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Cablegate: Scenesetter for Dcma Amb Yates Visit To

DE RUEHTO #1112/01 3291436
R 241436Z NOV 08



E.O. 12958: N/A

1. (SBU) The Embassy warmly welcomes you to Mozambique,
widely considered to be an exemplary post-conflict democratic
success story in Africa. Following the 2008 visits of Major
General Altshuler, Deputy Assistant Secretary of Defense for
African Affairs Theresa Whalen, and Deputy Assistant
Secretary of State for Africa Carol Thompson, your presence
in Mozambique will further accentuate the upswing in
bilateral relations. Your participation in the inauguration
ceremony of the U.S.-supported Military HIV/AIDS Hospital
will again underscore that the U.S. is 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 encouraging Mozambique
to participate in regional peacekeeping operations.

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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.

5. (SBU) Local elections will be held November 19, 2008 in
all 43 municipalities; in 2009, the country will hold its
fourth national elections. Renamo failed to re-nominate
popular Beira mayor Daviz Simango, allegedly due to his
success and potential as a threat to wrest control of Renamo
from Dhlakama. Simango is running as an independent and is
expected to win. A successful independent candidate could
pave the way for a renewed Renamo or a new political party.

Responsible Economic Stewardship

6. (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. The 2008 growth rate is
lower, 6.5 percent due, in part, to the difficult world
economic situation. Economic 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 2007 the U.S. was

MAPUTO 00001112 002 OF 002

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

7. (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 bilateral donor in the
country 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

8. (SBU) Mozambique is one of only two countries in the
world to receive combined PEPFAR, MCC and PMI support from
the USG. The MCC Compact signed in 2007 is on track for
implementation. The five-year, $507 million Compact 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.


9. (SBU) The GRM has been hesitant to criticize other
African governments over human rights violations and
historically has 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). Mozambique is
the vice-chair of the Political and Defense Organ of SADC and
GRM officials have been very involved in the SADC mediation
efforts in Zimbabwe. Senior GRM officials explain that it is
important for them to keep the channels of communication open
with Mugabe, even though they too see the need for some kind
of political solution to the ongoing crisis.

Peacekeeping Operations

10. (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.

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