```

[Senate Hearing 111-439]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 111-439
 
       EXPLORING U.S. POLICY OPTIONS TOWARD ZIMBABWE'S TRANSITION

=======================================================================

                                HEARING

                               BEFORE THE

                    SUBCOMMITTEE ON AFRICAN AFFAIRS

                                 OF THE

                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 30, 2009

                               __________

       Printed for the use of the Committee on Foreign Relations

  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html

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                COMMITTEE ON FOREIGN RELATIONS         

             JOHN F. KERRY, Massachusetts, Chairman        
CHRISTOPHER J. DODD, Connecticut     RICHARD G. LUGAR, Indiana
RUSSELL D. FEINGOLD, Wisconsin       BOB CORKER, Tennessee
BARBARA BOXER, California            JOHNNY ISAKSON, Georgia
ROBERT MENENDEZ, New Jersey          JAMES E. RISCH, Idaho
BENJAMIN L. CARDIN, Maryland         JIM DeMINT, South Carolina
ROBERT P. CASEY, Jr., Pennsylvania   JOHN BARRASSO, Wyoming
JIM WEBB, Virginia                   ROGER F. WICKER, Mississippi
JEANNE SHAHEEN, New Hampshire        JAMES M. INHOFE, Oklahoma
EDWARD E. KAUFMAN, Delaware
KIRSTEN E. GILLIBRAND, New York
                  David McKean, Staff Director        
        Kenneth A. Myers, Jr., Republican Staff Director        

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

                SUBCOMMITTEE ON AFRICAN AFFAIRS        

            RUSSELL D. FEINGOLD, Wisconsin, Chairman        

BENJAMIN L. CARDIN, Maryland         JOHNNY ISAKSON, Georgia
JIM WEBB, Virginia                   JIM DeMINT, South Carolina
EDWARD E. KAUFMAN, Delaware          BOB CORKER, Tennessee
JEANNE SHAHEEN, New Hampshire        JAMES M. INHOFE, Oklahoma

                              (ii)        

  
?

                            C O N T E N T S

                              ----------                              
                                                                   Page

Baukol, Andrew, Acting Assistant Secretary for International 
  Affairs, Department of Treasury, Washington, DC................    11
    Prepared statement...........................................    12
Carson, Hon. Johnnie, Assistant Secretary of State for African 
  Affairs, Department of State, Washington, DC...................     4
    Prepared statement...........................................     5
Feingold, Hon. Russell D., U.S. Senator from Wisconsin, opening 
  statement......................................................     1
Gast, Earl, Acting Assistant Administrator for Africa, U.S. 
  Agency for International Development, Washington, DC...........     6
    Prepared statement...........................................     8
Isakson, Hon. Johnny, U.S. Senator from Georgia, opening 
  statement......................................................     3
Lindborg, Nancy, president, Mercy Corps, Washington, DC..........    31
    Prepared statement...........................................    32
Moss, Todd, vice president for corporate affairs and senior 
  fellow, Center for Global Development, Washington, DC..........    27
    Prepared statement...........................................    29
Steinberg, Hon. Donald, deputy president, International Crisis 
  Group, Brussels, Belgium.......................................    22
    Prepared statement...........................................    24

                                 (iii)

  

       EXPLORING U.S. POLICY OPTIONS TOWARD ZIMBABWE'S TRANSITION

                              ----------                              

                     WEDNESDAY, SEPTEMBER 30, 2009

                               U.S. Senate,
                   Subcommittee on African Affairs,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:15 a.m., in 
room SD-419, Dirksen Senate Office Building, Hon. Russ Feingold 
(chairman of the subcommittee) presiding.
    Present: Senators Feingold, Kaufman, and Isakson.

         OPENING STATEMENT OF HON. RUSSELL D. FEINGOLD,
                  U.S. SENATOR FROM WISCONSIN

    Senator Feingold. Good morning. The hearing will come to 
order.
    On behalf of the Senate Foreign Relations Subcommittee on 
African Affairs, I welcome all of you to this hearing entitled 
``Exploring U.S. Policy Options Toward Zimbabwe's Transition.''
    I'm honored that I will be joined by the ranking member of 
this subcommittee, Senator Isakson, and I will invite him to 
deliver some opening remarks in just a moment, when he arrives.
    Just over a year ago, the subcommittee held a hearing on 
the crisis in Zimbabwe, and that hearing came amidst months of 
intense violence carried out by Robert Mugabe and his allies 
against the opposition MDC's members, supporters, and families. 
This was a deliberate campaign to hold on to power and subvert 
the will of the people that was expressed in the March 29 
elections.
    Today, the situation in Zimbabwe looks different, at least 
on the surface. Last September, with South Africa's mediation, 
the parties signed the Global Political Agreement and committed 
to form a transitional government. And after 5 months of 
delays, this February, MDC leader Morgan Tsvangirai was sworn 
in as Prime Minister, and the MDC assumed control of several 
ministries. This came just as Zimbabwe's economy reached a low 
point with world-record inflation and millions of people at 
risk of starvation. The transitional government, under the 
leadership of the new Minister of Finance from MDC, has been 
able to stop that economic decline and has taken initial steps 
to reverse it. It has stabilized the situation in other 
respects, as well.
    However, 8 months on, many aspects of the Global Political 
Agreement are still not implemented, beginning with the 
appointment of new provincial governors and the replacement of 
the Reserve Bank Governor and Attorney General. Moreover, 
security forces continue to operate as instruments of Mugabe's 
ZANU-PF party, condoning land takeovers and harassing MDC and 
civil society activists. At every turn thus far, hard-liners in 
the traditional government have resisted moves that would 
undermine their historic patronage system and power structures. 
And, for the most part, they appear to be succeeding.
    Reformers in the government are working hard to overcome 
that resistance, but in many cases, they lack a leverage, as 
well as qualified personnel and resources. In short, Zimbabwe's 
transition remains a work in progress, incomplete, and far from 
irreversible.
    So, that brings us to today's discussion, U.S. strategy and 
policy options toward that transition. Unsurprisingly, Mugabe 
has increased his calls for the removal of United States and 
European U.N. sanctions. Regional actors and leaders have 
echoed that call and made it the focus of their resolution on 
Zimbabwe at the SADC summit earlier this month. I would 
understand, and even be sympathetic to their position, if there 
was real progress being made toward implementing the Global 
Political Agreement. But, no one really believes that. Rather 
than deflecting responsibility, regional leaders should step up 
and hold Mugabe accountable for implementing his share of the 
agreement. They signed on as guarantors of the agreement, and 
they should live up to that responsibility.
    Let me be clear. I see no reason for the United States to 
repeal sanctions until we see real, irreversible progress and 
an end to widespread abuses. However, this does not mean that 
our hands are tied and that the United States should be on the 
sidelines. A strict wait-and-see approach is arguably not the 
best way to influence this transition or keep pressure on 
Mugabe and company. There are a number of actions that the 
United States can take now, both symbolic and substantive, to 
engage the government and help strengthen the hand of reformers 
within it. And at the same time, there may be ways that we can 
ramp up the pressure on those individuals obstructing the 
agreement and perpetrating continuing abuses. We need to 
explore all these options and move beyond the all-or-nothing 
debate that seems to have frozen U.S. policy. That debate is 
out of touch with the fluidity of this transition, as well as 
the dynamism of our diplomats. Similarly, with our assistance, 
we should now look at how we can best keep up with and 
influence the changing situation on the ground.
    I was pleased that President Obama pledged $73 million in 
new funds for education, health, and livelihoods when he met 
with Prime Minister Tsvangirai earlier this year. Scaling up 
and shifting our assistance in Zimbabwe to help rebuild 
institutions and lay the groundwork for economic recovery makes 
practical sense. It's also another way in which we can 
strengthen the hand of reformers within the transition. But, in 
order to have that positive effect, this new assistance needs 
to be well designed and well targeted, and it needs to be 
coordinated with our diplomatic efforts. Today's hearings will 
explore how the United States can best leverage our assistance, 
together with our diplomacy, toward advancing the political 
transition.
    Now, we have a great lineup of witnesses this morning. 
We'll hear first from Assistant Secretary of State for African 
Affairs, Johnnie Carson. Assistant Secretary Carson is no 
stranger to Zimbabwe; he was our Ambassador there from 1995 to 
1997. Since taking office, I know he's been actively engaged on 
the issue. We'll also hear, on our first panel, from USAID 
Acting Assistant Administrator for Africa, Earl Gast, and 
Acting Assistant Secretary of Treasury for International 
Affairs, Andrew Baukol. Both USAID and Treasury play critical 
roles in our strategy toward Zimbabwe.
    So, I thank all of you for being here. I ask that you keep 
your remarks to 5 minutes or less so we can have plenty of time 
for questions and discussion, and we, of course, will submit 
your longer statements for the record.
    On our second panel, we'll hear from Ambassador Don 
Steinberg, who is currently deputy president for policy of the 
International Crisis Group. During three decades of U.S. 
diplomatic service, Ambassador Steinberg served as Ambassador 
to Angola, Director of the State Department's Joint Policy 
Council, Special Representative to the President for 
Humanitarian Demining, Special Haiti Coordinator, and NSC 
Senior Director for Africa. Since leaving government, 
Ambassador Steinberg has written extensively on issues relating 
to Africa, as well as the role of women in conflict and 
peacebuilding.
    We'll also hear from Dr. Todd Moss, vice president for 
corporate affairs and senior fellow of the Center for Global 
Development. Dr. Moss served as Deputy Assistant Secretary of 
State for African Affairs from May 2007 to October 2008 while 
on leave from the center. His research has focused on United 
States/Africa relations and financial issues facing sub-Saharan 
Africa, and he has worked for years on this economic crisis in 
Zimbabwe.
    Finally, we will hear from Nancy Lindborg, president of 
Mercy Corps. Mercy Corps has been a humanitarian development 
leader in Zimbabwe, providing assistance to more than 300,000 
people. Ms. Lindborg traveled to Zimbabwe just a few months 
ago, and she'll provide an important perspective on the 
changing humanitarian situation there.
    So, again, I thank everybody for being here. It's my 
pleasure now to turn to our distinguished ranking member, 
Senator Isakson, for his opening remarks.

           OPENING STATEMENT OF HON. JOHNNY ISAKSON,
                   U.S. SENATOR FROM GEORGIA

    Senator Isakson. Well, thank you, Chairman Feingold, and I 
want to welcome Secretary Carson, and all the members that will 
be testifying before the subcommittee today. This is a very 
important hearing, and I associate myself completely with the 
remarks of the chairman. Given the history of Robert Mugabe and 
Zimbabwe, it's absolutely critical that reform and transition 
take place and that the United States be engaged appropriately 
to see to it that that happens. I look forward to hearing from 
all of the witnesses today, and work with them on a strong 
United States policy on Zimbabwe.
    So, thank you, Mr. Chairman, for the time. I'll turn it 
over to the questions.
    Senator Feingold. Thank you so much, Senator.
    I thank Senator Kaufman for being here, as well.
    And we will now begin with Assistant Secretary Carson.
    Mr. Carson.

STATEMENT OF HON. JOHNNIE CARSON, ASSISTANT SECRETARY OF STATE 
    FOR AFRICAN AFFAIRS, DEPARTMENT OF STATE, WASHINGTON, DC

    Mr. Carson. Thank you, Chairman Feingold, Ranking Member 
Isakson, members of the committee. I welcome the opportunity to 
appear before you today to discuss Zimbabwe. I look forward to 
working with the Congress and this committee in advancing 
United States interests and returning Zimbabwe to democracy, 
stability, and economic prosperity.
    I have a longer statement that I would like to submit for 
the record, if I may.
    Since the signing of the Global Political Agreement in 
September 2008 and the launch of the transitional government 
this past February, progress on reform in Zimbabwe has been 
mixed and uneven. On the positive side, economic conditions 
have steadily improved since February. The use of the dollar 
has eliminated hyperinflation and given renewed confidence to 
business and consumers. We have seen more market-based 
activity. Budget transparency has become a reality, thanks to 
the efforts of Finance Minister Tendai Biti. While purchasing 
power continues to be a challenge for most Zimbabweans, the 
signs of a limited recovery are manifest.
    On the negative side, the political situation has changed 
very little, if at all. Improved economic conditions have not 
lead to any major political change, nor given the Movement for 
Democratic Change, and MDC's leader, Morgan Tsvangirai, equal 
footing to compete in the political realm. Robert Mugabe 
remains firmly in control of government and government policy. 
He is likely to remain dominant as long as he and his party 
cohorts retain control over Zimbabwe's security apparatus which 
includes the police, the intelligence services, and the 
military.
    Mugabe is surrounded by a half-dozen hard-liners who carry 
out his policies. These include his Defense and Justice 
Ministers, the armed services and political chiefs, and the 
Attorney General. We have seen no evidence of dissent among 
them that would threaten Mugabe's control.
    Mugabe and the ZANU-PF hard-liners could take a number of 
steps to show a commitment to democratic reform. Mugabe could 
end the violent land seizures that continue to take place in 
Zimbabwe. He could stop the harassments and politically 
motivated arrests of MDC politicians and Members of Parliament. 
He could swear in the MDC's remaining Cabinet members, 
including the Deputy Minister of Agriculture, Roy Bennett. And 
he could repeal the country's draconian emergency decree that 
restricts personal freedoms. President Mugabe could also end 
media censorship and dismiss the corrupt Attorney General and 
the Reserve Bank Governor.
    The Global Political Agreement calls for a new political 
dispensation in Zimbabwe. To follow through on that, President 
Mugabe could publicly reaffirm his commitment to the drafting 
of a new constitution and the holding of national elections 
under international supervision and monitoring. The people of 
Zimbabwe deserve to freely elect their leaders.
    The steps that I have just outlined above do not require 
any economic resources to complete, but they do require a 
commitment to democracy, respect for human rights, and the rule 
of law. If Mr. Mugabe supports the Global Political Agreement, 
he should take these steps to ensure the effectiveness of the 
government.
    Mr. Chairman, members of the committee, I want to thank you 
for this opportunity to appear before you today. I will be 
pleased to take questions following this intervention.
    Thank you.
    [The prepared statement of Mr. Carson follows:]

Prepared Statement of Hon. Johnnie Carson, Assistant Secretary of State 
        for African Affairs, Department of State, Washington, DC

    Chairman Feingold, Ranking Member Isakson, and members of the 
committee, I welcome the opportunity to appear before you today to 
discuss Zimbabwe. I look forward to working with the Congress, and 
especially with this committee, in advancing U.S. interests and 
returning Zimbabwe to democracy, stability, and economic prosperity.
    The people of Zimbabwe continue to face extreme hardship, and 
desperately need a government that respects human rights and rule of 
law and works to rebuild institutions and public services. Thus far in 
the current fiscal year, U.S. humanitarian aid to Zimbabwe has 
surpassed $200 million for emergency assistance, including food aid and 
food security, refugee support, health, and water, sanitation, and 
hygiene programs. We continue to be the largest provider of food 
assistance to Zimbabwe, and we stand solidly behind Zimbabweans in 
their continuing time of need.
    We note that this assistance would not be necessary were it not for 
the antidemocratic and abusive practices of Robert Mugabe and his 
followers. The United States has not sanctioned the needy and deserving 
people of Zimbabwe. Our targeted sanctions are imposed specifically on 
individuals and entities that have hindered democracy and abused human 
rights there. The reason we imposed targeted sanctions and continue 
them now is the failure of those individuals to act in the best 
interest of the people of Zimbabwe. Our measures will remain in place 
until genuine, sustained democratic opening has taken place.
    September 15 marked the 1-year anniversary of the signing of the 
Global Political Agreement (GPA) by the two factions of the Movement 
for Democratic Change and the Zimbabwe African National Union-Patriotic 
Front (ZANU-PF). In February, a transitional government was initiated 
based on the GPA. We commend Prime Minister Morgan Tsvangirai and 
members of his Movement for Democratic Change for entering the 
government in spite of longstanding and ongoing abuse and intimidation 
by President Robert Mugabe and members of his ZANU-PF party.
    During the past 7 months, the transitional government has made 
important progress in halting the devastating economic decline and 
implementing measures to restore fiscal integrity. The elimination of 
the worthless Zimbabwean dollar, rationalization of the budget process, 
and other sound policies by Finance Minister Tendai Biti have 
eliminated hyperinflation and begun to restore the confidence of the 
people of Zimbabwe. Other reformist ministers are also embracing 
change, and abandoning the failed policies of the past, and we strongly 
encourage all political actors in Zimbabwe, of whatever political 
party, to do the same. Challenges remain, however, as most Zimbabweans 
continue to survive on less than $1 per day and as millions remain food 
insecure.
