The investment world just does not have the luxury of time to analyse Zidera and determine who is exactly under sanctions or not
By Colls Ndlovu
Recently, the United Kingdom imposed sanctions on some individuals within Zimbabwe’s top military establishment.
The Zimbabwe faces Zidera which was signed by former US President George W. Bush into law in December 2001, allegedly to promote democracy and economic recovery in Zimbabwe.
The question which arises of course is: what exactly is wrong with this sanctions law imposed against Zimbabwe?
The answer is that the contentious clauses within Zidera that prejudice ordinary Zimbabweans are to be found in section 4 (c ) of Zidera which specifically compels or coerces US executive directors of each international financial institution to oppose and vote against, (i) any extension by that institution any loan, credit, or guarantee to the government of Zimbabwe (this has invariably been interpreted to include even loans to Zim institutions) , (ii) that US executives must oppose and/or vote against any cancellation or reduction of indebtedness owed by the government of Zimbabwe to the US or any international financial institution.
These are the two injurious clauses that tend to prejudice Zimbabweans. Anyone who has ever sat on a credit committee of any international bank will tell you that because of these two clauses, Zimbabwe together with its institutions and people are deemed to be under sanctions hence no loan can be extended to them because that will raise the eerie and ire of the US government and attract severe punishment to whosoever breaches that directive.
Arising from the foregoing, one can see that the contentious clauses specifically places Zimbabwe as a country on the sanctions list simply because international transactions are conducted in US$s. American banks like Bank of New York, JP Morgan Chase etc etc are the clearing banks for any US$ denominated transactions implying that Zimbabwe will invariably find itself on the wrong side of US executives as directed by Zidera.
So in simple terms, de facto (as a matter of fact) and de jure (formally) Zimbabwe is indeed under sanctions in terms of Zidera.
In simple language, yes, Zimbabwe is under sanctions
So in terms of the doctrine of substance over legal form, Zimbabwe as a country is under sanctions.
What surprises me is that Zimbabwe’s Constitutional Court judges together with the attorney general’s office have never bothered to subject Zidera under legal scrutiny with a view to assist the govt and people of Zimbabwe with the correct legal opinion. Their inaction constitutes the subrogation responsibility. Its worse than the dereliction of duty
So in Zim something that is not a problem ends up becoming a problem because of brinkmanship and the country’s deadly specialisation in know-nothingism.
So sanctions have been there since 2001 and the relevant instrumentalities of the govt have done absolutely nothing. This is where reliance on politics and politocians has cost the country dearly. Professional lawyers within these arms of govt should have long done this basic work .
If the Constitutional court judges together with the attorney general’s office were not sleeping on the wheel, their firm, unequivocal and unambiguous legal opinion would have been formally presented to the US embassy right there in Harare eplaining to them in what specific ways (as I have highlighted in my short articles above) Zidera prejudices Zimbabwe as a country beyond the listed individuals that are supposedly under sanctions.
1 billion%. This thing of sanctions is a very simple thing which needed to be clearly explained in terms of how it prejudices the country and people of Zimbabwe beyond the targetted errant folks. The best starting point is a workshop arranged by Zim’s judiciary and the US Embassy’s legal folks right there in Mbare (oops Belgravia or oops Chitungwiza) in Harare and spend a day clearly explaining to them in very very simple terms what needs to be adjusted.
If they need technical folks to assist with the interpretation from a financial viewpoint and how fjnancial institutions use samctions then some of us would be more than happy to assist them
Looking at the sanctions, we have already realised and concluded that technically Zidera places the country (not just the few listed folks) as a whole under sanctions.
Now, arising therefrom one needs to remember that systems and software that are used to screen countries that are under sanctions use a very simple and straight forward algorithm: (i) if the country is under US sanctions block or flag that country (Zim is under US sanctions).
Therefore it gets flagged which explains why Zim has a very rocky relationship with many financial institutions including clearing agents like Visa, Mastercard, Euroclear and numerous others. A few days ago Skrill another payment agent pulled out.
Companies just do not have the luxury of knowing or even checking who exactly is under sanctions (individuals or country). They just block and flag anything that says Zimbabwe.
As I argued that the investment world just does not have the luxury of time to analyse Zidera and determine who is exactly under sanctions or not. And indeed why should they do so when Zimbabwe’s own judiciary and especially the constitutional court judges have not bothered to do so?.
In any event, the investment community will merely check on such sources as investopedia (the wikipedia of investments) and this is what they find when they want to make a decision on whether or not to invest in Zimbabwe.
Colls Ndlovu, a currency expert, is an award-winning economist and central banker, and is the originator and developer of the NCX Index.
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