President Robert Mugabe displayed his economic ignorance when he officially opened Parliament in July 2003 as his economic recovery ambitions were not based on reality, or any concept close to this, according to United States ambassador to Zimbabwe Joseph Sullivan.
“The projects and policy solutions he proposed in his speech are not based on visible economic principles and ignore the role government has played in creating the current disastrous economic situation,” the ambassador said.
He said Mugabe expressed incredulity that basic goods such as milk, bread, and vegetable oil reappeared after price controls were effectively lifted and prices rose to market rates, and then said the government must strengthen price-monitoring mechanisms while simultaneously encouraging companies to increase capacity utilisation.
The objective of this strengthening exercise was supposedly to make consumer goods more affordable but the two objectives were antithetical, as the recent history of price controls and production showed.
“In another example of economic ignorance, Mugabe seemed to advocate stronger government interference in the production process when he proclaimed that the main challenge to economic revival was the provision of adequate means, production targets, and technical assistance,” Sullivan said.
Full cable:
Viewing cable 03HARARE1506, PARLIAMENTARY AGENDA HOLDS FEW SUPRISES –
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This record is a partial extract of the original cable. The full text of the original cable is not available.
250929Z Jul 03
UNCLAS SECTION 01 OF 03 HARARE 001506
SIPDIS
SENSITIVE
NSC FOR SENIOR AFRICA DIRECTOR J. FRAZER
LONDON FOR C. GURNEY
PARIS FOR C. NEARY
NAIROBI FOR T. PFLAUMER
E.O. 12958: N/A
SUBJECT: PARLIAMENTARY AGENDA HOLDS FEW SUPRISES –
LIMITATIONS ON FREE EXPRESSION AND ECONOMIC DECLINE TO
CONTINUE
REF: A. HARARE 1311
¶B. HARARE 874
¶C. 02 HARARE 2545
¶1. (SBU) Summary. The Fourth Session of Parliament promises
to be much the same with the GOZ intent on legislation that
further stifles dissent, free speech, NGOs, and private
sector initiatives. President Mugabe’s economic agenda,
which he presented during the July 22 Parliamentary opening
day ceremony, is fantastical, given the prevailing economic
conditions, and will do nothing to reverse the downward
economic spiral. End Summary.
——————————————–
No Surprises in ZANU-PF Parliamentary Agenda
——————————————–
¶2. (SBU) The Fourth Session of the Fifth Parliament opened
July 22 with a speech by President Robert Mugabe in which he
proposed seventeen new bills ZANU-PF would like to pass
through Parliament. Several of these new pieces of
legislation would imperil economic recovery, curtail free
speech more, and impinge on civil liberties.
Still Trying to Get NGOs
————————
¶3. (U) ZANU-PF has proposed the Non-Governmental
Organizations Bill, which seeks to ensure the operations of
Non-Governmental Organizations(NGOs) are consistent with and
supportive of government policies and programs. It expands
the definition of NGOs to include trusts. In September 2002,
the Government required NGOs to register with the Ministry of
Social Welfare, in compliance with the Private Voluntary
Organizations Act, or they would have to cease operations.
Several ministers asserted that organizations that were not
required to register because they did not fit the definition
of an NGO, such as Amani Trust, Zimbabwe Democracy Trust and
Southern Africa Media Development Fund, were not properly
registered and engaged in activities intended to unseat the
government. (See Reftel C).
No More Parliamentary Boycotts
——————————
¶4. (U) The Privileges Amendment Bill seeks to amend several
Acts of Parliament to punish MPs who boycott, interrupt, or
walk out on a Presidential address to Parliament. The
offending MP would be subject to a fine equivalent to six
months, salary. The bill would also afford more protection
to judges against arrest or search in court premises where
they are judges.
More Land for the Taking
————————
¶5. (U) The Land Acquisition Amendment Bill seeks to speed up
the remaining process of acquiring the remaining designated
land. Mugabe’s speech did not make it clear if the
legislation would sanction his supporters who have abused the
land redistribution for personal gain.
Indigenization Campaign Continues
———————————
¶6. (U) The Indigenization Bill would ensure that companies
allocate at least twenty percent of shareholding to workers.
The Mines and Minerals Act also seeks to make it easier for
small-scale indigenous miners to participate in the industry.
(Note: Although the bill has yet to be introduced, GOZ
officials in Mutare have already sent a letter to local
industrialists instructing them to list how they would comply
with the 20 percent requirement. End note.)
A New Fund to Help Poor
———————–
¶7. (SBU) The Posts and Telecommunications Act will set up a
fund to ensure telecommunication and postal services are
available to the rural population at reduced prices.
(Comment: This new fund will most likely not help the rural
population obtain low-cost phone and postal services unless
it is designed as an urban (opposition stronghold) subsidy
for rural areas (ZANU-PF constituency). It will probably be
another source of funds for the GOZ to tap for other
purposes. End comment.)
