SCENESETTER FOR VISIT OF AMBASSADOR DEMETRIOS MARANTIS TO

UNCLAS SECTION 01 OF 06 MBABANE 000048 SENSITIVE SIPDIS DEPT PASS TO USTR (WJACKSON FOR AMBASSADOR MARANTIS); AF/S (MHARRIS) E.O. 12958: N/A TAGS: PREL PGOV ECON ETRD OVIP MARANTIS DEMETRIOS WZ SUBJECT: SCENESETTER FOR VISIT OF AMBASSADOR DEMETRIOS MARANTIS TO SWAZILAND Summary -------------- ¶1. (SBU) Swaziland is a politically stable country with significant democracy and governance shortfalls, and a divided civic community challenging the government's lack of response to these deficits. It has a deeply traditional society with large economic disparities between the developed urban areas connected by well-paved roads on one hand, and rural areas suffering from severe water shortages and deep poverty on the other. The nation suffers from the highest HIV/AIDS prevalence in the world. Relations between the Government of the Kingdom of Swaziland (GKOS) and the United States are amicable. The Swazis welcome increased U.S. participation in several areas, including national security; development of government institutional capacities; democratization programs; foreign investments, AGOA, and guidance on membership in the Millennium Challenge Corporation. The greatest U.S. impact on Swaziland is through its HIV/AIDS programs, enabled by partners operating throughout the country. DOD/PEPFAR (DHAPP) is a significant contributor to the Umbutfo Swaziland Defense Force (USDF) HIV/AIDS response. At present, the most serious problem facing Swaziland is how to make up the 40 percent drop in Southern African Customs Union (SACU) revenues, its single largest source of income to finance its budget. End Summary. Economic Hard Times -------------- ¶2. (SBU) You will be arriving in Swaziland at a time when a dramatic drop in SACU receipts, Swaziland's principal source of income, has forced the government to cut ministries' budgets and consider alternative ways to raise money to finance the 2010 budget. Formerly, SACU receipts accounted for approximately 60 percent of the GKOS's budget, but for FY2010, Swaziland's share was slashed from 6 billon emalangeni (800 million USD) to 1.9 billion emalangeni (253 million USD) due to losses in customs revenue and the cost for Swaziland to repay overpayments from SACU in previous years. At this writing, the Swazi government is seeking a loan from the African Development Bank to cover its budget deficit. ¶3. (SBU) While government interlocutors may ask for your help in getting the country out of its economic predicament through increased American investment in Swaziland, the Prime Minister almost certainly will request, at least obliquely, that President Obama receive King Mswati III. The king has been on the throne for 23 years and never has been received by the U.S. Chief Executive for an official working or state visit to Washington. It is unlikely the Administration will consider such a request seriously in the absence of government progress toward granting greater liberties to the Swazi people. Relations with the United States -------------- ¶4. (U) The Government of the Kingdom of Swaziland (GKOS) values its relationship with the United States, both for the prestige of having a major country with a resident diplomatic mission here, and also for the humanitarian assistance the U.S. provides, particularly on HIV/AIDS. The Prime Minister and other Cabinet officials are generally available to meet with the Ambassador or DCM. ¶5. (U) GKOS response to U.S. suggestions, demarches, and documents is frequently slow or non-existent. It took steady effort for nearly two years to obtain an Article 98 agreement and the exchange of notes which brought it into effect. Swaziland-specific studies conducted by the USAID Trade Hub in Gaborone -- AGOA diversification, an Investor Roadmap, a study on transportation, and a Combating Corruption in Swaziland Report -- were praised, then shelved. Approximately 20 percent of the Investor Roadmap's recommendations have been implemented. Insisting on a policy of non-interference in the internal affairs of other countries, and solidarity with other African Union nations, the GKOS has not voted with the United States on any of its "important issues" in the UN General Assembly in at least four years, although occasionally it has abstained when other African votes were in opposition. ¶6. (U) The Embassy's top Mission Strategic Plan priorities are democracy and good governance; economic development; and fighting the scourge of HIV/AIDS. Some sectors of the GKOS are extremely dedicated to fighting HIV/AIDS, but they have insufficient backing from top-level leadership. The new government, formed in late 2008, signed a bilateral "Framework" agreement that describes the mutual commitments the USG and Swazi governments have made in regard to the 30 million USD PEPFAR funding that is expected to flow into this country annually for the next few years. The fall in SACU revenues poses a