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Sanctions: EU, US and post-Mugabe Zimbabwe

17 Jan 2020 at 06:25hrs | Views
THE United States of America (USA) has two forms of sanctions relevant to Zimbabwe. The first is imposed by Executive Order, with the President using powers under the International Emergency Economic Powers Act (50 U.S.C. 1701), the second by the Zimbabwe Economic Recovery and Democracy Act (Zdera).

Presidential executive orders

The president of the United States may impose sanctions on individuals and entities anywhere in the world using powers under the International Emergency Economic Powers Act. The National Emergencies Act (50 U.S.C. 1601, 1622(d)) permits the annual renewal of the emergency and section 301 of title 3, of the United States Code allows for the delegation of Presidential powers accorded under the emergency. The legislation is clearly broadly interpreted as the provisions can only be invoked "to deal with any unusual and extraordinary threat … to the national security, foreign policy, or economy of the United States" (1701b of the Act).

When first invoked in 2003, under Executive Order 13288, it was held that: "…the actions and policies of certain members of the government of Zimbabwe and other persons to undermine Zimbabwe's democratic processes or institutions, (are) contributing to the deliberate breakdown in the rule of law in Zimbabwe, to politically motivated violence and intimidation in that country, and to political and economic instability in the southern African region".

In 2008, Executive Order 13469 expanded the scope of the national emergency declared in the earlier executive order and authorised "the blocking of the property of certain persons determined to have engaged in actions or policies to undermine democratic processes or institutions in Zimbabwe, to commit acts of violence and other human rights abuses against political opponents, and to engage in public corruption."

The actions these persons were deemed "to continue to pose an unusual and extraordinary threat to the foreign policy of the United States". It seems, however, that the Global Magnitsky Act of 2016 (Public Law 114-328), would have been used had it then been available as it is more appropriate, being designed to sanction those who have engaged in "gross violations of human rights or significant acts of corruption."

It was recently applied against "the Gupta brothers", alleged to have been involved in acts of corruption through "state capture" in South Africa.
The Presidential Executive Order in relation to Zimbabwe provides that: "(a)ny transaction or dealing by a United States person or within the United States in property or interests in property blocked pursuant to this order is prohibited, including but not limited to the making or receiving of any contribution of funds, goods, or services to or for the benefit of any person listed".

Only persons and entities on the list are embargoed from trading with "United States Persons" — a defined category which includes juristic persons. The Executive Order is therefore not a trade embargo against Zimbabwe. Individuals on the list are known as Specially Designated Nationals (SDNs). The list is available by following the links here: https://www.treasury.gov/resource-center/sanctions/SDN-list/Pages/default.aspx.

The list includes SDNs from every country subject to US sanctions and is difficult to examine but, in relation to Zimbabwe, appears to contain 83 individuals, 21 farm enterprises and 32 entities. Implementation and monitoring falls to the US Treasury Department's Office of Foreign Asset Control (Ofac) and the listing of SDNs, by delegation of presidential authority, is undertaken by the OFAC in consultation with the Secretary of State. OFAC has made regulations to effect the Executive Order (31 CFR Part 541).

Unlike the EU Council, however, Ofac has not been assiduous in keeping the list of SDNs updated, and it now contains several people whose malfeasance occurred nearly two decades ago, have little political relevance or connection with the current Zanu-PF government or are since deceased.The Executive Order has been continued, as amended, every year since its introduction.

Zdera

The second form of sanctions are against Zimbabwe itself (rather than individuals and entities) and arise from the Zimbabwe Democracy and Economic Recovery Act (Public law 107-99, Zdera or Zidera) of December 21 2001. Section 4(c)(1) of the Act requires the Secretary of the Treasury to instruct the United States' executive directors to major and specified international financial institutions (IFIs) to vote against the grant of any loans to the government of Zimbabwe "except as may be required to meet basic human needs or for good governance."

In addition, Zdera provides that the United States government will withhold funding for the African Development Fund equivalent to any funding provided to Zimbabwe through Pillar II for arrears clearance.'' These requirements are only to be removed upon certification by the US President that Zimbabwe has met certain conditions (revised in June 2018) many of which relate specifically to the then pending elections in 2018, and probably require further amendment.

