VZCZCXRO9774
OO RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSB #0091/01 0401433
ZNR UUUUU ZZH
O R 091433Z FEB 10
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0031
INFO SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RHEFDIA/DIA WASHINGTON DC
RHEHNSC/WHITE HOUSE NATIONAL SECURITY COUNCIL WASHINGTON DC
RHMCSUU/EUCOM POLAD VAIHINGEN GE
RUEAIIA/CIA WASHINGTON DC
RUEHBY/AMEMBASSY CANBERRA 0012
RUEHDS/AMEMBASSY ADDIS ABABA 0012
RUEHOT/AMEMBASSY OTTAWA
RUEHRL/AMEMBASSY BERLIN 0012

UNCLAS SECTION 01 OF 06 HARARE 000091 
 
SENSITIVE 
SIPDIS 
AF/S FOR BRIAN WALCH 
NSC FOR SENIOR AFRICA DIRECTOR MICHELLE GAVIN 
 
E.O. 12958: N/A 
TAGS: OREP PREL PGOV ZI
SUBJECT: Welcome (back) to Zimbabwe - CODEL MEEKS/WATT Scenesetter 
 
------------- 
 
SUMMARY 
 
------------- 
 
 
 
¶1.  (SBU) U.S. Mission Zimbabwe welcomes CODEL  Meeks/Watt and 
their delegation.  Your return visit comes at an important period 
in Zimbabwe's history, at the one-year anniversary of the entry 
into government of the Movement for Democratic Change (MDC) 
factions in February 2009 and the formation with ZANU-PF of a 
coalition government.  It  is an opportunity to express support for 
democratic reform in Zimbabwe and emphasize our expectations of the 
government.  While the power-sharing agreement between President 
Mugabe's ZANU-PF and the MDC is flawed and fragile, under the 
coalition government the economy has stabilized after a lost decade 
and there are signs of political change.  Most noteworthy is that 
Morgan Tsvangirai is Prime Minister, something that was virtually 
inconceivable following the violence of the 2008 elections, and the 
combined MDC factions now have  an equal weight with ZANU-PF in 
Parliament.  Commissions -- Media, Electoral, and Human Rights -- 
may be established in the near future.  Also, despite delays, the 
process of drafting a new constitution remains on track. 
Disturbingly, however, Mugabe and ZANU-PF continue to drag their 
heels on full implementation of the Global Political Agreement 
(GPA).  MDC governors have not yet been appointed, Deputy Minister 
of Agriculture-designate Roy Bennett has not yet been sworn in, and 
Reserve Bank of Zimbabwe (RBZ) Governor Gideon Gono and Attorney 
General Johannes Tomana, appointed in violation of the GPA, remain 
in office.  The Attorney General's office under Tomana has 
selectively prosecuted MDC Members of Parliament (MPs) in an 
apparent attempt to weaken what was an MDC majority in Parliament. 
While violence has decreased, ZANU-PF structures remain in place in 
parts of the country and there is continued intimidation of MDC 
supporters.  Invasions and disruptions of white-owned farms and 
nature conservancies also continue. 
 
 
 
¶2.  (SBU) Investors are showing renewed interest in Zimbabwe due to 
the country's abundant natural resources and well-educated 
populace.  But so far they are generally remaining on the 
sidelines, concerned about political instability and absence of 
investment security.  There is no land tenure -- title to land 
resides in the State and seizure of land is constitutional -- and 
the government has threatened to require 51 percent indigenous 
ownership of businesses in all sectors. 
 
 
 
¶3.  (SBU) Donors, especially the U.S., provide large amounts of 
humanitarian assistance, but are unwilling to reengage in direct 
development assistance to the Government of Zimbabwe (GOZ) until 
there is greater compliance with the GPA, particularly an end to 
human rights violations and establishment of the rule of law.  In 
an effort to achieve greater compliance with the GPA, Tsvangirai 
and the MDC have appealed to the Southern African Development 
Community (SADC) and its designated Zimbabwe mediator, South 
African President Jacob Zuma.  Zuma has established a South African 
facilitation team that has visited Zimbabwe several times and held 
extensive talks with the three negotiating parties in an effort to 
advance deadlocked negotiations.  However, despite mediation 
efforts, in late January ZANU-PF announced that they would not make 
any further concessions unless the MDC succeeded in convincing 
Western nations to remove sanctions.   Real change appears unlikely 
until there are new elections, and this will probably occur in 2012 
or 2013.  END SUMMARY. 
 