threat to nascent progress in the country's ownership of its HIV response, as well as to the implementation of free primary MBABANE 00000048 002 OF 006 education. The Embassy presses for greater governmental transparency, anti-corruption implementation, and a multiparty political arena, but because changing the traditional structure is anathema to the King and his advisors, these efforts have met with mixed success. On economic development, the centerpiece of Embassy effort is a USAID-administered trust fund supporting the Swaziland Enterprise and Entrepreneurship Program (SWEEP),a five-year program which promotes small business formation and expansion. Its expiration in 2011 will be a significant loss to U.S. government visibility and impact in Swaziland. Political Overview -------------- ¶7. (SBU) The Monarchy: Swaziland has a ruling monarchy, composed of heads of state King Mswati III and the Queen Mother. They are revered in this deeply traditional society. The King holds Swazi land in trust for the nation, and parcels it out through the 366 chiefs whom he appoints and who represent him at the local level. Despite the King holding absolute authority, he is not in total control of the GKOS decision-making process. The King has a tightly-knit group of advisors (Swazi National Council) who filter information passed from Government Ministers to the King, and all responses from the King to the Ministers. Members of the National Council are staunch traditionalists, and many are Christian Pentecostal ministers, traditional chiefs or healers, and former conservative government officials. Few have experience with international travel, some are illiterate, and most are anti-democratic in our definition of the word. ¶8. (U) Parliament: The King appoints two-thirds of the Senate and 10 of the 65 members of the House of Assembly, and must assent to any legislation passed by the Parliament before it can become law. He appoints the Prime Minister (PM) and the other members of the Cabinet (on the PM's recommendation),and can dissolve Parliament at any time. The Parliament has not taken action on many laws which must be amended to bring them into conformity with the 2006 Constitution, causing conflicts in application. ¶9. (SBU) Parliamentary Elections: The most recent election was held in September 2008. Those elections were viewed as non-compliant with international standards. Elections are held regularly (every five years),but since most power is concentrated in the King and political parties are not allowed to contest for any elected office, elections are more of an exercise in giving the people a pretense of participation than a contest for power. ¶10. (U) Umbutfo Swaziland Defense Force (USDF): The USDF is responsible for external security but also has limited domestic security responsibilities, mainly patrolling the porous borders between South Africa and Mozambique. Since a September 2008 car bomb detonated less than three kilometers from the King's administrative capital, the USDF has been charged with patrolling bridges along the highway running between the capital city of Mbabane and the industrial center of Manzini. The USDF reports to the Minister of Defense, the King. The principal secretary of defense and the army commander are responsible for day-to-day USDF operations. The USDF is generally professional, despite inadequate resources and bureaucratic inefficiency, but is susceptible to political pressure, corruption, and occasional human rights abuses. ¶11. (U) Constitution, human rights: The constitution took effect on February 8, 2006, and is Swaziland's first constitution in over 30 years. The constitutional drafting process took ten years, did not include civic education about the purpose of a constitution, and excluded group submissions. The Constitution confirms most of the King's powers; exempts the King, Queen Mother, and the senior prince from the law; and makes insufficient provision for separation of powers. However, it does provide for a fairly comprehensive list of fundamental rights and freedoms, most of which were not previously protected by any law. It also promotes women to the status of legal adults, and states that a woman cannot be forced to comply with a tradition to which she in conscience objects. ¶12. (U) In mid-2008, Parliament passed the Suppression of Terrorism Act (STA). Most analysts view the act as excessively repressive. In October 2008, following the bomb detonation noted above, Prime Minister Barnabas Dlamini banned four political organizations under this act, then, in November, the leader of one of the banned organizations was arrested. He was released after almost one year, when the prosecution failed to present sufficient evidence to continue a trial. ¶13. (U) Judiciary: In 2002, Prime Minister Barnabas Dlamini (in a previous appointment) precipitated a judicial crisis when he announced that the GKOS would not obey a number of Court of Appeals