[Senate Report 111-369]
[From the U.S. Government Publishing Office]
Calendar No. 699
111th Congress Report
SENATE
2d Session 111-369
======================================================================
ZIMBABWE TRANSITION TO DEMOCRACY AND
ECONOMIC RECOVERY ACT OF 2010
_______
December 15, 2010.--Ordered to be printed
Mr. Kerry, from the Committee on Foreign Relations,
submitted the following
REPORT
[To accompany S. 3297]
The Committee on Foreign Relations, having had under
consideration the bill (S. 3297), to update United States
policy and authorities to help advance a genuine transition to
democracy and to promote economic recovery in Zimbabwe, reports
favorably thereon, with an amendment in the nature of a
substitute, and recommends that the bill (as amended) do pass.
CONTENTS
Page
I. Purpose..........................................................1
II. Committee Action.................................................1
III. Discussion.......................................................2
IV. Cost Estimate....................................................5
V. Evaluation of Regulatory Impact..................................6
VI. Changes in Existing Law..........................................6
I. Purpose
The purpose of S. 3297 is to amend the 2001 Zimbabwe
Democracy and Economic Recovery Act (ZDERA) to acknowledge that
conditions on the ground in Zimbabwe have changed, seize upon
new opportunities to push for democracy and help lay the
groundwork for economic recovery, and encourage the work of
reformers in the government while recognizing the continuing
role played by Robert Mugabe.
II. Committee Action
Senators Feingold, Isakson, Kerry, Cardin, and Durbin,
introduced S. 3297 on May 4, 2010. On September 21, 2010, the
committee considered S. 3297 and ordered it reported favorably,
with an amendment in the nature of a substitute, by voice vote.
III. Discussion
For decades Zimbabwe's dismal political and economic
climate has been dictated by President Robert Mugabe and his
party, the Zimbabwean African National Union-Patriotic Front
(ZANU-PF). This misrule culminated in economic disaster, the
collapse of health and educational systems, and extreme
repression. In September 2008, after strongly contested
national elections and months of political violence against
opposition members and their supporters, ZANU-PF and both
factions of the opposition Movement for Democratic Change
(MDC), led by Morgan Tsvangirai and Arthur Mutambara signed a
Global Political Agreement (GPA) as mediated by President Thabo
Mbeki of South Africa. Under the GPA, the transitional
government agreed to pursue the restoration of the rule of law,
economic recovery, land reform, freedom of expression and
political association, a new constitution, nondiscrimination,
and free and fair elections. Though fragile and often subject
to abuse by ZANU-PF, this power-sharing agreement has created
new opportunities to push for democracy and lay the groundwork
for economic recovery.
The new transitional government has shown some tentative
signs of progress. Under the leadership of Prime Minister
Morgan Tsvangirai and Minister of Finance Tendai Biti, a series
of economic reforms have been initiated, including the Short-
Term Economic Recovery Program, that will halt some of the
destructive activities of the previous administration while
directing limited resources to the social services and
infrastructure projects the population urgently needs. On the
financial front more broadly, Finance Minister Biti has
succeeded in arresting runaway inflation and helping to restore
some productive economic activity. Store shelves are no longer
barren and there has been some progress in restoring health
services and reopening schools. In a step toward broader
democratic values, the transitional government has also
established the Media, Human Rights, and Electoral Commissions.
However, political and social progress has lagged far
behind economic advancements. Governance reforms are
desperately needed, political and human rights abuses continue,
and unemployment remains as high as 90 percent. The committee
nonetheless sees a moment of opportunity for constructive
engagement, with targeted pressure and without the lifting of
sanctions, which can support reformist elements of the
government of Zimbabwe. These steps were strongly encouraged by
a distinguished panel of outside witnesses in a hearing on
September 30, 2009.
The goal of this engagement is to reinforce and encourage
democratic and human rights reforms, poverty reduction,
humanitarian assistance, establishment of rule of law, economic
stabilization and infrastructure development. Full re-
engagement with the government of Zimbabwe will only be
possible when there have been clear advances toward these ends.
