MUTHARIKA MEETS DONORS, SENDS MIXED MESSAGES

UNCLAS SECTION 01 OF 02 LILONGWE 000457

SIPDIS

C O R R E C T E D C O P Y (TEXT PARA 7 AND PARA NUMBERING)

SENSITIVE

E.O. 12958: N/A
TAGS: PGOV KDEM EFIN PINR MI
SUBJECT: MUTHARIKA MEETS DONORS, SENDS MIXED MESSAGES

REF: LILONGWE 451


1. (U) Summary. President Bingu wa Mutharika convened heads
of mission from donor countries and agencies in Lilongwe for
a two-hour meeting on May 27 during which he outlined his
plans to move Malawi from "poverty to prosperity." While
the bulk of the meeting was spent paraphrasing the
inauguration speech he delivered three days earlier, he
deviated from the script long enough to divulge plans to
dramatically reduce the size of the cabinet; that he favors
state subsidies in the agriculture sector; that he intends to
establish a new university; that he will jail opposition
leader Gwanda Chakuamba if he continues to cause problems;
and that he wants the support of international donors to deal
with Malawi's crushing domestic debt burden. End summary.

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"From Poverty to Prosperity".....
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2. (U) Mutharika provided chiefs of mission with copies of
his inaugural speech outlining his plans to turn Malawi's
economy around. (A copy of the speech has been faxed to
AF/S.) As noted in reftel, Mutharika intends to move Malawi
"from poverty to prosperity" (which has already become his
administration's tag-line) by implementing a four-pronged
reform package in the public, private, agricultural, and
civil service sectors. He reiterated his pledges to control
corruption, make statutory corporations profitable (or close
them down),and reduce expenditures and borrowing.


3. (SBU) The president said he was still working on reducing
the size of the cabinet from 46 (29 ministers and 17 deputy
ministers). Though he has yet to settle on an exact figure,
he said its size should be "no more than twenty" -- including
the president himself and the two vice presidents. He made
clear to donors that he is "running a risk" and that there
will be many (presumably from the former government) who will
soon be "cursing me at their breakfast tables."


4. (U) To further lower expenditures, Mutharika said he would
reduce state residence and travel expenses, and would soon
begin "dismantling" government offices in Blantyre. He vowed
to make Lilongwe a true capital and noted he had moved from
Blantyre on the first day of his administration.

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,,, but at a Cost
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5. (SBU) While pressing for expenditure reductions, Mutharika
also announced several big-ticket items that will be
difficult for the government to fund. He announced his plan
to turn Malawi into a "hunger-free" nation in about two
years. To do so,he said the prices of fertilizer and maize
must be reduced, and that farmers needed to be provided
Starter Packs (seeds and fertilizer). He stated that if the
private sector fails to reduce prices of fertilizer and
maize, he will "close down their shops" and have the state
take over -- if only on a "temporary" basis. He added that
he would also promote irrigation projects to increase
Malawi's agricultural output.


6. (SBU) Another expensive proposal is Mutharika's plan to
establish a third university in Malawi. Pointing out that
there is a university in the Southern Region and one in the
Northern Region, he said it was only natural that there
should be one in the capital city of Lilongwe in the Central
Region.

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Chakuamba: "I'll Lock Him Up!"
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7. (SBU) In telling donors he intended to enhance security in
the country by increasing the government's support to the
police and the military, Mutharika went off-script to skewer
opposition candidate Gwanda Chakuamba, who has filed a court
petition to have the results of the election declared null
and void. Pointing out that Chakuamba also contested the
national elections in 1994 and 1999 and incited his
supporters to cause disturbances, Mutharika said: "The man is
a thug, pure and simple." Mutharika added (three times) that
if disturbances continued, he would lock Chakuamba up.
Insisiting that Chakuamba's protests are not political ("the
man is greedy and crazy"),he vowed he "will not tolerate
disturbance of the peace in this country."


8. (SBU) Mutharika also told donors not to believe stories
that the Catholics and Presbyterians had opposed his
candidacy. Insisting that only a few individuals were the
instigators of anti-UDF sentiment in the churches, he claimed
that religious leaders were now making known their support of
him.

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Appeal to Donors: "It's Not My Debt"
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9. (SBU) Mutharika appealed to donors for support in reducing
domestic debt. Saying he could not implement his reforms
while simultaneously paying off Malawi's domestic debt (note:
currently at about $600 million),he asked for donors' help
in "eliminating" domestic debt. Claiming that "it's not my
debt," Mutharika said he should not be burdened with the
situation created by the previous government. (Note:
Mutharika served as Minister of Economic Planning up until
his election.)

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Comment
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10. (SBU) While almost everything Mutharika said in two hours
was measured, soothing, well-reasoned, and designed to enlist
the good will of donors, his discourse was punctuated by some
jarring comments. Talking about reducing expenditures while
at the same time announcing plans for a new university (in a
country where primary and secondary education is
disfunctional) represents a clear disconnect. Likewise,
extolling the virtues of the private sector while announcing
that the GOM will subsidize agriculture (and close down
private vendors if they fail to reduce prices sufficiently)
is unsettling. And while many would agree that Chakuamba is
indeed stirring up trouble after his electoral loss,
Mutharika's vitriol and threats of imprisonment (which would
certainly provide Chakuamba the mantle of martyrdom) seem
unwise for a new head of state who somehow has to find a way
both to unify a badly divided country and to reassure donors.
End comment.
DOUGHERTY