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Cablegate: Zim Notes May 9, 2008

VZCZCXRO9449
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSB #0417/01 1301035
ZNR UUUUU ZZH
R 091035Z MAY 08
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC 2883
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA 1959
RUEHAR/AMEMBASSY ACCRA 1970
RUEHDS/AMEMBASSY ADDIS ABABA 2092
RUEHRL/AMEMBASSY BERLIN 0641
RUEHBY/AMEMBASSY CANBERRA 1369
RUEHDK/AMEMBASSY DAKAR 1726
RUEHKM/AMEMBASSY KAMPALA 2148
RUEHNR/AMEMBASSY NAIROBI 4579
RHEHAAA/NSC WASHDC
RHMFISS/EUCOM POLAD VAIHINGEN GE
RUEHGV/USMISSION GENEVA 1231
RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK
RHEFDIA/DIA WASHDC
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 03 HARARE 000417

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

SIPDIS

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

SUBJECT: ZIM NOTES May 9, 2008


-------------
1. SUMMARY
-------------
Topics of the week:

- It's Official, MDC Tops ZANU-PF In Presidential Poll
- Recount Of Parliament Vote Confirms Initial Results
- MDC Reconciliation
- Violence Continues
- More Violent Farm Invasions
- Ambassador Hosts Meeting On Violence
- SADC Investigates Violence
- Veterans Of The Liberation War Get Six-Fold Allowance Raise
- Editor Arrested
- Swedish Aid Worker Declared Persona Non Grata
- Zimbabwe Dollar In Tail Spin In Liberalized Market
- New Higher Notes Issued
- Kingdom Meikles Shares Tradable on Zimbabwe and London Exchanges

------------------------------
2. Price Movements-Exchange Rate
and Selected products
------------------------------

Parallel rate for cash converged with the inter-bank average at
ZW$210 million:US$1;
Bank transfer rate: Z$260 million; official rate remained at
ZW$$30,000:US$1

Sugar fell again to Z$300 million/2kg vs. controlled price of
Z$8million/2kg

Cooking oil doubled to Z$700 million/750ml vs. controlled price of
Z$9.3million/750ml

Petrol and diesel more than doubled to Z$400million/liter vs.
controlled price of Z$60,000/liter

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

3. It's Official, MDC Tops ZANU-PF In Presidential Poll... After
an unprecedented delay of over one month, the Zimbabwe Electoral
Commission's (ZEC) Chief Elections Officer declared on May 2 that
Morgan Tsvangirai (MDC-T) had received 47.9% of the presidential
vote, incumbent Robert Mugabe (ZANU-PF) 43.2%, Independent Simba
Makoni 8.3%, and Independent Langton Towungana 0.6%. He further
stated that as no candidate had secured a majority of the total
votes cast, there would be a runoff election between the two top
vote getters on a date still to be announced by the ZEC. The
Commission has the power to extend the period in which a runoff must
take place. Suggesting that the ruling party is unsure whether
Mugabe can win a runoff, Deputy Information Minister Bright Matonga
said it could be put off for up to a year. Our best information is
that a date will be announced in the next 10 days and that a runoff
election will be set within 40 days.
4. Recount Of Parliament Vote Confirms Initial Results... The ZEC
announced last week there were no changes to the winners of House of
Assembly and Senate seats as a result of the recount in 23
constituencies. The convening of Parliament, however, will have to
await declaration of the winner of the presidential election as the
new Parliament only forms once the president is sworn in.
5. MDC Reconciliation... In the wake of an agreement by the
Tsvangirai and Mutambara factions of the MDC to unite in support of
Tsvangirai in a runoff election, both factions have agreed that
Mutambara faction bigwigs Gibson Sibanda, Welshman Ncube, and Paul

HARARE 00000417 002 OF 003


Themba Nyathi will stand as united MDC candidates in three
by-elections to be held at a date to be set by the ZEC. All three
MDC members ran in the March 29 elections and lost to Tsvangirai
faction candidates. The by-elections are necessitated by the deaths
of candidates before the March 29 election.
6. Violence Continues... ZANU-PF-perpetrated violence continues
unabated, principally in rural areas. There is documentation of
over 700 victims who have been treated, over 200 who have been
hospitalized and 20 deaths as a result of the violence. Actual
figures are much higher.
7. More Violent Farm Invasions... The Commercial Farmers' Union
informed us of a dozen new farm invasions in the past seven days,
predominantly in Chegutu and Norton in Mashonaland West province,
within an hour's drive of Harare. In half of the cases, the farmer
was forced off his property. All the affected farmers in Chegutu
had been given interim relief by the SADC Tribunal in Windhoek, but
it is not being respected and police are providing no protection.

