Cablegate: Embassy Harare

R 021313Z JUN 08



E.O. 12958: N/A
SUBJ: ZIM NOTES 5-30-2008

- ...But Remains Divided
- Visit to Mashonaland East Reveals Fearful Populace
- Government Propaganda Aimed At U.S. Ambassadors
- Zim First Lady Slams Opposition
- International NGO Operations Suspended
- VOA Expands Studio 7 Broadcasts
- PEPFAR Strategy On Track
- Bad Week For African Dictators
- Zimbabwe Dollar Swoons
- May Inflation Tops 1 Million Percent
- Tourism Prices Liberalized
- High Market Liquidity
- Cotton Crop Up

Price Movements-Exchange Rate
and Selected Products

2. Parallel rate for cash diverged further, at ZW$650 million:
US$1, from inter-bank average of Z$529 million: US$1
Bank transfer rate jumped to: Z$800 million; official rate:
ZW$$30,000: US$1

Sugar rose to Z$800 million/2kg vs. controlled price of Z$8

Cooking oil increased to Z$1.3 million/750ml vs. controlled price of
Z$9.3 million/750ml

Petrol and diesel rose to Z$920million/liter vs. controlled price of

On the Political/Social Front

3. Opposition Returns To Campaign Mode... On May 27, MDCyH!Q%~situation

in Zimbabwe and outline his party's response. Tsvangirai stated
that over 50 people have been killed and at least 25,000 displaced
since the March 29 elections. In response, Tsvangirai announced the
launch of the President's Fund for Victims of Violence, intended to
assist Zimbabweans impacted by the recent surge in
government-sponsored attacks. Tsvangirai repeatedly drove home what
appears to be the MDC's mantra for the campaigning days ahead: "The
rebuilding of Zimbabwe begins now." See Harare 470.

4. ...But Remains Divided... On May 29, Morgan Tsvangirai and
former independent candidate Simba Makoni held separate briefings in
which they discussed violence, the June 27 run-off election, and
their perspectives on a government of national unity (GNU).
Significant differences in their respective positions indicate that
a united opposition will not be immediately achieved. Both deplored
ongoing violence, but Tsvangirai laid the blame at the feet of
ZANU-PF, while Makoni stated that both ZANU-PF and the MDC were
responsible. Both men called for a GNU to be convened as soon as
possible, but Tsvangirai proposed a broad GNU under an MDC mandate,
while Makoni suggested it be formed from all "key constituencies."
While Tsvangirai focused on creating a benign electoral environment,
Makoni stated that holding the contest would be disastrous for the
Zimbabwe; he advocated a two to five year transitional government
with elections to follow. See Harare 473.

5. Visit to Mashonaland East Reveals Fearful Populace... Mission
staff visited the town of Murewa, scene of significant ZANU-PF
directed violence, the day after Morgan Tsvangirai presided over a
funeral there for MDC provincial secretary Shepherd Jani, who was
brutally murdered last week. Residents were visibly on edge and
reluctant to talk. At a nearby rural Catholic mission, medical
staff and clergy related that the local ZANU-PF chairman, who lost
his seat as counselor in the March 29 election, had been holding
political meetings and threatening those who did not attend. One
meeting was held on the grounds of the mission over objections of
the church and the local governor. Mission staff also met with one
victim of the violence - a 37-year-old woman - who had been beaten
with sticks by a group of about 20 people, including some women.
She and her husband were both known MDC supporters. While doctors
feared her husband's leg was broken, their x-ray machine had been
broken for a month and they could not afford the imported parts to
fix it. Local NGOs were working to bring the couple to Harare for
additional treatment.

6. Government Propaganda Aimed At U.S. Ambassador... In a front
page story on May 28, the government mouthpiece The Herald reported
that "United States Ambassador to South Africa Patrick Kelly Diskin
sneaked into Zimbabwe" from Botswana for 14 days of secret
consultations with Ambassador McGee. The newspaper published U.S.
diplomatic passport and license plate numbers, which they claimed
belonged to the Ambassador. In reality, Patrick Diskin is USAID's
Regional Food for Peace Program Coordinator based in Pretoria.
Diskin was on a routine visit to assist USAID/Zimbabwe in monitoring
the implementation humanitarian food assistance programs, which
provided US$171 million worth of food to Zimbabwe's most vulnerable
individuals in the last year. The U.S. Ambassador to South Africa
is, of course, Eric M. Bost. The report came on the heels of May 25
threats by Mugabe to expel Ambassador McGee if he continued to
"meddle in Zimbabwe's internal affairs."

7. Zim First Lady Slams Opposition... First Lady of Zimbabwe Grace
Mugabe took a shot at Morgan Tsvangirai during a May 28 trip to
Mashonaland Central with her husband to meet with victims of
political violence mostly perpetrated by, according to ZANU-PF
propaganda, the MDC. "Even if people vote for the MDC, Morgan
Tsvangirai will never step foot inside the State House," she stated.
"He will only get to hear about what it looks like inside State
House from people who have been there. Even if [Mugabe] loses, he
will only leave State House to make way for someone from Zanu-PF."
The First Lady donated building supplies, clothes, food, and money
to affected town residents at a rally just weeks ahead of the June
27 run-off.

