July 12, 2019
Zimbabwe: A Continuing Crisis
A six-year economic crisis in Zimbabwe has intensified
(see CRS In Focus IF10933, Zimbabwe: Forthcoming
since national elections in July 2018, in which President
Elections). Their findings indicate that the poll did not meet
Emmerson Mnangagwa and his Zimbabwe African
international standards in many respects. Mnangagwa won
National Union-Patriotic Front (ZANU-PF) prevailed. The
the presidential race, with 50.6% of votes, and took office
dire economic situation has prompted public discontent,
in late August 2018 after the MDC, citing alleged
strikes, protests and, in early 2019, days of riots.
irregularities, unsuccessfully sued to nullify the election.
ZANU-PF won 180 seats in the 270-seat National
In response, state security forces have violently repressed
Assembly and the MDC won 87 seats.
demonstrations and arrested civil society activists. Since
February 2019, the state has also pursued a dialogue with
U.S. Policy and Congressional Role
the political opposition, but only minor parties have
ZDERA (P.L. 107-99) frames U.S. policy toward Zimbabwe. It
participated. The Movement for Democratic Change
prohibits U.S. support for multilateral debt relief and credit for
Alliance (MDC), the largest opposition party, has refused to
Zimbabwe’s government pending free and fair elections, credible
participate unless the state ends its repression and alleged
land reform, security force subordination to civilian leaders, and
breaches of the rule of law. The MDC also insists that any
“restoration” of the rule of law, notably regarding civil freedoms
dialogue be convened by an independent mediator; it
and property rights. It also called for U.S. financial and travel
contends that the Mnangagwa government is “illegitimate”
sanctions against persons undermining the rule of law or abetting
and responsible for what the MDC calls a “political crisis.”
political violence. Such sanctions were later imposed and remain
Background
in effect. They also target persons who engage in public
President Mnangagwa (muh-nahn-GAHG-wah) assumed
corruption. Congress has also conditioned and restricted aid to
power in November 2017, after ZANU-PF chose him as its
Zimbabwe’s government in annual appropriations laws, and there
party leader. He succeeded President Robert Mugabe, a
is a U.S. ban on defense item and service transfers to Zimbabwe.
semi-authoritarian who had led Zimbabwe and ZANU-PF
In 2018, Congress passed the ZDERA Amendment Act of 2018
since independence from the United Kingdom in 1980.
(P.L. 115-231). The new law, which retained ZDERA’s core
Mugabe resigned under pressure from ZANU-PF following
provisions, raises the prospect of stronger bilateral political,
a military intervention in politics aimed at ousting him. This
trade, and investment ties if the Zimbabwean government
intervention was spurred by intra-ZANU-PF rivalry—
implements existing ZDERA criteria and takes "concrete,
notably over who would succeed Mugabe as president and
tangible steps" to carry out specified economic reforms, recover
party leader—and followed Mugabe’s dismissal of
stolen public assets, and ensure "good governance, including
Mnangagwa as vice president and Mugabe’s sidelining of a
respect for the opposition, rule of law, and human rights." P.L.
party faction aligned with Mnangagwa and the military.
115-231 also calls on Zimbabwe’s government to take various
Zimbabwe Under Mnangagwa
actions to ensure free, fair, and credible elections and to align
Upon taking office, Mnangagwa pledged to pursue a range
Zimbabwe's laws with its 2013 constitution.
of economic and political reforms—notably free and fair
elections—and asserted that Zimbabwe was “open for
Repression Since the 2018 Elections
business.” This raised hopes for an end to years of deep
On August 1, 2018, two days after the vote, protests broke
economic malaise and an abiding pattern of human rights
out in Harare, the capital, amid MDC demands for the
violations and undemocratic governance under Mugabe.
release of presidential vote results. Some of the protesters
engaged in violent acts (e.g., property destruction and
Such changes are key U.S. goals under the Zimbabwe
arson). After police failed to control the crowds, military
Democracy and Economic Recovery Act of 2001 (ZDERA;
reinforcements fatally shot six protesters. In succeeding
see text box), but to date the Mnangagwa administration has
days, soldiers, other state agents, and unidentified attackers
not pursued a course of action that would satisfy the
carried out widespread beatings, harassment, and detentions
requirements of ZDERA. State constraints on freedoms of
of opposition supporters. Citing threats, several senior
assembly and expression declined in advance of the 2018
elections, and Mnangagwa’s administration recorded some
MDC leaders unsuccessfully sought asylum in neighboring
Zambia. Some of these leaders were later tried on charges
moderate progress toward some of his 2017 reform pledges.
such as public violence and the illegal declaration of
Since the election, however, there has been a marked
election results. A presidentially appointed commission of
deterioration in economic and political conditions and a rise
inquiry later probed the killings, but little has been done to
in state civil and human rights abuses.
respond to its findings. In subsequent months, the state
2018 Election
arrested and brought questionable charges against multiple
The pre-poll electoral process featured some improvements
state critics, journalists, and trade unionists and, in one
over past elections, but domestic and international election
case, beat MDC members of parliament.
observers and the MDC identified multiple serious flaws
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Zimbabwe: A Continuing Crisis
In January 2019, amid rapid inflation and widespread fuel
(Many people now make a living in the informal sector,
and cash shortages, Mnangagwa abruptly raised fuel prices
which may now employ more than 90% of the labor force.)
by 150%. This led to protests, which sparked three days of
Figure 1. Zimbabwe at a Glance
widespread riots and looting. In response, security forces
arbitrarily detained, beat and, in some cases, tortured
protesters and opposition activists. Security forces also shot
at protesters, reportedly killing 17 and wounding many
more, and raped at least 17 women. The government also
cut internet access, but a court ruled the move unlawful and
access was later restored. The crackdown, which included
raids on private homes, persisted after protests had ended.
Since these events, security forces have detained multiple
labor organizers, CSO activists, and opposition figures, and

