Welcome (back) to Zimbabwe - CODEL MEEKS/WATT Scenesetter

UNCLAS SECTION 01 OF 06 HARARE 000091 SENSITIVE SIPDIS AF/S FOR BRIAN WALCH NSC FOR SENIOR AFRICA DIRECTOR MICHELLE GAVIN E.O. 12958: N/A TAGS: OREP PREL PGOV ZI SUBJECT: Welcome (back) to Zimbabwe - CODEL MEEKS/WATT Scenesetter -------------- SUMMARY -------------- ¶1. (SBU) U.S. Mission Zimbabwe welcomes CODEL Meeks/Watt and their delegation. Your return visit comes at an important period in Zimbabwe's history, at the one-year anniversary of the entry into government of the Movement for Democratic Change (MDC) factions in February 2009 and the formation with ZANU-PF of a coalition government. It is an opportunity to express support for democratic reform in Zimbabwe and emphasize our expectations of the government. While the power-sharing agreement between President Mugabe's ZANU-PF and the MDC is flawed and fragile, under the coalition government the economy has stabilized after a lost decade and there are signs of political change. Most noteworthy is that Morgan Tsvangirai is Prime Minister, something that was virtually inconceivable following the violence of the 2008 elections, and the combined MDC factions now have an equal weight with ZANU-PF in Parliament. Commissions -- Media, Electoral, and Human Rights -- may be established in the near future. Also, despite delays, the process of drafting a new constitution remains on track. Disturbingly, however, Mugabe and ZANU-PF continue to drag their heels on full implementation of the Global Political Agreement (GPA). MDC governors have not yet been appointed, Deputy Minister of Agriculture-designate Roy Bennett has not yet been sworn in, and Reserve Bank of Zimbabwe (RBZ) Governor Gideon Gono and Attorney General Johannes Tomana, appointed in violation of the GPA, remain in office. The Attorney General's office under Tomana has selectively prosecuted MDC Members of Parliament (MPs) in an apparent attempt to weaken what was an MDC majority in Parliament. While violence has decreased, ZANU-PF structures remain in place in parts of the country and there is continued intimidation of MDC supporters. Invasions and disruptions of white-owned farms and nature conservancies also continue. ¶2. (SBU) Investors are showing renewed interest in Zimbabwe due to the country's abundant natural resources and well-educated populace. But so far they are generally remaining on the sidelines, concerned about political instability and absence of investment security. There is no land tenure -- title to land resides in the State and seizure of land is constitutional -- and the government has threatened to require 51 percent indigenous ownership of businesses in all sectors. ¶3. (SBU) Donors, especially the U.S., provide large amounts of humanitarian assistance, but are unwilling to reengage in direct development assistance to the Government of Zimbabwe (GOZ) until there is greater compliance with the GPA, particularly an end to human rights violations and establishment of the rule of law. In an effort to achieve greater compliance with the GPA, Tsvangirai and the MDC have appealed to the Southern African Development Community (SADC) and its designated Zimbabwe mediator, South African President Jacob Zuma. Zuma has established a South African facilitation team that has visited Zimbabwe several times and held extensive talks with the three negotiating parties in an effort to advance deadlocked negotiations. However, despite mediation efforts, in late January ZANU-PF announced that they would not make any further concessions unless the MDC succeeded in convincing Western nations to remove sanctions. Real change appears unlikely until there are new elections, and this will probably occur in 2012 or 2013. END SUMMARY. -------------- -------------- Despite Flawed Agreement, MDC Joins Government -------------- -------------- HARARE 00000091 002 OF 006 ¶4. (SBU) Presidential and Parliamentary elections took place on March 29, 2008 and were relatively fair. The Tsvangirai (MDC-T) and Mutambara (MDC-M) factions of the MDC combined won a parliamentary majority. Tsvangirai may have won a majority in the presidential vote, but after delaying the announcement of results for almost a month, the Zimbabwe Electoral Commission announced he was just short of the 50 percent of the vote necessary to claim outright victory. In the run-up to the June 27, 2008 presidential runoff election, ZANU-PF unleashed a campaign of violence against MDC supporters. Tsvangirai ultimately withdrew his name and Mugabe won a clearly