    Unfortunately, hard-liners from the previous Mugabe regime that 
remain in Government, and others at their direction, continue to 
violate the human rights of the Zimbabwean people. These hard-liners 
have refused to move forward with agreements on senior government 
appointments, media freedom, and other important reforms. The Governor 
of the Reserve Bank was reappointed by Mugabe, before the formation of 
the transitional government, and without consultation with the Movement 
for Democratic Change. The Attorney General was appointed unilaterally 
by Mugabe prior to the start of the transitional government, in 
violation of the GPA. Since his appointment, he has carried out a 
sustained campaign of politicized arrests and prosecution of members of 
the opposition, in particular Movement for Democratic Change officials, 
and members of civil society. Violent land invasions continue. So do 
severe human rights abuses, including extrajudicial killings, by 
members of the security forces, especially in the Marange diamond 
mining area. Revenues from these diamond mines and from gold mines that 
rightfully belong to the Zimbabwe people are plundered by these hard-
liners, and moved outside Zimbabwe for their own personal use.
    The prospects for reform and democratic transformation in Zimbabwe 
are immensely challenging, but we remain committed to facilitating 
peaceful change to improve the condition of Zimbabweans. Our assistance 
to Zimbabwe seeks to lay the groundwork for a return to democracy and 
prosperity by supporting democratic voices and civil society, including 
support to the Prime Minister's office for communications and other 
capacity-building. In addition, our assistance supports efforts to 
mitigate the devastating impact of HIV/AIDS and other epidemics. As 
noted by President Obama in June, this humanitarian aid is directed 
through nongovernmental organizations and contractors rather than 
through the central government. In this way, we can be assured 
assistance reaches the people who need it. We are mindful of existing 
legal restrictions on our assistance and will continue to consult 
closely with the Congress on any new or expanded assistance proposals. 
This includes our recent notification and consultation on new targeted 
programs in the agriculture and education sectors. These initiatives 
were undertaken in response to President Obama's commitment to Prime 
Minister Tsvangirai in June.
    We continue to support those working for full implementation of the 
GPA, and to seek ways to ease the suffering of the people of Zimbabwe 
without aiding those forces who cling to power through repression and 
corruption. The road to reform in Zimbabwe will be long and 
challenging. In addition to a new constitution, reform of the electoral 
process and electoral institutions, as well as the repeal of repressive 
legislation which restricts freedom of speech and assembly, are 
essential to free and fair elections. The GPA calls for the completion 
of a new constitution by August 2010. Following a public referendum on 
the constitution, internationally monitored elections should take place 
as soon as feasible to enable the people of Zimbabwe to freely select 
their President and other representatives. The international community 
has joined us in calling for transparency in the process of drafting a 
new constitution and the conduct of closely monitored elections.
    We also call on the nations of Africa, in particular the members of 
the Southern African Development Community, to ensure that Mugabe and 
his cohorts fully implement the GPA and work toward democratic reform. 
We were pleased that South African President Jacob Zuma visited 
Zimbabwe last month and stressed the importance his government places 
on democracy and respect for human rights in Zimbabwe and compliance 
with the GPA.

    Senator Feingold. Thank you, Secretary Carson.
    Mr. Gast.

  STATEMENT OF EARL GAST, ACTING ASSISTANT ADMINISTRATOR FOR 
AFRICA, U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT, WASHINGTON, 
                               DC

    Mr. Gast. Good morning, Mr. Chairman, Ranking Member 
Isakson, and members of the subcommittee. Thank you for the 
opportunity to testify on how USAID is confronting challenges 
and promoting progress in Zimbabwe.
    While Zimbabwe's political transition brought with it great 
promise, the stark reality of what it's like to live in 
Zimbabwe remains tenuous. The number of Zimbabweans without 
enough food to eat will exceed 2 million by early next year. 
Much of the country's water and sanitation system is either not 
functioning, or close to it. Schools and public hospitals were 
closed for most of last year, and are only slowly beginning to 
rebuild. Zimbabwe's first cases of the H1N1 virus were 
confirmed last month, and the fragile health system will depend 
on donor assistance to respond to an outbreak. The lack of 
progress in democracy, governance, and human rights has been 
disappointing.
    The need is overwhelming, and while we agree that it is 
premature to reengage the Government of Zimbabwe with a full 
development assistance program, there is also a risk of doing 
too little. We believe that positive change will come only when 
there are better opportunities and demonstrable improvement in 
people's lives.
    As part of a closely coordinated group of international 
donors, USAID adheres to the humanitarian-plus concept of 
providing for the Zimbabwean people, while strengthening 
democratic institutions and supporting timely, credible 
elections.
    In fiscal year 2009, the United States has provided $313 
million, targeting the critical needs of Zimbabwe's people: 
Health, water, food, agriculture, protection of vulnerable 
people, economic recovery, and accountable and responsible 
governance. Our quick response to last year's disastrous 
cholera outbreak helped mitigate both its impact and its chance 
of recurring this year. We mobilized $2 million to stem the 
tide of an imminent malaria outbreak, protecting over a million 
persons. We are helping small farmers improve food production 
through access to credit, markets, and training. We are 
assisting the drafting of a new constitution and strengthening 
government institutions.
    The $73 million pledged by President Obama this summer will 
augment these activities, bolstering our programs in good 
governance, civil society, independent media, and support for 
victims of violence, as well as significantly expanding our 
efforts to fight HIV/AIDS.
    To help prepare for elections, USAID is supporting civil 
society's pursuit of electoral law reform. We will also provide 
them training on parallel vote tabulation, a system we 
supported during the 2008 elections that was instrumental in 
limiting the ruling party's ability to manipulate the results.
    The whole of this assistance program is critical to helping 
reformers in the transitional government move Zimbabwe toward 
recovery and improve the lives of Zimbabwe's people. And our 
support is carefully targeted to reach only these reformers. We 
have been diligent in ensuring that none of our assistance is 
diverted or misused by Robert Mugabe and his associates. 
Zimbabwe's government is aware that true and full reengagement 
with the international community can only begin when it takes 
clear steps toward meeting donor principles on democracy, rule 
of law, and economic stabilization. Until that time, USAID will 
continue to do everything it can to respond to the needs of 
Zimbabwe's people and work with them to build a better future.
    And we will continue to celebrate signs of hope. Just this 
week, the Zimbabwe Supreme Court issued a permanent stay of 
prosecution in the case of human rights activist Jestina 
Mukoko. Last December, she was abducted by police and tortured 
in secret locations. The ruling that she cannot be tried, 
either now or in the future, came from judges appointed by 
Robert Mugabe and is a signal of progress and justice that we 
applaud.
    Thank you, Mr. Chairman, Ranking Senator Isakson, and 
members of the subcommittee, for the continued commitment you 
have shown to the Zimbabwean people, and for your support for 
real reform within the government. I welcome any questions you 
might have.
    [The prepared statement of Mr. Gast follows:]

  Prepared Statement of Earl Gast, Acting Assistant Administrator for 
   Africa, U.S. Agency for International Development, Washington, DC

    Good morning, Mr. Chairman, Ranking Senator Isakson, and members of 
the subcommittee. Thank you for the opportunity to testify on U.S. 
policy options for Zimbabwe's transition and on how the U.S. Agency for 
International Development (USAID) is confronting challenges and 
promoting progress.
    As my colleagues from the Departments of State and Treasury have 
already highlighted Zimbabwe's troubled history and provided the 
context for our need to deliver targeted assistance to the people of 
Zimbabwe and reform-minded elements of the transitional government, I 
will focus my remarks on USAID-related matters.
    To date in FY 2009, the U.S. Government has provided approximately 
$313 million for health, vulnerable population protection, agriculture 
and food security, economic recovery and market systems, humanitarian 
coordination, water, sanitation, and hygiene (WASH) programs, as well 
as emergency relief supplies and food assistance in Zimbabwe. In 
addition, funding has included support for civil society strengthening; 
support to help fulfill the terms of the Global Political Agreement 
(GPA) (e.g., resources for the constitution-making process); programs 
to demonstrate responsible governance (e.g., improving the public 
outreach capacity of the Office of the Prime Minister); assistance to 
nongovernmental monitoring of compliance of all parties to the GPA; and 
support for independent media.
    The USG is the leading food assistance donor to Zimbabwe. To date 
in FY 2009, USAID's Food for Peace program has provided nearly 190,000 
metric tons of Public Law 480, Title II emergency food assistance, 
valued at more than $166 million, through the World Food Programme and 
the Consortium for Southern Africa Food Emergency (C-SAFE). I would 
also highlight the provision by our Office of Foreign Disaster 
Assistance's (OFDA) of nearly $31 million in FY 2009 for emergency 
humanitarian assistance and our Office of Transition Initiative's 
funding for transitional support in FY 2009 of $4.58 million.
    In addition, OFDA committed more than $7.3 million in emergency 
assistance this year for Zimbabwe's cholera outbreak to support the 
provision of emergency relief supplies for affected populations, 
humanitarian coordination and information management, health programs, 
WASH interventions, and hygiene promotion and social mobilization 
activities. OFDA has also committed more than $8.5 million for other 
WASH programming to date in FY 2009 to improve community resilience to 
cholera and other waterborne diseases and to help mitigate a potential 
recurrence of cholera later in 2009. To date in FY 2009, OFDA has 
contributed nearly $9 million for agriculture and food security 
programming, including the construction and rehabilitation of water 
catchment structures, training in conservation farming, distribution of 
agricultural inputs, and improvement of livestock health. In addition, 
to complement agriculture and food security programming, OFDA has 
committed more than $2.5 million for regional food procurement and 
distribution in Zimbabwe in FY 2009.
    The $73 million in funding for Zimbabwe pledged by President Obama 
during Prime Minister Tsvangirai's recent visit to the United States 
includes significant interagency funding for HIV/AIDS programs through 
PEPFAR ($46.5 million). It also expands existing USAID programs in: 
parliamentary strengthening ($2.4 million); elections and constitution-
making ($3.2 million); rule of law ($3.8 million); consensus-building 
($2.7 million); media ($1.5 million); victims of torture ($1.9 
million); civil society/local government capacity-building ($5.8 
million); maternal and child health, including tuberculosis ($4.1 
million); and family planning ($1.2 million).
    The President also indicated a desire to assist with education and 
agriculture, both of which are being addressed through new programs. 
One million dollars is currently being programmed in support of 
textbook procurement and distribution. In the agricultural sector, $26 
million is currently being programmed for a loan guarantee program to 
provide inputs to farmers and to support farmer training, market 
linkage development, and supply of inputs in out-years. These new 
activities, as well as family planning activities, required waivers of 
section 620(q) of the Foreign Assistance Act and the Brooke amendment, 
found in section 7012 of the FY 2009 Department of State, Foreign 
Operations and Related Programs Appropriations Act (FOAA), both of 
which prohibit assistance to countries in default on USAID loans, such 
as Zimbabwe. With the signing of the waivers on September 9, these 
activities can proceed. We believe that these programs in agriculture, 
education, and family planning will rapidly yield results to 
demonstrate the benefits of pursuing reform.
    Other new activities this year will focus on reviving the ailing 
public health system through provision of training, supplies, 
equipment, and services. In this regard, earlier this year, USAID 
mobilized an additional $2 million in urgent funding to address 
increasing concerns that measles and malaria epidemics were imminent. 
To prevent these epidemics and reduce the potential for increased 
maternal and child mortality, USAID supported a measles immunization 
and vitamin A campaign; procuring the commodities needed to improve 
maternal and child health, such as syringes, IVs, and gloves; and 
funding the training, logistics, management, and social mobilization 
needed to effectively implement these programs. In collaboration with 
the U.K.'s Department for International Development, USAID also 
provided emergency funding for an indoor residual spray program, where 
teams were quickly mobilized in 20 high-risk districts. The teams 
sprayed more than 600,000 structures, protecting nearly a million 
people from malaria.
    Under the GPA signed September 15, 2008, Zimbabwe's leaders have 
broadly agreed to pursue economic recovery, land reform, a new 
constitution, freedom of expression and political association, 
nondiscrimination, justice and national healing, free and fair 
elections, and the restoration of the rule of law. The extent to which 
the repressive elements within the government respect the terms of this 
agreement, however, remains a source of concern.
    USAID is responding by: assisting in drafting the new constitution; 
assisting in the reform of governmental institutions and processes; 
strengthening local government and Parliament; addressing emergency 
health needs; and providing a humanitarian safety-net for those most 
affected by economic instability.
    To help prepare for new elections, USAID will help civil society 
pursue electoral law reform and provide training on parallel vote 
tabulation, a system that was instrumental in limiting the ruling 
party's ability to manipulate polling data during the March 2008 
elections. Furthermore, USAID will help democratic political parties 
rebuild their structures after the movement of many key members into 
government service and further losses as a result of inter-election 
violence. If possible, assistance will also be extended to support the 
development and reform of electoral systems.
    To support economic stabilization and recovery, USAID will help 
small farmers and improve agricultural production through access to 
credit, skills development, establishment of market linkages, 
strengthening of agricultural institutions, and a better overall 
enabling environment. Implementation of these activities was made 
possible through the recent approval of limited waivers to the section 
620(q) and Brooke amendment restrictions. As conditions permit broader 
USG engagement, USAID is prepared to expand its assistance to include 
public financial management technical assistance (macroeconomic reform) 
and the private sector.
    USAID, in consultation with other donors and the U.S. Embassy in 
Harare remains diligent in ensuring that none of our assistance is 
diverted or misused by Robert Mugabe and his associates. All USAID 
assistance is carefully targeted to support reformers within the 
government and civil society. No funds go directly to the transitional 
government as support is delivered in the form of goods and services 
through grantees and contractors hired and monitored in compliance with 
standard U.S. Government procurement procedures. U.S. Government 
sanctions against designated individuals and institutions are carefully 
observed in the award of contracts and grants and the designation of 
beneficiaries of assistance.
    The consultation process includes all major donors present in 
Zimbabwe who meet on a weekly basis to review the operating 
environment, assess progress, discuss challenges, and modify a 
collective approach to providing assistance ensuring consistency 
between donor programs. Consistent with the strongly unified position 
on the concept of ``Humanitarian Plus'' of the donor community, USAID's 
programs are centered around safeguarding the Zimbabwean people, 
supporting the transitional government's ability to meet its 
commitments under the GPA and to respond to the needs of its people, 
and enhancing the likelihood of free and fair elections within 2 years. 
Specifically, USAID efforts focus on re-establishing and strengthening 
democratic institutions, processes, and systems; providing social 
assistance to protect vulnerable people during the transition; and 
supporting economic revitalization, especially in the agricultural 
sector. All of the activities being implemented are done in close 
consultation with Congress, State, and Treasury Departments and the 
National Security Council and are consistent with the U.S. Government's 
overall strategy in this transition period.
    The United States is part of a closely coordinated donor group--
along with the United Kingdom, the European Commission, Canada, Sweden, 
Norway, Denmark, Australia, Germany, France, Switzerland, and the 
Netherlands--that has agreed on five principles, and associated 
benchmarks, to guide our reengagement with the transitional Government 
of Zimbabwe:

    1. Full and equal access to humanitarian assistance;
    2. Commitment to macroeconomic stabilization;
    3. Restoration of rule of law;
    4. Commitment to democratic processes and respect for human rights;
    5. Commitment to timely elections with international observers.

    The donors have agreed to retain targeted sanctions on President 
Mugabe and Zimbabwe African National Union-Patriotic Front (ZANU-PF) 
hard-liners until a credible reform-minded government is evident. They 
have also agreed that while transitional assistance is scaling up, none 
of this will be delivered in the form of budget support or directly 
through the government. True and full reengagement, typified by full 
sustainable development and cooperation programs can only begin when 
the entire government takes clear steps toward meeting donor principles 
on democracy, rule of law, and economic stabilization.
    As USAID implements its transitional assistance programs, we are 
planning for contingencies. All activities are implemented through 
nongovernmental organizations or contractors and can be suspended 
rapidly if the situation warrants such action. If the unity government 
were to fail, we would rapidly scale back our programs to only support 
reformists outside the government and address the most pressing 
humanitarian needs. Some programming now under the rubric of 
humanitarian plus, such as education and agriculture, might be 
suspended. We are following a pragmatic approach in Zimbabwe, looking 
for opportunities to strengthen people's resolve and to maintain the 
forward momentum of democratization and reform. We believe that 
positive change will come from the expansion of opportunity and 
demonstrable improvements in people's lives. We will endeavor to 
continue to support this change within the parameters of U.S. policy.
    There have been improvements since the formation of the 
transitional government in February, but enormous challenges remain. 
U.S. support is critical to help reformers in the transitional 
government move Zimbabwe toward recovery and legitimate democratic 
governance defined by a constitution and elections. In the aftermath of 
last year's flawed elections, some signs of reform have emerged. 
Ministers from the Movement for Democratic Change (MDC) party--and even 
some ZANU-PF officials--are working hard to bring much-needed services 
to the people. At the same time, there are strong opponents to reform 
who seek to undermine the power-sharing agreement and discredit 
reformists.
