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C O N F I D E N T I A L SECTION 01 OF 04 MAPUTO 000278 
 
SIPDIS 
 
SIPDIS 
 
AF/S - HTREGER, LCECSARINI, DMOZENA 
NSC - WLUCAS 
 
E.O. 12958: DECL: 03/07/2016 
TAGS: PGOV PREL KOR EAID MZ
SUBJECT: MOZAMBIQUE - PRESIDENT GUEBUZA'S FIRST YEAR 
 
 
MAPUTO 00000278  001.2 OF 004 
 
 
Classified By: Ambassador Helen La Lime for Reason 1.4(d) 
 
¶1. (C) Summary.  On balance, Guebuza's first year in office 
has been positive.  His main tasks for that year as we see 
them were to confront the Chissano-era spirit of "deixa 
andar", maintain economic policy continuity to allow 
continued growth, and set the stage for reductions in 
absolute poverty.  In varying degrees, he has succeeded. 
However his administration's performance has been uneven, and 
a cabinet shakeup is possible sometime this year.  We believe 
that the success of Guebuza,s next year in office will 
depend largely on how he addresses corruption, maintains 
economic momentum, and consolidates his control over the 
party, while the results of his efforts to fight HIV/AIDS 
will likely only be visible over the longer term.  Also worth 
watching will be the implications for the country,s 
multiparty democracy of Guebuza,s strengthening of FRELIMO 
in the face of the lack of an effective opposition.  End 
summary. 
 
Taking the Reins 
---------------- 
 
¶2. (C) Campaigning hard in the two years before his election, 
Guebuza managed to win considerable support both among the 
people and within the ruling party as the successor to 
18-year president Joaquim Chissano, who had led the country 
during the latter part of its long civil war and presided 
over a decade of subsequent growth.  Chissano had not stepped 
aside entirely willingly, and Guebuza was by no means assured 
of his party,s undivided support. 
 
¶3. (C) Guebuza campaigned forcefully against the "spirit of 
deixa andar" or letting things slide, that had pervaded the 
government during the later Chissano years.  This campaign 
contributed to his victory, but it also generated high 
expectations and provoked resistance from the Chissano wing 
of FRELIMO, including many holdovers within the government. 
Some of Guebuza,s ministerial choices reportedly were the 
result of negotiations within the party.  In selecting 
ministers, vice-ministers, and governors, Guebuza appeared to 
value loyalty more than subject matter expertise, and to 
prefer those with experience in the provinces and not just 
Maputo. 
 
¶4. (SBU) Guebuza,s first steps in the campaign against 
"deixa andar" were an effort to improve responsiveness to the 
public and a crackdown in several ministries on the use of 
official vehicles and cell phones.  Guebuza also has become 
known for demanding more of his ministers, of not being 
afraid to address perceived problems, and of demanding 
greater accountability in government.  The change of 
administrations, the first in 18 years and the country,s 
first ever as the result of an election, proved difficult for 
some ministries, but within six months most were functioning 
reasonably well. 
 
¶5. (C) During the year, the GRM also took several steps 
against corruption.  It dismissed several officials widely 
believed to be corrupt, including the two most senior 
officials in the social security system and the powerful 
Labor Ministry representative in South Africa, a party 
stalwart who was believed to have benefited for years from 
his lucrative role in supplying Mozambicans to work in South 
Africa,s mines.  It replaced the head of the national 
electricity company, who was under investigation for 
allegedly running public electricity lines to his farm.  The 
GRM also paid back approximately $500,000 in Swedish 
assistance misused by the former Education Minister and took 
the passports of the former Education Minister and the former 
Minister of Interior.  At lower levels, many officials were 
dismissed as a result of allegations of corruption.  However, 
the GRM did not prosecute any high-profile or even mid-level 
officials. 
 
