The Multinational Monitor


G L O B A L   N E W S W A T C H

Zimbabwe Tries to Beat Dependency

Lonrho Causes Pipeline Trouble

What is dependency? Scholars of economic development in the Third World often speak of a country being dependent on multinational corporations. A current dispute between the government of Zimbabwe and the giant British-based Lonrho corporation brings this airy concept of dependency down to earth.

Landlocked Zimbabwe has no oil reserves of its own; it imports 100% of its fuel needs along two pipelines - one from Durban, South Africa, the other from Maputo, Mozambique.

Now the government of Zimbabwe - politically disturbed by its economic ties to South Africa, and interested in seeking out additional fuel routes - hopes to use a newly-completed oil pipeline running from the more convenient port of Beira, Mozambique. But Zimbabwe's government has one critical problem: it doesn't own the pipeline, Lonrho does, and Lonrho wants to impose a heavy tariff on Zimbabwe's use of the line.

"Lonrho is asking Zimbabwe to pay $40.50 a ton ... while the government is prepared to pay only $27.06," the African Economic Digest reported on May 28. Discussions between Prime Minister Robert Mugabe and Lonrho's chairman, R.W. "Tiny" Rowland, have taken place over the past few months to resolve the issue, but no agreement has yet been reached.

Lonrho's stubbornness in negotiations may stem in part from the attacks on the pipeline waged by guerrilla units opposed to Mozambique's government and sympathetic to South Africa's. Two such attacks have occurred on the Mozambique side of the pipeline over the past six months, the most recent one in early May. Due to these security problems, "Lonrho is facing great difficulties in arranging insurance cover for the vital pipeline," reported Zimbabwe's Financial Gazette on May 21.

"Whatever the reasons for the delays in negotiations, the economy is being held ransom," says Sean Grease, a coordinator of the Southern African Development Coordination Conference, an organization of nine Southern African states attempting to promote regional economic integration apart from South Africa (see MM, June, 1980). "Any company has to understand that the costs of delay are very serious in economic and political terms for the government of Zimbabwe."

For Lonrho's part, the dispute with Zimbabwe represents one final hitch in a project which has dragged on for 20 years. In 1962, Tiny Rowland signed an agreement with the then-Rhodesian government to build and own the pipeline. But because of international economic sanctions imposed in 1965 on Ian Smith's white supremacist government of Rhodesia, Lonrho's completion of the pipeline was economically unfeasible. Only after Mugabe led Zimbabwe to independence in the spring of 1980 did it make sense for Lonrho to finish work on the pipeline, which finally was completed in early January.

Currently, however, Lonrho seems set on extracting as big a concession as possible from Zimbabwe's new government. According to the African Economic Digest, Lonrho "also wants compensation for the 15 years when the pipeline was not in use."

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