A research institute in Pretoria said South African President Thabo Mbeki’s policy of “quiet diplomacy” in Zimbabwe had contributed to that country's economic collapse.

The report by the South African Institute of International Affairs said warmer relations between South Africa and Zimbabwe since Mr. Mbeki took office in 2000, his tolerant approach to Harare policies, and inaction by other Southern African Development Community member nations, had discouraged firmer action by SADC and the African Union while blocking censure motions tabled in the United Nations.

"Apart from complicity with some of the other SADC countries in keeping the Zimbabwe issue off the agenda at successive SADC and AU meetings, the South African government has actively supported Zimbabwe in blocking motions of censure against Zimbabwe in international forums, most notably the U.N. Human Rights Commission," said the report, entitled "A Nation in Turmoil: The Experience of South African Firms Doing Business in Zimbabwe."

The report also faults Pretoria’s endorsement of the results of Zimbabwean elections that have been challenged by the opposition as tainted by violence or fraud.

The report said Reserve Bank of Zimbabwe Governor Gideon Gono has become what it called a "de facto prime minister," while his central bank has engaged in business activities that should be left to the private sector, such as change bureaus.

The report noted, however, that longstanding business ties between South Africa and Zimbabwe "have not been severed by the current economic problems, although many companies have preferred to 'ringfence' their Zimbabwe operations by keeping financials separate from [overall operations] as a way of riding out the storm."

And, "Despite the deterioration of the economic situation, many people believe Zimbabwe is still a better and easier place in which to do business than many other African countries, because of its strong business sector and relatively good infrastructure," the report states.However, it also notes that companies have found that Harare's "erratic and often extreme policy decisions" complicate planning, while "government interference in the economy is a constant threat."

Policy recommendations in the report included: a change in political leadership; restoration of the rule of law; the reinstatement of property rights; making policy more predictable; re-evaluating foreign exchange policy; shifting spending priorities to address national, rather than ruling party, needs; significantly reducing public deficits; making policies more conducive to foreign investment; and restructuring the Reserve Bank to make it more autonomous while addressing concerns Gono is so powerful in the marketplace "that he is on the verge of becoming both player and referee."

Reporter Blessing Zulu of VOA's Studio 7 for Zimbabwe spoke with report author Dianna Games, executive director of publishing and research firm Africa @ Work and managing editor of the institute's South African Journal of International Affairs.

Governor Gideon Gono responded briefly to the criticisms in the report.

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