RBZ laughs at GOZ crop forecasts

UNCLAS SECTION 01 OF 02 HARARE 000831

SIPDIS

SENSITIVE

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


E. O. 12958: N/A
TAGS: ECON EAID BTIO EINV PGOV PTER ZI
SUBJECT: RBZ laughs at GOZ crop forecasts



1. (SBU) Summary: Reserve Bank (RBZ) Governor Gideon Gono
says he has confronted Agriculture Minister Joseph Made
over his optimistic forecast of a 2.4 million m/t maize
harvest. The Governor alleges other cabinet officials,
such as Security Minister Nicolas Goche and acting
Finance Minister Herbert Murerwa, also privately belittle
Made's stratospheric estimate. On a number of other
issues - rule-of-law violations, school fees increases,
the official Z$824:US$ rate, recent farm acquisitions -
Gono was dismissive of policies favored by Made and other
Zanu-PF hardliners. End Summary.

The GOZ's voice of reason?
--------------

2. (SBU) Ambassador Sullivan called on the RBZ Chief on
May 13, engaging in a far-ranging exchange. As in our
past encounters, Gono betrayed a keen sense of self-
importance, stressing the personal danger he had placed
himself in for taking command of the Zimbabwean economy.
Melodrama aside, Gono is still a voice of relative
sanity, at least by GOZ standards. Covering a host of
topics, Gono:

- laughed out loud at the latest GOZ maize forecast of
2.4 million m/t, drawing on his own farming experience
and exclaiming "no way." He suggested the RBZ might
issue a dissenting report. Gono also complained Made
halted the United Nations joint Food and Agriculture
Organization/World Food Program survey after the
Minister's Permanent Secretary had authorized it and was
actually participating in the survey. He judged that the
reason Made was insisting on such a high number was for
Mugabe to trumpet the success of land reform at last
weekend's SADC summit on agriculture.

- expressed hope the GOZ would still ask the United
Nations Development Program to assist with next year's
scheduled Parliamentary elections. (When we noted that
the issue reached beyond cost and to the election's
credibility and legitimacy, he asked for and was provided
the SADC Parliamentary Norms.)

- complained that GOZ rule-of-law transgressions were
undermining his efforts to reengage internationally.

- asserted Trojan Nickel CEO Leonard Chimimba was
assassinated last week before he could meet with Gono and
offer insight into mining sector corruption. Various
press accounts have characterized Chimimba's death as
part of a carjacking.

- said he was working to restore the validity of Zimbabwe
Investment Center certificates (investment guarantees the
GOZ overlooked in its seizure of many foreign-owned farms
and conservancies). If acted upon, this could bode well
for Amcit investors who have lost properties during land
reform.

- recounted he came to Coca-Cola's rescue when the
Zimbabwe Revenue Authority insisted on the Coke's
ingredients for tax purposes. (The Embassy recently
worked with the American Business Association of Zimbabwe
to provide U.S. company reps an intimate audience with
the Governor.)

- lamented the imprisonment of school headmasters over
unapproved fee hikes.

- characterized GOZ reluctance to scrap the Z$824:US$
rate as "psychological" rather than rational.


3. (SBU) On economic policy, Gono argued he has markedly
improved the lot of exporters, even while failing to
eliminate 25 percent revenue withholding at the ultra-low
Z$824:US$ rate. Gono said he had come up with a number
of "tricks" to counterbalance the low rate, allowing
exporters easy access to low interest rates and zimdollar
prepayment for export earnings. (Comment: We still see no
evidence of export expansion, but will continue to
monitor. In an event, more export revenue now passes
through official channels.) On the fiscal side, de facto
Finance Minister Gono noted he has fought to hold down
public sector wage increases and other unbudgeted
expenses. He was appalled when the Ministry of
Agriculture's Agricultural Rural Development Authority
(ARDA) asked him for support after its high-profile
seizure of Kondozi Farm, retorting that "the private
owners never asked for Reserve Bank help."

Blanket amnesty on the way
--------------

4. (SBU) Concerning the RBZ's anti-corruption campaign,
Gono said he would grant a blanket amnesty for forex
externalization in his next monetary review. He claimed
he was unable to do anything about James Makamba's
detention since February 9, since he believed the
businessman was being held for personal reasons (a
reference to his rumored affair with Grace Mugabe). Gono
did hope to sponsor an amnesty in his next quarterly
address (apparently estimating that Mugabe might be
willing to let Makamba free by then).


5. (SBU) Gono reiterated his interest in visiting
Washington for meetings with the International Monetary
Fund later this month. Ambassador Sullivan warned that
the process for obtaining a waiver to travel (Gono is on
travel ban) normally takes four weeks, if granted. Gono
expressed disappointment but indicated he could postpone
travel. In addition to the Department of Treasury, Gono
expressed an interest in visiting ExImBank.

Gono's Political Significance
--------------

6. (SBU) It is not clear where Gono falls in among Zanu-
PF factions. He obviously has issues with hardliners
Made and Information Minister Jonathan Moyo. He still
considers the Finance Ministry an adversary and bemoaned
Deputy Minister David Chapfika's charges that Gono was
singling out indigenous firms in his anti-corruption
campaign. At least to us, Gono has not spoken glowingly
about any top ZANU-PF figure, other than former Finance
Minister Simba Makoni.


7. (SBU) With powers stretching well beyond a
conventional central banker, Gono is carving out a
powerful niche for himself. He mentioned he is enlarging
his RBZ oversight committee to 29 members and will
include civil society groups such as the two labor
confederations. In this manner, he could in effect take
over the failed Tripartite Negotiating Forum (TNF),which
the Zimbabwe Confederation of Trade Unions (ZCTU) has
refused to rejoin.

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

8. (SBU) Probably no GOZ higher-up and Mugabe-confidant
embraces GOZ "enemies" - Western diplomats, the
International Monetary Fund, the Commercial Farmers Union
(CFU) - to the degree Gono does. He boasted that CFU
President Doug Taylor-Freeme, the figurative white farmer
headman, drops by his farm in Mashonaland West to advise
on production. For now, Gono is maneuvering on both
sides of the fence, believing he is the one man who can
bridge the gap. At some point, he may be forced to
choose between Zanu-PF conformity and international
reengagement, but it is certainly in our interest to help
him understand the steps required for international
reengagement.

Sullivan