AMBASSADOR CALLS ON FINANCE MINISTER MURERWA AND HEARS

C O N F I D E N T I A L SECTION 01 OF 02 HARARE 003637

SIPDIS

STATE FOR AF, AF/S, AF/EPS, EB/IFD/ODF, EB/TPP/ODC
TREASURY FOR ED BARBER AND GRACE SONE
USDOC FOR 2037/ERIC HENDERSON
STATE PASS USTR/RWHITTAKER
NSC FOR SENIOR AFRICA DIRECTOR GAYLE SMITH
LONDON FOR PFLAUMER

CONFIDENTIAL

PAGE 02 HARARE 03637 01 OF 02 051257Z
E.O. 12958: DECL: 07/05/05
TAGS: ECON EFIN PREL EAGR PINR ZI
SUBJECT: AMBASSADOR CALLS ON FINANCE MINISTER MURERWA AND HEARS
PARTY PLATITUDES ON A TURNAROUND PLAN


CLASSIFIED BY AMBASSADOR MCDONALD, REASON 1.5 (B),(D)


1. (C) SUMMARY: IN A JULY 3 MEETING WITH THE FINANCE MINISTER,
MURERWA TOLD US THAT HALTING ZIMBABWE'S ECONOMIC TAILSPIN WAS THE
GOVERNMENT'S NUMBER ONE PRIORITY, IN PART AS A RESPONSE TO THE
STRONG SHOWING OF THE OPPOSITION IN THE RECENT PARLIAMENTARY
ELECTIONS. HE COULD NOT PROVIDE US SPECIFICS ON HOW THIS WOULD BE
CARRIED OUT. HE ALSO TOLD US THAT WHETHER HE WOULD STAY ON AS
FINANCE MINISTER WAS STILL IN THE AIR, AND APPEARED TO US TO BE
READY FOR A CHANGE IN DUTIES. HE LAMENTED THE RECENT ELECTION
VIOLENCE, AND MOUTHED THE PARTY LINE THAT THE WHITE FARMERS COERCED
THEIR WORKERS TO SUPPORT THE MDC. AT THE HEAD OF FINANCE, IT MAY BE
TIME FOR A CHANGE. END SUMMARY.


2. (C) IN A CALL ON FINANCE MINISTER HERBERT MURERWA ON JULY 3,
ACCOMPANIED BY ECON/COMM CHIEF AND POLOFF, THE AMBASSADOR WAS
ADVISED THAT ADDRESSING ZIMBABWE'S SEVERE ECONOMIC PROBLEMS WILL BE
THE GOVERNMENT'S NUMBER ONE PRIORITY. ACKNOWLEDGING THAT THE MDC'S
STRONG SHOWING IN THE JUST COMPLETED PARLIAMENTARY ELECTIONS WAS DUE
TO THE ELECTORATES BAD ECONOMIC PLIGHT, THE MINISTER STATED THAT THE
RULING PARTY KNEW THAT "BREAD AND BUTTER ISSUES" ARE PARAMOUNT.
"THE PARTY PERFORMED POORLY", MURERWA TOLD US, "BECAUSE OF THE
PROTEST VOTE AND, ESPECIALLY IN MATABELELAND, BECAUSE THE OPPOSITION
HAD ENCOURAGED AN ETHNIC SPLIT", A DEVELOPMENT THE MINISTER
LAMENTED. THE MINISTER WARNED AGAINST THE DANGERS OF FANNING ETHNIC
TENSIONS IN ZIMBABWE, AND IMPLIED THAT THE RULING PARTY WOULD NOT
CONFIDENTIAL

PAGE 03 HARARE 03637 01 OF 02 051257Z
TOLERATE ANY SUCH ACTIONS FROM THE NEW OPPOSITION PARTY. MURERWA
PROCLAIMED THE SAVING GRACES OF THE LONG-STALLED "MILLENIUM ECONOMIC
RECOVERY PROGRAM", DECLARING THAT IT WOULD "TACKLE THE ROOT CAUSES
OF INFLATION, CREATE A BETTER ENVIRONMENT FOR FOREIGN DIRECT
INVESTMENT, RESOLVE THE LAND ISSUE ONCE AND FOR ALL, AND FULFILL THE
GOVERNMENT'S GOAL OF CREATING JOBS IN THE URBAN AREAS, ETCETERA,
ETCETERA." LIKE THE PLAN ITSELF, THE MINISTER WAS MUM ON JUST HOW
THESE ADMIRABLE GOALS WOULD BE ATTAINED. WHEN THE POLITICAL OFFICER
QUESTIONED IF THE GOZ HAD THE ASSETS AND RESOURCES TO EXECUTE AN
AMBITIOUS LAND PROGRAM AND URBAN JOBS PROGRAM AT THE SAME TIME, THE
FINANCE MINSTER BEAMED AT US AND DODGED THE QUERY.

