US embassy cable - 04HARARE831

UNCLAS SECTION 01 OF 02 HARARE 000831 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR AF/S 
NSC FOR SENIOR AFRICA DIRECTOR JFRAZER 
USDOC FOR AMANDA HILLIGAS 
TREASURY FOR OREN WYCHE-SHAW 
PASS USTR FLORIZELLE LISER 
STATE PASS USAID FOR MARJORIE COPSON 
 
E. O. 12958: N/A 
TAGS: ECON, EAID, BTIO, EINV, PGOV, PTER, ZI 
SUBJECT: RBZ laughs at GOZ crop forecasts 
 
 
1. (SBU) Summary: Reserve Bank (RBZ) Governor Gideon Gono 
says he has confronted Agriculture Minister Joseph Made 
over his optimistic forecast of a 2.4 million m/t maize 
harvest.  The Governor alleges other cabinet officials, 
such as Security Minister Nicolas Goche and acting 
Finance Minister Herbert Murerwa, also privately belittle 
Made's stratospheric estimate.  On a number of other 
issues - rule-of-law violations, school fees increases, 
the official Z$824:US$ rate, recent farm acquisitions - 
Gono was dismissive of policies favored by Made and other 
Zanu-PF hardliners.  End Summary. 
 
The GOZ's voice of reason? 
-------------------------- 
2. (SBU) Ambassador Sullivan called on the RBZ Chief on 
May 13, engaging in a far-ranging exchange.  As in our 
past encounters, Gono betrayed a keen sense of self- 
importance, stressing the personal danger he had placed 
himself in for taking command of the Zimbabwean economy. 
Melodrama aside, Gono is still a voice of relative 
sanity, at least by GOZ standards.  Covering a host of 
topics, Gono: 
 
- laughed out loud at the latest GOZ maize forecast of 
2.4 million m/t, drawing on his own farming experience 
and exclaiming "no way."  He suggested the RBZ might 
issue a dissenting report.  Gono also complained Made 
halted the United Nations joint Food and Agriculture 
Organization/World Food Program survey after the 
Minister's Permanent Secretary had authorized it and was 
actually participating in the survey.  He judged that the 
reason Made was insisting on such a high number was for 
Mugabe to trumpet the success of land reform at last 
weekend's SADC summit on agriculture. 
 
- expressed hope the GOZ would still ask the United 
Nations Development Program to assist with next year's 
scheduled Parliamentary elections.  (When we noted that 
the issue reached beyond cost and to the election's 
credibility and legitimacy, he asked for and was provided 
the SADC Parliamentary Norms.) 
 
- complained that GOZ rule-of-law transgressions were 
undermining his efforts to reengage internationally. 
 
- asserted Trojan Nickel CEO Leonard Chimimba was 
assassinated last week before he could meet with Gono and 
offer insight into mining sector corruption.  Various 
press accounts have characterized Chimimba's death as 
part of a carjacking. 
 
- said he was working to restore the validity of Zimbabwe 
Investment Center certificates (investment guarantees the 
GOZ overlooked in its seizure of many foreign-owned farms 
and conservancies).  If acted upon, this could bode well 
for Amcit investors who have lost properties during land 
reform. 
 
- recounted he came to Coca-Cola's rescue when the 
Zimbabwe Revenue Authority insisted on the Coke's 
ingredients for tax purposes.  (The Embassy recently 
worked with the American Business Association of Zimbabwe 
to provide U.S. company reps an intimate audience with 
the Governor.) 
 
- lamented the imprisonment of school headmasters over 
unapproved fee hikes. 
 
- characterized GOZ reluctance to scrap the Z$824:US$ 
rate as "psychological" rather than rational. 
 
3. (SBU) On economic policy, Gono argued he has markedly 
improved the lot of exporters, even while failing to 
eliminate 25 percent revenue withholding at the ultra-low 
Z$824:US$ rate.  Gono said he had come up with a number 
of "tricks" to counterbalance the low rate, allowing 
exporters easy access to low interest rates and zimdollar 
prepayment for export earnings. (Comment: We still see no 
evidence of export expansion, but will continue to 
monitor.  In an event, more export revenue now passes 
through official channels.)  On the fiscal side, de facto 
Finance Minister Gono noted he has fought to hold down 
public sector wage increases and other unbudgeted 
expenses.  He was appalled when the Ministry of 
Agriculture's Agricultural Rural Development Authority 
(ARDA) asked him for support after its high-profile 
seizure of Kondozi Farm, retorting that "the private 
owners never asked for Reserve Bank help." 
 
Blanket amnesty on the way 
-------------------------- 
4. (SBU) Concerning the RBZ's anti-corruption campaign, 
Gono said he would grant a blanket amnesty for forex 
externalization in his next monetary review.  He claimed 
he was unable to do anything about James Makamba's 
detention since February 9, since he believed the 
businessman was being held for personal reasons (a 
reference to his rumored affair with Grace Mugabe).  Gono 
did hope to sponsor an amnesty in his next quarterly 
address (apparently estimating that Mugabe might be 
willing to let Makamba free by then). 
 
5. (SBU) Gono reiterated his interest in visiting 
Washington for meetings with the International Monetary 
Fund later this month.  Ambassador Sullivan warned that 
the process for obtaining a waiver to travel (Gono is on 
travel ban) normally takes four weeks, if granted.  Gono 
expressed disappointment but indicated he could postpone 
travel.  In addition to the Department of Treasury, Gono 
expressed an interest in visiting ExImBank. 
 
Gono's Political Significance 
----------------------------- 
6. (SBU) It is not clear where Gono falls in among Zanu- 
PF factions.  He obviously has issues with hardliners 
Made and Information Minister Jonathan Moyo.  He still 
considers the Finance Ministry an adversary and bemoaned 
Deputy Minister David Chapfika's charges that Gono was 
singling out indigenous firms in his anti-corruption 
campaign.  At least to us, Gono has not spoken glowingly 
about any top ZANU-PF figure, other than former Finance 
Minister Simba Makoni. 
 
7. (SBU) With powers stretching well beyond a 
conventional central banker, Gono is carving out a 
powerful niche for himself.  He mentioned he is enlarging 
his RBZ oversight committee to 29 members and will 
include civil society groups such as the two labor 
confederations.  In this manner, he could in effect take 
over the failed Tripartite Negotiating Forum (TNF), which 
the Zimbabwe Confederation of Trade Unions (ZCTU) has 
refused to rejoin. 
 
Comment 
------- 
8. (SBU) Probably no GOZ higher-up and Mugabe-confidant 
embraces GOZ "enemies" - Western diplomats, the 
International Monetary Fund, the Commercial Farmers Union 
(CFU) - to the degree Gono does.  He boasted that CFU 
President Doug Taylor-Freeme, the figurative white farmer 
headman, drops by his farm in Mashonaland West to advise 
on production.  For now, Gono is maneuvering on both 
sides of the fence, believing he is the one man who can 
bridge the gap.  At some point, he may be forced to 
choose between Zanu-PF conformity and international 
reengagement, but it is certainly in our interest to help 
him understand the steps required for international 
reengagement. 
 
Sullivan