VZCZCXRO0607
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHTO #0828/01 2411432
ZNR UUUUU ZZH
R 281432Z AUG 08
FM AMEMBASSY MAPUTO
TO RUEHC/SECSTATE WASHDC 9273
INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUEHLO/AMEMBASSY LONDON 0221

UNCLAS SECTION 01 OF 02 MAPUTO 000828 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR AF/FO, AF/S 
 
E.O. 12958: N/A 
TAGS: PGOV PREL OTRA OVIP ECON ETRD EINV KPKO EAID
MZ 
SUBJECT: SCENESETTER FOR A/S FRAZER'S VISIT TO MOZAMBIQUE, 
SEPTEMBER 5-6, 2008 
 
Summary and Introduction 
------------------------ 
 
¶1.  (SBU) The Embassy warmly welcomes you to Mozambique, 
widely considered to be an exemplary post-conflict democratic 
success story in Africa.  Following the 2007 visits of First 
Lady Laura Bush, MCC CEO Ambassador John Danilovich, and HHS 
Secretary Mike Leavitt, your presence in Mozambique will 
further accentuate the upswing in bilateral relations.  This 
trip will raise awareness of our role as the largest 
bilateral donor to Mozambique, one of only two countries in 
the world benefiting from President Bush's three major 
initiatives--the Millennium Challenge Corporation (MCC), the 
President's Emergency Plan for AIDS Relief (PEPFAR), and the 
President's Malaria Initiative (PMI).  The visit will also 
provide the opportunity to further USG interest in addressing 
regional challenges, including Zimbabwe, consolidating 
democracy and good governance, and encouraging Mozambique to 
participate in regional peacekeeping operations. 
 
A Post-Conflict Success Story 
----------------------------- 
 
¶2.  (U) Since the signing of the 1992 Rome Peace Accord, 
which ended sixteen years of civil war, Mozambique has made 
significant progress as a young democracy and is rightfully 
considered a post-conflict success story.  The Frelimo party 
led the independence struggle and has maintained political 
power since Portuguese colonial rule ended in 1975. Frelimo's 
military opponent during the subsequent civil war, Renamo, 
has been the main opposition party since the first elections 
in 1994.  In December 2004 Mozambique held its third 
presidential and legislative elections.  Armando Guebuza won 
the presidency by a wide margin, defeating Renamo leader 
Afonso Dhlakama (who also ran unsuccessfully in 1994 and 
1999). 
 
A Democratic Example, But Still Fragile 
--------------------------------------- 
 
¶3.  (SBU) Voter turnout in the December 2004 presidential and 
legislative elections was approximately 45 percent, down 
substantially from the 75 percent turnout in 1999.  Although 
slightly fewer Frelimo voters cast their ballots than did so 
in 1999, about half of the Renamo supporters did not vote. 
Some analysts suggest Renamo supporters may have felt cheated 
in the very close 1999 election and cynically saw little 
point in participating.  International observer groups 
monitored the elections and indicated that the elections were 
carried out in a generally successful and peaceful manner but 
noted there were irregularities in the administration of the 
elections.  All agreed, nonetheless, that final results 
broadly reflected the will of voters. 
 
¶4.  (SBU) In the December 2004 legislative election, Frelimo 
won 160 out of 250 seats in the National Assembly ) just 
seven short of a two-thirds majority.  Renamo won 84 seats 
and an allied coalition of small parties took the remaining 
six.  Since 2005 several of these small parties have 
distanced themselves from Renamo.  Renamo's unexpectedly poor 
showing has led to disarray within the party and Dhlakama's 
leadership has been called into question.  This has weakened 
any organized opposition to Frelimo, now in power for more 
than thirty years.  In November, local elections will be held 
in all 43 municipalities, and in 2009, the country will hold 
its fourth national elections.  The municipal elections in 
particular should provide a good opportunity to assess the 
viability of Renamo as an effective opposition. 
 
