VZCZCXRO6554
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSB #0488/01 1621507
ZNR UUUUU ZZH
R 111507Z JUN 09
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC 4597
INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA 2310
RUEHAR/AMEMBASSY ACCRA 2884
RUEHDS/AMEMBASSY ADDIS ABABA 3003
RUEHRL/AMEMBASSY BERLIN 1440
RUEHBY/AMEMBASSY CANBERRA 2266
RUEHDK/AMEMBASSY DAKAR 2633
RUEHKM/AMEMBASSY KAMPALA 3051
RUEHNR/AMEMBASSY NAIROBI 5494
RUEHGV/USMISSION GENEVA 2179
RHEHAAA/NSC WASHDC
RHMFISS/EUCOM POLAD VAIHINGEN GE
RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK
RHEFDIA/DIA WASHDC
RUEAIIA/CIA WASHDC
RUCPDOC/USDOC WASHDC

UNCLAS SECTION 01 OF 02 HARARE 000488 
 
SENSITIVE 
SIPDIS 
AIDAC 
 
AF/S FOR B. WALCH 
ADDIS ABABA FOR USAU 
ADDIS ABABA FOR ACSS 
NSC FOR SENIOR AFRICA DIRECTOR MICHELLE GAVIN 
NSC FOR CPRATT 
TREASURY FOR D. PETERS 
STATE PASS TO USAID FOR LDOBBINS AND JHARMON 
COMMERCE FOR BECKY ERKUL 
AFR/SA FOR ELOKEN, LDOBBINS, BHIRSCH, JHARMON 
AA/AFR FOR MOORE 
OFDA/W FOR ACONVERY, CCHAN, LPOWERS, KMARTIN 
FFP/W FOR JBORNS, ASINK, LPETERSEN 
PRETORIA FOR HHALE, PDISKIN, SMCNIVEN 
GENEVA FOR NKYLOH 
ROME FOR USUN FODAG FOR RNEWBERG 
BRUSSELS FOR USAID PBROWN 
 
E.O. 12958: N/A 
TAGS: EAID EFIN EAGR PREL PGOV PHUM ASEC ZI
SUBJECT:  AFRICAN DEVELOPMENT BANK: NOT YET TIME TO REENGAGE 
 
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SUMMARY 
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¶1.  (SBU) Ambassadors and aid agency heads attended a briefing by 
African Development Bank (AFDB) President Donald Kaberuka on June 9. 
Kaberuka, who we met just after the COMESA summit in Victoria Falls, 
related his impressions of Zimbabwe and the content of various 
meetings with political and business leaders during his visit. 
During meetings with both Prime Minister Morgan Tsvangirai and 
President Robert Mugabe, the leaders touted the new arrangement as 
workable.  Kaberuka said that investors will continue to be 
skeptical about Zimbabwe until further changes have been achieved. 
Finally, he advised that the time has not come for full-scale 
reengagement.  END SUMMARY. 
 
----------------------------- 
Message to the Private Sector 
----------------------------- 
 
¶2.  (SBU) Donald Kaberuka, President of the African Development Bank 
was in Harare on June 9 following the recent Common Market of 
Eastern and Southern Africa (COMESA) meeting in Victoria Falls, 
Zimbabwe.  During our meeting on June 9 with Kaberuka and 
representatives from the UK, Germany, Netherlands, Sweden, Denmark 
and France, Kaberuka said that his message to the Zimbabweans at the 
COMESA meeting focused on the importance of creating business 
confidence as a means of creating economic growth. 
 
---------------------------- 
Mugabe and Tsvangirai Upbeat 
---------------------------- 
 
¶3. (SBU) Kaberuka also told us of his discussions with both 
President Mugabe and Prime Minister Tsvangirai regarding the 
prospects of the inclusive government and land reform. 
Unsurprisingly, Tsvangirai was upbeat and said that the government 
is working.  He acknowledged unresolved issues and appealed to 
Kaberuka to advocate for international engagement. 
 
¶4.  (SBU) Mugabe also told Kaberuka that the inclusive government is 
working, but described it as a temporary arrangement.  On land, the 
president said, "this is nothing new."  He told Kaberuka that the 
government would allow people to take possession of their land as 
part of the land reform.  Mugabe also cited an alleged ongoing land 
audit and repeated his claim that the government will not allow land 
for prestige purposes.  (COMMENT: Although the need for a land audit 
was cited in the September 15 Global Political Agreement (GPA), no 
progress towards an audit has yet been made.  In fact, many of the 
recent farm seizures have been led by ZANU-PF leaders who have 
already received one or more farms.  END COMMENT.) 
 
¶5. (SBU) When Kaberuka noted the international skepticism of the 
Q5. (SBU) When Kaberuka noted the international skepticism of the 
GPA, Mugabe commented that those who are skeptical "have always 
been."  Kaberuka reiterated to Mugabe that international support 
will not increase substantially until further progress towards 
fulfilling the GPA has been achieved. 
 
HARARE 00000488  002 OF 002 
 
 
 
-------------------------- 
AFDB Programs and Concerns 
-------------------------- 
 
 
¶6. (SBU) Turning to Zimbabwe's financial woes, Kaberuka said that 
Zimbabwe is the biggest liability on the AFDB books.  He outlined 
the Bank's current programs in country and said the AFDB will 
establish an in-country presence as soon as possible, in addition to 
bank staff already in Harare based at the Ministry of Finance. 
 
7 (SBU) The AFDB is currently providing Zimbabwe technical 
assistance in the form of US$6 million to the Ministry of Finance 
and will soon provide Finance Minister Tendai Biti with a senior 
advisor.  In addition, the bank is providing assistance for water 
and sanitation systems in coordination with UNICEF. 
 
¶8. (SBU) The AFDB is also working with the World Bank on Zimbabwe's 
arrears. Kaberuka told us the AFDB is willing to offer US$100 
million of its own money and could accept contributions from donors 
for arrears clearance when the time comes.  Kaberuka noted that this 
process took 18 months in Liberia but more recently the clearance of 
Cote d'Ivoire's arrears took just six months due largely to a 
contribution from the French.  Kaberuka was very clear that budget 
support was "a long way off" and noted that the Bank's 
recently-approved short-term strategy would not be expanded any time 
soon. 
 
¶9. (SBU) Kaberuka further related that local bankers had expressed 
skepticism that the inclusive government either won't hold or that 
there will be policy reversals.  Until further political and 
economic change is achieved and is seen as irreversible, investors 
will continue to steer clear of Zimbabwe's troubled economy. 
 
¶10. (SBU) In closing, Kaberuka told donors, "the time has not come 
for full scale reengagement." 
 
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COMMENT 
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¶11. (SBU) As in previous meetings and his public statements, 
Mugabe's comments to Kaberuka clearly indicate that the intransigent 
leader sees the current arrangement as a short-term deal.  Mugabe 
remains stuck in the past and is not thinking about long-term 
development.  In contrast, Tsvangirai remains focused on the future. 
 In the present, however, the business environment remains 
unappealing to private investors.  As Kaberuka says, it remains 
clear that neither donors nor businesses can reengage with further 
assistance or investment until further change has been achieved. 
END COMMENT. 
 
MCGEE