ZIMBABWE - INPUT FOR 2006 REPORT ON AGOA

UNCLAS SECTION 01 OF 03 HARARE 000310

SIPDIS

SIPDIS

AF/S FOR B. NEULING
NSC FOR SENIOR AFRICA DIRECTOR C. COURVILLE
STATE PASS TO USAID FOR M. COPSON AND E.LOKEN
TREASURY FOR J. RALYEA AND B. CUSHMAN
COMMERCE FOR BECKY ERKUL

E.O. 12958: N/A
TAGS: ASEC ECON EFIN ELAB ETRD PGOV PHUM ZI
SUBJECT: ZIMBABWE - INPUT FOR 2006 REPORT ON AGOA

REF: STATE 026707


1. Zimbabwe continues to fall short of AGOA,s qualifying
criteria. Post,s input for the annual AGOA report (reftel)
follows:

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Economy
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2. The government has an interventionist approach to the
economy and Zimbabwe is generally unwelcoming to foreign
investment. Private sector confidence is waning in the face
of poor governance and the erosion of property rights. The
government has sanctioned seizures of privately owned
agricultural land without compensation, and changed the
constitution in 2005 to transfer ownership of expropriated
agricultural land to the government without recourse to the
courts. Subsidies provided by the Reserve Bank of Zimbabwe
(RBZ) in the form of cheap or even free foreign exchange for
fuel, grain, and electricity are the main driver of
inflation, which surpassed officially 600 percent in January
2006 (but unofficially was well in excess of 1000 percent).
There was no progress in 2005 in privatizing parastatals, and
the number and size of price controls is unabated.


3. The RBZ continues to control exchange rates at
unrealistic levels, ensuring scarcity of legitimate forex and
fuelling a parallel market in which the value of the Zimbabwe
dollar continued to plummet in 2006. Among numerous barriers
to trade are exchange requirements for exporters and high
duties for importers. Zimbabwe,s IMF voting rights remain
suspended and the GOZ has shown no political will to
implement the comprehensive package of macroeconomic policies
and structural reforms required for their restoration and to
become eligible for IMF financing.
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Politics
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4. The ruling ZANU-PF party applies increasingly repressive
tactics to perpetuate its rule. The opposition and civil
society operate in an environment of state-inspired
intimidation. Following a parliamentary election in March
2005, which international observers deemed neither free nor
fair, the ruling party now controls enough seats to change
the country's constitution at will. The next national
elections are due in 2008, but the government has publicly
contemplated extending President Mugabe,s term until 2010.


5. Government efforts to influence and intimidate the
judiciary have seriously eroded the rule of law. The
government and ruling elite have ignored numerous adverse
judgments, including especially with respect to the taking of
private property, and senior officials have reiterated
publicly that court orders that are not politically
acceptable to the ruling party will not be honored.


6. There is widespread corruption in government, including
the ongoing redistribution of expropriated commercial farms
to ruling party elite, privileged access to limited foreign
exchange and fuel, and the distribution of new housing plots
to mostly civil servants, security forces, and ruling party
supporters. In 2005 the government enacted an
Anti-Corruption Act, which established a government-appointed

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Anti-Corruption Commission; however, it includes no members
from civil society or the private sector. The government
also established the Ministry of State Enterprises,
Anti-Monopolies, and Anti-Corruption to investigate and raise
awareness about corruption, but government officials and
police lack sufficient political backing to effectively
investigate the corruption. Instead the government
prosecutes individuals selectively, focusing on those who
have fallen out of favor with the ruling party and ignoring
transgressions by favored elite.

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Poverty Reduction
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7. The government maintains several programs that ostensibly
provide food or basic services to the poor. However,
implementation of these programs is often influenced by
politics, with areas represented by the opposition
disadvantaged. Moreover, the programs had minimal effect
compared to the general thrust of the government,s economic
policies, which have caused most Zimbabweans to grow
progressively poorer over the past six years. The
government,s Operation Murambatsvina, or &Drive out the
Trash,8 destroyed the homes and livelihoods of hundreds of
thousands of Zimbabweans in 2005. Human development
indicators that were once among the best in sub-Saharan
Africa have deteriorated sharply and Zimbabwe now lies in the
bottom 30 of 177 countries in the world. Zimbabwe has not
finalized a Poverty Reduction Strategy Paper.

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Human Rights/Labor
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8. The government's human rights record is among the worst
in the world. Operation Murambatsvina was the most serious
of many violations in 2005. In its aftermath, the government
compounded the suffering by blocking the efforts of NGOs to
provide emergency relief.


9. Security forces selectively harass, beat, and arbitrarily
arrest opposition supporters and critics within human rights
organizations, the media, and organized labor. The
government has strengthened laws restricting freedom of
assembly, speech, and press.


10. The government is a signatory to ILO conventions 29 and
105 and conventions protecting worker rights, although the
world body recently designated Zimbabwe as a "notorious
country" for its continued attempts to limit workers' right
to organize and hold labor union meetings. The government
has stepped-up harassment of the Zimbabwe Congress of Trade
Unions (ZCTU) and its leadership, and threatened to eliminate
the ZCTU. It has taken steps to marginalize the traditional
unions and the formal labor dispute resolution mechanism.


11. The growing rate of unemployment has reduced the number
of children employed in the formal sector, but informal child
employment has increased as more children work to fill the
income gap left by ill, unemployed, or deceased relatives.
The minimum age for light work, other than apprenticeship or
work associated with vocational education, is 15 years. The
government has ratified ILO conventions 138 and 182. There
is no compulsory education, and the government's commitment

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to children's rights and welfare is weak.

DELL