For long term success, it is critical to support non-
governmental organizations and civil society. Regional
collaboration will also be crucial, particularly through the
Southern African Development Community and the African Union.
This legislation provides impetus for these initial steps by
acknowledging changing political and economic realities and the
limitations of change to date.
Section 4 affirms that it is the policy of the United
States to: support the people of Zimbabwe through the continued
provision of humanitarian assistance; provide resources to the
agricultural, economic, education, and health sectors through
non-governmental entities; promote trade with non-sanctioned
entities in Zimbabwe; engage with regional governments and
organizations, international financial institutions, and other
donors' support for civil society organizations; assist those
who have demonstrated commitment to the reforms in the GPA;
continue the ban on the transfer of defense items and direct
monetary assistance; and, update and renew targeted financial
sanctions and travel bans against those found to be responsible
for the breakdown of the rule of law, politically motivated
violence, hindrance of democracy, and other ongoing illegal
activities in Zimbabwe.
Section 5 authorizes the President, in accordance with
section 531 of the Foreign Assistance Act of 1961, as amended
(22 U.S.C. 2346), to provide technical assistance to ministries
of the transitional Government and to the Parliament of
Zimbabwe to provide the expertise and support necessary to
ensure progress on economic, political, and security sector
reforms. As per the amended language, this notwithstanding
authority will expire on September 30, 2014. The transitional
Government is expected to work to enact the reforms under the
GPA and the Parliament should work to make the government
accountable for its actions. To strengthen the efforts of
reformers, the committee believes the United States should
continue to provide technical assistance that will lead to
capacity building in the ministries and offices that have shown
commitment to reform and to Parliamentary efforts to address
legislation that violates democratic principles.
The committee believes two efforts are particularly
critical to economic progress: land reform and food
distribution and production. Given the absence of respect for
property rights in Zimbabwe, S. 3297 seeks to support efforts
to conduct a comprehensive and non-partisan land audit that
will serve as a step toward the establishment of accountability
and security of tenure. The committee believes that efforts
related to food distribution and production should be
supported, including the encouragement of policies that
incentivize agricultural production and institutions that
provide support to the agricultural sector. Though existing
problems with land tenure, including violent seizures of land
by ZANU-PF and its supporters, may limit some efforts, the
committee believes support of market-based mechanisms for
agricultural production and the processing of agricultural
commodities would be important for further economic progress.
Section 7 amends Section 4 of the Zimbabwe Democracy and
Economic Recovery Act of 2001 to reflect the 2008 Global
Political Agreement and the evolving political conditions that
require the United States to employ greater flexibility in
dealing with the International Financial Institutions while
still maintaining strong conditions on relevant actors. In
becoming party to the GPA, ZANU-PF and MDC have committed
themselves to working together to prioritize the restoration of
economic stability and growth and the creation of conditions
for a new constitution that respects human rights and
democratic principles. In amending the previous legislation, S.
3297 requires the Secretary of the Treasury, in consultation
with the Secretary of State, to gather information on the debt
incurred by Zimbabwe and the feasibility and advisability of
restructuring, rescheduling, or eliminating such debt in the
future. The legislation requires the Secretary of the Treasury
to instruct U.S. executive directors to each international
financial institution to oppose any extension of loans, credit,
or guarantees unless there is sufficient oversight and it can
be ensured the relevant funds are not administered through
ministries that have not demonstrated commitment to reform and
responsible fiscal management or the Reserve Bank of Zimbabwe,
unless governance problems within the Reserve Bank have been
addressed. Section 7 further provides that funds cannot be
administered by individuals or institutions sanctioned by the
United States. The legislation does not lift any current
sanctions. It further requires that the Secretaries of the
Treasury and State notify appropriate Congressional committees
if the United States votes in favor of any loan, credit, or
guarantee to the Government of Zimbabwe by an international
financial institution. The President is able to waive the
conditions on multilateral financing upon notification that it
is in the national interest of the United States to do so.
