US embassy cable - 05PRETORIA2948

C O N F I D E N T I A L PRETORIA 002948 
 
SIPDIS 
 
DEPT FOR AF/S B. NEULING AND K. GAITHER, EB/IFD, EB/OMA 
LONDON, PARIS, BRUSSELS FOR AFRICA WATCHERS 
 
E.O. 12958: DECL: 07/24/2015 
TAGS: PREL, PHUM, KDEM, ECON, ZI, SF, KFIN 
SUBJECT: MBEKI CONFIRMS SOUTH AFRICA CONSIDERING BAILOUT 
LOAN TO ZIMBABWE 
 
REF: PRETORIA 2854 
 
Classified By: Charge d'Affaires Jeff Hartley 
Reasons 1.4(b) and (d) 
 
1. (U) Summary.  Following a three-day cabinet retreat, 
President Mbeki confirmed publicly that South Africa was 
considering lending Zimbabwe funds to pay its IMF arrears. 
Mbeki said that intense discussions with the Government of 
Zimbabwe on a bailout had not been concluded, and that some 
conditions would apply.  On the report of the UN special 
envoy, Mbeki said that the SAG would "act on the 
recommendations . . . with the UN, our own people, and the 
Government of Zimbabwe."  He avoided criticizing the GOZ's 
Operation Restore Order, but welcomed UN engagement in 
helping "Zimbabwe solve the problem it faces."  End summary. 
 
2. (U) Speaking at a July 24 press conference following a 
three-day Cabinet lekgotla (retreat), President Mbeki 
confirmed publicly that South Africa was considering lending 
Zimbabwe funds to pay its IMF arrears in a last ditch effort 
to keep the IMF from expelling Zimbabwe.  Mbeki said that 
Pretoria did not want Zimbabwe to collapse since South Africa 
would "inherit all of the consequences" of that collapse. 
 
3. (U) Mbeki argued that expelling Zimbabwe from the IMF 
would further isolate the country and be "counterproductive" 
to change.  He suggested that "members of the IMF executive 
board" share his view.  On the question of paying Zimbabwe's 
IMF debt, Mbeki said that "it may well be that in the end we 
are going to come to the decision that South Africa takes on 
a portion of the debt." 
 
4. (SBU) Mbeki said that discussions with the Government of 
Zimbabwe on the bailout loan have not been concluded.  He did 
not explicitly describe South Africa's conditions for a loan, 
which we understand are still being contemplated, but hinted 
at some of his thinking. 
 
-- The reform of the Zimbabwean Reserve Bank and monetary 
system would be a "very important element" of the solution. 
 
-- Any agreement must be an "inclusive one, taking on the 
broad interests and concerns of all Zimbabweans." 
 
-- The bailout would be discussed with the MDC, once the 
discussions with the GOZ were more developed. 
 
5. (U) On the report of the UN Special Envoy on Human 
Settlement Issues in Zimbabwe, Mbeki said that the SAG would 
"act on the recommendations . . . with the UN, our own 
people, and the Government of Zimbabwe."  He avoided 
criticizing the GOZ's Operation Restore Order, but welcomed 
UN engagement in helping "Zimbabwe solve the problem it 
faces."  Mbeki said he would meet with the South African 
Council of Churches again to discuss the South African 
humanitarian response. 
 
6. (U) The formal press release from the Cabinet lekgotla 
touched on Zimbabwe only briefly:  "On the issue of 
developments in Zimbabwe, the lekgotla reaffirmed SA's 
principled position to assist the people of that country in 
finding a solution to the socio-economic and political 
challenges that they face." 
 
7. (C) Comment:  South Africa's priority in Zimbabwe seems to 
be first and foremost stability, ensuring that the crisis 
does not spill over its border.  Pretoria will try to 
leverage its bailout for Zimbabwe to achieve economic, and to 
a lesser extent political, reform, but we do not believe that 
the SAG will impose (and enforce) the kind of conditions that 
will lead to dramatic reversals in ZANU-PF's policies.  South 
Africa wants Mugabe gone, but through peaceful, 
constitutional change in a stable political environment.  The 
proposed bailout loan is driven more by the desire to 
maintain regional stability than getting Mugabe out of power. 
 End comment. 
HARTLEY