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INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY

C O N F I D E N T I A L SECTION 01 OF 03 LUSAKA 000563 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR DAS CAROL THOMPSON 
 
E.O. 12958: DECL: 05/10/2017 
TAGS: PGOV ZA
SUBJECT: SCENESETTER FOR DAS THOMPSON'S VISIT TO ZAMBIA, 
JUNE 1-6, 2007 
 
REF: A. LUSAKA 510 
 
     ¶B. LUSAKA 492 
     ¶C. 06 LUSAKA 1694 
     ¶D. 06 LUSAKA 1669 
 
Classified By: Ambassador Carmen Martinez.  Reasons 1.4 (b) and (d). 
 
¶1. (SBU) Summary: The U.S. Mission in Zambia warmly welcomes 
Deputy Assistant Secretary of State Carol Thompson to Zambia 
from June 1 to June 6, 2007.  Your visit comes at a time when 
President Mwanawasa and his administration are seeking to 
establish a second-term agenda following the President's 
re-election last September and during an ongoing debate over 
a new constitution, and slow but steady progress in high 
profile corruption prosecutions.  The Zambian economy is 
benefiting from high copper prices, and sound economic and 
fiscal management have resulted in reduced rates of inflation 
and significant debt forgiveness.  But despite steady if 
modest economic growth, Zambia continues to rank near the 
bottom of the UN's Human Development Index and about 70 
percent of its population lives below the poverty line. 
HIV/AIDS and other serious health problems present a critical 
developmental and humanitarian crisis: the infection rate 
among adults is 16 percent and Zambia has an estimated 
750,000 AIDS orphans.  End Summary. 
 
An Expanding Partnership 
------------------------ 
 
¶2. (SBU) The U.S. enjoys good relations with Zambia.  The 
U.S. provided approximately $240 million in bilateral 
assistance in 2006; the majority of the funding supported the 
PEPFAR initiative.  Zambia is one of 15 PEPFAR focus 
countries, which collectively represent approximately 50 
percent of HIV infections worldwide.  Under PEPFAR, Zambia 
received more than $81 million in FY 2004, nearly $130 
million in FY 2005 and approximately $160 million in FY 2006 
to support comprehensive HIV/AIDS prevention, treatment and 
care programs.  The FY 2007 PEPFAR budget is $213 million. 
 
¶3. (SBU) In addition, the GRZ has signed an Article 98 
agreement, is a Millennium Challenge Account Threshold 
Country, and participates in the Africa Contingency 
Operations Training Assistance (ACOTA) program.  Although 
Zambia is eligible for benefits under the Africa Growth and 
Opportunity Act, U.S.-Zambia bilateral trade is small.  In 
2006, Zambia exported only $28 million worth of goods (mostly 
copper) to the United States and imported $51 million worth 
of goods (machinery and equipment, grains) from the United 
States.  The GRZ welcomed the opportunity to participate in a 
new Presidential initiative that addresses women's justice 
and empowerment.  Zambia is a committed partner in the global 
war on terror, as shown by Zambian authorities' rapid 
apprehension of terrorist suspect Rashid Haroon Aswat in 
¶2005. 
 
¶4. (C) Despite good relations, we are disappointed with the 
timid approach the President has taken to addressing key 
political, economic and social issues since winning 
re-election in September, 2006.  It appears that the GRZ's 
interests recently seem to be moving out of alignment with 
ours on many key concerns, such as promoting private sector 
development, addressing the HIV/AIDS pandemic, and fighting 
corruption.  Policy decisions, public comments and the 
behavior of the President and senior officials in the initial 
months of his second administration reveal a preference for 
more state intervention in the economy; perhaps more 
cronyism; less respect for rule of law; weaker political 
reform and anti-corruption efforts; and an overall lack of 
leadership and unwillingness to take responsibility for GRZ 
problems or failures (Ref B). 
 
Presidential and Parliamentary Elections 
---------------------------------------- 
 
¶5. (SBU) More than 70 percent of Zambia's 3.9 million 
registered voters turned out to vote in the September 2006 
presidential and parliamentary elections, in which President 
Mwanawasa won a second and final term with approximately 43 
percent of the vote.  The European Union Election Observation 
Mission concluded that the elections were a "marked 
improvement" over the 2001 vote and were "generally 
well-administered, largely peaceful and offered voters a wide 
range of candidates to choose from in a genuinely competitive 
process."  Observers credited the Electoral Commission of 
Zambia (ECZ) and its Chairperson, Justice Irene Mambilima, 
with the success of the vote.  Despite progress, there were 
incidents of campaign violations, discrepancies in the 
tabulation of the vote, and election-related riots. 
Unsuccessful candidates filed a total of 40 election 
 
LUSAKA 00000563  002 OF 003 
 
 
petitions, most of which alleged campaign misconduct.  Courts 
have heard the majority of the petitions and have to date 
nullified the results of two parliamentary elections. 
Decisions are pending in other cases and some of the 
petitions have been dismissed on technical grounds (Ref C). 
 