    Due to U.S. and others' assistance, the humanitarian situation in 
Zimbabwe has improved since the end of the massive cholera outbreak a 
few months ago and an improved harvest in 2009 as compared to 2008. 
However, deteriorating or nonfunctional water and sanitation 
infrastructure requires major rehabilitation, the health system is in 
the early stages of the recovery process after public hospitals were 
forced to close last year, a gap continues to exist in agricultural 
inputs for the current planting season, and the potential exists for 
spread of H1N1, or swine flu, after health authorities reported the 
first laboratory-confirmed cases in Zimbabwe in August. In addition, 
the USAID-funded Famine Early Warning Systems Network (FEWS NET) 
estimates that between 2 million and 2.4 million people are likely to 
be food-insecure during the peak hunger period, which typically lasts 
from January to March.
    The education sector witnessed dramatic deterioration in 2008 as a 
result of the prolonged and violent election period, teacher strikes 
and the hyperinflationary environment. A large number of schools were 
closed for much of the year. However, the transitional government has 
clearly indicated commitment toward education and most schools resumed 
teaching in 2009. Currently, the sector is characterized by severe 
shortages of essential supplies including textbooks, reduced 
accessibility due to high staff turnover, destabilized planning and 
management capacities, and inconsistent availability of teachers, who 
in the past few months have intermittently gone on strike over low 
wages.
    This administration appreciates and understands ongoing concerns 
over the lack of progress in democracy, governance, and human rights. 
This administration is in full agreement that it is premature to 
reengage the Government of Zimbabwe with a full development assistance 
program. However, we believe that there is also a risk of doing too 
little. The support USAID is providing and has proposed to provide to 
reform-minded elements of the transitional government and the broader 
community is critical if the people of Zimbabwe are to believe that 
change can be achieved through an accountable government.

    Senator Feingold. Thank you very much, Mr. Gast.
    Mr. Baukol.

  STATEMENT OF ANDREW BAUKOL, ACTING ASSISTANT SECRETARY FOR 
 INTERNATIONAL AFFAIRS, DEPARTMENT OF TREASURY, WASHINGTON, DC

    Mr. Baukol. Thank you, Mr. Chairman, Ranking Member 
Isakson, other distinguished members of the panel. Thank you 
for inviting me to testify, along with my colleagues, here 
today. I'm also impressed with your next lineup of panelists, 
including people from the Center for Global Development, Mercy 
Corps, and the International Crisis Group. I had the pleasure 
to visit a Mercy Corps project in Zimbabwe in July this year, 
and was very impressed with what they're doing to help the 
people of Zimbabwe.
    Regarding Zimbabwe's economy, the bottom line is that the 
economy has taken a turn for the better during the tenure of 
the transitional government in the last 7 months, but progress 
could be fleeting if it is not supported by a political 
solution that restores democracy, the rule of law, and strong 
institutions.
    The last 7 months have been characterized by relative 
economic stability as reformist elements began to undo some of 
the more disastrous economic policies of the previous 9 years, 
especially by doing away with the discredited Zimbabwe dollar. 
This has ended hyperinflation and led to some reliable of 
economic activity. The new Finance Minister has also introduced 
other measures to reduce the government's interference in the 
economy and to stop the quasi-fiscal activities of the Reserve 
Bank of Zimbabwe. Government revenues are beginning to recover, 
and the Finance Ministry has reduced government spending to 
more closely match expected revenues. Let me note that I've met 
Minister Biti several times over the past year. I think he's 
doing a good job under very trying circumstances.
    The international financial institutions have taken a 
cautious approach to engagement in Zimbabwe due to the large 
arrears but--by the government and the lack of a track record 
on reform. The IMF has begun to lead short-term, targeted 
technical assistance missions, and the World Bank is 
administering a multidonor trust fund to support basic 
analytical work on the Zimbabwean economy and to assess its 
needs. Further actions will depend on continued reform, as well 
as a plan to address Zimbabwe's arrears to the international 
financial institutions.
    The key question today regards United States actions in 
Zimbabwe. We believe that it will be important for U.S. 
agencies to have the ability to respond positively, if 
conditions for assistance with economic reform are 
demonstrated. Broad cash--broad assistance programs or cash 
assistance by the United States are not appropriate now, but 
targeted technical assistance that complies with current legal 
restrictions could help address the capacity constraints that 
have arisen from years of political repression and brain drain. 
Such technical assistance would have to be provided to 
officials and ministries who have demonstrated the willingness 
to reform and who can show a continued commitment to these 
efforts. This assistance could also be deployed or withdrawn 
quickly, according to circumstances on the ground.
    Nonetheless, while the United States can play a role in 
assisting reform-minded Zimbabwean officials in areas of 
economic governance, and while economic progress will likely 
strengthen the reformers' hand in pressing for political 
reforms, we should recognize that sustained improvement in the 
economy will not come without a full restoration of democracy 
and law and order.
    Our assistance to Zimbabwe and our policy at the 
international financial institutions are governed by existing 
legislation and executive orders. For the target areas of 
assistance that I discussed, the United States should be able 
to act under the legislation, but we will find it difficult to 
support broader engagement by the international financial 
institutions, including any arrears clearance process.
    Treasury also maintains targeted economic sanctions against 
the Mugabe regime and has designated dozens of senior regime 
officials, supporters, and state-owned or -controlled 
companies. Treasury believes that, where circumstances clearly 
warrant, we should consider licensing, delisting, or easing 
sanctions on individuals or institutions to reward improved 
behavior and provide a positive incentive for change.
    In summary, Zimbabwe has arrived at a crucial crossroads in 
its modern history. The United States and the rest of the 
international community are right to be skeptical of Mugabe's 
actions and withhold full reengagement and development 
assistance. But, we should seek to support people and 
institutions in Zimbabwe that are pursuing appropriate economic 
policies and that are working to bring about a government that 
reflects the will of Zimbabwe's people.
    Thank you for your time. I'm anxious to answer any 
questions you might have.
    [The prepared statement of Mr. Baukol follows:]

Prepared Statement of Andrew Baukol, Acting Assistant Secretary, Office 
of International Affairs, U.S. Department of the Treasury, Washington, 
                                   DC

    Chairman Feingold, Senator Isakson, and distinguished members of 
the committee, thank you for inviting me to testify at this important 
hearing on the current situation in Zimbabwe. Thank you also for asking 
my colleagues from the Department of State and USAID to join me at the 
witness table. I think we all agree that Zimbabwe's economy has taken a 
turn for the better over the last 7 months and that progress could be 
fleeting if it is not supported by a political solution that restores 
democracy, rule of law, and strong institutions.
    People who follow Zimbabwe closely are probably familiar with the 
recent economic trends, but it is worth recapping the economic 
mismanagement that devastated the country and contributed to the 
profound fragility of the current situation. When Robert Mugabe took 
office as leader of Zimbabwe after a long civil war, Zimbabwe had all 
the ingredients necessary for prosperity. With a per capita GDP of 
around $1,400,\1\ Zimbabwe was blessed with ample mineral resources, 
decent infrastructure, and productive farms that made it a breadbasket 
to Southern Africa. In 1980, Tanzania's then-President Nyerere told 
Mugabe he had inherited the ``jewel of Africa.'' For almost two 
decades, Mugabe's government managed to maintain economic growth and 
roughly stable per capita GDP, but beginning in the late 1990s, the 
wheels began to come off. Thanks to a set of disastrous economic 
policies, headlined by a chaotic land redistribution scheme, five 
decades of economic progress were erased in 5 years, with per capita 
GDP in 2005 roughly equaling that in 1953, according to an analysis by 
the Center for Global Development. The combination of undermining the 
rule of law, instituting oppressive economic decrees, and suppressing 
press freedoms and political opposition led one observer in 2003 to 
describe Zimbabwe as a case study in ``How to Kill a Country.'' \2\
---------------------------------------------------------------------------
    \1\ Michael Clemens and Todd Moss, ``Costs and Causes of Zimbabwe's 
Crisis,'' CGD Notes, Center for Global Development, July 2005.
    \2\ Samantha Power, ``How to Kill a Country,'' the Atlantic 
Monthly, December 2003.
---------------------------------------------------------------------------
    The economic crisis further deepened as bad policies and the 
government's paranoid reaction to international isolation due to gross 
violations of human rights fed the spiral of decline.

   The government revalued the currency in 2006 but quickly 
        began resorting to the printing press to paper over yawning 
        budget deficits. Inflation hit 90 sextillion percent in 
        November 2008.
   Despite its former status as a breadbasket for the region--
        one that sourced U.N.-sponsored food aid to other countries in 
        Africa \3\--Zimbabwe's agricultural output declined to the 
        point that about half of the population was in need of food aid 
        in 2008.
---------------------------------------------------------------------------
    \3\ Ibid.
---------------------------------------------------------------------------
   Neglect of the medical sector and water infrastructure 
        helped lead to a cholera outbreak that killed 4,276, according 
        to the WHO.\4\
---------------------------------------------------------------------------
    \4\ World Health Organization, June 9, 2009, update (http://
www.who.int/csr/don/2009_06_09/en/index.html).
---------------------------------------------------------------------------
   An estimated one-fourth of the population left conditions in 
        Zimbabwe over the last decade; most went to South Africa in 
        search of jobs to support their families.
   The country's reserves plummeted to $5.8 million by the end 
        of 2008, according to the IMF,\5\ despite the country's 
        possession of mineral resources such as chromite, coal, 
        platinum, asbestos, copper, nickel, gold, and iron ore.
---------------------------------------------------------------------------
    \5\ International Monetary Fund, 2009 Article IV Consultation With 
Zimbabwe, 6 May 2009, PIN No. 09/53 (http://www.imf.org).
---------------------------------------------------------------------------
   Economic activity and GDP plummeted, with the IMF estimating 
        that per capita GDP fell to $188 on a PPP basis in 2008.

    In this context, the last 7 months have been characterized by 
relative economic stability as reformist elements of the transitional 
government began to undo some of the more disastrous economic policies 
of the previous 9 years. In the weeks before the transitional 
government became effective and only weeks after introducing a 100-
trillion Z-dollar note, the acting Finance Minister acknowledged the 
ongoing dollarization of the economy by allowing Zimbabweans to conduct 
business in other currencies. The rapid abandonment of the Zimbabwe 
dollar by the populace--and later steps by the government to do away 
with the discredited currency--have led to stabilization of prices and 
some revival of economic activity. Finance Minister Biti has also 
introduced other measures to reduce the government's interference in 
the economy, including eliminating the 7.5-percent foreign exchange 
surrender requirement, eliminating the 5-percent tax on bank profits, 
eliminating import duties on capital equipment and raw materials, 
cutting import duties in half on intermediate products, and stopping 
quasi-fiscal activities at the Reserve Bank of Zimbabwe (which took the 
form of directed lending for favored businesses and sectors). Consumer 
demand has rebounded modestly, and businesses are also reacting to the 
new incentives of a stable currency and the removal of many 
restrictions on economic activity.
    Government revenues are beginning to recover, and the Zimbabwean 
Government expects to take in about $1 billion in revenue this year, or 
about 25 percent of GDP. This would represent a sharp uptick from an 
estimated 4.2-percent of GDP in 2008. The Finance Ministry has slashed 
government expenditures to more closely match expected revenues, 
thereby avoiding the accumulation of massive arrears or the printing of 
money to pay government debts. Yet the government is facing significant 
pressures for increased civil service pay and expenditures in basic 
social services that were neglected in recent years, especially in 
health and education. It is also banking on large amounts of budget 
support by the donor community, roughly 10 percent of GDP, which has 
not materialized yet.
    While there may be an interest from businesses in resuming 
production and some room for the agricultural sector to take advantage 
of the current situation, recovery will not be easy. The banking 
sector--traditionally a critical source of funding for business 
growth--suffers in Zimbabwe from a lack of liquidity. There are only 
$700 million in deposits in the country's banking system--not nearly 
enough to fund the lending needed to restart the economy. Zimbabwe's 
banking sector is interested in gaining access to lines of credit from 
abroad to enable local lending, but the general uncertainty about the 
investment climate and the lack of a credible central bank make it 
unlikely that Zimbabwe will be able to access additional credit lines. 
Even local branches of international banks are strapped for liquidity, 
with their parent banks unwilling to take on the risk of funneling more 
capital into Zimbabwe. The central bank in Zimbabwe (RBZ) has been an 
active part of the economic destabilization of the last decade, but it 
has been neutralized for the time being by dollarization. Substantial 
reform of the RBZ is needed to enable it to play a positive role in the 
economy. In summary, Zimbabwe remains one of the riskiest locations for 
investment, and Dunn & Bradstreet recently called it the worst 
investment location in the world, equal to Afghanistan.
    The international financial institutions (IFIs) have taken a 
cautious approach to engagement in Zimbabwe due to the large arrears by 
the government--over $1.3 billion--and the lack of a track record on 
reform. The IMF has begun to lead short-term, targeted technical 
assistance missions,\6\ and the World Bank is administering a 
multidonor trust fund to support basic analytical work on the 
Zimbabwean economy and to assess its needs. Further actions will depend 
on a track record of reform as well as a plan to address Zimbabwe's 
arrears.
---------------------------------------------------------------------------
    \6\ In May, the IMF's executive board approved a request to lift 
the suspension of technical assistance and allow targeted technical 
assistance in the areas of tax policy, payments systems, lender-of-
last-resort operations and banking supervision, and central banking 
goverance and accounting.
---------------------------------------------------------------------------
    Zimbabwe has around $6 billion in foreign debt, of which $1.3 
billion is arrears to multilateral bodies. It owes the IMF 89.5 million 
SDRs, or around $140 million. At the development banks, Zimbabwe has 
$702.5 million in arrears to the World Bank and $468.8 million in 
arrears to the African Development Bank as of July 2009. Clearing 
Zimbabwe's arrears at the IFIs will depend greatly on whether the IMF 
and World Bank Boards find Zimbabwe eligible for the Heavily Indebted 
Poor Countries (HIPC) Initiative. Zimbabwe has limited domestic 
resources, and competing expenditure priorities make it unlikely that 
it could repay arrears--even in part--in the foreseeable future.
    I would note that the donor community has been functioning well in 
the case of Zimbabwe. The donor community coordinates closely and has 
adopted a common set of principles for engagement in Zimbabwe. Donors 
are united in seeking to support reformers when appropriate and enhance 
social service delivery in key sectors such as health and education. 
They are also working to enhance food production and reduce Zimbabwe's 
dependence on food aid. Finally, some donors are working on key 
economic governance issues, such as improving the Ministry of Finance's 
financial management capability. We are actively looking at what role 
the U.S. can play in assisting reform-minded Zimbabwean officials in 
areas of economic governance in order to stabilize the region. The 
depressed state of the Zimbabwean economy introduces fragility and risk 
to the region, as witnessed by recent refugee flows and the spread of 
the cholera epidemic beyond Zimbabwe's borders. Sustained improvements 
in the economy will not come without a full restoration of democracy 
and law and order. We are disturbed by new violent farm invasions and 
other violations of the Global Political Agreement (GPA) that cast 
doubt on the commitment of the ZANU-PF to true cooperation with the 
MDC. The continued presence of Gideon Gono as head of the central bank 
is one example fueling these doubts. Mugabe reappointed Gono as head of 
the RBZ at the beginning of the new government despite Gono's 
leadership over the monetary policies that led to one of the world's 
worst cases of hyperinflation. Gono has also been linked to several 
corruption scandals and is currently subject to U.S. and EU sanctions. 
Finance Minister Biti, the leading force behind recent economic reforms 
and a member of the MDC, has effectively limited Gono's power by 
terminating the RBZ's quasi-fiscal activities and has introduced 
legislation to increase oversight over the RBZ.
    We continue to look for signs of sustained commitment to economic 
reform and believe that it will be important for U.S. agencies to have 
the ability to respond positively if conditions for assistance are 
demonstrated. Broad assistance programs or cash assistance by the 
United States are not appropriate given the tenuous nature of the 
reform process, but targeted technical assistance that complies with 
current legal restrictions could help address the capacity constraints 
that have arisen from years of political repression and brain drain. 
Such technical assistance would have to be provided to officials and 
ministries who have demonstrated the willingness to reform and 
stabilize the economy and who can show a continued commitment to these 
efforts. Such assistance could also be deployed--or withdrawn--quickly, 
according to circumstances on the ground. Assistance to Zimbabwe is 
also affected by other legislation, such as the Zimbabwe Democracy and 
Economic Recovery Act (ZDERA) and the recent designation of Zimbabwe as 
noncompliant with minimum standards under the Trafficking Victims 
Protection Act.
    As you know, the United States does not have broad economic 
sanctions on the country of Zimbabwe. In accordance with Executive 
Order (E.O.) 13469 of July 25, 2008, E.O. 13391 of November 22, 2005, 
and E.O. 13288 of March 6, 2003; the Treasury Department has maintained 
targeted economic sanctions against the Mugabe regime and has 
designated dozens of senior regime officials, supporters, and state-
owned or -controlled companies. In cases where the behavior of listed 
individuals or institutions changes, the U.S. Government could consider 
easing sanctions via licensing, delisting, or other appropriate 
measures, if warranted.
