US embassy cable - 01HARARE1124

C O N F I D E N T I A L SECTION 01 OF 02 HARARE 001124 
 
SIPDIS 
 
STATE FOR AF/S, AF/EPS, EB/IFD/ODF, EB/TPP/ODC 
TREASURY FOR ED BARBER, BARAK HOFFMAN 
USDOC FOR 2037 ERIC HENDERSON 
STATE PASS USTR/RWHITTAKER 
NSC FOR SENIOR AFRICA DIRECTOR JFRAZER 
LONDON FOR CGURNEY 
PARIS FOR BISA WILLIAMS 
 
                       CONFIDENTIAL 
 
PAGE 02        HARARE  01124  01 OF 02  270600Z 
E.O. 12958: DECL: 03/26/11 
TAGS: ETRD, EFIN, PREL, PHUM, PGOV, ZI 
SUBJECT: INDUSTRY PERMSEC BRIEFS US ON A RANGE OF 
ISSUES: AGOA; DEVALUATION; AND TALKS WITH SOUTH 
AFRICA 
 
 
CLASSIFIED BY ECON/COMM OFFICER MARK PROKOP, REASON 
1.5 (B), (D) 
 
REFS: A) CAPETOWN 405 
 
1.  (C) SUMMARY: ON MARCH 26 CHARGE AND ECONOFF MET 
WITH STEWART COMBERBACH, PERMANENT SECRETARY AT THE 
MINNISTRY OF INDUSTRY AND INTERNATIONAL TRADE IN AN 
INFORMAL MEETING TO DISCUSS CURRENT EVENTS AND 
DEVELOPMENTS.   THE PERMSEC, WITH WHOM WE ENJOY FRANK 
AND HONEST DIALOGUE TOUCHED, UNPROMPTED, ON A BROAD 
RANGE OF TIMELY AND NOTEWORTHY TOPICS.  THE MAIN 
POINTS ARE: THAT ZIMBABWE RETAINS HOPE THAT IT WILL 
BE ABLE TO QUALIFY FOR THE BENEFITS OF THE AFRICAN 
GROWTH AND OPPORTUNITY ACT (AGOA); THAT POLICY 
AGREEMENT TO DEVALUE HAS OCCURRED THOUGH WHEN AND BY 
HOW MUCH IS YET UNKNOWN; AND THAT THE DIALOGUE WITH 
THE SOUTH AFRICANS WAS SUBSTANTIVE AND FRANK, THOUGH 
IT IS PREMATURE TO WANT TO SEE CHANGES OR BENEFITS. 
THE PERMSEC DID NOT HAVE HARD DATA ON A MEETING DATE 
FOR THE MBEKI/MUGABE MEETING, AND WANTS TO MAINTAIN 
AN ACTIVE DIALOGUE WITH THE U.S.  END SUMMARY. 
 