flawed victory. ¶5. (SBU) The international community, including SADC countries, refused to recognize Mugabe's victory and grant him the legitimacy he craved. Under pressure from SADC, and with the economy imploding under inflation that ultimately reached over a quadrillion percent, Mugabe entered into negotiations with the MDC. The GPA was signed on September 15, 2008. For Mugabe, a coalition government represented a way to shift responsibility to the MDC and to gain legitimacy; for Tsvangirai, it presented an opportunity to enter government, to stabilize the economy, and to help badly affected Zimbabweans. ¶6. (SBU) While lofty in tone -- the GPA called for an end to violence, institution of the rule of law, and power sharing -- the agreement was scant as to detail and Tsvangirai spent the next five months trying to negotiate with Mugabe as to the specifics of the new government. During this period of negotiation, over 30 MDC officials and members of civil society were abducted, tortured, and prosecuted. (NOTE: Even after the formation of the new government, many of these people are still being prosecuted, although there is no evidence to support charges against them. END NOTE.) Despite few gains in negotiations with Mugabe, Tsvangirai and the MDC agreed to the passage of Constitutional Amendment 19 which incorporated the GPA and paved the way for the inauguration of MDC officials and the establishment of the new government in February, 2009. -------------- Political Progress is Slow... -------------- ¶7. (SBU) Prior to the 2008 elections, it would have been difficult to conceive that Morgan Tsvangirai would be Prime Minister of Zimbabwe, that the MDC would have a majority in parliament, and that the Speaker of the House of Assembly would be from the MDC. The MDC is now in a position to influence the political and economic trajectory of Zimbabwe, and Tsvangirai has been received in the U.S., Europe, and Africa as a head of government. Nevertheless, ZANU-PF is attempting to frustrate political progress and the GPA remains unfulfilled. ¶8. (SBU) The GPA called for major appointments subsequent to its signature to be made by Mugabe as President in consultation with Tsvangirai as Prime Minister. Nevertheless, Mugabe without consultation appointed Gono as Reserve Bank Governor and Tomana as Attorney General. Finance Minister Tendai Biti of MDC-T has largely marginalized Gono, whose source of power over the last several years rested in his ability to print money; with the abandonment of the Zimbabwe dollar and the usage of foreign currency, principally the U.S. dollar, Gono's wings have been clipped. Gono remains a symbol, however, of economic mismanagement HARARE 00000091 003 OF 006 and ZANU-PF patronage. Tomana has been largely responsible for the selective prosecution of a number of MDC MPs. This is quite likely part of a ZANU-PF strategy to weaken and perhaps overcome the MDC's parliamentary majority. Tsvangirai and the MDC have urged Mugabe to comply with the GPA by dismissing both Gono and Tomana and replacing them in consultation with Tsvangirai. ¶9. (SBU) Under the GPA, ZANU-PF and the MDC are supposed to divide governorships, ministerial permanent secretaries, and ambassadorships. The parties agreed that permanent secretaries and ambassadors will remain in place and be replaced proportionally as positions become open. The first five MDC ambassadors were named. An agreement was reached months ago dividing governorships between the parties, however Mugabe reneged on the deal. ¶10. (SBU) Roy Bennett, the MDC treasurer, returned from exile after the formation of the new government. He was appointed to be a Senator and designated by Tsvangirai as the Deputy Minister of Agriculture. Bennett was arrested and charged with treason three days after the new government was formed and released on bail a month later. He is alleged to have illegally possessed weapons to use against the government. Bennett's trial is ongoing and Mugabe has refused to swear him in as deputy minister despite the fact that other government officials have been sworn in despite pending charges. ¶11. (SBU) ZANU-PF structures, used to terrorize and intimidate MDC supporters in the last election, remain in place in many rural areas. ¶12. (SBU) Invasions and disruptions of farms and nature conservancies continue to take place. These actions prevent harvests and are inimical to tourism which is a key component of economic growth in Zimbabwe. -------------- ...But There is Progress -------------- ¶13. (SBU) The GPA calls