Tag Archives: zimbabwe and United States

The Power Plays in Africa

As the overthrow of despot Robert Mugabe entered a stalemate on November 17,  2017, eyes turned to China — Zimbabwe’s largest foreign investor and a key ally — amid speculation over its role in the military coup.Source in Harare believe the Zimbabwean conflict within the ruling party Zanu PF is involving two rival camps has direct links to China and Russia with both countries trying to control and protect their own economic interests.

The army chief General Constantino Chiwenga, visited Beijing l — just days before tanks rolled into the streets of Harare. President Mugabe has been been hostile to the Chinese in recent years accusing them of plundering the countries diamonds worth $15 billion.  On October 2017 First Lady Grace Mugabe was in Russia where she represented her 93-year-old husband at a function where he was honoured with some accolade in Russia at the World Federation of Democratic Youth (WFDY) in Moscow.

“It is a BRICS internal rivalry with both Russia and South Africa on one side trying to protect their economic interests and China on the other side,” a regional think-tank in London said on November 17, 2017… Russia has been investing in several projects in southern African nations, for example, the ALROSA group of diamond mining companies is engaged in several projects in Zimbabwe, while mining and steelmaking company Evraz and Severstal steel and steel-related mining company conduct their business in South Africa.

Russia and South Africa, which together control about 80% of the world’s reserves of platinum group metals, have created a trading bloc similar to OPEC to control the flow of exports according to Bloomberg.

Zimbabwe, Canada, and the U.S. are among other major platinum group metals producers.

Russian and South African officials signed a memorandum of understanding today to cooperate in the industry.South Africa mines about 70 percent of the world’s platinum, while Russia leads in palladium, a platinum group metal used in autocatalysts, with about 40% of output, according to a 2012 report by Johnson Matthey Plc.

According to the Chamber of Mines of Zimbabwe (CMZ) and geologists, Zimbabwe has far bigger platinum reserves than Russia. The country currently has the second known largest platinum reserves after South Africa. Experts say underfunding and limited exploration has over the years stifled growth of the mining sector.

The Zimbabwe chamber is on record saying it seeks to increase production to the targeted 500 000 ounces per annum requires the setting up of base and precious metal smelters and refineries, investment of $2,8 billion in mines, $2 billion in processing plants and between $200 and $500 million to ensure adequate power supply. Already, the country’s major platinum miners – Zimplats, Unki and Mimosa who are currently processing the metal in neighbouring South Africa – have undertaken to construct the refinery….

Miles Blessing Tendi, a lecturer in African history and politics at the University of Oxford, says there is no way to be certain if China knew about Mugabe’s fate but believes China’s respect for sovereignty would make their involvement uncharacteristic.

Excerpt, It gets ugly as Russia and South Africa gang-up against China over Zimbabwe coup, http://www.thezimbabwemail.com/, November 17, 2017

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Monetary Defeat and Political Suicide-Zimbabwe

Zimbabwean dollars image from wikipedia

Zimbabwe: Deflation has taken root as consumer demand shrinks and the economy struggles with a shortage of dollars. Once bustling factories in Harare are now rusty shells, devastated by the 1999-2008 recession that cut GDP by about half.  In addition, the mines are reeling from the fall in commodity prices and a drought has left 16% of the population needing food aid. Formal unemployment stands at more than 80% and power shortages are getting worse…

A year ago, Mugabe, the President of Zimbabwe,  turned to “old friend” China, but behind the official warmth Beijing made clear the days of blank cheques were over, forcing Zimbabwe to make repayments on $1 billion of loans made over the previous five years….

Zimbabwe has also opened talks on fresh loans from the World Bank, IMF and African Development Bank for the first time since 2009, when it started defaulting on its foreign debt, which now stands at $10.4 billion or 74% of GDP….

In the past, Mugabe parcelled out land seized from white commercial farmers, raised wages for state workers and printed money to finance government spending to shore up his support. Now he has little room to manoeuvre after the adoption of the US dollar in 2009. The government can no longer devalue the currency, print money to stimulate the economy or influence interest rates…

But new international loans will require reforms, including selling some loss-making state firms, which are a constant drain on the public purse, analysts said.Harare would need to plug leaks in its finances, increase transparency in mining revenue, redistribute idle farms to competent farmers and ease black economic empowerment laws requiring foreign-owned firms to sell majority shares to locals.  “By far the biggest reform is that of the civil service. The government needs to cut spending on salaries, which the authorities are conscious of,” said a Western diplomat who has helped Harare in discussions with foreign creditors.  Wages take up 83% of Zimbabwe’s $4 billion annual budget. Finance Minister Patrick Chinamasa has said the bill should be cut in half, but there is no consensus within cabinet on how to do it.  The government is now the biggest employer with 550,000 workers of the total 800,000 formal jobs. Most Zimbabweans earn a living in the informal sector and on the streets.

Excerpts from Zimbabwe’s Mugabe warms to the West as economy wobbles, Reuters, Oct. 22, 2015