8. Ambassador Hosts Meeting On Violence... Ambassador McGee hosted
a meeting this week with SADC ambassadors and representatives to
discuss the growing violence in Zimbabwe. He showed a video,
produced by the Solidarity Peace Trust, which contains statements of
violence victims as well as graphic images, and led a discussion on
ending the violence. The Ambassador also visited a local hospital,
along with several EU ambassadors and the Angolan ambassador, and
talked with patients. He has invited EU and SADC ambassadors to
accompany him next week to rural areas where violence has occurred.
See Harare 408.

9. SADC Investigates Violence... The leader of the South African
contingent of SADC's election observation delegation, Ambassador
Kingsley Mamabolo, stated this week in South Africa that a runoff
election could not credibly be held now because of the escalating
violence. While Mamabolo did not ascribe blame of the violence, his
report to South African president Thabo Mbeki resulted in the
dispatch of a team of retired South African generals to Zimbabwe to
further investigate the violence. The group has met with a
cross-section of Zimbabweans, including ZANU-PF, MDC, religious
leaders, and civil society. Mbeki is expected in Harare today for
talks with Mugabe.

10. Veterans Of The Liberation War Get Six-Fold Allowance Raise...
The Standard reported on May 4 that the GOZ had raised war veterans'
monthly allowances from Z$1.6 billion to Z$9 billion. The weekly
newspaper added, for comparison's sake, that a teacher earns Z$6.4
billion, or roughly US$32, a month. In this context most teachers
aligned to the Progressive Teachers' Union of Zimbabwe are calling
for a strike to get a minimum monthly salary of Z$18 billion.

11. Editor Arrested... Davison Maruziva, editor of the independent
The Standard newspaper, was arrested and charged with false
statements prejudicial to the state and contempt of court. The
charges stem from an article written by Arthur Mutambara and
published in The Standard last month. It criticized Mugage and the
government, and questioned Mugabe's right to remain in office.
Police have indicated charges will also be brought against
Mutambara.

12. Swedish Aid Worker Declared Persona Non Grata... The GOZ this
week notified the Swedish Cooperative Center, a Swedish
non-governmental organization, that it was cancelling the visa and
work permit of the Center's Country Director. The notification came
in the form of a letter signed by Didymus Mutasa, Minister of State
for National Security, Lands, Land Reform and Resettlement in the
President's Office, rather than from immigration. No reason for the
action was given. The Cooperative Center is engaged in rural
development and nutrition in Gokwe and Gweru in Midlands province.

HARARE 00000417 003 OF 003

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

13. Zimbabwe Dollar In Tail Spin In Liberalized Market... The
Zimbabwe dollar fell sharply following the partial liberalization of
the exchange rate last week (see Harare 00416). The week opened
with the currency trading at Z$160 million:US$1 in the banks. By
mid week, the cash rate on the parallel market had begun to converge
with the new inter-bank rate at around Z$200 million:US$1. Given
the prevailing high year-on-year inflation rate in April of one
million percent for high income earners (according to a widely
respected private sector report), and low foreign financial inflows,
the Zimbabwe dollar is set to continue depreciating until exports
start responding favorably to the new exchange rate and to the new
foreign currency surrender requirements.

14. New Higher Notes Issued... As inflation soars and the demand
for transaction balances increases, the Reserve Bank introduced new
Z$100 million (roughly 50 US cents) and Z$250 million notes this
week, just over a month after releasing a Z$50 million note.

15. Kingdom Meikles Shares Tradable on Zimbabwe and London
Exchanges... Kingdom Meikles Africa Ltd announced this week that the
Reserve Bank had granted approval for full fungibility status to all
of its shares registered on the London register and listed on the
London Stock Exchange. This means, in theory at least, that shares
bought in local currency on the Zimbabwe Stock Exchange may be sold
for Sterling on the London Stock Exchange and vice versa. As with
similarly fungible Old Mutual shares, the devil lies in the detail,
especially in regard to obtaining Exchange Control approval from the
Reserve Bank for the transaction.


MCGEE

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