US dictates terms under which SA should bail out Zimbabwe

With threats of expulsion from the International Monetary Fund hanging over its head, Zimbabwe was desperate to secure a loan from the South African Government but the United States viewed this as an opportunity to squeeze concessions for reform from President Robert Mugabe’s government.

It set out the following as points for consideration by the South African government:

• Any conditions you impose on your loan should be specific, measurable benchmarks that will improve Zimbabwe’s political and economic environment and require the GOZ to engage not only with the political opposition but with the Zimbabwean people as a whole.
•  As a first step, the GOZ should terminate Operation Restore Order fully and allow local and international humanitarian organizations unfettered access to the displaced.
  •  The GOZ should immediately reinstate the Mayor of Mutare, who was suspended by the Ministry of Local Government and Housing for facilitating the UN Special Envoy during her recent visit, and should not persecute others who attempted to alleviate suffering associated with Restore Order.
  •  The GOZ should immediately relax enforcement of, and in the nearest future repeal, the Public Order and Security Act (POSA) and Access to Information and Protection of Privacy Act (AIPPA), including the immediate re-opening of the four newspapers closed under AIPPA and allowing public meetings without the approval or presence of police.
  •  As per the IMF, economic reforms should include (but not be limited to): implementation of a market-oriented foreign exchange regime, restraints on public spending and credit, and elimination of government controls on the prices and distribution of commodities and services.
  •  SAG assistance should take the form of pay-outs directly to GOZ creditors (aside from the IMF, many of whom presumably are South African entities) rather than direct payments to the GOZ.

Full cable:

Viewing cable 05HARARE1009, SAG-GOZ NEGOTIATIONS AND THE USG

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

251354Z Jul 05

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——————1AF450 251445Z /38

FM AMEMBASSY HARARE

TO SECSTATE WASHDC PRIORITY 8647

INFO SOUTHERN AFRICAN DEVELOPMENT COMMUNITY

AMEMBASSY ABUJA

AMEMBASSY ACCRA

AMEMBASSY ADDIS ABABA

AMEMBASSY DAKAR

AMEMBASSY KAMPALA

AMEMBASSY NAIROBI

AMEMBASSY PARIS

AMEMBASSY ROME

NSC WASHDC

USEU BRUSSELS

USMISSION USUN NEW YORK

C O N F I D E N T I A L HARARE 001009

SIPDIS

AF/S FOR B. NEULING

NSC FOR SENIOR AFRICA DIRECTOR C. COURVILLE

E.O. 12958: DECL: 12/31/2010

TAGS: PREL PGOV PHUM ECON EFIN SA ZI

SUBJECT: SAG-GOZ NEGOTIATIONS AND THE USG

REF: (A) HARARE 1008 (B) PRETORIA 2854 (C) PRETORIA

2841

Classified By: Charge d’Affaires, a.i., Eric T. Schultz under Section 1

.4 b/d

——-

Summary

——-

¶1. (C) The Mugabe regime is confronting a “perfect storm” of

converging challenges – international opprobrium over

Operation Restore Order, the economy’s accelerating

implosion, and a looming IMF vote on Zimbabwe’s expulsion.

As a result, the GOZ is showing growing desperation and

signaling uncharacteristic vulnerability to outside

influence. Loan negotiations underway with the SAG (ref B)

may offer the best vehicle through which the GOZ could be

pressured to implement political and economic reforms. We

believe the USG should quietly demarche the SAG on this

prospective loan and on any conditions that may be attached

to it. End Summary.

——————————–

“Perfect Storm” Converges on GOZ

——————————–

¶2. (C) UN Envoy Ann Tibaijuka’s damning report on Restore

Order, including a call that responsible officials be held

accountable, has broken the taboo against prominent official

Africans speaking out against the regime and has dramatically

increased the GOZ,s international isolation. Governments

that just months ago defended the flawed administration of

Zimbabwe’s elections are now quiet or openly distancing

themselves from the GOZ on Restore Order.

¶3. (C) This increased international opprobrium could not

come at a worse time for a government trying to arrest a

national economic implosion. Foremost on the GOZ’s economic

agenda appears to be securing funding to address food and

fuel shortages and to stave off IMF expulsion by paying off

arrears. In a significant about face (septel), economic

policy czar Gideon Gono appears to have convinced the regime

that expulsion would have profound adverse consequences.

——————————-

SAG With Unprecedented Leverage

——————————-

¶4. (C) Although official sources indicate publicly that the

GOZ is approaching “China, Iran, Malaysia, and so on”, South

Africa is the most likely source of the needed funding and

negotiations are reportedly on-going for a $1 billion SAG

bailout of the GOZ. For its part, the SAG appears to have

attached significant priority to its negotiations with the

GOZ, as indicated by President Mbeki’s recent personal

intervention with Embassy Pretoria (ref C). Moreover, while

details of the negotiations are sketchy, the SAG reportedly

is imposing unspecified political and economic reforms as

conditions for the loan (ref B).

———————————

Comment on SAG Conditions for GOZ

———————————

¶5. (C) As the UN and elements in South Africa appear to be

leading the charge on pressing the GOZ on Restore Order and

its economic policy, there is little need for high profile

USG criticism of the regime at this point. When the stakes

get high, the ruling party historically has tried to play the

neo-colonialist imperialist conspiracy card; it would like to

now as well. We agree with President Mbeki that stepping up

western rhetoric against the regime now would only provoke it

to no constructive end and play to Mugabe’s strength in his

unfolding engagement with Mbeki.

¶6. (C) That said, in view of our past collaboration with the

SAG, we urge a quiet but proactive approach to SAG engagement

with the GOZ. We believe the GOZ will most readily agree to

symbolic, non-substantive conditions such as inter-party

negotiations that will require little effort on their part to

undermine. We would urge instead that SAG conditionality

focus on the systemic flaws in the political environment and

economy with a view to empowering civil society and

engineering a more competitive democratic process in the long

run.

———————————

Potential Points For Use With SAG

———————————

¶7. (C) We offer the following points to be advanced or taken

into consideration in any approach to the SAG regarding

conditions on a loan to Zimbabwe:

— Any conditions you impose on your loan should be specific,

measurable benchmarks that will improve Zimbabwe’s political

and economic environment and require the GOZ to engage not

only with the political opposition but with the Zimbabwean

people as a whole.

— As a first step, the GOZ should terminate Operation

Restore Order fully and allow local and international

humanitarian organizations unfettered access to the

displaced.

— The GOZ should immediately reinstate the Mayor of Mutare,

who was suspended by the Ministry of Local Government and

Housing for facilitating the UN Special Envoy during her

recent visit, and should not persecute others who attempted

to alleviate suffering associated with Restore Order.

— The GOZ should immediately relax enforcement of, and in

the nearest future repeal, the Public Order and Security Act

(POSA) and Access to Information and Protection of Privacy

Act (AIPPA), including the immediate re-opening of the four

newspapers closed under AIPPA and allowing public meetings

without the approval or presence of police.

— As per the IMF, economic reforms should include (but not

be limited to): implementation of a market-oriented foreign

exchange regime, restraints on public spending and credit,

and elimination of government controls on the prices and

distribution of commodities and services.

— SAG assistance should take the form of pay-outs directly

to GOZ creditors (aside from the IMF, many of whom presumably

are South African entities) rather than direct payments to

the GOZ.

SCHULTZ

NNNN

(50 VIEWS)