Cabinet Shakeups 
---------------- 
 
¶6. (C) President Mwanawasa has also been unusually active in 
shuffling and firing cabinet ministers during the first eight 
months of his second term of office.  After firing the 
Minister of Lands in February and the Minister of Information 
and Broadcasting Services in early April, the President fired 
his Minister of Health, Angela Cifire, on April 23.  You will 
meet with Cifire's replacement Brian Chituwo, who previously 
served as Health Minister and Education Minister in 
Mwanawasa's first term.  In a published letter, the President 
asked Chituwo to "ensure that abolition of user fees (for 
basic health services) did not result in the deterioration of 
the quality of health care currently being provided in the 
rural areas."  The President also directed the new Minister 
to make sure that medicines and other medical items were 
procured efficiently and transparently, to avoid shortages of 
critical drugs in health institutions, and to "ensure that an 
attractive reward package for core clinical staff, namely, 
doctors, nurses, pharmacists and laboratory technologists is 
put in place" to attract staff to work in rural areas.  The 
USG lost a hardworking partner in Cifire; however, Chituwo is 
well and favorably known to us and we expect that he will be 
an able partner (Ref D). 
 
¶7. (C) You will also meet Minister of Information and 
Broadcasting Services Mike Mulongoti.  The President 
appointed Mulongoti (previously Deputy Foreign Minister) to 
fill the vacant Minister of Information and Broadcasting 
Services position, noting the tremendous confidence he had in 
Mulongoti's ability and leadership qualities.  Mulongoti is a 
knowledgeable and proactive interlocutor, and had been the 
Mission's principal high-level point of contact at the 
Foreign Ministry.  Although we will miss his presence at the 
MFA, we hope that he will continue to be a useful partner in 
his new role at the Ministry of Information, where he will 
preside over a continuing debate over the reform of media 
laws and a proposed freedom of information act. 
 
A Reviving Economy 
------------------ 
 
¶8. (SBU) For almost thirty years, Zambia's economy faltered. 
The fall in copper prices that began in the mid-1970's 
undermined the ability of first-President Kenneth Kaunda's 
socialist state (1964-1991) to provide social services, and 
led to the accumulation of massive external debt.  Corruption 
during the later years of rule of second-President Frederick 
Chiluba (1991-2001) eroded gains from market oriented reforms 
in the early 1990's and generated a strong distrust of 
markets and economic liberalization. 
 
¶9. (SBU) As a consequence of these developments, about 70 
percent of Zambians live in poverty today.  Economic growth 
has been between 4 and 6 percent in recent years, but the 
investment climate has not been sufficiently favorable to 
generate the 7 to 8 percent growth rates required to reduce 
Zambia's poverty.  The government seeks greater diversity in 
the economy, particularly growth in the agriculture and 
tourism sectors.  But recent strengthening of the local 
currency and concerns over future volatility may hurt 
non-traditional export sectors and limit efforts to diversify 
the economy. 
 
¶10. (SBU) As a result of good fiscal management, Zambia 
successfully reached the HIPC completion point in April 2005 
and stands to benefit from approximately $6 billion in debt 
forgiveness.  The rate of inflation has risen slightly in 
recent months and now stands at about 12 percent, still well 
below the historical average.  The GRZ's acknowledgement of 
the need for continued economic discipline evidenced in 
Finance Minister Magande's national budget speech offers hope 
for greater improvements in Zambian citizens' standard of 
living. 
 
Fight Against Corruption 
------------------------ 
 
¶11. (SBU) A legacy of corruption and mismanagement has eroded 
confidence in government and hampered social and economic 
development.  Consequently, the fight against corruption is a 
U.S. priority in Zambia.  One of the hallmarks of President 
Mwanawasa's first term in office was his heralded effort to 
 
LUSAKA 00000563  003 OF 003 
 
 
bring to justice those whose corruption undermined Zambia's 
economy over the past decade.  The U.S. continues to support 
the work of the Task Force on Corruption, but the complex 
cases pursued by the Task Force take time and require 
continued high-level support from the President.  The Task 
Force has scored some success through seizures of assets 
plundered by former government officials, and has recently 
begun to secure convictions.  Following a civil trial led by 
Zambia's Attorney General, on May 3, a British Court found 
that former President Chiluba was liable for the theft of 46 
million in Zambian assets during his time in office.  The 
criminal case in Zambia against Chiluba is ongoing. 
 
Constitutional Reform 
--------------------- 
 
¶12. (SBU) Many consider Zambia's current constitution to be 
deficient, in part because it gives too much power to the 
executive branch of government.  In 2003, President Mwanawasa 
commissioned a Constitution Review Commission (CRC) to take 
comments and issue a draft constitution.  Although the CRC 
issued its final report on constitutional reform at the end 
of 2005, the government has done little since then to move 
the reform process forward.  To prompt the government to act, 
a civil-society umbrella group called the Oasis Forum, 
recently declared a "constitutional struggle" and introduced 
a 10-step, 71-week, "roadmap" to a new constitution for 
Zambia.  President Mwanawasa has disputed the legality of the 
Oasis Forum plan and said that the GRZ would implement its 
own roadmap to constitutional reform.  Civil society leaders 
are skeptical of the President's plan, which they say is 
unnecessarily expensive and complicated and, which by the 
government's own timeline, will take approximately five years 
to complete (Ref A). 
MARTINEZ