2.  (C) HIS DISTILLED OBSERVATIONS ARE PROVIDED BELOW 
IN BULLET FORMAT. 
                       CONFIDENTIAL 
 
PAGE 03        HARARE  01124  01 OF 02  270600Z 
 
THE AFRICAN GROWTH AND OPPORTUNITY ACT 
-------------------------------------- 
 
== IS AGOA FOR ZIMBABWE DEAD?  BASED ON CONVERSATIONS 
HELD LAST YEAR WITH FORMER DAS WHITNEY SCHNEIDMANN 
AND USTR'S ROSA WHITTAKER, COMBERBACH WAS UNDER THE 
IMPRESSION THAT THERE EXISTS A CERTAIN LATITUDE IN 
THE INTERPRETATION OF THE ACT'S DEMOCRACY AND HUMAN 
RIGHTS HURDLES SET OUT IN THE ACT'S LANGUAGE.  IN 
OTHER WORDS, IF ZIMBABWE CAN BE SEEN AS MAKING 
PROGRESS TOWARDS IMPROVING ITS RULE OF LAW STANCE AND 
RESPECT FOR PROPERTY RIGHTS, IS IT SUFFICIENT TO GET 
THE TRADE BENEFITS OF THE ACT?  WE POINTED OUT THAT 
THIS WAS NOT AN INTERPRETATION WE WERE FAMILIAR WITH, 
ALSO NOTING THAT RECENT DEVELOPMENTS, SUCH AS THE 
OFFICIAL REACTIONS TO BOTH THE CMAG VISIT PROPOSAL 
AND THE RECEPTION GIVEN THE INTERNATIONAL BAR 
ASSOCIATION DELEGATION TENDED TO MOVE ZIMBABWE'S CASE 
FURTHER BACK, RATHER THAN AHEAD.  THE PERMSEC WANTS 
TO KEEP THE DIALOGUE OPEN ON THE MATTER, WITH THE 
INTERLOCUTORS HE KNOWS AND WITH THOSE REPRESENTING 
THE NEW ADMINSTRATION.  AS THE EMBASSY IN WASHINGTON 
HAD NO ONE CAPABLE OF HANDLING THE DIALOGUE, 
COMBERBACH ASKED FOR CONTACT INFORMATION OF VARIOUS 
AMERICAN OFFICIALS SO HE COULD DO IT HIMSELF. 
 
== TIED TO THE PRECEDING POINT, COMBERBACH EXPLAINED 
THAT HE HAD COMMUNICATED ZIMBABWE'S AGOA 
REQUIREMENTS' PROBLEM TO HIS COUNTERPART AT THE 
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PAGE 04        HARARE  01124  01 OF 02  270600Z 
MINISTRY OF HOME AFFAIRS.  HE RELATED TO US, WITHOUT 
MUCH ENTHUSIASM, THE RESPONSE HE RECEIVED, WHICH WAS 
THAT THE RULE OF LAW IS BEING FIRMLY UPHELD 
THROUGHOUT THE COUNTRY, WITH THE EXCEPTION OF SOME 
"TRESPASSING" BY "FORMER LIBERATION FIGHTERS". 
DISINGENEOUS AS THE REPONSE IS, COMBERBACH HAD 
REPEATEDLY ASKED THE HOME AFFAIRS MINSTRY FOR A LIST 
OF ALL THE INCIDENTS TO WHICH THE POLICE HAD TAKEN 
APPROPRIATE ACTION SO THAT HE COULD FORWARD IT TO THE 
USG FOR OUR GOOD CONSIDERATION, BUT TO DATE HAD 
RECEIVED NO SUCH DATA. 
 
THE FOREIGN EXCHANGE MESS AND DEVALUING 
--------------------------------------- 
 
== ON DEVALUATION, HE TOLD US THAT A POLICY DECISION 
HAD BEEN MADE TO DEVALUE, THOUGH THE TIMING, AND THE 
AMOUNT, OF THE SHIFT HAD NOT YET BEEN DETERMINED, BUT 
RULED OUT THE POSSIBILITY OF A FLOATING EXCHANGE 
RATE.  HE FURTHER TOLD US THAT IT WAS WITH THIS IN 
MIND THAT THE FINANCE MINSTER MAKONI HAD MET RECENTLY 
WITH SOME OF THE MAIN PLAYERS ON THE FOREIGN EXCHANGE 
SCENE.  THESE INCLUDED THE COMMERCIAL BANKS, BUREAUS 
DE CHANGE AND SOME OF THE LEADING EXPORTERS (THESE IN 
THE COMPANY OF MINSITER OF STATE FOR SECURITY, 
NICHOLAS GOCHE), TO INFORM THEM THAT THIS TIME 
 