--------------
WILL HE STAY ON AS FINANCE MINISTER?
--------------


3. (C) ON THE MATTER OF HIS POSSIBLE REAPPOINTMENT, MURERWA WAS
EXTREMELY CIRCUMSPECT. (COMMENT: IN RECENT DAYS THE RUMOR MILL HAS
PLACED GIDEON GONO, MANAGING DIRECTOR OF THE COMMERCIAL BANK OF
ZIMBABWE, AT THE HEAD OF THE SUCCESSION LIST; THOUGH THE JOB'S VALUE
AS A REWARD FOR GONO'S TIRELESS EFFORTS TO SECURE FINANCING FOR THE
COUNTRY'S FUEL IMPORTS CAN BE QUESTIONED. THIS IS BECAUSE THE NEXT
FINANCE MINISTER WILL FACE THE DAUNTING TASK OF HAVING TO PULL
ZIMBABWE OUT OF A VERY DEEP ECONOMIC HOLE, WITH INFLATION, A SEVERE
BALANCE OF PAYMENTS IMBALANCE AND A RUNAWAY BUDGET DEFICIT AS THE
BIGGEST NEAR-TERM CHALLENGES. END COMMENT.) MURERWA JOKED THAT
PERHAPS BECOMING THE MINISTER OF EDUCATION, SPORTS AND CULTURE WOULD
BE PREFERABLE, AS THEN HE COULD AT LEAST VISIT ALL THE COUNTRY'S
GOLF COURSES.

--------------
CONFIDENTIAL

PAGE 04 HARARE 03637 01 OF 02 051257Z
THE PATH FORWARD
--------------


4. (C) ON A MORE SERIOUS POLITICAL NOTE, THE MINISTER DECLARED THAT
IT WAS TIME FOR HIS COUNTRY TO HEAL ITS WOUNDS AND MOVE FORWARD.
THE HISTORIC LAND INEQUALITY ISSUE HAD TO BE SOLVED, AND ZIMBABWE
PUT BACK ON THE PATH TO GROWTH AND DEVELOPMENT. THE AMBASSADOR MADE
THE POINT THAT THE UNITED STATES COULD HELP ZIMBABWE DEAL WITH ITS
ECONOMIC MISTAKES, BUT THE GOVERNMENT'S HUMAN RIGHT VIOLATIONS
INFLICTED ON ITS OWN PEOPLE WERE NOT ACCEPTABLE. THE ECON OFFICER
ALERTED THE MINISTER TO THE ELIGIBILITY REQUIREMENTS OF THE AFRICAN
GROWTH AND OPPORTUNITY ACT (AGOA),STATING THAT HUMAN AND DEMOCRATIC
RIGHTS ISSUES, RATHER THAN MARKET AND OPERATING ENVIRONMENT ISSUES,
WERE NOW MORE PROBLEMATIC FOR ZIMBABWE. THE MINISTER ASSURED US
THAT ENHANCING RELATIONS WITH THE UNITED STATES WAS A TOP PRIORITY
OF HIS GOVERNMENT, AND PROMISED POSITIVE STEPS TO DECISIVELY QUALIFY
FOR THE BENEFITS OF THE AGOA. (NOTE: THE MINISTER WAS SURPRISINGLY
UNINFORMED ABOUT THE PROVISIONS OF THE AGOA DEADLINES, ALTHOUGH HE
RESPONDED TO ECON/COMM CHIEF'S POINTS ON THE NEED TO ACT QUICKLY TO
ENSURE THAT ZIMBABWE QUALIFIES THIS FISCAL YEAR. END NOTE) ON THE
DETAILS OF THE LAND REFORM PROGRAM HE TOLD US WE WOULD HAVE TO TALK
WITH VICE PRESIDENT MSIKA AND THE MINISTRY OF AGRICULTURE. HE
FLATLY STATED THAT A DECISION ON DEVALUATION WOULD HAVE TO AWAIT THE
APPOINTMENT OF A NEW CABINET, WHICH HE EXPECTED TO CONTAIN ABOUT
HALF NEW FACES. THE MINISTER CLOSED BY ASSURING US THAT A
TURNAROUND WAS LOOMING, THOUGH HIS TESTIMONY DELIVERED WITH