    In summary, Zimbabwe has arrived at a second crucial crossroads in 
its modern history. In light of Robert Mugabe's continued resistance to 
heed the results of democratic elections, the United States and the 
rest of the international community have a right to be skeptical of his 
actions and withhold full reengagement and development assistance. 
However, we should also support people and institutions in Zimbabwe 
that are pursuing appropriate economic policies and working to bring 
about a government that reflects the will of Zimbabwe's people.

    Senator Feingold. I thank everyone on the panel, and we 
will now begin with 7-minute rounds.
    Assistant Secretary Carson, to some it may seem that United 
States policy toward Zimbabwe has been pretty static since 
February, when the transitional government was formed, with 
perhaps the exception of the new funds President Obama pledged 
in June that I was talking about before. How would you respond 
to that impression, and while we maintain sanctions, how can we 
convey to all parties in Zimbabwe that the United States is 
actively engaged in preparing for different contingencies?
    Mr. Carson. Thank you, Mr. Chairman.
    I would say U.S. policy has not been static, that we have 
been, in fact, engaged. I think the indications of that are 
clear. The President himself has taken a direct role by meeting 
with Morgan Tsvangirai in the White House. Secretary Clinton 
has met with Morgan Tsvangirai at the State Department. 
Breaking with the previous administration's policy of not 
meeting with senior officials of the Zimbabwean Government, I 
have, in fact, tried to meet with, and talk with, senior 
leaders. I met with Robert Mugabe, myself, in Sirte, Libya. It 
was not a very easy conversation. I met with the Vice President 
of Zimbabwe in New York in June. That was a much better 
conversation and led me to believe that I might be able to have 
a decent diplomatic conversation with the President of 
Zimbabwe.
    We continue to engage, as much as we possibly can, the 
leaders in the region. Secretary Clinton, during her trip to 
Africa in August, talked specifically about the situation in 
Zimbabwe with the South African Foreign Minister, as well as 
with the President of South Africa, Jacob Zuma. We remained 
engaged and active in providing additional, but very calibrated 
and carefully delivered, new assistance to Zimbabwe in the 
field of education and agriculture. We will remain engaged. We 
will push as hard as we can for the full implementation of the 
Global Political Agreement.
    Senator Feingold. And speaking of the different 
contingencies, has the administration developed a plan for how 
we and other donors could assist Zimbabwe's economic recovery, 
if there is a genuine democratic reform? And could such a plan 
and dedicated resources, if we made them public, help leverage 
the reform itself?
    Mr. Carson. We have talked with our key partners in Western 
Europe, on a number of occasions, about how we could 
collectively work together to help Zimbabwe's recovery once 
there was a political transition. We will continue to work with 
our closest allies on this. We have not published anything with 
specific numbers beside it, but we certainly have had these 
discussions, and will carry on these discussions, with key 
donor partners.
    Senator Feingold. What about holding out a more, sort of, 
public carrot approach?
    Mr. Carson. Well, we haven't put the carrot out there 
directly, publicly, but certainly, when I spoke to Robert 
Mugabe in Sirte, Libya, one of the notions was to help ensure 
that there would be a successful transition; that the United 
States would support such a democratic transition. He was not 
interested in that.
    Senator Feingold. Assistant Secretary, what is your 
assessment of the effectiveness of our current targeted 
sanctions, and to what extent is the administration looking at 
the possibility of removing individuals or entities from those 
sanctions, or adding new individuals and entities?
    Mr. Carson. I think that those sanctions should remain in 
place until we are certain that there is clear political 
movement. And we should also take a look at adding additional 
individuals to that list if they are perceived to be inhibiting 
progress toward the full implementation.
    Senator Feingold. Are there people under consideration in 
that category?
    Mr. Carson. At this point, no; but we are concerned about 
individuals who may be profiting from mining ventures in 
Zimbabwe.
    Senator Feingold. OK. Secretary, as you know, Human Rights 
Watch has documented how the police and army continue to use 
brutal force to control access to the diamond fields in Marange 
district in eastern Zimbabwe. Despite pledges from the 
government that it would remove its armed forces from the 
diamond fields, they have not left the area, and the abuses are 
continuing. What is the United States position on suspending 
Zimbabwe from the Kimberley Process? Could this make any 
difference? And what other steps can be taken to cut off the 
revenue flows that ZANU-PF gets from its control of these 
diamond fields?
    Mr. Carson. Let me just say that we are looking at this 
very closely; we take all of those allegations seriously. As 
you may know, Senator Feingold, we do already have a number of 
senior police officials on our list of individuals who are 
sanctioned. We will look at that list to determine whether we 
should add additional individuals there. We are looking at 
trying to remove Zimbabwe from the Kimberley Process if we 
cannot, in fact, get some improvement in the handling on the 
mineral resources there.
    It is an issue of great concern to us. We do not believe 
that Zimbabwe's minerals should be used to finance illegal 
activities or activities which continue to support a government 
which is not totally legitimate.
    Senator Feingold. Thank you.
    Assistant Secretary Baukol, you wrote in your testimony 
that targeted technical assistance could be provided to 
officials and ministries who have demonstrated the willingness 
to reform and stabilize the economy. Could you talk 
specifically about what this assistance would entail, as well 
as what assistance, if any, we are currently providing to the 
Minister of Finance?
    Mr. Baukol. The targeted technical assistance I had in mind 
was mainly to the Ministry of Finance, which has taken a number 
of bold steps over the last 7 months to remove powers from the 
Reserve Bank of Zimbabwe. And those quasi-fiscal activities 
free up prices, reduce the monopoly of the Grain Marketing 
Board, and other important steps.
    Currently, the U.S. Treasury is not providing any direct 
technical assistance to the Finance Ministry. We have not 
gotten a formal request from the ministry yet. The ministry is 
getting assistance from the IMF. And I've talked to the 
minister, and he's very appreciative about such assistance, 
which is helping him do a number of things within the ministry. 
As you mentioned in your opening remarks, there is serious lack 
of capacity at a number of government institutions due to the 
situation of the last several years. So, he's in serious need 
of assistance in issues such as improving his revenue 
authority, making sure that his revenue units are collecting 
all the revenues that they can, and that they're not being 
diverted to other places. Also, in terms of--on the spending 
side, he's set up a single treasury account, which will help 
him manage the spending process and make sure the money goes to 
where it's suppose to go. But, he could use additional 
assistance in a number of these areas.
    Senator Feingold. Thank you very much.
    Senator Isakson.
    Senator Isakson. Thank you, Mr. Chairman.
    Secretary Carson, I always hate to show my ignorance, but 
the chairman just mentioned something that I am not aware of, 
and I'll bet you can explain it. What's the Kimberley Process?
    Mr. Carson. The Kimberley Process is a governments, 
industry and civil society initiative to stem the mining and 
trading of rough diamonds; adherence to its certification 
scheme assures that countries and companies legally mine the 
stones and that the sale of the stones does not, in effect, 
support illegal activities, illegal governments, and guerrilla 
movements. It attempts to put a control mechanism on the flow 
of illegally mined minerals, such as diamonds and other 
extractive materials.
    Senator Isakson. Who enforces that process?
    Mr. Carson. It's collectively enforced by governments and 
countries.
    Senator Isakson. OK.
    You had said in your testimony that the Mugabe government 
had been taking some of the profits from minerals and diamonds 
and taking it offshore for their own benefit. It that correct?
    Mr. Carson. Yes, we believe that to be the case.
    Senator Isakson. Can the Kimberley Process in any way have 
any affect to stop that?
    Mr. Carson. Yes, it can, and we are looking at this to try 
to get governments and companies not to purchase materials that 
have been mined from sources that are controlled by the 
government illegally.
    Senator Isakson. Thank you very much.
    Mr. Gast, in your printed remarks you refer to President 
Obama's $73 million funding commitment to Zimbabwe, and, in 
that, you broke it down into various things including PEPFAR. 
My question is with regard to parliamentary strengthening, 
education, and constitution-making, rule of law, consensus-
building, media, victims of torture, civil society, and local 
government capacity. Those topics that you mentioned are a 
total of $21.3 million of the $73 million. Who do you--who 
does--who carries out that assistance? Do you contract with 
NGOs, or does USAID carry it out? Can you give me some idea on 
that?
    Mr. Gast. Sure. Thank you for your question.
    Yes, we do carry out some of the assistance directly, by 
making grants to local institutions, Zimbabwean institutions, 
that meet the criteria for our doing direct disbursements. For 
those organizations that are weak and cannot meet U.S. 
Government accounting standards, then what we do is use 
international NGOs; and, in this case, one of our principal 
partners is PACT, and PACT works on rebuilding the capacity of 
the local NGOs.
    Senator Isakson. What is PACT? Is that an acronym?
    Mr. Gast. It's an acronym. PACT stands for Private Agencies 
Collaborating Together.
    Senator Isakson. OK, thank you very much.
    Mr. Baukol, in your remarks you refer to--and I'll just 
read it, ``As you know, the United States does not have broad 
economic sanctions on the country of Zimbabwe.'' And then it 
goes, ``In accordance with executive order'' such and such, 
``the Treasury Department has maintained targeted economic 
sanctions against the Mugabe regime and has designated dozens 
of senior regime officials, supporters, and state-owned or -
controlled companies.''
    What are those targeted--what are the Treasury's targeted 
sanctions, as far as the financial institutions are concerned?
    Mr. Baukol. We have listed a number of specific Zimbabwean 
entities that have been supporting the Mugabe regime over the 
last number of years. Our sanctions prevent these designated 
entities from gaining any access to U.S. financial system by 
preventing our banks and financial institutions from dealing 
with any of the entities on our sanctions list.
    Senator Isakson. So, in other words, if these guys that are 
taking money or minerals and diamonds, and are getting it 
offshore and then trying to launder it for their own benefit, 
you try and put sanctions against those who are the 
facilitators for that. Is that correct?
    Mr. Baukol. Yes, that's the principle behind it. So, for 
example, one of the sanctioned individuals is the chairman of 
the Reserve Bank of Zimbabwe, who's one of Mugabe's main----
    Senator Isakson. Just got reappointed, I understand.
    Mr. Baukol. He got reappointed last year. And he's--he and 
his family are helping the Mugabe regime, so if they were 
trying to divert funds anywhere, if it came to the attention of 
U.S. financial institutions that it was going through U.S. 
financial institutions, they would need to block those 
transactions and not do business with these sanctioned people.
    Senator Isakson. And do you coordinate these sanctions with 
the State Department?
    Mr. Baukol. Absolutely. When we come up with the list and--
of both individuals and entities, we work closely with the 
State Department and the rest of the U.S. Government.
    Senator Isakson. OK.
    Last, Mr. Gast, I understand there's a drought in Zimbabwe. 
Is that correct?
    Mr. Gast. That is correct.
    Senator Isakson. How severe is it? Is it a famine like 
drought or----
    Mr. Gast. No; but there's--there is a drought in southern 
Africa, as well as east Africa, so we're concerned about that, 
and we're monitoring it.
    We, last year, because of the economic crisis and the 
inability of getting any sort of input into the agriculture 
sector, had to feed more than 7 million persons. This year, we 
project the number to be around 2 million. Significant. But, 
with our timely inputs of agricultural seed, fertilizer, in the 
hands of people, the situation is much improved over last year.
    Senator Isakson. Good. Thank you very much.
    Thank you, Mr. Chairman.
    Senator Feingold. Senator Kaufman.
    Senator Kaufman. Secretary Carson, what's the status of 
press freedom in Zimbabwe these days?
    Mr. Carson. Very, very limited. There is press censorship 
and press control on publications of materials there. When 
there is not absolute censorship, there is self-censorship 
because of fear of running into political complications with 
the government. The international media has limited access to 
the country. At one point, there was no international media 
allowed in. The government has since, in the last couple of 
months, said they could come in, but they still have difficulty 
getting visas and difficulty reporting. I would say, on a scale 
of 1 to 10, press freedoms are probably somewhere around 2.5.
    Senator Kaufman. Is there hope that's going to change in 
the foreseeable future?
    Mr. Carson. It would easy for that to change, if, in fact, 
the government of President Robert Mugabe wanted it done. There 
could be a removal of all restrictions on the press, and 
permission for the independent media to come back to Zimbabwe.
    Senator Kaufman. But, there's no indications that's going 
to happen.
    Mr. Carson. There's no indication that we will see an 
opening of press freedom very rapidly.
    Senator Kaufman. What's the status of the rule of law in 
Zimbabwe these days?
    Mr. Carson. The status of the rule of law is pretty bad. 
Zimbabwe, in 1990, had one of the best judicial systems in 
Africa. The courts were completely independent. Robert Mugabe's 
regime has systematically eroded judicial independence. We have 
seen, however, over the last couple of days, as my colleague 
Earl Gast has pointed out, a decision by the Zimbabwe Supreme 
Court, which, surprisingly, exonerated several individuals who 
had been tortured by Robert Mugabe and harassed by his 
government.
    That was a rare sign of judicial independence. We hope it 
will continue to move forward in a positive way; but, until we 
see a long-term trend, this is more of an aberration than a 
reality.
    Senator Kaufman. And what would you say the status of human 
rights are in Zimbabwe these days?
    Mr. Carson. Status of human rights, very poor. There 
continues to be farm invasions, violent farm invasions. There 
continues to be political harassment of the MDC, including 
political figures and parliamentarians. There continues to be 
police abuse. There continue to be people held in detention. 
On--again, on a scale of 1 to 10, I would say, human rights are 
probably--respect for human rights would somewhere around 1.5 
to 2.
    Senator Kaufman. Is there real--any real indication, to 
kind of sum this up, that the political situation in Zimbabwe 
is going to change in the foreseeable future?
    Mr. Carson. As I indicated in my testimony, President 
Mugabe still has a very firm grip on power. He has that grip on 
power because he retains the control and the loyalty of the 
security forces--the intelligence services, the military 
services, and the police. He also is able to mobilize young 
party thugs on behalf of his government. If we see the signs of 
a breakup in support for Mugabe by the security services, it 
would be an indication both of a fracturing of the ZANU-PF 
structures and also a weakening of Mugabe's leadership.
    While we acknowledge the economic progress that has taken 
place as being very positive, we have not seen significant 
movement forward on the implementation of the Global Political 
Agreement. Far too many political obstacles remain for Morgan 
Tsvangirai and the MDC. We would like to see those obstacles 
removed.
    In my conversations with Vice President Joice Mujuru in New 
York in June and in my conversations with President Robert 
Mugabe in Sirte, Libya, in July, I encouraged the ZANU-PF 
leadership to move forward on the full implementation of the 
Global Political Agreement. If indeed we saw sustained progress 
on the political side, then we could begin to reengage in more 
significant fashion on both the political and the economic 
side. You know, much has been done as result of Mr. Tendai 
Biti's work on the economic side, but as far as I can see, 
there has not been a correlation that links that economic 
progress to political progress. We still see very little 
happening that gives strong encouragement that Mugabe is ready 
to let go.
    Senator Kaufman. Could you just spend--my final question is 
the influence of China in Zimbabwe.
    Mr. Carson. I think the Chinese were, at one time, keenly 
interested in exploiting Zimbabwe's vast mineral potential, 
especially as the Western mineral companies started to retreat. 
But, I think that the Chinese have become wary of Zimbabwe. 
They don't want to be attached to what is, in fact, a long-term 
losing proposition. There have been reports of large Chinese 
loans to Zimbabwe. There's really no indication that these 
loans have actually been extended to the government. I do note, 
symbolically, that the last time Hu Jintao, China's senior 
leader, made a trip to Africa, he went to Zambia and not to 
Zimbabwe. The Chinese have been cautious in how they've dealt 
with Robert Mugabe.
    Senator Kaufman. Thank you.
    And thank you, Mr. Chairman, for another excellent hearing.
    Senator Feingold. Thank you, Senator Kaufman.
    I'll just use a part of a second round.
    Assistant Secretary Baukol, as you said in your testimony, 
Zimbabwe was recently called one of the worst investment 
locations in the world, on a par with Afghanistan. In your 
view, why is it one of the worst investment locations, and what 
will it ultimately take for Zimbabwe to attract foreign 
investment?
    Mr. Baukol. Thank you, Senator.
    I think there's a number of steps that Zimbabwe would need 
to take, and progress on the political agreement would be at 
the top of the list, I believe. In my consultations with the 
financial sector in Zimbabwe, with private-sector 
representatives in Zimbabwe, they point to uncertainties about 
the rule of law, about contracts, about even their, you know, 
funds in the financial sector, and a lot of these issues relate 
to the Global Political Agreement. For example, the fact that 
Mr. Gono is still head of the Reserve Bank of Zimbabwe leads 
many people to be hesitant about putting new money into new 
investments in Zimbabwe, because of fears that those funds 
might, at some point, be taken in some way or another. So, in 
addition to regular institution-building, which Zimbabwe needs, 
sort of, across the board, I would say political progress would 
be at the top of the list.
