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Cablegate: Zim Notes, March 7, 2008

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DE RUEHSB #0184/01 0671033
ZNR UUUUU ZZH
R 071033Z MAR 08 ZDK
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC 2554
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA 1867
RUEHAR/AMEMBASSY ACCRA 1802
RUEHDS/AMEMBASSY ADDIS ABABA 1927
RUEHRL/AMEMBASSY BERLIN 0506
RUEHBY/AMEMBASSY CANBERRA 1204
RUEHDK/AMEMBASSY DAKAR 1561
RUEHKM/AMEMBASSY KAMPALA 1983
RUEHNR/AMEMBASSY NAIROBI 4414
RHEHAAA/NSC WASHDC
RHMFISS/EUCOM POLAD VAIHINGEN GE
RUEHGV/USMISSION GENEVA 1054
RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK
RHEFDIA/DIA WASHDC

UNCLAS SECTION 01 OF 04 HARARE 000184

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, March 7, 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: ZW$25million:US$1; bank transfer rate jumped
to: Z$38-40million; official rate: ZW$$30,000:US$1
Sugar soared to Z$28million/2kg vs. controlled price of
Z$8million/2kg
Cooking oil climbed to Z$38million/750ml vs. controlled price of
Z$9.3million/750ml
Petrol and diesel inched up to Z$32million/liter vs. controlled
price of Z$60,000/liter

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

3. Makoni Launches Campaign... Simba Makoni launched his campaign
at a rally in Bulawayo March 1, reportedly attended by about 10,000
people. At the rally, Dumisa Dabengwa, a ZANU-PF Politiburo member
and former liberation fighter and lieutenant to Joshua Nkomo, became
the first high-ranking ZANU-PF officials to defect publicly to
Makoni. His move away from the ruling party threatens to destroy
the Unity Accord signed by ZANU-PF and Nkomo's PF-ZAPU in 1987 that
united the two liberation movements and ended a period of
post-independence unrest. See Harare 175.

4. Mugabe Has Narrow Lead In Public Opinion Poll... A sampling of
1000 prospective voters in a poll conducted by the Mass Public
Opinion Institute of Zimbabwe showed President Robert Mugabe with 30
percent support and challengers Morgan Tsvangirai and Simba Makoni
with 28 percent and 12 percent respectively. Thirty percent
declined to indicate a preference. The poll was conducted between
February 22 and 26 (before Dabengwa endorsed Makoni) and covered all
provinces with the exception of Mashonaland Central. Accurate
polling is difficult in Zimbabwe and Makoni's popularity may be
understated in the survey. Again, see Harare 175.

5. Through The Looking Glass In Harare... On March 6, Foreign
Minister Mumbengegwi briefed heads of mission from western countries
on developments related to March 29 elections, beginning with the
ZANU-PF decision in February 2007 to harmonize presidential,
legislative and local elections, and extending up to the planned
announcement of results. The Minister predicted that the Zimbabwe
Election Commission would complete its tabulation swiftly and report
results within 12-24 hours of the closing of polls. Mumbengegwi's
remarks were a paean to Zimbabwean democracy:
Resident diplomats must be "the first to agree" that
Zimbabwe is a "star performer" on human rights.
"No one can honestly argue that the political playing
field is uneven."
The Mbeki process was a "complete success."
In Zimbabwe "we never, ever ambush the opposition."
"All the concerns expressed by the opposition have been
addressed to their full satisfaction."
With Zimbabwe's electoral practices, "there is no
chance of rigging."
"We always have peace and tranquility after our
elections because the people have confidence in the
process."

6. Stunned, the two dozen diplomats present did not join in when
MFA staff applauded the Minister. The only question for him
concerned the identity of foreign election observation missions
invited by the Ministry; Mumbengegwi replied that 14 organizations

HARARE 00000184 002 OF 004


had been invited on the basis of reciprocity and impartiality; he
ignored the request to identify them.

