Mugabe displays his “economic ignorance”

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:

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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

TAGS: PGOV ZI

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

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