 
 
--------------------------------------------- ------------------- 
 
Despite Flawed Agreement, MDC Joins Government 
 
--------------------------------------------- ------------------- 
 
HARARE 00000091  002 OF 006 
 
 
¶4.  (SBU) Presidential and Parliamentary elections took place on 
March 29, 2008 and were relatively fair.  The Tsvangirai (MDC-T) 
and Mutambara (MDC-M) factions of the MDC combined won a 
parliamentary majority.  Tsvangirai may have won a majority in the 
presidential vote, but after delaying the announcement of results 
for almost a month, the Zimbabwe Electoral Commission announced he 
was just short of the 50 percent of the vote necessary to claim 
outright victory.  In the run-up to the June 27, 2008 presidential 
runoff election, ZANU-PF unleashed a campaign of violence against 
MDC supporters.  Tsvangirai ultimately withdrew his name and Mugabe 
won a clearly flawed victory. 
 
 
 
¶5.  (SBU) The international community, including SADC countries, 
refused to recognize Mugabe's victory and grant him the legitimacy 
he craved.  Under pressure from SADC, and with the economy 
imploding under inflation that ultimately reached over a 
quadrillion percent, Mugabe entered into negotiations with the MDC. 
The GPA was signed on September 15, 2008.  For Mugabe, a coalition 
government represented a way to shift responsibility to the MDC and 
to gain legitimacy; for Tsvangirai, it presented an opportunity to 
enter government, to stabilize the economy, and to help badly 
affected Zimbabweans. 
 
 
 
¶6.  (SBU) While lofty in tone -- the GPA called for an end to 
violence, institution of the rule of law, and power sharing -- the 
agreement was scant as to detail and Tsvangirai spent the next five 
months trying to negotiate with Mugabe as to the specifics of the 
new government.  During this period of negotiation, over 30 MDC 
officials and members of civil society were abducted, tortured, and 
prosecuted.  (NOTE:  Even after the formation of the new 
government, many of these people are still being prosecuted, 
although there is no evidence to support charges against them.  END 
NOTE.)  Despite few gains in negotiations with Mugabe, Tsvangirai 
and the MDC agreed to the passage of Constitutional Amendment 19 
which incorporated the GPA and paved the way for the inauguration 
of MDC officials and the establishment of the new government in 
February, 2009. 
 
 
 
--------------------------------- 
 
Political Progress is Slow... 
 
--------------------------------- 
 
 
 
¶7.  (SBU) Prior to the 2008 elections, it would have been difficult 
to conceive that Morgan Tsvangirai would be Prime Minister of 
Zimbabwe, that the MDC would have a majority in parliament, and 
that the Speaker of the House of Assembly would be from the MDC. 
The MDC is now in a position to influence the political and 
economic trajectory of Zimbabwe, and Tsvangirai has been received 
in the U.S., Europe, and Africa as a head of government. 
Nevertheless, ZANU-PF is attempting to frustrate political progress 
and the GPA remains unfulfilled. 
 
 
 
¶8.  (SBU) The GPA called for major appointments subsequent to its 
signature to be made by Mugabe as President in consultation with 
Tsvangirai as Prime Minister. Nevertheless, Mugabe without 
consultation appointed Gono as Reserve Bank Governor and Tomana as 
Attorney General.  Finance Minister Tendai Biti of MDC-T has 
largely marginalized Gono, whose source of power over the last 
several years rested in his ability to print money; with the 
abandonment of the Zimbabwe dollar and the usage of foreign 
currency, principally the U.S. dollar, Gono's wings have been 
clipped.  Gono remains a symbol, however, of economic mismanagement 
 
HARARE 00000091  003 OF 006 
 
 
and ZANU-PF patronage.  Tomana has been largely responsible for the 
selective prosecution of a number of MDC MPs.  This is quite likely 
part of a ZANU-PF strategy to weaken and perhaps overcome the MDC's 
parliamentary majority.  Tsvangirai and the MDC have urged Mugabe 
to comply with the GPA by dismissing both Gono and Tomana and 
replacing them in consultation with Tsvangirai. 
 
 
 
¶9.  (SBU) Under the GPA, ZANU-PF and the MDC are supposed to divide 
governorships, ministerial permanent secretaries, and 
ambassadorships.  The parties agreed that permanent secretaries and 
ambassadors will remain in place and be replaced proportionally as 
positions become open.  The first five MDC ambassadors were named. 
An agreement was reached months  ago dividing governorships between 
the parties, however Mugabe reneged on the deal. 
 
 
 
¶10.  (SBU) Roy Bennett, the MDC treasurer, returned from exile 
after the formation of the new government.  He was appointed to be 
a Senator and designated by Tsvangirai as the Deputy Minister of 
Agriculture.  Bennett was arrested and charged with treason three 
days after the new government was formed and released on bail a 
month later.  He is alleged to have illegally possessed weapons to 
use against the government.  Bennett's trial is ongoing and Mugabe 
has refused to swear him in as deputy minister despite the fact 
that other government officials have been sworn in despite pending 
charges. 
 
