eBusiness Weekly
Kudzanai Sharara Taking Stock
The United States of America’s president-elect Joseph Biden would not need much induction in dealing with the affairs of Zimbabwe as he has already been involved in some of the historic events of this country.
Joseph Biden, became the United States’ president-elect after he defeated incumbent President Donald Trump in the 46th US elections held last week.
But with Zimbabwe currently under United States’ economic and political sanctions, and seeking to mend its relations with the world’s superpower, there is growing interest and anxiety on how the Biden administration will handle the country’s quest for unconditional removal of sanctions.
Interestingly, Biden was involved in the imposition of the sanctions on Zimbabwe, being one of the sponsors of the Zimbabwe Democracy and Economic Recovery Act (ZDERA).
ZDERA is an act passed by the United States Congress that imposed economic sanctions on Zimbabwe, allegedly to provide for a transition to democracy and to promote economic recovery.
According to several sources including Wikipedia, Senator Biden, alongside Hillary Clinton, was one of the prime sponsors of ZDERA signed into law by the then president George W Bush in 2001.
Zimbabwe believes the sanctions have been damaging to the economy and has garnered support from fellow African countries in calls to have them removed forthwith.
This is not the first time that Biden has been involved in the affairs of Zimbabwe.
In 1978, Biden was a member of the US’s Committee on Foreign Relations, which on June 1978 received a “Staff Report” or a Rhodesian Settlement Agreement between then Prime Minister Ian Smith, Reverend Ndabaningi Sithole, Bishop Abel Muzorewa and Senator Jeremiah Chirau.
The accord was heralded by its signatories as an “end to white rule”.
In its analysis, the US Committee on Foreign Relations focused on the strengths and weaknesses of the accord and its significance for the US foreign policy.
The Committee, in which Biden was part of, came to the conclusion that, in reality, support of the internal agreement as is, was almost certain to damage US policy in Africa.
“Among other things it would put the United States on the same side as the white regimes, and portray Americans as being more interested in challenging Russia than supporting a legitimate struggle for self-determination.”
In the end, the Committee was not in support of the Rhodesian agreement as it believed supporting it would mean the US would lose its credibility as a great power which was genuinely committed to the elimination of racism, the promotion of human rights, and the implementation of the majority rule.
It’s a position, the then US president Jimmy Carter took. In a joint statement with the then Nigerian President Olusegun Obasanjo, the two said the Rhodesian agreement was “unacceptable”.
While Biden is one of the ZDERA sponsors, he might be interested in lending an ear to Zimbabwe’s plight as he has reportedly done so in the past.
According to a 2014 report in the Chicago Tribune, Biden co-sponsored a reception that entertained or listened to Zimbabwe’s pleas for the lifting of sanctions.
In a case in which one Gregory Turner was charged with illegally lobbying on behalf of Zimbabwe’s then president, the late Robert Mugabe, Turner argued that “a 2006 Capitol Hill meeting between a senior Zimbabwe official, then-US Senator Joe Biden and other congressional leaders led him to believe his activities to end longtime economic sanctions were lawful”.
According to the defense filing, “Biden is seen on video welcoming (Gideon) Gono . . . and shaking Gono’s hand.”
It is, however, anyone’s guess what Biden will do with regards to sanctions on Zimbabwe.
For now, what is evident is the impact his election victory is having on the US dollar, a currency that is part of Zimbabwe’s dual currency regime, alongside the Zimbabwe dollar. Analysts reckon the US dollar, could weaken further under a Biden administration.
As reported by CNBC, Citi Private Bank strategists predicted a weaker dollar ahead, given that a Biden administration would reduce uncertainty in international trade policy while JPMorgan Private Bank’s Adam Margolis said the theme at play was to continue to look for “opportunities” to trim the overweight exposure on the dollar.
“Perhaps the greatest clarity post-election is for global trade. US foreign policy will enter a more predictable phase without escalating tariff threats. We see a declining US dollar, and rising emerging markets as highly likely,” wrote Citi Private Bank in a note.
With Zimbabwe using the dollar as a major currency of trade, a weakening dollar has its advantages and disadvantages.
The advantage to Zimbabwe of a weak US dollar is that international prices for precious metals such as gold, platinum and palladium would firm.
This can improve export earnings even without increasing production.
A weak dollar means exports become cheap making locally made products competitive on the market. The US dollar is currently valued at R15,29 against a value of R17,7 three months ago, making Zimbabwean products cheaper in relation to its major trading partner South Africa.
On the flip side, a weak US dollar will make imports expensive in relation to trading partners such as South Africa or China as more US dollars are now required to purchase rand or yuan priced products when compared to three months ago when the US dollar was a little stronger.