                       CONFIDENTIAL 
 
                           CONFIDENTIAL     PTO3424 
 
PAGE 01        HARARE  01124  02 OF 02  270558Z 
ACTION AF-00 
 
INFO  LOG-00   AID-00   CIAE-00  COME-00  CTME-00  INL-00   USNW-00 
      DODE-00  DOTE-00  SRPP-00  DS-00    EB-00    EUR-00   EXIM-01 
      E-00     FAAE-00  FBIE-00  VC-00    FRB-00   H-01     TEDE-00 
      INR-00   INSE-00  IO-00    ITC-01   JUSE-00  LAB-01   L-00 
      AC-01    NSAE-00  NSCE-00  OIC-02   OMB-01   OPIC-01  PA-00 
      PM-00    PRS-00   ACE-00   P-00     SCT-00   SP-00    SSO-00 
      SS-00    STR-00   TRSE-00  T-00     USIE-00  PMB-00   DSCC-00 
      PRM-01   DRL-02   G-00     SAS-00     /012W 
                  ------------------D76E86  270558Z /22 
P 270540Z MAR 01 
FM AMEMBASSY HARARE 
TO SECSTATE WASHDC PRIORITY 8511 
INFO NSC WASHDC PRIORITY 
SOUTHERN AFRICAN DEVELOPMENT COMMUNITY 
USDOC WASHDC 
DEPT OF TREASURY WASHDC 
 
C O N F I D E N T I A L SECTION 02 OF 02 HARARE 001124 
 
SIPDIS 
 
STATE FOR AF/S, AF/EPS, EB/IFD/ODF, EB/TPP/ODC 
TREASURY FOR ED BARBER, BARAK HOFFMAN 
USDOC FOR 2037 ERIC HENDERSON 
STATE PASS USTR/RWHITTAKER 
NSC FOR SENIOR AFRICA DIRECTOR JFRAZER 
LONDON FOR CGURNEY 
PARIS FOR BISA WILLIAMS 
 
                       CONFIDENTIAL 
 
PAGE 02        HARARE  01124  02 OF 02  270558Z 
E.O. 12958: DECL: 03/26/11 
TAGS: ETRD, EFIN, PREL, PHUM, PGOV, ZI 
SUBJECT: INDUSTRY PERMSEC BRIEFS US ON A RANGE OF 
ISSUES: AGOA; DEVALUATION; AND TALKS WITH SOUTH 
AFRICA 
 
EVERYONE INVOLVED MUST STICK AND PLAY TOGETHER, AND 
NOT ALLOW THE PARALLEL OR THE BLACK MARKET TO GET TOO 
FAR AWAY FROM THE OFFICIAL RATE.  MAKONI'S MESSAGE 
WAS THAT "WE WILL NOT PLAY CHASE AFTER JOHNNY" IN 
TERMS OF THE OPERATIVE EXCHANGE RATE, AS HAS BEEN THE 
CASE OF LATE, SAID THE PERMSEC.  COMBERBACH FURTHER 
EXPLAINED THAT HIS GOVERNMENT MADE A DISTINCTION 
BETWEEN A PARALLEL AND A BLACK MARKET FOR FOREIGN 
CURRENCY.  THE FORMER, WHICH QUOTED A RATE SLIGHTLY 
ABOVE THE OFFICIAL ONE, WAS TOLERABLE AS A PRESSURE 
VALVE.  THE LATTER, WHERE FOREX STARVED PEOPLE PAID 
AN EXCHANGE RATE FO UP TO (RECENTLY) 120 ZIMBABWE 
DOLLARS TO THE U.S. DOLLAR, IS VIEWED BY SOME ZANU-PF 
POLITBURO MEMBERS AS ECONOMIC SABOTAGE, CARRIED OUT 
BY PRE-LIBERATION MINDED INDIVIDUALS INTERESTED IN 
PERSONAL GAIN OR DAMAGE TO THE ECONOMY.  IF THIS TYPE 
OF THINKING PREVAILS, HE TOLD US, THEN IT COULD GET 
VERY MESSY WITH THE POLICE OR OTHERS BROUGHT IN TO 
ENFORCE EXCHANGE REGULATIONS, ELIMINATE FOREIGN 
CURRENCY ACCOUNTS OR SEIZE ASSETS. 
 
