afrol News, 7 January - Equatorial Guinea has emerged as one of Zimbabwe's main creditors following massive unpaid oil deliveries since the surrender of coup plotter Simon Mann from Harare to Malabo in 2008.
As the Reserve Bank of Zimbabwe at the end of the year announced its need for refinancing, the extent of the bank's debts was publicly known. Out of a total unsustainable debt of US$ 1.2 billion, the Bank owed some US$ 222 million to Equatorial Guinea, which turned out to be its greatest creditor.
These large debts were accumulated since 2004, when Simon Mann was arrested at the Harare airport and a plot to organise a coup in Equatorial Guinea was revealed.
Equatorial Guinea and Zimbabwe at the moment did not have strong bilateral ties, but Equatoguinean Dictator Teodoro Obiang Nguema immediately took an initiative to deepen relations with his Zimbabwean counterpart Robert Mugabe as Mr Mann's plot was unravelling. President Mugabe at the time already was facing mounting international isolation and financial problems.
A state visit of Equatoguinean President Obiang to Zimbabwe in March 2006 brought the two leaders - both facing massive international condemnation over their human rights policies - closer together. At the occasion, the first steps of a deal providing for Mr Mann's extradition to Equatorial Guinea and oil deliveries to Zimbabwe were negotiated.
The oil deal was finally publicised in June 2006 by Zimbabwean state-controlled media. A "purely commercial" energy trading agreement had been signed with the government of Equatorial Guinea, Harare authorities announced. It was insisted that these energy resources were "to be bought and sold at market rates" on the Zimbabwean market.
The deal came after petrol was becoming scarce in Zimbabwe. Even friendly nations such as South Africa and Libya at the time mostly had halted petrol supplies to the Mugabe regime as Zimbabwe became unable to pay for these supplies.
For the Equatoguineans, it was clear that oil supplies to Zimbabwe would have to be supplied through a credit line as Harare had no hard currencies to pay with. To avoid publicity about these unfavourable conditions, it was agreed that the credit was to be handled by the non-transparent accounts of the Reserve Bank in stead of normal credits handled by the Harare Finance Ministry.
Although obvious to all observers, both Equatorial Guinea and Zimbabwe denied any link to an extradition of Mr Mann. Malabo sources however already in April 2006 announced that Mr Mann would be sent to Equatorial Guinea. And indeed, in February 2008, he was extradited to Malabo.
Meanwhile, Equatorial Guinea has continued to provide Zimbabwe with oil on credit. Within four years, this credit has accumulated to US $ 222 million, which is a large amount given the desperate poverty experienced by the majority of Equatoguinean citizens.
It remains doubtful whether the Malabo government will be able to recover its funds, if this ever was the intentions. Currently, the Reserve Bank of Zimbabwe is insolvent and is asking the Harare Finance Ministry to take over its large and unsustainable debt burden. Models are still sought to solve the crisis.
If the Bank's debts are transferred to the Treasury, a future government will try to renegotiate Zimbabwe's debt burden with the aim of achieving debt reduction or cancellation. In this situation, Equatorial Guinea can be pressured by other Zimbabwean creditors to cancel its major debt post.
Equatorial Guinea meanwhile continues to provide oil to Zimbabwe.
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