Search

 

Cablegate: Zim Notes 02-29-2008

VZCZCXRO2619
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSB #0163/01 0630459
ZNR UUUUU ZZH
R 030459Z MAR 08
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC 2534
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA 1861
RUEHAR/AMEMBASSY ACCRA 1792
RUEHDS/AMEMBASSY ADDIS ABABA 1918
RUEHRL/AMEMBASSY BERLIN 0497
RUEHBY/AMEMBASSY CANBERRA 1195
RUEHDK/AMEMBASSY DAKAR 1552
RUEHKM/AMEMBASSY KAMPALA 1974
RUEHNR/AMEMBASSY NAIROBI 4405
RUEHGV/USMISSION GENEVA 1045
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHDC
RHEHAAA/NSC WASHDC
RHMFISS/EUCOM POLAD VAIHINGEN GE
RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK

UNCLAS SECTION 01 OF 04 HARARE 000163

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 02-29-2008


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.

--------------------------------------------- ------
Price Movements-Exchange Rate and Selected Products
--------------------------------------------- ------

2. *Parallel rate for cash soared to ZW$20million:US$1;
Bank transfer rate: Z$25million;
Official rate: ZW$$30,000:US$1
Sugar rose to Z$20million/2kg vs. controlled price of
Z$8million/2kg
Cooking oil rose to Z$22million/750ml vs. controlled price of
Z$9.3million/750ml
**Petrol and diesel more than doubled to Z$30million/liter vs.
controlled price of Z$60,000/liter

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


3. 25,000 Attend MDC Rally... MDC (Movement for Democratic Change)
President Morgan Tsvangirai launched his presidential campaign on
February 23 in the picturesque Eastern Highlands city of Mutare
located in Manicaland province Q the ancestral home of both
Tsvangirai and rival presidential hopeful Simba Makoni. The

SIPDIS
Tsvangirai faction was pleased that local police allowed the crowd

SIPDIS
to move from the bus and train stations to the rally site without
incident. Tsvangirai addressed an enthusiastic crowd of 25,000
blaming the governmentQs disastrous economic policies for destroying
ZimbabweQs once booming economy and leaving millions of its citizens
unemployed and hungry. The former labor leader acknowledged the
need for assistance from the international community to bring about
an economic recovery, but also said Zimbabweans must count on
themselves. Upon hearing about the size and success of the rally,
Mugabe reportedly said Qwhere is Makoni, I thought he was going to
take some of TsvangiraiQs support.

4. With this weekQs release of its manifesto and policy papers, the
MDC Tsvangirai faction is in full campaign mode. During the week,
Tsvangirai went on Qwalk-aboutsQ in the high density suburbs of

SIPDIS
Harare, talking with residents about his ideas for addressing the
Qunprecedented levels of poverty, unemployment and hunger.
Tsvangirai told us there are plans for more rallies in the cities

SIPDIS
and towns; they are also rolling out a Qnetworking campaign
strategy for the rural areas.

5. Makoni Launches Rallies This Weekend... Independent
presidential hopeful Simba Makoni, the former Finance Minister who
was recently expelled from ZANU-PF for challenging Mugabe for
president, will officially launch his campaign this weekend at
rallies in Bulawayo on March 1 and Harare the next day. With a
rising sun representing a new dawn in Zimbabwe as his formation
symbol, Makoni has generated great interest around the country with
his last minute entry into the race. Anecdotal reports suggest
large numbers of potential voters registered to vote immediately
after his announcement, but skepticism still remains among voters
about his motives and authenticity. What also remains to be seen is
whether disgruntled ZANU bigwigs come out in his support.

6. A Run-Off Presidential Election Could Be In the Cards...
Zimbabwe is abuzz with the idea of a possible run-off in the
upcoming presidential polls. With Simba Makoni throwing his hat in
the ring along with Mugabe and MDC opposition leader Morgan

HARARE 00000163 002 OF 004


Tsvangirai, there are now three viable candidates contesting for

SIPDIS
State House. The Electoral Act states that the successful
presidential candidate must receive a majority of the total number
of valid votes cast Q i.e., at least 50 percent plus one vote. If
that does not occur, a run-off election must be held within 21 days
between the top two candidates. If the second election results in a
tie, Parliament sits as an electoral college to decide between the
two candidates by secret ballot and without debate. In the 2002
presidential election, Tsvangirai secured 42 percent of the votes,
with the majority of these being in the urban areas, against
MugabeQs 56 percent which was predominantly in the rural areas.
With nearly 3 million votes cast in the 2002 contest which was
blatantly stolen from Tsvangirai by rigging, the difference between
Mugabe and Tsvangirai was only about 425,000 votes. Many political
analysts believe a run-off will only come into play if ZANU
break-away Makoni is able to lure some of MugabeQs rural support.

