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RHMFISS/HQ USAFRICOM STUTTGART GE

UNCLAS SECTION 01 OF 03 GABORONE 000139 
 
SENSITIVE 
SIPDIS 
 
STATE PLEASE PASS TO HOUSE FOR CODEL MEEKS-WATT 
 
E.O. 12958: N/A 
TAGS: OREP ECON EFIN PREL PGOV BC
SUBJECT: WELCOME TO BOTSWANA: SCENESETTER FOR CODEL 
MEEKS-WATT, FEB. 19-20, 2010 
 
GABORONE 00000139  001.2 OF 003 
 
 
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Mineral Exporter Faces Tough Times 
---------------------------------- 
 
 ¶1. (SBU) Embassy Gaborone warmly welcomes Codel Meeks-Watt 
to Botswana.  Your visit comes as the Government of Botswana, 
which announced its proposed FY 10/11 budget last week, 
attempts to maintain its social welfare and infrastructure 
development programs despite the global economic slowdown. 
Botswana produces around 30 percent of the world's diamonds 
by value, and its economy is heavily dependent on the mineral 
sector.  Finance Minister Matambo announced that the GOB's 
diamond revenues are expected to decline by 36 percent in the 
current fiscal year to USD 1 billion and may not fully 
recover to pre-recession levels until FY 12/13.  The lack of 
demand for diamonds has been coupled with a decline in tax 
and customs revenues, causing Botswana to enter an 
unprecedented period of deficit spending.  For FY 10/11, the 
GOB anticipates a budget shortfall of about 12.2 percent of 
GDP.  Botswana will draw down some of its considerable 
foreign reserves and use a concessional loan from the African 
Development Bank to help finance its deficit spending. 
 
¶2. (SBU) Botswana has responded to the economic crisis with 
several belt-tightening measures, including postponement of 
development projects and 7 percent across the board budget 
cuts for Ministries and government agencies.  Government is 
the single largest employer in Botswana and its workers 
received no raises or cost-of-living adjustments in 2009 or 
¶2010.  The goverment also plans to raise the value-added tax 
from 10 to 12 percent starting in April 2010.  The combined 
wage freeze and tax hike is not popular.  However, Botswana 
hopes that by prioritizing key projects and services and 
cutting others, freezing wages, and increasing taxes, it can 
weather the next 18 months until the diamond market recovers. 
 Botswana's GDP growth for FY 09/10 is projected to be flat, 
though it may recover to 5 percent in FY 10/11. 
 
----------------------------- 
President Focuses on Delivery 
----------------------------- 
 
¶3. (SBU) Ian Khama is Botswana's fourth President and the son 
of its revered first President, Seretse Khama.  As vice 
president in April 2008, he assumed the presidency when 
then-incumbent Festus Mogae resigned.  In October 2009, Khama 
led the ruling Botswana Democratic Party (BDP) to victory in 
the 10th consecutive peaceful, free, and fair elections in 
the country's history.  With 53 percent of the vote, the BDP 
won 45 of the 57 seats in Parliament.  President Khama is 
known as a no-nonsense, hardworking leader.  When he moved 
into the presidency in 2008, Khama promised he would focus on 
"four D's" as President: democracy, development, dignity and 
discipline.  After his 2009 election he added a "fifth D" to 
the list: delivery.  Khama recognizes that the GOB must speed 
up infrastructure and other development projects and ensure 
that civil servants are more responsive to citizens.  The BDP 
holds a large majority in Parliament and should have no 
trouble passing any initiatives it proposes.  However, the 
ruling party has at times been plagued by factional fighting, 
and Khama will need to find a way to appease his rivals 
Qand Khama will need to find a way to appease his rivals 
within the party to avoid obstacles in implementing his 
agenda.  While some critics contend that Khama's style is too 
"militaristic," his supporters say that he is simply 
impatient with traditional politics.  Khama's personal 
popularity as the son of the country's first president will 
afford him some additional latitide in governing. 
 
