FINANCE MINISTER'S "TORNADO OF TAXATION" IRRESPONSIBLE, MAY

UNCLAS MBABANE 000352

SIPDIS

DEPT FOR AF/S (MHARRIS)

E.O. 12958: N/A
TAGS: ELAB PREL PHUM WZ
SUBJECT: FINANCE MINISTER'S "TORNADO OF TAXATION" IRRESPONSIBLE, MAY
LEAD TO VIOLENCE, ACCORDING TO LABOR LEADER JAN SITHOLE

REF: MBABANE 339


1. SUMMARY: According to former Swaziland Federation of Trade
Unions (SFTU) General Secretary Jan Sithole, the recent Swazi
Finance Minister's taxation proposals to close a revenue gap were
"irresponsible." In response to a drop in Southern Africa Customs
Union (SACU) revenues, which currently finance over 60 percent of
Swaziland's budget, the Minister proposed taxing cattle or freezing
public servant wages, something the former General Secretary said
would result in widespread unrest prompting a violent government
crackdown. Sithole indicated to PolOff that anger is building in
the country, and expectations for multi-party democracy will
increase pressure before the 2013 elections. He recommended using
international leaders respected by King Mswati III, such as former
Mozambican President Joaquim Chissano, to motivate the King to enact
reforms before it was too late. END SUMMARY.


2. On December 18, former SFTU General Secretary Jan Sithole, who
stepped down after 25 years as general secretary in October, met
with PolOff to discuss labor issues and the impact a decline in the
Swazi economy is having on political developments. He emphasized
that Minister of Finance Majozi Sithole's (no relation) recent
taxation proposals to close a revenue gap were irresponsible and
would lead to violence if carried out. In response to a drop in
Southern African Customs Union (SACU) revenues, which currently
finance over 60 percent of Swaziland's budget, the Minister proposed
taxing cattle or freezing public servant wages. The former labor
union leader, who was detained by police multiple times during his
tenure as Secretary General, said he would expect government to
react to the resulting unrest with violence and further
suppression.


3. Even without a "tornado of taxation" sparking anti-government
sentiment, Sithole believes that anger is building up in the country
and that demands for multi-party democracy will increase pressure on
the government as the 2013 elections near.


4. Sithole recommended that the embassy continue with its efforts
to pressure the government in private, indicating that we would lose
any gains if we were too "loud," and suggested that the U.S. focus
on pushing government towards dialogue with voices of dissent.
Regarding the role that the International Labor Organization (ILO)
has played in prodding Swaziland to reform, he said that ILO's
statements and inclusion of Swaziland in its "special paragraph"
could have a positive snowball effect if other governments take up
the refrain.


5. King Mswati III, Sithole indicated, enjoys unparalleled wealth
and power, and therefore would need a lot of outside pressure to
bring about political change. He recommended recruitment of
international and regional leaders the King respected, such as
former Mozambican President Joaquim Chissano, to encourage the King
to engage in reform.


6. COMMENT: Sithole's views on economic developments driving a
political crisis track statements by a member of the royal family in
reftel. Both discussed the need for civic education and that King
Mswati III will not move toward political reform unless he can be
convinced reform is better for him personally, as well as for the
country, than predicted civil unrest that will inevitably turn
violent and could destroy royalty's role altogether. END COMMENT.


MORRISON