for an 18-month process to draft a new constitution. This process is being guided by a committee of Cabinet ministers, the Minister of Constitutional and Parliamentary Affairs, and Parliament. Despite opposition from ZANU-PF (which fears that completion of a new constitution will be a prelude to early elections),and elements of civil society (who oppose a political, as opposed to a civic-led process),it is proceeding, albeit it at a slower than anticipated pace. ¶14. (SBU) The BBC is now operating openly -- though there are some pressures to self-censor -- and there are possibilities that independent daily newspapers will be allowed to publish in the coming months. ¶15. (SBU) The MDC is present in government and in ministries it controls is establishing policies and taking actions. In general, it is seen by the public, which has never known post-independence anything but a ZANU-led government, as a legitimate democratic governing force. HARARE 00000091 004 OF 006 -------------- Reversing Economic Decline -------------- ¶16. (SBU) Zimbabwe's economy shrank across all sectors between 1999 and 2008; real GDP is estimated to have declined by over 40 percent. President Mugabe's large unbudgeted payments in late 1997 to agitating veterans of the 1970s liberation war precipitated the economic decline, and Zimbabwe's costly military intervention in the Democratic Republic of Congo in the late 1990s further destabilized the economy. The disastrous fast-track land redistribution exercise that began in 2000 and the implementation of draconian price controls led to a sharp fall in food production and exports. The collapse of the agricultural sector also harmed Zimbabwe's manufacturing sector, a second pillar of the economy closely linked to agriculture. In addition, Zimbabwe's pariah status devastated the tourism industry. A fourth pillar of the economy - the mining sector - was also hit hard by misguided pricing, poor foreign exchange policies, and patronage abuse. ¶17. (SBU) Zimbabwe's rate of inflation spiraled out of control as the government turned to money creation to fund its spending. Inflation is estimated to have peaked at an unprecedented level of 500 quadrillion percent in September 2008. In late 2008, the Zimbabwe dollar virtually disappeared from circulation and the pricing of goods and services shifted to foreign currency. ¶18. (SBU) Formal acceptance of dollarization by the government in February 2009 finally stopped hyperinflation overnight and ushered in macroeconomic stability. The adoption of a cash budget (monthly expenses matching monthly revenue) by the new government put an end to high deficits while dollarization provided a strong nominal anchor for the control of inflation. Upon the new government's reengagement with the International Monetary Fund (IMF) in 2009, the Fund approved the provision of limited technical assistance to Zimbabwe. ¶19. (SBU) While the economy has begun to stabilize, the systematic and ongoing attack on property rights, and reports that all companies will be required to have 51 percent indigenous ownership, have scared off investors. Today Zimbabwe, once the breadbasket of southern Africa, is a deeply indebted country with a per capita GDP of about US$1/day. The success of the new government's economic policies will depend on introducing further far-reaching reforms that will spur production and attract support from international donors and investors alike. -------------- Current U.S. Assistance -------------- ¶20. (SBU) USAID's current FY 2010 budget level for Zimbabwe (excluding centrally-funded humanitarian assistance) is approximately US$65 million. These funds support activities related to democracy and governance, health, and the start-up of an economic growth program. This funding level will enable the Mission to begin to implement components of its recently approved transition strategy for Zimbabwe. In addition to the above funding, USAID receives significant support from USAID's Bureau for HARARE 00000091 005 OF 006 Democracy, Conflict, and Humanitarian Assistance (USAID/DCHA) for food and non-food humanitarian assistance and transition support. FY 2010 funding from DCHA has not been confirmed; however, FY 2009 levels included US$160 million from the Office for Food for Peace (USAID/FFP),US$31 million from the Office of Foreign Disaster Assistance (USAID/OFDA),and US$4 million from the Office of Transition Initiatives (USAID/OTI). -------------- Status of GOZ and Donor Community -------------- ¶21. (SBU) Through an analytical Multi-Donor