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Cablegate: Goz Still Distrusts Exporters

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

UNCLAS HARARE 000805

SIPDIS

SENSITIVE

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

E. O. 12958: N/A
TAGS: ETRD ECON EINV ZI
SUBJECT: GOZ Still Distrusts Exporters


1. (SBU) Summary: The GOZ believes most export firms
shelter earnings, depriving the country of hard currency
to import energy, fuel and other necessities. In
response, the GOZ has erected counterproductive export
obstacles. End Summary.

2. (U) An April 25 article in the GOZ-run Herald began:
"The current energy crisis which threatens to cripple
industrial production can be overcome if exporters
repatriate all foreign currency to the Reserve Bank." We
have no doubt many exporters conceal earnings off-shore
to evade the GOZ's harsh exchange requirements. This is
part of a broad migration toward the informal economy,
assisted by politically-connected indigenous banks. (An
exporter once told us: "I used to worry about exchange
requirements. Then I discovered indigenous banks.") By
blaming exporters for low treasury receipts, however, the
GOZ ignores the free-falling economy's far more
substantial impact.

3. (SBU) Worse still, the Reserve Bank's severe approach
discourages law-abiding exporters. Zimbabwe Spinners and
Weavers' Executive Secretary told us the Reserve Bank
treated him so harshly that his firm has reduced monthly
fabric shipments to Europe from 50 to 2 containers. The
Reserve Bank insists exporters remit revenue within 90
days of shipment. But our interlocutor said standard
practice is that European textile importers take 5-6
weeks after delivery to settle accounts. When he
petitioned for an elongated 180-day period, the Reserve
Bank rebuked him for hiding earnings. As a consequence,
the company now focuses on the less lucrative South
African market with shorter shipping durations.

4. (SBU) Comment: This is but one example of the GOZ's
deep-seated suspicion of private sector integrity. As
usual, the GOZ does not distinguish between profiting and
profiteering. An anti-capitalist reflex also causes it
to ignore private sector pleas that many controlled
prices are below production cost. In the case of
exports, the GOZ self-destructively enforces draconian
disincentives at a time when most developing countries
offer subsidies and other incentives. In short,
government ministers who still address each other as
"comrades" have drawn few lessons from the failure of
command economies around the world.

Sullivan

© Scoop Media

 
 
 
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