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Cablegate: Zim Notes June 20, 2008

VZCZCXRO4291
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSB #0526/01 1721253
ZNR UUUUU ZZH
R 201253Z JUN 08
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC 3054
INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA 1991
RUEHAR/AMEMBASSY ACCRA 2070
RUEHDS/AMEMBASSY ADDIS ABABA 2190
RUEHRL/AMEMBASSY BERLIN 0732
RUEHBY/AMEMBASSY CANBERRA 1467
RUEHDK/AMEMBASSY DAKAR 1825
RUEHKM/AMEMBASSY KAMPALA 2246
RUEHNR/AMEMBASSY NAIROBI 4677
RHEHAAA/NSC WASHDC
RHMFISS/EUCOM POLAD VAIHINGEN GE
RUEHGV/USMISSION GENEVA 1336
RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK
RHEFDIA/DIA WASHDC
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 03 HARARE 000526

SIPDIS

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

E.O.12958: N/A
TAGS: PGOV PREL ASEC PHUM ECON EAGR EFIN EMIN ZI
SUBJECT: ZIM NOTES June 20, 2008


---------------
1. SUMMARY
---------------

Topics of the week:

- Harare Hit by Electoral Violence
- Ambassador Meets SADC Observer Leader
- Retaliation for Diplomats' Visit
- MDC Secretary General Faces Treason Charges
- NGOs Still Suspended
- Hidden and Hungry at Harvest House
- Secretary Rice Talks Zim with UNSC
- Public Broadcaster Bans Opposition Ads
- Journalists Fear New Hit List
- Cargill Caught in Election Melee
- Sinking Dollar Makes Government Skittish
- Inflation Over Two Million Percent
- Growing Food Insecurity
- Misguided Policies Spawn Acute Bread Shortage
- Seed Co Finds Profit Outside Zimbabwe
- Quote of the Week

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

Parallel rate for cash more than doubled again to Z$7.9 billion:US$1
against inter-bank average of Z$6.8 billion:US$1

Bank transfer rate trebled to Z$1.9 trillion:US$1; official rate:
Z$$30,000: US$1

Bread rose on the parallel market from Z$2.5 billion to Z$3.5
billion vs. controlled price of Z$400 million

Sugar soared to Z$8 billion/2kg vs. controlled price of Z$8
million/2kg

Cooking oil jumped to Z$7.5 billion/750ml vs. controlled price of
Z$9.3 million/750ml

Petrol and diesel more than doubled to Z$12 billion/liter vs.
controlled price of Z$60,000/liter

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

3. Harare Hit by Electoral Violence... With reports of ZANU-PF-led
electoral violence escalating in Harare, on June 18 Ambassador McGee
and Emboffs toured the high-density area of Epworth and found the
MDC stronghold partially under the control of party thugs running
re-education bases. Embassy staff witnessed the brutality of a
ZANU-PF youth militia first-hand when hundreds of Epworth residents
fled a mob of young men, many in ZANU-PF t-shirts and all
brandishing sticks, tire irons, and axes, who chased women, children
and the elderly toward a ZANU-PF rally. See Harare 517, and, for a
clip of the recorded violence:
www.cnn.com/video/#/video/world/2008/06/19/
mabuse.zimbabwe.violence.cnn (NOTE: URL address divided for cable
formatting, be sure to include the entire address when copying.)

4. Ambassador Meets SADC Observer Leader... Ambassador McGee met
June 17 with Tanki Mothae, director of the SADC Organ on Politics,
Defense, and Security Affairs, and head of the SADC observers in
Zimbabwe. Mothae said there were currently close to 200 SADC
observers in Zimbabwe and a further 150 would arrive in the next
week. He said he was constantly receiving reports and attempting to

HARARE 00000526 002 OF 003


verify incidents of violence. See Harare 520.

5. Retaliation for Diplomats' Visit... ZANU-PF MPs and thugs
continue to attack MDC supporters and their families in Bindura in
retaliation for a U.S. delegation visit on June 5. See Harare 515.

6. MDC Secretary General Faces Treason Charges... Tendai Biti
appeared in court twice this week following his arrest on June 12.
Biti is facing counts of treason, publishing documents prejudicial
to the State, causing disaffection within the police, and insulting
the President. The treason charge is based on a document dated
March 25 that is widely considered to be a forgery. The document
purports to lay out MDC plans for governing. Biti's defense
attorneys complained that he had been denied access to food, water,
and his legal counsel for the first 48 hours of his imprisonment.
Also, he was forced to write statements during a 19-hour-long
overnight interrogation without the presence of his lawyer.

7. NGOs Still Suspended... On June 13 the GOZ "clarified" that
some NGOs, mainly those operating in health-services delivery, may
continue their work. The GOZ suspension of NGO-driven food aid
programs, however, remains in effect.

