Biti joked it might be a good idea to get rid of Air Zimbabwe

Finance Minister Tendai Biti joked that selling Air Zimbabwe might not be such a bad idea as the airline was losing $500 000 a week.

He said this while discussing compensation for Dutch farmers who had been granted a $23 million judgment by the International Centre for the Settlement of Investment Disputes.

The government seized the land of the farmers and they went to court arguing that their farms were covered by a Bilateral Investment Promotion and Protection Agreement between Zimbabwe and the Netherlands.

The judgment allowed the seizure of government assets, permitting the attachment of Air Zimbabwe planes.

Biti, however, said he had made provision for compensation to the farmers in his budget.

Full cable:

Viewing cable 09HARARE622, BITI ON CURRENT ISSUES

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C O N F I D E N T I A L SECTION 01 OF 03 HARARE 000622

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ADDIS ABABA FOR USAU

ADDIS ABABA FOR ACSS

STATE PASS TO USAID FOR J. HARMON AND L. DOBBINS

E.O. 12958: DECL: 06/17/2019

TAGS: PGOV PREL ASEC PHUM ECON ZI

SUBJECT: BITI ON CURRENT ISSUES

Classified By: CDA Katherine Dhanani for reason 1.4 (b) and (d)

——-

SUMMARY

——-

¶1. (SBU) Minister of Finance Tendai Biti told the American

Business Association of Zimbabwe (ABAZ) that Zimbabwe was at

a cross roads; continued progress depended on successful

completion of the constitutional process and resolution of

ZANU-PF succession, the land issue, and Global Political

Agreement (GPA) outstanding issues. He also briefly reviewed

some of his recent actions as Minister of Finance.

Separately, he discussed MDC internal politics and ZANU-PF

succession, and the threat on his life. END SUMMARY.

¶2. (C) Biti addressed the monthly meeting of ABAZ on July

¶29. He met with Pol/Econ chief on July 28.

———————-

A Political Crossroads

———————-

¶3. (SBU) Biti prefaced his remarks to ABAZ by noting that

economic progress and development depended on political

reform. Averring that Zimbabwe was at a crossroads, he

pointed to four problematic areas: ZANU-PF succession, land,

outstanding GPA issues, and the constitution and elections.

Resolution of all of these was important to the progress of

the new government.

¶4. (C) Biti said that ZANU-PF was preoccupied with

succession to President Robert Mugabe. Until this was

resolved, it would be difficult for ZANU-PF to act as a

mature party and engage rationally in the political process.

(NOTE: In our conversation with Biti on July 28, he said he

had recently talked with Minister of Defense Emmerson

Mnangagwa regarding defense forces needs. In the course of

the conversation, he asked Mnangagwa when “the old man” would

leave. Mnangagwa responded that Mugabe intended to resign as

ZANU-PF head in December at the party congress. Biti

acknowledged that “we’ve heard this before,” and it would be

imprudent to give this too much credence. END NOTE.)

¶5. (SBU) Turning to land, Biti said it was imperative that

private land title exist for purposes of investment and

credit markets. He noted that the GPA called for a land

audit; it was important that this be done as soon as possible

to eliminate multiple farm ownership.

¶6. (SBU) Biti noted that a number of GPA issues remained

outstanding, including the appointments of Reserve Bank of

Zimbabwe (RBZ) governor Gideon Gono and Attorney General

Johannes Tomana He observed that Prime Minister Morgan

Tsvangirai would meet with South African president Jacob Zuma

this week to discuss the GPA and that SADC would likely

consider outstanding issues in August or September.

¶7. (SBU) Finally, Biti discussed the constitutional process.

He said the Kariba draft (which he helped write) had been

designed as an interim constitution for the last elections,

and it was never contemplated that it would be a permanent

document. Now that there was a process to adopt a new

constitution, it was important to get it right. Of primary

importance was a term limitation on the executive to avoid

the African syndrome of presidents serving in perpetuity.

Qthe African syndrome of presidents serving in perpetuity.

Without discussing timetables, Biti stressed the need to have

new elections after the adoption of the constitution.