 
 
¶11.  (SBU) ZANU-PF structures, used to terrorize and intimidate MDC 
supporters in the last election, remain in place in many rural 
areas. 
 
 
 
¶12.  (SBU) Invasions and disruptions of farms and nature 
conservancies continue to take place.  These actions prevent 
harvests and are inimical to tourism which is a key component of 
economic growth in Zimbabwe. 
 
 
 
---------------------------- 
 
...But There is Progress 
 
---------------------------- 
 
 
 
¶13.  (SBU) The GPA calls for an 18-month process to draft a new 
constitution.  This process is being guided by a committee of 
Cabinet ministers, the Minister of Constitutional and Parliamentary 
Affairs, and Parliament.  Despite  opposition from ZANU-PF (which 
fears that completion of a new constitution will be a prelude to 
early elections), and elements of civil society (who oppose a 
political, as opposed to a civic-led process), it is proceeding, 
albeit it at a slower than anticipated pace. 
 
 
 
¶14.  (SBU) The BBC is now operating openly --  though there are 
some pressures to self-censor -- and there are possibilities that 
independent daily newspapers will be allowed to publish in the 
coming months. 
 
 
 
¶15.  (SBU) The MDC is present in government and in ministries it 
controls is establishing policies and taking actions.  In general, 
it is seen by the public, which has never known post-independence 
anything but a ZANU-led government, as a legitimate democratic 
governing force. 
 
HARARE 00000091  004 OF 006 
 
 
----------------------------------- 
 
Reversing Economic Decline 
 
----------------------------------- 
 
 
 
¶16.  (SBU) Zimbabwe's economy shrank across all sectors between 
1999 and 2008; real GDP is estimated to have declined by over 40 
percent.  President Mugabe's large unbudgeted payments in late 1997 
to agitating veterans of the 1970s liberation war precipitated the 
economic decline, and Zimbabwe's costly military intervention in 
the Democratic Republic of Congo in the late 1990s further 
destabilized the economy.  The disastrous fast-track land 
redistribution exercise that began in 2000 and the implementation 
of draconian price controls led to a sharp fall in food production 
and exports.  The collapse of the agricultural sector also harmed 
Zimbabwe's manufacturing sector, a second pillar of the economy 
closely linked to agriculture.  In addition, Zimbabwe's pariah 
status devastated the tourism industry.  A fourth pillar of the 
economy - the mining sector - was also hit hard by misguided 
pricing, poor foreign exchange policies, and patronage abuse. 
 
 
 
¶17.  (SBU) Zimbabwe's rate of inflation spiraled out of control as 
the government turned to money creation to fund its spending. 
Inflation is estimated to have peaked at an unprecedented level of 
500 quadrillion percent in September 2008.  In late 2008, the 
Zimbabwe dollar virtually disappeared from circulation and the 
pricing of goods and services shifted to foreign currency. 
 
 
 
¶18.  (SBU) Formal acceptance of dollarization by the government in 
February 2009 finally stopped hyperinflation overnight and ushered 
in macroeconomic stability.  The adoption of a cash budget (monthly 
expenses matching monthly revenue) by the new government put an end 
to high deficits while dollarization provided a strong nominal 
anchor for the control of inflation.  Upon the new government's 
reengagement with the International Monetary Fund (IMF) in 2009, 
the Fund approved the provision of limited technical assistance to 
Zimbabwe. 
 
 
 
¶19.  (SBU) While the economy has begun to stabilize, the systematic 
and ongoing attack on property rights, and reports that all 
companies will be required to have 51 percent indigenous ownership, 
have scared off investors.  Today Zimbabwe, once the breadbasket of 
southern Africa, is a deeply indebted country with a per capita GDP 
of about US$1/day.  The success of the new government's economic 
policies will depend on introducing further far-reaching reforms 
that will spur production and attract support from international 
donors and investors alike. 
 
 
 
---------------------------- 
 
Current U.S. Assistance 
 
---------------------------- 
 
 
 
¶20.  (SBU) USAID's current FY 2010 budget level for Zimbabwe 
(excluding centrally-funded humanitarian assistance) is 
approximately US$65 million.  These funds support activities 
related to democracy and governance, health, and the start-up of an 
economic growth program.  This funding level  will enable the 
Mission to begin to implement components of its recently approved 
transition strategy for Zimbabwe.   In addition to the above 
funding, USAID receives significant support from USAID's Bureau for 
 
HARARE 00000091  005 OF 006 
 
 
Democracy, Conflict, and Humanitarian Assistance (USAID/DCHA) for 
food and non-food humanitarian assistance and transition support. 
FY 2010 funding from DCHA has not been confirmed; however, FY 2009 
levels included US$160 million from the Office for Food for Peace 
(USAID/FFP), US$31 million from the Office of Foreign Disaster 
Assistance (USAID/OFDA), and US$4 million from the Office of 
Transition Initiatives (USAID/OTI). 
 
