IV.  POLITICAL ENVIRONMENT

Nature of Bilateral Relationship with U.S.

The U.S. and Tanzania maintain increasingly cordial relations.  While our
bilateral aid program in Tanzania, approximately $ 30 million annually, is
not insignificant, we rank only 13th among bilateral donors.

Major Political Issues Affecting Business Climate

The Tanzania political atmosphere remains stable and the government is
undertaking a measured, but steady program towards multi-party democracy.
Tanzania has been blessed with relative peace since independence, and the
economic decline in Tanzania was a result of its centralized socialist
economic policies rather than political or military turmoil.

The nature of the current political changes in Tanzania show all of the
signs of a peaceful transition to a new political order and thus pose no
significant threats to economic development.  With the advent of
multi-partyism and calls for a review of the current union constitution,
the future status of the union of Tanganyika and Zanzibar remains unclear.
The economic consequences of any potential split in the union would depend
upon the nature of the decision to end the union.  The environment in
Tanzania is becoming increasingly politicized with the advent of
multi-partyism.  However, given the nature of Tanzanian politics, civil
disturbances are unlikely. However, at least one new activist in the move
toward multi-partyism is attempting to gain political support through
exploitation of popular discontent associated with economic superiority
exercised by the minority non-indigenous Asian portion of society.  For the
present, this issue is only being debated, with no apparent negative
results, but the topic is popular and emotional, and we do not know what it
will lead to in terms of negative action.  We believe it will continue to
be important during the process of privatization.

Additionally, with an increasingly independent press, the following issues
are among those being most vigorously debated:  Corruption in government
ranks; the wisdom of pursuing privatization; and divestiture of
parastatals.

Brief Synopsis of Political System, Schedule for Elections and Orientation
of Major Political Parties

Under President Mwinyi, Tanzania embarked on a path of political and
economic transformation after 30-plus years of Julius Nyerere's statist
economic policies and single-party rule.  The pace of reform in both
spheres has been frustrating, but the momentum generally is in the right
direction.  Tanzania remains a relative island of stability, especially
relative to its neighbors, a situation which augers well for a largely
peaceful transition.

The most dramatic political change occurred in 1992, when the constitution
was amended to permit opposition to the ruling Chama cha Mapinduzi (CCM)
party.  Currently, twelve new political parties have permanent
registration.  Multi-party local elections on the mainland are scheduled
for October, 1994.  National elections for the presidency and parliament
(including Zanzibar are to be conducted in October, 1995.