Focus on links with Libya

Libya has renewed a US $360 million financing facility for Zimbabwe to cover the importation of fuel for another year, as queues formed this week outside filling stations in the capital, Harare, amid fears of petrol shortages. The state-run The Herald newspaper reported that the deal was signed on Monday, following a visit to Libya by President Robert Mugabe. The Zimbabwean delegation included Finance and Economic Development Minister Herbert Murerwa, Energy and Power Development Minister Amos Midzi, and Commercial Bank of Zimbabwe chief executive Gideon Gono. The Herald said the financing facility, a repeat of last year's agreement, involved the Libyan Arab Foreign Bank, the Libyan Arab Investment Company and the state oil company Tamoil. The facility would deliver quarterly tranches of $90 million as part of a "trade, investment and fuel supply" agreement. Tamoil reportedly supplies about 70 percent of Zimbabwe's fuel needs, with the remainder provided by the Independent Petroleum Group of Kuwait. However, analysts said it remained unclear what Tripoli wins in return for the financial lifeline to Zimbabwe, which is suffering severe foreign exchange shortages and has almost zero aid flows. Murerwa, who signed the agreement with his Libyan counterpart Ageli Breni, was quoted as saying that Libya would "invest in the mining, tourism and agricultural sectors and infrastructure development in the oil industry". The independent Financial Gazette reported that Libya would enter joint ventures in Zimbabwe and reopen gold mines that had closed as a result of the country's economic difficulties. "Libya is looking for investment in hotels, tourism and the service sector. They are trading equity stakes for repayment of the loans. But the difficulty is giving them stakes that are remotely close to the financial commitments they have made," Patrick Smith, editor of the London-based newsletter Africa Confidential, told IRIN. The nature of the Zimbabwean economy, with close links to South African private industry, limits how far the Libyans can buy in. "That leaves Zimbabwe with only the option of privatising chunks of the economy for the benefit of Libyan interests," Smith added. The new financing agreement cements Libya's growing involvement in Zimbabwe, despite reports that the north African country had been pressing hard for repayment of earlier loans. According to Ahmed Rajab, editor of the London-based newsletter Africa Analysis, behind the new-found friendship between the two geographically distant countries is a shared anti-West ideology, with both regarding themselves as part of a "progressive, pro-liberation, anti-imperialist front". Smith noted that Zimbabwe in the past had reservations over Libya's role in Africa. Harare, for example, had been a long-standing supporter of the Sudanese People's Liberation Army, whereas Tripoli has backed the Sudanese government. "But as Mugabe has had more and more problems with the West, [Libyan leader Mu'ammar] al-Qadhafi has made himself more and more useful. [There is now] a web of commercial, economic, political, diplomatic and security connections," Smith said.