US outlines its plans for Zimbabwe after Mugabe

The United States showed why it was interested in Zimbabwe when the Movement for Democratic Change launched a week-long anti-government protest aimed at forcing President Robert Mugabe out of office.

In a cable dispatched to Washington on 4 June, 2003, two days after the start of the protest, the United States embassy in Harare sent to Washington what it called the “day after” Mugabe recommendations.

The embassy saw a situation where its institutions led by the United States Agency for International Development would shape democracy in a new Zimbabwe while its business enterprises would steer economic recovery.

USAID was to work with right wing institutions like the National Democratic Institute, International Republican Institute and State University of New York/Albany.

US companies like General Electric could provide locomotives to rejuvenate the National Railways of Zimbabwe, Caterpillar could provide machines to coal miner Wankie Colliery and Boeing could supply jets to Air Zimbabwe.

But the embassy said this would only be possible if there was a genuine reformist government.

“Of course, it matters not just that Mugabe goes, but who comes. We do not recommend policy modification if Mugabe remains in power behind the scenes or if a transition government is headed by a hard-liner – at least until we discern which way the wind is blowing,” the embassy said.

“If, on the other hand, a reform-minded transition government comes to power, the US has a role in assuring that the transition to a freely-elected government occurs and that essential political and economic reforms are begun.

“In general, we could help steady Zimbabwe’s first-ever political transition under very trying circumstances. We could begin to rebuild a strained bilateral relationship and selectively lift travel and financial sanctions. If appropriate, we could revise travel warnings that affect tourist inflows.”

Full cable:

Viewing cable 03HARARE1130, AFTER MUGABE: POST RECOMMENDATIONS FOR A U.S.

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This record is a partial extract of the original cable. The full text of the original cable is not available.

C O N F I D E N T I A L SECTION 01 OF 03 HARARE 001130

SIPDIS

STATE FOR AF, AF/S, DRL, EB/IFD

NSC FOR SENIOR DIRECTOR FRAZER

STATE PASS USAID

STATE PASS EXIM/OPIC

E.O. 12958: DECL: 06/01/2005

TAGS: EAID PGOV ECON EFIN KDEM PHUM PREL SENV SOCI ZI EXIM

SUBJECT: AFTER MUGABE: POST RECOMMENDATIONS FOR A U.S.

RESPONSE

Classified By: Econchief William Weissman. Reason: 1.5 (b/d).

¶1. (c) Summary: While it is still uncertain whether President

Robert Mugabe will depart in the next days or months, Post

considers it prudent to offer policymakers “day after”

recommendations at this stage. Assuming a transition

government is committed to political and economic reform, the

U.S. should immediately assist with elections, humanitarian

needs and infrastructure loan guarantees. A transition

government will not completely overcome the country’s

political divisions or recession, but it could lay the

foundation for a viable democracy and market economy. To

accomplish this, we suggest the U.S. establish the legal

groundwork for waiving the Brooke-Alexander Amendment and

620(q) at the appropriate time. End Summary.

¶2. (c) Of course, it matters not just that Mugabe goes, but

who comes. We do not recommend policy modification if Mugabe

remains in power behind the scenes or if a transition

government is headed by a “hard-liner” – at least until we

discern which way the wind is blowing. It is possible that

such a government would entrench itself and further restrict

liberties. Even under a reformist government, we emphasize

that there is no quick fix for Zimbabwe. It may take a

decade of healthly growth before the economy returns to 1997

levels. Health and education systems might not reach

mid-1990s levels for a generation, if ever.

Transition Headed by Bonafide Reformist

—————————————

¶3. (c) If, on the other hand, a reform-minded transition

government comes to power, the U.S. has a role in assuring

that the transition to a freely-elected government occurs and

that essential political and economic reforms are begun. In

general, we could help steady Zimbabwe’s first-ever political

transition under very trying circumstances. We could begin

to rebuild a strained bilateral relationship and selectively

lift travel and financial sanctions. If appropriate, we

could revise travel warnings that affect tourist inflows.

Codel and high-level USG visits would also underscore our

enthusiasm for a reforming Zimbabwe.

Democracy Assistance

——————–

¶4. (c) More specifically, we could help the transition

government’s most pressing task – carrying out free and fair

elections, our top Mission Performance Plan goal. USAID

should provide assistance and expertise to establish an

Independent Electoral Commission. In order to promote an

environment in which candidates and parties can wage open and

non-violent election campaigns, the GOZ will need to

repeal/amend an existing body of repressive legislation,

including the Public Order and Security Act, the Access to

Information and Protection of Privacy Act, the Elections Act

and the Media and Broadcasting Act. As the new election

approaches, USAID would fund the training and deployment of

election observers, polling agents for political parties,

transparent ballot boxes and computerized voter rolls. We

would also continue Voice of America and independent media

support. Using existing mechanisms such as National

Democratic Institute, International Republican Institute and

State University of New York/Albany, we estimate additional

total cost at $7 million. Some of these costs could be

shared with other donors, although we think that USAID, NDI,

IRI, and SUNY are in the best position to lead these

activities.