    Senator Feingold. Assistant Administrator Gast, Zimbabwe 
is, of course, a fertile country, and I understand why USAID 
would be eager to transition from providing food assistance to 
enhancing actual agricultural production. Beyond the loan 
guarantee program you described to provide inputs and support 
for farmers, is USAID looking to undertake any other activities 
in this regard? What would they entail? And will Zimbabwe be 
part of this administration's Global Food Security Initiative?
    Mr. Gast. A very good question, Senator.
    As Assistant Secretary Carson mentioned, our assistance is 
very carefully calibrated, and we have met--had many 
interagency discussions with Treasury, with State Department 
and NSC, on a way forward, an approach in tying our assistance 
with our policy. I think what we're doing now in agriculture is 
appropriate. If you look at the statistics, I think it's less 
than 10 percent of the population are in the formal economy and 
have jobs. And so, we see this initial effort in agriculture as 
a way of getting the small farmers engaged in commerce. We--if 
this is successful, if we're able to show that there is a need 
for credit--additional credit coming in, we can look at 
expanding the program. But, we are contemplating designs for 
new activities in the future, but we want to see how the 
initial activities that we have underway now proceed, first.
    Senator Feingold. And would further assistance for 
agriculture require further waivers? And do you see any risk to 
expanding our engagement in the absence of any real land tenure 
security?
    Mr. Gast. Absolutely right. Land tenure and security is 
vitally important, and that ties, of course, to the GPA, the 
Global Political Agreement.
    The waiver--I think that we have used waiver authorities 
appropriately on the Brooke amendment and the 620(q). And, with 
the exception of that one--the Credit Guarantee Program--we did 
not require waiver authority for agriculture. The only risk, in 
the future, is if we want to--if we decide it's time to engage 
with the ministry--and it's too soon for that, the Ministry of 
Agriculture--we do have the 7070(e) provision which prevents us 
from working directly with the government unless the Secretary 
of State can certify that rule of law has been reestablished in 
Zimbabwe.
    Senator Feingold. Thank you.
    Senator Isakson.
    Senator Isakson. Just one--out of curiosity, one question, 
Mr. Gast. You talked about agriculture and building the economy 
in Zimbabwe, and I am wondering if CARE is working in Zimbabwe 
as an NGO? Do you know?
    Mr. Gast. I'm not certain that they are--they likely are in 
Zimbabwe.
    [The written information supplied for the record by Mr. 
Gast follows:]

    CARE is one of USAID's Office of Food for Peace partners providing 
emergency food assistance. It is funded through the Consortium for 
Southern Africa Food Emergency comprising World Vision, Catholic Relief 
Services, and CARE. C-SAFE is the second largest food assistance 
provider in Zimbabwe and works in collaboration with the World Food 
Programme (WFP).
    In addition, CARE receives funds from USAID's Office of Foreign 
Disaster Assistance to provide livelihood support to disadvantaged 
populations.
    CARE is expected to receive a grant from the USAID Mission to 
support similar work fairly soon. CARE is working with the savings and 
loans groups (ISAL) under their livelihood programs in Zimbabwe.

    Senator Isakson. Well, the reason I mentioned, Mr. 
Chairman, just to amplify that building of the economy, 
building of local enterprise, agriculture, and things like 
that, when I was in Tanzania in May, I visited CARE's operation 
in a number of places, and they've established a program called 
Village Savings and Loan, where they're actually getting the 
money to the individuals who are then contributing it back out 
in the form of small microloans, and are building businesses 
that are value added. These businesses are really having a 
tremendous positive effect. I know it is in that country, and 
it seems like that type of thing might be, eventually, what we 
could, hopefully, get to Zimbabwe to help those people out.
    Senator Feingold. Mr. Baukol, did you have something to say 
about CARE's presence in Zimbabwe?
    Mr. Baukol. Yes, when I was there in July and I toured a 
project that was led by Mercy Corps, but it included a number 
of other NGOs, including CARE, as well as Africare, OXFAM, and 
several others, and it was doing things along the lines that 
Senator Isakson described.
    Senator Isakson. Thank you very much.
    Senator Feingold. Senator Kaufman.
    Well, I want to thank this panel very much. This is a very 
important part of our signaling, through this committee and 
otherwise, a serious American engagement in the issues of 
Zimbabwe. I thank the panel.
    And I'd ask the second panel to come forward.
    [Pause.]
    Senator Feingold. Welcome, to the panel. I look forward to 
hearing from you.
    Ambassador Steinberg, would you start it off for us, 
please?

     STATEMENT OF HON. DONALD STEINBERG, DEPUTY PRESIDENT, 
         INTERNATIONAL CRISIS GROUP, BRUSSELS, BELGIUM

    Ambassador Steinberg. Thank you, Mr. Chairman. I'd like to 
begin by congratulating you and Senator Isakson for holding 
this hearing.
    Crisis Group believes that Zimbabwe now has the best chance 
in a decade to put behind it the divisions, abuses, and self-
implosion that is the legacy of Robert Mugabe for the country. 
There is the combination of an exclusive government, a 
reemerging civil society, an educated population, once-proud 
manufacturing, agriculture, and mining sectors waiting for 
recovery, and the good will of countries in the region and 
beyond.
    In this regard, we are very concerned that, despite these 
hopeful possibilities, a wait-and-see attitude from the 
international community, including the United States, 
especially in the political area, risks creating the ultimate 
self-fulfilling prophecy of a failure of this inclusive 
government and a return to even worse conflict and repression.
    When Morgan Tsvangirai and his MDC colleagues joined the 
Unity Government in February, skeptics portrayed them as 
neophytes who would very soon suffer from Mugabe's ``divide, 
rule, co-opt, and destroy'' strategy. Nonetheless, against long 
odds, we saw some immediate improvements. Schools and hospitals 
were reopened; the Zimbabwe dollar was shelved; and food and 
other products returned to market places. We saw a substantial 
reduction in human rights abuses, although they're continuing, 
to some extent. The cholera epidemic was brought under control. 
And a bipartisan committee was put together to draft a new 
constitution.
    We all recognized that this was all very fragile, however, 
and we saw exactly the same kinds of problems that Secretary 
Carson and others have identified: The continuing farm 
seizures; the arrest and repression of MDC parliamentarians; 
the reappointment of Gideon Gono at the Reserve Bank and 
Johannes Tomana as the Attorney General's Office; and the 
general frustration of the Global Political Agreement.
    But, it's important to remember that Prime Minister 
Tsvangirai said publicly, and continues to say, ``Don't punish 
us, and don't punish the people of Zimbabwe, for working with 
Robert Mugabe.''
    When he came to the United States and Europe this summer, 
Tsvangirai was met with lukewarm encouragement, a lot of 
skepticism, and, frankly, very little cash. Tellingly, no one 
called for a Marshall Plan for Zimbabwe. In fact, this 
hesitation, in our view, risks thwarting the very changes that 
we want to see in the country, both by weakening the hand of 
the MDC and the moderates in the ZANU-PF party and by reducing 
popular support for the reform process. If you look at the 
humanitarian relief situation, less than half of the 
requirement to feed individuals has been met. We're hearing of 
a possibility of a new outbreak of cholera when the rainy 
season hits. We are seeing strikes by teachers and health 
workers because of a lack of resources for the government. The 
government can't even buy grain from its own farmers because 
the Grain Marketing Board has no money. And even the vital 
process of constitutional reform has been stalled because the 
government doesn't have the money to pay for the outreach 
consultations that are required.
    We're equally concerned that the MDC, in particular, is 
risking its relationship with the masses in Zimbabwe. It's 
losing its political and popular support because it hasn't been 
able to deliver on what it promised when it went into 
government.
    Mr. Chairman, we are fully on board with the maintaining of 
sanctions on the hard-liners who are thwarting the reform 
process in Zimbabwe. Asset freezes, travel restrictions, et 
cetera, are essential. And we believe that, in fact, these are 
essential to leave in place until a new constitution has been 
decided, and an electoral reform process is in place.
    But, at the same time, we should be highlighting, rather 
than hiding, the 313 million dollars' worth of assistance that 
the United States is giving to agriculture and education and to 
civil society. In addition, we should be helping to empower 
civil servants and members of the legislature and judiciary. We 
should be looking to encourage trade and foreign investment in 
Zimbabwe to create jobs to address a 90-percent unemployment 
rate and to attract back the 3 to 4 million Zimbabweans who 
have fled across the border to South Africa.
    Mr. Chairman, to conclude, I understand that some worry 
that a strategy like this would prematurely reward Mugabe and 
his hard-liners, or in some way reduce the pressure on them to 
participate in the reform process. In truth, the assistance 
would strengthen the hands of moderates and make it more 
difficult for extremists to again seize power. It would create 
a situation where we can avoid more repression, more isolation 
for Zimbabwe's people, and more hardship for the region.
    Let me put it simply, if you want to sideline those who are 
trying to sideline the democratic reform process, it's time to 
support the people of Zimbabwe and the Unity Government now.
    Thank you.
    [The prepared statement of Ambassador Steinberg follows:]

Prepared Statement of Donald Steinberg, Deputy President International 
                    Crisis Group, Brussels, Belgium

    Mr. Chairman. I would like to thank you and Ranking Member Senator 
Isakson for bringing us together today to explore policy options toward 
the transition in Zimbabwe, and for your continuing leadership on these 
issues.
    As an international nongovernmental organization committed to 
preventing and ending deadly conflict, International Crisis Group 
believes that Zimbabwe now has its best chance in a decade to put 
behind it the divisions, abuses, and self-implosion that has been the 
legacy of the abusive regime of Robert Mugabe. The combination of an 
inclusive government, a reemerging and vibrant civil society, an 
educated population and workforce, a once-rich manufacturing, 
agricultural, and mining sector waiting for recovery; and the good will 
of countries in its region and beyond can open the door to a post-
conflict recovery that would benefit both its long-suffering people and 
the broader southern African region.
    But for all the hopeful possibilities inherent in this situation, a 
``wait-and-see'' attitude from the international community, including 
the United States, risks creating a self-fulfilling prophecy of a 
return to conflict and repression.

                      MDC'S ENTRY INTO GOVERNMENT

    When Morgan Tsvangirai led his party, the Movement for Democratic 
Change (MDC), into a unity government with Zimbabwe African National 
Union (ZANU-PF) in February 2009 under the terms of the Global 
Political Accord, sceptics gave the new formation little chance of 
success. Tsvangirai and the MDC were portrayed as neophytes who would 
soon become the latest victims of Mugabe's ``divide, rule, co-opt and 
destroy'' strategy. It was broadly understood that the MDC position was 
driven by a pragmatic assessment of their options. Mugabe and his hard-
line allies and security forces held most of the cards: a monopoly on 
force, a willingness to repress and abuse its political opponents, and 
the obsequious support of South African President Thabo Mbeki, charged 
by the Southern African Development Community to negotiate a solution 
to the longstanding electoral and political crisis. The MDC calculated 
that its capacity to affect change would be greater within government 
than outside it.
    Understandably repulsed by the autocratic actions, human rights 
abuses, and corrupt practices of Mugabe and his coterie, foreign 
donors--including the United States--have held back on support to the 
new government in which they maintain the upper hand. The original 
approach of providing only narrowly defined humanitarian assistance was 
eventually modified to a position described as ``humanitarian-plus,'' 
and included support for not only life-saving emergency projects, but 
also for agricultural recovery, civil servants involved in relief 
exercises, and health and educational institutions. This approach was 
seen as balancing a desire to improve the lot of Zimbabwe's population 
with continuing pressure on the actors in the new government--
especially Mugabe and ZANU-PF--to meet their commitments toward a 
transition to democracy governance.
    Against long odds, the new government started out reasonably well. 
Many schools and hospitals reopened. The Zimbabwe dollar, which had 
been turned into an international joke by multibillion percent 
inflation, was shelved. Civil servants were paid a small stipend and 
returned to work; goods started to return to empty store shelves; a 
cholera epidemic was brought under control; and a bipartisan 
parliamentary committee was formed to reform the constitution. Human 
rights activists reported a significant drop in government abuses.
    An ambitious reconstruction program--the Short-Term Economic 
Recovery Programme--identified the need for about $8.5 billion in 
resources, including foreign assistance and investment, and was 
generally well-received by foreign donors and the Bretton Woods 
institutions. Prime Minister Tsvangirai, Finance Minister Tendai Biti 
and their MDC party received much of the credit for these 
developments--even from the rank-and-file army--and a new sense of hope 
returned to Zimbabwe.
    But Tsvangirai could see clearly that these changes were fragile 
and pleaded for foreign help to consolidate them. ``Don't make us pay 
for working with Mugabe,'' he wrote in a powerful opinion piece in the 
London Times.
    Indeed, from early on, there were ample signs of concern. Farm 
seizures have continued virtually unabated. While human rights abuses 
declined, ZANU-PF-led security forces have continued to arrest and 
detain activists and MDC parliamentarians. Hard-line partisans like the 
Reserve Bank Governor, Gideon Gono, and the Attorney General, Johannes 
Tomana, were unduly reappointed, top generals boycotted the new 
national security establishments and showed public disdain for 
Tsvangirai, and ZANU-PF has delayed or ignored key commitments under 
the Global Political Accord (GPA). The constitutional reform process 
has been thwarted by ZANU-PF's insistence that the secretly authored 
Kariba draft serve as the basis for a new constitution.
    Some old regime elements, especially hard-line generals and other 
Mugabe loyalists, are actively thwarting the new government, motivated 
by fear of a loss of power and its financial benefits; possible 
prosecution for their crimes; hatred of Tsvangirai and the MDC; and a 
belief that that they are the guardians of the country's liberation. 
These forces continue to work flat out to undermine the inclusive 
government by stalling processes that should lead to the fulfilment of 
the GPA and refusing to implement government decisions. True to form, 
Mugabe is giving them backing, calling into grave question his 
commitment to make the inclusive government work.

                THE RISKS OF INTERNATIONAL DISENGAGEMENT

    During his visit to the United States and Europe this summer, 
Tsvangirai was met with luke-warm encouragement, much skepticism, and 
very little cash. In addition to the revulsion over supporting a 
government including Mugabe, Zimbabwe's timing was awful. It was 
seeking massive foreign aid and private investment at a time when 
donors were cutting aid budgets and foreign investors were seeking safe 
havens in the stormy global economy. Tellingly, no one has called for a 
``Marshall Plan for Zimbabwe.''
    In fact, this stance risks thwarting the very changes the 
international community is seeking, both by weakening the hand of the 
MDC and moderates in ZANU-PF, and by undercutting popular support for 
the reform process. The humanitarian situation remains dire, with 
reluctant donors pledging less than half of the $718 million required 
to ward off disease and hunger. The United Nations and nongovernmental 
organizations have warned of a potential new cholera outbreak ahead of 
the rainy season. Moreover, doctors and teachers have gone on strike to 
demand better pay. The government is unable to buy grain from farmers 
because the Grain Marketing Board has no money. The constitutional 
reform process is stalled in part over the failure of the government to 
finance outreach and consultation programs.
    Already, there are disturbing warnings that the MDC is losing 
contact with its popular base, including in the context of the 
constitutional reform process. Civil society activists are increasingly 
complaining that this process is being driven by political elites for 
their own purposes. Similar arguments are emerging with regard to 
efforts to develop mechanisms to hold the perpetrators of human rights 
abuses accountable for their actions. Within the MDC itself, some 
question the wisdom of remaining in the unity government.
    Further, despite succession battles within ZANU-PF between the 
rival factions of the hard-line Defense Minister Emmerson Mnangagwa and 
the more moderate Gen. Solomon Mujuru and his wife, Vice President 
Joice Mujuru, the forces committed to Mugabe seem to be firmly in 
control.

        MAINTAIN TARGETED SANCTIONS; ENHANCE TARGETED ASSISTANCE

    Mr. Chairman, the United States must stand firmly against those who 
are thwarting the democratic transformation in Zimbabwe. Tough targeted 
sanctions--including trade and travel bans and assets freezes--against 
such individuals and the companies they control under the International 
Emergency Economic Powers Act, the National Emergencies Act, and 
section 301 of title 3 of the United States Code should remain in place 
to secure the commitment of the recalcitrant parties to their 
commitments under the GPA.
    But at the same time, targeted reconstruction and development 
assistance--channeled through fully transparent, credible and 
accountable mechanisms and institutions--is essential now. Such 
mechanisms do exist: The International Monetary Fund, for example, has 
ensured responsible use of the one-time expansion of special drawing 
rights to Zimbabwe equivalent to a $500 million loan for the purpose of 
building and repairing schools, hospitals, roads, railways and 
communication networks. The United States, other donors, and 
international financial institutions should:

   Expand assistance to support revival of the education, 
        agriculture, water, health and water sanitation, including 
        support for the soon-to-be-announced Government Works Program. 
