MOZAMBIQUE - PRESIDENT GUEBUZA'S FIRST YEAR

C O N F I D E N T I A L SECTION 01 OF 04 MAPUTO 000278

SIPDIS

SIPDIS

AF/S - HTREGER, LCECSARINI, DMOZENA
NSC - WLUCAS

E.O. 12958: DECL: 03/07/2016
TAGS: PGOV PREL KOR EAID MZ
SUBJECT: MOZAMBIQUE - PRESIDENT GUEBUZA'S FIRST YEAR


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Classified By: Ambassador Helen La Lime for Reason 1.4(d)


1. (C) Summary. On balance, Guebuza's first year in office
has been positive. His main tasks for that year as we see
them were to confront the Chissano-era spirit of "deixa
andar", maintain economic policy continuity to allow
continued growth, and set the stage for reductions in
absolute poverty. In varying degrees, he has succeeded.
However his administration's performance has been uneven, and
a cabinet shakeup is possible sometime this year. We believe
that the success of Guebuza,s next year in office will
depend largely on how he addresses corruption, maintains
economic momentum, and consolidates his control over the
party, while the results of his efforts to fight HIV/AIDS
will likely only be visible over the longer term. Also worth
watching will be the implications for the country,s
multiparty democracy of Guebuza,s strengthening of FRELIMO
in the face of the lack of an effective opposition. End
summary.

Taking the Reins
--------------


2. (C) Campaigning hard in the two years before his election,
Guebuza managed to win considerable support both among the
people and within the ruling party as the successor to
18-year president Joaquim Chissano, who had led the country
during the latter part of its long civil war and presided
over a decade of subsequent growth. Chissano had not stepped
aside entirely willingly, and Guebuza was by no means assured
of his party,s undivided support.


3. (C) Guebuza campaigned forcefully against the "spirit of
deixa andar" or letting things slide, that had pervaded the
government during the later Chissano years. This campaign
contributed to his victory, but it also generated high
expectations and provoked resistance from the Chissano wing
of FRELIMO, including many holdovers within the government.
Some of Guebuza,s ministerial choices reportedly were the
result of negotiations within the party. In selecting
ministers, vice-ministers, and governors, Guebuza appeared to
value loyalty more than subject matter expertise, and to
prefer those with experience in the provinces and not just
Maputo.


4. (SBU) Guebuza,s first steps in the campaign against
"deixa andar" were an effort to improve responsiveness to the
public and a crackdown in several ministries on the use of
official vehicles and cell phones. Guebuza also has become
known for demanding more of his ministers, of not being
afraid to address perceived problems, and of demanding
greater accountability in government. The change of
administrations, the first in 18 years and the country,s
first ever as the result of an election, proved difficult for
some ministries, but within six months most were functioning
reasonably well.


5. (C) During the year, the GRM also took several steps
against corruption. It dismissed several officials widely
believed to be corrupt, including the two most senior
officials in the social security system and the powerful
Labor Ministry representative in South Africa, a party
stalwart who was believed to have benefited for years from
his lucrative role in supplying Mozambicans to work in South
Africa,s mines. It replaced the head of the national
electricity company, who was under investigation for
allegedly running public electricity lines to his farm. The
GRM also paid back approximately $500,000 in Swedish
assistance misused by the former Education Minister and took
the passports of the former Education Minister and the former
Minister of Interior. At lower levels, many officials were
dismissed as a result of allegations of corruption. However,
the GRM did not prosecute any high-profile or even mid-level
officials.


6. (U) Following his practice during his campaign, Guebuza
traveled extensively throughout the country over the past
year -- listening to complaints, promising some support but
also encouraging local initiative. The trips were partly a
fulfillment of his pledge during the election campaign, that
he would lead the fight against absolute poverty everywhere
in the nation. But they also have increased his national
visibility and boosted his claim that his government serves
all of Mozambique. Many commentators in the media praise him
for instilling greater self-confidence among Mozambicans.


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7. (U) Guebuza has spoken out on the threat of AIDS
repeatedly and very forcefully in a number of widely
publicized fora, including a four-day series of events held
in Maputo in February of this year. In his remarks he has
come across as open, concerned and focused on the issue,
demonstrating strong leadership on a sensitive topic of
increasing worry to all. He also has emphasized the need for
Mozambicans to take personal responsibility rather than
blaming outsiders or looking elsewhere for help; this call
for personal responsibility is a frequent theme of his
remarks on economic issues as well.

