US embassy cable - 03HARARE615

UNCLAS SECTION 01 OF 02 HARARE 000615 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR AF/S 
NSC FOR SENIOR AFRICA DIRECTOR JFRAZER 
USDOC FOR 2037 DIEMOND 
PASS USTR ROSA WHITAKER 
TREASURY FOR ED BARBER AND C WILKINSON 
STATE PASS USAID FOR MARJORIE COPSON 
 
E. O. 12958: N/A 
TAGS: ECON, EINV, ETRD, ZI 
SUBJECT: Business Leaders Push Envelope - Gently 
 
Ref: Harare 531 
 
1. (SBU) Summary: Zimbabwean business leaders told us 
they are increasingly willing to assert themselves with 
GOZ ministers. Still, they acknowledge that their 
outspokenness has its limits and carries some risks. End 
summary. 
 
Modest Break-Through? 
--------------------- 
2. (SBU) Ambassador Sullivan hosted a roundtable 
discussion on March 25 for five prominent company chiefs: 
Dairiboard's Anthony Mandiwanza, Cottco's Sylvester 
Nguni, International Capital Corporation's Bernard 
Chidzero, Intermarket's Nicholas Vingirai and PG 
Industries' Gerald Mujaji.  The businessmen feel the GOZ 
has finally begun to entertain their input, citing recent 
talks with the Confederation of Zimbabwe Industries 
(CZI), which Mandiwanza heads, as well as the 
government/industry/labor Tripartite Negotiating Forum 
(TNF).  These negotiations helped bring about devaluation 
and could lead to a relaxation in price controls. 
 
3. (SBU) Nonetheless, dialogue with the GOZ still has its 
challenges.  Mandiwanza agreed the GOZ should scrap price 
controls, but could not make that case in blunt terms to 
the ultra-sensitive government ministers.  Instead, he 
redefined controls as "managed" prices, satisfying the 
government's interventionist zeal and the private 
sector's need for higher prices. Mandiwanza employed the 
same strategy in gaining a devaluation, labeling it an 
"export support mechanism."  He was less successful in 
arguing for liberalized fuel prices and import licenses, 
as inflation fears cut the proposed price increase by two- 
thirds.  In these and any other matters of economic 
policy, roundtable participants agreed that even moderate 
government officials have a very steep learning curve. 
Businesses are more accustomed to getting their way 
through quiet, tactical bribes.  Conversely, our 
interlocutors still fear for themselves and their 
families if they stick their necks out too far, ensuring 
the government/business relationship remains uneasy. 
 
Comment 
------- 
4. (SBU) As we have reported (ref), the GOZ has 
successfully implemented devaluation and higher fuel 
prices.  These are arguably the first positive 
macroeconomic developments in over a year, and ones that 
several roundtable participants had a hand in.  If the 
GOZ wants to turn around this economy, however, it's 
still just in the first inning.  Further reforms will fan 
popular discontent, possibly triggering an escalation in 
GOZ repression. 
 
5. (SBU) The businessmen want desperately to approach 
economics in isolation from politics, maintaining the 
kind of neutral, nonpartisan posture that a corporation 
might in the U.S.  Most businesses bent over backwards to 
avoid any appearance of supporting the opposition's 
stayaway on March 19-20, although most avoided opposing 
it either.  At a time when the public-private sector 
dialogue is advancing, neutrality has both appeal and 
merit.  Ultimately, though, we do not believe anyone here 
in government, business or civil society can disentangle 
economic growth and stability from political legitimacy, 
human rights and rule-of-law -- economic-political 
linkage that both the African Growth and Opportunity Act 
(AGOA) and New Partnership for Africa's Development 
(NEPAD) underscore.  Participants at the lunch -- the 
elite of indigenous businessmen -- are increasingly 
cognizant of the linkages and the need for Zimbabwe to 
reengage internationally with its traditional economic 
partners.  PG's Mujaji said his participation at this 
moment in an American Embassy lunch was intended and will 
be read as a signal by the GOZ. 
 
6. (SBU) At the lunch, we underlined problems with GOZ 
governance and lack of respect for human and civil 
rights.  We praised the businessmen for their success in 
achieving several positive economic steps, but observed 
that the economic crisis could not solved without also 
addressing Zimbabwe's political crisis, in which at least 
half the population is alienated from the Government. 
Sullivan