7. Teachers Out On Strike, Again... Following on the heels of the
abduction and brutal attack on nine Progressive TeachersQ Union of
Zimbabwe (PTUZ) members by ZANU-PF youths last week, Zimbabwe
TeachersQ Association (ZIMTA) on February 28 called for teachers to
go on a full-scale strike until a minimum monthly salary of ZW$3.5
billion (US$140 at the parallel bank transfer rate) and other
demands are met. ZIMTA, representing 55,000 of the roughly 110,000
teachers in the country, told us that teachers were angry with
rumors that military and police received large bonuses ahead of
elections while the government has failed to make good on teachers
retention allowances, as agreed in January. The strike comes at a
volatile time as teachers - influential opinion makers in
communities - sit at home disgruntled, and parents scramble to deal
with idle children as elections approach. Moreover, teachers
normally serve as the bulk of poll workers during elections. ZIMTA
said the Zimbabwe Elections Commission (ZEC) had yet to contact the
teachers to serve as poll workers, but if and when it does, the
labor group would QunofficiallyQ encourage its members not to
participate in light of the labor action. Morgan Tsvangirai told us
that ZEC faces a real problem if they choose to by-pass the
disgruntled teachers or if teachers make themselves unavailable.
One would then expect to see plain-clothed military and police
serving as poll workers on Election Day Q which would be a violation
of the amended Electoral Act.

8. USAID DAA Franklin Moore Visits Zimbabwe Programs... Starting
his Washington posting by visiting field operations, USAID Deputy
Assistant Administrator for Africa Franklin Moore spent three days
in Zimbabwe meeting with civil society leadership, discussing
strategy with the donor community, and monitoring programs. A
former resident of Zimbabwe, Moore expressed surprise at the drastic
decline in the state of the infrastructure and of the economy.
Joined by USAID's Director of the Office for Southern African
Affairs Eric Loken, Moore discussed the political future with
opposition party leader Morgan Tsvangirai and other heads of civil
society organizations. Moore attended a Prayer Breakfast with civil
society leaders; toured a New Start HIV counseling and testing
center and the office of the Counseling Services Unit; visited Joint
Initiative project sites in Chitungwiza related to shelter,
education, and livelihoods support; and met with a leading
economist, banker, and business people representing the private
sector and agrarian sector to learn more about the state of the
economy. In separate discussions, USAID partners raised linkage
between humanitarian and development programs and potential ways to
alter some relief strategies to help sustain the livelihoods of
beneficiaries. Moore and Loken are joining Ambassador McGee and
USAID Mission Director Karen Freeman at the SADC region Heads of
Mission Conference in Cape Town this week, where Zimbabwe is a
featured topic of discussion.

9. QThe HeraldQ Publishes U.S. AmbassadorQs Op-ed On Voting
Rights... The GOZ-controlled QThe HeraldQ newspaper surprised us

HARARE 00000163 003 OF 004


and published, unabridged, on February 25 an opinion piece by
Ambassador McGee urging Zimbabweans to exercise their voting rights
in the forthcoming elections. But it also ran a half page piece in
the same issue titled, QU.S. interest in ZimQ elections baffling,
noting that QArtists, be they musicians, painters, sculptors or
writers, thrive on the skill of concealing messages in their
artworks,Q and stating that the opinion piece had an Qalarmist,
vague and sometimes condemnatory manner.Q In addition, it carried a
full page diatribe the next day headlined "U.S. Enemy of Zim
Democracy." See full editorial at http://harare.usembassy.gov.

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

10. *The Zimbabwe Dollar Continues To Swoon... The local currency
continued to depreciate sharply on the parallel market with the cash
rate falling from Z$6million to Z$20 million:US$ in February while
the bank transfer rate dropped from Z$7million to Z$25 million:US$.
The Reserve Bank of Zimbabwe continues to drive the market as it
struggles to raise foreign exchange by any means.

11. ZECO Listing Lifts Zimbabwe Stock Exchange... ZECO Holdings,
an engineering and construction company, listed on the ZSE at four
times its initial public offer price. ZECO Holdings was set up
recently to consolidate the ownership of Delward and Crittal-Hope,
both owned by Native Investments which, in turn, is owned by the
former ZANU-PF chairman for Mashonaland West, Phillip Chiyangwa.
Native Investments had an 82.58 percent stake before the listing and
now controls 66.05 percent of the new company. The performance
followed a surprisingly successful IPO which was oversubscribed by
1.5 times, brushing aside negative sentiments arising from worsening
economic fundamentals and the companyQs link with Chiyangwa.

