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Cablegate: Zim Notes January 18, 2008

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RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSB #0040/01 0220709
ZNR UUUUU ZZH
R 220709Z JAN 08
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC 2400
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA 1818
RUEHAR/AMEMBASSY ACCRA 1724
RUEHDS/AMEMBASSY ADDIS ABABA 1850
RUEHRL/AMEMBASSY BERLIN 0448
RUEHBY/AMEMBASSY CANBERRA 1127
RUEHDK/AMEMBASSY DAKAR 1484
RUEHKM/AMEMBASSY KAMPALA 1906
RUEHNR/AMEMBASSY NAIROBI 4334
RHEHAAA/NSC WASHDC
RHMFISS/EUCOM POLAD VAIHINGEN GE
RUEHGV/USMISSION GENEVA 0977
RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK
RHEFDIA/DIA WASHDC

UNCLAS SECTION 01 OF 03 HARARE 000040

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 January 18, 2008

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 rate for cash: ZW$3.2 million:US$1; For bank transfers:
Z$5.2 million; Official rate: ZW$$30,000:US$1
Sugar on the parallel market rose to Z$3 million/2kg vs. controlled
price of Z$247,000/2kg
Cooking oil on the parallel market steady at Z$9 million/750ml vs.
controlled price of Z$440,000/750ml
*Petrol rose to Z$4.4 million/liter while diesel fell to Z$3.8
million/liter vs. Z$60,000/liter at the controlled price

------------------------------
On the Political/Social Front
------------------------------

3. No Apparent Progress Out Of Mbeki Meeting With Mugabe... The
press reports and Embassy contacts confirm that South African
president Thabo Mbeki was unable to make any progress with President
Mugabe on an agreement between ZANU-PF and the MDC during his visit
to Harare this week. For details, see Harare 0038.

4. MDC Plans "Freedom March" To Pressure Mugabe For Later
Election... The Morgan Tsvangirai faction of the MDC plans to stage
a demonstration on Wednesday, January 23 in Harare to put pressure
on the ruling party to postpone the election date and to implement a
new constitution before the elections. Tsvangirai's faction held
three rallies last weekend in the high-density suburbs of Mbare,
Dzivarasekwa and Glen View, and will hold its "star rally" on Sunday
to build support for the demonstration. Tsvangirai faction
Information Director Luke Tamborenyika told embassy officials that
the MDC hopes to attract a crowd of more than 10,000 people. MDC
officials met with the police and believe they will receive written
permission to proceed. Police contacts confirm this.

5. Zimbabwe Police Raid Anglican Church Services In Political Row
Over Bishop... The Archbishop of Canterbury condemned the former
Anglican bishop of Harare after police used force to interrupt
official Anglican Church services. Police intervened because the
services were held without the authorization of the Zimbabwean
government. Truncheon wielding police dragged three priests and
several parishioners from a church where services were being
conducted last Sunday. The former bishop, Nolbert Kunonga, is an
ally of President Mugabe. The Anglican Province of Central Africa
removed his priestly license after he illegally separated from the
Church in December. Kunonga has claimed the conflict was based on
his alleged more conservative position on homosexuality. The
Church, on the other hand, has maintained that it revoked Kunonga's
license because of his failure to exercise independence from the
Mugabe government.

6. Education System Failing... A new school term started on January
15, but many teachers failed to report to work despite receiving a
1,000% pay raise. Progressive Teachers' Union of Zimbabwe (PTUZ)
told us many teachers left the country over the break for more
lucrative teaching positions in South Africa, Swaziland and Malawi.
Zimbabwe Teachers' Association (ZIMTA) pointed out that the ongoing
cash shortage prevented many teachers from accessing enough money to
pay for transport. Steep inflation and the cash crisis also left
most parents struggling to pay for school fees, supplies, uniforms,
and food. One local embassy employee found that hard-to-find school
shoes had jumped from about US$10 equivalent in October to US$40
this month. Another colleague reported having to send his child off
to boarding school with a large cache of food and water because the
school could not afford to buy supplies in advance. PTUZ is

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planning to mobilize civic groups to support a national strike in
the coming weeks to draw attention to the failing education system.