--------------------------------------------- -- 
Botswana's Principled Stance on Regional Crises 
--------------------------------------------- -- 
 
¶4. (SBU) Botswana is consistent and courageous in urging 
democracy and the rule of law in Africa, especially in 
Zimbabwe, where President Khama has resisted the SADC 
consensus of "quiet diplomacy."  Botswana provided refuge to 
now-Prime Minister Tsvangirai during the negotiations of the 
Global Political Agreement, and since the formation of the 
unity government has ceaselessly encouraged full GPA 
implementation.  Khama told reporters in October 2009 that 
 
GABORONE 00000139  002 OF 003 
 
 
should the MDC pull out of the coalition, Botswana would no 
longer recognize Mugabe as the legitimate President.  The 
Botswana-Zimbabwe bilateral relationship remains difficult. 
For example, in January 2010, three Botswana wildlife 
officers accidentally strayed into Zimbabwe while on duty and 
were arrested and imprisoned.  After the GOZ refused to 
communicate with the GOB for over three weeks to resolve this 
situation, Botswana announced on February 5 that it would 
recall its Defense and Intelligence Attaches from Harare by 
the end of the month and it expected Zimbabwe to reciprocate. 
 Botswana has been vocal on other regional crises include 
Madagascar and Sudan, regularly announcing that Botswana 
would arrest and extradite Sudanese President Bashir should 
he visit.  In 2008 and 2009, Botswana voted with the United 
States on all key UNGA human rights resolutions, in violation 
of the "African consensus" against single country 
resolutions. 
 
------------------------------------- 
Prosperous Economy Needs to Diversify 
------------------------------------- 
 
¶5. (SBU) Botswana has risen from extreme poverty to 
middle-income status in only 40 years, thanks to a 
combination of diamond wealth, good leadership, and sound 
macroeconomic policies.  Botswana's GDP per capita is over 
USD 13,000, but thirty percent of its 1.8 million citizens 
are living in poverty, many in isolated rural communities. 
President Khama recognizes that diamonds are not forever, and 
that mineral wealth alone will not improve the living 
standards for Botswana's poor.  Economic diversification is 
the key to Botswana's future success, and the Khama 
government is promoting diversification both within the 
mineral sector and more broadly.  The country is attempting 
to move beyond mining and into value-added activities like 
sorting and cutting and polishing.  A DeBeers-GOB joint 
venture (the Diamond Trading Center) opened in Gaborone in 
2008, and 16 jewelery firms which have opened production 
facilities here are now able to buy rough stones locally. 
However, the diamond industry was hit hard by the global 
economic crisis.  It is estimated that Botswana's economy 
contracted by over ten percent in 2009, and many of its new 
jewelry manufacturers have scaled back local production, so 
it is too soon to tell how this new industry will fare. 
 
¶6. (SBU) Botswana recognizes that due to its location and 
small population size, it is not likely to be a traditional 
manufacturing center, and instead is focusing on developing a 
service economy.  While its high value/low impact tourism is 
its greatest success so far, Botswana has a thriving 
financial services industry, and is hoping to expand into 
information technology (perhaps call centers or back office 
support) and regional medical centers.  The Batswana were 
traditionally farmers and ranchers, and the Khama government 
also hopes to encourage the agricultural sector and reduce 
the country's dependence on imported food.  Khama is 
intensely interested in the Administration's Food Security 
Initiative. 
 
---------------------------------------- 
Together Reducing the Impact of HIV/AIDS 
---------------------------------------- 
Q---------------------------------------- 
 
¶7. (U) Botswana is one of the countries hardest hit by 
HIV/AIDS, but through partnership with the United States, we 
are making enormous progress to reduce the reach and impact 
of the disease.  Our partnership with the GOB on PEPFAR works 
because the GOB has upheld its side of the bargain, spending 
an estimated USD 754 million of Botswana government funds on 
HIV/AIDS since 2005.  In turn, we have invested some USD 390 
million since 2005 to support them, implemented through Peace 
Corps, CDC, USAID, DOD, and the State Department.  The strong 
USG-GOB partnership has encouraged Harvard, Baylor, Johns 
Hopkins, and the University of Pennsylvania to join us, 
providing the GOB management and clinical experience, 
knowledge, and financial backing.  The universities also 
cooperate not only with the GOB but also with the Bill and 
Melinda Gates, Merck, and Clinton foundations, all of whom 
are active here.  The World Bank and Global Fund lend 
essential multilateral dimensions and expertise to the fight. 
 