Benefiting From a Weak Opposition
--------------


8. (C) Guebuza has benefited from, and perhaps contributed
to, the failure of the principal opposition party RENAMO to
carve out a role for itself. In an adroit political move,
shortly after taking office Guebuza invited the leaders of
all the political parties over for lunch to talk over their
differences and try to find some common ground. Dhlakama
refused, but the leaders of the other, much smaller, parties
joined Guebuza. This left Dhlakama and RENAMO looking like
sore losers, unwilling to work with the new regime. In fact,
Dhlakama and his party had been badly wounded by the 2004
elections, in which many former RENAMO supporters stayed home
and RENAMO ended up losing 22 seats in the National Assembly
and holding only 90 against FRELIMO's 160.


9. (C) RENAMO has been unable to articulate a strong program
of its own or portray itself as a credible alternative, and
its leaders have taken only occasional potshots at the
government over popular issues such as rising fuel prices,
corruption and crime. Violence in September 2005 between
RENAMO and FRELIMO supporters (backed by security forces) in
the small northern town of Mocimboa da Praia proved to be a
local dispute which did not reverberate nationally. At the
end of 2005, Guebuza welcomed Dhlakama onto the Council of
State advisory body created under the 2004 constitution,
giving Dhlakama some personal recognition but reducing his
ability to portray himself as a vigorous opponent of the
government.

Continued Economic Growth and Donor Support
--------------


10. (SBU) The economy continued to grow rapidly, with growth
again surpassing 7 percent, although rising fuel and
transportation prices resulted in inflation of 14 percent for
the year, almost double the GRM,s target. At this juncture,
business circles give the Guebuza government mixed reviews.
The Minister of Industry and Commerce supports reducing trade
barriers and encouraging greater investment, and his
consolidation of the business registration process into
"one-stop shops" in provincial capitals is seen as a positive
step. However, in late 2005 the government decided against
carrying out a study it had promised the IMF of the use of
land as collateral, a sign that progress in the land sector
will be difficult.


11. (SBU) Donors have been pleased that Guebuza has
maintained the basic policy framework, including a focus on
rural poverty reduction and health, of the Chissano
government, and strong donor support has continued. In
September the World Bank announced a new tranche of $60
million in budget support, and in December the IMF registered
its continued approval of GRM policies.

Foreign Affairs
--------------


12. (C) To handle foreign affairs, Guebuza retained
Chissano's Minister in the Presidency for Diplomatic Affairs,
Francisco Madeira, who is the central figure on some foreign
policy issues, such as Zimbabwe. Foreign Minister Alcinda
Abreu is seen as relatively inexperienced on foreign policy
issues, though her credentials as a member of FRELIMO,s
powerful Political Committee are likely to protect her in any
possible cabinet reshuffle.


13. (C) Guebuza traveled abroad frequently in his first year,
including four visits to the US ) in June for a meeting with
President Bush, later in June for the Corporate Council on
Africa,s Business Summit, in September for the UNGA, and in
December for a Carter Center event. He clearly values strong
ties with the US and hopes they will lead to increased trade

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and investment. He has returned from his visits favorably
impressed with his reception and American society. We have
very close working relations with Guebuza's Minister of
Industry and Trade, Antonio Fernando, and a number of younger
staff members in the government are considered quite
pro-American by Mozambican standards.


14. (SBU) Guebuza also has given increased prominence to
Mozambique's relations with China. He welcomed greater
Chinese investment and assistance when he spoke at the Davos
Summit in February, downplaying Western concerns about
China,s role in Africa, and Prime Minister Diogo visited
China in August of 2005. Chinese trade with Mozambique
doubled in 2005 over 2004, according to the Chinese embassy
in Maputo.


15. (U) Guebuza has benefited from being able to follow
through on high-profile foreign policy initiatives begun
under Chissano. The most significant of these is the very
popular agreement with Portugal in November on the return of
Cahora Bassa, the giant hydroelectric plant on the Zambeze,
to Mozambican control -- an agreement whose details remain to
be finalized, though the outlines are set. This
accomplishment was described in most media reviews of 2005 as
the year,s highlight. Also in the last year, the GRM has
signed agreements allowing visa-free travel to and from
Mozambique for Mozambicans and citizens of all of
Mozambique's neighbors and laid the foundation for the
"unity" bridge over the Rovuma River that forms the border
with Tanzania.

A Mixed Bag of Ministers
--------------


16. (SBU) On the whole the Guebuza team may be at least as
strong as the last Chissano cabinet -- with the Ministers of
Interior, Education, Public Works, Health, Labor, and Energy
considered to be the best of the lot. Interior Minister Jose
Pacheco has cracked down on police corruption, including
taking the unusual step of releasing the results of an audit
of his ministry that showed tens of millions of dollars
missing during the era of his predecessor. Health Minister
Garrido, while not winning friends within the ministry
because of his allegedly autocratic ways, has made clear that
service to the public must improve. The unpredictable Labor
Minister, Helena Taipo, has apparently resolved the
longstanding dispute between the government and Mozambican
laborers who claim they are owed compensation for their work
in Communist East Germany. She will win further plaudits if
her ministry successfully completes ongoing negotiations with
business and unions on a labor law that would improve
somewhat the country,s existing Marxist-era law that
discourages investment and employment.