Unfinished Business
——————-
¶8. (U) In addition to these items, Parliament will resume
debate on the Citizenship Bill and Electoral Bill, which both
received adverse reports from the Parliamentary Legal
Committee (see Reftels A and B). In addition to debate on
these two bills, Parliament is likely to debate the expulsion
of Zengeza MDC MP Tafadzwa Musekiwa, who has missed more than
the constitutional limit of 21 consecutive days of
Parliament.
————————————–
Economic Plan = Recipe for Destruction
————————————–
¶9. (SBU) Mugabe,s economic recovery ambitions are not based
on reality, or any concept close to this. The projects and
policy solutions he proposed in his speech are not based on
visible economic principles and ignore the role government
has played in creating the current disastrous economic
situation. Mugabe expressed incredulity that basic goods
such as milk, bread, and vegetable oil reappeared after price
controls were effectively lifted and prices rose to market
rates, and then said the GOZ must strengthen price-monitoring
mechanisms while simultaneously encouraging companies to
increase capacity utilization. The objective of this
strengthening exercise is supposedly to make consumer goods
more affordable but the two objectives are antithetical, as
the recent history of price controls and production shows.
In another example of economic ignorance, Mugabe seemed to
advocate stronger government interference in the production
process when he proclaimed that the main challenge to
economic revival was the provision of adequate means,
production targets, and technical assistance.
¶10. (SBU) Mugabe blamed the shortage of foreign exchange in
the economy on a weak monetary authority and unclear monetary
policies that allowed abuse of earnings and speculative
activities, but he did connect these poor monetary policies
with the crack-brained ZANU-PF government policies that were
the root cause. He also blamed the unethical practices of
financial institutions, mining houses, and individual
exporters for the country’s problems. To curb these
practices, Mugabe said the GOZ would introduce an
Anti-Corruption Commission Bill to stem the outflow of
foreign exchange through over or under invoicing, discount
pricing, advance payments to foreign suppliers of raw
materials, and smuggling of precious metals. Mugabe also
proclaimed that interest rates must be brought down to create
real wealth, even though real interest rates are already
negative, but never addressed the spiraling inflation rate.
¶11. (SBU) The grandiose economic recovery plans presented in
Mugabe,s speech are not feasible in the prevailing economic
environment, especially given the GOZs lack of foreign
exchange. Mugabe told Parliament that the GOZ would continue
construction on ongoing dam projects and begin at least two
new one. He also indicated that the GOZ would rehabilitate
existing smallholder irrigation schemes and construct at
least two medium irrigation schemes per province (at least 16
projects). He did not explain how the GOZ would pay for
these initiatives.
¶12. (SBU) Mugabe said the GOZ would strive for
self-sufficiency in the energy sector. He cited an
infeasible memorandum of understanding between the Zimbabwe
Electricity Supply Authority (ZESA) and the Mozambique
government for ZESA to take up equity in Mozambique’s Hydro
Caborra Bassa (HCB). (Note: The Mozambique Government
reportedly owes Portugal a large sum for HCB costs and wants
to sell a percentage of the dam. End note.) However, the GOZ
cannot buy a percentage of the HCB because they have not
foreign exchange. Mugabe hinted at a liberalization of the
fuel sector through a dual price structure even though a dual
price structure requires huge subsidies and is open to abuse.
He also proposed an ambitious Gaseous Hydrocarbons Bill that
would provide for exploration, production, importation,
transportation, distribution, and utilization of coal-based
gaseous products and natural gas for economic development,
even though the GOZ has no way to financial support such
efforts and it is inconceivable that foreign investors would
risk a significant up front investment in the prevailing
business climate.
———————————————
No Ratification of Counterterrorism Protocols
———————————————
¶13. (SBU) Contrary to what Zimbabwe has led the U.N. Security
Council’s Counterterrorism Committee to believe, ratification
of the UNSCR 1373 is most likely not on Parliament’s agenda.
Mugabe did not mention this, and neither ZANU-PF nor MDC MPs
with whom we spoke were aware of the need for this action.
(Note: The executive office typically sets Parliament’s
agenda and proposes legislation. End note.) PolOff,s
attempts to confirm whether the item is on the parliamentary
agenda with Parliament’s clerk were futile. Nonetheless, the
Money Laundering and Proceeds of Crime Bill, which seeks to
establish an anti-money laundering authority to monitor any
persons suspected of money laundering and provides for the
confiscation of ill-gotten gains of crimes, may be a move
toward implementing sections of UNSCR 1373. It is perhaps
the one bright spot in an otherwise dim legislative agenda.
——-
Comment
——-
¶14. (SBU) Mugabe,s speech gives a preview as to what
Parliament will do in the next session, particularly since
most bills come from the executive through the ministries.
If passed, the proposed legislation would maintain the status
quo, and Zimbabwe would in all likelihood continue along the
path of international isolation and condemnation and economic
decline. The economic development and recovery plan Mugabe
proposes can be summarily dismissed because the GOZ does not
have the wherewithal to fund any of these initiatives,
refuses to accept basic economic principles, and ignores the
reality on the ground. End comment.
SULLIVAN
(23 VIEWS)
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