Cablegate: Central Banker Gono: What to Expect

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

200819Z Nov 03





E. O. 12958: N/A
SUBJECT: Central Banker Gono: What to Expect

1. (SBU) Summary: Gideon Gono's assiduously-crafted
image as Zimbabwe's star businessman/negotiator will not
survive his Reserve Bank tenure. The economy he's about
to steward is a sliver of its former self. Initially, we
expect Gono to quietly advocate market-oriented policies
through his personal relationship with President Mugabe
and penchant for backroom deals. When that fails - as we
believe it will - Gono will face his toughest dilemma,
whether to take his dissent public (like former Finance
Minister Simba Makoni) or cower in private (like the
present Finance Minister Herbert Murerwa and former
Reserve Bank Governor Leonard Tsumba). In the end, he
must sacrifice either his insider privilege or public
repute. End Summary.

The Job No One Wanted
2. (SBU) Gono foresaw this Faustian bargain and did all
he could to avoid the Governorship. After six months of
Gono's bobbing and weaving, Mugabe at last pinned him
down. Since then, the incoming Reserve Bank chief has
made the best of his appointment, casting himself as a
business wunderkind called into service to rescue his

3. (SBU) In contrast, most local businesspeople consider
Gono a ZANU-PF crony who built an empire on sweetheart
deals. As the unofficial banker of Mugabe and the ruling
ZANU-PF, Gono has traded low interest (and bad risk)
loans for preferential deals. Local bankers dismiss his
acclaimed turnaround of Commercial Bank of Zimbabwe (CBZ)
as smoke-and-mirrors. Nonetheless, Zimbabwe Broadcasting
Corporation (which he chairs) and Financial Gazette
(which he owns) tout it as Zimbabwe's Herculean business

Not the Worst Choice
4. (SBU) Our contacts with Gono lead us to believe he
understands why the GOZ's interventionist economic policy
is not working, and that only material gain makes
producers produce. Unlike many ZANU-PF hardliners
enthralled by the Cuban "economic miracle," Gono has
instead pointed to the Malaysia as the model to emulate.
He is also a skilled negotiator who brokered a complex
fuel deal with the Libya's Tamoil in 2001. It took the
Libyans a year to realize Gono had swindled them into
sending free fuel.

5. (SBU) At one point, Gono showed us a "strictly private
and confidential" paper he prepared for Mugabe. It may
give some indication of his slant as central bank chief.
Gono bends over backward to massage Mugabe's ego and
couch his proposals in the least-threatening manner: "If
any parts or sections of the document are found to be
offensive to anybody or out of line with political and
economic thinking in the Government, I apologize."
While no reader would mistake Gono's prescriptions for
those of the IMF, they beat the present policy melange
hands-down. He calls for a more realistic exchange rate,
though the GOZ should still "manage the process and not
leave it to the market." Gono argues that the GOZ should
stabilize the political environment, grant resettled
farmers title-deed, provide more incentives for exporters
and "get Zimbabwe/UK relations back on course."

6. (SBU) From what we know of Gono, we believe he will
align with GOZ moderates and push for more commonsensical
economics. But can he succeed where a sharper-witted
administrator like ex-Finance Minister Simba Makoni
failed? The rosiest scenario says maybe, since Gono can
take his case around GOZ hardliners and directly to
Mugabe. Furthermore, he can turn the Financial Gazette
into the Reserve Bank's publicity organ - a potential
counterweight to Information Minister Jonathan Moyo's use
of State media.

7. (SBU) Unfortunately, we consider it more likely Gono
will back down when confronted by Mugabe and his more
militant ministers. Better than anyone, Gono understands
that GOZ connections made - and can break - his empire.
Bluntly put, we predict Gono will decide it's better to
be rich than right, falling in line behind other weak-
kneed GOZ malcontents. But conformity to bad policy has
its price: The economy's continued recession will
finally shatter Gono's public persona as Zimbabwe's
turnaround artist.


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