Section 8 amends the Department of State, Foreign
Operations, and Related Programs Appropriations Act of 2010 to
prohibit assistance to the central government of Zimbabwe
unless funds are used toward macroeconomic growth, health, and
education assistance. If the Secretary of State determines and
reports to the appropriate committees that rule of law has been
restored in Zimbabwe the underlying prohibition is removed.
Section 9 directs new attention to ZANU-PF's illegal
activities in the diamond sector, finding that: armed forces of
Zimbabwe continue to exert control over diamond mines; the
Government of Zimbabwe has been non-compliant with the minimum
standards of the Kimberley Process; there are serious concerns,
particularly related to smuggling and grave violence in and
around the Marange diamond fields; and, the army and police
forces continue to serve ZANU-PF and fuel efforts to undermine
democratic processes and institutions. The committee is
seriously concerned about the issue of Zimbabwean diamond
production and Zimbabwe's certification under the Kimberley
Process. It also finds that there should be improved regional
efforts to help stop the flow of illegal diamonds as well as
efforts to identify and prepare bilateral or other sanctions on
individuals and entities that are undermining democratic
processes through illegal activities involving diamonds.
Section 10 encourages the review and update of targeted
sanctions related to Zimbabwe, paying attention to the ways
that individuals or entities support efforts to undermine
democratic processes, the role and function of these entities
in activities critical to economic recovery, and how sanctions
could be strengthened against them.
Given concerns over fraud and violence during the 2008
elections and the lack of clarity on upcoming elections,
Section 11 sets out the sense of Congress that the United
States develop a coordinated strategy to help prepare for
future elections. This should be done in concert with
international partners and regional governments, aiming to
reduce the likelihood of fraud and the potential for outbreaks
of violence.
Section 12 requires the Secretary of the Treasury, the
Secretary of State, and the Administrator of the U.S. Agency
for International Development to provide a briefing to
appropriate congressional committees that is to include (1) A
description of technical assistance that has been provided to
ministries of the transitional Government and to the Parliament
of Zimbabwe, how this has contributed to progress on economic
and political reforms, and any ways U.S. law are policy should
be changed to strengthen the likelihood of success for
democratic and economic reforms; (2) Steps taken to investigate
and address the connection between illegal activities involving
diamonds and efforts to undermine democratic processes and
institutions; (3) Steps taken to review and update targeted
sanctions, focusing on how specific entities undermine
democratic processes, the role of these entities to economic
recovery, and how sanctions can be strengthened against them;
and, (4) Efforts toward a regional coordinated strategy in
preparation for future elections in Zimbabwe. This briefing is
to be provided no later than 180 days after the enactment of
this legislation.
IV. Cost Estimate
In accordance with Rule XXVI, paragraph 11(a) of the
Standing Rules of the Senate, the committee provides this
estimate of the costs of this legislation prepared by the
Congressional Budget Office.
United States Congress,
Congressional Budget Office,
Washington, DC, December 3, 2010.
Hon. John F. Kerry,
Chairman, Committee on Foreign Relations,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 3297, the Zimbabwe
Transition to Democracy and Economic Recovery Act of 2010.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Sunita
D'Monte.
Sincerely,
Douglas W. Elmendorf.
Enclosure
cc: Hon. Richard G. Lugar, Ranking Minority Member.
------
Congressional Budget Office Cost Estimate
December 3, 2010.
S. 3297
Zimbabwe Transition to Democracy and Economic
Recovery Act of 2010
AS ORDERED REPORTED BY THE SENATE COMMITTEE ON FOREIGN RELATIONS ON
SEPTEMBER 21, 2010
S. 3297 would authorize the President to use the Economic
Support Fund (ESF), a Department of State assistance program to
provide technical assistance to Zimbabwe to support economic,
political, and security-sector reforms in that country. That
authority would expire in 2014. Assistance would be provided to
the Parliament and ministries of the transitional government.
