SAG-GOZ NEGOTIATIONS AND THE USG

C O N F I D E N T I A L HARARE 001009 SIPDIS AF/S FOR B. NEULING NSC FOR SENIOR AFRICA DIRECTOR C. COURVILLE E.O. 12958: DECL: 12/31/2010 TAGS: PREL PGOV PHUM ECON EFIN SA ZI SUBJECT: SAG-GOZ NEGOTIATIONS AND THE USG REF: (A) HARARE 1008 (B) PRETORIA 2854 (C) PRETORIA 2841 Classified By: Charge d'Affaires, a.i., Eric T. Schultz under Section 1 .4 b/d -------------- Summary -------------- ¶1. (C) The Mugabe regime is confronting a "perfect storm" of converging challenges - international opprobrium over Operation Restore Order, the economy's accelerating implosion, and a looming IMF vote on Zimbabwe's expulsion. As a result, the GOZ is showing growing desperation and signaling uncharacteristic vulnerability to outside influence. Loan negotiations underway with the SAG (ref B) may offer the best vehicle through which the GOZ could be pressured to implement political and economic reforms. We believe the USG should quietly demarche the SAG on this prospective loan and on any conditions that may be attached to it. End Summary. -------------- "Perfect Storm" Converges on GOZ -------------- ¶2. (C) UN Envoy Ann Tibaijuka's damning report on Restore Order, including a call that responsible officials be held accountable, has broken the taboo against prominent official Africans speaking out against the regime and has dramatically increased the GOZ,s international isolation. Governments that just months ago defended the flawed administration of Zimbabwe's elections are now quiet or openly distancing themselves from the GOZ on Restore Order. ¶3. (C) This increased international opprobrium could not come at a worse time for a government trying to arrest a national economic implosion. Foremost on the GOZ's economic agenda appears to be securing funding to address food and fuel shortages and to stave off IMF expulsion by paying off arrears. In a significant about face (septel),economic policy czar Gideon Gono appears to have convinced the regime that expulsion would have profound adverse consequences. -------------- SAG With Unprecedented Leverage -------------- ¶4. (C) Although official sources indicate publicly that the GOZ is approaching "China, Iran, Malaysia, and so on", South Africa is the most likely source of the needed funding and negotiations are reportedly on-going for a $1 billion SAG bailout of the GOZ. For its part, the SAG appears to have attached significant priority to its negotiations with the GOZ, as indicated by President Mbeki's recent personal intervention with Embassy Pretoria (ref C). Moreover, while details of the negotiations are sketchy, the SAG reportedly is imposing unspecified political and economic reforms as conditions for the loan (ref B). -------------- Comment on SAG Conditions for GOZ -------------- ¶5. (C) As the UN and elements in South Africa appear to be leading the charge on pressing the GOZ on Restore Order and its economic policy, there is little need for high profile USG criticism of the regime at this point. When the stakes get high, the ruling party historically has tried to play the neo-colonialist imperialist conspiracy card; it would like to now as well. We agree with President Mbeki that stepping up western rhetoric against the regime now would only provoke it to no constructive end and play to Mugabe's strength in his unfolding engagement with Mbeki. ¶6. (C) That said, in view of our past collaboration with the SAG, we urge a quiet but proactive approach to SAG engagement with the GOZ. We believe the GOZ will most readily agree to symbolic, non-substantive conditions such as inter-party negotiations that will require little effort on their part to undermine. We would urge instead that SAG conditionality focus on the systemic flaws in the political environment and economy with a view to empowering civil society and engineering a more competitive democratic process in the long run. -------------- Potential Points For Use With SAG -------------- ¶7. (C) We offer the following points to be advanced or taken into consideration in any approach to the SAG regarding conditions on a loan to Zimbabwe: -- Any conditions you impose on your loan should be specific, measurable benchmarks that will improve Zimbabwe's political and economic environment and require the GOZ to engage not only with the political opposition but with the Zimbabwean people as a whole. -- As a first step, the GOZ should terminate Operation Restore Order fully and allow local and international humanitarian organizations unfettered access to the displaced. -- The GOZ should immediately reinstate the Mayor of Mutare, who was suspended by the Ministry of Local Government and Housing for facilitating the UN Special Envoy during her recent visit, and should not persecute others who attempted to alleviate suffering associated with Restore Order. -- The GOZ should immediately relax enforcement of, and in the nearest future repeal, the Public Order and Security Act (POSA) and Access to Information and Protection of Privacy Act (AIPPA),including the immediate re-opening of the four newspapers closed under AIPPA and allowing public meetings without the approval or presence of police. -- As per the IMF, economic reforms should include (but not be limited to): implementation of a market-oriented foreign exchange regime, restraints on public spending and credit, and elimination of government controls on the prices and distribution of commodities and services. -- SAG assistance should take the form of pay-outs directly to GOZ creditors (aside from the IMF, many of whom presumably are South African entities) rather than direct payments to the GOZ. 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