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Cablegate: Zim Notes December 7, 2007

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DE RUEHSB #1093/01 3411051
ZNR UUUUU ZZH
R 071051Z DEC 07
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC 2214
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA 1788
RUEHAR/AMEMBASSY ACCRA 1679
RUEHDS/AMEMBASSY ADDIS ABABA 1810
RUEHRL/AMEMBASSY BERLIN 0420
RUEHBY/AMEMBASSY CANBERRA 1087
RUEHDK/AMEMBASSY DAKAR 1435
RUEHKM/AMEMBASSY KAMPALA 1866
RUEHNR/AMEMBASSY NAIROBI 4294
RHEHAAA/NSC WASHDC
RHMFISS/EUCOM POLAD VAIHINGEN GE
RUEHGV/USMISSION GENEVA 0937
RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK
RHEFDIA/DIA WASHDC

UNCLAS SECTION 01 OF 04 HARARE 001093

SIPDIS

AF/S FOR S.HILL
ADDIS ABABA FOR USAU
ADDIS ABABA FOR ACSS
NSC FOR SENIOR AFRICA DIRECTOR B.PITTMAN
TREASURY FOR J.RALYEA AND T.RAND
STATE PASS TO USAID FOR L.DOBBINS AND E.LOKEN
COMMERCE FOR BECKY ERKUL

SIPDIS

E.O.12958: N/A
TAGS: PGOV PREL ASEC PHUM ECON ZI

SUBJECT: Zim Notes December 7, 2007

1. The Embassy Harare Political/Economic Section began producing
Zim Notes in July, 2007 to present a perspective on current events
in Zimbabwe. Suggestions are always welcome. If you would like to
receive Zim Notes by email, as well, please contact Frances Chisholm
at chisholmfm@state.gov. Distribution is restricted to U.S.
government employees.

2. Parallel exchange rate: ZW$2,100,000:US$1
Official exchange rate: ZW$30,000:US$1
Sugar on the parallel market jumped to Z$2.5 million/2kg vs.
controlled price of Z$247,000/2kg
Cooking oil on the parallel market - steady at Z$5 million for 750
ml vs. controlled prince of Z$440,000/750ml
Fuel - scarce at the nearly doubled price of Z$4 million/liter vs.
Z$60,000/liter at controlled price and unavailable.

-----------------------------
On the Political/Social Front
-----------------------------
3. MDC Sets Conditions for SADC Agreement - MDC negotiators Tendai
Biti and Welshman Ncube in a diplomatic briefing on Tuesday said
that essential to an agreement were implementation before elections
of the already agreed-upon draft constitution and an election date
that would permit time for organizing and campaigning (Harare 1080).
On Wednesday, the MDC (Tsvangirai faction) issued a press release
reporting that its National Executive Committee had met that day and
resolved that neither an agreement nor free and fair elections would
be possible unless the following conditions were met:
--Introduction of a new constitution before elections;
--Reconstitution of the Zimbabwe Electoral Commission (ZEC) which
would be responsible for a new voters' roll and delimitation of
constituencies;
--Restoration of daily newspapers and freedom for journalists to
operate;
--Implementation of agreed-upon reforms to POSA, AIPPA, the
Broadcasting Act, and electoral laws;
--Unimpeded international monitoring of elections;
--Voting by the Diaspora.
MDC spokesperson Nelson Chamisa told the press the National
Executive Committee would meet again on December 16 and decide
whether to ratify any agreement reached between the MDC and ZANU-PF
and whether to contest next year's elections.

4. *A Farewell March? - ZANU-PF's so-called "Million Men and Women
March" on November 28 to show support for President Robert Mugabe's
candidacy in 2008 fell well short of expectations. Press reports on
the crowd size varied widely - anywhere from 10,000 to 200,000 - but
our best guess is that around 40,000 participated, although many
unwillingly. To ensure a respectable showing, ZANU-PF mobilized
nearly every available form of state transportation to bring in
"supporters" from out of town. There is no doubt it was the largest
political rally in years, but only because the government has not
afford the oppposition equal space, according to many political
observers.

