Things are looking worse than ever in Zimbabwe, as the increasingly isolated President Robert Mugabe defied international pressure and outright condemnation to proceed with a “one-candidate poll” in the runoff election for the presidency on Friday - leaving not only the beleaguered public, but also foreign and domestic businesses, between a rock and a hard place.

As expected, Mugabe sailed to a landslide victory today, yet may face a situation of complete international illegitimacy, even among neighboring African republics

Many of the issues this blog focuses on in terms of corporate foreign policy are currently playing out in a dramatic fashion in Zimbabwe, as battle-hardened foreign investors work to cling to their commitments after surviving more than a decade under a profligate corruption-and-extortion  despot.  With fewer and fewer friends abroad, Mugabe’s administration will be looking to further tighten the screws on the business sector to extract desperately needed concessions, and may in fact begin looking for “symbolic punishments” against private business in response to diplomatic actions by their host countries (Russia is an expert in this).  As the Guardian reports, many democracy and human rights observations are beginning to ask the critical questions:  are foreign companies helping keep Mugabe in power?  Do business activities in Zimbabwe contribute to the collapse of democratic institutions and liberties?  Should investors be obligated to withdraw from the country in order to contribute to further political pressure.

The answers to such questions are much more ambiguous and complicated than they may seem, and despite the preposterous unquantifiable levels of hyperinflation, some investors (particularly in mining) are defending the dictatorial actions of Mugabe in order to preserve their proximity to power.  Is this abandon of ethnics the only method of survival?

The patient attitude of many mining multinationals is understandable - having had experience with a number of current and past clients in the extractive industries, I’ve seen the extraordinary amount of time, capital, and effort that needs to be invested over a period of several decades to run a successful mining project.  In Zimbabwe, there are some who are betting on the long-term upside of sticking with their commitments.  Also, there is full knowledge among both the multinationals and the government that international assistance is desperately needed for the economy to produce metals exports, which will be essential to Mugabe’s political survival.

Those who are able to will put a stop on all new investments.  Economic analyst John Robertson tells Reuters the following:  “I think everything will be frozen for now. All plans will be put in abeyance.  (…)  I think that while everything is in abeyance at the moment, maybe people will still hold their options open, and hope that within a couple of months they can come back and renew their investigations into (investment) possibilities.”

With the opposite perspective is of course Anglo American, the British mining giant which has taken quite a beating in the press recently for their decision to move ahead with a multi-million pound platinum mine in the country despite the political crisis.  Liberal Democrat Edward Davy has slammed Anglo for allegedly propping up the Mugabe regime with this investment, which he says would be a “huge boost” for the dictator and “a devastating blow to the population of Zimbabwe as a whole.”

The company itself has a statement on the Zimbabwe developments here, which emphasizes that their decision to continue forward with this mine, after 60 years of active participation in this economy, was based on their commitment to maintain the jobs of more than 650 employees and contractors, “as well as their families and all those who depend indirectly on the activity surrounding the project.”

If Anglo wants to stay in Zimbabwe while avoiding the worst in reputational damage, they are on the right track, but should work harder to argue their position.  As the sanctions pile up against Mugabe, it is the citizens who are going to suffer the worst from the West’s moral stand - just look at North Korea or Cuba.  Likewise it seems that whether or not mining companies stay or leave Zimbabwe will have little effect on whether Mugabe can be ousted from power.  However, a properly strategic corporate foreign policy would seek to establish close relations with other governments and NGOs to have a clear and transparent discussion about what is happening on the ground, and open a dialogue about how a continuing foreign business presence can contribute to greater political opening in the future.

The fact of the matter is that staying in Zimbabwe right now is going to be bad PR, any way you cut it.  And while the United States, Britain, and Canada have been very vocal in their strong condemnation of this electoral farce, the African Union has shown great hesitance to do anything about Mugabe, while the Chinese are actually actively preventing any international action from the UN (Russia would like join them if necessary).  Mugabe is isolated, and has few friends, but it is not comforting to know that companies like Anglo now find themselves allied with other authoritarian states committed to preventing the international community from promoting democratic practices.