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Cablegate: Business Leaders Push Envelope - Gently

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 HARARE 000615

SIPDIS

SENSITIVE

STATE FOR AF/S
NSC FOR SENIOR AFRICA DIRECTOR JFRAZER
USDOC FOR 2037 DIEMOND
PASS USTR ROSA WHITAKER
TREASURY FOR ED BARBER AND C WILKINSON
STATE PASS USAID FOR MARJORIE COPSON

E. O. 12958: N/A
TAGS: ECON EINV ETRD ZI
SUBJECT: Business Leaders Push Envelope - Gently

Ref: Harare 531

1. (SBU) Summary: Zimbabwean business leaders told us
they are increasingly willing to assert themselves with
GOZ ministers. Still, they acknowledge that their
outspokenness has its limits and carries some risks. End
summary.

Modest Break-Through?
---------------------
2. (SBU) Ambassador Sullivan hosted a roundtable
discussion on March 25 for five prominent company chiefs:
Dairiboard's Anthony Mandiwanza, Cottco's Sylvester
Nguni, International Capital Corporation's Bernard
Chidzero, Intermarket's Nicholas Vingirai and PG
Industries' Gerald Mujaji. The businessmen feel the GOZ
has finally begun to entertain their input, citing recent
talks with the Confederation of Zimbabwe Industries
(CZI), which Mandiwanza heads, as well as the
government/industry/labor Tripartite Negotiating Forum
(TNF). These negotiations helped bring about devaluation
and could lead to a relaxation in price controls.

3. (SBU) Nonetheless, dialogue with the GOZ still has its
challenges. Mandiwanza agreed the GOZ should scrap price
controls, but could not make that case in blunt terms to
the ultra-sensitive government ministers. Instead, he
redefined controls as "managed" prices, satisfying the
government's interventionist zeal and the private
sector's need for higher prices. Mandiwanza employed the
same strategy in gaining a devaluation, labeling it an
"export support mechanism." He was less successful in
arguing for liberalized fuel prices and import licenses,
as inflation fears cut the proposed price increase by two-
thirds. In these and any other matters of economic
policy, roundtable participants agreed that even moderate
government officials have a very steep learning curve.
Businesses are more accustomed to getting their way
through quiet, tactical bribes. Conversely, our
interlocutors still fear for themselves and their
families if they stick their necks out too far, ensuring
the government/business relationship remains uneasy.

Comment
-------
4. (SBU) As we have reported (ref), the GOZ has
successfully implemented devaluation and higher fuel
prices. These are arguably the first positive
macroeconomic developments in over a year, and ones that
several roundtable participants had a hand in. If the
GOZ wants to turn around this economy, however, it's
still just in the first inning. Further reforms will fan
popular discontent, possibly triggering an escalation in
GOZ repression.

5. (SBU) The businessmen want desperately to approach
economics in isolation from politics, maintaining the
kind of neutral, nonpartisan posture that a corporation
might in the U.S. Most businesses bent over backwards to
avoid any appearance of supporting the opposition's
stayaway on March 19-20, although most avoided opposing
it either. At a time when the public-private sector
dialogue is advancing, neutrality has both appeal and
merit. Ultimately, though, we do not believe anyone here
in government, business or civil society can disentangle
economic growth and stability from political legitimacy,
human rights and rule-of-law -- economic-political
linkage that both the African Growth and Opportunity Act
(AGOA) and New Partnership for Africa's Development
(NEPAD) underscore. Participants at the lunch -- the
elite of indigenous businessmen -- are increasingly
cognizant of the linkages and the need for Zimbabwe to
reengage internationally with its traditional economic
partners. PG's Mujaji said his participation at this
moment in an American Embassy lunch was intended and will
be read as a signal by the GOZ.

6. (SBU) At the lunch, we underlined problems with GOZ
governance and lack of respect for human and civil
rights. We praised the businessmen for their success in
achieving several positive economic steps, but observed
that the economic crisis could not solved without also
addressing Zimbabwe's political crisis, in which at least
half the population is alienated from the Government.
Sullivan

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