SIMBA MAKONI - DISILLUSTIONED AND IN-THE-WAITING

C O N F I D E N T I A L SECTION 01 OF 04 HARARE 001322

SIPDIS

AF/S FOR B. NEULING, NSC FOR SENIOR AFRICA DIRECTOR C.
COURVILLE, TREASURY FOR J. RALYEA AND B. CUSHMAN

E.O. 12958: DECL: 09/22/2010
TAGS: ECON EFIN PGOV PHUM PREL ZI
SUBJECT: SIMBA MAKONI - DISILLUSTIONED AND IN-THE-WAITING


Classified By: Ambassador Christopher Dell under Section 1.4 b/d


1. (C) Summary: During a September 21 meeting, Politburo
member and ex-Finance Minister Dr. Simba Makoni told the
Ambassador there was much more questioning of policy by
government insiders since Operation Restore Order. Mugabe,
however, was out of touch with reality, his mind blocked to
what was happening on the ground. Like his ministers, he
was closed to learning from experience. Makoni rued the
lack of rational and informed discussion of economic policy
at the highest levels of government. He disparaged Reserve
Bank Governor Gono handling of the food and forex crises
and the decision to pay down an unexpectedly large amount
of arrears to the IMF. He maintained that all responsible
ministers had known about the impending food shortages
since March, but the information had not reached Mugabe,
who, in any case, lacked the will to act on it. Makoni
said Zimbabwe had the capacity to fend for itself, solve
its own problems, and would eventually pull itself out of
its dire straights. End Summary.

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Operation Restore Order nterest Will Peter Out
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2. (C) At a meeting with the Ambassador at Makoni's
modest company office in an industrial section of Harare,
the Ambassador asked him whether Operation Restore Order
had affected Makoni own farming village. Makoni
described how the thatched and brick buildings along the
road to his farm had been reduced to rubble and a nearby
settlement leveled to the ground. Many people were still
living in the open as the rainy season approached, but
shacks were also being reconstructed. Since Operation
Restore Order, Makoni said there was much more questioning
of policy "by us on the inside" than ever before. Asked
how the blame game would play out, he said Mugabe had
distanced himself from the Operation; IGNATIUS Chombo,
Minister of Local Government, Public Works and Urban
Development, was a prime candidate for accountability, but,
he proceeded cryptically, "not the mastermind."
Nevertheless, he said the Operation could only have been
carried out with Mugabe's approval, "he not that
distant."


3. (C) Makoni opined that interest in the Operation could
peter out, "vanish," with no one ultimately taken to task.
At the Ambassador suggestion that accountability did not
necessarily stop at Zimbabwe border, and a day of
reckoning could come, Makoni replied that Operation Restore
Order will be only one of many ill-advised things that
happened under the present regime, and, when Mugabe is
gone, all blame will be placed squarely on Mugabe.

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Mugabe ut of Touch
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4. (C) Makoni painted a picture of Mugabe as out of touch
with reality. He has blocked his mind to many things,
knows little about what is happening "out there," and is
surrounded by ministers equally closed to learning from
experience. During Mugabe's tour of the Annual Harare
Agricultural Fair in mid August, for example, the seed
companies assured him there was an adequate supply of maize
seed in the country. According to Makoni, Mugabe "hit the
roof" when he recently became aware of the dire state of
seed availability. Noting that moving people from shacks
into decent homes had been a cornerstone of the ZANU-PF
party program, Makoni was incredulous that Mugabe had
failed to visit a single Operation Restore Order or Garikai
site. Makoni maintained Mugabe wanted to hear that the
government has met Garikai's targets, and that's what he is
told. Queried by the Ambassador whether Mugabe would act
on information if he understood the problems, Makoni
replied negatively. To illustrate, he described Mugabe's
outrage upon learning in a 2002 government audit of the
multiple ownership and underutilization of farms by
government officials. Pointing out that Makoni himself had
two farms, Chombo four, and Minister of State for National
Security Mutasa five, Mugabe said, "We have to lead by
example." Yet he never took any action. Citing the
astronomical cost of rice and potatoes compared to maize,
Makoni described as "incredible" Mugabe's suggestion during
his recent visit to the UN General Assembly that
Zimbabweans consume those staples if maize is not
available.


5. (C) At some length, Makoni depicted how Mugabe could
not accept that the market could best determine the
currency exchange rate. Makoni recounted how Mugabe had
grudgingly agreed to devalue the currency from Z$38:1 to
Z$55:1 when Makoni was Finance Minister (the official rate
today is Z$26,002:1; the parallel rate is Z$65,000:1).
Mugabe reminded him often that the Zim dollar had been more
valuable than the US dollar at independence. When the
exchange rate was Zim$8,000:1, Mugabe was accessing US
dollars at Zim$55:1, according to Makoni. He said Mugabe
viewed himself as an economist, and, in numerous
discussions, had dismissed the ex-Finance Minister as "a
chemist" (Note: Makoni has a PhD in chemistry) and his
explanation of market forces as mere "textbook economics."

