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Cablegate: Zim Notes 8-29-2008

VZCZCXRO1615
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSB #0758/01 2421106
ZNR UUUUU ZZH
R 291106Z AUG 08
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC 3358
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA 2048
RUEHAR/AMEMBASSY ACCRA 2246
RUEHDS/AMEMBASSY ADDIS ABABA 2366
RUEHRL/AMEMBASSY BERLIN 0896
RUEHBY/AMEMBASSY CANBERRA 1643
RUEHDK/AMEMBASSY DAKAR 1999
RUEHKM/AMEMBASSY KAMPALA 2420
RUEHNR/AMEMBASSY NAIROBI 4852
RHEHAAA/NSC WASHDC
RHMFISS/EUCOM POLAD VAIHINGEN GE
RUEHGV/USMISSION GENEVA 1515
RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK
RHEFDIA/DIA WASHDC
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 03 HARARE 000758

AF/S FOR G.GARLAND
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 8-29-2008

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

Topics of the week:

- MDC Wins House Speakership...
- Police Forcefully Disrupt NGO Meeting...
- Looming Food Crisis...
- Death Toll at 171...
- Infrastructure Bombing...
- Abuses of Students Come to Light...
- Olympic Swimmer Returns Triumphant...
- Payment Delays/Power Cuts Strain RioZim...
- Delta Corporation in "Survival Mode"...
- Dismal Turnout at Harare Ag Show
- Inflation Factoid...

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

Parallel rate for cash doubled to Z$200:US$1

Bank transfer nearly quadrupled to Z$2000:US$1 against inter-bank
average of Z$31:US$1

Bread on the parallel market rose to Z$300

Sugar rose to Z$300/2kg

Cooking oil inched up to Z$90/750ml

Petrol and diesel rose by a third to Z$300/liter

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

3. MDC Wins House Speakership... The MDC (MDC-T) Tsvangirai
formation shocked ZANU-PF and President Robert Mugabe by winning the
House of Assembly speaker's position on Monday. MDC-T's Lovemore
Moyo defeated Paul Themba Nyathi, nominated by the MDC Mutambara
faction (MDC-M) by a vote of 110-98. In a secret ballot, apparently
4 ZANU-PF MPs and 8 MDC-M MPs defied their parties and voted for
Moyo. The following day, Mugabe convened Parliament. In a blatant
demonstration of disrespect for Mugabe and his position as
president, the MPs jeered and heckled him throughout his speech.
Moyo's election confounded SADC, which had called for the convening
of Parliament after Tsvangirai failed to sign a power-sharing deal,
and put to bed an alliance between ZANU-PF and MDC-M designed to
undermine MDC-T. Tsvangirai and his party are emboldened and will
undoubtedly continue to take a strong stand in negotiations with
ZANU-PF. See Harare 747, 741, 730.

4. Police Forcefully Disrupt NGO Meeting... The anti-riot squad
illegally disrupted the annual meeting of Crisis in Zimbabwe
Coalition (CZC) at a local hotel on August 28, claiming that under
the dreaded Public Order and Security Act (POSA), CZC should have
given them four days' notice for convening a public meeting.
However, the High Court previously determined that under POSA
internal meetings do not require police permission.

5. Looming Food Crisis... The Mugabe government continues to deny
NGOs and Private Voluntary Organizations access to over 1.3 million
at-risk Zimbabweans to provide food, water, seed, fertilizer, and
hygienic support. Currently, less than 300,000 people are receiving
assistance, and record-low harvests may expose up to 5 million

HARARE 00000758 002 OF 003


Zimbabweans to a severe food crisis. While there are large
stockpiles of supplies in South Africa and Zimbabwe, the supply
backlog is forcing donors to reconsider the utility of sending
additional aid to Zimbabwe. Some NGOs have been able to conduct
discrete workaround operations with the consent of local officials,
though these groups still routinely face the threat of violence from
war veterans and youth brigade members. See Harare 754.