¶6. (U) Following his practice during his campaign, Guebuza 
traveled extensively throughout the country over the past 
year -- listening to complaints, promising some support but 
also encouraging local initiative.  The trips were partly a 
fulfillment of his pledge during the election campaign, that 
he would lead the fight against absolute poverty everywhere 
in the nation.  But they also have increased his national 
visibility and boosted his claim that his government serves 
all of Mozambique.  Many commentators in the media praise him 
for instilling greater self-confidence among Mozambicans. 
 
 
MAPUTO 00000278  002.2 OF 004 
 
 
¶7. (U) Guebuza has spoken out on the threat of AIDS 
repeatedly and very forcefully in a number of widely 
publicized fora, including a four-day series of events held 
in Maputo in February of this year.  In his remarks he has 
come across as open, concerned and focused on the issue, 
demonstrating strong leadership on a sensitive topic of 
increasing worry to all.  He also has emphasized the need for 
Mozambicans to take personal responsibility rather than 
blaming outsiders or looking elsewhere for help; this call 
for personal responsibility is a frequent theme of his 
remarks on economic issues as well. 
 
Benefiting From a Weak Opposition 
--------------------------------- 
 
¶8. (C) Guebuza has benefited from, and perhaps contributed 
to, the failure of the principal opposition party RENAMO to 
carve out a role for itself.  In an adroit political move, 
shortly after taking office Guebuza invited the leaders of 
all the political parties over for lunch to talk over their 
differences and try to find some common ground.  Dhlakama 
refused, but the leaders of the other, much smaller, parties 
joined Guebuza.  This left Dhlakama and RENAMO looking like 
sore losers, unwilling to work with the new regime.  In fact, 
Dhlakama and his party had been badly wounded by the 2004 
elections, in which many former RENAMO supporters stayed home 
and RENAMO ended up losing 22 seats in the National Assembly 
and holding only 90 against FRELIMO's 160. 
 
¶9. (C) RENAMO has been unable to articulate a strong program 
of its own or portray itself as a credible alternative, and 
its leaders have taken only occasional potshots at the 
government over popular issues such as rising fuel prices, 
corruption and crime.  Violence in September 2005 between 
RENAMO and FRELIMO supporters (backed by security forces) in 
the small northern town of Mocimboa da Praia proved to be a 
local dispute which did not reverberate nationally.  At the 
end of 2005, Guebuza welcomed Dhlakama onto the Council of 
State advisory body created under the 2004 constitution, 
giving Dhlakama some personal recognition but reducing his 
ability to portray himself as a vigorous opponent of the 
government. 
 
Continued Economic Growth and Donor Support 
------------------------------------------- 
 
¶10. (SBU) The economy continued to grow rapidly, with growth 
again surpassing 7 percent, although rising fuel and 
transportation prices resulted in inflation of 14 percent for 
the year, almost double the GRM,s target.  At this juncture, 
business circles give the Guebuza government mixed reviews. 
The Minister of Industry and Commerce supports reducing trade 
barriers and encouraging greater investment, and his 
consolidation of the business registration process into 
"one-stop shops" in provincial capitals is seen as a positive 
step.  However, in late 2005 the government decided against 
carrying out a study it had promised the IMF of the use of 
land as collateral, a sign that progress in the land sector 
will be difficult. 
 
¶11. (SBU) Donors have been pleased that Guebuza has 
maintained the basic policy framework, including a focus on 
rural poverty reduction and health, of the Chissano 
government, and strong donor support has continued.  In 
September the World Bank announced a new tranche of $60 
million in budget support, and in December the IMF registered 
its continued approval of GRM policies. 
 
Foreign Affairs 
--------------- 
 
¶12. (C) To handle foreign affairs, Guebuza retained 
Chissano's Minister in the Presidency for Diplomatic Affairs, 
Francisco Madeira, who is the central figure on some foreign 
policy issues, such as Zimbabwe.  Foreign Minister Alcinda 
Abreu is seen as relatively inexperienced on foreign policy 
issues, though her credentials as a member of FRELIMO,s 
powerful Political Committee are likely to protect her in any 
possible cabinet reshuffle. 
 