The President of the US may waive the requirement of meeting the conditions if he or she believes this to be in the national interest. The general conditions are that:

The rule of law has been restored in Zimbabwe, including respect for ownership and title to property, freedom of speech and association, and an end to the lawlessness, violence, and intimidation;

The government of Zimbabwe has demonstrated a commitment to an equitable, legal, and transparent land reform;The government implement the 2013 constitution – particularly by "aligning" all legislation that predated the constitution with its provisions and implementing its devolution requirements;

The government demonstrates a sustained commitment to reforming Zimbabwe's economy;The government accounts for diamond revenue in a transparent and credible manner;

The Zimbabwean armed forces, the national police of Zimbabwe, and other state security forces are responsible to and serve the elected civilian government.
Specific conditions relating to elections are:

The voters' roll is released in printed and digital format; Zimbabwe Electoral Commision is permitted to carry out its functions in an entirely independent manner;
The Defence forces of Zimbabwe are neither permitted to actively participate in campaigning for any candidate nor to intimidate voters, and must verifiably and credibly uphold their constitutionally mandated duty to respect the fundamental rights and freedoms of all persons and be non-partisan in character;

International observers, including from the United States and European Union, are permitted to observe the entire electoral process;

Candidates are allowed free and full access to state media, which must afford equal time and coverage to all registered parties, in an impartial manner, and must be able to campaign in an environment that is free from intimidation and violence;

Civil society organisations must freely and independently be able to carry out voter and civic education, and to monitor the entire electoral process.
The president-elect is free to assume the duties of the office;

In two sections 9 and 10 added to Zdera in June 2018, Congress also provides guidance as to what it considers the Zimbabwe government should do to meet the conditions. These considerations are sometimes wrongly regarded as additional conditions. They are that the government:

1) seeks to unify the people of Zimbabwe by:
a) acknowledging that human rights have been abused, including during Operation Murambatsvina, and in the wake of the 2008 elections;
b) undertaking a genuine process of national reconciliation up to and including acknowledging and apologizing for the Gukurahundi atrocities;
c) taking steps to offer redress or compensation to victims of the above abuses; and
d) ordering an immediate inquiry into the disappearance of prominent human rights activists, including Patrick Nabanyama, Itai Dzamara, and Paul Chizuze.
2) (and Sadc) should enforce the Sadc tribunal rulings from 2007 to 2010, including 18 disputes involving employment, commercial, and human rights cases surrounding dispossessed Zimbabwean commercial farmers and agricultural companies. It is often forgotten that Zdera adopts a carrot-and-stick approach and not just the latter.

If the conditionalities are met, Zdera requires the United States executive director of each international financial institute (IFI) to take proactive steps for the "restructuring, rescheduling, or eliminating the sovereign debt of Zimbabwe" held by the institutions and to propose that the IFIs "undertake financial and technical support for Zimbabwe, especially support that is intended to promote Zimbabwe's economic recovery and development, the stabilisation of the Zimbabwean dollar, and the viability of Zimbabwe's democratic institutions".

Like the European Union measures, Zdera is thus not a trade embargo against the country, but applies conditionalities before the US will vote in favour of loans by IFIs to Zimbabwe, when these come up for consideration.

The government of Zimbabwe has, through the Transitional Stabilisation Programme (TSP), indicated that it will implement political reforms that will have the effect of meeting the requirements of Zdera, so it is unclear why it finds them objectionable. Paragraph 4 of the TSP, for example, lists among its objectives for "Vision 2030":

Improved governance and the rule of law.Re-orientation of the country towards democracy.Upholding freedoms of expression and association.
Peace and national unity.Respect for human and property rights.Attainment of responsive public institutions.Broad based citizenry participation in national and socio-economic development programmes.

Political and economic re-engagement with the global community.Creation of a competitive and friendly business environment.However, the rules of IFIs require that Zimbabwe repay prior loans before accessing further funding. Zimbabwe is indebted to all relevant IFIs except the IMF, and therefore has not been eligible for loans over the more than two decades that it has been in arrears.

Zimbabwe cleared its US$107,9 million debt with the IMF in October 2016. However, the pari passu rule requires that arrears are cleared with all IFIs to meet the condition. This entails Zimbabwe clearing the nearly US$2,3 billion outstanding to the World Bank (US$1,3 billion), the African Development Bank (US$680 million) and the European Investment Bank (US$308 million).

For this reason, Zdera has never been implemented and the US has never voted against any loans to Zimbabwe. Loans to Zimbabwe had been suspended by the IMF and World Bank in September and October 1999 respectively, (i.e. before the land invasions in 2000 that are often cited as the initial catalyst) according to Zdera, because of "economic mismanagement, undemocratic practices, and the costly deployment of troops to the Democratic Republic of the Congo".

To be continued next week

Matyszak is a senior lawyer and research consultant, ISS. This article was first published by Veritas.

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