Cablegate: Zimbabwe Not Qualified for Agoa

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

230913Z Sep 03

UNCLAS HARARE 001938

SIPDIS

DEPT FOR AF/EPS DKRZYWDA
DEPT PLS PASS USTR C. HAMILTON
COMMERCE/ITA FOR HVINEYARD
TREASURY FOR OWHYCHSHAW

E. O. 12958: N/A
TAGS: ETRD PREL ELAB PHUM ZI
SUBJECT: Zimbabwe not qualified for AGOA

Post reaffirms Zimbabwe's unsuitability for Africa Growth
and Opportunity Act (AGOA) trade preferences at this
juncture. The country falls short in each of the six key
areas:

- Market-Based Economy: The GOZ approaches the economy
through broad interventionism, with parastatals serving
as monopolistic middlemen for products such as tobacco
and grain. The GOZ still controls private sector grain,
fuel and transport prices, but it has relaxed limits for
many other products and services. At the same time, the
GOZ still claims to keep extensive "price monitoring" in
place, sometimes visiting firms and sporadically fining
them for charging market rates. Exporters must exchange
half their revenues at an official rate only one-seventh
the market rate. Government, rather than the central
bank, determines interest rates, currently about 350
percent negative.

- Political Pluralism, Rule-of-Law, Due Process: The
opposition political party operates in a climate of
intimidation and repression. The GOZ is prosecuting the
opposition leader for treason, a crime that carries the
death penalty. Over the past year, the GOZ has removed
Harare's elected mayor and shut down the only non-
government daily newspaper. During the country's high-
profile land redistribution, the GOZ has ignored rule-of-
law and due process.

- Elimination of Barriers to U.S. Trade and Investment:
The suspension of rule-of-law has scared away all but a
trickle of foreign investment. Due to their rapid
impoverishment, Zimbabwean firms and consumers can no
longer afford imported goods from the U.S.; although a
number of Zimbabwean products continue to move to the
U.S., indirect export taxes discourage this trade.

- Economic Policies to Reduce Poverty: While the GOZ
maintains several programs that provide food or basic
services to the poor, these run counter to the general
thrust of GOZ economic policy, which has caused most
Zimbabweans to grow progressively poorer over the past 6
years. Many Zimbabweans take home but a fraction of
their 1997 wages. Income taxes kick in at a monthly
salary of US$3. Electricity and fuel are heavily
subsidized but difficult to come by. Controls have
failed to keep prices in check. An acute cash shortage
made it difficult for lower-income Zimbabweans to access
money in their accounts during most of 2003.

- System to Combat Corruption: Favoritism in government
contracting is rampant. Many, if not most, senior
officials have extrajudicially seized at least one large
commercial farm during land redistribution.

- Protection of Worker Rights: Despite official
recognition of worker rights, the government continues to
exert heavy pressure on labor unions, limiting their
freedom of association and right to organize. Unions
have been denied routine meetings and necessary
consultations with constituents under the draconian
Protection of Order and Security Act(POSA). Senior
members of the Zimbabwe Congress of Trade Unions (ZCTU)
have been arrested on spurious charges, some of them
later reporting physical abuse while in police custody.
The most recent amendment to the Labor Relations Act
severely restricts the ability of workers to strike, and
increases the authority for the government to declare
strikes illegal.

Sullivan

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