 
 
--------------------------------------------- 
 
Status of GOZ and Donor Community 
 
--------------------------------------------- 
 
 
 
¶21.  (SBU) Through an analytical Multi-Donor Trust Fund (MDTF), the 
donor community, including the USG, has created a mechanism to 
provide technical assistance to progressive-line ministries and the 
Office of the Prime Minister to fill critical gaps.  This mechanism 
is intended to assist overwhelmed ministries to identify and 
prioritize critical needs and to advise on policy reforms. 
Coordination between the GOZ and the donor community is at a 
nascent stage.  Much work remains to improve coordination at all 
levels and to educate the GOZ on aid effectiveness principles and 
standard development practices.  A programmatic trust fund is under 
negotiation which would allow donors to jointly address critical 
infrastructure needs such as water and sanitation. 
 
 
 
------------------------------------- 
 
U.S. Policy and Reengagement 
 
------------------------------------- 
 
 
 
¶22.  (SBU) The U.S. and other donors form a very cohesive front 
subscribing to a set of principles to guide reengagement with 
Zimbabwe to ultimately include developmental assistance.  These 
principles include: 
 
 
 
-- Full and equal access to humanitarian assistance; 
 
-- Commitment to macroeconomic stabilization; 
 
-- Restoration of the rule of law, including enforcement of 
contracts, an independent judiciary, and respect for property 
rights; 
 
-- Commitment to the democratic process and respect for 
internationally accepted human rights standards; and 
 
-- Commitment to timely free and fair elections with international 
standards, and in the presence of international observers. 
 
 
 
¶23.  (SBU) Access to humanitarian assistance has improved, the 
MDC-controlled finance ministry is working to achieve macroeconomic 
stabilization, and a constitutional process called for by the GPA 
is underway -- a new constitution is a predicate to new elections. 
 
 
 
 
¶24.  (SBU) USAID is supporting the constitution-making process by 
funding civil society organizations involved and by contributing to 
a multi-donor effort spearheaded by UNDP.  USAID resources in 
support of those efforts amount to US$3 million and US$1 million, 
respectively.  Much remains to be done, however, in the area of 
 
HARARE 00000091  006 OF 006 
 
 
human rights and rule of law and the USG has signaled that greater 
engagement and developmental assistance will depend on progress in 
these areas.  In the interim, and following the guidance of 
President Obama from his meeting in June, 2009 with Prime Minister 
Tsvangirai, we are putting in place "humanitarian plus" assistance 
in the areas of health, education, and agriculture, including 
credit guarantees. 
 
 
 
--------------- 
 
The Outlook 
 
--------------- 
 
 
 
¶25.  (SBU) The behavior of Mugabe and ZANU-PF indicates that they 
are determined to play an obstructionist role, thwarting all MDC 
attempts to fully implement the GPA, while regrouping in 
anticipation of elections .  ZANU-PF is now conditioning further 
GPA progress on the lifting of sanctions.  While the MDC has long 
argued that sanctions are out of their control, recent comments by 
British Foreign Secretary Miliband to the effect that the UK would 
consult with the MDC before altering its sanctions policy, 
undermined that position.  It now appears that the EU will lift 
sanctions on some parastatals later this month. 
 
 
 
¶26. (SBU)  In light of ZANU-PF intransigence on the GPA, the MDC 
appears close to declaring a deadlock and referring the issue to 
SADC.  If there is still no progress on GPA issues, the MDC may 
begin a push for elections.  The most likely scenario remains a 
continuing and uneasy coalition between ZANU-PF and the MDC with 
some economic progress and fitful and limited political reform. 
Real political change would seem possible only after a new 
election.  Neither party, however, seems eager to advance elections 
which are scheduled under the current constitution for 2013. 
 
 
 
------------------------- 
 
A Note on Your Visit 
 
------------------------- 
 
 
 
¶27.  (SBU) Your visit provides an opportunity to demonstrate U.S. 
commitment to democratic transition in Zimbabwe.  You will be 
meeting with President Mugabe, Prime Minister Tsvangirai, and 
Minister of Finance Tendai Biti.  With Mugabe, you will be able to 
reiterate the message that the U.S. supports the Zimbabwean people, 
but that greater engagement, including assistance, depends on a 
demonstration of greater commitment to political reform and rule of 
law.  With Tsvangirai, you can express support for his efforts to 
achieve democratic reform and encourage him to continue to press 
for full implementation of the GPA.  With Biti, you can underscore 
the importance of fiscal responsibility and reiterated the 
importance of political reform as a predicate for increased U.S. 
engagement and assistance. 
RAY