Trust Fund (MDTF),the donor community, including the USG, has created a mechanism to provide technical assistance to progressive-line ministries and the Office of the Prime Minister to fill critical gaps. This mechanism is intended to assist overwhelmed ministries to identify and prioritize critical needs and to advise on policy reforms. Coordination between the GOZ and the donor community is at a nascent stage. Much work remains to improve coordination at all levels and to educate the GOZ on aid effectiveness principles and standard development practices. A programmatic trust fund is under negotiation which would allow donors to jointly address critical infrastructure needs such as water and sanitation. -------------- U.S. Policy and Reengagement -------------- ¶22. (SBU) The U.S. and other donors form a very cohesive front subscribing to a set of principles to guide reengagement with Zimbabwe to ultimately include developmental assistance. These principles include: -- Full and equal access to humanitarian assistance; -- Commitment to macroeconomic stabilization; -- Restoration of the rule of law, including enforcement of contracts, an independent judiciary, and respect for property rights; -- Commitment to the democratic process and respect for internationally accepted human rights standards; and -- Commitment to timely free and fair elections with international standards, and in the presence of international observers. ¶23. (SBU) Access to humanitarian assistance has improved, the MDC-controlled finance ministry is working to achieve macroeconomic stabilization, and a constitutional process called for by the GPA is underway -- a new constitution is a predicate to new elections. ¶24. (SBU) USAID is supporting the constitution-making process by funding civil society organizations involved and by contributing to a multi-donor effort spearheaded by UNDP. USAID resources in support of those efforts amount to US$3 million and US$1 million, respectively. Much remains to be done, however, in the area of HARARE 00000091 006 OF 006 human rights and rule of law and the USG has signaled that greater engagement and developmental assistance will depend on progress in these areas. In the interim, and following the guidance of President Obama from his meeting in June, 2009 with Prime Minister Tsvangirai, we are putting in place "humanitarian plus" assistance in the areas of health, education, and agriculture, including credit guarantees. -------------- The Outlook -------------- ¶25. (SBU) The behavior of Mugabe and ZANU-PF indicates that they are determined to play an obstructionist role, thwarting all MDC attempts to fully implement the GPA, while regrouping in anticipation of elections . ZANU-PF is now conditioning further GPA progress on the lifting of sanctions. While the MDC has long argued that sanctions are out of their control, recent comments by British Foreign Secretary Miliband to the effect that the UK would consult with the MDC before altering its sanctions policy, undermined that position. It now appears that the EU will lift sanctions on some parastatals later this month. ¶26. (SBU) In light of ZANU-PF intransigence on the GPA, the MDC appears close to declaring a deadlock and referring the issue to SADC. If there is still no progress on GPA issues, the MDC may begin a push for elections. The most likely scenario remains a continuing and uneasy coalition between ZANU-PF and the MDC with some economic progress and fitful and limited political reform. Real political change would seem possible only after a new election. Neither party, however, seems eager to advance elections which are scheduled under the current constitution for 2013. -------------- A Note on Your Visit -------------- ¶27. (SBU) Your visit provides an opportunity to demonstrate U.S. commitment to democratic transition in Zimbabwe. You will be meeting with President Mugabe, Prime Minister Tsvangirai, and Minister of Finance Tendai Biti. With Mugabe, you will be able to reiterate the message that the U.S. supports the Zimbabwean people, but that greater engagement, including assistance, depends on a demonstration of greater commitment to political reform and rule of law. With Tsvangirai, you can express support for his efforts to achieve democratic reform and encourage him to continue to press for full implementation of the GPA. With Biti, you can underscore the importance of fiscal responsibility and reiterated the importance of political reform as a predicate for increased U.S. engagement and assistance. RAY