SCENESETTER FOR SECRETARY LEAVITT'S VISIT TO

UNCLAS SECTION 01 OF 02 MAPUTO 000969

SIPDIS

SENSITIVE
SIPDIS

HHS FOR CHIEF OF STAFF LINDA HOFFMAN
AF FOR DAS CAROL THOMPSON

E.O. 12958: N/A
TAGS: OVIP PGOV ECON KHIV PREL EAID MZ
SUBJECT: SCENESETTER FOR SECRETARY LEAVITT'S VISIT TO
MOZAMBIQUE

Summary and Introduction
--------------


1. (SBU) The Embassy warmly welcomes Secretary Leavitt and
his accompanying delegation to Mozambique, widely considered
to be an exemplary post-conflict democratic success story in
Africa. Following the June visit of First Lady Laura Bush
and the July MCC compact signing in Washington with President
Armando Guebuza, Secretary Leavitt's presence in Mozambique
will further accentuate the upswing in bilateral relations.
He will be the highest ranking USG official to Mozambique
since the 2002 visit by former HHS Secretary Thompson. This
trip will raise awareness of USG investments in health and
our role as the largest bilateral donor to Mozambique, the
only country in the world benefiting from President Bush's
three major initiatives--the Millennium Challenge Corporation
(MCC),the President's Emergency Plan for AIDS Relief
(PEPFAR),and the President's Malaria Initiative (PMI). The
visit will also provide the opportunity to further USG
interest in encouraging Mozambique to participate in regional
peacekeeping operations and to address regional challenges,
including Zimbabwe.

A Post-Conflict Success Story
--------------


2. (U) Since the signing of the 1992 Rome Peace Accord,
which ended sixteen years of civil war, Mozambique has made
significant progress as a young democracy and is rightfully
considered a post-conflict success story. The Frelimo party
led the independence struggle and has maintained political
power since Portuguese colonial rule ended in 1975. Frelimo's
military opponent during the subsequent civil war, Renamo,
has been the main opposition party since the first elections
in 1994. In December 2004 Mozambique held its third
presidential and legislative elections. Armando Guebuza won
the presidency by a wide margin, defeating Renamo leader
Afonso Dhlakama (who also ran unsuccessfully in 1994 and
1999).

A Democratic Example, But Still Fragile
--------------


3. (SBU) Voter turnout in the December 2004 presidential and
legislative elections was approximately 45 percent, down
substantially from the 75 percent turnout in 1999. Although
slightly fewer Frelimo voters cast their ballots than did so
in 1999, about half of the Renamo supporters did not vote.
Some analysts suggest Renamo supporters may have felt cheated
in the very close 1999 election and cynically saw little
point in participating. International observer groups
monitored the elections and indicated that the elections were
carried out in a generally successful and peaceful manner but
noted there were irregularities in the administration of the
elections. All agreed, nonetheless, that final results
broadly reflected the will of voters.


4. (SBU) In the December 2004 legislative election, Frelimo
won 160 out of 250 seats in the National Assembly - just
seven short of a two-thirds majority. Renamo won 84 seats
and an allied coalition of small parties took the remaining
six. Since 2005 several of these small parties have
distanced themselves from Renamo. Renamo's unexpectedly poor
showing has led to disarray within the party and Dhlakama's
leadership has been called into question. This has weakened
any organized opposition to Frelimo, now in power for more
than thirty years.

Responsible Economic Stewardship
--------------


5. (U) Since the mid 1980s, the government has broadly
followed IMF and World Bank guidelines on economic issues.
Mozambique's macroeconomic reforms and success in attracting
large investment projects have resulted in an average annual
GDP growth rate of eight percent from 1994-2006, the highest
in Africa over this time period. This growth is from a very
low base however, as per capita GDP for 2006 registered
around USD 320. Foreign direct investment, exports, and
revenue collection all have increased significantly. Since
the late 1990s most of the state companies have been
privatized, with only about one dozen remaining in government
hands.

Darling of the Aid Community; USG Largest Donor
-------------- --


MAPUTO 00000969 002 OF 002



6. (U) In large part because of successful implementation of
projects and compliance with international donor
requirements, the government receives almost 60% of its
budget directly from foreign aid. The USG is the largest
single donor to the GRM. In particular, our USD 160 million
in PEPFAR funds in 2007 total more than the HIV/AIDS funds
committed by all other donors and the Mozambican government
combined. Although the USG does not provide direct budget
support, we have forgiven all of Mozambique's USD 151 million
debt as part of Mozambique's Highly Indebted Poor Countries
relief initiative.

PEPFAR, MCC, PMI: Unique in the World
--------------


7. (SBU) Mozambique is the only country in the world to
receive combined PEPFAR, MCC and PMI support from the USG.
PEPFAR will provide approximately USD 160 million in 2007 for
Mozambique, up from USD 82 million in 2006. All agencies at
post, including State, USAID, CDC, the Peace Corps, and
Defense, participate in the Interagency PEPFAR team.


8. (U) On July 13, Millennium Challenge Corporation CEO John
Danilovich and Mozambican President Guebuza signed a
five-year, $507 million Compact that will reduce poverty
through increased incomes and employment by improving water
systems, sanitation, roads, land tenure, and agriculture,
with a focus on the country's four northern provinces. The
MCC program in Mozambique is entering a 9-month planning
phase prior to implementation, and some Mozambicans have
expressed frustration with the lengthy MCC negotiation and
implementation processes.

Peacekeeping Operations
--------------


9. (SBU) Mozambique's armed forces (FADM) have benefited
from substantial USG military training and assistance,
especially through the African Contingency Operations and
Training Assistance (ACOTA) program. The FADM successfully
participated in the African Union's 2005 peacekeeping
operations in Burundi, and has publicly recognized its
interest in a higher-profile contribution to peacekeeping
operations in Sudan. The Embassy is working to assist FADM in
further developing its peacekeeping capacity, and we look
forward to supporting the GRM's eventual contribution to
regional operations.

Zimbabwe
--------------


10. (SBU) The GRM has been hesitant to criticize other
African governments over human rights violations and has
historically abstained from voting on any such resolutions.
GRM officials have stated publicly that Mozambique, instead
of criticizing actions, prefers to focus on what can be done
to address such issues within the regional institutions
(e.g., the AU and SADC). Mozambique has also been hesitant
to engage on Zimbabwe, due to the close historical ties
between the countries.

Conclusion: Bilateral Relations on the Upswing
-------------- -


11. (U) This is the first cabinet-level visit to Mozambique
in more than five years, and comes soon after First Lady
Laura Bush,s visit in June and the MCC signing in July. In
September, a U.S. Navy ship will make the first port call to
Mozambique since the country's independence in 1975.
Together these events highlight our ever stronger bilateral
relationship and emphasize the United States' leading role in
Mozambique's development in democracy, health, and prosperity.
Chapman