decisions against the government. The Court resigned en masse, and MBABANE 00000048 003 OF 006 no appeals were heard for two years. The walkout forced the King's hand and he removed Dlamini. The 2006 Constitution renamed the Court of Appeals the Supreme Court, states that the judiciary shall be independent, and that the courts shall interpret the Constitution. After a five year hiatus, in 2008 the King reappointed Dlamini as PM. The selection has been interpreted by many as a move to consolidate the powers of the traditional authorities and take back previous advancements in the rule of law. ¶14. (U) The country has two parallel legal systems: Swazi Law and Custom, and Roman Dutch Law, resembling that of South Africa. Swazi National Courts apply Swazi law and custom on minor offenses, inheritance and land disputes. The King appoints the judiciary on the recommendation of the Judicial Services Commission. The GKOS has not obviously interfered in the judiciary's independence recently, but the judiciary usually delays delivery of decisions on controversial political cases calling for interpretation of the constitution. The court system chronically suffers from insufficient funding, but last year saw the number of Supreme Court judges climb from three to nine. ¶15. (SBU) Corruption: GKOS officials agree that corruption is a severe problem in Swaziland. In 2008, the Minister of Finance opined that corruption cost the country approximately 5 million USD (40 million emalangeni) a month. The Anti-Corruption Commission was re-established in April 2008 after being disbanded in 2005. Staff members were only recently appointed, and there have been no prosecutions. Swazis with close connections to the royal family are generally considered untouchable. ¶16. (U) Political parties: When the present King's father, King Sobhuza II, annulled Swaziland's initial constitution and instituted rule by decree in 1973, he specifically banned political parties. The presence of a political party was assumed to imply unhappiness with the rule of the king, and there must be no opposition to the king. Since that time, the ruling class has argued that political parties are un-Swazi and divisive; in Swazi culture, disagreements are to be settled by discussion and consensus, not votes or clashes of ideology. The 1973 Decree lapsed when the Constitution took effect in 2006. The Constitution is silent on the question of political parties, but states that anyone standing for election to any position must compete on his individual merit. Different GKOS officials have given differing views on whether political parties are now legal, and at least one group has gone to court to demand to be registered as a political party. One case has stalled, apparently due to the group's inability to pay their lawyer, while another has been argued in the Supreme Court and is waiting for a decision. ¶17. (SBU) Civil society: Non-governmental organizations operate freely in Swaziland, publicizing and advocating their views. However, politically active groups are weak, poorly organized, and have little impact on the government. Most Swazis respect the monarchy and Swazi tradition, and though dissatisfaction may be growing, it tends to manifest itself in fatalism. Although widespread political turmoil is unlikely, the use of the Suppression of Terrorism Act to ban the four most active opposition groups indicates that the GKOS feels it is under some degree of threat. One GKOS official confidentially termed the situation as "simmering." Economic Overview -------------- ¶18. (U) GDP makes it a "lower middle income country," but income distribution is extremely skewed, with one of the highest Gini coefficients (60.9) in the world. The World Bank estimates twenty percent of the population controls eighty percent of the nation's wealth. The GKOS states that 69 percent of Swazis live on less than seven emalangeni (under one dollar) per day. GKOS estimates the official unemployment rate at 28 percent, while non-governmental organizations say it is closer to 70 percent. The IMF estimates Swaziland's 2008 real growth rate as 2.6 percent. Swaziland has an educated workforce and fairly good infrastructure, but suffers water shortages and depends on external generation for most of its electricity. South Africa, which surrounds Swaziland on three sides, accounts for over 80 percent of Swaziland's imports and 74 percent of Swaziland's exports. Swaziland generally defers to South Africa in trade negotiations between the Southern African Development Community and other nations. ¶19. (U) Government revenue: The GKOS collects tariffs, fees, and various business and individual income taxes, but normally depends on receipts from the Southern African Customs Union (SACU) for 60 percent of its budget. Declining SACU revenues are contributing to a substantial 2010 budget deficit. South Africa's plans to adjust MBABANE 00000048 004 OF 006 the current revenue