ZIMBABWE - AGOA ELIGIBILITY REVIEW

UNCLAS SECTION 01 OF 04 HARARE 000814 SIPDIS AF/S FOR B.WALCH AF/EPS FOR G.MALLORY DRL FOR N.WILETT ADDIS ABABA FOR USAU ADDIS ABABA FOR ACSS STATE PASS TO USAID FOR J.HARMON AND L.DOBBINS NSC FOR M.GAVIN TREASURY FOR A.IERONIMO COMMERCE FOR K.BOYD USTR FOR C.HAMILTON E.O. 12958: N/A TAGS: PGOV PREL ASEC PHUM ZI SUBJECT: ZIMBABWE - AGOA ELIGIBILITY REVIEW REF: STATE 97769 TPSC SUBCOMMITTEE ON AGOA IMPLEMENTATION COUNTRY ELIGIBILITY RECOMMENDATIONS 2009 STATE SUBMISSIONS Country: Zimbabwe Current AGOA Status: Ineligible Country Background Summary: Economic conditions improved in Zimbabwe in 2009 after opposition parties agreed to join a transitional government that will revise the constitution and prepare for new elections. Hyperinflation compelled the GOZ to withdraw the Zimbabwe dollar from circulation in February. This move and additional liberalization measures introduced by the transitional government have boosted the economy, which should grow this year for the first time in more than a decade. But President Mugabe's ZANU-PF party retains control over key GOZ institutions, including the judiciary, the police, the intelligence service, and the army. These institutions continue to be involved in human rights abuses. Comments on Eligibility Requirements ¶I. Market-Based Economy ¶A. Major Strengths Identified With the withdrawal of the Zimbabwe dollar, there are no longer exchange controls. Tariff cuts have eased cross-border trade. Though Zimbabwe's physical infrastructure has deteriorated in recent years, it is still superior to that of most African countries. The banking system is sophisticated by regional standards, though many banks are in need of recapitalization due to the effects of hyperinflation. Zimbabwe's private sector is remarkably resilient. Many firms would expand operations if more financing were available. ¶B. Major Issues/Problems Identified -- The political stalemate between ZANU-PF and the reform-minded Movement for Democratic Change (MDC) leaves key economic policy questions unresolved. -- Property rights are insecure following a decade of government-sanctioned farm invasions. Businesses are uncertain about how the government may choose to enforce an "indigenization" law. -- The World Economic Forum's Global Competitiveness Report for 2009-2010 ranks Zimbabwe second-to-last out of 133 countries studied. -- The government lacks the financial resources to restore basic services. Revenue collapsed during the 2007-08 hyperinflation. It is recovering slowly but still falls far short of GOZ requirements. The GOZ has defaulted on external debts and cannot borrow. -- The central bank has been compromised by years of HARARE 00000814 002 OF 004 political intervention. It is in need of recapitalization, reform, and new leadership. II. Political Reforms, Rule of Law, and Anti-corruption ¶A. Major Strengths Identified Formation of the transitional government in February has created new opportunities for restoration of democratic rule. ¶B. Major Issues and Problems Identified -- The GOZ continues to discourage political pluralism by limiting citizens' rights to freedom of assembly, freedom of speech, and due process. -- Security forces harass, beat, and arbitrarily arrest ZANU-PF opponents, including MDC legislators. -- The constitution prohibits arbitrary arrest and detention; however, security forces arbitrarily arrest, detain, and torture persons. -- Prolonged pretrial detention remains a problem. -- In politically sensitive cases, the GOZ can influence or intimidate judges. Members of the political elite can ignore adverse court rulings. -- Corruption is widespread. The GOZ 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 confiscated commercial farms, is not transparent and is driven by patronage. III. Poverty Reduction ¶A. Major Strengths Identified None ¶B. Major Problems/Issues Identified -- President Mugabe's "fast-track land reforms," which have allowed the violent seizure and uncompensated confiscation of thousands of commercial farms, have displaced hundreds of thousands of farm workers. Many rural families have lost their livelihoods and access to education and health care. -- Surveys indicate that 1.6 million Zimbabweans -- at least 13 percent of the population -- will lack food security by the end of 2009. -- The distribution system of the GOZ's Grain Marketing Board, which supplies seed and fertilizer to smallholders, is underfunded and inefficient, hampering food production in many parts of the country. IV. Labor, Child Labor, and Human Rights ¶A. Major Strengths Identified -- The GOZ has ratified both ILO Conventions 182 and 138. HARARE 00000814 003 OF 004 -- The law prohibits forced or compulsory labor, including by children. -- Under the Labor Relations Amendment Act, 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, partly through limits on freedom of association and the right to organize. In some cases, security forces used excessive force or torture to coerce striking workers to return to work. -- Unions were denied routine meetings and necessary consultations with constituents under the Protection of Order and Security Act (POSA). -- 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 demolish informal businesses and evict people from their homes. -- Prison conditions improved slightly but 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 intimidation and excessive tax burdens. -- The constitution provides for freedom of assembly; however, the government restricted this right in practice through laws such as POSA, which many legal experts believe to be unconstitutional. POSA does not require permits for meetings or processions, but it does require 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. Because of consistent violations of labor rights, in February the ILO launched a Commission of Inquiry to investigate violations of ILO Convention 87 and 98, the right to organize and bargain collectively. Members of the Commission visited Zimbabwe in April and August and were followed by intelligence officers on both occasions. HARARE 00000814 004 OF 004 -- Domestic violence against women, especially wife beating, continued to be a serious problem and crossed racial, ethnic, and economic lines. Although a Domestic Violence Act was passed in 2007, few have been charged under the law. -- 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, 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. In the 2009 Trafficking in Persons Report, the State Department ranked Zimbabwe as Tier 3, the lowest possible ranking. ¶V. International Terrorism/U.S. National Security ¶A. Major Strengths Identified -- While the U.S. has a severely strained bilateral relationship with Zimbabwe, the GOZ 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. PETTERSON