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Cablegate: Zim Notes 2-15-2008

VZCZCXRO9307
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSB #0133/01 0461054
ZNR UUUUU ZZH
R 151054Z FEB 08
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC 2488
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA 1846
RUEHAR/AMEMBASSY ACCRA 1774
RUEHDS/AMEMBASSY ADDIS ABABA 1900
RUEHRL/AMEMBASSY BERLIN 0483
RUEHBY/AMEMBASSY CANBERRA 1177
RUEHDK/AMEMBASSY DAKAR 1534
RUEHKM/AMEMBASSY KAMPALA 1956
RUEHNR/AMEMBASSY NAIROBI 4385
RHEHAAA/NSC WASHDC
RHMFISS/EUCOM POLAD VAIHINGEN GE
RUEHGV/USMISSION GENEVA 1027
RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK
RHEFDIA/DIA WASHDC

UNCLAS SECTION 01 OF 03 HARARE 000133

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 2-15-2008


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. Price Movements-Exchange Rate and Selected products
Parallel rate for cash soared to ZW$8.5million:US$1; bank transfer
rate: Z$10million; official rate: ZW$$30,000:US$1
*Sugar shot to Z$15million/2kg vs. new controlled price of
Z$8million/2kg
*Cooking climbed to Z$20million/750ml vs. new controlled price of
Z$9.3million/750ml
Petrol rose to Z$11million/liter and Z$10 million/liter vs.
controlled price of Z$60,000/liter

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

1. Simba Makoni Speaks... Simba Makoni on February 13 held a press
conference and gave a diplomatic briefing. He stated he would run
as an independent candidate (ZANU-PF said his decision had resulted
in his automatic expulsion from the party), and that supporters from
all parties were welcome to endorse him. Short on specifics, Makoni
said he offered reengagement and renewal in a polarized country
riven by fear, disease, and poverty. Makoni's presumed principal
backers such as Solomon Mujuru have not come out publicly. He
insists he has widespread backing throughout the country, although
without public polling this is certainly subject to dispute. While
most political observers believe a Makoni-Tsvangirai united front
would have an excellent chance of defeating Mugabe, there are no
signs at present of such an alliance, and the danger exists that
Makoni and Tsvangirai could split the opposition vote. See Harare
0130.

2. Street Protests As Elections Draw Near... About 100 students
took to the streets of Bulawayo on February 13 over the high cost
and declining quality of education and to demand a free and fair
election in March. Four students including the Zimbabwe National
Students Union President, Clever Bere, were detained and beaten.
Police assaults caused others to seek medical attention. Privilege
Mutanga, the Gender and Human Rights Secretary for ZINASU, who is
nine months pregnant, suffered a broken hand and a twisted ankle.
Members of Women of Zimbabwe Arise (WOZA) also demonstrated in
Bulawayo and Harare on February 12 and 13 respectively. The aim of
these peaceful protests was to "encourage Zimbabweans to stand up
for their children in these times of extreme hardship and as an
election looms." Eleven members of WOZA required medical attention
for injuries sustained from being beaten by baton sticks.

3. Challenges In Registering To Vote... Although the Zimbabwe
Electoral Commission (ZEC) extended voter registration from February
7 to February 13, many people, particularly in Harare, have found
the process cumbersome and full of hurdles. While evidence is
anecdotal, it is sufficient to indicate a pattern. Among Embassy
locally employed staff (LES), we've seen cases of names no longer
being on the voter rolls and failure on the part of officials to
confirm subsequent registration. In another case, names of family
members appeared on the rolls although the relatives had not lived
in or even visited Zimbabwe in a decade. An Embassy household staff
member who was born in Zimbabwe and has voted in previous elections
was told in attempting to verify registration that he was not a
citizen and could not register to vote without first applying for
citizenship because his parents were born in Mozambique.