¶13. (C) Guebuza traveled abroad frequently in his first year, 
including four visits to the US ) in June for a meeting with 
President Bush, later in June for the Corporate Council on 
Africa,s Business Summit, in September for the UNGA, and in 
December for a Carter Center event.  He clearly values strong 
ties with the US and hopes they will lead to increased trade 
 
MAPUTO 00000278  003.2 OF 004 
 
 
and investment.  He has returned from his visits favorably 
impressed with his reception and American society.  We have 
very close working relations with Guebuza's Minister of 
Industry and Trade, Antonio Fernando, and a number of younger 
staff members in the government are considered quite 
pro-American by Mozambican standards. 
 
¶14. (SBU) Guebuza also has given increased prominence to 
Mozambique's relations with China.  He welcomed greater 
Chinese investment and assistance when he spoke at the Davos 
Summit in February, downplaying Western concerns about 
China,s role in Africa, and Prime Minister Diogo visited 
China in August of 2005.  Chinese trade with Mozambique 
doubled in 2005 over 2004, according to the Chinese embassy 
in Maputo. 
 
¶15. (U) Guebuza has benefited from being able to follow 
through on high-profile foreign policy initiatives begun 
under Chissano.  The most significant of these is the very 
popular agreement with Portugal in November on the return of 
Cahora Bassa, the giant hydroelectric plant on the Zambeze, 
to Mozambican control -- an agreement whose details remain to 
be finalized, though the outlines are set.  This 
accomplishment was described in most media reviews of 2005 as 
the year,s highlight.  Also in the last year, the GRM has 
signed agreements allowing visa-free travel to and from 
Mozambique for Mozambicans and citizens of all of 
Mozambique's neighbors and laid the foundation for the 
"unity" bridge over the Rovuma River that forms the border 
with Tanzania. 
 
A Mixed Bag of Ministers 
------------------------ 
 
¶16. (SBU) On the whole the Guebuza team may be at least as 
strong as the last Chissano cabinet -- with the Ministers of 
Interior, Education, Public Works, Health, Labor, and Energy 
considered to be the best of the lot.  Interior Minister Jose 
Pacheco has cracked down on police corruption, including 
taking the unusual step of releasing the results of an audit 
of his ministry that showed tens of millions of dollars 
missing during the era of his predecessor.  Health Minister 
Garrido, while not winning friends within the ministry 
because of his allegedly autocratic ways, has made clear that 
service to the public must improve.  The unpredictable Labor 
Minister, Helena Taipo, has apparently resolved the 
longstanding dispute between the government and Mozambican 
laborers who claim they are owed compensation for their work 
in Communist East Germany.  She will win further plaudits if 
her ministry successfully completes ongoing negotiations with 
business and unions on a labor law that would improve 
somewhat the country,s existing Marxist-era law that 
discourages investment and employment. 
 
¶17. (C) However, some ministers and ministries are weak. 
Perhaps the most obviously unsuccessful minister is Esperanza 
Machavela, the Minister of Justice.  Corrupt, backward and 
depressingly inefficient, Mozambique's judicial system has 
long been identified by donors and the IMF as a major 
disincentive to investment and a brake on the country's 
development.  Machavela has yet to demonstrate any leadership 
on reform, contenting herself only with searching for ways to 
address overcrowding in Mozambique's antiquated prison 
system.  Nor has there been any forward movement by her 
ministry in fighting corruption, particularly in 
investigations into two high-profile killings that shocked 
the country five years ago -- the murder of prominent 
journalist Carlos Cardoso and the killing of a senior bank 
official, Siba Siba, both related to investigations of bank 
fraud.  Nympine Chissano, the son of former President 
Chissano, was implicated in the Cardoso murder, and it is 
likely that prominent Chissano regime figures want the Siba 
Siba investigation frozen.  To many, Machavela, Mozambique's 
former ambassador to Portugal, seems unsuited to lead any 
serious reform fight or to confront Chissano cronies. 
 