7. Election Observers: The Herald reported March 7 that all 13 SADC
states have been invited to observe the election, along with
Senegal, Algeria, Egypt, Kenya, Nigeria, Ghana, Libya, Uganda,
Ethiopia and Sudan, plus China, India, Malaysia, Indonesia and Iran,
Brazil, Jamaica, Venezuela and Nicaragua, the African Union, COMESA,
NAM, ECOWAS, the Pan African Parliament, the Economic Community of
Central African States and the East African Community. Among the
invited sub-regional organizations are the ACP states, the
Association of South East Asian Nations, MAGREB Union, Community of
Portuguese Language Countries and the Inter-Governmental Authority
on Development. The December 12 Movement is the only Liberation
Movement invited. Diplomats accredited to Zimbabwe may also
observe.

8. GOZ Press Goes on Attack...The government mouthpiece The Herald
carried on Thursday and repeated Friday a series of full-page
attacks on the MDC, Simba Makoni, and the U.S. and UK this week,
portraying the opposition candidates as puppets of the West. One
page carried a reproduction of a London Citigroup invitation to meet
Makoni advisor Nkosana Moyo for a fundraising lunch. Another
reproduced U.S. Executive Order 13288 extending targeted sanctions
under the headline "SANCTIONS ARE REAL-In case you do not know, this
is what George Bush did to your country only this Tuesday, 4th March
2008." The bottom of the page admonished "VOTE ZANU PF to punish
and forever silence puppet sanctions-mongers." A third page
referenced a possible UK ban on the Zimbabwean cricket team visiting
England this summer: "They tell you sanctions are 'smart,'
'targeted' or even non-existent." Below pictures of four renowned
Zimbabwean athletes (two white and two black), the text continues,
"These sports people and ordinary Zimbabweans will tell you they are
not." Again, the ad ends with a call to "VOTE ZANU PF to defeat
puppets, Bush, Brown, and their sanctions."

9. State Broadcaster Says It's Ready To Provide Fair & Balanced
Election Coverage... In radio and television news bulletins on
March 6 that exclusively featured ZANU PF campaign rallies, Zimbabwe
Broadcasting Corporation (ZBC) CEO Henry Muradzikwa said ZBC, the
sole legal national public broadcaster, has a mandate to ensure that
all political players are given a platform to inform the electorate
on their manifestos and other political programs, and ZBC will
afford contesting candidates and parties equal and fair access to
radio and television.

10. Simba Goes High Tech... Presidential contender Simba Makoni
has established a website:
http://www.simbamakoni.co.zw or http://www.smakoni.com

11. More White Farmers To Join SADC Tribunal Challenge... A group
of 70 white farmers will file a joint application at the Southern
African Development Community (SADC) Tribunal in Windhoek
challenging the seizure of their farms by the GOZ. The Tribunal
ruled in December that the government should stop evicting William
Campbell from his farm pending determination of the legality of
Zimbabwe's fast-track land reform; the Tribunal is expected to hear
Campbell's challenge on March 26. A ruling declaring land reform
illegal would have far reaching consequences, opening the floodgates
to thousands of damage claims by dispossessed white farmers.
Furthermore, and as importantly, such a ruling would set a
significant precedent, possibly triggering a spate of similar cases
from other aggrieved farmers in the SADC region.

12. Zim Activist Scores Another Award... Amnesty International USA
will honor Betty Makoni, director of Girl Child Network (GCN), with
an award for her work as a defender of women and girls' rights. The
former school teacher from the high-density Harare suburb of
Chitungwiza has been an active and critical voice for the rights of

HARARE 00000184 003 OF 004


girls and young women in Zimbabwe - and around the world. Since its
inception in 1998 as a club of nine high school girls, GCN has grown
into a network of 500 girls' clubs in 49 of Zimbabwe's 58 districts
that serves 30,000 girls, raises community awareness, and lobbies
the government to protect the rights of the girl child. Makoni's
courage and tenacity in the face of death threats, intimidation and
arrests has helped dismantle the link between culture and violence
against girls in Zimbabwe.

