU-PF is just seeking short-term financial relief.
- International partners must also show commitment by bringing fresh thinking to Zimbabwe’s current crisis and evolving transition to a post-Mugabe era. Beyond the potential of a major humanitarian and economic emergency within Zimbabwe, the wider region is less resilient than was the case in 2008, and an unstable Zimbabwe will have significant regional impact.
- Although the EU and Australia have reviewed their Zimbabwe strategies, including responding to Harare’s re-engagement strategy by revising and in some cases easing their sanctions, the United States and Canada have lagged behind with outdated sanctions lists. At a time when the US administration is reviewing its strategy towards Sudan and its head of state, Omar al-Bashir, US policymakers should do so too with regard to Zimbabwe.
- International and regional governmental engagement does not guarantee the success of long-term reform, but continued isolation will almost certainly lead to the failure of reforms to take hold. A nuanced process of exerting political pressure balanced with the offer of support will reinforce the technocratic assistance provided by the IFIs, and will be fundamental to ensuring the effective use of any prospective concessional financing.