sharing agreement will also negatively affect GKOS SACU revenue receipts over the next few years. The Ministry of Finance has worked for several years to substitute a value-added tax for existing levies, without much progress, aside from the recent consolidation of several agencies into a unified Revenue Authority. The Ministry currently collects only twenty percent of taxes owed. IMF and World Bank officials have repeatedly counseled the GKOS to reduce the size of the civil service, which absorbs some 60 percent of the recurrent budget, and improve expenditure allocation. The GKOS has not followed this advice, as the civil service is a controllable resource for providing jobs for the extended royal family and those close to them. Swaziland's close association with South Africa in the Common Monetary Area (CMA) limits its autonomy in monetary policy. The national currency, the lilangeni, is fixed at par with the South African rand, which is also legal tender in Swaziland. ¶20. (U) Agriculture: Swaziland's economy is based on agriculture and agro-industry. Almost 60 percent of farming is subsistence and accounts for most maize production and cattle raising. However, drought has devastated maize and other crops in the lowveld for years, and 25 percent of the population requires food assistance. World Food Program has been providing food to about 20 percent of the population. In 2007, the Embassy issued a disaster declaration because of drought conditions and extensive wildfires. Last year, harvests were somewhat improved, but the rains were sporadic and too heavy at the wrong times in many locations. The same is occurring this season. Additionally, some analysts now believe that a dependency on food handouts has developed. Part of the problem is that there is normal migration to the cities of ambitious young people. Also, the high rate of HIV/AIDS infections and deaths in what should be the most productive age groups leaves only old people and children to farm. Water for irrigation, and even for household use, is limited. Large tracts of land along rivers are usually agricultural concessions (e.g. citrus and sugar cane plantations) from royalty to large companies they hold a major share in. Swaziland exports sugar, canned fruit, wood pulp, and soft drink concentrate (including to Coca Cola). Cotton was once a major cash crop, but for the past four years the country has produced too little cotton to make it worthwhile to operate the ginnery. The European Union will have reduced the price it paid for African sugar under preferential price agreement by 37 percent in 2010. The United States allocates Swaziland a sugar quota that the latter rarely uses. ¶21. (U) Business: Swaziland is eligible for benefits under the Africa Growth and Opportunity Act (AGOA). Exports from Swaziland to the U.S. under AGOA and GSP provisions in 2007 were valued at $145.3 million. Swaziland provided factory shells and tax breaks to attract investors, mostly Taiwanese, who created garment assembly plants. At their peak, the plants provided up to 30,000 jobs. However, following the lapse of the Multifiber Agreement in January 2005, some plants closed and the number of jobs they provide fell to about 18,000. High transportation costs and the strength of the rand against the dollar (as mentioned above, the Swazi lilangeni is linked to the rand at par) reduced the competitiveness of products produced in Swaziland. There has been no substantial foreign direct investment in Swaziland during the past four years. GKOS efforts to promote small and medium enterprises (SMEs) have had limited success, primarily due to government bureaucracy and the conservative lending policies of banks, most of which are branches of South African banks. Swaziland places great hopes in tourism as an engine of development. ¶22. (U) Labor: Several labor federations are active in Swaziland. Suspected of being incipient political parties, they are not popular with the GKOS. They were especially active in the 2008 election year, calling for multiparty democracy and joining with the Congress of South African Trade Unions (COSATU) to protest King Mswati's policies. They participated in a protest march at the SADC Heads of State meeting on August 16, 2008 and a September 2008 border boycott, and collaborated with COSATU to protest the King's appearance at the May 10 swearing-in ceremony for then South African President-elect Jacob Zuma. Since the 2008 appointment of the current Prime Minister, unions have faced increasing police interference. ¶23. (U) In 2002, the AFL-CIO filed a petition to deny General System of Preferences (GSP) eligibility to Swaziland due to the country's non-conformity with internationally recognized labor rights. The GKOS gradually implemented legislation and regulations to conform to these labor standards, and the petition was dropped in ¶2006. HIV/AIDS -------------- ¶24. (U) The 2006-07 Demographic and Health Survey (the first MBABANE 00000048 005 OF 006 national survey in Swaziland to include HIV testing) estimated that 25.9 percent of the population age 15-49 is living with HIV/AIDS (31.1 percent of women and 19.7 percent of men). This constitutes the highest prevalence rate in the world. With an estimated 80 percent TB/HIV co-infection rate, Swaziland also has the highest tuberculosis rate in the world. An estimated 110,000 children are orphans, many of them because AIDS has claimed one or both parents. By the end of 2010, this number is projected to rise above 120,000. ¶25. (U) In 1999 King Mswati III declared HIV/AIDS a national emergency. The GKOS established the National Emergency Response Council on HIV/AIDS (NERCHA) to coordinate multi-sectoral HIV programs, has a National HIV/AIDS policy, and updates its HIV strategy every three years. The GKOS provides anti-retroviral drugs free to approximately 30,000 Swazis. However, due to the stigma attached to HIV/AIDS, many Swazis refuse to be HIV tested for fear of rejection by family and friends, loss of employment, and possible eviction from property. ¶26. (U) Most of the effort and money expended to fight HIV/AIDS in Swaziland comes from external donors, particularly the United States Government and the Global Fund against HIV/AIDS, Tuberculosis, and Malaria (funded approximately 30 percent by the USG). ¶27. (U) In the past six years, the amount of USG aid allocated to HIV/AIDS- related programs in Swaziland has increased from about 250,000 to 30 million U.S. dollars. PEPFAR funds support national prevention efforts such as prevention of mother-to-child transmission, behavior change communication programs, male circumcision, and others. The PEPFAR program also supports expanded access to HIV counseling and testing, improved availability of laboratory services, and strengthening of a national supply chain and drug management system, which are all essential for enhancing the quality and scale-up of a holistic and integrated HIV/AIDS and TB care and treatment service. PEPFAR provides institutional and human capacity building to address the serious human resource crisis that exists in both the public and private sectors, and supports multiple strategic information interventions to better report and understand the full impact of the HIV/AIDS crisis. ¶28. (U) As part of the PEPFAR program, in addition to the above, the U.S. Department of Labor sponsored a considerable intervention on HIV/AIDS prevention in the workplace, and for orphan and vulnerable children, from 2004-2008. The U.S. Department of Defense, through its military-to-military program, has supported the establishment of the Swaziland Uniformed Services HIV/AIDS Alliance (SUSAH). It is providing HIV/AIDS and TB prevention, care and treatment, strategic information, and health systems strengthening not only to the USDF, but also correctional and security services. ¶29. (U) The Peace Corps returned to Swaziland in 2003, at the invitation of the GKOS, specifically to provide interventions and education on HIV/AIDS. The Peace Corps Volunteers - currently 64 in Swaziland - educate school children, youth, and their communities about HIV and its prevention, encourage Swazis to get HIV tested, promote access to care and treatment and good nutrition for AIDS sufferers, conduct life skill workshops and youth camps specifically urging youth to delay the initiation of sexual activity, and train community leaders about HIV/AIDS prevention and mitigation. Much of this activity is also funded by PEPFAR. Peace Corps plans include increased movement into the education system, with additional volunteers. Other USG Assistance -------------- ¶30. (U) USAID Southern Africa Trade Hub (Gaborone) works with the Ministry of Finance; Ministry of Commerce, Industry and Trade; Ministry of Natural Resources and Energy; and the Ministry of Agriculture. The Embassy has small program funds via USAID for the Ambassador's Girls Scholarship Program, the Ambassador's Special Self-Help Program, and democracy and human rights programs. Defense assistance, in addition to DHAPP noted above, includes the International Military Education and Training (IMET) program that funds approximately eight military personnel in external training a year, as well as leadership training through shorter seminars and exchanges. Additional exchange programs and educational opportunities operate through the Mission's Public Affairs Section. Diplomatic Community -------------- ¶31. (U) In addition to the Embassy of the United States, Swaziland hosts the Embassy of Taiwan, the Office of the European Union, the High Commission of South Africa, and the High Commission of MBABANE 00000048 006 OF 006 Mozambique. The UN Development Program in Swaziland oversees the offices of the World Food Program, UNICEF, the World Health Organization, and UNAIDS. It is anticipated that both Kuwait and Qatar will open embassies in Swaziland in the near term.