13. Diarrheal Disease On The Rise... Among the confirmed cholera
figures presented at this week's Inter-Agency Standing Committee
(IASC) Coordination Meeting on Health were 20 deaths and 162 cases
alone in the Mudzi District of Mashonaland East near the Mozambique
border. Ten further fatalities were reported in three other areas.
Deteriorating sanitation conditions and inadequate supply of clean
water are contributing significantly to the rise of diarrheal
disease, and the formal healthcare system is, in many locations,
unable to respond satisfactorily to the situation. USAID's Office
of Foreign Disaster Assistance (OFDA) has supported
prevention-focused water, sanitation, and hygiene initiatives
throughout the country since late 2007, and contingency supplies
from this program are now being deployed and utilized in several
affected areas. A coordinated effort emerging from the IASC is
responding adequately to the situation.

--------------------------
Economic and Business News
--------------------------
14. GOZ Report Confirms Maize Deficit... In a First Round Crop
Assessment Report, a joint team from the Ministry of Agriculture,
Operation Maguta, the Famine Early Warning Systems Network
(FEWSNet), the Food and Agriculture Organization (FAO) and the
Meteorological Office concluded that persistent rains, a general
shortage of fertilizer, late planting, inadequate fuel supplies, low
maize prices and late grain payments would all factor into a smaller
crop than expected this year, forcing Zimbabwe, once again, to
import food. Only 14% of the maize crop was planted early; 60% of
the crop was planted by communal farmers and 3% by large-scale
commercial farmers. The fertilizer industry supplied only 7% of the
targeted amount of basal fertilizer needed and 10% of the required
top dressing. Of the major crops, ground nuts appear to be having
the best season with 50% more area planted than planned and the crop
in generally fair to good condition. A follow-on assessment will
calculate crop yield estimates.
15. German Printer Filling Soaring Demand For Banknotes... The
Sunday Times of London reported that German printer Giesecke &
Devrient is supplying the GOZ with Z$170 trillion/week worth of
banknotes (about US$7 million/week at the street rate), "bankrolling
the regime," in the words of one local banker. See Harare 162.
16. *Nevertheless, Zim Dollar's Decline Slows... The pace of
depreciation of the local currency on the parallel market slowed
somewhat this week as cash shortages re-emerged. The demand for
cash appears to be outstripping supply as inflation soared above
300,000% in February by some private sector estimates. The cash
rate has held fairly steady for the last three days at around Z$25
million:US$, while the bank transfer rate fell more sharply from
Z$31 million:US$ on Monday to Z$38-40 million today, reflecting the
growing cash shortage. In addition, the Reserve Bank of Zimbabwe
(RBZ) appears to be less active in the market, adding to the decline
in demand for foreign exchange.

17. Stock Market Soars... The Zimbabwe Stock Exchange scaled new
heights this week with most counters registering significant gains,
underpinned by surpluses on the money market, lack of profitable
alternative investments, and rising inflation, given the prevailing
high money supply growth. Market capitalization surpassed Z$100
quadrillion (US$2.5 billion) and the benchmark industrial index is
up 310% since early January notwithstanding some recent profit
taking.

HARARE 00000184 004 OF 004

18. Hotel Group To Expand... Leading local hotel group Zimsun
Leisure with 22 hotels, lodges and casinos throughout Zimbabwe,
announced plans to build three more hotels in Harare, a five-star
hotel in Beitbridge and new hotels in Mutare and Nyanga. With its
sights set on becoming Africa's biggest hotel operator, Zimsun is
rebranding to the name Africasun. The tourism sector is widely
believed to be best poised of all sectors for a fast turnaround
"when things come right."

19. But, For Now, Zimbabwe Earns Low Ranking On Travel & Tourism
Competitiveness Index... The World Economic Forum's Travel &
Tourism Competitiveness Report 2008 ranked Zimbabwe 117th out of 130
countries reviewed. It ranked Zimbabwe at the absolute bottom of
the heap in the availability of qualified labor, which we find
exaggerated, and it placed the country favorably on price
competitiveness, which we find odd in light of the industry's steep
non-resident rates and highly unfavorable official exchange rate.

20. Barclays Expands Branches/Retail Customers... Barclays opened
11 new branches (buying 8 of the properties) in 2007 bringing the
total number of branches to 38, and expects to continue expanding
aggressively in 2008. Its retail customer base rose 54% in 2007
from 119,000 to 183,000. Analysts commented that the bank is
poising itself to crank up earnings quickly "when the environment is
conducive."

MCGEE

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