By Roger Bate of America Enterprise Institute
Posted: Wednesday, April 16, 2008
National Review Online
A company with links to a U.S. government contractor is enabling Robert Mugabe despotic rule in Zimbabwe by printing bank notes. In the past month, these increasingly worthless notes have been used to bribe officials in the public sector, army, and other public-security services to curry votes for the Mugabe regime.
In the weeks prior to the March 29 election, with Zimbabwe’s economy collapsing and inflation already running at 100,000 percent, a German company called Giesecke & Devrient (G&D) ran its printing presses at maximum capacity, delivering 432,000 sheets of banknotes to Mugabe’s government each week. The money, equivalent to nearly Z$173 trillion (U.S. $32 million), was then dispersed among targeted voters.
Despite the Mugabe regime’s efforts–illegal as well legal–independent observers say the opposition Movement for Democratic Change (MDC) and its leader, Morgan Tsvangirai, won the election.
Despite the Mugabe regime’s efforts–illegal as well legal–independent observers say the opposition Movement for Democratic Change (MDC) and its leader, Morgan Tsvangirai, won the election. But the Zimbabwe Electoral Commission has not released the results. The MDC is fearful that Mugabe is maneuvering to steal a potential run-off contest between the top two candidates (which Zimbabwean law requires within 21 days of the original election if no candidate receives 50 percent of the vote in the first round), or may be tampering with the original vote to fabricate a majority that will ensure his victory. In the meantime, his security services have banned rallies, beaten up MDC politicians, briefly arrested two foreign journalists, and forbidden any EU or U.S. election observers.
Mugabe has also used currency printed by G&D to pay thugs to squat on some of the few white-owned farms remaining in the country. According to one local I spoke with, Mugabe wants “to continue the myth that Northerners are only interested in Zimbabwe because white farmers are being harmed.” As if to demonstrate the point, at the same time that regional leaders met in Zambia to discuss the crisis, a column in the Herald, Zimbabwe’s state-run newspaper, decried the idea that “African leaders are supposed to do the bidding of the white West. . . . to pressure Zimbabwe to abet the regime change agenda.”
G&D has directly contributed to a meltdown. According to the Sunday Times of London, the company is receiving more than $750,000 a week from the Mugabe regime “for delivering notes at the astonishing rate of Z$170 trillion a week.” Inflation caused by this reckless currency printing has destroyed once-sustainable food markets and stymied business investment, and has contributed to thousands of deaths a week from malnutrition and disease. The black market value of the Zimbabwe dollar has dropped by 70 percent against the U.S. dollar since the mass printing of bank notes began recently (official exchange rates are now irrelevant).
The international community would just like the issue to disappear. German Chancellor Angela Merkel has taken a rhetorically strong stance against the Mugabe regime, and has supported EU travel and banking sanctions against its cronies. But her government says that G&D’s involvement in Zimbabwe is a private matter.
While the U.S. government has placed effective sanctions on the leaders of the regime in Harare, it is still contracting with G&D’s American affiliate to provide security-card and banknote services. (The Treasury Department’s latest contract with the company is worth $381,200). State Department officials would only speak on background, but it appears that there is no official policy or position on G&D. Since G&D America is an independently listed U.S. business doing no business with Zimbabwe, it’s likely that Treasury will take no action against the company. No one at G&D’s offices in Dulles, Virginia, would answer the phone or return our messages.
Western complicity in Mugabe’s despotism is egregious, but African leaders have been far worse. The weekend after an emergency meeting with Mugabe, South African president Thabo Mbeki (who received shelter from Mugabe during the dark days of apartheid), claimed that “there is no crisis in Zimbabwe,” a theme that was repeated at a summit of the Southern African Development Community (SADC). The summit, hosted by Zambian President Levy Mwanawasa, started strongly by making the unprecedented move of inviting MDC leader Tsvangirai to attend, widely seen as an acknowledgement that he had won the election. (Mugabe decided not to attend.) But after 12 hours of deliberation, stretching well into the early hours of Sunday, SADC’s delegates scurried away, leaving Zambia’s Foreign Affairs Minister, Kabinga Pande, to deliver a thin statement calling for a verification of election results in the presence of candidates and observers. He claimed that both parties had agreed that the election was free and fair and that there was no crisis.
MDC Secretary-General Tendai Biti flatly rejects this claim. At a press conference shortly after the summit, he praised the SADC for having “the guts” to hold the meeting at all, but said the crisis was far from resolved. Indeed, the High Court of Zimbabwe has rejected an MDC appeal for the government to publish results within the statutorily required two-week window following the election (the window closed last Friday.) The Zimbabwe Electoral Commission’s offer to hold a recount of the presidential and parliamentary poll is not consistent with Zimbabwean law, which requires a run-off.
At the SADC Summit, former U.N. Secretary-General Kofi Annan of Ghana warned the leaders at the summit they had “a grave responsibility to act, not only because of the negative spillover effects on the region, but also to ensure that democracy, human rights and the rule of law are respected.” They can hardly be said to have fulfilled that responsibility yet.
Until they do, G&D can encourage better practices in Zimbabwe by turning off the currency spigot. As reported by SecureID News in 2008, G&D operated in 53 countries and had 2006 revenues totaling almost 1.3 billion euros, about U.S.$1.9 billion. Its Zimbabwe revenue stream is tiny and according to at least one government source, the company is well-respected internationally. But it would do well to protect this reputation by doing the right thing and cutting its ties to Mugabe and his thugs.
Of course, one could argue that G&D might actually be precipitating the collapse of the Mugabe regime by driving up inflation and deepening Zimbabwe’s financial crisis. One Zimbabwean economist suggested that inflation may now be nearing 15,000 percent a month, which is destroying any sustainable agricultural markets on which the poorest depend. Thousands die weekly as a result.
If G&D does not take action, the EU should. They should threaten to deny any future contracts to companies providing direct services to the Mugabe regime. It’s appalling, as MDC Senator David Coltart told me, “that a German company is profiting out of Zimbabweans’ despair,” fueling inflation by printing dollars “which are then used to fund Mugabe’s campaign of repression.”
Roger Bate is a resident fellow at AEI.