CBO estimates that implementing the bill would cost $19 million
over the 2011-2015 period, assuming appropriation of the
necessary amounts. Enacting S. 3297 would not affect direct
spending or revenues; therefore, pay-as-you-go procedures do
not apply.
S. 3297 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would impose no costs on state, local, or tribal governments.
The estimated budgetary impact of S. 3297 is shown in the
following table. The costs of this legislation fall within
budget function 150 (international affairs). For this estimate,
CBO assumes that the estimated authorizations will be
appropriated each fiscal year and that outlays will follow
historical spending patterns for similar and existing programs.
Changes in Spending Due to S. 3297
By Fiscal Year, in Millions of Dollars
----------------------------------------------------------------------------------------------------------------
20011 2012 2013 2014 2015 2011-2015
----------------------------------------------------------------------------------------------------------------
Estimated Authorization Level...................... 6 6 6 6 0 24
Estimated Outlays.................................. 1 3 5 5 5 19
----------------------------------------------------------------------------------------------------------------
In 2010, the Department of State received an appropriation
of $8.8 billion for ESF. Of that amount, almost $6 million was
allocated for technical assistance to the Parliament of
Zimbabwe and certain ministries. Based on information from the
department, CBO estimates that implementing the bill would
require appropriations of $6 million a year over the 2011-2014
period. The bill also would expand the potential uses of
existing appropriated funds by authorizing assistance to the
central government for health and education programs; however,
the department has no plans to use such authority.
The CBO staff contact for this estimate is Sunita D'Monte.
The estimate was approved by Theresa Gullo, Deputy Assistant
Director for Budget Analysis.
V. Evaluation of Regulatory Impact
Pursuant to Rule XXVI, paragraph 11(b) of the Standing
Rules of the Senate, the committee has determined that there is
no regulatory impact as a result of this legislation.
VI. Changes in Existing Law
In compliance with Rule XXVI, paragraph 12 of the Standing
Rules of the Senate, changes in existing law made by the bill,
as reported, are shown as follows (existing law proposed to be
omitted is enclosed in black brackets, new matter is printed in
italic, existing law in which no change is proposed is shown in
roman).
ZIMBABWE DEMOCRACY AND ECONOMIC RECOVERY
ACT OF 2001, P.L. 107-99
* * * * * * *
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Zimbabwe Democracy and
Economic Recovery Act of 2001''.
SEC. 2. STATEMENT OF POLICY.
It is the policy of the United States to support the people
of Zimbabwe in their struggle to effect peaceful, democratic
change, achieve broad-based and equitable economic growth, and
restore the rule of law.
SEC. 3. DEFINITIONS.
* * * * * * *
[SEC. 4. SUPPORT FOR DEMOCRATIC TRANSITION AND ECONOMIC RECOVERY.
[(a) Findings.--Congress makes the following findings:
[(1) Through economic mismanagement, undemocratic
practices, and the costly deployment of troops to the
Democratic Republic of the Congo, the Government of
Zimbabwe has rendered itself ineligible to participate
in International Bank for Reconstruction and
Development and International Monetary Fund programs,
which would otherwise be providing substantial
resources to assist in the recovery and modernization
of Zimbabwe's economy. The people of Zimbabwe have thus
been denied the economic and democratic benefits
envisioned by the donors to such programs, including
the United States.
[(2) In September 1999 the IMF suspended its support
under a ``Stand By Arrangement'', approved the previous
month, for economic adjustment and reform in Zimbabwe.
[(3) In October 1999, the International Development
Association (in this section referred to as the
``IDA'') suspended all structural adjustment loans,
credits, and guarantees to the Government of Zimbabwe.
[(4) In May 2000, the IDA suspended all other new
lending to the Government of Zimbabwe.
[(5) In September 2000, the IDA suspended
disbursement of funds for ongoing projects under
previously-approved loans, credits, and guarantees to
the Government of Zimbabwe.
