ZIMBABWE - AGOA ELIGIBILITY REVIEW

UNCLAS SECTION 01 OF 03 HARARE 000903 AF/S FOR B. WALCH AF/EPS FOR ANN BREITER AND GABRIELLE MALLORY USTR FOR CONNIE HAMILTON SIPDIS E.O.12958: N/A TAGS: ETRD ECON XA ZI SUBJECT: ZIMBABWE - AGOA ELIGIBILITY REVIEW REF: STATE 85086 TPSC SUBCOMMITTEE ON AGOA IMPLEMENTATION COUNTRY ELIGIBILITY RECOMMENDATIONS 2007 STATE SUBMISSIONS Country: Zimbabwe Current AGOA Status: Ineligible Country Background Summary: The political and economic situation deteriorated further in Zimbabwe in 2008 as special interest groups dictated policy at the expense of the greater good. Opposition parties won more votes than the ruling party in March parliamentary elections, but no candidate achieved a majority in the presidential election, necessitating a run-off. Opposition parties boycotted the run-off election in June as a result of intimidation and violence against the electorate by the ruling party which made a fair election impossible. The economy contracted further under draconian price controls and misguided monetary and fiscal policies, and more economic activity shifted into the informal sector. Comments on Eligibility Requirements ¶I. Market-Based Economy ¶A. Major Strengths Identified None ¶B. Major Issues/Problems Identified - As a result of gross government mismanagement of the economy, the role of markets weakened steadily and the country's economic outlook is bleak. - The World Economic Forum's Global Competitiveness Report 2007-2008 ranked Zimbabwe 129 out of 131 countries studied. - A persistent and widening budget deficit and a highly accommodating monetary policy stance led to the prevailing hyper-inflationary environment. The official exchange rate was infrequently adjusted and consequently heavily overvalued in real terms, depressing exports and stimulating activity on the parallel market. - The Reserve Bank of Zimbabwe was also deeply engaged in loss-making quasi-fiscal activity. Financing this activity fuelled money supply growth and inflation. Negative real interest rates distorted savings and investment patterns. - Unemployment in the formal sector is estimated at over 90 percent. - The continued deterioration of macroeconomic conditions, lack of rule of law, high foreign exchange surrender requirements on exporters, a widening parallel market exchange rate premium, shortage of foreign exchange, and pervasive shortages of food, fuel, electric power, and other basics rendered Zimbabwe's investment climate highly unattractive. II. Political Reforms/Rule of Law/Anticorruption ¶A. Major Strengths Identified None ¶B. Major Issues/Problems Identified - The GOZ continued its attacks on political pluralism through the use of repressive legislation to prevent freedom of assembly and demonstrations against the government. - The ruling party also has proposed legislation dealing with the interception of communications and counterterrorism that legal experts caution could be used against regime opponents. - Politically, the opposition party operates in a climate of intimidation and repression. Security forces harass, beat, and arbitrarily arrest perceived opposition supporters. - The constitution prohibits arbitrary arrest and detention; however, some laws effectively weakened this prohibition, and security forces arbitrarily arrested and detained persons repeatedly. - Prolonged pretrial detention remained a problem. - In politically sensitive cases, the judiciary, especially the higher courts, showed indications of being politically influenced or intimidated. Political elites frequently ignore adverse court holdings. - Official corruption is widespread. The Government of Zimbabwe prosecutes corruption selectively, focusing on individuals who have fallen out of favor with the ruling party. - The government's allocation of resources, such as new homes and formerly white-owned commercial farms, has been nontransparent and driven by patronage. III. Poverty Reduction HARARE 00000903 002 OF 003 ¶A. Major Strengths Identified None ¶B. Major Problems/Issues Identified - National assessments show that the yield of the staple maize crop from the 2008 harvest was the lowest on record. As a result, it was estimated that two million Zimbabweans were food insecure from July through September 2008 in both urban and rural areas. - The GOZ banned NGO field operations for nearly three months in 2008, which prevented the distribution of food to vulnerable people. - The distribution system of the Grain Making Board (GMB),which has a statutory monopoly on all imported grains, is extremely inefficient, leaving many parts of the country without consistent access to grains. Moreover, the GMB is subject to political manipulation at the local level. - All in all, current trends indicate that poverty is on the increase in both rural and urban areas. IV. Labor, Child Labor, and Human Rights ¶A. Major Strengths Identified - The GOZ has ratified both ILO Conventions 182 and 138. - The law prohibits forced or compulsory labor, including by children. - Under the Labor Relations Amendment Act (LRAA),child labor is punishable by a fine and two years imprisonment. - In October 2007, the GOZ enacted the Domestic Violence Act, which criminalizes domestic violence and provides enhanced protection for victims of abuse. ¶B. Major Issues/Problems Identified - Despite official recognition of worker rights, the government continued to exert heavy pressure on labor unions - limiting their freedom of association and the right to organize. - Unions were denied routine meetings and necessary consultations with constituents under the draconian Protection of Order and Security Act (POSA). - Forced child labor occurred and child labor remains a problem due to worsening macroeconomic conditions. - The government's human rights record remained very poor. - Although the constitution prohibits such practices, security forces tortured, raped, and otherwise abused persons. There continued to be reports that police used excessive force in apprehending and detaining criminal suspects. - In moves that echoed the 2005 Operation Restore Order, which destroyed the homes and businesses of over 700,000 people, the GOZ continued to periodically demolish informal businesses and evict people from their homes. - Prison conditions remained harsh and life threatening. - The constitution provides for freedom of expression, but legislation limits this freedom in the "interest of defense, public safety, public order, state economic interests, public morality, and public health." Independent newspapers face unwieldy tax burdens and intimidation. - The constitution provides for freedom of assembly; however, the government restricted this right in practice through laws such as POSA, which many legal experts believed were unconstitutional. POSA does not require permits for meetings or processions, but it requires that organizers notify the police of their intentions to hold a public gathering seven days in advance. Failure to do so results in criminal prosecution as well as civil liability. - Although the constitution provides for freedom of association, the government restricted this right in practice for political organizations. In 2008, Zimbabwe was one of two countries the ILO's Applications and Standard Committee criticized regarding implementation of ILO Convention 87, which deals with freedom of association. - Domestic violence against women, especially wife beating, continued to be a serious problem and crossed racial, ethnic, and economic lines. - The government's commitment to children's rights and welfare remained weak. The government has a National Plan of Action for Orphans and Vulnerable Children (NPA for OVC),which was completed in 2004 but has not been fully implemented. It is designed to ensure that orphans and vulnerable children are able to access education, food, health services, and birth registration and are protected from abuse and exploitation, but activities set out in the plan were insufficiently funded. - There are no laws to prohibit specifically trafficking in persons. There were reports that the country was both a point of origin and a transit path for trafficking. ¶V. International Terrorism/U.S. National Security HARARE 00000903 003 OF 003 ¶A. Major Strengths Identified - While our relationship with the GOZ is severely strained, the government does not engage in actions specifically meant to support international terrorism or undermine U.S. national security; it has also been cooperative on counter-terrorism issues. ¶B. Major Issues/Problems Identified - Most senior GOZ officials regularly attempt to undermine U.S. foreign policy interests through false attacks at high-profile international fora. DHANANI