8. International NGO Operations Suspended... The Minister of
Public Service, Labor, and Social Welfare, Nicolas Goche, has
instructed the NGO CARE to suspend its humanitarian food aid
operations indefinitely until investigations about "political
activities" are completed. CARE is a key implementing partner of
USAID's food aid program. The UN Humanitarian Coordinator in
Harare reported to an OCHA/Donor Group meeting on May 29 that
several additional NGOs would be called to a meeting with the
Minister on June 2, and that it was possible they would be
suspended. While not completely closing down or cancelling
agreements with NGOs, the government is showing hostility toward any
agency that it suspects is providing material assistance to
communities that voted against ZANU-PF in the March 29 elections.
The current early post-harvest season should mitigate the impact of
a suspension of food aid distributions, and no large scale
distributions are typically conducted until August. However, there
are already reports of maize scarcity in some areas, and a prolonged
suspension could have dire consequences for the beneficiaries of
CARE and other NGOs.

9. VOA Expands Studio 7 Broadcasts... In an effort to increase
opportunities for Zimbabweans to receive independent news reports
during the election period, VOA will begin repeat coverage of its
highly popular Studio 7 radio broadcasts immediately following its
normal program. The expanded coverage will begin June 1.

10. PEPFAR Strategy On Track... A May portfolio review and
strategy appraisal by the U.S. PEPFAR Zimbabwe Team revealed that in
spite of increasing economic degradation and political unrest, the
HIV program and strategy are on track. For the near term, the team
assumes that political conditions will limit partners' abilities to
travel to certain areas and to conduct some outreach activities.
However, these limits are expected to wax and wane in different
geographic areas, and overall program momentum is expected to be
maintained in the current environment. The team also formulated
"good case" and "worse case" scenarios to respond to the potential
for a changed operating environment.

11. Bad Week For African Dictators... Ethiopia's Supreme Court
sentenced former president Mengistu Haile Mariam to death this week
for mass murder during his 17-year rule. Mengistu has been living
in comfortable exile in Zimbabwe under the protection of Robert
Mugabe. The international press also reported the arrest of
Jean-Pierre Bemba, former vice president of the Democratic Republic
of Congo, in Belgium earlier this week on a war crimes warrant from
the International Criminal Court. The warrant covers alleged
offences against the civilian population of the Central African
Republic in 2002 and 2003, including rape, torture, and outrages
upon personal dignity.

On the Economic and Business Front

12. Zimbabwe Dollar Swoons... The local currency continued to sing
the blues on the parallel market. In the past week, the Zim dollar
fell by 33.8 percent from Z$430 million: US$1 to Z$650 million:
US$1. Demand for foreign exchange keeps outstripping supply and the
government is beginning to raise concerns over the rapid rate of
depreciation. Addressing journalists in Harare on May 27, the
Minister of Finance stated that while the liberalization of the
foreign exchange market had some benefits, it had also resulted in a
number of hardships. This is hardly surprising since the costs of
any exchange rate depreciation are front-loaded while the benefits
take longer to appear as economic agents wait to see whether the
policy change will last. As ZANU-PF enters a spending frenzy ahead
of the presidential election runoff, we predict no let up in the
slide over the next weeks.

13. May Inflation Tops 1 Million Percent... According to the
Zimbabwe Independent, leaked Central Statistical Office figures show
that the official rate of inflation increased from 732,604 percent
in April to 1,694,000 percent between May 1 and May 23. An unnamed
senior official in the Ministry of Finance reportedly stated that
the government has now forecast the figure to reach between 1.8
million and 2 million percent for the entire month of May.
14. Tourism Prices Liberalized... Following the partial
liberalization of the foreign exchange market, the National Incomes
and Pricing Commission (NIPC) decontrolled prices in the tourism
sector this month to increase viability of the players. Prior to
this, players were paying for their imports at the parallel rate but
forced to use the highly overvalued official rate in terms of their
pricing. The private sector-led Zimbabwe Council of Tourism hailed
the policy shift for finally taking international pricing formulae
into account.

15. High Market Liquidity... High liquidity has characterized the
money market in recent months, with daily surpluses averaging Z$600
trillion (US$1,721,664 at the average street rate for May). Our
banking contacts blame the imbalance on, among other factors, the
quasi-fiscal (i.e. off-budget) activities of the Reserve Bank of
Zimbabwe (RBZ)-in particular, concessionary financing; private
companies offloading foreign exchange onto the market at the
inter-bank rate; tobacco financing on the auction floors; and
increased government spending prior to the impending election
runoff. Once again, commercial banks are bearing the cost by being
forced to park their surpluses in 90-day non-negotiable certificates
of deposit (NNCDs) that do not earn interest. As a result, money
market interest rates have remained subdued at 50-150 percent per

16. Cotton Crop Up... The preliminary forecast for 2008 seed
cotton production is 300,000 MT, an increase of 18.1percent from
last year's crop, according to the annual Zimbabwe Cotton and
Products report published by the USDA FAS Global Agriculture
Information Network. The industry plans to expand production
further by increasing the area planted and recruiting new farmers.
In 2007, Zimbabwe earned over US$120 million from the export of
about 86,000MT (395,000 bales) of cotton lint, second only to
tobacco as an export crop. About 300,000 small scale farmers
produce 99.2 percent of the crop.

Quote of the Week

17. From Front Page Story In The Herald of May 26:
"I am told that [Ambassador McGee] says he foughtin Vietnam;
fighting in Vietnam does not give hi the right to be interfering in
our domestic affirs. Tall as he is, if he continues doing that, I
will kick him out...I am just waiting to see if hemakes one more
step wrong. He will get out. Thisis Zimbabwe, it is not an
extension of the Unite States."


© Scoop Media

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