6. MDC Secretary General Tendai Biti is seeking to have the
humanitarian access issue raised in Parliament. The UN Food and
Agriculture Organization is preparing a presentation for
parliamentarians on the impact of the suspension on food aid. The
MDC is also planning a media blitz on the effects of the NGO ban.
In addition, local and international NGOs are increasing their
advocacy by issuing a common statement on behalf of 100+ agencies.
They are also finalizing a presentation to convey the impact of the
ban on food security, agricultural recovery, nutrition/child
protection, and water/sanitation, and they also plan to step up
advocacy in the region.

7. Death Toll at 171... The death toll from post-March 27 election
violence now stands at 171. However, the actual number is likely
higher, due to the unknown number of unconfirmable deaths. See
Harare 751.

8. Infrastructure Bombing... On the evening of August 21, two
bombs were detonated on the Hunyani bridge 25 kilometers from Harare
on the Bulawayo-Harare road. The bombs caused minor damage to the
road and rail line. Police have no leads or suspects in their
investigation. This is the second bombing to take place this month.
At this point we don't know if this was malicious mischief, efforts
by an anti-Mugabe group to harm infrastructure, or intentional
ZANU-PF action to later blame on the MDC.

9. Abuses of Students Come to Light... "Inside Pandora's Box"
details the strong-arm tactics used against Zimbabwean student
protesters in 2006. Produced by Students Solidarity Trust-a local
Zimbabwean student activist group-the 42-page report delves into the
detentions and beatings of students, as well as the legislative
measures taken by the Mugabe regime to suppress student protests.
The report is on the Embassy intranet site.

10. Olympic Swimmer Returns Triumphant... Olympic gold and silver
medalist Kirsty Coventry returned to a hero's welcome at Harare
International Airport this week. The Herald awarded her a front
page picture and banner headline, "Royal welcome for Kirsty."
Mugabe mentioned her triumph in his speech at the opening of
Parliament; the MDC responded by shouting, "she's white, she's
white," in mockery of Mugabe's customary racist attitude toward
Zimbabwe's white population.

----------------------------------
On the Economic and Business Front
----------------------------------

11. Payment Delays/Power Cuts Strain RioZim... Nonpayment for gold
deliveries to the Reserve Bank continues to constrain cash flow at
RioZim. In its half-year results, RioZim reported that gold
production at Renco Mine declined 31% compared to the same period
last year, affected by load shedding and plant breakdowns. Nickel
and copper production fell 39%, primarily due to power cuts.
Analysts see the company's best prospects in coal and diamonds.
Coal production at Sengwa Colliery increased just over 10% before
RioZim recently terminated mining there in May to focus on seeking a
partner for a 2000 MW power station envisioned for the site. Murowa
Diamonds, 22% owned by RioZim, nearly tripled its diamond output to
135,000 carats.


HARARE 00000758 003 OF 003


12. Delta Corporation in "Survival Mode"... Delta executives said
the economy had entered the "melt down zone" and Delta was in
"survival mode," streamlining operations and refocusing on exports.
Capacity utilization at the beverage giant is 25-35%. Illustrative
of the export strategy, local sales of malt-based lager declined 46%
in the last 6-month reporting period as Delta sidetracked its barley
malt for the export market. Elsewhere in the business tea
production fell 62% over the previous reporting period, along with
declines in poultry, beef, fruits and vegetables. Analysts
nevertheless recommend Delta for its strong balance sheet, cash flow
and brands.

13. Dismal Turnout at Harare Ag Show... At mid-week, attendance at
the once-renowned Harare Agricultural Show was less than a quarter
of last year's already poor showing, matched only by the low turnout
of exhibitors.

14. Inflation Factoid... The highest-denomination note (Z$500)
fell in value on the street from US$33 to US$2.50 in the month of
August.

-----------------
Quote of the Week
-----------------

15. Mugabe at a lunch marking the opening of Parliament, reported
in The Herald of August 27: Cde Mugabe said judging by the number
of new cars on the roads, some of which included the latest models,
it was surprising to note that Zimbabwe was regarded as poor.


MCGEE

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