17. (C) However, some ministers and ministries are weak.
Perhaps the most obviously unsuccessful minister is Esperanza
Machavela, the Minister of Justice. Corrupt, backward and
depressingly inefficient, Mozambique's judicial system has
long been identified by donors and the IMF as a major
disincentive to investment and a brake on the country's
development. Machavela has yet to demonstrate any leadership
on reform, contenting herself only with searching for ways to
address overcrowding in Mozambique's antiquated prison
system. Nor has there been any forward movement by her
ministry in fighting corruption, particularly in
investigations into two high-profile killings that shocked
the country five years ago -- the murder of prominent
journalist Carlos Cardoso and the killing of a senior bank
official, Siba Siba, both related to investigations of bank
fraud. Nympine Chissano, the son of former President
Chissano, was implicated in the Cardoso murder, and it is
likely that prominent Chissano regime figures want the Siba
Siba investigation frozen. To many, Machavela, Mozambique's
former ambassador to Portugal, seems unsuited to lead any
serious reform fight or to confront Chissano cronies.


18. (C) The powerful head of the newly formed Ministry of
Planning and Development, Aiuba Cuereneia, so far has been a
disappointment, as well. Cuereneia came to the job with
close ties to Guebuza (he had been treasurer for FRELIMO in
recent years, when Guebuza was FRELIMO Secretary General) but
little government background. Comparatively young and
inexperienced outside the confines of party politics, he
still faces a steep learning curve. There also are rumors
that he is using his government position for personal
benefit. The perception of Cuereneia is especially worrisome

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because many reckon he is being groomed to succeed Guebuza
one day. (Note: Another rumored contender is the more
experienced Interior Minister, Jose Pacheco. End note.)


19. (C) Other less-than-stellar performers, as we see them,
include the Minister of Transportation -- who has publicly
criticized on several occasions private management of the
ports and railways in favor of Mozambique's inefficient
railway parastatal -- and the Minister of Agriculture, who
last fall openly ignored proper legal procedures in the
seizing of an important tobacco concession and appears to
favor increasing state intervention in the agricultural
sector. Prime Minister Luisa Diogo has kept a low profile
and seems to have survived speculation last year that she was
being overshadowed by Cuereneia and might soon be replaced.

Looking Forward
--------------


20. (SBU) The ineffectiveness of some of his ministers points
to several challenges that loom for Guebuza on the road
ahead. One is reining in corruption. The GRM is set to
release a national anti-corruption strategy in the next
month, but there is some question as to how useful it will
be. It may be that the public will not be convinced that
things have changed unless and until corrupt officials are
prosecuted rather than just being dismissed. Donors, too,
want to see action on this front, and some have become more
vocal. Scandanavian donors who are funding a year-long audit
of the Bank of Austral collapse (related to the Cardoso and
Siba Siba murders) will press for accountability when the
results are known.


20. (SBU) A second challenge will be to maintain forward
momentum in liberalizing the economy and spurring sustainable
growth. Some signs are encouraging; economic growth is
likely to continue at high rates, and strong donor financial
support is likely to continue over at least the medium term,
along with frequent consultation on policy issues. With
progress in the land sector unlikely, the fate of the effort
to reform the labor law will be a key signal for 2006.


21. (SBU) A third challenge will be to continue trying to
change public attitudes towards HIV/AIDS. Guebuza has been
vocal on this issue in recent months, but he acknowledges
that Mozambicans have yet to change their behavior. Given the
long-term nature of the epidemic, it is probable that even if
he is successful the situation will get worse before it
improves.


22. (C) FRELIMO,s Ninth Party Congress, scheduled to take
place in mid-year, is seen as an opportunity for Guebuza to
strengthen his control within FRELIMO and may be the occasion
for a cabinet shakeup. Guebuza has shown himself willing to
acknowledge areas in which performance is not satisfactory,
and he may feel that a year is enough time to judge his
ministers, performance and replace some.


23. (C) We believe that the success of Guebuza,s next year
in office will depend largely on how he addresses corruption,
maintains economic momentum, and consolidates his control
over the party, while the results of his efforts to fight
HIV/AIDS will likely only be visible over the longer term.
Also worth watching will be the implications for the
country,s multiparty democracy of Guebuza,s strengthening
of FRELIMO in the face of RENAMO,s weakness and the lack of
an effective opposition.

La Lime
La Lime