Malawi's foreign policy is centered on maintaining cordial relations with its neighbors and its Western trading partners. The end of Mozambique's civil war will benefit Malawi as refugees leave and economic links are reestablished. Because Malawi is a land-locked nation, the opening of the railroad line from Salima to Beira (in Mozambique) will lessen the burden of transportation costs for imports and exports.
As a member of the Organization for African Unity (OAU) and the South African Development Community (SADC), Malawi has benefited from the end of apartheid in South Africa with increased aid and trade. Malawi, however, faces the flood of cheap foreign imports from Zimbabwe and South Africa, which negatively impacts domestic producers and could fuel a balance-of-payments problem. Negotiations are currently underway to create a duty free economic zone in southern Africa, involving Malawi and its neighbors. Muluzi needs to continue to campaign abroad for increased investment and aid in order to maintain the country's economic foundation. In early 1999, he visited Libya to seek economic assistance, which is necessary given the West's declining interest in sub-Saharan Africa since the end of the Cold War.
Malawi receives a substantial amount of economic assistance from the United States. The U.S. government provides more than US $27 million annually in assistance under USAID's new Country Strategic Plan (CSP) for the period 2001-05. The aid is focused on programs in government reform, including increased citizen involvement in government; health issues, including HIV/AIDS and children's health; increased sustainable employment opportunities; and education.
Early in 2002, Denmark and Britain suspended aid packages citing corruption within the government that kept monies from being distributed to those in need. The British cited the purchase in 2001 of 39 luxury vehicles for Malawian cabinet members, which the British believe were financed with development aid funds. Britain has looked to the IMF to investigate the country's economic policies and will only release aid once those policies have been approved.
Malawi assumed the chair of the SADC in 2001. President Muluzi has taken an active role in SADC on issues such as the global coalition against terrorism and land reform in Zimbabwe.
Malawi is also a member of the UN, the IMF, World Bank, the African Development Bank (AFDB), the Common Market for East and Southern Africa (COMESA), Nonaligned Movement, G-77, and the World Health Organization (WHO).