In true megalomaniacal fashion, Mugabe addressed the crowd wearing a
shirt bearing his own image. True to his tired script, he again
railed on Britain, blamed all the country's woes on a Western
conspiracy, and called on Zimbabweans to identify and defeat their
"common enemy".

5. State of the Nation - In his 20th state of the nation address in
Parliament on December 4 President Mugabe toned down the usual
vitriol - at least towards the opposition - and implored Zimbabweans
to persevere in the face of continuing challenges. Mugabe commended
the MDC for participating in a "new era of constructive engagement
across the political divide." He added that campaigning should be
permitted in an "atmosphere of peace." At one point Mugabe even
admitted that some problems (e.g., predatory pricing by greedy

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individuals) were homegrown. Once again Mugabe pinned hopes of an
economic turn around on the "Look East" policy. Unable to resist
taking pot shots at his detractors, he blamed Britain for a
"sinister campaign" to isolate the country and said only "friendly
and objective" members of the international community would be
invited to observe elections.

6. Practice Makes Perfect - Teachers Threaten To Strike Again - In
what has become a quarterly exercise in futility, teachers are once
again threatening to strike over low wages, continually eroded by
inflation. Raymond Majongwe, the outspoken leader of the
Progressive Teacher's Union of Zimbabwe (PTUZ), this week demanded
an increase in teacher's pay to ZW$318 million (about US$138) or
teachers would not return to schools when the new term begins in
January. Teachers last received a raise on October 3 when their
minimum monthly wage was increased to ZW$14 million then about US$30
on the parallel market. Due to skyrocketing inflation, that USD
salary equivalent quickly diminished to about US$11 by November 23
and about US$6 by December 5. Majongwe told us government needs to
get serious about retaining teachers as more workers head everyday
for greener pastures in South Africa. See Zim Notes November 23.

7. ZESN Dismisses Mop-Up Mobile Voter Registration Exercise As
Ineffective - The Zimbabwe Election Support Network (ZESN) released
a report on the "mop-up" mobile voter registration exercise that ran
from October 26 through November 15. It concluded that the
registration process did not address some of the fundamental issues
raised by the opposition and civil society after the previous
exercise in June, which ZESN regarded as ineffective. Among other
observations, ZESN reported that the exercise was inadequately
publicized, affected by power cuts, and lacked adequate simple
resources like registration forms and film. ZESN has called on the
government to carry out a more comprehensive and transparent voter
registration process. The full ZESN report is available at:
http://www.zesn.org.zw/newsflash_view.cfm?nfi d=8

8. Morgan Tsvangirai Begins Nationwide Rallies - MDC President,
Morgan Tsvangirai addressed a rally of about 10,000 people in Glen
Norah, a Harare high density suburb, on Sunday December 2. He
talked about the general state of the economy, the SADC-initiated
dialogue, and the forthcoming elections. MDC Information Secretary,
Nelson Chamisa told embassy officials that this was the first of
many more rallies nationwide. The next rally will take place in
Nkayi, Matabeleland North, next week.

--------------------------------------------- ----
On the Economic and Business front
--------------------------------------------- ----
9. Cash Shortage At Crisis Level - The cash shortage that hit the
country a few weeks ago has reached crisis level as commercial banks
struggle to mobilize deposits. The Reserve Bank of Zimbabwe (RBZ) is
not making the situation any easier as it supplies fewer and fewer
bank notes to the market. A senior executive at a major commercial
bank told us the RBZ supplied the bank with only Z$15 billion on
December 5, 2007 - not enough cash for even a single branch under
normal circumstances. The banker told us some smaller banks were
getting no cash at all from the RBZ. Cash-rich clients and
supermarkets are back to selling cash to ready buyers at a 25% to
50% commission, mitigating some of the losses they are making in
grocery sales at monitored and controlled prices.

10. Release Of New Bearer Cheques Still "Imminent" - RBZ Governor
Gono called bank CEO's together on Thursday and told them that the
rollout of new bearer cheques (not a new currency, we now
understand) was imminent, as reported to us by one bank executive
who attended the meeting.

