VZCZCXRO6869
PP RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSB #1242/01 2851015
ZNR UUUUU ZZH
P 121015Z OCT 06
FM AMEMBASSY HARARE
TO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY PRIORITY
RUEHC/SECSTATE WASHDC PRIORITY 0692
INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUEHUJA/AMEMBASSY ABUJA 1335
RUEHAR/AMEMBASSY ACCRA 1186
RUEHDS/AMEMBASSY ADDIS ABABA 1339
RUEHBY/AMEMBASSY CANBERRA 0600
RUEHDK/AMEMBASSY DAKAR 0965
RUEHKM/AMEMBASSY KAMPALA 1393
RUEHNR/AMEMBASSY NAIROBI 3771
RUEHFR/AMEMBASSY PARIS 1162
RUEHRO/AMEMBASSY ROME 1814
RUEHBS/USEU BRUSSELS
RUEHGV/USMISSION GENEVA 0586
RHEHNSC/NSC WASHDC
RUCNDT/USMISSION USUN NEW YORK 1556
RUEKJCS/JOINT STAFF WASHDC
RUEHC/DEPT OF LABOR WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEKDIA/DIA WASHDC//DHO-7//
RUCPDOC/DEPT OF COMMERCE WASHDC
RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK//DOOC/ECMO/CC/DAO/DOB/DOI//
RUEPGBA/CDR USEUCOM INTEL VAIHINGEN GE//ECJ23-CH/ECJ5M//

UNCLAS SECTION 01 OF 02 HARARE 001242 
 
SIPDIS 
 
SIPDIS 
 
AF/S FOR S. HILL 
AF/EPS FOR J. POTASH 
STATE PASS TO USTR FOR C. HAMILTON 
NSC FOR SENIOR AFRICA DIRECTOR C. COURVILLE 
STATE PASS TO USAID FOR M. COPSON AND E.LOKEN 
TREASURY FOR J. RALYEA AND A. SEVERINS 
COMMERCE FOR BECKY ERKUL 
 
E.O. 12958: N/A 
TAGS: AGOA ASEC ECON ELAB ETRD PGOV PHUM ZI
SUBJECT: ZIMBABWE NOT COMPLIANT WITH AGOA ELIGIBILITY 
CRITERIA 
 
REF: STATE 163056 
 
Zimbabwe continues to fall short of AGOA,s qualifying 
criteria. Post's input for the upcoming interagency review 
follows: 
 
a. Market-Based Economy: As a result of gross government 
mismanagement of the economy, the role of markets has 
weakened steadily and the country,s economic outlook is 
bleak.  The World Economic Forum,s Global Competitiveness 
Report 2006-2007 cited Zimbabwe,s macroeconomic environment 
as the worst in the world.  A persistent and deepening budget 
deficit and loose monetary policy have led to quadruple-digit 
inflation.  The official exchange rate is infrequently 
adjusted and consequently heavily overvalued, depressing 
exports and further weakening the market value of the 
Zimbabwe dollar.  The Reserve Bank of Zimbabwe is also deeply 
engaged in loss-making quasi-fiscal activity that has 
distorted investment patterns.  The IMF has estimated that 
real per capita GDP will contract by a further 5.1 percent in 
¶2006.  Unemployment in the formal sector is estimated at 
75-80 percent. 
 
b. Political Reforms/Rule of Law/Anticorruption: This year, 
the GOZ is continuing its attack on political pluralism by 
enacting and proposing new legislation that strengthens its 
hand against the democratic opposition.  In June, the GOZ 
began to enforce the Criminal Law (Codification and Reform) 
Act, which expanded the Government's already repressive 
system of legislation.  Police frequently use the new law to 
block demonstrations by civil society groups.  The ruling 
party also has proposed legislation dealing with the 
interception of communications and counterterrorism that 
legal experts caution could be used against regime opponents. 
 In moves that echoed last year's Operation Restore Order, 
which destroyed the homes and businesses of over 700,000 
people, the GOZ continues to periodically demolish informal 
businesses and evict people from their homes.  Politically, 
the opposition party operates in a climate of intimidation 
and repression.  Security forces harass, beat, and 
arbitrarily arrest perceived opposition supporters.  The GOZ 
keeps the country's only non-government daily newspaper out 
of operation.  In politically sensitive cases, the judiciary, 
especially the higher courts, shows indications of being 
politically influenced or intimidated.  Political elites 
frequently ignore adverse court holdings.  Official 
corruption is widespread.  The Government of Zimbabwe 
prosecutes corruption selectively if at all, focusing on 
individuals who have fallen out of favor with the ruling 
party.  The Government's allocation of resources, such as new 
homes and formerly white-owned commercial farms, has been 
nontransparent and driven by patronage. 
 
c. Elimination of Barriers to U.S. Trade and Investment:  The 
steeply deteriorating macroeconomic conditions, lack of rule 
of law, foreign exchange surrender requirements on exporters, 
a historically wide parallel exchange rate premium, declining 
availability of foreign exchange, and pervasive shortages of 
food, fuel, electric power and other basics render Zimbabwe's 
investment climate highly unattractive.  Total investment as 
 
HARARE 00001242  002 OF 002 
 
 
a percentage of GDP has fallen dramatically from 15.5 percent 
in 1997-2001 to an estimated 3.5 percent in 2006. 
 
d. Poverty Reduction:  While the GOZ maintains several 
programs that provide food or basic services to the poor, 
they have had minimal effect against the backdrop of sharply 
declining economic and social indicators.  Most Zimbabweans 
have grown progressively poorer over the past 6 years.  The 
2004 Progress Report on Zimbabwe Millennium Development Goals 
estimates that the proportion of the population living below 
the Food Poverty Line rose from 57 percent in 1995 to 69 
percent in 2002.  In the same time period, the proportion of 
the population falling below the total consumption poverty 
line edged up from 74 percent to 80 percent. The Zimbabwe 
Demographic Health Survey 2005-2006 reports a worsening of 
the nutritional status of children since the last survey in 
¶1999.  Despite abundant rainfall the past year, food 
production improved only slightly and remained well below 
estimated need.  As a result, food security remained a 
problem for over 1 million Zimbabweans, especially the rural 
poor.  All in all, current trends indicate that poverty is on 
the increase in both rural and urban areas. 
 
e. Workers' Rights/Child Labor/Human Rights:  The Government 
engages in the pervasive and systematic abuse of human and 
worker rights.  Security forces arbitrarily arrest and 
detain, assault, and torture with impunity persons considered 
critical of the ruling party or its policies.  Despite 
official recognition of worker rights, the Government 
continues to exert heavy pressure on labor unions - limiting 
their freedom of association and right to organize.  Unions 
have been denied routine meetings and necessary consultations 
with constituents under the draconian Protection of Order and 
Security Act (POSA).  The GOZ maintains several programs 
aimed at improving child welfare; however, child labor 
remains a problem due to worsening macroeconomic conditions. 
 
f. International Terrorism/U.S. National Security: While our 
relationship with the GOZ is severely strained, the 
Government does not engage in actions specifically meant to 
support international terrorism or undermine U.S. national 
security and has been cooperative on counter-terrorism 
issues.  That said, the most senior GOZ officials regularly 
attempt to undermine U.S. foreign policy interests by 
recklessly espousing public rhetoric filled with blatant 
falsehoods and wild accusations at high-profile international 
fora. 
 
SCHULTZ