12. ZECO's performance has lifted the whole market, which, in
addition, is being driven by surplus conditions on the money market
as well as the run in the parallel exchange rate. ZSE market
capitalization is now $67.6 quadrillion (US$2.68 billion at the
parallel bank transfer rate); industrials are up 171.2 percent this
year. Satisfied with his first IPO, Chiyangwa promised to come back
to the stock market to take another of his companies - Pinnacle
Property Holdings - public.

13. **Price Spikes As Fuel Supply Tightens... Many Caltex service
stations did not receive fuel deliveries this week, but fuel was
available at Direct Fuel Import (DFI) service stations at
US$1.25-US$1.30 per liter (roughly US$5/gallon). The QZimbabwe
IndependentQ reported today that fuel shortages are looming as
government has started stocking diesel and petrol for the election
campaign and the National Oil Company of Zimbabwe (NOCZIM) has been
directed to hold on to the fuel they have imported on behalf of
private companies.

14. Grim Results From Mining And Construction Sectors... RioZim
recorded a significant decline in minerals production and real
earnings during the second half of 2007. Production at the Renco
gold mine, the Empress Nickel Refinery, and Murowa Diamonds fell
sharply while coal from the Sengwa Colliery held steady. Adverse
factors included an unrealistically low gold support price, the
continued failure by the Reserve Bank to pay the foreign currency
component of gold deliveries (which consequently compromised
RioZimQs ability to discharge its foreign liabilities), power
outages and an inconsistent supply of oxygen, as well as an
uncompetitive exchange rate. Moreover, RioZim was not spared the
problem of skills flight which is crippling production at most
mining houses. According to the Chamber of Mines, this factor is
set to lead to a further decline in minerals production until
working conditions and remuneration improve.


HARARE 00000163 004 OF 004


15. At the manufacturing arm of Murray and Roberts Zimbabwe, one of
ZimbabweQs leading construction and engineering companies, capacity
utilization fell to 10-15 percent in the second half of 2007. Price
controls and water and power cuts played havoc with production,
according to CEO Canada Malunga at an analyst briefing this week.
Looking ahead, M and R is focusing on toll manufacturing. On the
construction side, analysts concur that the short to medium term
outlook for the company is grim and only an economic recovery will
revive operations. Imara Asset Management noted that the scope for
the repair of roads, water pipes and the sewer system alone presents
vast opportunities that the company could exploit. But these
capital-intensive projects would most probably have to be funded
from external sources and these sources will remain elusive until
the political situation stabilizes.

16. Quote Of The Week From Murray and Roberts CEO Canada Malunga At
AnalystsQ Briefing This Week:

QEveryday we are recruiting to train new students from Harare
Polytech, Bulawayo Polytech, UZ (University of Zimbabwe) and NUST
(National University of Science and Technology) but also losing
trained people each day. In other words we have diversified into
tertiary education... there are also employees who come for less
than three months and leave for Botswana, just to have Murray and
Roberts on their CVs.

DHANANI

© Scoop Media

 
 
 
 
 
World Headlines

 

Werewolf: Gordon Campbell On North Korea, Neo-Nazism, And Milo

With a bit of luck the planet won’t be devastated by nuclear war in the next few days. US President Donald Trump will have begun to fixate on some other way to gratify his self-esteem – maybe by invading Venezuela or starting a war with Iran. More>>

Victory Declared: New Stabilisation Funding From NZ As Mosul Is Retaken

New Zealand has congratulated the Iraqi government on the successful liberation of Mosul from ISIS after a long and hard-fought campaign. More>>

Gordon Campbell: On The Current US Moves Against North Korea

If Martians visited early last week, they’d probably be scratching their heads as to why North Korea was being treated as a potential trigger for global conflict... More>>

ALSO:

Gordon Campbell: On The Lessons From Corbyn’s Campaign

Leaving partisan politics aside – and ignoring Jeremy Corbyn’s sensational election campaign for a moment – it has to be said that Britain is now really up shit creek... More>>

ALSO:

Another US Court: Fourth Circuit Rules Muslim Ban Discriminatory

ACLU: Step by step, point by point, the court laid out what has been clear from the start: The president promised to ban Muslims from the United States, and his executive orders are an attempt to do just that. More>>

ALSO:

 
 
 
 
 
 
  • Pacific.Scoop
  • Cafe Pacific
  • PMC