The already rickety Zimbabwe government of national unity is facing yet another divisive issue - how to react as international courts rule that the government must pay millions of dollars to white farmers whose lands are protected by Bilateral Investment Promotion and Protection Agreements (BIPPAs).
Cabinet sources say the Movement for Democratic Change wants the government to stop seizing land or compensate the farmers. However, hardliners in Zanu PF say there is no going back on the land reform program.
Lands Minister Herbert Murerwa says the cabinet has agreed not to occupy farms protected by a BIPPA, but notes that others in his Zanu PF party think no white or foreign-owned enterprise should be exempt.
A German, Heinrich Von Pezold, and other farmers are suing the government for US$600 miillion.Von Pezold bought a forestry and sawmilling firm, Border Timbers, which operated 5 forest estates and 3 sawmills.
He also had several tea estates in Manicaland Province, which were forcibly taken by the government under the land reform scheme.
As Pezold’s purchases were protected by a BIPPA between Germany and Zimbabwe signed in 1995, the take-over of the Von Pezold properties caused a diplomatic row between the two countries.
Pezold’s case is now up for arbitration at the International Centre for Settlement of Investment Disputes in Paris.
Attorney-General Johannes Tomana told VOA that the government is preparing its defennce against Von Pezoild.
This will be the second time Zimbabwe has been dragged before the International Centre for Settlement of Investment Disputes.
A group of 40 Dutch farmers, whose properties were protected by a bilateral agreement, successfully appealed to the international body in April 2009. The Dutch were awarded a total of US$25 million.
The government was ordered to pay this within 90 days. Three and a half years later, the award remains unpaid and interest on the settlement has been accruing.
Zimbabwe said recently it would settle the debt, but the finance minister says there is no money.
Chief economist Prosper Chitambara of the Labour and Economic Development Research Institute of Zimbabwe says failure to respect bilateral agreements is another obstacle to economic recovery.