US embassy cable - 05HARARE1009

C O N F I D E N T I A L  HARARE 001009 
 
SIPDIS 
 
 
AF/S FOR B. NEULING 
NSC FOR SENIOR AFRICA DIRECTOR C. COURVILLE 
 
E.O. 12958: DECL: 12/31/2010 
TAGS: PREL, PGOV, PHUM, ECON, EFIN, SA, ZI, Zimbabwe South African Relations 
SUBJECT: SAG-GOZ NEGOTIATIONS AND THE USG 
 
REF: (A) HARARE 1008 (B) PRETORIA 2854 (C) PRETORIA 
 
     2841 
 
Classified By: Charge d'Affaires, a.i., Eric T. Schultz under Section 1 
.4 b/d 
 
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Summary 
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1.  (C) The Mugabe regime is confronting a "perfect storm" of 
converging challenges - international opprobrium over 
Operation Restore Order, the economy's accelerating 
implosion, and a looming IMF vote on Zimbabwe's expulsion. 
As a result, the GOZ is showing growing desperation and 
signaling uncharacteristic vulnerability to outside 
influence.  Loan negotiations underway with the SAG (ref B) 
may offer the best vehicle through which the GOZ could be 
pressured to implement political and economic reforms.  We 
believe the USG should quietly demarche the SAG on this 
prospective loan and on any conditions that may be attached 
to it.  End Summary. 
 
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"Perfect Storm" Converges on GOZ 
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2.  (C) UN Envoy Ann Tibaijuka's damning report on Restore 
Order, including a call that responsible officials be held 
accountable, has broken the taboo against prominent official 
Africans speaking out against the regime and has dramatically 
increased the GOZ,s international isolation.  Governments 
that just months ago defended the flawed administration of 
Zimbabwe's elections are now quiet or openly distancing 
themselves from the GOZ on Restore Order. 
 
3.  (C) This increased international opprobrium could not 
come at a worse time for a government trying to arrest a 
national economic implosion.  Foremost on the GOZ's economic 
agenda appears to be securing funding to address food and 
fuel shortages and to stave off IMF expulsion by paying off 
arrears.  In a significant about face (septel), economic 
policy czar Gideon Gono appears to have convinced the regime 
that expulsion would have profound adverse consequences. 
 
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SAG With Unprecedented Leverage 
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4.  (C) Although official sources indicate publicly that the 
GOZ is approaching "China, Iran, Malaysia, and so on", South 
Africa is the most likely source of the needed funding and 
negotiations are reportedly on-going for a $1 billion SAG 
bailout of the GOZ.  For its part, the SAG appears to have 
attached significant priority to its negotiations with the 
GOZ, as indicated by President Mbeki's recent personal 
intervention with Embassy Pretoria (ref C).  Moreover, while 
details of the negotiations are sketchy, the SAG reportedly 
is imposing unspecified political and economic reforms as 
conditions for the loan (ref B). 
 
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Comment on SAG Conditions for GOZ 
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5. (C) As the UN and elements in South Africa appear to be 
leading the charge on pressing the GOZ on Restore Order and 
its economic policy, there is little need for high profile 
USG criticism of the regime at this point.  When the stakes 
get high, the ruling party historically has tried to play the 
neo-colonialist imperialist conspiracy card; it would like to 
now as well.  We agree with President Mbeki that stepping up 
western rhetoric against the regime now would only provoke it 
to no constructive end and play to Mugabe's strength in his 
unfolding engagement with Mbeki. 
 
6.  (C) That said, in view of our past collaboration with the 
SAG, we urge a quiet but proactive approach to SAG engagement 
with the GOZ.  We believe the GOZ will most readily agree to 
symbolic, non-substantive conditions such as inter-party 
 
negotiations that will require little effort on their part to 
undermine.  We would urge instead that SAG conditionality 
focus on the systemic flaws in the political environment and 
economy with a view to empowering civil society and 
engineering a more competitive democratic process in the long 
run. 
 
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Potential Points For Use With SAG 
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7. (C) We offer the following points to be advanced or taken 
into consideration in any approach to the SAG regarding 
conditions on a loan to Zimbabwe: 
 
-- Any conditions you impose on your loan should be specific, 
measurable benchmarks that will improve Zimbabwe's political 
and economic environment and require the GOZ to engage not 
only with the political opposition but with the Zimbabwean 
people as a whole. 
 
-- As a first step, the GOZ should terminate Operation 
Restore Order fully and allow local and international 
humanitarian organizations unfettered access to the 
displaced. 
 
-- The GOZ should immediately reinstate the Mayor of Mutare, 
who was suspended by the Ministry of Local Government and 
Housing for facilitating the UN Special Envoy during her 
recent visit, and should not persecute others who attempted 
to alleviate suffering associated with Restore Order. 
 
-- The GOZ should immediately relax enforcement of, and in 
the nearest future repeal, the Public Order and Security Act 
(POSA) and Access to Information and Protection of Privacy 
Act (AIPPA), including the immediate re-opening of the four 
newspapers closed under AIPPA and allowing public meetings 
without the approval or presence of police. 
 
-- As per the IMF, economic reforms should include (but not 
be limited to): implementation of a market-oriented foreign 
exchange regime, restraints on public spending and credit, 
and elimination of government controls on the prices and 
distribution of commodities and services. 
-- SAG assistance should take the form of pay-outs directly 
to GOZ creditors (aside from the IMF, many of whom presumably 
are South African entities) rather than direct payments to 
the GOZ. 
SCHULTZ 
 
 
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