Although many in the West were quick to interpret Mugabe’s policy as a desperate gamble, evidence suggests that this was a carefully calculated step. In particular, China, Malaysia and India have a sustained track record of involvement in another African pariah, Sudan. Moreover, ruling ZANU-PF party officials took note of the role China played in Angola. With onerous diplomatic penalties, Western embargoes on arms sales as well as targeted sanctions against top ZANU-PF officials, the time seemed ripe for courting booming Asian economies.
Yet, the hoped-for surge in Asian investment capital or loans has never really materialized. Zimbabwe is endowed with a variety of strategic minerals, and was a leading African agricultural exporter. However, Asian countries have become as wary of the Zimbabwean situation as their Western and South African counterparts.
There have been few Chinese deals to date, some of which are apparently underwritten by tobacco futures:
–Agriculture. Both governments have identified agriculture as a priority area.
–Mining and energy. Agreements have been reached to construct three thermal power stations. However, work on these is yet to begin or has been halted. In the platinum sector, it is rumored that China turned down a government offer to invest. A prospective Chinese buyer of Zimbabwe’s Iron and Steel Company pulled out in 2005 when faced with absorption of substantial losses. This month, Sinosteel purchased a 67% stake in Zimbabwe’s top ferrochrome producer and exporter, Zimasco Consolidated Enterprises, suggesting that Harare had finally met certain guarantees.
–Weapons. China’s sales of weaponry to Zimbabwe have come in the wake of Western sanctions. However, the volume of exported weapons from China is of less significance than in previous years. Nevertheless, use of foreign exchange or bartering agreements to buy weapons demonstrates Mugabe’s desire to keep the country’s security forces on his side.
For China, the dilemma has been to balance the need to account for growing South African displeasure at its role in Zimbabwe at the same time that it wishes to retain a position within the economy in anticipation of the post-Mugabe era. Chinese blocking of discussion of “Operation Murambatsvina” at the UN Security Council, which saw security forces displace hundreds of thousands from settlements in the outskirts of Harare in 2005, is probably the most tangible diplomatic gain Mugabe has received.
The Look East policy has had an impact, though it may not have paid the dividends Mugabe anticipated:
–The policy has demonstrated that China has limits on its willingness to prop up pariah regimes, especially when the costs of doing so outweigh expected economic returns.
–It also has shown that opportunistic Asian investment, when confronted by predatory African regimes, will pursue minimalist diplomacy to protect its interests.
–With a clutch of white Zimbabwean farmers reportedly employed in China to improve tobacco production, it also underscores that the Zimbabwean economy may soon lose what leverage it has in that sector.
China’s desire to limit exposure to economic uncertainty in Zimbabwe reflects a crucial difference between Harare’s and other African relationships with Beijing and other potential Asian investors. It also emphasizes that Zimbabwe’s economic crisis is inextricably linked to the political situation. Until the latter is resolved, investors will approach with extreme caution.
To read an extended version of this article, log on to Oxford Analytica’s Web site.
Post published in: Uncategorized