ZIM MINFIN BITI BRIEFS CHARGE

C O N F I D E N T I A L SECTION 01 OF 04 HARARE 000759 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: DECL: 09/22/2019 TAGS: PGOV PREL ASEC PHUM EFIN ECON ZI SUBJECT: ZIM MINFIN BITI BRIEFS CHARGE REF: A. HARARE 753 ¶B. HARARE 736 Classified By: CDA Donald Petterson for reasons 1.4 (b) and (d) -------------- SUMMARY -------------- ¶1. (C) Minister of Finance and MDC Secretary-General Tendai Biti told the Charge on September 21 that the MDC will canvass its supporters as to whether the MDC should remain in government; he believes most MDC members favor staying in the inclusive government and confronting Mugabe and ZANU-PF. While many ZANU-PF officials want the inclusive government to fail, he believes Mugabe does not, and will give in on outstanding issues. Three of the Global Political Agreement (GPA) negotiators (Biti, Welshman Ncube, and Patrick Chinamasa) will be part of a constitutional oversight committee to unlock the constitution-making process. These negotiators will also focus on outstanding issues. Biti believes a "decent" constitution will emerge from the constitutional process which will then pave the way for elections. ¶2. (C) Turning to financial and economic issues, Biti said he had been in contact with the IMF over the last four months and had discussed Zimbabwe's newly allocated Special Drawing Rights (SDRs). He said he is considering using SDRs for arrears clearance, infrastructure development, support for the export sector, and budget support, but will consult with the IMF in making any decisions. Revenues have now leveled off and additional economic growth, in the absence of donor an International Financial Institution (IFI) support, will depend on private investment. South Africa in particular appears ready to invest. Biti intimated that ZDERA should be modified as Zimbabwe makes progress, and that sanctions on certain parastatals and banks should be lifted as they are now under the control of the Ministry of Finance. ¶3. (C) On the issue of the Chiadzwa diamond fields, Biti claims that the Kimberley Process has not been cooperative in providing technical assistance. Additionally, corruption and lack of capacity within the government have prevented it from dealing adequately with Chiadzwa. END SUMMARY. ¶4. (C) The Charge met on September 21 with Biti at the Ministry of Finance. -------------- MDC Ready to Fight -------------- ¶5. (C) Following up on last week's meeting with Prime Minister Morgan Tsvangirai (Ref A),the Charge asked Biti about prospects for progress on GPA outstanding issues and the MDC's course of action. Biti responded that the MDC would canvass supporters on three options: 1) Remain in government and continue as is; 2) Pull out of government; 3) Remain in government and fight for progress within the existing framework. ¶6. (C) He summarized some of the advances since the formation of the inclusive government in February. The economy was growing, albeit slowly. He noted that in rural areas where there was no food a year ago, meat was available. Violence had dramatically decreased in rural areas. Schools had reopened. As a consequence, even though most GPA issues Qhad reopened. As a consequence, even though most GPA issues had not been resolved -- the appointment of governors and Roy Bennett, prosecutions of MDC parliamentarians, a stalled constitutional process, and lack of progress on the democracy agenda (failure to repeal POSA and AIPPA),for example -- HARARE 00000759 002 OF 004 Biti thought most MDC supporters would support remaining in government and "fighting." This was also his position. Tsvangirai, in Biti's opinion, should no longer talk about working well with Mugabe but should talk tough, as in his Bulawayo speech celebrating the MDC's 10th anniversary (Ref B). ¶7. (C) Asked whether Mugabe would give ground on outstanding issues, Biti replied that Mugabe was "tired." While most ZANU-PF officials wanted the inclusive government to fail, Mugabe did not, Biti surmised. This was because a failed government would be bad for his legacy and because he did not want to fight an MDC attacking him from outside of government. Biti said the MDC would continue "chipping away" at ZANU-PF, which he characterized, like Mugabe, as "tired." ¶8. (C) Biti expected progress on the formation of commissions. Mugabe's failure to select members of the Media Commission had precipitated Tsvangirai's threat on September 14 to end their one-on-one conversations on the GPA (Ref B) and resulted in discussion of the constitution and moving forward later in the week. Biti thought that Mugabe, on his return from the UNGA, would name the members of the Media Commission, and that efforts would proceed to select nominees for other commissions (electoral, human rights, and anti-corruption). ¶9. (C) The Charge noted that continuing farm invasions and efforts to expropriate interests in conservancies by the governor of Masvingo and other ZANU-PF officials in the Save area featured prominently in the news and would be a deterrent to investment. Biti responded that this was a delicate issue, since any actions on behalf of white farmers would be portrayed by ZANU-PF as racist. Nevertheless, this was a top issue that Tsvangirai would continue to raise with Mugabe. ¶10. (C) Biti said that if Mugabe did not give on outstanding issues, the MDC's recourse was to "raise the decibel level," boycott cabinet, and/or appeal to the SADC Troika. ¶11. (C) Biti said ZANU-PF had made a mistake in giving the "social" ministries such as health and education to the MDC. These ministries had had a positive effect on peoples' lives, and the MDC was receiving credit. As an example, Biti said an MDC rally in Karoi last weekend had been well-attended, and people spoke to him about how much better their living situation was this year compared to last. -------------- Moving the Constitutional Process Forward -------------- ¶12. (C) Elaborating on the new constitutional mechanism (Ref A),Biti said there had been little leadership exercised over the constitutional process in the last few months. The GPA principals would now have overall responsibility for the process to draft a new constitution, but a steering committee of three of the GPA negotiators (Biti, Patrick Chinamasa, and Welshman Ncube),the three chairs of the parliamentary Select Committee on the Constitution, and the Minister of QCommittee on the Constitution, and the Minister of Constitutional and