US embassy cable - 02HARARE2378

C O N F I D E N T I A L HARARE 002378 
 
SIPDIS 
 
E.O. 12958: DECL: 10/30/2012 
TAGS: ECON, PGOV, ZI 
SUBJECT: EX-FINANCE CHIEF MAKONI'S DIM VIEW OF ECONOMY 
 
 
Classified By: Economic section chief William Weissman. 
Reason: 1.5b/d. 
 
1. (C) Summary: Ex-Finance Minister Simba Makoni fears 
thousands of Zimbabweans will soon suffer worsening effects 
of malnutrition due to lack of food and adequate transport 
logistics.  He feels that Zimbabwe would have to undergo 
change "from within or from outside" to get its economy back 
on track.  However, he believes President Mugabe feels too 
threatened by opposition Movement for Democratic Change (MDC) 
inroads to compromise on key issues, and cabinet ministers 
are too cowed by the President to challenge official dogma. 
End Summary. 
 
A lonely voice of dissent 
------------------------- 
2. (C) During his 2-year tenure as Finance Minister ending in 
August, Makoni was a rare GoZ higher-up calling for an end to 
disastrous economic policies, such as the official exchange 
rate, overspending, price controls and costly military 
intervention in the Democratic Republic of Congo. Thus many 
in Zimbabwe's business and donor communities saw Makoni as 
the last hope for a return to economic normalcy.  In a 
meeting with Ambassador Sullivan and econoff, he reiterated 
support for rationalizing monetary and fiscal policies, but 
cautioned that these actions would exacerbate suffering in 
the short-run.  However, he believed the GoZ could level with 
its population, explaining that this was the only way to 
avert an inevitable economic meltdown.  While still in office 
in June, he projected that the country would need 24-36 
months to regain 1997 levels; he now thinks that theoretical 
recovery period is even more elusive. 
 
3. (C) In cabinet meetings, Makoni was often a lone detractor 
from President Mugabe's line. He found this especially 
disheartening because he knew 16 of 20 participants sided 
with him, and many egged him on during breaks.  Makoni said 
ministers advocate policy that they believe Mugabe wants 
rather than what works.  "It all depends upon what the old 
man says," he said.  The President would be more amenable to 
compromise if the opposition MDC presented a less apparent 
threat, a fact he characterized as regrettable.  In the end, 
Makoni feels Zimbabwe will probably only reverse course under 
a new government.  Makoni also believed the economic crisis 
could only be resolved when the country's political crisis 
was addressed. 
 
A pessimistic view of food, HIV, land redistribution 
--------------------------------------------- ------- 
4. (C) Makoni offered his take on additional crises: 
 
- Food. He recalled being rebuked in the cabinet for 
forecasting shortages and seeking international assistance. 
He considers the National Railway of Zimbabwe (NRZ) unsuited 
to move large quantities of food.  At one point, he rejected 
NRZ requests for US$ 22 million in imported parts and about 
US$ 50 million in rolling stock because he considered the 
railway management inept.  He worries that thousands of 
Zimbabweans might die of malnutrition in the coming months. 
 
- HIV/AIDS. Makoni speculated that each extended Zimbabwean 
family is touched by an AIDS death each week, and he 
recounted that 6 workers on his own farm have died of AIDS. 
 
- Land Redistribution.  He suggested sardonically that 
Zimbabwe has "progressed" from a country where a few whites 
own the land to a country where a few blacks control it, with 
the peasant masses remaining poor and landless. 
 
Comment 
------- 
5. (C) Makoni's unsuccessful tenure as Finance Minister 
demonstrates that the Mugabe government allows little space 
for dissent.  Encircled by zealots and yes-men, Mugabe shows 
no sign of moving toward conventional macroeconomic policies. 
 Gaps are meanwhile widening between revenue and expenditure, 
street and controlled prices, and parallel and official 
exchange rates - signs that the needed medicine Makoni 
prescribed will taste even more bitter when the GoZ one day 
reconciles these contradictions and rejoins the rational 
world. 
SULLIVAN