CHINESE ASSISTANCE TO ZIMBABWE

UNCLAS HARARE 000557 C O R R E C T E D COPY - CORRECTING CLASSIFICATION TO UNCLAS SENSITIVE SENSITIVE SIPDIS AF/S FOR B.WALCH DRL FOR N. WILETT ADDIS ABABA FOR USAU ADDIS ABABA FOR ACSS STATE PASS TO USAID FOR J. HARMON AND L. DOBBINS E.O. 12958: N/A TAGS: PGOV EAID ASEC PHUM CH ZI SUBJECT: CHINESE ASSISTANCE TO ZIMBABWE -------------- SUMMARY -------------- ¶1. (U) Over the past couple of weeks, both President Robert Mugabe and Prime Minister Morgan Tsvangirai have claimed credit for obtaining $US950 million in lines of credit from China. There were also reports that Zimbabwe would receive a $5 billion loan in exchange for platinum mining rights. At a press conference on July 3, Minister of Finance Tendai Biti categorically denied both loans. END SUMMARY. ¶2. (U) On June 30, Tsvangirai issued a statement summarizing his recently-concluded trip to the U.S. and Europe. After claiming pledges of humanitarian and transitional assistance of $500 million, he commented that Zimbabwe was not restricted to a "look west" or "look east" policy and averred that in his absence Biti had secured lines of credit from China totaling $950 million. On July 2, the Zimbabwe Independent reported that Biti had signed a Memorandum of Understanding with China's Eximbank for a $5 billion loan in exchange for platinum rights. ¶3. (U) At a press conference on July 3, Biti denied that Zimbabwe had reached any agreements with China for loans. Speaking to The Standard after Biti's conference, Tsvangirai's spokesman, James Maridadi, addressed the alleged $950 million loan and said it represented pledges; he could not understand why Biti was insisting there was no money coming from China. ¶4. (U) The Herald's banner headline on July 6 was "President hails China aid." The lead paragraph read, "President Mugabe has applauded China for unconditionally extending a US$950 million credit facility to help Zimbabwe's economic recovery program and blasted the West for insisting on conditions even as they render bits and pieces of aid to their agencies under the guise of assisting the people of Zimbabwe." The article quoted Mugabe as saying the loan was the first tranche in a $5 billion bridging package that had been negotiated four years ago and it was "nonsense" that the MDC had secured any loans from China. -------------- COMMENT -------------- ¶5. (SBU) For years, ZANU-PF has trumpeted assistance from China--assistance that never materializes. What is disconcerting is that Tsvangirai, who returned from his western trip with less concrete assistance than hoped for, now appears to be playing the same game. The lack of coordination between Tsvangirai and Biti is also troubling. The bottom line is that until China can get investment guarantees--non-existant in the current environment--material Chinese assistance is extremely unlikely. DHANANI