SCENESETTER FOR DAS THOMPSON'S VISIT TO ZAMBIA,

C O N F I D E N T I A L SECTION 01 OF 03 LUSAKA 000563

SIPDIS

SIPDIS

DEPT FOR DAS CAROL THOMPSON

E.O. 12958: DECL: 05/10/2017
TAGS: PGOV ZA
SUBJECT: SCENESETTER FOR DAS THOMPSON'S VISIT TO ZAMBIA,
JUNE 1-6, 2007

REF: A. LUSAKA 510


B. LUSAKA 492

C. 06 LUSAKA 1694

D. 06 LUSAKA 1669

Classified By: Ambassador Carmen Martinez. Reasons 1.4 (b) and (d).


1. (SBU) Summary: The U.S. Mission in Zambia warmly welcomes
Deputy Assistant Secretary of State Carol Thompson to Zambia
from June 1 to June 6, 2007. Your visit comes at a time when
President Mwanawasa and his administration are seeking to
establish a second-term agenda following the President's
re-election last September and during an ongoing debate over
a new constitution, and slow but steady progress in high
profile corruption prosecutions. The Zambian economy is
benefiting from high copper prices, and sound economic and
fiscal management have resulted in reduced rates of inflation
and significant debt forgiveness. But despite steady if
modest economic growth, Zambia continues to rank near the
bottom of the UN's Human Development Index and about 70
percent of its population lives below the poverty line.
HIV/AIDS and other serious health problems present a critical
developmental and humanitarian crisis: the infection rate
among adults is 16 percent and Zambia has an estimated
750,000 AIDS orphans. End Summary.

An Expanding Partnership
--------------


2. (SBU) The U.S. enjoys good relations with Zambia. The
U.S. provided approximately $240 million in bilateral
assistance in 2006; the majority of the funding supported the
PEPFAR initiative. Zambia is one of 15 PEPFAR focus
countries, which collectively represent approximately 50
percent of HIV infections worldwide. Under PEPFAR, Zambia
received more than $81 million in FY 2004, nearly $130
million in FY 2005 and approximately $160 million in FY 2006
to support comprehensive HIV/AIDS prevention, treatment and
care programs. The FY 2007 PEPFAR budget is $213 million.


3. (SBU) In addition, the GRZ has signed an Article 98
agreement, is a Millennium Challenge Account Threshold
Country, and participates in the Africa Contingency
Operations Training Assistance (ACOTA) program. Although
Zambia is eligible for benefits under the Africa Growth and
Opportunity Act, U.S.-Zambia bilateral trade is small. In
2006, Zambia exported only $28 million worth of goods (mostly
copper) to the United States and imported $51 million worth
of goods (machinery and equipment, grains) from the United
States. The GRZ welcomed the opportunity to participate in a
new Presidential initiative that addresses women's justice
and empowerment. Zambia is a committed partner in the global
war on terror, as shown by Zambian authorities' rapid
apprehension of terrorist suspect Rashid Haroon Aswat in

2005.


4. (C) Despite good relations, we are disappointed with the
timid approach the President has taken to addressing key
political, economic and social issues since winning
re-election in September, 2006. It appears that the GRZ's
interests recently seem to be moving out of alignment with
ours on many key concerns, such as promoting private sector
development, addressing the HIV/AIDS pandemic, and fighting
corruption. Policy decisions, public comments and the
behavior of the President and senior officials in the initial
months of his second administration reveal a preference for
more state intervention in the economy; perhaps more
cronyism; less respect for rule of law; weaker political
reform and anti-corruption efforts; and an overall lack of
leadership and unwillingness to take responsibility for GRZ
problems or failures (Ref B).

Presidential and Parliamentary Elections
--------------


5. (SBU) More than 70 percent of Zambia's 3.9 million
registered voters turned out to vote in the September 2006
presidential and parliamentary elections, in which President
Mwanawasa won a second and final term with approximately 43
percent of the vote. The European Union Election Observation
Mission concluded that the elections were a "marked
improvement" over the 2001 vote and were "generally
well-administered, largely peaceful and offered voters a wide
range of candidates to choose from in a genuinely competitive
process." Observers credited the Electoral Commission of
Zambia (ECZ) and its Chairperson, Justice Irene Mambilima,
with the success of the vote. Despite progress, there were
incidents of campaign violations, discrepancies in the
tabulation of the vote, and election-related riots.
Unsuccessful candidates filed a total of 40 election

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petitions, most of which alleged campaign misconduct. Courts
have heard the majority of the petitions and have to date
nullified the results of two parliamentary elections.
Decisions are pending in other cases and some of the
petitions have been dismissed on technical grounds (Ref C).