CONFIDENTIAL

CONFIDENTIAL PTQ7965

PAGE 01 HARARE 03637 02 OF 02 051541Z
ACTION AF-00

INFO LOG-00 NP-00 AGRE-00 AID-00 ACQ-00 CEA-01 CIAE-00
SMEC-00 CTME-00 INL-01 DINT-00 DODE-00 DOEE-00 DOTE-00
SRPP-00 DS-00 EB-00 EUR-00 EXIM-01 E-00 FAAE-00
FBIE-00 VC-00 FRB-00 H-01 TEDE-00 INR-00 ITC-01
LAB-01 L-00 VCE-00 AC-01 NSAE-00 OMB-01 OPIC-01
PA-00 PM-00 PRS-00 ACE-00 P-00 SP-00 IRM-00
SSO-00 SS-00 STR-00 T-00 USIE-00 FMP-00 PMB-00
DSCC-00 DRL-02 G-00 NFAT-00 SAS-00 /011W
-------------- 6A743F 051541Z /45
P 051300Z JUL 00
FM AMEMBASSY HARARE
TO SECSTATE WASHDC PRIORITY 6509
INFO SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
AMEMBASSY LONDON
USDOC WASHDC
NSC WASHDC
DEPTTREAS WASHDC

C O N F I D E N T I A L SECTION 02 OF 02 HARARE 003637

SIPDIS

STATE FOR AF, AF/S, AF/EPS, EB/IFD/ODF, EB/TPP/ODC
TREASURY FOR ED BARBER AND GRACE SONE
USDOC FOR 2037/ERIC HENDERSON
STATE PASS USTR/RWHITTAKER
NSC FOR SENIOR AFRICA DIRECTOR GAYLE SMITH
LONDON FOR PFLAUMER

CONFIDENTIAL

PAGE 02 HARARE 03637 02 OF 02 051541Z
E.O. 12958: DECL: 07/05/05
TAGS: ECON EFIN PREL EAGR PINR ZI
SUBJECT: AMBASSADOR CALLS ON FINANCE MINISTER MURERWA AND HEARS
PARTY PLATITUDES ON A TURNAROUND PLAN

CHARACTERISTIC BONHOMIE, DID NOT SUFFICE TO MAKE US TRUE BELIEVERS.

--------------
POLITICAL VIOLENCE
--------------


5. (C) THE MINISTER SAID THE COUNTRY NEEDED TO MOVE FORWARD, AFTER
ITS RECENT ELECTION SEASON VIOLENCE, AND FOCUS NOW ON ECONOMIC
RECOVERY. HE DOWNPLAYED, HOWEVER, THE DEGREE OF VIOLENCE ZIMBABWE
JUST EXPERIENCED, NOTING THAT SOUTH AFRICA HAS MORE VIOLENCE ON A
DAILY BASIS THAN ZIMBABWE HAD DURING ITS ELECTION PERIOD. HE
CONCEDED THAT THE MOVEMENT FOR DEMOCRATIC CHANNGE IS A "NATIONAL
PARTY" AND HOPED THAT IT WILL WORK WITH THE RULING PARTY TO ADDRESS
THE COUNTRY'S ECONOMIC PROBLEMS.

--------------
COMMENT
--------------


6. (C) MURERWA APPEARED TIRED BUT RESIGNED AND NOT QUITE SURE OF
WHERE HE SHOULD HANG HIS HAT AS THE NEWLY REELECTED MP FOR
GOROMONZI. THAT HIS BATTERIES ARE LOW IS NO SURPRISE, AND ALTHOUGH
ONE OF THE MORE DECENT MINISTERS, A NEW FACE IN HIS CHAIR WOULD BE
WELCOME BY US; PROVIDED THE PERSON IS COMPETENT, OPEN-MARKET
ORIENTED, AND NOT MERELY A SYCOPHANT OF THE POLITBURO OR PRESIDENT.
END COMMENT.
CONFIDENTIAL

PAGE 03 HARARE 03637 02 OF 02 051541Z

MCDONALD

CONFIDENTIAL

>