¶18. (C) The powerful head of the newly formed Ministry of 
Planning and Development, Aiuba Cuereneia, so far has been a 
disappointment, as well.  Cuereneia came to the job with 
close ties to Guebuza (he had been treasurer for FRELIMO in 
recent years, when Guebuza was FRELIMO Secretary General) but 
little government background.  Comparatively young and 
inexperienced outside the confines of party politics, he 
still faces a steep learning curve.  There also are rumors 
that he is using his government position for personal 
benefit.  The perception of Cuereneia is especially worrisome 
 
MAPUTO 00000278  004.2 OF 004 
 
 
because many reckon he is being groomed to succeed Guebuza 
one day.  (Note: Another rumored contender is the more 
experienced Interior Minister, Jose Pacheco.  End note.) 
 
¶19. (C) Other less-than-stellar performers, as we see them, 
include the Minister of Transportation -- who has publicly 
criticized on several occasions private management of the 
ports and railways in favor of Mozambique's inefficient 
railway parastatal --  and the Minister of Agriculture, who 
last fall openly ignored proper legal procedures in the 
seizing of an important tobacco concession and appears to 
favor increasing state intervention in the agricultural 
sector.  Prime Minister Luisa Diogo has kept a low profile 
and seems to have survived speculation last year that she was 
being overshadowed by Cuereneia and might soon be replaced. 
 
Looking Forward 
--------------- 
 
¶20. (SBU) The ineffectiveness of some of his ministers points 
to several challenges that loom for Guebuza on the road 
ahead.  One is reining in corruption.  The GRM is set to 
release a national anti-corruption strategy in the next 
month, but there is some question as to how useful it will 
be.  It may be that the public will not be convinced that 
things have changed unless and until corrupt officials are 
prosecuted rather than just being dismissed.  Donors, too, 
want to see action on this front, and some have become more 
vocal.  Scandanavian donors who are funding a year-long audit 
of the Bank of Austral collapse (related to the Cardoso and 
Siba Siba murders) will press for accountability when the 
results are known. 
 
¶20. (SBU) A second challenge will be to maintain forward 
momentum in liberalizing the economy and spurring sustainable 
growth.  Some signs are encouraging; economic growth is 
likely to continue at high rates, and strong donor financial 
support is likely to continue over at least the medium term, 
along with frequent consultation on policy issues.  With 
progress in the land sector unlikely, the fate of the effort 
to reform the labor law will be a key signal for 2006. 
 
¶21. (SBU) A third challenge will be to continue trying to 
change public attitudes towards HIV/AIDS.  Guebuza has been 
vocal on this issue in recent months, but he acknowledges 
that Mozambicans have yet to change their behavior. Given the 
long-term nature of the epidemic, it is probable that even if 
he is successful the situation will get worse before it 
improves. 
 
¶22. (C) FRELIMO,s Ninth Party Congress, scheduled to take 
place in mid-year, is seen as an opportunity for Guebuza to 
strengthen his control within FRELIMO and may be the occasion 
for a cabinet shakeup.  Guebuza has shown himself willing to 
acknowledge areas in which performance is not satisfactory, 
and he may feel that a year is enough time to judge his 
ministers, performance and replace some. 
 
¶23. (C) We believe that the success of Guebuza,s next year 
in office will depend largely on how he addresses corruption, 
maintains economic momentum, and consolidates his control 
over the party, while the results of his efforts to fight 
HIV/AIDS will likely only be visible over the longer term. 
Also worth watching will be the implications for the 
country,s multiparty democracy of Guebuza,s strengthening 
of FRELIMO in the face of RENAMO,s weakness and the lack of 
an effective opposition. 
 
La Lime 
La Lime