———————

On the Economic Front

———————

HARARE 00000622 002 OF 003

¶8. (C) According to Biti, legislation has been prepared and

will be introduced in the next couple of weeks to restrict

the quasi-fiscal activities of the RBZ and to circumscribe

the powers of the governor. Additionally, an independent

auditor will be established. Privately, Biti told us that he

had discussed the legislation with Mugabe and that passage

was assured. Next, he said he would seek to revise the tax

code.

¶9. (C) Biti reiterated his public comments that the Zimbabwe

dollar would not return in the foreseeable future. Zimbabwe

was making plans to abandon the current multi-currency regime

and to adopt either the U.S. dollar or the Rand. The

advantage to the Rand was that it could eventually be a

regional currency. Biti said he had discussed the matter

with Mugabe and intimated that a decision had been made. He

said a decision would be announced in November.

¶10. (SBU) Biti was asked whether a $23 million judgment by

the International Centre for the Settlement of Investment

Disputes in favor of Dutch farmers who had brought a claim

against the GOZ for expropriation of farms in violation of a

Bilateral Investment Promotion and Protection Agreement would

permit the attachment of Air Zimbabwe planes. After joking

that this might not be a bad thing–the airline was losing

$500,000 per week–Biti said he had made provision for

compensation to the farmers in his budget.

¶11. (SBU) Biti was also asked whether he would provide

compensation to Zimplats and other mining groups which had

had their foreign currency accounts raided by the RBZ. He

replied he considered the RBZ and not government to be

liable; he would consider a small government contribution,

but his main focus was in helping mineral developers operate

efficiently in the future by establishing reasonable taxes

and royalties.

—————————

Politics and a Death Threat

—————————

¶12. (C) In our private conversation on July 29, Biti

criticized Tsvangirai for being too conciliatory toward

Mugabe and for lacking a strategic plan for the MDC in

government. He thought ZANU-PF was weak and that the MDC

should be more assertive with a reform agenda. We noted that

Tsvangirai had made a strong statement at the launch last

week of the Organ on National Healing, Reconciliation, and

Integration in which he emphasized the necessity of complying

with the GPA and noted that political violence continued.

Biti said he had prepared Tsvangirai for his speech. He

commented that recent meetings of the MDC Standing Committee

(10 or so top officials) had been unusually contentious.

Nelson Chamisa and he in particular had urged Tsvangirai to

be more assertive.

¶13. (C) Biti said he was learning each day how powerful the

finance ministry was. He had taken unilateral actions such

as the removal of duties on imported newspapers and would

continue to act to liberalize the economy. As to political

reforms, he downplayed repeal or modification of AIPPA and

Qreforms, he downplayed repeal or modification of AIPPA and

POSA; these acts had been substantially and positively

modified in 2008. Although Gono’s continued presence at the

RBZ was a thorn in his side and symbolically demonstrated

lack of progress under the new government, Gono had been

almost completely marginalized. By far the most important

area for reform, in his opinion, was the media. He noted

that Parliament was in the process of constituting a new

media commission, and he expected the media environment to

open up.

HARARE 00000622 003 OF 003

¶14. (C) Biti said he took the death threat against him

earlier this week (a bullet and threatening note were

delivered to his residence) seriously. His wife and young

son had recently joined him from South Africa and he was

considering moving to a more secure neighborhood. After

having just told us of some of his political differences with

Tsvangirai, Biti said that after receiving the threat he

immediately drove to Tsvangirai’s house to inform him. He

remarked that Tsvangirai responded to him not as a party

president to a secretary general, but as a father to a son.

——-

COMMENT

——-

¶15. (C) State media reports have attempted to exploit

differences within the MDC as dissension that could lead to

weakening of the party. Biti is ambitious and undoubtedly

sees himself as the heir apparent. And he does differ with

Tsvangirai on tactics. But he and others realize that

Tsvangirai is the only MDC leader with genuine national

stature and we see no challenge to his leadership or

weakening of the party. It is true that the MDC needs to be

more focused and strategic. Biti, Chamisa and others are

constructively and forcefully making this point.

¶16. (C) While Biti has been critical of Tsvangirai’s working

relationship with Mugabe, he himself has realized that

diplomacy is sometimes the better part of valor. The

relationship he has established with Mugabe permitted Cabinet

approval of his initial budget and has helped him gain

support for the RBZ legislation.

DHANANI

(16 VIEWS)