Responsible Economic Stewardship 
-------------------------------- 
 
¶5.  (U) Since the mid 1980s, the government has broadly 
followed IMF and World Bank guidelines on economic issues. 
Mozambique's macroeconomic reforms and success in attracting 
large investment projects have resulted in an average annual 
GDP growth rate of eight percent from 1994-2007, the highest 
in Africa over this time period.  This growth is from a very 
low base however, as per capita GDP for 2008 registered 
around USD 375.  Foreign direct investment, exports, and 
revenue collection all have increased significantly.  U.S. 
investment in Mozambique has grown steadily, and in 2007the 
U.S. was the largest foreign direct investor.  Most of the 
state companies have been privatized, with only about one 
dozen remaining in government hands. 
 
Aid Community Voicing Concerns; USG Largest Donor 
 
MAPUTO 00000828  002 OF 002 
 
 
--------------------------------------------- ---- 
 
¶6.  (U) The government receives approximately 50% of its 
budget directly from foreign aid, and this trend is expected 
to continue despite recent complaints by European donors 
about the state of democracy, particularly governance and 
corruption issues.  As the line between Frelimo and the 
government continues to blur, the group of donor nations 
expressed concern in 2008 that many democracy indicators have 
not been met.  As a result, Sweden, Switzerland, and Denmark 
recently announced a restructuring of their foreign 
assistance which appears to reduce the amount of aid provided 
to Mozambique.  The USG is the largest single donor to the 
GRM with USD 325 million.  In particular, our USD 216 million 
in PEPFAR funds in 2008 total more than the HIV/AIDS funds 
committed by all other donors and the Mozambican government 
combined.  Although the USG does not provide direct budget 
support, we have forgiven all of Mozambique's USD 151 million 
debt as part of Mozambique's Highly Indebted Poor Countries 
relief initiative. 
 
PEPFAR, MCC, PMI: A Unique Mix 
------------------------------ 
 
¶7.  (SBU) Mozambique is one of only two countries in the 
world to receive combined PEPFAR, MCC and PMI support from 
the USG.  In 2007, MCC CEO John Danilovich and Mozambican 
President Guebuza signed a five-year, $507 million Compact 
that will reduce poverty through increased incomes and 
employment by improving water systems, sanitation, roads, 
land tenure, and agriculture, with a focus on the country's 
four northern provinces.  Despite some frustration about the 
lengthy negotiation and implementation process, in July the 
MCC program began advertising tenders to bidders for several 
of its projects. 
 
Zimbabwe 
-------- 
 
¶8.  (SBU) The GRM has been hesitant to criticize other 
African governments over human rights violations and has 
historically abstained from voting on any such resolutions. 
GRM officials have stated publicly that Mozambique, instead 
of criticizing actions, prefers to focus on what can be done 
to address such issues within the regional institutions 
(e.g., the AU and SADC).  Despite numerous high-level 
meetings encouraging the Mozambicans to engage on Zimbabwe, 
the Mozambican government has been hesitant to follow the 
lead of Botswana and Zambia, due to the close historical ties 
between the countries. 
 
Peacekeeping Operations 
----------------------- 
 
¶9.  (SBU) Mozambique's armed forces (FADM) have benefited 
from substantial USG military training and assistance, 
especially through the African Contingency Operations and 
Training Assistance (ACOTA) program.  The FADM successfully 
participated in the African Union's 2005 peacekeeping 
operations in Burundi, and has publicly recognized its 
interest in a higher-profile contribution to peacekeeping 
operations in Sudan.  The Embassy is working to assist FADM 
in further developing its peacekeeping capacity, and we look 
forward to supporting the GRM's eventual contribution to 
regional operations. 
 
 
Conclusion: Bilateral Relations on the Upswing 
--------------------------------------------- - 
 
¶10.  (U) This is the first Assistant Secretary for African 
Affairs to visit Mozambique in three and a half years, and 
follows on the heels of several high-level USG visits in 
¶2007.  This year, the PEPFAR program was renewed for an 
additional five years, the MCC has begun advertising for its 
initial implementation of projects, and an agreement to 
purchase land for the New Embassy Compound was completed. 
Together these events highlight our ever stronger bilateral 
relationship and emphasize the United States' leading role in 
Mozambique's development in democracy, health, and prosperity. 
Amani