Sanctions and Rational Optimism

Zimbabwe Defense Minister Emmerson Mnangagwa, some two weeks ago, has threatened to seize foreign owned companies’ shareholding unless they urgently denounce sanctions put in place by Western countries. Addressing a ZANU PF meeting in Mutare, Mnangagwa said that companies’ bosses will soon be summoned to appear on national radio and denounce western sanctions, if not they will lose 90% of their shareholding.

Obviously this was not a cabinet decision. Statements made at political rallies must be seen as colorful metaphors meant to appease an unhappy electorate. They are in the same category as: ”Read my lips, no increase in taxes” or “Our banks are safe”.

The sanctions against Zimbabwe are not the same as the historical trade sanctions against the Apartheid regime. The sanctions against Zimbabwe, initiated by the USA and EU, are targeted towards certain persons and their companies. There are also certain limitations for institutions to lend money to the Government of Zimbabwe.

I would not mind to sign a paper urging the EU and USA to withdraw the sanctions, provided I can add an extra clause: “provided that Rationality comes back into Zimbabwe”. That seems to me a pragmatic win-win deal.

In my view the sanctions were never effective, and did not help a bit to normalize the Zimbabwean Situation. Trust and rational policies may do the thing. Certainly not Western Democracy, that is a non-workable concept in the non-Western world. (Read the works of Kishore Mahbubani!).

Trade between Zimbabwe and the West is not forbidden nor is it immoral. It is actually encouraged by Western governments. In 2010 I have seen various trade missions from the West in Harare. They have visited diplomatic missions, government ministries and companies in Zimbabwe. All of them sniffing out the possibilities of enhancing trade. Surely these are not sanction-buster missions.

The West is concerned with the enormous growth in trade figures between Zimbabwe and their friends in the East, with China and India leading this growth.

The small Dutch business community is equally concerned. Last week I heard the following comments at a social gathering of the Dutch community: “Why are there European and American trade missions coming into Zimbabwe? Why not the Dutch”? At that same gathering it was decided to form a small group in order to form a Dutch – Zimbabwean Business Association. Because there are “enormous opportunities for companies in Zimbabwe and Holland to trade, to exchange goods and services, to innovate and to work the land profitably.”

Despite the threat of Minister Mnangagwa, despite the populist, irrational drive to enforce legislation which wants to enforce foreign companies to sell 51% of their shares to the indigenous people, there is a belief, shared by China and India, but also by the West, that decent trade is possible.

Investors do not spend too much time on analyzing political speeches. They are more interested in the processes of trade and innovation, so well described in the book “The Rational Optimism” written by Matt Ridley.