7. USG Recruits Secret Political Officers, According to The
Herald... In a front-page article on January 10, The Herald
reported that Embassy Harare has been secretly conducting interviews
with prospective political officers for deployment in the provinces
ahead of the elections as part of its anti-Zimbabwe campaign. The
government mouthpiece followed up soon after with the Zim Notes
cartoon of the week, shown below. The government press has focused
on race in several reports about Ambassador McGee; for example in
November a The Sunday Mail columnist opined that he was "likely to
turn out to be the 'house negro' Malcolm X wrote about."

--------------------------
Economic and Business News
--------------------------

8. RBZ Governor Gono Relieves Cash Crisis - For Now - With New
Notes... After a series of policy flip-flops, RBZ Governor Gono
released new, much higher denominated notes into the cash-starved
market today. The largest new note - Z$10 million - is nominally
worth 50 times more than the largest note in circulation less than a
month ago, yet under hyperinflation it is still only about US$2 on
the parallel market for bank transfers. We expect hyperinflation to
quickly erode the benefit of this new infusion of cash as long as
the GOZ fails to address Zimbabwe's underlying economic crisis.

9. Bill Extends Life of National Incomes And Prices Commission
(NIPC)... With the term of the NIPC due to expire next month, the
GOZ has gazetted the National Incomes and Prices Commission
Amendment Bill. Its effect is to extend the life of the Commission
which will continue to approve applications for increases in
remuneration, rentals and service charges. Extension of the tenure
of the NIPC implies that most manufacturers and retailers will
continue to find it difficult to cover their operating costs as
approval of price increases will continue to be based on an
arbitrary formula that has little or no bearing on actual costs
incurred. Consequently, we expect domestic production to contract
further, with imports taking more space in the markets, resulting in
more, not less, inflation.

10. Taps Run Dry In Harare For Lack of Electric Power... Water
supply to Harare and Chitungwiza has deteriorated sharply since the
Zimbabwe National Water Authority (ZINWA) took over water
responsibility from these two City Councils two years ago. In recent
weeks service degenerated further, with some high-density suburbs
going without water for more than a week. A ZINWA official
attributed the problem to the intermittent supply of electric power
to Harare's main waterworks. He told us that heightened power
shortfalls associated with ZESA's nonpayment of power from
Mozambique had aggravated the situation. While the ZINWA official
maintained there would be improved pumping capacity in the next days
with renewed power supply from Mozambique, the state-owned The
Herald reported today that extensive vandalism on the 330 KVA power
lines in Mozambique has cut off power imports from Zimbabwe's
eastern neighbor.

11. Flooding And More Rain Forecast... An assessment team from the
United Nations Office for the Coordination of Humanitarian Affairs
(OCHA) determined that more than 10,000 people have been displaced
from their homes in Zimbabwe due to heavy rainfall since early
December 2007. Thousands more have been affected, mainly through
the likely loss of their crops. The IFRC Disaster Relief Emergency
fund (DREF) has approved funding for the Southern Africa flood
operation and is currently mobilizing its emergency response team to
support the assessment process of the National Red Cross in the
worst affected countries-Zimbabwe, Zambia and Mozambique. Wet
conditions are forecast to persist over the northern areas of

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Zimbabwe through late January with an increase in rainfall from
January 22.

12. *Distortion Of Week - The Diesel Discount... Chevron and BP
executives told us that the parallel market in fuel was flush with
diesel, driving down the price. The GOZ provides diesel to farmers
at Z$60,000/liter (just over a penny a liter on the parallel
market). But this year, yet again, farmers are finding it more
lucrative, easier, and commercially less risky to sell the fuel on
the black market - for 60 times and more as much - than pour it in
their tractors and farm.

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