8. Hidden and Hungry at Harvest House... Two months into a
government-led campaign of violence, as many as 2,400 homeless and
hungry Zimbabweans, including at least 471 children, many of whom
are ill, continue to seek sanctuary at Harvest House, the opposition
MDC's Harare headquarters. Embassy staff recently toured the site
and saw evidence that all of these opposition supporters and their
families fear for their lives if they return home, have no home to
return to, or both. In light of the NGO suspension, few resources
are reaching this vulnerable group. See Harare 522.

9. Secretary Rice Talks Zim with UNSC... On June 19, Secretary
Rice and Burkina Faso Foreign Minister Djibrill Bossole co-chaired
an informal meeting with members of the UN Security Council on
Zimbabwe. Rice stated that "by its actions the Mugabe regime has
given up any pretense that the June 27 election will be allowed to
proceed in a free and fair manner...We have reached the point where
broader, stronger international action is needed." FM Bossole
called on regional stakeholders, including SADC members, to find a
solution to the crisis.

10. Public Broadcaster Bans Opposition Ads... ZBC (Zimbabwe
Broadcasting Corporation), which has denied the opposition political
advertising and news coverage since the March 29 elections,
confirmed the ban on June 19. Justice Minister Patrick Chinamasa
defended the move, saying that international coverage favored the
MDC and never reported the ruling party's position.

11. Journalists Fear New Hit List... Journalists told our Public
Affairs Section that they had received information on the existence
of a "hit list" targeting independent media journalists. Frightened,
they have adopted new survival methods, including sleeping away from
home, to avert danger ahead of next week's election.

12. Cargill Caught in Election Melee... Cargill MD Priscilla
Mutembwa told us that the company and its employees were particular
targets of harassment. Youth militia shut down a Cargill cotton
buying point in Mutoko in Mashonaland East province, decrying the
company for being U.S.-owned and beating Cargill employees there and
elsewhere for allegedly supporting the opposition. Complicating the
situation, an Indian-owned Singapore-based newcomer to Zimbabwe's
cotton sector apparently is funding ZANU-PF in prime Cargill markets
and contributing to the violence. The ZANU-PF MP in Magunje
district in rural Mashonaland West announced, incorrectly, at a
large must-attend rally this week that Cargill was closing down,
moving out of the area, and that the Singapore-based company would
step into the void.

HARARE 00000526 003 OF 003

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

13. Sinking Dollar Makes Government Skittish... The Zimbabwe
dollar plummeted a further 57 percent against the greenback in the
past week, driven by high demand for forex and uncertainty
surrounding next week's presidential runoff election. In an
indication of the government's unease about the effect of the
precipitous fall in the value of the currency on soaring inflation,
the Reserve Bank of Zimbabwe (RBZ) issued contradictory instructions
to banks on the exchange rate on June 18. It initially instructed
banks to abandon the willing buyer willing seller concept and revert
to the official exchange rate of Z$30,000:US$1, but within an hour
issued a retraction.

14. Inflation Over Two Million Percent... Another leading
supermarket chain has shared its internal inflation calculation with
us: it put the m-o-m rate of price increases in May at 563 percent
and the y-o-y rate slightly above 2 million percent.

15. Growing Food Insecurity... The FAO/World Food Program Crop and
Food Supply Assessment Mission concluded in its Special Report of
June 18, 2008 that the number of food insecure people in Zimbabwe
will rise from 2.04 million people in the next three months to about
5.1 million (well over half of most estimates of the population
size) at the height of the hungry season between January and March
2009. Production of the staple maize crop was 28 percent lower than
in 2007, which in turn was 44 percent lower than the previous year.
Communal farmers used to produce the bulk of the country's maize,
but yields have fallen by about three quarters in the past ten years
due primarily to the loss of the symbiotic relationships with former
large-scale commercial agriculture and the demise of agro-input
industries. The 34-page report is available at
http://www.fao.org/giews/

16. Misguided Policies Spawn Acute Bread Shortage... Bread
shortages have reappeared as Zimbabwe's wheat and flour stocks
collapse. Wheat production has been in decline for several years.
While farm takeovers and low prices explained much of the poor wheat
output in the early 2000s, in more recent years, shortages of fuel,
electricity, foreign exchange and fertilizer have predominated.
Zimbabwe has relied on imports to fill the gap, but due to foreign
exchange shortages they have not met the growing demand for bread.
Nevertheless, because affordable substitutes are still available
along with the staple maize meal, we don't foresee the shortage
sparking "bread riots."

17. Seed Co Finds Profit Outside Zimbabwe... Citing low
government-controlled prices to producers, Seed Co Limited CEO Pat
Devenish estimated that hybrid maize seed production in Zimbabwe's
2008/09 growing season could be 30 percent below last year's crop.
Having ring fenced domestic operations and expanded in the region,
Seed Co reported that 91 percent of the past year's turnover had
come from outside Zimbabwe, and sales had tripled in U.S. dollar
terms.

18. Quote of the Week: Emmerson Mnangagwa, Minister of Rural
Housing and heir apparent to Mugabe, was reported in the press
saying that Morgan Tsvangirai "likes being arrested" because of the
international attention his arrests draw.

MCGEE

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