US embassy cable - 05LILONGWE282

UNCLAS SECTION 01 OF 02 LILONGWE 000282 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR AF/S ADRIENNE GALANEK 
STATE FOR EB/IFD/OMA FRANCES CHISHOLM 
STATE FOR EB/IFD/ODF LINDA SPECHT 
TREASURY FOR INTERNATIONAL AFFAIRS/AFRICA/LUKAS KOHLER 
 
E.O. 12958: N/A 
TAGS: EAGR, ECON, EFIN, EINV, MI, Agriculture, Economic 
SUBJECT: MALAWI PAUSES ON FOOD CRISIS ACTION 
 
REF: A. LILONGWE 143 
     B. LILONGWE 198 
     C. LILONGWE 210 
 
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SUMMARY 
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1. (SBU) Malawi's president has recently softened his public 
stand on this year's food crisis and the government's likely 
reaction to it.  From earlier indications, the GOM appeared 
to be set on a course of massive government-funded 
importation of maize for the commercial market.  After 
several meetings with donors, the GOM now seems willing to 
wait for second-round crop estimates.  A unified message from 
donors, patient explanation of how international food aid 
works, and high-level engagement appear to have been 
effective.  End summary. 
 
 
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PANIC REACTION 
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2. (SBU) As reported earlier (ref C), the GOM's response to 
early indications of a developing food crisis was close to 
panic.  The government appeared to be ready to break its 
budget on yet another expensive and disruptive intervention 
into the commercial maize market.  President Bingu wa 
Mutharika announced to donors that he intended to import 
upwards of 100,000 metric tons of maize.  Government summoned 
experts and donors to consider how to organize the 
transportation of large volumes of maize into the country 
almost immediately.  All of this was exacerbated by nearly 
complete ignorance by the new team of senior GOM officials 
about how the donor community assesses and reacts to food 
relief needs. 
 
3. (SBU) Several circumstances combined to produce this 
reaction.  Opposition members of Parliament, looking to make 
political hay of the government's botched agricultural inputs 
program, have been eager to report a failed crop.  Annual 
rainfall all but stopped just as the first crop estimate, 
itself predicting an average maize crop, came in mid-February 
(ref A).  Poor rainfall throughout the region has threatened 
to reduce potential import supplies from Zambia, Mozambique, 
and Tanzania.  Meanwhile, a maize surplus in South Africa is 
tempting the GOM with low prices that will be hard to match 
as the hungry season wears on. 
 
 
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DONORS: LET'S LOOK AT THIS CALMLY 
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4. (SBU) As soon as the government made its plans known, the 
donor community pulled together to present a unified message: 
limit action to humanitarian relief (with donor support), 
avoid intervening in the commercial maize market (a major 
cause of food shortages in the 2002/3 famine), and send clear 
signals to the market.  The International Monetary Fund 
immediately halted negotiations for a new funded program and 
pressed the GOM to make its plans clear in the draft budget. 
During meetings with senior foreign officials, including A/S 
for African Affairs Constance Newman and senior European 
Union officials in Brussels, Mutharika has heard the same 
messages. 
 
5. (SBU) Recently, the government seems to be moving to a 
rational course of action.  When Mutharika returned from 
Brussels, his remarks to the press indicated something near a 
complete reversal: government will wait for later crop 
estimates before committing to any action, and government 
will work with donors to meet humanitarian relief needs. 
Subsequent donor meetings have indicated that the same 
general tendency away from a panic response. 
 
 
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COMMENT: A SUCCESSFUL INTERVENTION--MAYBE 
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6. (SBU) While the end of this episode has yet to be written, 
it appears at this point as if the donor community, together 
with the IMF, has managed to keep the GOM from breaking its 
budget and deepening the crisis by interfering with the 
commercial markets. Whether this could have happened without 
a new IMF program hanging in the balance is an open question. 
 But a few points are clear.  First, a strong consensus on 
donor messages has helped, especially since the message has 
included assurances of help in the event of a genuine crisis. 
 Second, patient engagement to educate new senior officials 
on the way the international community assesses and responds 
to food crises is proving valuable; this step is necessary to 
build confidence in the donors' response mechanisms. 
Finally, engagement at the most senior levels of government 
has been crucial to approaching this very political problem. 
None of this excludes the possibility of another catastrophic 
government intervention, but it now seems a smaller 
possibility. 
GILMOUR