Mugabe shifts blame for recession

UNCLAS HARARE 002342

SIPDIS

SENSITIVE

STATE FOR AF/S
NSC FOR SENIOR AFRICA DIRECTOR JFRAZER
USDOC FOR 2037 DIEMOND
TREASURY FOR OREN WYCHE-SHAW
PASS USTR FLORIZELLE LISER
STATE PASS USAID FOR MARJORIE COPSON


E. O. 12958: N/A
TAGS: ECON EFIN EINV ETRD PGOV ZI
SUBJECT: Mugabe shifts blame for recession



1. (SBU) Summary: In his December 2 State of the Nation
address to Parliament, President Mugabe slammed foreign
exchange fraud rather than sanctions for the country's
economic downturn, adopting a slightly less
confrontational stance toward the U.S. End Summary.


2. (SBU) Over the past year, the GOZ has only rarely
spoken at length about the economy without identifying
U.S. and European sanctions as a prime cause. In
yesterday's remarks, Mugabe also acknowledged that a
World Food Program contribution of US$212.8 million
"through the international community is sincerely
appreciated." He asked that "partners extend their
support to our land reform programme."


3. (SBU) On the other hand, Mugabe did indirectly
criticize U.S. policy in Iraq and upbraided "the Anglo-
Saxon unholy alliance against Zimbabwe" in the
Commonwealth. The President offered no coherent
proposals to turn around the economy.

Comment
--------------

4. (SBU) The GOZ now sees forex leakages as the main
economic villain, even displacing mythical Western trade
and investment sanctions. We understand the GOZ is
trying to more firmly control remissions, foreign
currency accounts and export processing zones - but it
has not decided on a policy. Interestingly, Reserve Bank
Governor Gideon Gono's bank - CBZ - continues to be one
of the most brazen parallel market players. Finally, we
do not know if Mugabe's failure to mischaracterize U.S.
travel and financial restrictions in this address is a
result of Amb's Sullivan's interviews in the independent
press last week - and whether the GOZ will continue in
this vein.

Sullivan