Humanitarian/Economic Assistance

——————————–

¶5. (c) To begin the process of economic recovery, we would

strongly encourage a reformist transition government to

modify/remove macroeconomic distortions by:

– adopting the Zimdollar’s floating (parallel) rate for

exporters

– raising interest rates (currently over 150 percent

negative) above inflation

– eliminating universal fuel and electricity subsidies

– reducing public borrowing and spending

– curtailing price controls

– disbanding the government’s grain monopoly

During the initial 6-12 month reform phase, we believe the

Zimbabwean economy, currently shrinking by an annualized rate

of 16 percent, will continue to recede. Zimbabweans will

suffer as the country moves from an interventionist to market

economy, triggering acute humanitarian needs. For that

reason, we should supplement existing assistance efforts by

immediately drawing upon $250 million in PL 480 funds for

additional urban and rural feeding programs, contingent on

agricultural policy reforms. From Disaster Assistance Funds,

we suggest $6 million for water treatment/purification

chemicals (covering approximately 6 months for Harare and

Bulawayo), $20 million for seeds and other agricultural

inputs, and $10 million for the national health system. Of

the $10 million, channeled through USAID and the Centers for

Disease Control and Prevention, we would devote $5 million to

essential drugs, supplies and equipment, $3 million to

anti-retroviral therapy (ARV) sustaining between 3,000 and

5,000 persons and $2 million to an integrated network of

clinics for voluntary counseling and testing (VCT) and

prevention of mother to child transmission (MTCT).

Financial Assistance

——————–

¶6. (c) A caveat: It is imperative the U.S. only provide

financial support if the GOZ first moves aggressively to tear

down the distortions cited above. It is not in the U.S.

interest to broadly subsidize fuel or electricity

consumption. For approximately a year, Libya’s Tamoil

infused over $300 million into Zimbabwe through fuel

donations, perpetuating macroeconomic distortions and

stunting growth. The U.S. should not take over Libya’s role,

as Zimbabwean businesses and consumers need to come to terms

with real-world tariffs. After the elimination of these

subsidies, however, the U.S. could assist the GOZ to finance

public transport and minimum-use electricity for low-income

households. For this purpose, we propose an initial $60

million for a half-year through the PL480 or 416(b) programs,

generating local currency through monetized food programs.

¶7. (c) In a reform environment, we also recommend OPIC and

ExIm Bank consider loan guarantees for projects that promote

U.S. exports and shore up Zimbabwe’s dilapidated

infrastructure (in spite of existing arrears – see next

paragraph). This could involve badly-needed rejuvenation of

General Electric locomotives at the National Railway of

Zimbabwe, Caterpillar machines at coal-miner Wankie Colliery

and Boeing jets at Air Zimbabwe. Furthermore, the country’s

participation in African Growth and Opportunity (AGOA)

sessions as an observer (with full admission following free

and fair elections) would allow Zimbabwean firms to plan a

reentry into the U.S. market. (Most U.S.-bound textile

production here has migrated to AGOA countries.)   We should

also explore possibilities for including Zimbabwe in free

trade negotiations with the Southern Africa Customs Union.

Funding Obstacles

—————–

¶8. (c) The main obstacle to much of this support is the

Brooke-Alexander Amendment and 620(q), legislation

prohibiting assistance to the GOZ because of its default on

official U.S. loans. Overcoming Brooke-Alexander and 620(q)

requires that the GOZ become current on outstanding debt to

the U.S., or obtain a waiver. GOZ arrearages on two ExIm

Bank loans total about $17 million and on a USAID loan about

$127,000. Understandably, an incoming transition government

would not make a priority of paying down the ExIm arrears.

Thus, we recommend that the GOZ pay off the small USAID

arrears and receive a waiver of the Brooke-Alexander and

620(q) restrictions for the ExIm loan. Additionally, we

might wish to report to Congress on how changes in Zimbabwe

impact upon Zimbabwe Democracy Act (ZDERA) implementation.

Post suggests the U.S. undertake a comprehensive legal

analysis of this option now and, for rapid response, have a

strategy already in place as soon as Mugabe departs.

Comment

——-

¶9. (c) We have outlined “day after” recommendations above.

Following free and fair elections, the U.S. could do a great

deal more. We assume only a democratically-elected

government will be able to tackle Zimbabwe’s most daunting

issues, such as rationalizing land reform, privatizing

inefficient parastatals and restarting International Monetary

Fund and WorldBank support. At that point, the U.S. could

reengage Zimbabwe across the spectrum – granting debt relief,

redeploying the Peace Corps, offering AGOA membership,

including the country in President Bush’s HIV/AIDS

initiative, restoring International Military Education and

Training (IMET) and lifting all sanctions. There will be

ample time to plan for this during the transition phase.

¶10. (c) While the above appears the most likely scenario, we

would wish to be flexible in case the transition government

is able and willing to undertake more thorough and

comprehensive reforms. (After all, it would likely be far

easier to roll back land redistribution abuses with ZANU-PF

collaboration than with ZANU-PF opposing such changes from

the outside.) In the event of a seriously reformist

transition government, we would also wish to encourage

agreement with the International Monetary Fund/WorldBank and

to consider use of the U.S. Treasury Exchange Stabilization

Fund as a bridge to an IMF loan.

SULLIVAN

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