US embassy cable - 05HARARE1322

C O N F I D E N T I A L SECTION 01 OF 04 HARARE 001322 
 
SIPDIS 
 
AF/S FOR B. NEULING, NSC FOR SENIOR AFRICA DIRECTOR C. 
COURVILLE, TREASURY FOR J. RALYEA AND B. CUSHMAN 
 
E.O. 12958: DECL: 09/22/2010 
TAGS: ECON, EFIN, PGOV, PHUM, PREL, ZI, Restore Order/Murambatsvina, Economic Situation 
SUBJECT: SIMBA MAKONI - DISILLUSTIONED AND IN-THE-WAITING 
 
 
Classified By: Ambassador Christopher Dell under Section 1.4 b/d 
 
1.  (C)  Summary:  During a September 21 meeting, Politburo 
member and ex-Finance Minister Dr. Simba Makoni told the 
Ambassador there was much more questioning of policy by 
government insiders since Operation Restore Order.  Mugabe, 
however, was out of touch with reality, his mind blocked to 
what was happening on the ground.  Like his ministers, he 
was closed to learning from experience.  Makoni rued the 
lack of rational and informed discussion of economic policy 
at the highest levels of government.  He disparaged Reserve 
Bank Governor Gono  handling of the food and forex crises 
and the decision to pay down an unexpectedly large amount 
of arrears to the IMF.  He maintained that all responsible 
ministers had known about the impending food shortages 
since March, but the information had not reached Mugabe, 
who, in any case, lacked the will to act on it.  Makoni 
said Zimbabwe had the capacity to fend for itself, solve 
its own problems, and would eventually pull itself out of 
its dire straights.  End Summary. 
 
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Operation Restore Order  nterest Will Peter Out 
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2.  (C)  At a meeting with the Ambassador at Makoni's 
modest company office in an industrial section of Harare, 
the Ambassador asked him whether Operation Restore Order 
had affected Makoni  own farming village.  Makoni 
described how the thatched and brick buildings along the 
road to his farm had been reduced to rubble and a nearby 
settlement leveled to the ground.  Many people were still 
living in the open as the rainy season approached, but 
shacks were also being reconstructed.  Since Operation 
Restore Order, Makoni said there was much more questioning 
of policy "by us on the inside" than ever before.  Asked 
how the blame game would play out, he said Mugabe had 
distanced himself from the Operation; Ignatius Chombo, 
Minister of Local Government, Public Works and Urban 
Development, was a prime candidate for accountability, but, 
he proceeded cryptically,  "not the mastermind." 
Nevertheless, he said the Operation could only have been 
carried out with Mugabe's approval, "he  not that 
distant." 
 
3.  (C)  Makoni opined that interest in the Operation could 
peter out, "vanish," with no one ultimately taken to task. 
At the Ambassador  suggestion that accountability did not 
necessarily stop at Zimbabwe  border, and a day of 
reckoning could come, Makoni replied that Operation Restore 
Order will be only one of many ill-advised things that 
happened under the present regime, and, when Mugabe is 
gone, all blame will be placed squarely on Mugabe. 
 
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Mugabe  ut of Touch 
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4.  (C)  Makoni painted a picture of Mugabe as out of touch 
with reality.  He has blocked his mind to many things, 
knows little about what is happening "out there," and is 
surrounded by ministers equally closed to learning from 
experience.  During Mugabe's tour of the Annual Harare 
Agricultural Fair in mid August, for example, the seed 
companies assured him there was an adequate supply of maize 
seed in the country.  According to Makoni, Mugabe "hit the 
roof" when he recently became aware of the dire state of 
seed availability.  Noting that moving people from shacks 
into decent homes had been a cornerstone of the ZANU-PF 
party program, Makoni was incredulous that Mugabe had 
failed to visit a single Operation Restore Order or Garikai 
site.  Makoni maintained Mugabe wanted to hear that the 
government has met Garikai's targets, and that's what he is 
told.  Queried by the Ambassador whether Mugabe would act 
on information if he understood the problems, Makoni 
replied negatively.  To illustrate, he described Mugabe's 
outrage upon learning in a 2002 government audit of the 
multiple ownership and underutilization of farms by 
government officials.  Pointing out that Makoni himself had 
two farms, Chombo four, and Minister of State for National 
Security Mutasa five, Mugabe said, "We have to lead by 
example."  Yet he never took any action.  Citing the 
astronomical cost of rice and potatoes compared to maize, 
Makoni described as "incredible" Mugabe's suggestion during 
his recent visit to the UN General Assembly that 
Zimbabweans consume those staples if maize is not 
available. 
 
5.  (C)  At some length, Makoni depicted how Mugabe could 
not accept that the market could best determine the 
currency exchange rate.  Makoni recounted how Mugabe had 
grudgingly agreed to devalue the currency from Z$38:1 to 
Z$55:1 when Makoni was Finance Minister (the official rate 
today is Z$26,002:1; the parallel rate is Z$65,000:1). 
Mugabe reminded him often that the Zim dollar had been more 
valuable than the US dollar at independence.  When the 
exchange rate was Zim$8,000:1, Mugabe was accessing US 
dollars at Zim$55:1, according to Makoni.  He said Mugabe 
viewed himself as an economist, and, in numerous 
discussions, had dismissed the ex-Finance Minister as "a 
chemist" (Note: Makoni has a PhD in chemistry) and his 
explanation of market forces as mere "textbook economics." 
 
