Leading Banker Fears Decision Paralysis

UNCLAS HARARE 000337

SIPDIS

SENSITIVE

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E. O. 12958: N/A
TAGS: ECON ETRD EFIN ZI
SUBJECT: Leading Banker Fears Decision Paralysis

Ref: a) Harare 111 b) Harare 244


1. (SBU) Summary: Unless the GOZ modifies its economic
policies, the Bankers' Association President believes its
once-formidable infrastructure will be irreparably
damaged. End summary.


2. (SBU) Standard Chartered Chief Executive and Zimbabwe
Bankers' Association President Washington Matsaira told
Ambassador Sullivan that President Mugabe's inner-circle
"hawks" are subverting the Tripartite Agreement (septel)
as well as the Confederation of Zimbabwe Industries'
(CZI) proposal to devalue the Zimdollar for exporters
(ref a). Hardliners -- Justice Minister Patrick
Chinamasa, Agriculture Minister Joseph Made, Information
Minister Jonathan Moyo and Public Works Minister Ignatius
Chombo -- are either still enriching themselves from the
GOZ's interventionist policies (often accessing U.S.
dollars at the official rate) or unwilling to press
Mugabe to make a change. This has led to decision-making
paralysis, particularly frustrating because CZI's
leadership believed it had convinced all the key players
of the need to devalue. Matsaira said a group of
exporters even persuaded the GOZ to allow a one-time
parallel market exchange US$ 25 million last month,
seeming admission that the official rate is untenable.
There has been no further positive sign from government.


3. (SBU) Matsaira notices increasing infrastructure and
even moral decay in Zimbabwe, symptoms of the economic
crisis that may become permanent by the year's end. An
every-man-for-himself dictum is taking grip of a society
that once exalted community. The banker sees unmotivated
teachers and bribe-hungry policemen with an audacity
unthinkable just 5 years ago. The brain-drain is so
severe that it is no longer possible to fill certain
professional positions at Standard Chartered (in spite of
the country's high unemployment). Indigenous fuel
companies clandestinely send their supply of heavily-
subsidized fuel to neighboring countries. In sum,
Matsaira thinks Zimbabwe is gradually being "Zaire-ized,"
a reference to Mobutu Sese Seko's misrule in today's
Democratic Republic of the Congo.

Comment
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4. (SBU) Matasaira's somber observations parallel those
that lower-grade local employees shared with us a few
weeks ago (ref b). Zimbabweans surprise themselves with
their own growing contempt for laws and social-norms, one
step in the country's rapid metamorphism.

Sullivan