11. Update On "Mother of All Agricultural Seasons" - The FAO-led
Agriculture Coordination Working Group heard at its November 29

HARARE 00001093 003 OF 004


meeting that Zimbabwe's target maize seed requirement is 50,000 MT
against 35,100 MT local seed supply, of which 28,457 MT has been
distributed by seed houses to date. Groundnut seed is in short
supply; the local supply of soybean stands at 8,400 MT against a
requirement of 12,000 MT; 1,442 MT of sorghum seed is available
against a target quantity of 4,000 MT. The basal fertilizer
requirement is 720,000 MT - available stocks stand at 157,698 MT
(excluding toll manufactured fertilizers, which mainly cover crops
grown under contract and by corporates). World Food Program and
C-SAFE provided food to 4,083,383 people in November. And, on a
positive note, most of the country is in the "normal" or
"above-normal" rainfall range as the summer agricultural season
commences.

12. Passport Fees Hiked - The Herald reported this week that the
Registrar General's Office increased passport fees as of November
26, to Z$5 million (US$1.90 at the parallel rate) for a regular
application and Z$20 million (US$7.69) for issuance within 24 hours,
up from Z$150,000 (US$0.19) and Z$1 million (US$0.38) respectively.
An Embassy FSN who applied for a passport last month, however, told
us he had to pay US$220 for the 24-hour service, a figure also cited
in a local electronic financial newsletter this week.

13. Be Independent, Electricity Regulators Told - At the fourth
annual conference of the Regional Electricity Regulators association
(RERA) held in Victoria Falls on November 27 and 28, Dr Frank
Sebbowa, CEO Electricity Regulatory Authority of Uganda chronicled
how regulators in East Africa had succumbed to political
interference and warned RERA members not to fall into the same trap.
Vinod Shrivastava, President of US-based Core International, said
regulators should focus on a few key governance principles, namely
commitment to high ethical standards, adoption of clear and simple
rules for the sector, employment of skilled personnel and
strengthening of external checks by consumers, competition
authorities and the courts. Roger Williams, Technical Director of
Zimbabwe's chrome giant ZIMASCO, reported that the company lost
US$17 million directly from power outages and had a potential
revenue loss of an additional US$33 million between January and
October 2007 due to unreliable power supplies. According to the
Southern African Power Pool (SAPP), the region requires a total
investment of around US$43 billion to ensure uninterrupted power
supply in the medium to long term. In the meantime, delegates
agreed on the need to implement both load shedding and demand side
management techniques.

14. Johnson & Johnson Withdraws From Zimbabwe - Citing
"insurmountable issues" for most businesses in sourcing foreign
currency, Johnson & Johnson country manager Christopher Muyeye
informed business partners on November 28 that the company was
withdrawing from Zimbabwe effective November 30, 2007. Johnson &
Johnson had already shut down its manufacturing arm and was only
importing and distributing Johnson & Johnson products, which proved
to be unviable without access to foreign exchange.

15. Zimbabwe Slips Into Trade Deficit With U.S. For First Time In
Over Decade - Zimbabwe's bilateral trade balance with the U.S.
slipped into a cumulative annual deficit for the first time since
1995 with the release of the Jan-Sept figures. Total volume of
trade (imports plus exports) rose slightly in the nine month period
to US$112.6 million, up from US$105.1 million in the same period in
2006, and rising for the fifth year in a row.

16. Background Paper On The Requirements For A Future Economic
Program - In circulation among donors in Harare is a thoughtful
background economic paper, Progressive Zimbabwe - Sustainable Growth
& Transformation, prepared by the Zimbabwe Institute in South Africa
and available at: http://www.zimbabweinstitute.org

17. See Harare 1091 for Readout Of World Bank Nov 22-30 Mission To

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Zimbabwe.

18. Quotes Of The Week From The Financial Gazette of December 6-12,
2007 on the Million Men and Women March:
"I don't understand why people would march to celebrate failure."
(Political Analyst Ibbo Mandaza)
*And even less charitable, from former Information Minister Jonathan
Moyo: "It was a farewell march."

MCGEE

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