[(b) Support for Democratic Transition and Economic
Recovery.--
[(1) Bilateral debt relief.--Upon receipt by the
appropriate congressional committees of a certification
described in subsection (d), the Secretary of the
Treasury shall undertake a review of the feasibility of
restructuring, rescheduling, or eliminating the
sovereign debt of Zimbabwe held by any agency of the
United States Government.
[(2) Multilateral debt relief and other financial
assistance.--It is the sense of Congress that, upon
receipt by the appropriate congressional committees of
a certification described in subsection (d), the
Secretary of the Treasury should--
[(A) direct the United States executive
director of each multilateral development bank
to propose that the bank should undertake a
review of the feasibility of restructuring,
rescheduling, or eliminating the sovereign debt
of Zimbabwe held by that bank; and
[(B) direct the United States executive
director of each international financial
institution to which the United States is a
member to propose to undertake financial and
technical support for Zimbabwe, especially
support that is intended to promote Zimbabwe's
economic recovery and development, the
stabilization of the Zimbabwean dollar, and the
viability of Zimbabwe's democratic
institutions.
[(c) Multilateral Financing Restriction.--Until the
President makes the certification described in subsection (d),
and except as may be required to meet basic human needs or for
good governance, the Secretary of the Treasury shall instruct
the United States executive director to each international
financial institution to oppose and vote against--
[(1) any extension by the respective institution of
any loan, credit, or guarantee to the Government of
Zimbabwe; or (2) any cancellation or reduction of
indebtedness owed by the Government of Zimbabwe to the
United States or any international financial
institution.
[(d) Presidential Certification that Certain Conditions are
Satisfied.--A certification under this subsection is a
certification transmitted to the appropriate congressional
committees of a determination made by the President that the
following conditions are satisfied:
[(1) Restoration of the rule of law.--The rule of law
has been restored in Zimbabwe, including respect for
ownership and title to property, freedom of speech and
association, and an end to the lawlessness, violence,
and intimidation sponsored, condoned, or tolerated by
the Government of Zimbabwe, the ruling party, and their
supporters or entities.
[(2) Election or pre-election conditions.--Either of
the following two conditions is satisfied:
[(A) Presidential election.--Zimbabwe has
held a presidential election that is widely
accepted as free and fair by independent
international monitors, and the president-elect
is free to assume the duties of the office.
[(B) Pre-election conditions.--In the event
the certification is made before the
presidential election takes place, the
Government of Zimbabwe has sufficiently
improved the pre-election environment to a
degree consistent with accepted international
standards for security and freedom of movement
and association.
[(3) Commitment to equitable, legal, and transparent
land reform.--The Government of Zimbabwe has
demonstrated a commitment to an equitable, legal, and
transparent land reform program consistent with
agreements reached at the International Donors'
Conference on Land Reform and Resettlement in Zimbabwe
held in Harare, Zimbabwe, in September 1998.
[(4) Fulfillment of agreement ending war in
democratic republic of congo.--The Government of
Zimbabwe is making a good faith effort to fulfill the
terms of the Lusaka, Zambia, agreement on ending the
war in the Democratic Republic of Congo.
[(5) Military and national police subordinate to
civilian governmenT.--The Zimbabwean Armed Forces, the
National Police of Zimbabwe, and other state security
forces are responsible to and serve the elected
civilian government.
[(e) Waiver.--The President may waive the provisions of
subsection (b)(1) or subsection (c), if the President
determines that it is in the national interest of the United
States to do so.]
SEC. 4. SUPPORT FOR DEMOCRATIC TRANSITION AND ECONOMIC RECOVERY.
(a) Findings.--Congress finds that the parties to the
September 15, 2008, Global Political Agreement between the
Zimbabwe African National Union-Patriotic Front (ZANU-PF) and
the Movement for Democratic Change (MDC) committed themselves
by law to work together to chart a new political direction for
Zimbabwe, to prioritize the restoration of economic stability
and growth, and to create conditions for the drafting of a new
constitution that respects human rights and democratic
principles.
