US embassy cable - 05PRETORIA3141

C O N F I D E N T I A L PRETORIA 003141 
 
SIPDIS 
 
DEPT FOR AF/S B. NEULING AND K. GAITHER, EB/IFD, EB/OMA 
LONDON, PARIS, BRUSSELS FOR AFRICA WATCHERS 
 
E.O. 12958: DECL: 08/03/2015 
TAGS: PREL, PHUM, ECON, KDEM, ZI, SF 
SUBJECT: CABINET GIVES GREEN LIGHT TO ZIMBABWE LOAN; 
ZIMBABWEAN FINANCE OFFICIALS VISIT PRETORIA 
 
REF: A. PRETORIA 2854 
     B. PRETORIA 2948 
     C. PRETORIA 2983 
 
Classified By: Acting DCM Jeff Hartley 
Reasons 1.4(b) and (d) 
 
1. (U) The South African Cabinet announced August 3 that it 
is "open" to providing assistance to Zimbabwe, including 
"provision of a loan facility in relation to Zimbabwe's 
obligations to the International Monetary Fund" (full Cabinet 
statement on Zimbabwe loan at para 5).  Government spokesman 
Joel Netshitenzhe said that South Africa is considering 
loaning between $200 - $500 million to Zimbabwe to address 
the GOZ's obligations to the IMF. 
 
2. (U) Netshitenzhe claimed that the SAG will not impose 
"conditions" on the loan because Pretoria does not want to be 
big brother to its neighbor, but then outlined some general 
criteria for the loan that seemed to indicate that, indeed, 
Pretoria would apply conditions (see para 3): 
 
-- the loan must benefit the Zimbabwean people as a whole; 
-- it must be within the context of Zimbabwean program of 
economic reform and "political normalization;" 
-- the SAG expects that it will pay the funds directly to the 
IMF, not the GOZ; and 
-- South Africa wants to ensure that the economic 
difficulties that created the problems will not reoccur in 
the future. 
 
3. (C) Zimbabwean Finance Minister Murerwa and Reserve Bank 
Governor Gono arrived in South Africa the afternoon of August 
4, according to International Crisis Group analyst Sydney 
Masamvu.  Masamvu, who spoke with Gono August 4, said that 
Gono and Murerwa planned to meet with South African Finance 
Minister Manuel and Reserve Bank Governor Mboweni upon 
arrival to discuss the loan conditions.  Gono said they hoped 
to receive $500 million from the South Africans to "deal with 
the IMF problem."  Gono had free rein from Mugabe to discuss 
SAG economic conditions for the loan, but Presidents Mugabe 
and Mbeki would discuss the political conditions on the 
sidelines of the AU summit on UN reform taking place in Addis 
Ababa August 4.  Finalizing the loan with South Africa was 
particularly urgent for the GOZ since the Zimbabweans had not 
received the support they sought from the Chinese, Gono told 
Masamvu. 
 
4. (C) Comment.  It appears we are entering the end game on 
the South African loan to Zimbabwe.  While Pretoria insists 
publicly it is not imposing conditions on their loan, the 
reality is that they will not provide funds without at least 
some guarantees on economic reform.  The nature of the 
political conditions are less predictable given that they are 
being handled at the presidential level.  End comment. 
 
5. (U) Text of the August 3 South African Cabinet statement 
on the loan as follows:  "Cabinet was briefed on the ongoing 
interaction between South Africa and Zimbabwe on the 
assistance that South Africa can provide to that country.  In 
principle, government is open to such assistance, including 
provision of a loan facility in relation to Zimbabwe's 
obligations to the International Monetary Fund.  Our approach 
on this matter is premised on the principle that such 
assistance should be to the benefit of the Zimbabwean people 
as a whole, within the context of their programme of economic 
recovery and political normalization." 
FRAZER