US official said Mugabe has consistently outplayed South Africans

A United States embassy official in Pretoria expressed doubts that the South African government could ease President Robert Mugabe out of power arguing that he had always outplayed the South Africans.

Charge d’Affaires John J. Hartley said in a cable dispatched on 19 July 2005 that the South African government had decided that it could not standby and watch Zimbabwe collapse, but though it wanted Mugabe gone, it wanted this to be through controlled constitutional change and not economic implosion or a violent uprising.

“The question is whether Mugabe will really stick to the agreement once South Africa has provided funds and helped bail him out with the IMF……… Mugabe has consistently outplayed the South Africans, but this time Pretoria thinks it finally has the upper hand.”

Full cable:

Viewing cable 05PRETORIA2854, SOUTH AFRICA INTENSIFIES ENGAGEMENT IN ZIMBABWE;

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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 PRETORIA 002854

SIPDIS

DEPT FOR AF/S B. NEULING AND T. CRAIG, EB/IFD, EB/OMA

LONDON, PARIS, BRUSSELS, ADDIS FOR AFRICA WATCHERS

E.O. 12958: DECL: 07/18/2015

TAGS: PREL PHUM ECON EFIN KDEM ZI SF

SUBJECT: SOUTH AFRICA INTENSIFIES ENGAGEMENT IN ZIMBABWE;

CONSIDERS BAILOUT LOAN

REF: PRETORIA 2841

Classified By: Charge d’Affaires John J. Hartley

Reasons 1.4(b) and (d)

¶1. (C) Summary. Over the last ten days, South Africa has

become increasingly concerned about the deteriorating

economic situation in Zimbabwe and has intensified its

diplomatic activity to find a solution to the crisis. Deputy

President Mlambo-Ngcuka traveled to Zimbabwe July 13 and met

with Zimbabwean Vice President Mujuru and President Mugabe.

Mugabe sent Reserve Bank head Gono to South Africa to

follow-up and discuss a possible South Africa bailout loan to

Zimbabwe. South Africa is considering loaning Zimbabwe funds

to pay creditors, including the IMF, hoping to use this loan

as leverage for political and economic reform. End summary.

————————————-

Diplomatic Flurry and Church Pressure

————————————-

¶2. (C) Following a period of relative inactivity after the

March 31 Zimbabwean parliamentary elections, the South

African Government (SAG) has significantly stepped up its

diplomatic engagement in Zimbabwe:

— President Mbeki met with Zimbabwe opposition leader Morgan

Tsvangirai of the Movement for Democratic Change (MDC) July 3

SIPDIS

in Pretoria. Tsvangirai claimed publicly after the meeting

that Mbeki was changing his strategy in Zimbabwe. According

to Tsvangirai, Mbeki admitted to him that “quiet diplomacy”

had not worked.

— South African Deputy President Phumzile Mlambo-Ngcuka

traveled to Zimbabwe with Deputy Finance Minister Jabu

Moleketi July 13 and met with Zimbabwean Vice President Joyce

Mujuru and President Robert Mugabe. Mlambo-Ngcuka said she

visited Harare to gain a “global understanding of the

challenges” facing Zimbabwe. According to Sydney Masamvu of

the International Crisis Group, who spoke to Mujuru’s husband

Solomon, Mlambo-Ngcuka delivered a tough message to Vice

President Mujuru, pushing for the resumption of dialogue with

the MDC and the end to Operation Restore Order.

— President Mbeki met with a South African Council of

Churches delegation July 15 to discuss the humanitarian

situation in Zimbabwe. SACC had organized a senior-level

delegation to Zimbabwe July 10-12, led by the President of

the SACC, Russel Botman, and Archbishop Njongonkulu Ndungane.

The delegation strongly condemned Operation Restore Order,

saying that it has caused “widespread suffering to the most

vulnerable people.” The SACC called on the operation to stop

“in God’s name.” According to Botman, Mbeki committed to

supporting church humanitarian relief operations in Zimbabwe.

