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Cablegate: Scenesetter for a/S Frazer's Visit to Mozambique,

VZCZCXRO0607
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHTO #0828/01 2411432
ZNR UUUUU ZZH
R 281432Z AUG 08
FM AMEMBASSY MAPUTO
TO RUEHC/SECSTATE WASHDC 9273
INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUEHLO/AMEMBASSY LONDON 0221

UNCLAS SECTION 01 OF 02 MAPUTO 000828

SENSITIVE
SIPDIS

DEPT FOR AF/FO, AF/S

E.O. 12958: N/A
TAGS: PGOV PREL OTRA OVIP ECON ETRD EINV KPKO EAID
MZ
SUBJECT: SCENESETTER FOR A/S FRAZER'S VISIT TO MOZAMBIQUE,
SEPTEMBER 5-6, 2008

Summary and Introduction
------------------------

1. (SBU) The Embassy warmly welcomes you to Mozambique,
widely considered to be an exemplary post-conflict democratic
success story in Africa. Following the 2007 visits of First
Lady Laura Bush, MCC CEO Ambassador John Danilovich, and HHS
Secretary Mike Leavitt, your presence in Mozambique will
further accentuate the upswing in bilateral relations. This
trip will raise awareness of our role as the largest
bilateral donor to Mozambique, one of only two countries in
the world benefiting from President Bush's three major
initiatives--the Millennium Challenge Corporation (MCC), the
President's Emergency Plan for AIDS Relief (PEPFAR), and the
President's Malaria Initiative (PMI). The visit will also
provide the opportunity to further USG interest in addressing
regional challenges, including Zimbabwe, consolidating
democracy and good governance, and encouraging Mozambique to
participate in regional peacekeeping operations.

A Post-Conflict Success Story
-----------------------------

2. (U) Since the signing of the 1992 Rome Peace Accord,
which ended sixteen years of civil war, Mozambique has made
significant progress as a young democracy and is rightfully
considered a post-conflict success story. The Frelimo party
led the independence struggle and has maintained political
power since Portuguese colonial rule ended in 1975. Frelimo's
military opponent during the subsequent civil war, Renamo,
has been the main opposition party since the first elections
in 1994. In December 2004 Mozambique held its third
presidential and legislative elections. Armando Guebuza won
the presidency by a wide margin, defeating Renamo leader
Afonso Dhlakama (who also ran unsuccessfully in 1994 and
1999).

A Democratic Example, But Still Fragile
---------------------------------------

3. (SBU) Voter turnout in the December 2004 presidential and
legislative elections was approximately 45 percent, down
substantially from the 75 percent turnout in 1999. Although
slightly fewer Frelimo voters cast their ballots than did so
in 1999, about half of the Renamo supporters did not vote.
Some analysts suggest Renamo supporters may have felt cheated
in the very close 1999 election and cynically saw little
point in participating. International observer groups
monitored the elections and indicated that the elections were
carried out in a generally successful and peaceful manner but
noted there were irregularities in the administration of the
elections. All agreed, nonetheless, that final results
broadly reflected the will of voters.

4. (SBU) In the December 2004 legislative election, Frelimo
won 160 out of 250 seats in the National Assembly ) just
seven short of a two-thirds majority. Renamo won 84 seats
and an allied coalition of small parties took the remaining
six. Since 2005 several of these small parties have
distanced themselves from Renamo. Renamo's unexpectedly poor
showing has led to disarray within the party and Dhlakama's
leadership has been called into question. This has weakened
any organized opposition to Frelimo, now in power for more
than thirty years. In November, local elections will be held
in all 43 municipalities, and in 2009, the country will hold
its fourth national elections. The municipal elections in
particular should provide a good opportunity to assess the
viability of Renamo as an effective opposition.

Responsible Economic Stewardship
--------------------------------

5. (U) Since the mid 1980s, the government has broadly
followed IMF and World Bank guidelines on economic issues.
Mozambique's macroeconomic reforms and success in attracting
large investment projects have resulted in an average annual
GDP growth rate of eight percent from 1994-2007, the highest
in Africa over this time period. This growth is from a very
low base however, as per capita GDP for 2008 registered
around USD 375. Foreign direct investment, exports, and
revenue collection all have increased significantly. U.S.
investment in Mozambique has grown steadily, and in 2007the
U.S. was the largest foreign direct investor. Most of the
state companies have been privatized, with only about one
dozen remaining in government hands.

Aid Community Voicing Concerns; USG Largest Donor

MAPUTO 00000828 002 OF 002


--------------------------------------------- ----

6. (U) The government receives approximately 50% of its
budget directly from foreign aid, and this trend is expected
to continue despite recent complaints by European donors
about the state of democracy, particularly governance and
corruption issues. As the line between Frelimo and the
government continues to blur, the group of donor nations
expressed concern in 2008 that many democracy indicators have
not been met. As a result, Sweden, Switzerland, and Denmark
recently announced a restructuring of their foreign
assistance which appears to reduce the amount of aid provided
to Mozambique. The USG is the largest single donor to the
GRM with USD 325 million. In particular, our USD 216 million
in PEPFAR funds in 2008 total more than the HIV/AIDS funds
committed by all other donors and the Mozambican government
combined. Although the USG does not provide direct budget
support, we have forgiven all of Mozambique's USD 151 million
debt as part of Mozambique's Highly Indebted Poor Countries
relief initiative.

PEPFAR, MCC, PMI: A Unique Mix
------------------------------

7. (SBU) Mozambique is one of only two countries in the
world to receive combined PEPFAR, MCC and PMI support from
the USG. In 2007, MCC CEO John Danilovich and Mozambican
President Guebuza signed a five-year, $507 million Compact
that will reduce poverty through increased incomes and
employment by improving water systems, sanitation, roads,
land tenure, and agriculture, with a focus on the country's
four northern provinces. Despite some frustration about the
lengthy negotiation and implementation process, in July the
MCC program began advertising tenders to bidders for several
of its projects.

Zimbabwe
--------

8. (SBU) The GRM has been hesitant to criticize other
African governments over human rights violations and has
historically abstained from voting on any such resolutions.
GRM officials have stated publicly that Mozambique, instead
of criticizing actions, prefers to focus on what can be done
to address such issues within the regional institutions
(e.g., the AU and SADC). Despite numerous high-level
meetings encouraging the Mozambicans to engage on Zimbabwe,
the Mozambican government has been hesitant to follow the
lead of Botswana and Zambia, due to the close historical ties
between the countries.

Peacekeeping Operations
-----------------------

9. (SBU) Mozambique's armed forces (FADM) have benefited
from substantial USG military training and assistance,
especially through the African Contingency Operations and
Training Assistance (ACOTA) program. The FADM successfully
participated in the African Union's 2005 peacekeeping
operations in Burundi, and has publicly recognized its
interest in a higher-profile contribution to peacekeeping
operations in Sudan. The Embassy is working to assist FADM
in further developing its peacekeeping capacity, and we look
forward to supporting the GRM's eventual contribution to
regional operations.


Conclusion: Bilateral Relations on the Upswing
--------------------------------------------- -

10. (U) This is the first Assistant Secretary for African
Affairs to visit Mozambique in three and a half years, and
follows on the heels of several high-level USG visits in
2007. This year, the PEPFAR program was renewed for an
additional five years, the MCC has begun advertising for its
initial implementation of projects, and an agreement to
purchase land for the New Embassy Compound was completed.
Together these events highlight our ever stronger bilateral
relationship and emphasize the United States' leading role in
Mozambique's development in democracy, health, and prosperity.
Amani

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