Sources: CIA & IMF public data; 2018 data unless otherwise stated.
charged some with government subversion. State media
also have warned against alleged plots to oust the
Other factors include poor infrastructure, regulatory
government, possibly to justify a harsh response if
weaknesses and poorly managed state-owned enterprises
economic protests recur.
(SOEs), corruption, a poor investment climate, and a
drought that has led to frequent power cuts. Part of the
Spiraling Economic Crisis
country also suffered damage from a recent cyclone.
Mnangagwa has prioritized efforts to rescue the badly ailing
economy, but ZANU-PF's economic policy record—which
Debt Deal?
has featured land seizures and abrupt policy shifts—is poor.
High deficit spending has generated high public debt, worth
ZANU-PF oversaw a 66% contraction of the economy from
$16 billion (72% of GDP) in late 2017, of which $8.8
2000 to 2008 featuring hyperinflation that hit an annual rate
billion is external debt, including international financial
of 471 billion percent in September 2008. The economy
institution (IFI) arrears worth $2.3 billion. These arrears
recovered rapidly under Tendai Biti of the MDC, Finance
have prevented access to IFI loans and reduced state access
Minister during a power-sharing government (2009-2013).
to commercial credit. (The IMF also reports that the state
Biti ended use of the Zimbabwe dollar and replaced it with
may face additional possible liabilities of $2.4 billion to $10
a system in which multiple foreign currencies were legal,
billion related to compensation for land seizures—mostly
but in which the U.S. dollar predominated.
from white farmers—during the Mugabe era.)
The economy has faltered since 2013, when ZANU-PF won
Since 2015, the government has unsuccessfully sought to
a parliamentary majority, ending the power-sharing deal.
pay off its IFI arrears. The government hopes to do so using
The International Monetary Fund (IMF) currently projects
“bridge loans” from an undetermined creditor, restart
that gross domestic product will drop by 5.2% in 2019. A
regular IFI loan payments, potentially gain renewed access
key factor in the economic crisis has been an acute lack of
to IFI credit—and then renegotiate its other bilateral foreign
cash caused by U.S. dollar shortages. In 2016, to increase
debts. In May 2019, to emphasize its commitment to
cash available for market activity, the central bank created a
macroeconomic stability and to earn international creditors’
local unit of exchange called the “bond note.” The bank
confidence, the government agreed to implement a series of
also has promoted the use of digital dollar bank credits.
reforms under IMF observation. The risk of failure is high,
however, as the reforms may impinge on powerful vested
Both bond notes and bank credits were officially equal to
political interests, and the state has a poor record of
the dollar, but the market did not treat them as such. Over
carrying out such pledges. Under the IMF program, for
time, sellers charged more for purchases made with bond
instance, it agreed not to obtain new commercial loans, but
notes and bank credits than for those made with U.S.
just after signing the IMF agreement it accepted a
dollars. This led to inflation, as a lack of U.S. dollars forced
previously arranged $500 million nonconcessional loan.
people to use increasingly less valuable bond notes and
bank credits. The government responded in February 2019
U.S. Stance
by merging bond notes and dollar bank credits into a single
U.S. officials welcome improved relations with Zimbabwe,
new currency, the “RTGS dollar,” and allowed its exchange
which recently hired two U.S. lobbying firms to help
rate to float. The same problems that had afflicted bond
achieve that end, but maintain that the government must
notes and bank credits, however, also affected the RTGS
first meet the goals set out in ZDERA. In May 2019, a U.S.
dollar. Its value rapidly plunged relative to the U.S. dollar,
official stated that while the IMF program is a positive step,
goods shortages worsened, and prices soared. Annual
deep political and legal reforms must accompany economic
inflation hit 98% in May 2019, when the government again
reforms. U.S officials have also called for security forces to
hiked fuel prices, by 49% on average.
be held accountable for human rights abuses, notably the
violence in August 2018 and early 2019. Meanwhile,
To counter inflation and the RTGS dollar’s persistent slide,
diverse U.S. aid programs continue to support humanitarian
the government ended the multi-currency system in late
needs and endeavor to improve human rights, economic
June 2019; it renamed the RTGS dollar the “Zimbabwe
growth, health, and good governance. Bilateral aid totaled
dollar” and made it the sole legal tender. This change has
$231 million in FY2018. The State Department requested
raised fears of a return to hyperinflation—and may also be
$156 million for FY2019 and $175 million for FY2020.
unlikely to address other factors underlying the economic
crisis. These include low production due to the closure of
Nicolas Cook, Specialist in African Affairs
many firms in recent years, which has shrunk the supply of
goods and increased already high unemployment rates.
IF11268
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Zimbabwe: A Continuing Crisis


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https://crsreports.congress.gov | IF11268 · VERSION 1 · NEW

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