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Gold smugglers lie on sanctions-busting



GOLD barons exposed the Al Jazeera investigation for smuggling, corruption and money laundering generating billions of dollars for self-aggrandisement are using a false pretext of sanctions-busting to justify corrupt activities when Zimbabwe is not under a trade and bullion embargo.

Some of the gold dealers, Kamlesh Pattni, Ewan Macmillan and Henrietta Rushwaya for instance, claim they were engaged in smuggling activities to deal with sanctions and help government when Zimbabwe is not under a trade embargo and can openly sell its mineral exports, including bullion.

 While Western countries, including the United States, European Union states, Britain, Canada and Australia and New Zealand imposed limited targeted sanctions on Zimbabwe, those were not international sanctions.

They were imposed bilaterally by the countries or blocs concerned and have been largely reviewed and removed in some cases. Through the Zimbabwe Democracy and Economic Recovery Act of 2001, updated in 2018, the United States imposed sanctions on Harare over policy, rule of law, political violence, human rights and elections issues.

It also used the Treasury’s Office of Foreign Assets Control for targeted sanctions. This ensured that Zimbabwe would not get any funding from international financial institutions and multilateral development banks where the US has a voice.

However, the United Nations has no sanctions on Zimbabwe as was the case with Rhodesia after Ian Smith declared Unilateral Declaration of Independence (UDI) from the United Kingdom in November 1965.

The British government regarded UDI as illegal and unacceptable, and sought ways to end the rule of Smith’s Rhodesian Front party. In the absence of an internal uprising, London, having eschewed the use of force, resorted to a policy of economic sanctions to effect the desired political and social changes.

 These were intended to affect incomes, employment, and economic activity generally so as to generate dissent and disaffection among the white population, who, it was hoped, would either emigrate or force a return to legality, the negotiating table, and progress towards a mutually acceptable form of independence.

That was the first time the United Nations Security Council imposed mandatory economic sanctions against a state. The sanctions were broadened in 1968, but still were only partly successful; some strategic minerals, especially chrome, were exported to willing buyers.

In Zimbabwe’s case, the country can still trade with any other country and export whatever it had producer, including gold. As a result, claims by the gold barons that they are smuggling to help the country are not true.

Reserve Bank of Zimbabwe governor John Mangudya highlighted that point when he sought to distance the central bank from the smuggling and corruption activities of the gold dealers. One gold baron claimed Mangudya is on speed dial with tycoon Simon Rudland.

Mangudya denied the claims. “It is particularly strange that reports claim that ‘through the bank, government is using illicit ways as a scheme to bust international sanctions placed on political leaders and government entities’,” Mangudya said. “The bank is not a sanctioned entity, and the cited individuals are not sanctioned persons either. There are no sanctions on Zimbabwean exports and imports, including trade in gold, to warrant ‘circumventing international sanctions’ through illicit gold trade.

“As such, the claim that there is ‘a scheme to bust sanctions using illicit ways’ shows beyond doubt that the peddlers of this narrative have a sinister agenda with nefarious objectives of tarnishing both the bank and the Republic of Zimbabwe. So since Zimbabwe can trade and export gold, the sanctions-busting claims by gold barons are not true and misleading.

 Trade sanctions are restrictions on trade with a country. They often come in the form of a ban on trading, which prevents exports or imports of certain products and raw materials into or out of a country.

 They limit the country’s exports or restrict its imports; and entail embargoes and quantitative restrictions. Countries such as South Africa, Iraq, and Rhodesia, had trade sanctions imposed against them, as the international community wanted to influence political changes in those countries. In Zimbabwe, trade sanctions have only manifested themselves in the form of denied access to foreign lines of credit, which ordinarily finance external trade, and access to markets, particularly the US market, through exclusion from African Growth and Opportunity Act.

The market for the country’s exports is also shrinking, as export competitiveness crumbles largely due to adverse perceptions and high country risk profile. Zanu PF and government officials make it appear as if Zimbabwe is under blanket international sanctions when it not.

 Misunderstandings between Zimbabwe and some members of the international community, triggered by the violent and chaotic land redistribution, political violence and disputed elections, resulted in sanctions being imposed on Zimbabwe from year 2001.

 Simultaneously, Zimbabwe also defaulted on its international obligations, resulting in international financial institutions, notably the International Monetary Fund, World Bank and African Development Bank, suspending lending operations and technical assistance to Zimbabwe.

Sanctions have traditionally been applied against certain countries to achieve desired political and economic outcomes. These largely consist of the imposition of embargoes, trade and financial restrictions, and diplomatic isolation.

In recent years, the coverage of sanctions has widened to include other elements that are not directly linked to trade and commerce such as culture and sports. Economic sanctions and related restrictions are by far the most important of all sanctions imposed on a nation. In the main, they consist of the withdrawal, or threat of withdrawal of trade and financial relations, including technical cooperation.

 In an effort sharpen the effectiveness of sanctions, the West imposed targeted measures, including travel bans and freezing of foreign bank accounts of individuals or entities.

Some financial isolation also came due to de-risking refers as banking institutions reviewed relationships with and closed accounts of clients considered “high risk”. There was a trend towards de-risking of money service businesses, foreign embassies, nonprofit organisations, and correspondent banks, which has resulted in account closures mainly in the US, the UK, and Australia. Low profit, reputational concerns, and rising Anti-Money Laundering/Combating Financing of Terrorism (AML/CFT) scrutiny contribute to de-risking, which can further isolate communities from the global financial system and undermine AML/CFT.

In view of the above, the imposition of sanctions on Zimbabwe by the US and the EU have branded Zimbabwe and its entire financial linkages with the rest of the world as representing high risk, making the country a compelling target for de-risking interventions by leading correspondent banks. Zimbabwe has lost over 100 international correspondent bank relationships due to de-risking and lines of credit.-STAFF WRITER

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