        Particular attention should be given to programs to assist 
        women, including reproductive health care and girls' education.
   Help empower a functioning civil service and legislature, 
        and support reform of politicized government institutions, 
        including the judiciary.
   Strengthen civil society--groups of women, academics, 
        journalists, lawyers, farmers, and others--fractured and 
        polarized in recent years by Mugabe's divide-and-rule tactics.
   Adopt innovative programs to encourage new trade and foreign 
        investment in Zimbabwe to address the country's massive 
        unemployment rate and promote the return of 4 million 
        Zimbabwean migrants who are increasingly the target of 
        xenophobic attacks in South Africa and elsewhere in the region.

               AMERICA'S INTERESTS IN ZIMBABWE'S RECOVERY

    Mr. Chairman. At a time when crises in Afghanistan, Burma, Congo, 
Iran, Iraq, North Korea, Pakistan, Somalia, Sri Lanka, and Sudan fill 
the in-boxes of American policymakers, it would be easy to move the 
slow-simmering crisis to the back burner. Neither the MDC nor ZANU-PF 
consorts with global terrorists, and collapse of the unity government 
will not lead to jihadi training camps in rural areas. Zimbabwe is 
neither a supplier nor a major trafficker in illegal drugs, arms, or 
persons. Its refugees are not flooding into the United States. Zimbabwe 
has no oil, and most of its minerals face free-falling global demand. 
No exotic diseases threaten pandemic: it suffers from ``just'' cholera, 
malaria, and HIV/AIDS. The country straddles no sea-lanes and has no 
pirates.
    But there are strong motivations for broad American engagement. 
Just because the global effects of Zimbabwe's implosion have so far 
been modest, this could change rapidly. Transnational threats incubate 
in unexpected ways in the hothouse of instability and weak governance. 
What if the H1N1 virus had emerged in Harare and swept through a 
country where the health infrastructure had been ravaged?
    Zimbabwe's recovery is of major regional importance. If Zimbabwe is 
a smallish country of 12 million people, the southern African region--
with a market of 200 million, growing oil production, peacekeepers 
throughout Africa, and a location along key shipping lanes--is by 
contrast of great strategic, commercial and political importance to the 
United States. A prosperous Zimbabwe could be an engine of growth for 
the region, providing key links to regional communications, transport 
and electricity grids. Zimbabwe has long been considered a potential 
breadbasket for the region, based on what used to be efficient 
agriculture, albeit needing serious and responsible land reform.
    By contrast, instability in Zimbabwe is profoundly destabilizing to 
its neighbors. An estimated 4 million Zimbabweans fleeing economic 
hardship and political abuses have flooded across borders, overwhelming 
the social services and the good will of South Africa, Botswana, and 
other neighbors. Botswana, Africa's shining star of stability and human 
rights, has built an electrified fence and resorted to detention and 
expulsions to keep desperate Zimbabweans out.
    This regional importance has been one reason why the SADC has been 
advocating greater international support for the unity government. 
South Africa itself has put up about $75 million to support the process 
of democratic transformation. During his visit to Harare in late August 
and a subsequent meeting with Secretary of State Clinton, South African 
President Jacob Zuma gave welcome indications that he will press a 
tougher stance vis-a-vis Mugabe on outstanding GPA obligations, respect 
for rule of law, and cessation of repressive actions by the security 
forces under his control.
    But regrettably, the international community cannot rely solely on 
Zimbabwe's neighbors to promote this process. As shown again in their 
September 7-8 meeting in Kinshasa, many SADC leaders continue to kowtow 
to Mugabe. Following a presentation in which he told these leaders that 
the unity government is doing well, SADC unproductively called for the 
lifting of targeted international sanctions on Zimbabwe and cancelled 
an extraordinary summit on Zimbabwe to review the weak implementation 
of the GPA.
    Working with regional actors, the broader international community 
and, of course, the Zimbabwean people themselves, the United States has 
a unique opportunity to promote democratic transformation and 
socioeconomic recovery in Zimbabwe.
    I know that some worry that such a strategy would prematurely 
reward Mugabe and his hard-line supporters, or somehow reduce the 
pressure on them to cooperate with the reform process.
    In truth, a policy of engagement and targeted assistance through 
credible and transparent channels would strengthen the hands of 
moderates and make it more difficult for the extremists to again seize 
power, which would result in even greater repression and isolation for 
Zimbabwe's people and greater instability throughout South African and 
beyond. Put simply: We believe that if you want to sideline Mugabe and 
his hard-liners, you should support the people of Zimbabwe by embracing 
the unity government now.

    Senator Feingold. Thank you very much, sir.
    Dr. Moss.

 STATEMENT OF TODD MOSS, VICE PRESIDENT FOR CORPORATE AFFAIRS 
 AND SENIOR FELLOW, CENTER FOR GLOBAL DEVELOPMENT, WASHINGTON, 
                               DC

    Dr. Moss. The situation in Zimbabwe is not unlike a forced 
marriage between a violent criminal and a courageous spouse who 
is trying to restore order and sanity to a shattered household. 
The challenge for the United States is to help support the 
credible parts of the coalition without emboldening the 
criminal parts. Fortunately, I think that we do have policy 
options to achieve that very goal.
    Thank you, Chairman Feingold, Ranking Member Isakson, other 
members of the committee. Appreciate the opportunity to appear 
before you today to suggest ways the United States can respond 
forcefully and strategically to the challenges in Zimbabwe.
    While on leave from the Center for Global Development, I 
proudly served in the State Department of the previous 
administration, but did not work directly on our policy toward 
Zimbabwe. I have, however, been actively involved with the 
country for two decades, and now lead the Center's work on 
Zimbabwe, which also does include some informal assistance to 
the Ministry of Finance on the technical aspects of arrears 
clearance.
    I believe we should be clear. Morgan Tsvangirai won the 
March 2008 elections and rightfully should be President. 
Instead, we have a highly imperfect interim Unity Government; 
the cabal, responsible for destroying Zimbabwe's economy, for 
unleashing violence, and denying the will of the voters, are 
still in positions of power; the coalition government is thus 
extremely fragile. However, we must recognize that the 
situation on the ground is far better than it was a year ago. 
Mr. Tsvangirai is Prime Minister. There are credible and 
capable people from his party in charge of key ministries; most 
notably, finance, power, and health. Policy changes implemented 
by the Minister of Finance represent a clear break with the 
past. I believe the United States should support this positive 
progress, while still remaining clear-eyed about the risks 
ahead.
    A passive wait-and-see approach is a sure recipe for 
failure. The Unity Government can only survive if it shows 
forward momentum. Nor is it an option for the United States to 
throw its full weight blindly behind an uncertain coalition 
government. The only practical option for the United States is 
to find creative ways of supporting democratic forces, 
technocratic reforms, and economic recovery, while keeping 
resources out of the hands of the old guard and maintaining 
pressure on the instigators of violence.
    What might such a strategy entail? First, the United State 
must maintain targeted sanctions until it is clear that those 
people on the list are no longer actively working to undermine 
democracy and U.S. interests in the region. Second, we should 
continue to be forceful with Zimbabwe's neighbors to live up to 
their commitments, both to enforce the terms of the coalition 
deal and to provide adequate support. The diplomatic and 
financial efforts, so far, from South Africa are far from 
sufficient for a country that claims regional leadership. 
Third, the United States must find ways to provide ring-fenced 
support for activities and select ministries involved in 
restarting critical public services. Expectations are extremely 
high among the Zimbabwean population for positive, tangible 
change.
    I'll focus the remainder of my time on this last dilemma, 
how the United States can help economic revitalization without 
unintentionally giving comfort to negative forces, how we can 
help one part of the coalition without emboldening the other.
    An easy first step is for the U.S. Treasury to support 
efforts already underway at the multilateral development banks 
to assist the Ministry of Finance. We can even encourage the 
World Bank and the African Development Bank to seek and find 
special prearrears clearance money for Zimbabwe. These 
institutions are thinking hard about how to be constructive, 
but they're also looking for clear signals from key 
shareholders, like the United States.
    U.S. bilateral efforts must encourage forward progress, 
while ensuring that any assistance is fully accountable. For 
the sake of speed and flexibility, I believe we should build on 
existing U.S. pipelines and expertise in health, agriculture, 
and private investment. And I'll briefly suggest four specific 
examples.
    One, we should designate Zimbabwe a focus country for the 
President's AIDS and malaria initiatives.
    Two, noting that nearly 3 million Zimbabweans will be food-
insecure this year, we should make sure that Zimbabwe is 
included in the White House African Food Security Initiative.
    Third, the administration should direct the Overseas 
Private Investment Corporation and the U.S. Export-Import Bank 
to find creative ways of catalyzing private capital. For 
example, OPIC could announce an intention to launch a Zimbabwe 
Enterprise Fund, as it has done in places like Liberia.
    Fourth, we should make--the United States should make a 
modest contribution to the World Bank-administered Multi-Donor 
Trust Fund. A major U.S. contribution is neither likely, nor 
necessary, but some participation would be a visible sign of 
American intentions and support.
    By using these existing mechanisms and some creativity, the 
United States could mobilize significant resources, perhaps, 
from these four examples, as much as $500 million, to 
contribute toward Zimbabwe's recovery and reconstruction, and, 
at the same time, support the political process of restoring 
Zimbabwe to the community of democracies.
    Thank you.
    [The prepared statement of Dr. Moss follows:]

 Prepared Statement of Todd J. Moss, Vice President and Senior Fellow, 
             Center for Global Development, Washington, DC

    Thank you Chairman Feingold, Ranking Member Isakson, and other 
members of the subcommittee. I appreciate the opportunity to appear 
before you today to suggest ways the United States can respond 
forcefully and strategically to the economic and political challenges 
in Zimbabwe.
    I proudly served in the State Department of the previous 
administration, but, in the interest of full disclosure, did not work 
directly on our policy toward Zimbabwe. Nevertheless, I have been 
actively involved with the country for two decades and now lead the 
Center for Global Development's work on Zimbabwe.\1\
---------------------------------------------------------------------------
    \1\ For example, Benjamin Leo and Todd Moss, ``Moving Mugabe's 
Mountain: Zimbabwe's Path to Arrears Clearance and Debt Relief,'' 
Center for Global Development, Washington, DC, forthcoming October 
2009.
---------------------------------------------------------------------------
    Zimbabwe has experienced an economic and political trauma not 
unlike a major conflict.\2\ My colleague, Michael Clemens, and I 
estimate that Zimbabweans have over the past decade fallen back to an 
average income level not seen since the 1950s.\3\
---------------------------------------------------------------------------
    \2\ Todd Moss and Stewart Patrick, ``After Mugabe: Post-Conflict 
Lessons for Zimbabwe,'' Africa Policy Journal, Harvard University, 
April 2006.
    \3\ Michael Clemens and Todd Moss, ``Costs and Causes of Zimbabwe's 
Crisis,'' Center for Global Development, Washington, DC, July 2005.
---------------------------------------------------------------------------
    The tragedy of Zimbabwe, of course, is that this economic collapse 
is entirely man-made. Since September 2008 the country has been 
administered by an interim unity government that was forced on Robert 
Mugabe by regional leaders following the flawed March 2008 elections 
and a brutal campaign of violence against the Movement for Democratic 
Change and its supporters. We should be clear: Even in an environment 
of intense intimidation and repression, Morgan Tsvangirai won those 
elections.
    The current arrangement is highly imperfect, not least because the 
men responsible for destroying the economy, unleashing the violence, 
and denying the will of the voters are still in positions of power. The 
Mr. Mugabe is still surrounded by men who have every reason to try to 
cling to power and grab what they can. The coalition government is thus 
highly fragile and has made halting progress.
    However, it is critical to recognize that the situation on the 
ground is far better than it was a year ago. Mr. Tsvangirai is Prime 
Minister and there are credible and capable people from his party in 
charge of key ministries, most notably finance, power, and health.
    Policy changes implemented by the Minister of Finance represent a 
clear break with the past and have stabilized the macroeconomic 
climate. Inflation is under control and the poisonous influence of the 
central bank has been marginalized. The country may register positive 
economic growth for the first time since 1998. But an upturn is far 
from certain and far from robust.
    I believe the United States should support this positive progress, 
while still remaining clear-eyed about the risks ahead. The challenge 
for U.S. policy is to continue to support recovery and the restoration 
of democracy while still maintaining pressure on the negative elements.
    A passive wait-and-see approach is a recipe for failure. The unity 
government can only survive if it shows forward momentum and, given the 
depths of the country's plunge, assistance from the international 
community is essential.
    Nor is it an option for the United States to throw its full weight 
blindly behind the coalition government. Given the real uncertainties 
ahead, a big push seems neither prudent nor strategic.
    The only practical option for the United States is to find creative 
ways of supporting democratic forces, technocratic reforms, and 
economic recovery while keeping resources out of the hands of the old 
guard and maintaining pressure on the instigators of violence.
    What might such a strategy entail?
    First, the United States should maintain targeted sanctions until 
it is clear that those people on the list are no longer working to 
actively undermine U.S. interests in the region.
    Second, we should continue to be forceful with SADC to live up to 
its commitments, both in terms of enforcing the coalition deal and 
providing adequate support. The contributions so far from SADC members, 
especially South Africa, have not been sufficient to the task. We 
should prevail upon new SADC chair Joseph Kabila of Congo to keep 
Zimbabwe on the SADC agenda.
    Third, the United States should find ways to provide ring-fenced 
support for activities and select ministries involved in restarting 
critical public services. Expectations are high among the Zimbabwean 
population for positive, tangible change. Lack of visible progress will 
undercut the reformist position of the Prime Minister and his party.
    The United States can make significant contributions in all three 
of these areas. I will focus the remainder of my testimony on this last 
piece: how the United States can help economic revitalization without 
unintentionally giving comfort to negative forces.
    An easy first step is for the U.S. Treasury to support efforts 
underway at the multilateral development banks to assist the Finance 
Ministry. We can even encourage the World Bank and the African 
Development Bank to seek prearrears clearance money for Zimbabwe. These 
institutions are thinking hard about how to be constructive but also 
looking for signals from key shareholders.
    U.S. bilateral efforts must simultaneously encourage forward 
progress while ensuring that any assistance is fully accountable. For 
the sake of speed and flexibility, options should be prioritized that 
build on existing U.S. pipelines and expertise in health, agriculture, 
and private investment. For example:
    1. Designate Zimbabwe a focus country for the President's Emergency 
Plan for AIDS Relief (PEPFAR) and the President's Malaria Initiative 
(PMI). Current HIV/AIDS spending by the United States in Zimbabwe is 
approximately $30m per year, even though the country has among the 
world's highest prevalence rates. By comparison, PEPFAR obligated $696m 
to Zambia for FY 2004-08. For malaria, Mozambique and Zambia received 
$19m and $14m, respectively in FY08, versus $200,000 for Zimbabwe.
    2. Include Zimbabwe in the food security initiative. The USG 
provided $112 million in FY09 to Zimbabwe for emergency assistance, 
with USAID's Food for Peace accounting for 85 percent. Assistance could 
be expanded and broadened to include targeted agricultural productivity 
aid, in line with the White House focus on restoring long-term food 
security in Africa. The U.N. estimates that nearly 3 million 
Zimbabweans are food insecure this year. Restarting the country's once-
great agricultural base is vital to long-term revitalization.
    3. Encourage OPIC and ExIm to catalyze private capital. The 
Overseas Private Investment Corporation should announce an intention to 
launch a Zimbabwe Enterprise Fund. OPIC has already created more than a 
dozen private investment funds targeting Africa and several country-
specific funds, such as the $30 million Liberia Enterprise Development 
Fund. The U.S. Export-Import Bank should also consider, at the earliest 
possible moment, reopening a Zimbabwe window. This would provide trade 
credit for critical parts and supplies as the country rebuilds its 
power, transport, and water systems. If the administration wanted to be 
especially forward-leaning, it could begin negotiations with China ExIm 
Bank for small jointly funded infrastructure projects. This would not 
only leverage our economic influence, but also send a strong political 
signal to Harare.
    4. Make a modest contribution to the multidonor trust fund. The new 
government's survival depends in large measure on providing cash to 
restore social services and build the depleted civil service. Although 
a major U.S. contribution to the World Bank-administered multidonor 
trust fund seems unlikely and unnecessary, some participation from the 
United States would be a visible sign of American intentions and 
support.
    By using these existing mechanisms and a little aggressive 
creativity, the United States could mobilize significant resources to 
contribute toward Zimbabwe's recovery and reconstruction--and at the 
same time support the political process of restoring Zimbabwe to the 
community of democracies.

    Senator Feingold. Thank you very much, Dr. Moss.
    Ms. Lindborg.

     STATEMENT OF NANCY LINDBORG, PRESIDENT, MERCY CORPS, 
                         WASHINGTON, DC

    Ms. Lindborg. Thank you. Thank you, Chairman Feingold, 
Ranking Member Senator Isakson, and other committee members. 