(b) Sense of Congress.--It is the sense of Congress that,
in order for the United States to most effectively support a
transition to democratic and economic recovery in Zimbabwe to
the greatest effect, United States policy should, to the extent
possible, reflect new political conditions and opportunities
created by the Global Political Agreement.
(c) Debt Relief.--The Secretary of the Treasury, in
consultation with the Secretary of State, shall gather
information on the debt incurred by Zimbabwe held by
international financial institutions and private financial
institutions, and the feasibility and advisability of
restructuring, rescheduling, or eliminating such debt in the
future, including by using the resources of the International
Monetary Fund, the International Bank for Reconstruction and
Development, and other appropriate international financial
institutions.
(d) Multilateral Financing Conditions.--The Secretary of
the Treasury shall instruct the United States executive
director to each international financial institution to oppose
any extension by the respective institution of any loan,
credit, or guarantee to the Government of Zimbabwe unless the
proposed extension meets the following conditions:
(1) There are sufficient controls for transparency
and international oversight of the use of relevant
funds.
(2) Relevant funds, in cases where the international
financial institutions are providing direct funding to
or through the Government of Zimbabwe, will not be
administered through or in coordination with--
(A) ministries that have not demonstrated a
commitment to reform and responsible fiscal
management; or
(B) the Reserve Bank of Zimbabwe, unless
there are sufficient guarantees and a pattern
of evidence that governance problems within the
Reserve Bank of Zimbabwe have been addressed
such that relevant funds will not be redirected
for extra-legal purposes.
(3) Relevant funds will not be administered
by or directly accessible to individuals or
financial institutions sanctioned by the United
States.
(e) Notification.--
(1) In general.--If the United States votes in favor
of any loan, credit, or guarantee to the Government of
Zimbabwe by an international financial institution, the
Secretary of the Treasury, in coordination with the
Secretary of State, shall notify the appropriate
congressional committees within 30 days of such vote
and provide appropriate information on such vote
pertaining to the conditions in subsection (d).
(2) Appropriate congressional committees defined.--In
this subsection, the term ``appropriate congressional
committees'' means--
(A) the Committee on Foreign Relations, the
Committee on Banking, Housing, and Urban
Affairs, and the Committee on Appropriations of
the Senate; and
(B) the Committee on Foreign Affairs, the
Committee on Financial Services, and the
Committee on Appropriations of the House of
Representatives.
(f) Waiver.--The President may waive the provisions in
subsection (d) and (e) if the President determines that it is
in the national interest of the United States to do so.
Department of State, Foreign Operations, and Related Programs
Appropriations Act of 2010
* * * * * * *
Title VII
General Provisions
* * * * * * *
AFRICA
SEC. 7070. (A) EXPANDED INTERNATIONAL MILITARY EDUCATION AND
TRAINING.--
* * * * * * *
[(i) Zimbabwe.--
[(1) The Secretary of the Treasury shall instruct the
United States executive director to each international
financial institution to vote against any extension by
the respective institution of any loans to the
Government of Zimbabwe, except to meet basic human
needs or to promote democracy, unless the Secretary of
State determines and reports in writing to the
Committees on Appropriations that the rule of law has
been restored in Zimbabwe, including respect for
ownership and title to property, freedom of speech and
association.
[(2) None of the funds appropriated by this Act shall
be made available for assistance for the central
government of Zimbabwe, except for macroeconomic growth
assistance, unless the Secretary of State makes the
determination pursuant to paragraph (1).]
(i) Zimbabwe.--None of the funds appropriated by this Act
may be made available for assistance for the central Government
of Zimbabwe, except for macroeconomic growth, health, and
education assistance, unless the Secretary of State determines
and reports in writing to the Committees on Appropriations that
the rule of law has been restored in Zimbabwe, including
respect for ownership and title to property and freedom of
speech and association.