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Zimbabwe’s windfall from cancelling Odious Debts

Zimbabwe’s windfall from cancelling Odious Debts

 0 July 18, 2017 1:10 PM

Source: Zimbabwe’s windfall from cancelling Odious Debts | The Zimbabwean

This will not just be limited to Mugabe and his family, it will extend to ANY assets or money illegally obtained by ANY member of ZANU-PF, no matter how junior they may be in the ZANU-PF hierarchy. A lot of Mugabe’s followers will get a nasty shock once their party is ousted.

So, hopefully, their greed will be short-lived.

Of course, this news will bring no comfort to the many families and citizens who have been dispossessed or otherwise harmed, but it is to be hoped that the new government will ensure that everyone who has suffered as a result of these brutal and illegal seizures will be properly recompensed from any monies that are recovered, and their land or property returned to them where possible.

However, recovering all this money and assets will be of no help to the nation of Zimbabwe if the new government is also a corrupt, self-seeking one, because they will simply be swallowed up by the greedy machinery of the new administration. Zimbabwean citizens will benefit only partially if at all. This is an added vital reason for all Zimbabweans to ensure that their new government will actually be one that is working for the good of all citizens, and not for its own gratification.

Unfortunately, Zimbabweans appear to be making little effort to guard themselves against the new government simply being another (even if less corrupt, vicious and oppressive) version of ZANU-PF. Yet it is extremely important, if not vital, that they make it a priority to do so because Africa’s record of having governments that genuinely put their citizens first is absolutely appalling. And it has been so ever since the end of colonialism.

Indeed, it is no exaggeration to say that had Africans had decent governments, they would have been taken out of poverty years ago, and would by now have been enjoying lifestyles as good as Westerners – or, if not that, then rapidly approaching it. And all the faces of poverty would by now have been eradicated, or again nearly so: unsafe water & sanitation, malnutrition & famine, and totally inadequate education and healthcare.

People blame the West and China for the ongoing extreme poverty in Africa, and they are right. But the West and China have only been able to continue their exploitation of Africa and Africans because it has been in the interests of corrupt, self-seeking African governments to let them do so ever since the end of colonialism.

That is because, in almost every case, a change of government has simply meant one corrupt, self-seeking, repressive government taking over from another corrupt, self-seeking, repressive government. In some cases, the new regime has turned out to be even worse than the old one (although it is hard to believe that any new Zimbabwean government will be worse than Mugabe and ZANU-PF).

One consequence of this has been that only in a handful of cases has the assets stolen by an outgoing corrupt regime been confiscated and recovered by the new one. The reason is obvious: none of them want anyone to look too closely at what they themselves are doing in stealing from their nation and its citizens. So they would rather let the departing rulers leave with all their ‘loot’.

Once Zimbabwe does actually get a government that is going to put its citizens first, and is genuinely going to help them achieve fast-rising standards of living, seriously large sums of money are going to be required to rebuild the nation, and to invest in what will be needed: a rapidly growing private sector, because that, above all, is what leads to fast-rising incomes for the citizen population.

Billions of the US$ the new government needs will come from the recovery of stolen assets and money from Mugabe and ZANU-PF members.

But that is only the beginning because Zimbabwe could reclaim billions of US$ in the repayments it has already made on what are called Odious Loans. These are loans issued by foreign lenders to a government that is acting in its own self-interest rather than for its citizens, and the lender knew or should have known it, and they are almost certainly illegal under international law because they are instrumental in helping repressive, even brutal governments to stay in power.

The foreign lenders involved are mainly in the West or China and, apart from governments, banks, financial institutions and MNCs, they also include the UN, the World Bank and the IMF.

In these circumstances, it may not even be necessary to prove that the government had not used the loan for the benefit of its citizens. According to Dr Éric Toussaint & Professor Damien Millet in their book ‘Debt, the IMF, and the World Bank’: ‘Financial support for a criminal regime, even if it happens to build a school or hospital, amounts to consolidating the said regime’. So it is still an odious loan which can be repudiated, and any repayments already made on it can be reclaimed.

What amazes me is that every Western lender knows this. Yet they still continue to lend money to Mugabe knowing perfectly well that every loan they make is illegal and can be repudiated by the government that replaces Mugabe. This shows their complete confidence that any government that replaces Mugabe will be just as corrupt, just as anxious as he is to keep receiving Western loans, and therefore will not repudiate the odious loans made to Mugabe.

These loans come in a variety of forms. Some, Zimbabwe was forced to take over from the departing White Southern Rhodesian government as part of the deal for Independence. As Southern Rhodesia had been taken over by force from Black Africans, this is exactly the same as Germany forcing France to repay its debts of occupation after it was defeated. Germany would not have been allowed to do that then, and ex-colonial powers should not have been allowed to do the same to their ex-colonies.

In Zimbabwe’s case, the figure was US$700 million. Zimbabwe would be able to reclaim all the repayments it made on this, plus all the interest that will have accrued from 1980 to the present day on the repayments it actually made: a very substantial sum, perhaps as much as three times or more of the original $700 million ‘borrowed’, or over US$2 billion.

Believe it or not, some of these loans had been issued to Southern Rhodesia to buy Western arms in order to help it fight the Black Zimbabwean freedom forces. Yet, when it was formed, Zimbabwe still had to pay them back, despite these loans having been used by Smith to breach the UN sanctions.

Just as a matter of interest, Western powers promised to give Zimbabwe $2 billion in aid for agreeing to pay this figure. They then reneged on most of the deal, forcing Zimbabwe to take out more loans for its development.

Zimbabwe stills owes Western lenders in excess of US$9 billion (which excludes what it owes China). As all this would have been lent after it became obvious that Mugabe was acting in self-interest and not in the interest of Zimbabwean citizens, all this could be repudiated.

However, that is not the end of the story. The real points at issue are:

(1) At what date could foreign lenders have reasonably been expected to either know or should have known that Mugabe was no longer acting in the interests of Zimbabwean citizens but was clearly acting in his own interests?

(2) How much has Zimbabwe repaid on any Western loans issued after that date, including to the World Bank, the IMF and the UN?

Because not only is the new Zimbabwean government entitled to have these repayments refunded. It is also entitled to charge interest on the repayments it has already made on these odious loans.

It will require accountants to calculate how much Zimbabwe would get back. But I think it must be in excess of US$20 billion. Add to that maybe over US$2 billion in repayments plus interest of the loans Zimbabwe was forced to take over from Southern Rhodesia, plus untold US$ billions from Mugabe, his family, his hangers-on and ordinary ZANU-PF members.

Taking into account that Zimbabwe’s current revenue is approximately US$3.4 billion, it clearly means that Zimbabwe can finance all its future development needs without incurring any foreign debt at all.

But, I repeat, this will not work if a future self-interested government gets hold of this money because it will steal most of it for itself. It will only benefit Zimbabwean citizens if they ensure that their next government will genuinely only work for the best interests of its citizens.




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