4. Urban Water Woes continue... Although Bulawayo's main supply dam
is at 100% and spilling, there remains a shortage of water treatment

HARARE 00000133 002 OF 003


chemicals. Residents are advised to boil tap water, and there is an
urgent need for water treatment tablets at the household level.
Harare's high-density suburbs of Mabvuku and Tafara have received
technical and material support from UNICEF in the form of water
deliveries and borehole drilling. UNICEF is also coordinating
hygiene promotion, sanitation, and water services to the
high-density suburbs of Hopley, Hatcliffe Extension, and Epworth.
While the UN reports that cases of diarrhea-related illness remain,
at present, stable and manageable, the Herald quotes Ministry of
Health officials as reporting 7 deaths from cholera in one district
and four in another , all in February.

5. US$5 Million From CERF... The UN's Central Emergency Response
Fund allotted US$5 million to Zimbabwe for under-funded emergencies.
Priority projects will be chosen by the Inter-Agency Standing
Committee (IASC) Country Team on a biannual basis - at the beginning
and middle of each year - and will be selected from the 2008
Consolidated Appeals Process (CAP) activities.

6. Regional Flash Appeal For Flood Relief... This week OCHA issued
a Southern Africa Regional Preparedness and Response Plan to address
flooding in Malawi, Mozambique, Zambia, and Zimbabwe. The total
request was US$89 million, $15.8 million of which is requested for
Zimbabwe, where it is estimated that 15,000 people and 12,000
hectares have been affected since December.

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

7. *NIPC Approves Wave Of New Prices... The National Incomes and
Pricing Commission (NIPC) gave the green light to increase the
prices of numerous commodities dramatically. Mealie meal, for
example, went from Z$189,000 to Z$19.2 million/10 kg; international
phone call charges shot from Z$67,000 to Z$1.2 million/minute and
local calls went up from Z$43,000 to Z$300,000 - stil only 14 and 3
US cents respectively at the parallel rate. Responding to Reserve
Bank of Zimbabwe (RBZ) Governor Gono's recent advice to confine NIPC
activities to the three controlled and 16 monitored products, NIPC
chairman Masimirembwa was quoted in the press reminding Gono that
Statutory Instrument 142 of 2007 gave the NIPC authority to manage
pricing of every commodity and had been extended to June 30.

8. GOZ Releases Official Inflation Figures For December... The
year-on-year inflation rate rose to a record 66,212% in December, up
from 26,470% the previous month, according to the Central
Statistical Office (CSO). Month-on-month inflation nearly doubled
to 240% in December from 131% in November, by official reckoning.
The CSO uses the controlled prices of goods, regardless of their
availability, rather than purchase prices in calculating the
consumer price index. More reflective of actual spending, private
sector estimates of inflation in January for a broader consumer
basket are roughly triple the CSO December figure, with higher
school fees being the biggest inflation driver in January.

9. RBZ Ups Spending on "Logistical Preparedness" For Elections...
The RBZ has increased spending on fuel, motor vehicles, computers,
generators, food and other items intended exclusively for the March
29 elections to ensure "preparedness" for the polling day. See
Harare 0131.

10. And Perhaps Related, Foreign Exchange Woes Worsen...
Companies are finding it increasingly difficult, if not impossible,
to access foreign exchange held in their own Foreign Currency
Accounts (FCA) at the RBZ. Officials at the Confederation of
Zimbabwe Industries (CZI) told us the problem had worsened in the
last three weeks as the little amount of hard currency available has
been diverted, without the companies' permission, to fund other GOZ
obligations, leaving companies short of key imported raw materials

HARARE 00000133 003 OF 003


for production.

11. In his October 2007 Monetary Policy Statement, RBZ Governor
Gono centralized the management of all corporate FCA at the RBZ
allegedly as a way of boosting exporter viability and improving the
country's accountability for total export and other foreign currency
receipts. However, although exports grew in Q4 thanks to
concessionary funding, they have not kept pace with the GOZ's
increasing demand for foreign exchange associated with the need to
import electric power, fuel, raw materials, agricultural chemicals,
and other key needs. In typical short-term thinking, the RBZ
appears to be "borrowing" from the increasingly strapped corporates
to meet its own deepening forex shortfalls.


MCGEE

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