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Cablegate: Zim Notes 10-24-2008

VZCZCXRO5361
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSB #0963/01 3010832
ZNR UUUUU ZZH
R 270832Z OCT 08
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC 3614
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA 2106
RUEHAR/AMEMBASSY ACCRA 2377
RUEHDS/AMEMBASSY ADDIS ABABA 2497
RUEHRL/AMEMBASSY BERLIN 1003
RUEHBY/AMEMBASSY CANBERRA 1773
RUEHDK/AMEMBASSY DAKAR 2128
RUEHKM/AMEMBASSY KAMPALA 2553
RUEHNR/AMEMBASSY NAIROBI 4981
RHEHAAA/NSC WASHDC
RHMFISS/EUCOM POLAD VAIHINGEN GE
RUEHGV/USMISSION GENEVA 1646
RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK
RHEFDIA/DIA WASHDC
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 03 HARARE 000963

AF/S FOR B. WALCH
ADDIS ABABA FOR USAU
ADDIS ABABA FOR ACSS
NSC FOR SENIOR AFRICA DIRECTOR B.PITTMAN
TREASURY FOR D. PETERS
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 10-24-2008

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

Topics of the week:

- Deadlocked, But SADC-Hosted Talks to Resume...
- No Progress Says Tsvangirai...
- Lack of Passport Paper to Blame...
- Botswana Calls for New Elections...
- Zimbabwean Elephants Get a Reprieve...
- Zimbabwean Journalist Wins German Award...
- RBZ's Profligacy on Patronage Vehicles...
- The ZSE Runs Amok As Currency Grows Worthless...
- Fuel Shortages Force Cuts in Bus Services...
- Zimbabwe Chamber of Commerce Issues Manifesto...
- Another Victim of Price Controls...
- Good Start to Rainy Season...

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

Parallel rate for cash more than doubled to Z$55,000:US$1

Check rate (see note below) more than quadrupled to
Z$2,000,000,000:US$1 against inter-bank average of Z$346:US$1

Bread on the parallel market tripled to Z$70,000

Sugar rose to $150,000/2kg

Petrol and diesel rose to Z$80,000/liter

Note: Due to the suspension of the Real-Time Gross Settlement system
by the Reserve Bank of Zimbabwe on October 3, Post will now be
reporting on the unofficial check transfer rate that individuals and
entities are using to make non-cash payments.

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

3. Deadlocked, But SADC-Hosted Talks to Resume... The SADC
Troika-Angola, Mozambique, and Swaziland-will attempt to mediate a
resolution to the stalled power-sharing negotiations in Harare on
October 27. Insiders to the negotiations are not optimistic
progress will be made, or even in the event an agreement is reached,
that ZANU-PF would honor it. See Harare 959 and Harare 960.

4. No Progress Says Tsvangirai... MDC leader Morgan Tsvangirai
addressed the assembled OECD heads of mission on October 22 and
explained that the negotiations had made no progress and would
require SADC and AU mediation. Despite threats to boycott over
frustration at not yet having received his passport, Tsvangirai is
expected to participate in Troika discussions on the October 27.
Newly-appointed South African president Motlanthe is also expected
to be present. See Harare 955.

5. Lack of Passport Paper to Blame... Mugabe spokesperson George
Charamba blamed Western sanctions for a lack of passport paper that
led to the Registrar General's inability to issue Tsvangirai a new
passport. Tsvangirai has been waiting since August to get his
passport renewed, and chose not to attend a SADC Troika meeting in
Swaziland on Monday to highlight the issue.

6. Botswana Calls for New Elections... The Government of Botswana

HARARE 00000963 002 OF 003


issued a press release on October 20 criticizing ZANU-PF and
supporting Tsvangirai's efforts to achieve a power-sharing
settlement. In the event of continued deadlock, Botswana called for
a new presidential election to determine Zimbabwe's political
future.

7. Zimbabwean Elephants Get a Reprieve... The Zimbabwean Parks and
Wildlife Authority (Parks) has agreed, under pressure from
photographic tour operators, to suspend the issuance of hundreds of
questionable elephant hunting permits. The Parks program had been
abused as hunters and Parks' staff killed animals larger than
allowed or outside the program parameters and profited from the meat
and ivory. The "quiet diplomacy" effort proved successful in part
because the issue was kept out of the media. See Harare 956.

8. Zimbabwean Journalist Wins German Award... Trevor Ncube,
Zimbabwean journalist and publisher of Zimbabwe independent
newspapers The Zimbabwe Independent and The Standard, won Germany's
Africa Award for his tireless engagement on behalf of freedom and
human rights in Zimbabwe and Africa. The award was presented by the
president of the European Parliament.

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

9. RBZ's Profligacy on Patronage Vehicles... A vehicle importer
divulged to us how the RBZ was using the parallel market to finance
the importation of millions of U.S. dollars worth of popular pickup
trucks and 4x4s for patronage purposes. See Harare 947.

10. The ZSE Runs Amok As Currency Grows Worthless... As economic
fundamentals continue to weaken and negative real returns on the
money market deepen, the Zimbabwe Stock Exchange (ZSE) and fixed
properties have become the only reasonable hedges against exploding
inflation. All ZSE counters witnessed record-breaking increases in
prices in recent weeks. The industrial and mining indices have
risen by 415 trillion percent and 291 trillion percent respectively
since January. On a related note, the check exchange rate plummeted
further in line with movement in the Old Mutual Implied exchange
rate. The check rate fell from Z$40 million:US$1 on October 17 to
Z$2 billion:US$1 a week later, reflecting, in the main, the
continued shortage of foreign exchange.

11. Fuel Shortages Force Cuts in Bus Services... A cutback in
subsidized fuel from the government-owned National Oil Company of
Zimbabwe (NOCZIM) due to a crippling lack of foreign exchange has
left Zimbabwe United Passenger Company (ZUPCO) operating at 20
percent capacity. The public bus company can no longer maintain
full service on all its routes due to its low subsidized fares.

12. Zimbabwe Chamber of Commerce Issues Manifesto... The ZNCC
issued a business manifesto this week that calls for more policy
consultation between government and business; depoliticization and
demilitarization of public institutions; concentration on
engineering, import substitution and the full utilization of
strategic resources; and a policy environment that encourages
private public partnerships in construction and in infrastructure
maintenance.

13. Another Victim of Price Controls... Food giant Cairns released
a deplorable set of results to the end of August. Capacity
utilization fell from 40% in 2007 to 14% this reporting year, and
volume fell 53% under the scourge of price controls.

14. Good Start to Rainy Season... The clouds broke this week and
much of the country enjoyed a thunderous start to the rainy season.
Unfortunately, neither maize seed nor fertilizer is readily

HARARE 00000963 003 OF 003


available on the markets.

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

15. "The Zimbabwean economy has collapsed, but African economies do
not collapse until there is no food in State House." Chenjerai
Hove, a Columnist for Zimbabwetimes.com, October 19, 2008.


MCGEE

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