GABORONE 00000139  003 OF 003 
 
 
 The results are astounding: the GOB has virtually eliminated 
mother-to-child transmission of HIV; over 80 percent of 
Batswana who need anti-retroviral therapy get it; and new HIV 
infections appear to be slowing.  The struggle remains 
intense because 24 percent of Batswana are HIV positive and 
131,000 people are on therapy. 
 
------------------------------ 
Professional, Capable Military 
------------------------------ 
 
¶8. (SBU) The Botswana Defense Force is a capable, 
professional, civiian-controlled military that serves as a 
model fr the continent.  The BDF supports civil authorities 
in the area of anti-poaching operations, border control, and 
domestic law enforcement.  Increasingly the BDF also projects 
its positive values abroad.  Botswana's military training 
programs for both officers and NCOs are exemplary, and 
Botswana is offering this training to neighbors.  Botswana is 
willing to host specialized training for SADC militaries, 
both on special topics such as counterterrorism and as part 
of the BDF's vibrant State Partnership Program with the North 
Carolina National Guard -- commonly regarded as the best in 
Africa.  The United States already has a productive 
military-to-military relationship with the BDF, and an even 
stronger USG relationship would bolster the BDF's military 
effectiveness and its critical civilian support roles, and 
also have a multiplier effect on military professionalization 
in other African countries. 
 
¶9. (SBU) The BDF has frequently participated in past 
peacekeping operations, including Somalia, Mozambique and 
Lesotho.  The BDF's most likely commitment, at least in the 
near term, to peacekeeping on the continent would be to 
provide airlift.  The BDF's tactical airlift capability is 
easily one of the most effective in Africa.  This capability 
is currently suffering from a pilot shortage that could 
severely decrease its effectiveness.  Increased USG 
assistance, including through establishing an exchange 
officer program with the USAF, could help to train pilots and 
equip the BDF for potential PKO deployments. 
 
---------------------------------- 
Environmental Advocates in Africa? 
---------------------------------- 
 
¶10. (U) Botswana is a semi-arid country that values water 
conservation; through USAID, we are helping Botswana to 
partner with its neighbors on sustainable trans-boundary 
water management in the Okavango and Zambezi river basins. 
Botswana was the first African country to qualify for 
Tropical Forest Conservation Act benefits.  In 2006, our 
governments signed an agreement which through a debt-swap 
agreement provides USD 8.3 million for conservation of 
Botswana's forests, to be administered through a locally 
created trust fund, overseen by a Board with representatives 
from the USG and GOB.  President Khama is deeply committed to 
environmental conservation.  He serves on the board of 
Conservation International and plays an active role in its 
deliberations.  Botswana,s citizens also realize that their 
natural heritage, including the Okavango Delta and Chobe 
river basin, has enormous tourism potential and therefore 
economic benefits.  The country has chosen a high-cost, 
low-volume tourism strategy to allow visitors to experience 
Qlow-volume tourism strategy to allow visitors to experience 
the country's beauty without destroying it.  Public education 
and awareness activities are being undertaken by the GOB and 
by private environmental organizations, and in the last 
decade there has been an increase in community participation 
in natural resource management.  Botswana is currently facing 
an energy crisis, like most of the southern African region. 
The country currently imports 80 percent of its power from 
South Africa, and its sole electric plant is coal-fired. 
Botswana has large coal reserves and plans to expand its 
coal-fired generating capacity.  However, Botswana is also in 
talks with an independent power producer that hopes to 
utilize the country's coal-bed methane supply for cleaner 
electricity as well as eventually cooking gas and other 
commercial applications. 
 
NOLAN