Cabinet Shakeups
--------------


6. (C) President Mwanawasa has also been unusually active in
shuffling and firing cabinet ministers during the first eight
months of his second term of office. After firing the
Minister of Lands in February and the Minister of Information
and Broadcasting Services in early April, the President fired
his Minister of Health, Angela Cifire, on April 23. You will
meet with Cifire's replacement Brian Chituwo, who previously
served as Health Minister and Education Minister in
Mwanawasa's first term. In a published letter, the President
asked Chituwo to "ensure that abolition of user fees (for
basic health services) did not result in the deterioration of
the quality of health care currently being provided in the
rural areas." The President also directed the new Minister
to make sure that medicines and other medical items were
procured efficiently and transparently, to avoid shortages of
critical drugs in health institutions, and to "ensure that an
attractive reward package for core clinical staff, namely,
doctors, nurses, pharmacists and laboratory technologists is
put in place" to attract staff to work in rural areas. The
USG lost a hardworking partner in Cifire; however, Chituwo is
well and favorably known to us and we expect that he will be
an able partner (Ref D).


7. (C) You will also meet Minister of Information and
Broadcasting Services Mike Mulongoti. The President
appointed Mulongoti (previously Deputy Foreign Minister) to
fill the vacant Minister of Information and Broadcasting
Services position, noting the tremendous confidence he had in
Mulongoti's ability and leadership qualities. Mulongoti is a
knowledgeable and proactive interlocutor, and had been the
Mission's principal high-level point of contact at the
Foreign Ministry. Although we will miss his presence at the
MFA, we hope that he will continue to be a useful partner in
his new role at the Ministry of Information, where he will
preside over a continuing debate over the reform of media
laws and a proposed freedom of information act.

A Reviving Economy
--------------


8. (SBU) For almost thirty years, Zambia's economy faltered.
The fall in copper prices that began in the mid-1970's
undermined the ability of first-President Kenneth Kaunda's
socialist state (1964-1991) to provide social services, and
led to the accumulation of massive external debt. Corruption
during the later years of rule of second-President Frederick
Chiluba (1991-2001) eroded gains from market oriented reforms
in the early 1990's and generated a strong distrust of
markets and economic liberalization.


9. (SBU) As a consequence of these developments, about 70
percent of Zambians live in poverty today. Economic growth
has been between 4 and 6 percent in recent years, but the
investment climate has not been sufficiently favorable to
generate the 7 to 8 percent growth rates required to reduce
Zambia's poverty. The government seeks greater diversity in
the economy, particularly growth in the agriculture and
tourism sectors. But recent strengthening of the local
currency and concerns over future volatility may hurt
non-traditional export sectors and limit efforts to diversify
the economy.


10. (SBU) As a result of good fiscal management, Zambia
successfully reached the HIPC completion point in April 2005
and stands to benefit from approximately $6 billion in debt
forgiveness. The rate of inflation has risen slightly in
recent months and now stands at about 12 percent, still well
below the historical average. The GRZ's acknowledgement of
the need for continued economic discipline evidenced in
Finance Minister Magande's national budget speech offers hope
for greater improvements in Zambian citizens' standard of
living.

Fight Against Corruption
--------------


11. (SBU) A legacy of corruption and mismanagement has eroded
confidence in government and hampered social and economic
development. Consequently, the fight against corruption is a
U.S. priority in Zambia. One of the hallmarks of President
Mwanawasa's first term in office was his heralded effort to

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bring to justice those whose corruption undermined Zambia's
economy over the past decade. The U.S. continues to support
the work of the Task Force on Corruption, but the complex
cases pursued by the Task Force take time and require
continued high-level support from the President. The Task
Force has scored some success through seizures of assets
plundered by former government officials, and has recently
begun to secure convictions. Following a civil trial led by
Zambia's Attorney General, on May 3, a British Court found
that former President Chiluba was liable for the theft of 46
million in Zambian assets during his time in office. The
criminal case in Zambia against Chiluba is ongoing.

Constitutional Reform
--------------


12. (SBU) Many consider Zambia's current constitution to be
deficient, in part because it gives too much power to the
executive branch of government. In 2003, President Mwanawasa
commissioned a Constitution Review Commission (CRC) to take
comments and issue a draft constitution. Although the CRC
issued its final report on constitutional reform at the end
of 2005, the government has done little since then to move
the reform process forward. To prompt the government to act,
a civil-society umbrella group called the Oasis Forum,
recently declared a "constitutional struggle" and introduced
a 10-step, 71-week, "roadmap" to a new constitution for
Zambia. President Mwanawasa has disputed the legality of the
Oasis Forum plan and said that the GRZ would implement its
own roadmap to constitutional reform. Civil society leaders
are skeptical of the President's plan, which they say is
unnecessarily expensive and complicated and, which by the
government's own timeline, will take approximately five years
to complete (Ref A).
MARTINEZ