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The Food and Forex Crises ono's own mess
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6. (C) Makoni repeatedly disparaged Reserve Bank Governor
Gono's handling of the forex and food production crises,
and his public comments, most recently, that the private
sector should generate its own forex and not rely on the
RBZ, or that farmers should produce more even without
fertilizer. He recounted Gono's broken promises to farmers
that a share of their forex earnings would be available to
purchase inputs. Gono announced financial support to the
agriculture sector, but, in the end, "no one gets the
funds." Makoni pointed out the considerable room for
arbitrage under a centralized authority, and drew attention
to the way in which the system fed into power plays, with
"everyone coming around with a need." He described the
forex shortage as a symptom, not the cause, of Zimbabwe's
economic distress.


7. (C) Makoni characterized the food situation as
critical, even if adequate rains came, as the land was
unprepared for planting. State intervention in the sector
was necessary under these conditions of acute shortage, but
the action had to be rational and informed by what works in
the market. The government, on the other hand, favored a
command and control approach. He said all responsible
Ministers had known about the impending food shortage since
March, but the information had not reached Mugabe. He
derided Agriculture Minister Made as living "far from
reality," noting, as an example, his plan to designate 200
farmers per province, agriculturally productive or not, to
produce 50 ha of maize each. In animated detail, he
described the irrationality, inefficiency, and
inflexibility of the administrative hurdles he was
personally confronting to get the RBZ to release forex for
his farm inputs. He regarded the obstacles as
insurmountable for most small farmers and many large ones
as well, resulting in the extremely weak uptake by farmers
of available financing facilities.


8. (C) Makoni posed the question why Gono had made such a
large payment to the IMF. He opined that a US$40 million
or smaller arrears payment would have sufficed to gain a
reprieve. The large payment had dried up forex allocations
to the private sector for three months and exacerbated the
fuel crisis. He deplored the absence of rational
conversation or meeting of minds at the top level on how to
handle the IMF vote. While the business community
discussed economic policy with some Ministers, there was no
discussion among the top leadership in government or even
the next ring of players. In Mugabe's opinion, the IMF
advised devaluation so that Zimbabwe would lose
international esteem; the market manipulated exchange
rates, and in Zimbabwe's case, the country's enemies were
behind the manipulation.
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Makoni - "Mentally Troubled", but "We l Come Out of It"
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9. (C) Asked initially by the Ambassador how he was,
Makoni replied, "mentally troubled." Queried later where
it would all end, he replied, "nobody knows." Makoni said
Zimbabwe was bankrupt in 1999, but Mugabe maintains a
country can never go bankrupt and the state will always
survive. Makoni lamented the comfort the government took
in favorable comparisons of Zimbabwe with less developed
neighbors. He, on the other hand, would compare Zimbabwe
today with where it used to be and where it should be, had
it been better managed. He said Zimbabwean agriculture had
always produced, drought or no drought, and
enthusiastically recalled the days of competitions among
farmers to produce 10 tons of maize on a hectare of land.
Drawing on the Ambassador reference to the strong inflow
of assistance to Mozambique and Zambia, he exclaimed that
Zimbabwe had the capacity to fend for itself and solve its
own problems. His parting words were, "We l come out of
it."

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Bio Notes
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10. (C) Makoni, the only member of the Politburo not
under U.S. sanctions (but subject since March 2002 to EU
sanctions),can barely hide his disillusionment with the
state of Zimbabwe's political leadership and economy. Out
of the domestic limelight for the past 3 1/2 years, apart
from his recent bid for the presidency of the African
Development Bank, he is pursuing his farming interests in
Manicaland East with gusto and his business interests in
town. The youngest member of the Cabinet at Independence,
he owes his rapid rise to power to Mugabe. Yet Mugabe
failed to come to his rescue in 1996, when, as CEO of the
Herald Group, he clashed with Herald editor Chikerema over
editorial policy. Joyce Mujuru, then Minister of
Information (and now Vice President),took the editor
side and Makoni lost
his job. Makoni lost a 2000 primary
election bid to Chipanga, a former CIO Director. According
to an Embassy Foreign Service National well connected to
the Makoni family, he felt the old guard, especially
Didymus Mutasa, had conspired against him. According to
the FSN, Makoni two adult sons were illegal drug abusers;
one committed suicide in Cape Town, South Africa, the other
resides in Ireland, estranged from the family.

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Comment
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(11) (C) Makoni said mostly all the right things and he's
clearly at pains to continue cultivating a good
relationship and the image of himself as a ZANU-PF leader
we could work with. Although ousted by Mugabe as an
economic saboteur over exchange rate liberalization in
2002, as a member of the Politburo he still has Mugabe's
ear and reportedly has been consulted by Vice President
Mujuru of late. As recently as today his name was floated
in the local independent press as a possible successor to
Mugabe with the support of the Mujuru faction in ZANU-PF.
He remains a ZANU-PF party man to the core, even as he
openly criticizes them. Outside the limelight, he remains
relatively untouched by scandal. His name has been floated
as a potential "superminister" of economic affairs under a
Mujuru government, or even successor to Mujuru, when the
day comes. As Gono's name has also been floated, it was
illuminating to hear Makoni's rancorous take on Gono.
Makoni painted a picture of ZANU-PF asleep at the wheel,
Mugabe out of touch with reality, and Gono incapable of
managing the economy, which leaves Makoni, at least in his
own mind, as the party's best hope for meaningful
re-engagement with the international community.
DELL