Thanks for holding this hearing today. It's an important topic 
at an important time.
    And, as my copanelists have all strongly underscored, the 
principal dilemma is, How do you engage? How do you address the 
critical humanitarian challenges as the bottom has fallen out 
of what used to be a well-run county over this last decade? And 
how do you do so without compromising, given the tenuous 
political situation?
    Mercy Corps works in about 40 countries around the world, 
most of them conflict-affected, very transitional, difficult 
environments. Each is different, but one of the lessons that 
we've drawn from each of those environments is that there is 
often a lot of room to work at the community level, and up to 
and including local municipalities, that enables you to help 
encourage positive progress, energize a population that's eager 
for positive change, and at the same time address not just the 
immediate impacts of humanitarian crisis, but some of the 
systematic underpinnings that will cause them to occur over and 
over again, such as the cholera crisis that ravaged Zimbabwe 
last year and has every indication that it could return this 
coming year because of the massive failures of the water 
sanitation and public education systems.
    We've been operational in Zimbabwe since 2002. We see, with 
the advent of the Unity Government, several signs of positive 
hope that we think further justify the importance of moving 
past strict humanitarian support and into recovery and early 
reconstruction at the ground up.
    The first is that, since the dollarization of the economy, 
lives have changed in a stark way at the human level, at the 
family level. The ability to go out and buy bread at a cost 
that hasn't triple by 100,000 percent by the end of the day has 
simply changed how people live their days, created a 
substantial amount of optimism that's directly pegged to the 
advent of the Unity Government. The staggering hyperinflation 
has subsided, and people are able to get on with their lives 
with increased dignity.
    Restrictions on the movements and operations of 
international NGOs have been lifted. Where we were once 
virtually shut down for almost 6 months last year, we're now 
able to operate with little or no political impediments.
    We have project partnerships now, that were previously 
unheard of, at the municipal and local level, where we are able 
to work, with them with technical assistance, on community-
driven, community-identified projects that have immediate, 
long-lasting effect on the quality of life for the citizens.
    This is a sense of optimism that I think is important to 
support. There is both the opportunity--indeed, the 
imperative--to do so. The imperative is also because of the 
risk of the humanitarian relapse. As you've heard and as you 
know, Zimbabwe has been the important recipient of humanitarian 
assistance. It has been a Band-Aid. The cholera will reoccur if 
the water sanitation systems aren't addressed. The food 
insecurity will continue to run rampant if we aren't able to 
get at the ways for people to increase both at the community 
and a more systemic level, their food production. And the 
education system requires immediate and serious attention and 
investment to get that back up and running.
    Therefore, I strongly urge that the United States begin 
shifting assistance policies toward recovery and reconstruction 
to a broader and more focused engagement, in a targeted way 
that ensures accountability, partnerships with those who are 
eager and able to work, in partnership with the communities and 
with international assistance actors, to ensure that the 
projects are indeed for the benefit of the communities and that 
the responsibility is for increased services to the population.
    I would echo the three primary areas for this assistance 
being support at the community level, rebuilding the social 
fabric; helping families restore their livelihoods, support 
private-sector recovery to revitalize the economy, particularly 
in agriculture; and critical areas of health and education, 
because that's where it will matter most.
    These recommendations are incremental and feasible steps 
that we can take. Absolutely, we should continue to press the 
government on performance benchmarks, but not let those 
shortcomings preclude all efforts to support recovery.
    It's a targeted, incremental assistance strategy of early 
recovery and reconstruction, with much to gain.
    Thank you.
    [The prepared statement of Ms. Lindborg follows:]

     Prepared Statement of Nancy Lindborg, President, Mercy Corps, 
                             Washington, DC

    I would like to express my appreciation to Senator Feingold, Chair 
of the subcommittee, and to the ranking member, Senator Isakson, for 
the opportunity to offer testimony today on the situation in Zimbabwe. 
I thank the subcommittee for holding this hearing to review what is a 
critically important U.S. policy challenge in Africa. Zimbabwe has been 
on a difficult path in recent years, but the events of the past 6 
months give some reasons for hope--and therefore it is a very 
appropriate moment for this body to review the U.S. Government's 
policies toward the country.
    I am here today in my capacity as the President of Mercy Corps, a 
major international humanitarian and development nonprofit organization 
that currently works in 40 conflict affected and transitional 
countries, helping to rebuild safe, productive and just societies. 
Mercy Corps works in some of the world's most challenging transitional 
environments, including Afghanistan, Pakistan, Iraq, Sudan, the 
Democratic Republic of Congo, Sri Lanka, and Colombia. Our work is 
supported by a wide range of public, private, and international donors, 
including a strong partnership with USAID. Mercy Corps has been 
operational in Zimbabwe since 2002, working hand in hand with local 
communities in 6 of the country's 10 provinces. We respond to the 
relief and development needs of more than 100,000 of Zimbabwe's most 
vulnerable people. Our programs are working to create support systems 
for orphans and other vulnerable children, enhance food security, 
increase access to safe water, sanitation and community health 
information, and coordinate a humanitarian response to vulnerable 
displaced populations.
    The humanitarian efforts of the U.N. and NGOs have been critical in 
saving lives during the difficult period since 2005, when the 
Government's ``Operation Restore Order'' forcibly cleared out urban 
slums and displaced 700,000 people. However, we now have an urgent 
opportunity to move beyond the series of Band-Aids we have been 
collectively applying and begin supporting recovery and reconstruction 
in Zimbabwe. The international community has been understandably 
reluctant to invest in recovery given the tenuous political situation. 
However, we see an important opportunity to support and reinforce a 
positive path for Zimbabwe and, most urgently, address the continuing 
humanitarian crises at a more systemic level. With my testimony today, 
I will discuss why international support for recovery is so critical at 
this stage and offer some recommendations on next steps for 
international recovery and reconstruction assistance.
    As many of you know, Zimbabwe has been gripped in a spiraling 
collapse for the last decade. However, since the advent of the Unity 
Government in February of this year, there have been growing glimmers 
of hope. During my trip this summer to Zimbabwe, I saw firsthand the 
availability of goods in the stores and increased optimism in the 
communities I visited. Most importantly, we have seen the following 
indicators that progress is happening and should be supported:

   The economic situation has improved drastically following 
        the adoption of the U.S. dollar as the country's working 
        currency. After suffering through unimaginable hyperinflation 
        since early 2007, with prices doubling on almost a daily 
        basis,\1\ the dollarization of the economy in January 2009 has 
        restored a level of basic functionality within the economy. As 
        a result, trade with neighboring states is returning, stores 
        have rebuilt their stocks, and widespread shortages of basic 
        goods are a thing of the past. This has laid an important piece 
        of the foundation for Zimbabwe's economic recovery.
---------------------------------------------------------------------------
    \1\ John Hanke, Economics Professor at Johns Hopkins--http://
www.cato.org/zimbabwe.
---------------------------------------------------------------------------
   Restrictions on the movement and activities of NGOs, which 
        were put in place following last year's electoral controversy 
        have been greatly eased. These restrictions were suspended in 
        August 2008, and since then international aid agencies have 
        been able to move freely through much of the country. We are 
        not now facing political interference with our activities.
   Within some of our projects, we now have partnerships with 
        local government officials, something that would have been 
        unthinkable a few years ago. The Unity Government has taken a 
        more open and collaborative approach to NGOs, and this has 
        built on the easing of restrictions the government initiated a 
        year ago.
   Finally, in our experience, Zimbabweans are feeling a sense 
        of cautious optimism about their country for the first time in 
        years. After a decade of watching the creeping collapse of 
        their country, they are finally seeing signs of progress, and 
        some reasons for hope.

    Despite these signs of progress, the potential for further 
humanitarian crises could threaten what has so far been achieved. The 
fear of a renewed cholera outbreak during this year's rainy season \2\ 
and forecasts of a significant food gap this winter \3\ are stark 
reminders of the country's fragile state and persistent humanitarian 
challenges. The cholera outbreak which began last fall and persisted 
until July 2009 vividly illustrates how Zimbabwe's emergencies flow 
from infrastructural collapse. Approximately 100,000 people fell sick 
and over 4,000 died from a disease that is a virulent result of poor 
infrastructure and weak social services. Cholera typically spreads via 
the contamination of drinking water with human waste. The wide impact 
of this epidemic reveals the massive collapse of the country's safe 
water and sanitation infrastructure, as well as the poor state of 
public health education. Risky water, if boiled, becomes safe to drink, 
yet this message was clearly not understood by much of the population. 
Upon catching cholera, mortality can be reliably averted through basic 
medical treatment and ingestion of simple rehydration solutions. The 
fact that thousands still died shows how comprehensively the health 
care system has collapsed.
---------------------------------------------------------------------------
    \2\ Zimbabwean health expert Itayi Rusike has said cholera is 
``endemic''--that is, a persistent problem--in the country. http://
reliefweb.int/rw/rwb.nsf/db900sid/SNAA-7VA4Z4?OpenDocument
&rc=1&cc=zwe.
    \3\ Famine Early Warning System Network (FEWS-NET) report, August 
2009 http://reliefweb.
int/rw/rwb.nsf/db900sid/MYAI-7VG3QS?OpenDocument&rc=1&cc=zwe.
---------------------------------------------------------------------------
    Extend this scenario of collapse across Zimbabwe's other social and 
economic sectors and one begins to understand the level and scope of 
recovery challenges that the country now faces:

   The health system, once among the very best in Africa, 
        remains in shambles. While the cholera epidemic has mercifully 
        abated, it could easily reappear and the system continues to 
        face other challenges, most recently a staff strike over 
        inadequate and sometimes unpaid wages.
   The education system, which once gave Zimbabwe some of the 
        highest literary rates in Africa, has greatly deteriorated. 
        Teacher wages are now being paid, but remain low relative to 
        the expenses that teachers face. Transport costs alone can 
        consume up to a quarter of teachers' salaries. Facilities are 
        crumbling for a lack of basic maintenance; the poor water and 
        sanitation infrastructure at many schools continues to 
        contribute to cholera risks. Basic school supplies are so 
        scarce that some students this year are going to class without 
        any books.
   The agricultural sector is falling far short of its 
        potential productivity and continues to face serious obstacles. 
        Annual agricultural production in the country declined by 30 
        percent from 2006 to 2008.\4\ Smallholder farmers are among the 
        hardest hit, as declining yields, diminished purchasing power, 
        and livelihood vulnerability will cause an estimated 2.8 
        million households to experience food insecurity within the 
        coming year.\5\ The fruits of the economy's collapse are 
        evident in the more than 1 million Zimbabweans who have 
        migrated to South Africa in search of work. The basic economic 
        infrastructure supporting the agriculture sector, such as input 
        suppliers, processors, and market and transport linkages, has 
        greatly deteriorated. Without this infrastructure in place, the 
        sector will struggle to recover, and we will continue to see 
        Zimbabwean economic migrants flooding into South Africa in 
        search of work.
---------------------------------------------------------------------------
    \4\ WFP/FAO Study, June 2009.
    \5\ Ibid.

    The humanitarian challenges that Zimbabwe faces are, ultimately, 
systemic problems and must be addressed through investments in recovery 
and reconstruction.
    The international community is understandably reluctant to invest 
resources in recovery and reconstruction without further progress in 
the political sphere. However, we believe that a strategic approach to 
recovery assistance would both address some of the systemic causes of 
humanitarian needs, as well as support positive progress. Conversely, 
withholding recovery resources may simply undermine confidence in the 
Unity Government and provide convenient excuses if conditions fail to 
improve.
    I therefore strongly urge the USG to begin shifting assistance 
policies toward recovery and reconstruction, both to address the 
systemic drivers of the humanitarian crises and to reinforce the 
potential for positive political and social change. Recovery efforts 
can be most effective if they engage municipal authorities, community 
leadership, and civil society in joint efforts to address basic 
recovery needs in ways that were not previously feasible. With the 
changing environment, NGOs can work in partnership with willing local 
officials of any party to provide key inputs, rehabilitate 
infrastructure, and address key training and capacity-building needs.
    One example is our current work in Mutare, Zimbabwe's third-largest 
city. Mercy Corps is supporting the rehabilitation of the entire water 
purification system of Mutare, and is doing so in close collaboration 
with the local municipal authorities. We manage all the procurement and 
control the funds, but the municipality provides the technical staff 
and personpower required to revitalize the water system. With this 
model of collaboration, the accountability and management of donor 
funds are ensured while the government takes responsibility for 
providing increased services to its population. This sort of joint NGO 
local government-community collaboration is a good model for engaging 
the local government in the restoration of services, while maintaining 
accountability and project integrity. Whether in MDC or Zanu-PF areas, 
this kind of approach has the potential to provide positive incentives 
for constructive government behavior.
    What Zimbabwe most needs are programs that will enable recovery in 
key economic and social service sectors. Particularly notable have been 
the loss of community-level resiliency, the implosion of the country's 
economy, and the degradation of key social services. We see the 
greatest areas of immediate need and near-term potential as:

1. Increase recovery and transitional support at the community level
    There are many community-level initiatives that can begin 
reknitting the social fabric and restoring livelihoods. After the 
crippling effects of the last decade, these efforts are essential to 
enable families to support themselves with dignity and hope, to address 
the needs of the country's 1.5 million \6\ orphans and foster further 
confidence in the road ahead. Such efforts go beyond the scope of 
humanitarian relief by enabling communities to take charge of their own 
recovery. Livelihoods are a critical component here--the restoration of 
livelihoods will have a positive effect on household-level food 
security and mitigate vulnerability to hunger and disease, including 
efforts to restart and expand smallholder agricultural production. 
Meanwhile, the country's longstanding financial crisis means that 
small- and medium-sized entrepreneurs, who play a critical role in the 
functioning of rural economies, lack reliable access to credit and so 
cannot finance the rebuilding of their businesses. The country's 
microfinance institutions have yet to recover from the hyperinflation 
and need infusions of lending capital in order to resume operations. 
NGOs have been working to set up savings-and-lending cooperatives for 
more than 5,500 households, have constructed over 500 market stalls to 
support small entrepreneurs, and helped to establish more than 1,800 
household gardens--but much greater investments are needed.
---------------------------------------------------------------------------
    \6\ http://news.bbc.co.uk/2/hi/africa/8092896.stm.
---------------------------------------------------------------------------
    Community-level reconstruction support is also needed in the areas 
of water and sanitation services. A huge proportion of the population 
continues to lack access to safe drinking water and hygienic latrine 
facilities. Rectifying these problems is a critical step in protecting 
against future cholera outbreaks. Mercy Corps is working in partnership 
with community leaders and local officials to build and rehabilitate 
wells in more than 100 villages, constructing hundreds of sanitary 
latrines, and training thousands of community members on good community 
hygiene practices. These are good first steps--but it is time to begin 
a larger scale shift of community infrastructure resources toward 
recovery rather than emergency response, and begin thinking on 
multiyear timeframes rather than 6-to-12 month relief cycles.

2. Support private sector recovery to revitalize the economy
    Efforts to restore livelihoods and productivity at the community 
level must be complemented by the rebuilding of Zimbabwe's commercial 
agriculture sector, especially to avert future food crises. This 
recovery is greatly impeded by the deterioration of the economic 
infrastructure that formerly supported the sector. The agriculture 
``value chain'' of economic actors and functions that brings goods from 
individual farmers to processing to market to sale is in extreme 
disrepair. Vital private-sector networks of agricultural input 
suppliers, product vendors, warehousers, and traders have largely 
broken down. Assistance in rebuilding these value chains will be a 
vital component of efforts to restore agriculture production and 
revitalize the sector.
    The nonagriculture sectors of the economy also need extensive 
support if they are to recover. The manufacturing sector is operating 
well below capacity and the private sector in general faces a 
longstanding lack of access to credit. While the dollarization of the 
economy and the corresponding end to hyperinflation has improved the 
economic environment, there is a persistent lack of available credit to 
finance recovery of businesses.

3. Target critical areas of health and education, in partnership with 
        responsible, accountable government actors when possible
    The health and education sectors have fallen from among the best in 
Africa to collapsed sectors that provide little to no services. Both 
sectors are underfunded and face persistent threats of staff strikes 
over inadequate and irregular salary payments. Rebuilding these systems 
will be a long-term effort, but efforts should start now to extricate 
Zimbabwe from its current cycle of humanitarian crises. Mercy Corps' 
experience in Mutare demonstrates that it is possible for NGOs to work 
in constructive partnership with local government structures to 
initiative service recovery activities. This model should be rapidly 
extended to the health and education sectors, so donor resources begin 
to support service recovery efforts wherever local government actors 
and communities are willing to engage constructively and accountably in 
such programs.