THE SOUTH AFRICANS 
------------------ 
 
== ON THE SUBJECT OF THE RECENTLY HELD SOUTH 
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PAGE 03        HARARE  01124  02 OF 02  270558Z 
AFRICAN/ZIMBABWEAN MINISTERIAL MEETINGS, COMBERBACH 
TOLD US THAT HE DID NOT HAVE MUCH TO OFFER IN THE WAY 
OF HARD FACTS OR PARTICULARS, BUT SAID THAT THE TALKS 
WERE VERY FRANK.  HIS EXPLANATION FOR THE LACK OF 
DATA WAS THAT HIS MINISTER, AND MINISTER MAKONI OF 
FINANCE, HAD MORE THAN TWO HOURS OF TALKS WITH ONLY 
MINISTER MANUEL OF SOUTH AFRICA, FOLLOWED BY A 
PRIVATE DINNER OF THE THREE.  HE LAMENTED THE LACK OF 
INTER-MINISTERIAL COMMUNICATION REFERRING TO MEETING 
BETWEEN THE AGRICULTURE MINISTER AND HIS COUNTERPART, 
AND THE ENERGY MINISTER AS WELL, NONE OF THE CONTENT 
OF WHICH GOT SHARED AMONGST ALL THE GOZ PLAYERS. 
 
== COMBERBACH TOLD US THAT THE SOUTH AFRICANS WERE 
VERY AWARE OF THE DYNAMICS OF THE POLITICAL SITUATION 
HERE, AND AS IS THE CASE WITH MANY OF THE NEIGHBORS, 
SYMPATHIZE WITH THE PREDICAMENT OF THE MUGABE 
GOVERNMENT.  ALL OF THEM REALIZE THAT A BREAK WITH 
THE PAST HAS TO BE MADE, AND UNDERSTAND THAT THIS 
WILL BE A DIFFICULT PROCESS, BUT DO NOT WANT TO 
SUFFER UNNECESSARY COLLATERAL DAMAGE IN THE PROCESS. 
HE POINTED OUT THAT SOUTH AFRICA HAD LAID ITS CARDS 
ON THE TABLE AT THE ONSET OF THE MEETING, TELLING THE 
ZIMBABWEANS THAT: A) FOREIGN DIRECT INVESTMENT IS 
DOWN SEVERELY IN SOUTH AFRICA AND INDEED WAS 
INSUFFICIENT FOR THE NEEDS OF THE ECONOMY, A 
DEVELOPMENT THEY BLAME ON REGIONAL "CONTAGION" (READ 
ZIMABWE, THE CONGO, MOZAMBIQUE FLOODING AND TERM 
EXTENSIONS IN NAMIBIA AND ZAMBIA); B) THAT CAPITAL 
FLIGHT FROM SOUTH AFRICA IS ACCELERATING (BLAMED ON 
THE SAME "CONTAGION"); AND, C) THAT ALL THE MAJOR 
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PAGE 04        HARARE  01124  02 OF 02  270558Z 
DONOR COUNTRIES INCLUDING THE U.S., THE EU AND 
BRITAIN WERE TURNING UP THE HEAT ON SOUTH AFRICA TO 
DEAL MORE EFFECTIVELY WITH ZIMABBWE. 
 
== ON THE SUBJECT OF THE MBEKI/MUGABE MEETING, 
(REFTEL REFERS), HE TOO HAD HEARD THAT IT MIGHT OCCUR 
AT THE END OF THIS WEEK ON MBEKI'S TRIP BACK FROM 
CUBA, BUT NO HARD ANNOUNCEMENT HAD BEEN MADE YET. 
 
COMMENT 
------- 
 
3.  (C) COMBERBACH REALIZES THAT HIS EFFORTS AT 
BAILING ARE INSUFFICIENT FOR THE WATER VOLUME COMING 
INTO THE HOLD, BUT PUSHES ON OUT OF PROFESSIONAL 
DEDICATION AND PATRIOTISM.  HE SMELLS MORE TROUBLE 
AHEAD, AND WE PLACE HIGH REGARD IN HIS EXPERIENCE AND 
PROGNOSTICATION SKILLS.  THOUGH HE WAS HONEST WITH 
US, WE BELIEVE HE WOULD HAVE BEEN MORE FORTHCOMING 
AND SPECIFIC HAD NOT A MEMBER OF HIS STAFF BEEN IN 
ATTENDANCE, BUT HIS FRANK ADMISSION THAT PASSION 
OVERULES THOUGHT IN NATIONAL LEADERSHIP IS VALID.  THE 
VISIT ALLOWED US TO HEAR A REFRESHING IF LONELY VOICE 
OF REASON.  END COMMENT. 
 
IRVING 
 
                       CONFIDENTIAL 
 
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