———————

Possible Bailout Loan

———————

¶3. (C) South Africa is considering loaning funds to Zimbabwe

to stave off an economic collapse. EconOff spoke with

National Treasury Director for International Economics Danel

van Rensburg (strictly protect) July 19, who confirmed that

Zimbabwe asked South Africa for a $1 billion loan to make

payments to the IMF, African Development Bank, World Bank,

and Paris Club creditors, as well as to pay for food and fuel

imports. In the very near term, Zimbabwe is looking at

making payments on its general resources account (GRA) and

poverty reduction and growth facility (approximately $291

million) at the IMF. An IMF Board meeting will be held on

August 3 during which management will request that Zimbabwe

be expelled from the IMF. According to van Rensburg, South

Africa is concerned that once the IMF walks, all financial

flows to Zimbabwe will stop, resulting in serious

repercussions for South Africa if “things go really wrong;”

for example, South Africa might have to set up refugee camps

on the border. President Mbeki and Finance Minister Manuel

are lobbying to postpone the August 3 IMF decision for one

month, to give them time to negotiate conditions with the

Zimbabweans and for the Zimbabweans to “show good faith.”

Manuel reportedly called U.S. Treasury Secretary Snow, U.K.

Chancellor Brown, and Canadian Finance Minister Goodale to

make this pitch.

¶4. (C) Van Rensburg confirmed that Manuel met with Zimbabwe

Reserve Bank head Gideon Gono July 15, and that this was

followed by a more technical meeting at the working level.

(Note: ICG’s Masamvu also talked to Gono, who said that

Mugabe sent him to Pretoria as his envoy to discuss the terms

of a possible loan.) Loan discussions are still in the

preliminary stage. There is no agreement on the amount of

the loan or on the conditions. South Africa is looking at

making a payment on the GRA of about $170 million to

forestall the IMF expelling Zimbabwe, but South Africa wants

more time to negotiate conditions. According to van

Rensburg, conditions at this point include very general

issues such as ending Operation Restore Order, adherence to

the rule of law, and protection of property rights. Van

Rensburg thought that there would be some economic conditions

as well, e.g., dealing with price controls and ensuring the

autonomy of the Zimbabwe Central Bank — which may require a

constitutional change. The bailout would be extended as a

loan, to be repayable with interest in tranches.

¶5. (C) At this time, South Africa has no

government-to-government loan with Zimbabwe. The South

Africa Reserve Bank has extended a line of credit to the

Zimbabwe Central Bank, but this has never been used, although

van Rensburg believes that Zimbabwe may have recently

requested to use it. Van Rensburg thought that Zimbabwe owed

Eskom, the South Africa state electricity company, and South

African petroleum companies about $200 million, but is not

definite on the amount.

¶6. (C) Senior SAG spokesman Joel Netshitenzhe said publicly

July 18 that it was “quite possible” that recent discussions

between the GOZ and SAG covered “assistance that Zimbabwe

required.” Netshitenzhe said that principles guiding the

possible loan would be Zimbabwe’s economic recovery and

political normalization. He added that the decision to offer

financial assistance to the GOZ must pass through Cabinet and

Parliament. The opposition Democratic Alliance criticized

the possible loan to Zimbabwe, saying it was extending a

lifeline to a dying regime.

——-

Comment

——-

¶7. (C) South Africa has apparently decided that it cannot

stand on the sidelines as Zimbabwe’s economy collapses. For

the last five years, Zimbabwe’s decline has been a

“predictable disaster” which the South Africans believed they

could manage while seeking a political solution to the

crisis. In recent weeks the situation has become much less

predictable. This has led to the SAG’s flurry of activity to

find an economic and political solution to the crisis.

“Containing” the situation in Zimbabwe so that it does not

spill over into South Africa — at least not too much — has

always been one of the prime motivations behind SAG policy.

South Africa wants Mugabe gone, but through controlled

constitutional change — not economic implosion or a violent

uprising.

¶8. (C) It appears that a deal is in the works: South Africa

will provide a loan to Zimbabwe (and help stave off the IMF

expulsion vote) in return for commitments on serious economic

reform and dialogue with the MDC. President Mbeki’s call to

the Charge July 18 urging that the U.S. react with caution to

the forthcoming UN report on Operation Restore Order (reftel)

suggests that he does not want the international response to

the UN report to scuttle his plan. In the SAG view, the

potential loan deal has the twin benefits of staving off the

economic collapse while reenergizing the dormant political

talks on reforming the constitution.

¶9. (C) The question is whether Mugabe will really stick to

the agreement once South Africa has provided funds and helped

bail him out with the IMF. We note that the South Africans

do not appear to have asked for a timetable for Mugabe’s exit

or a commitment not to run in 2008. We also note that Mugabe

is reportedly traveling to China July 23 (and may have sent

feelers to Indonesia and/or Iran), possibly to request

financial assistance as a counter to Pretoria. Mugabe has

consistently outplayed the South Africans, but this time

Pretoria thinks it finally has the upper hand.

HARTLEY

(34 VIEWS)