                               CONCLUSION

    These recommendations represent the first incremental and feasible 
steps on Zimbabwe's long road to recovery. Working at community and 
local municipal levels, significant progress can be made in further 
building the capacity of key actors, rehabilitating shattered systems, 
and supporting positive progress. NGOs, local civil society 
organizations, and U.N. actors can all play a role in this process, 
serving as channels for smart, targeted recovery assistance that can 
support and reinforce ongoing Government reform efforts and avert 
additional humanitarian crises. Donors should continue to press the 
government on performance benchmarks, but should not let government 
shortcomings preclude all efforts to support recovery. On balance, 
investments in Zimbabwe's recovery are a risk worth taking. If the 
United States begins to incrementally ramp up recovery support, there 
will be multiple opportunities along the way to review the government's 
engagement with the recovery program and determine whether such efforts 
are making progress. There is relatively little to lose--but 
potentially much to gain.

    Senator Feingold. Thank you very much.
    Thank all of you.
    And we'll do 7-minute rounds again for this panel.
    Ambassador Steinberg, some argue that--as you've already 
alluded to--that engaging too much right now could give the 
wrong impression, give Mugabe and company breathing space. How 
do you respond to that, and how specifically do you see the 
balance between strengthening the hand of reformers in the 
government and then, on the other hand, keeping the pressure on 
Mugabe and his allies?
    Ambassador Steinberg. We talk a lot about keeping the 
pressure on Robert Mugabe, but I don't see what the pressure 
has gotten us. I don't see the bottom line for a policy that 
says, ``Hold back on assistance to the people, hold back on 
assistance to the reformers, and simply maintain the existing 
sanctions that we've had,'' that, frankly, have only a modest 
impact on the individuals involved. The real collapse, in their 
economic standing, has nothing to do with the sanctions that 
have been put in place; it has to do with the fact that the 
economy has imploded. And, in fact, we're in a classic 
situation where sanctions on the country, to some extent, even 
enhance the power of the individuals in office to use their 
sinecures for their own benefit. The fact that Gideon Gono was 
printing money endlessly, all night long, and giving it to key 
securocrats and generals and other ZANU-PF hard-liners, simply 
reinforced his power. So, I just don't understand a philosophy 
that says, ``Hold back, stick to the old policy,'' and somehow 
hope that Robert Mugabe will finally see the error of his ways 
and step back from power.
    If you heard his interview with Christiane Amanpour 3 or 4 
days ago, Mr. Mugabe is a man who has no touch with reality. 
Indeed, it is a pretty remarkable development that Morgan 
Tsvangirai has been able to achieve what he has within this 
government. There is a reason that he's a frontrunner to get 
the Nobel Peace Prize this year. And if you watched the 
Amanpour interview, you know it's because anybody who can deal 
with Robert Mugabe, deserves it. So, my suggestion, again, is 
engage in a very targeted way.
    The other point that I wanted to stress is that you provide 
assistance to Zimbabwe in a fully accountable way. The IMF has 
just announced a $400 million loan for Zimbabwe. It's the same 
loan that they're giving to every country to help them react 
more effectively to the global economic crisis. But they've 
said, ``We're not going to give it through the Reserve Bank, 
we're going to give it through the Minister of Finance, Tendai 
Biti. We're going to have very strict standards in place that 
ensure accountability, and we're confidant that that money is 
going to be well used.'' I think the United States can do the 
same.
    Senator Feingold. Ambassador, Zimbabwe's neighbors, with 
the one exception of Botswana, have not been willing to stand 
up to Mugabe and press him to implement his part of the 
agreement. Do you see any hope for any of the regional players 
to play a more constructive role? And particularly in light of 
your work as a diplomat in southern Africa, how do you think 
the United States should go about engaging with the different 
regional players on Zimbabwe?
    Ambassador Steinberg. We've been incredibly disappointed 
with the SADC countries, given their strong interest in seeing 
development and recovery. Zimbabwe is a small country by global 
standards--12 million people--but, the entire region of 
southern Africa is of vital importance to us. It's a region 
that has 200 million people, a region that's expanding its oil 
interests, a region that is providing a broad number of 
peacekeepers globally, a region that we're depending upon to 
guard important sea-lanes. And it is a key part of this 
regional network to get Zimbabwe back on track. In that regard, 
the kowtowing that has gone on by the regional leaders to 
Robert Mugabe, especially during the days when Thabo Mbeki was 
running the process, was very disturbing. And at the recent 
summit in Kinshasa, Robert Mugabe walked in and said, 
``Everything's going great, so cancel that meeting that you 
were going to have to talk about the problems here. And, oh, by 
the way, why don't you ask the international community to lift 
the sanctions on me.'' In reality, that's exactly what they 
did, and that was extremely disappointing to us.
    One positive development we see is the arrival on the scene 
of South African President Jacob Zuma. He has shown a much more 
evenhanded approach toward the situation. He recently traveled 
to Harare and delivered some pretty tough private messages, 
although he remains very respectful, publicly, to Robert Mugabe 
and the hard-line ZANU-PF elements. And he came back to South 
Africa and reinforced in speeches to Parliament and civil 
society, the stakes at play for South Africa in Zimbabwe, 
including the repatriation of 3 to 4 million Zimbabweans who 
are in the country, who, unfortunately, are facing an increased 
xenophobic sense, including fatal attacks in townships, which 
are undercutting Zuma's approach.
    Senator Feingold. I thank you.
    Ambassador Steinberg. And so, the conversations that 
Hillary Clinton had with Jacob Zuma recently, where she was 
reinforcing his resolve, were very important.
    Senator Feingold. Thank you very much.
    Dr. Moss, in your written testimony, you write that the 
U.S. Treasury should support efforts underway at the 
multilateral development banks to assist the Finance Ministry. 
What do those efforts entail? How could the United States 
support them? And do you see any risk that money provided by 
the banks to Zimbabwe could end up in ZANU-PF hands?
    Dr. Moss. Morgan Tsvangirai has met with the management of 
the World Bank--for example, he'll be seeing President 
Kaberuka, of the African Development Bank, in Istanbul this 
week--and he's been asking them for their help. Now, of course, 
the bank is constrained because of arrears that the government 
owes to these institutions, so they do not get their normal 
allocation, as a regular country would get. But, these banks 
all have special facilities for dealing with difficult 
situations. In the African Development Bank case, it's called 
the Fragile States Facility. The World Bank has a similar 
facility. And these are flexible pots of money that these banks 
can use in situations where the situation is evolving; they can 
be opportunistic and responsive. It's not huge amounts of 
money, but it's money that can used very strategically to try 
to encourage better outcomes and to get countries back on a 
normal path.
    That's precisely where Zimbabwe is now, and I think that 
the--the management of both the African Development Bank and 
the World Bank are thinking about how they can be constructive, 
but they're also mindful that their board, which includes the 
United States, is sending mixed signals on how creative and 
aggressive to be. And I think that the U.S. Treasury, through 
some subtle signals, could indicate that they would like the 
banks to try to be creative. I think the World Bank and African 
Development Bank are fully aware of the problems. They're not 
trying to work with the Central Bank Governor. They're not 
trying to work with some of the ministries still controlled by 
ZANU-PF. They're specifically trying to work with the reformist 
elements within government, and I think that's a trend we 
should try to encourage.
    Senator Feingold. Thank you.
    Senator Isakson.
    Senator Isakson. Mr. Steinberg, would you define current 
United States policy toward Zimbabwe as wait and see?
    Ambassador Steinberg. No; I think it's a little more than 
that, and I'm a little surprised that we portray it as such. 
That sends a signal to the Zimbabwean public that they're not 
getting as much support as they could. I would be stunned if 
the average Zimbabwean knows what was told in the first panel, 
that the United States is providing $313 million this year to 
support Zimbabwe. Our attitude is tantamount to shooting 
ourselves in the foot. One diplomat said to me that the policy 
is ``engage-and-see,'' and maybe that's more appropriate, but 
I'd much rather be sending the message that we recognize that 
something exciting is going on in Zimbabwe and we have our eyes 
fully open to the challenges. I meet frequently with civil 
society actors from Zimbabwe, with the head of the Human Rights 
Commission, with labor union leaders, and they all say there is 
a new sense of hope, there's a new sense of freedom, there's a 
new sense of possibility. And it's all going to go down the 
tubes if Morgan Tsvangirai and the MDC leave the government, 
and hard-line military leaders take over. It would be 
tantamount to a military coup, and it would occur if the MDC 
left. Then we're back at square one. In fact, we're back before 
square one.
    Senator Isakson. And I take it from listening to all of 
you--you didn't say it this way--but tangible support of the 
MDC by the United States would be a positive element within 
reaching the Global Political Agreement eventually, is that 
correct?
    Ambassador Steinberg. No, Mr. Senator. Direct support to 
the MDC, if that's what you're suggesting, would be a mistake. 
We cannot, in effect, pick sides in this process. Robert Mugabe 
would use that as the biggest sign that the United States real 
policy is regime change, and he would use that to build up his 
security forces to, essentially, arrest senior officials. He's 
trumped up charges against Roy Bennett, for example, the Deputy 
Agriculture Minister-to-be, basically accusing him of launching 
a coup against the Government of Zimbabwe. So, I think we have 
to avoid that.
    What we can do, however, is to support a process where--we 
know that the MDC is going to get most of the credit of this 
process. I said before, the best way to sideline Mugabe is to 
reinforce this government.
    Senator Isakson. Well, I think both you, Dr. Moss and Ms. 
Lindborg, all suggested a--I think Ms. Lindborg called it a 
``modest contribution'' to the multinational fund. Is that 
correct? And you said that, I think, Mr.--how much is a 
``modest contribution''?
    Dr. Moss. Well, without getting into the--there's a portion 
that's supposed to just do analysis. The United States, I 
believe, has made a small--I think it's about $200,000--you 
could check with the Treasury officials--small contribution to 
the analytic part that will do some research about what the 
donor community should do in the future. But, I think that the 
Multi-Donor Trust Fund is being set up in a way that could 
channel resources to select ministries involved in restarting 
public services, principally in health and education, as a 
way--if we look--the part of the dollarization is that civil 
servants now have to be paid in U.S. dollars, there's very 
limited dollars coming into the country. Tendai Biti is looking 
for financing mechanisms to allow the civil service to be 
rebuilt and to get the schools and clinics running again. The 
donor community is trying to work--trying to find ways that 
they could do this, where the ZANU-PF elements couldn't get 
their hands on the money, and the Multi-Donor Trust Fund is one 
of those possibilities.
    And, I think, that the United States doesn't very often 
behave in a way, or provide assistance in a way, that would--we 
don't often do these large Multi-Donor Trust Funds; the 
Europeans are much more--it's much more common approach. But, I 
believe, that even a modest token amount--I wouldn't want to 
put a figure on it, but north of a million dollars--would help 
to allow us to have say at the table in talking about how the 
funds were used and protected, and also, it would be an 
important signal that the United States was playing with our 
allies in helping to restore those services.
    Senator Isakson. Well, the reason I was looking for you to 
quantify that--and I understand why you don't want to put a 
number on it--but, in listening or reading to all of you, our--
it appears we're not in a wait-and-see mode, but we're in a 
not-enough mode, in terms of supporting the credible parts of 
the coalition in that country. I know Ms. Lindborg mentioned 
that we only put $30 million in PEPFAR, and, compared to other 
countries, a lot more is necessary considering how bad the 
situation in Zimbabwe is. Is that not correct?
    Ms. Lindborg. The overall--I would put the overall 
humanitarian assistance needs, especially to move it into early 
recovery and reconstruction. And there is the need and the 
opportunity to increase it and to work with other international 
donors.
    Senator Isakson. And Mr. Steinberg mentioned food security, 
and that we are doing about half of what really needs to be 
done. Is that correct?
    Ambassador Steinberg. The consolidated appeal from the 
United Nations is in the neighborhood of some $300 million. The 
total need in these areas is about $720 million, and we're 
about halfway there on each.
    Senator Isakson. OK.
    So----
    Dr. Moss. If----
    Senator Isakson. Yes, Mr. Moss.
    Dr. Moss [continuing]. If I might add, it's not just that--
you know, we are providing assistance in--especially in food 
assistance and the health care sector--it's not just that we 
need more; it's that it needs to be that the United States is 
responding to changing events on the ground in Zimbabwe. And I 
think that it's fine to say there's a low-level equilibrium. 
Even in the worst of times, the American people do not abandon 
people that are starving and dying of AIDS. That's a stance we 
should stick with. But, when things start to change, and we 
want to encourage progress, I think we need to respond 
strategically, and while it's not a full wait-and-see, I think 
the response from the United States has not been sufficient to 
help to try to build momentum for further progress in Zimbabwe.
    Senator Isakson. And having met Morgan Tsvangirai when he 
was here, it appears to me that his willingness to accept the 
prime ministership, rather than cause confrontation over a 
flawed election, that he is probably the best chance to really 
bring about fundamental change in Zimbabwe. I guess that's why 
he'd get the Peace Prize if----
    [Laughter.]
    Senator Isakson. Dr. Steinberg.
    Ambassador Steinberg. Yes, we speak with Mr. Tsvangirai 
very frequently, and I think we have to remember the pressure 
that he is under from his own supporters. They're saying, 
``What have we gotten out of this process?''
    Senator Isakson. Right.
    Ambassador Steinberg. ``You have a nice position as Prime 
Minister, other ministers have nice jobs, but what are we 
getting out of it?'' And he's got to be able to demonstrate 
that to his population.
    The other point that I made in my testimony orally, and is 
more developed in my written testimony, is a division that's 
starting to occur very similar to what is going on in Kenya 
right now--where the inclusive government is losing credibility 
with the population. I'm very concerned that it's going to be a 
situation where it's them, the politicians, against us. One of 
the key processes that's underway right now is the 
constitutional reform process, where Robert Mugabe is trying to 
force a draft, called the ``Kariba Draft,'' to be the basis of 
constitutional reform. It is a very bad document. It would 
enhance power of the executive, basically turning the 
legislature and the judiciary into the handmaiden of the 
executive. It provides powers for a 21-day state of emergency, 
with no restrictions upon it, that the President can simply 
declare. Our concern is that, unless we strengthen the hand of 
the MDC, they may be forced to actually accept this. And, if 
that's the case, we will see this divide occurring between 
women's organizations, labor unions, human rights groups, and 
the political class.
    Senator Isakson. Well, I want to thank all the panelists.
    I want to thank the chairman for calling this hearing 
today. I want to apologize for having to slip out, but I just 
got a call.
    Thank you very much for your testimony and for being here 
today.
    Senator Feingold. Thank you, Senator Isakson, for your very 
strong participation.
    And back to Dr. Moss, if Mugabe and other hard-liners in 
the government continue to obstruct progress, or if the 
transitional government were to collapse, what punitive policy 
options do you think the United States should consider that 
haven't previously been pursued?
    Dr. Moss. Well, I think if we have the scenario where we're 
back to where we were right after the elections, where there 
was an organized campaign of violence against the MDC in a 
ward-by-ward weeding out and attack on folks, if we start to 
see a major security crackdown, then I think that the United 
States will have to take a much more forceful stance with 
regard to the region. I think recent attempts to try to get the 
U.N. Security Council involved in Zimbabwe, which were blocked 
by China, I think that could--that would be something that the 
United States would have to pursue. And I think, in a sense, 
calling the South African's out--this has been their process; 
they've asked us to abide by it, to respect them as the 
regional hegemon, and to get behind it. For the most part, 
we've done that. And if they don't live up to their 
responsibilities, I think we need to assert international 
rights in that arena.
    Senator Feingold. Thank you, Doctor.
    Ms. Lindborg, you say that it is time to begin a shift of 
resources toward recovery, rather than emergency response. What 
are the practical implications of such a shift, in terms of 
USAID's work and planning? And do you see any risk of making 
that shift before there is greater progress with the political 
transition?
    Ms. Lindborg. Practically, what it means is that you would 
expand out of just directly responding to humanitarian need and 
provision of assistance, such as food or temporary measures to 
beat cholera, and moving to addressing some of the systemic 
causes of these emergencies.
    One--and one example is in the third-largest city of 
Zimbabwe, Mutare. We're working very closely with the municipal 
officials, who came in with the recent elections, to install a 
new water system so--with a filtration--so that this will get 
at the spread of cholera that occurs; and, at the same time, a 
broad public education campaign. So, it's moving past just 
treating the cholera, to treating the causes of the cholera at 
a more systemic level.
    Similarly, on the food and economic sectors, there are many 
things that one can do that move out of the emergency box and 
into the kind of investments that lay the foundation for deeper 
recovery and, ultimately, to connect in with the kind of 
development that one would hope Zimbabwe can move to soon.
    I think there is little risk and there is much to gain, 
particularly in terms of supporting the kind of optimism that 
my copanelists have alluded to, and the expectations that some 
of the early signs of progress have wrought within many of the 
Zimbabwean population.
    Senator Feingold. Well, this was a very thought provoking 
and helpful panel. I thank you. And I thank all the witnesses 
that came before us today.
    And that concludes the hearing.
    [Whereupon, at 11:45 a.m., the hearing was adjourned.]

                                  
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