US embassy cable - 05ROME2953

C O N F I D E N T I A L  ROME 002953 
 
SIPDIS 
 
 
E.O. 12958: DECL: 09/21/2015 
TAGS: EFIN, PREL, ZI, IT, IMF 
SUBJECT: ZIMBABWE IMF: ITALY LEANING AGAINST EXPULSION IN 
LIGHT OF RECENT PAYMENT 
 
REF: A. STATE 158016 
     B. STATE 163126 
 
Classified By: Economic M/C Scott Kilner, for reasons 1.4 (b)(d). 
 
1. (C) Summary: The GOI is leaning towards giving Zimbabwe 
additional time in light of the GOZ's recent partial payment 
of its arrears. End summary. 
 
 
2. (C) Economic Counselor and Econoff delivered reftel points 
August 30 to Ignazio Angeloni, Director General for 
International Affairs at the Ministry of Finance (who also 
serves as President of SACE, Italy's export credit bank). 
Poloff and Econoff also jointly delivered Ref demarche on 1 
September to Claudio Spinedi and Giuseppina Zarra from the 
MFA's Directorate General for Multilateral Economic and 
Financial Cooperation; and to Umberto Maltani, MFA Zimbabwe 
Desk Officer. 
 
FINANCE MINISTRY VIEWS 
---------------------- 
 
3. (C) Angeloni said he wanted to confer with Italy's IMF 
Executive Director before reacting to our points.  On 
September 1, he called Econ Counselor to say that Italy's IMF 
Executive Director had reported that Zimbabwe had made a 
"sizeable" payment on its arrears August 29.  Using SDR, 
rather than dollar figures, Angeloni said Zimbabwe had been 
in arrears some SDR 200 million, but had repaid SDR 82, or 
about two-thirds of its arrears.  Angeloni believed the 
repayment showed "some good will" on Zimbabwe's part, and 
that when this is the case, Fund members try to continue to 
work with the member in question. 
 
4.  (C) He said Italy's soundings at the Fund after the 
arrears payment indicated there would not be sufficient 
support to amass the necessary weighted fifty percent vote 
for the Executive Board to recommend to the Board of 
Governors to expel Zimbabwe from the IMF.  Angeloni thought 
under these conditions it would be better to wait to see if 
Zimbabwe's "good will" continued - and if Zimbabwe could turn 
around its disastrous economic policies. 
 
MFA VIEWS 
--------- 
 
5. (C) Spinedi said Italy concurs with the USG assessment of 
Zimbabwe and the IMF, and added that ultimately ousting 
Zimbabwe will be a political decision.  He said Italy 
condemns the Mugabe government's slum-clearing operations 
and does not exclude expelling Zimbabwe from the IMF, but 
Italy must first confer with EU colleagues.  (Spinedi said 
this was the first demarche they had received on the topic.) 
Rome's instructions to Italy's IMF executive director in 
Washington are to join the consensus among other G-7 
directors but not/not to openly advocate for Zimbabwe's 
expulsion. 
 
6. (C) Spinedi acknowledged that the IMF staff has not yet 
issued its fact-finding report, but judged that it would 
recommend an additional six-month delay in deciding 
Zimbabwe's fate within the IMF.  He noted that Zimbabwe's 
Central Bank had taken "small steps" in the right direction, 
despite Mugabe government policies.  Spinedi and Maltani 
noted that it will be difficult to take on Zimbabwe when 
"other" African states, including the Southern African 
Development Community, are trying to give Harare the benefit 
of the doubt. 
 
7. (C) Spinedi said he was aware of reports that Zimbabwe had 
recently made a payment on its arrears and wondered how this 
would change the mood within the IMF.  He did not think 
Harare had received financial assistance from South Africa, 
but had probably "dug deep" into its own coffers to make a 
last-minute gesture. 
 
COMMENT 
------- 
 
8.  (C) We believe that Italy will follow the EU lead on 
expelling Zimbabwe from the Fund, and may even press to give 
Zimbabwe another chance, following the sizeable arrears 
payment. End comment. 
SPOGLI 
 
 
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	2005ROME02953 - Classification: CONFIDENTIAL