Parliamentary affairs (Eric Matinenga) would oversee an operational committee and secretariat. Biti underscored that the three GPA negotiators would also constitute a de facto committee to deal with outstanding issues since the Joint Monitoring and Implementation Committee (JOMIC) had been useless. ¶13. (C) Biti thought that a "decent" constitution would emerge from the process. He commented that the Kariba Draft was a "decent" constitution; its primary shortcoming was provision for a strong president -- Biti favored a French HARARE 00000759 003 OF 004 model with powers divided between president, prime minister, and cabinet. If necessary, however, he would not object to the adoption of the Kariba Draft. The importance of a constitution, he emphasized, was as a vehicle to get to elections, since under the GPA a new constitution was a prerequisite to elections. (COMMENT: Biti negotiated the Kariba draft, and his favorable assessment of it is no surprise. Civil society has a different view -- and much of civil society will not see shifing the stewardship of the constitutional reform process from the parliament to the principals as a step in the right direction, since they wish to see it moved closer to the people, not further away. END COMMENT.) -------------- SDRs, HPIC, and Sanctions -------------- ¶14. (C) Biti's thoughts at present regarding SDRs were to use Zimbabwe's allocation to clear arrears, for infrastructure, for balance of payment support to the export sector, and possibly for budgetary support. In this regard, he noted that tax revenues had leveled off -- in fact, they had decreased from USD 98 million in July to USD 95 million in August -- and would not increase under present circumstances. He noted he had been in conversations with the IMF for the last four months and would have further consultations next week in Istanbul; he stated he would use SDRs in consultation with the IMF. Referring to attacks on him from Reserve Bank of Zimbabwe Governor Gideon Gono and ZANU-PF for not agreeing to use SDRs for economic stimulus, Biti commented that they viewed SDRs as a funding source for "one last Christmas party." ¶15. (C) Acknowledging that significant IFI and donor support was not on the horizon, Biti said he was looking for private investment to boost the economy. He believed South Africa was prepared to make significant investments, although he expressed concerns that much of this investment would be to buy up cheap assets. Biti was skeptical that investors would be deterred by indigenization laws; Mugabe had promised to be flexible with indigenization requirements and had conveyed this message to visiting investors. ¶16. (C) According to Biti, a mammoth debate had taken place in Cabinet last week on whether Zimbabwe should apply to the IMF for Highly Indebted Poor Country (HIPC) relief. Most ZANU-PF ministers had opposed requesting relief, arguing that this was part of a western agenda to subjugate Zimbabwe. Also, Zimbabwe would be equating itself with countries it considered less advanced. Biti stated that Mugabe had finally appointed a committee, which Biti thought would be sympathetic to seeking HIPC relief, to study the issue and make recommendations to Cabinet. (COMMENT: ZANU-PF propagandists have been attacking Biti on HIPC in the local media. We suspect that Biti in discussions with Cabinet included HIPC as part of long range economic plans and this has provided another hook for the ruling party to portray the Qhas provided another hook for the ruling party to portray the MDC as subservient to the West. END COMMENT.) ¶17. (C) While not specifically advocating repeal, Biti opined that ZDERA should be modified in response to progress on political reforms. He advocated lifting of sanctions on the Infrastructure Development Bank of Zimbabwe, Agribank, and ZB Bank since they were effectively under the control of the Ministry of Finance. -------------- No Action on Chiadzwa -------------- ¶18. (C) Biti said that the government had accepted all the HARARE 00000759 004 OF 004 recommendations of the Kimberley Process team that visited Zimbabwe from June 30 to July 4 to investigate Chiadzwa, with the exception of demilitarization. Minister of Mines Obert Mpofu had sent a letter to Kimberly representatives for technical assistance on issues such as smuggling, security, resolution of conflicting claims, and issuing concessions. According to Biti, Mpofu had not received a response. ¶19. (C) Biti identified two problems in trying to regularize the Chiadzwa situation: corruption and lack of capacity. Mpofu himself, according to Biti, was corrupt and was susceptible to trying to cut deals with opportunistic and corrupt investors. Additionally, an interministerial committee to deal with Chiadzwa notwithstanding, Cabinet lacked capacity to deal with the myriad issues -- human rights, security, smuggling, granting of concessions, surveys to determine locations and quantities of diamonds, etc. The ministers on the interministerial committee all had individual ministerial responsibilities; what was needed was a special minister to deal with Chiadzwa. -------------- COMMENT -------------- ¶20. (C) Although he was one of the negotiators of the GPA, Biti thought there were too many open-ended issues to justify the MDC entering into government in February, and he was one of the last to accept the formation of the inclusive government. The fact that he supports remaining in the government and believes most MDC supporters do as well, albeit with a more assertive posture vis-a-vis Mugabe and ZANU-PF, is a strong indication that despite press reports of MDC dissatisfaction with the GPA and consideration of leaving government, the MDC will remain in government for the long haul. The MDC will continue to press, probably more vocally than before, for ZANU-PF compliance with the GPA and resolution of outstanding issues, but the focus will be on the constitution and elections. ¶21. (C) On the economic side, the most contentious issue recently has been use of SDRs. ZANU-PF and Gono have attacked Biti for not agreeing to use SDRs for stimulus in the context of a very weak economy. Biti has fought back and let it be known he will not allow SDRs to be used for a ZANU-PF shopping spree. He and his advisers have made clear to us that while he has some initial ideas about how to use SDRs, he wishes to cooperate with the IMF and will make any decisions in consultation with the Fund. END COMMENT. PETTERSON