ZIMBABWE - INPUT FOR 2007 PRESIDENT'S REPORT ON

UNCLAS SECTION 01 OF 03 HARARE 000217 SIPDIS SIPDIS AF/S FOR S. HILL AF/EPS FOR J. POTASH NSC FOR SENIOR AFRICA DIRECTOR B. PITTMAN STATE PASS TO USAID FOR M. COPSON AND E.LOKEN TREASURY FOR J. RALYEA AND T.RAND COMMERCE FOR BECKY ERKUL ADDIS ABABA FOR USAU ADDIS ABABA FOR ACSS E.O. 12958: N/A TAGS: ETRD ELAB PHUM PGOV ZI SUBJECT: ZIMBABWE - INPUT FOR 2007 PRESIDENT'S REPORT ON AGOA REF: STATE 22438 ¶1. Zimbabwe continues to fall far short of AGOA's qualifying criteria. Post's input for the 2007 President's Report on AGOA (reftel) follows: -------------- Market Economy/Economic Reform -------------- ¶2. The Zimbabwean Government (GOZ) pays lip service to Marxist economic principles. Over the past 10 years the GOZ has increasingly used ideology to mask growing official corruption. Zimbabwe has become a forbidding place to invest for foreigners and Zimbabweans. Private sector confidence has collapsed as property rights have been seriously eroded and the rule of law ignored. 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. ¶3. The GOZ's disastrous fiscal and monetary policies have also contributed to the country's economic collapse. The IMF estimates the government's budget deficit at more than 50 percent of GDP. The A major part of the deficit is the result of off-budget subsidies provided by the Reserve Bank of Zimbabwe (RBZ) to corrupt and mismanaged parastatals. The main driver of inflation, which surpassed 1700 percent officially in February 2007 (private sector calculations are nearly double that rate) is the government's profligate monetary policy, which is the government's only means of covering the deficit. Inflation appears poised to increase exponentially. The IMF predicted that inflation would hit 5000 percent by the end of 2007, however, it may reach that mark before the year's mid-point. ¶4. The RBZ has kept the foreign exchange rate fixed since July 31, 2006 despite the country's hyperinflation, undermining what is left of the country's export sector. The scarcity of forex has fueled a parallel foreign exchange market in which the RBZ is the main actor. RBZ purchases of forex with local currency are the main factor driving the accelerating fall in value of the Zimbabwean dollar, which also appears poised to depreciate exponentially. ¶5. 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 regain eligibility for IMF lending. The country has stopped servicing its large external debt and is falling ever further into arrears. -------------- -- Political Pluralism/Rule of Law/Anti-Corruption -------------- -- ¶6. The government, dominated by President Robert Mugabe and the ruling ZANU-PF party since independence, has resorted to HARARE 00000217 002 OF 003 brute force to perpetuate its rule. The opposition and civil society operate in an environment of state-sponsored intimidation and violence. In March, 2007 the government moved to ban all rallies and demonstrations in contravention of Zimbabwe's constitution. The government used deadly force to break up an opposition prayer meeting subsequently arresting 50 opposition leaders, who were then beaten while in custody. ¶7. Presidential elections are scheduled for 2008. Recent elections have been stolen by the government and the ruling ZANU-PF party, which has relied on its total control of the electoral machinery to perpetrate fraud. In addition, the government and ruling party have heavily tilted the playing field against the opposition by closing independent news media and by manipulating the distribution of food assistance. ¶8. Following the 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. Despite announcing plans to leave office in 2008, Mugabe and his loyalists have proposed amending the constitution to extend his current term until ¶2010. Opposition to the extension has been widespread, including within the ruling party. In response, Mugabe has threatened to run again for a full presidential term in the 2008 elections. ¶9. Government efforts to influence and intimidate the judiciary have seriously eroded independence and undermined the rule of law. The government and ruling elite have ignored numerous adverse judgments, including those related to the taking of private property. Additionally, senior government officials and police have willfully defied court orders that are not politically acceptable to the ruling party. ¶10. The corruption in government has become endemic, including the redistribution of expropriated commercial farms to the ruling party elite, privileged access to foreign exchange and fuel, and the distribution of new housing plots primarily to civil servants, security forces, and ruling party supporters. The government-appointed Anti-Corruption Commission includes no members from civil society or the private sector and it has yet to register any notable accomplishments. The Ministry of State Enterprises, Anti-Monopolies, and Anti-Corruption lacks sufficient political backing to carry out its anti-corruption mandate. 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. -------------- Poverty Reduction -------------- ¶11. The government maintains several programs that ostensibly provide food or basic services to the poor. However, the HARARE 00000217 003 OF 003 programs are grossly under funded and their implementation is often influenced by politics, with areas represented by the opposition disadvantaged. Moreover, the government's economic policies have caused most Zimbabweans to grow progressively poorer over the past seven years. Human development indicators that were once among the best in sub-Saharan Africa have deteriorated sharply. Zimbabweans, for example, now have the world's lowest life expectancy and face acute food shortages this year. Zimbabwe has not finalized a Poverty Reduction Strategy Paper. -------------- Labor/Child Labor -------------- ¶12. Zimbabwe has ratified all eight of the ILO core Conventions, including ILO Convention 183 on the minimum age and ILO Convention 182 on the worst forms of child labor. The government, however, lacks the commitment and resources necessary to effectively enforce labor standards. Moreover, it frequently uses repressive laws and intimidation to limit workers' right to organize and hold labor union meetings. ¶13. The government has stepped-up harassment of the Zimbabwe Congress of Trade Unions (ZCTU) and its leadership. In September 2006, for example, police arrested and severely beat several senior leaders of ZCTU for their role in planning a peaceful demonstration for better wages and working conditions. The government also has taken steps to marginalize the traditional unions and the formal labor dispute resolution mechanism. ¶14. The ongoing economic crisis severely impedes the government's ability to address its child labor problems. Several international donors have committed multi-year funding to support social programs aimed at orphans and other vulnerable children but the scale the assistance is insufficient to alleviate the problem. Zimbabwe has, for instance, the highest percentage of orphans in the world. ¶15. 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. Children work in agriculture, street vending, and as domestic servants. There are reports that an increasing number of girls are involved in prostitution, especially in border towns. Primary education is compulsory, however, it is not free and an increasing number of Zimbabwean children have fallen out of the education system. The government's commitment to children's rights and welfare remains weak. DELL