Finance Head Dislikes Price Controls

UNCLAS HARARE 000590

SIPDIS

SENSITIVE

STATE FOR AF/S
NSC FOR SENIOR AFRICA DIRECTOR JFRAZER
USDOC FOR 2037 DIEMOND
PASS USTR ROSA WHITAKER
TREASURY FOR ED BARBER AND C WILKINSON
STATE PASS USAID FOR MARJORIE COPSON


E. O. 12958: N/A
TAGS: ECON EINV ETRD ZI
SUBJECT: Finance Head Dislikes Price Controls


1. (SBU) Summary: During a meeting with Ambassador
Sullivan, Finance Minister Herbert Murerwa agreed that
economic intervention has gone too far. He expressed
hope that he and other GOZ moderates will be able to push
through reforms that reach beyond last month's
devaluation. End summary.

Less International Support?
--------------

2. (SBU) Amb Sullivan recounted that the U.S. has
provided about US$ 130 million total assistance to
Zimbabwe during the past year. With the possibility
looming that only Zimbabwe among southern African
countries will continue to suffer significant food
deficiency, he stressed the need for meaningful economic
reform and better coordination between the donor
community and the GOZ's Grain Marketing Board (GMB).
Murerwa concurred that Zimbabwe will require some degree
of food assistance, probably in Masvingo as well as
Matabeleland North and South. He said he was "unhappy"
that the GOZ still subsidized maize-meal "at a horrendous
rate." Against Agriculture Minister Joseph Made's
opposition, Murerwa told us he has proposed raising the
price of maize and allowing the import of white maize at
market value. (Note: There is presently little incentive
for producers to sell grain to the GMB at controlled
prices.)

3 Bilateral Friction Points
--------------

3. (SBU) Expropriations of Amcit Properties: Amb
Sullivan protested the GOZ's unlawful seizure of land
belonging to five U.S. citizens under fast-track land
reform, requesting Murerwa's intercession. The Finance
Minister agreed to look at the cases and accepted copies
of the Embassy's notes verbal to date.


4. (SBU) Enfeebled Democracy: Murerwa expressed regret
that the land issue had soured bilateral relations. Amb
Sullivan countered that the USG had long supported land
redistribution within a legal framework. He argued that
the USG was most concerned with Zimbabwe's undemocratic
elections last March and deteriorating human rights
record. Murerwa insisted repeatedly that the GOZ's main
conflict was with the United Kingdom and not domestic
opposition. He expressed outrage at alleged opposition
violence in the just-concluded two-day national strike.


5. (SBU) Financial Sanctions: Amb Sullivan gave Murerwa
a copy of the March 6 executive order authorizing
financial sanctions against Zimbabwe's leaders. Murerwa
asked whether sanctions extended to businesses owned by
listed Zimbabweans. The Ambassador told him the USG has
yet to define these parameters.

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

6. (SBU) Murerwa shares customary ZANU-PF biases, blaming
the UK -- rather than suppression of opposition and rule-
of-law -- for Zimbabwe's estrangement from much of the
international community. However, he is decidedly among
GOZ moderates, more empirical than ideological, who are
working quietly to rationalize economic policies. We
have no doubt the Harvard-trained educator recognizes
that the GOZ has gone overboard on self-destructive price
controls and other statist policies. He will continue to
lobby gingerly for liberalization and against cabinet
hard-liners, probably with mixed results.

Sullivan