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The Food and Forex Crises  ono's own mess 
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6.  (C)  Makoni repeatedly disparaged Reserve Bank Governor 
Gono's handling of the forex and food production crises, 
and his public comments, most recently, that the private 
sector should generate its own forex and not rely on the 
RBZ, or that farmers should produce more even without 
fertilizer.  He recounted Gono's broken promises to farmers 
that a share of their forex earnings would be available to 
purchase inputs.  Gono announced financial support to the 
agriculture sector, but, in the end, "no one gets the 
funds."  Makoni pointed out the considerable room for 
arbitrage under a centralized authority, and drew attention 
to the way in which the system fed into power plays, with 
"everyone coming around with a need."  He described the 
forex shortage as a symptom, not the cause, of Zimbabwe's 
economic distress. 
 
7.  (C)  Makoni characterized the food situation as 
critical, even if adequate rains came, as the land was 
unprepared for planting.  State intervention in the sector 
was necessary under these conditions of acute shortage, but 
the action had to be rational and informed by what works in 
the market.  The government, on the other hand, favored a 
command and control approach.  He said all responsible 
Ministers had known about the impending food shortage since 
March, but the information had not reached Mugabe. He 
derided Agriculture Minister Made as living "far from 
reality," noting, as an example, his plan to designate 200 
farmers per province, agriculturally productive or not, to 
produce 50 ha of maize each.  In animated detail, he 
described the irrationality, inefficiency, and 
inflexibility of the administrative hurdles he was 
personally confronting to get the RBZ to release forex for 
his farm inputs.  He regarded the obstacles as 
insurmountable for most small farmers and many large ones 
as well, resulting in the extremely weak uptake by farmers 
of available financing facilities. 
 
8.  (C)  Makoni posed the question why Gono had made such a 
large payment to the IMF.  He opined that a US$40 million 
or smaller arrears payment would have sufficed to gain a 
reprieve.  The large payment had dried up forex allocations 
to the private sector for three months and exacerbated the 
fuel crisis.  He deplored the absence of rational 
conversation or meeting of minds at the top level on how to 
handle the IMF vote.  While the business community 
discussed economic policy with some Ministers, there was no 
discussion among the top leadership in government or even 
the next ring of players.  In Mugabe's opinion, the IMF 
advised devaluation so that Zimbabwe would lose 
international esteem; the market manipulated exchange 
rates, and in Zimbabwe's case, the country's enemies were 
behind the manipulation. 
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Makoni - "Mentally Troubled", but "We l Come Out of It" 
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9.  (C)  Asked initially by the Ambassador how he was, 
Makoni replied, "mentally troubled."  Queried later where 
it would all end, he replied, "nobody knows."   Makoni said 
Zimbabwe was bankrupt in 1999, but Mugabe maintains a 
country can never go bankrupt and the state will always 
survive.  Makoni lamented the comfort the government took 
in favorable comparisons of Zimbabwe with less developed 
neighbors.  He, on the other hand, would compare Zimbabwe 
today with where it used to be and where it should be, had 
it been better managed.  He said Zimbabwean agriculture had 
always produced, drought or no drought, and 
enthusiastically recalled the days of competitions among 
farmers to produce 10 tons of maize on a hectare of land. 
Drawing on the Ambassador  reference to the strong inflow 
of assistance to Mozambique and Zambia, he exclaimed that 
Zimbabwe had the capacity to fend for itself and solve its 
own problems.  His parting words were, "We l come out of 
it." 
 
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Bio Notes 
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10.  (C)  Makoni, the only member of the Politburo not 
under U.S. sanctions (but subject since March 2002 to EU 
sanctions), can barely hide his disillusionment with the 
state of Zimbabwe's political leadership and economy.  Out 
of the domestic limelight for the past 3 1/2 years, apart 
from his recent bid for the presidency of the African 
Development Bank, he is pursuing his farming interests in 
Manicaland East with gusto and his business interests in 
town.  The youngest member of the Cabinet at Independence, 
he owes his rapid rise to power to Mugabe.  Yet Mugabe 
failed to come to his rescue in 1996, when, as CEO of the 
Herald Group, he clashed with Herald editor Chikerema over 
editorial policy.  Joyce Mujuru, then Minister of 
Information (and now Vice President), took the editor 
side and Makoni lost 
his job.  Makoni lost a 2000 primary 
election bid to Chipanga, a former CIO Director.  According 
to an Embassy Foreign Service National well connected to 
the Makoni family, he felt the old guard, especially 
Didymus Mutasa, had conspired against him.  According to 
the FSN, Makoni  two adult sons were illegal drug abusers; 
one committed suicide in Cape Town, South Africa, the other 
resides in Ireland, estranged from the family. 
 
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Comment 
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(11)  (C)  Makoni said mostly all the right things and he's 
clearly at pains to continue cultivating a good 
relationship and the image of himself as a ZANU-PF leader 
we could work with.  Although ousted by Mugabe as an 
economic saboteur over exchange rate liberalization in 
2002, as a member of the Politburo he still has Mugabe's 
ear and reportedly has been consulted by Vice President 
Mujuru of late.  As recently as today his name was floated 
in the local independent press as a possible successor to 
Mugabe with the support of the Mujuru faction in ZANU-PF. 
He remains a ZANU-PF party man to the core, even as he 
openly criticizes them.  Outside the limelight, he remains 
relatively untouched by scandal.  His name has been floated 
as a potential "superminister" of economic affairs under a 
Mujuru government, or even successor to Mujuru, when the 
day comes.  As Gono's name has also been floated, it was 
illuminating to hear Makoni's rancorous take on Gono. 
Makoni painted a picture of ZANU-PF asleep at the wheel, 
Mugabe out of touch with reality, and Gono incapable of 
managing the economy, which leaves Makoni, at least in his 
own mind, as the party's best hope for meaningful 
re-engagement with the international community. 
DELL