Cablegate: Biggest Trucker Expounds On Smuggling, Fuel

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

UNCLAS HARARE 002360

SIPDIS

SENSITIVE

STATE FOR AF/S
NSC FOR SENIOR AFRICA DIRECTOR JFRAZER
USDOC FOR 2037 DIEMOND
PASS USTR ROSA WHITAKER
TREASURY FOR ED BARBER AND CWILKENSON
USAID FOR MAJORIE COPSON

E.O. 12958: N/A
TAGS: EFIN ECON ETRD ZI
SUBJECT: Biggest Trucker Expounds on Smuggling, Fuel

Sensitive but Unclassified. Not for Internet posting.

Ref: a) Harare 2339 b) Harare 2246

1. (SBU) Summary: As some U.S. business reps have pointed
out to us (ref a), unrecorded trade transactions now
comprise a sizeable chunk of Zimbabwe's economy. In fact,
the country's largest trucker has confirmed reports of
rampant smuggling, citing sugar, cigarettes and fuel as hot
items. His firm has avoided halting deliveries during the
ongoing fuel shortage by keeping large reserves. End
Summary.

Smugglers capitalize on weak zimdollar
--------------------------------------
2. (SBU) Unifreight CEO David Cruttenden told us trucking
companies are witnessing an explosion of smuggling out of
Zimbabwe. The heavily-devalued zimdollar (having collapsed
from 302 to 1,300/$US on parallel markets in a year) coupled
with price controls have created relative bargains here.
Freight companies are clamping down on drivers, who are
supplementing income by illicitly transporting cigarettes,
sugar and other goods to neighboring countries. In one
instance, a driver was caught hauling an extra 7 tons of
smuggled goods in addition to his full load, creating a
potential hazard to rig, road and other motorists. Once at
the border, drivers make numerous trips back-and-forth,
filling up on fuel in Zimbabwe for sale abroad.

Truckers maintain large reserves
--------------------------------
3. (SBU) Known in-country mostly as Swift, Unifreight tries
to keep 1 million liters of fuel in its own tanks. That's
over 5 weeks reserve capacity, since Unifreight requires
about 180,000 liters per week. Since June, the firm has
been unable to fully replenish its reserve tanks, which have
occasionally fallen to critical levels (i.e., less than 2
days supply). Cruttenden noted that suppliers have been
selling him a disproportionate amount of fuel on weekends,
when government monitors are off-duty. (Note: Sensitive to
shortages at the pumps, the GoZ has sometimes instructed
downstream operators to supply retail over commercial
customers. Ref b). The Unifreight chief believes a deeper
fuel crisis will gradually ground Zimbabwe's economy to a
halt.

Comment
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4. (U) By allowing the parallel to overrun the official
exchange rate by 23-fold, then restricting domestic prices
to artificially low levels, the GoZ is inadvertently
promoting an informal economy. The government generates no
revenue through these illegal exports and squanders precious
hard currency by subsidizing fuel consumption for non-
Zimbabweans. With no tempering of policy, the GoZ is
heading for ever-worsening deficiencies of forex and fuel.

Sullivan

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