ZANU-PF OFFICIAL ON CURRENT POLITICAL AND ECONOMIC

C O N F I D E N T I A L SECTION 01 OF 02 HARARE 000736 SIPDIS SIPDIS AF/S FOR S.HILL ADDIS ABABA FOR USAU ADDIS ABABA FOR ACSS STATE PASS TO USAID FOR E.LOKEN AND L.DOBBINS STATE PASS TO NSC FOR SENIOR AFRICA DIRECTOR B.PITTMAN E.O. 12958: DECL: 07/09/2012 TAGS: PREL PGOV ECON ZI SUBJECT: ZANU-PF OFFICIAL ON CURRENT POLITICAL AND ECONOMIC SITUATION Classified By: Pol/Econ Chief Glenn Warren under 1.4 b/d -------------- Summary -------------- ¶1. (C) Walter Mzembi, GOZ Deputy Minister for Water Resources and Infrastructural Development, told polecon chief that the recent price control policy had been badly mismanaged and that recovery would be difficult. The parlous economic situation was ZANU-PF's greatest enemy in next year's elections, but MDC lack of unity greatly improved the ruling party's chances. On U.S.-Zimbabwe relations, Mzembi encouraged greater contact between the Embassy and the government. End Summary. ¶2. (C) Polecon chief met with Mzembi on August 16. Mzembi is one of the few GOZ or ZANU-PF officials who has been willing to talk with us in recent years. -------------- Price Controls a Disaster -------------- ¶3. (C) Mzembi said that the GOZ's recent price control policy was a precipitous response to former Ambassador Dell's prediction in May that the government would fall within months as a result of inflation, which Dell said could climb to over one million percent by year's end. Mzembi thought a response to spiraling inflation was necessary. In his view, however, the government should have frozen prices, rather than roll them back to an arbitrary date, and should have formulated a comprehensive policy to deal with wholesalers and producers at the same time. ¶4. (C) Mzembi thought that recovery would be difficult. While the populist policy had been a short-term boon to consumers, there were no goods in the pipeline and it would be uneconomical, given current policies, for producers to renew production. In the long run, the solution was to let the law of supply and demand work. But this would require a change in government policy. Mzembi noted that he was one of the few within the government willing to challenge economic policy. -------------- Economy a Threat to ZANU-PF...but not the MDC -------------- ¶5. (C) Acknowledging that the absence of consumer goods caused by the price control policy was creating disquiet among not only urban dwellers, but also the rural population which has traditionally been ZANU-PF's base, Mzembi said that the parlous state of the economy was the greatest threat to a ZANU-PF victory in upcoming elections. At present, however, a divided MDC presented minimal threat to ZANU-PF. Mzembi also said ZANU-PF had had discussions with the pro-Senate (Mutambara) MDC faction about a coalition. Although there were currently Ndebele in government, a coalition to include elected parliamentarians from Matabeleland would increase ZANU-PF's strength, according to Mzembi. ¶6. (C) Polecon chief asked Mzembi about opposition to Mugabe within ZANU-PF, particularly from the Mujuru faction. Mzembi said internal opponents to Mugabe had "no balls," and he saw no effective challenge to the president from within the party. HARARE 00000736 002 OF 002 -------------- U.S.-GOZ RELATIONS -------------- ¶7. (C) Noting that U.S. policy would not change with the departure of Ambassador Dell and the arrival of a new ambassador, polecon chief told Mzembi we would nevertheless like to expand our contacts with reformist ZANU-PF parliamentarians and GOZ officials--whatever the configuration of a post-Mugabe government, some of these individuals could be involved and it would be useful to know each other. Mzembi responded that the advent of a new ambassador might present such opportunities, and he would sound out some of his colleagues. -------------- Comment -------------- ¶8. (C) With under nine months until elections, there are various POLITICAL cross-currents at play. The Tsvangirai faction has had talks with the Mujuru faction and the Mutambara faction has discussed a coalition with ZANU-PF in general. Both MDC factions continue to talk. While next March could well result in an election between Mugabe and the MDC, the dynamic POLITICAL environment could foster other scenarios. DHANANI