Cablegate: Economy Slides Further

This record is a partial extract of the original cable. The full text of the original cable is not available.

291400Z May 03

UNCLAS HARARE 001070

SIPDIS

SENSITIVE

STATE FOR AF/S and AF/EX
NSC FOR SENIOR AFRICA DIRECTOR JFRAZER
USDOC FOR 2037 DIEMOND
PASS USTR FLORIZELLE LISER
TREASURY FOR ED BARBER AND C WILKINSON
STATE PASS USAID FOR MARJORIE COPSON

E. O. 12958: N/A
TAGS: ECON ETRD EINV PGOV ZI
SUBJECT: Economy Slides Further

1. (SBU) Summary: Zimbabwe's free-falling economy has
taken a turn for the worse. Fuel, electricity and even
bank notes are becoming scarcer. Business leaders who
laid hopes on the GOZ's economic reform process a few
months ago are increasingly joining the Movement for
Democratic Change (MDC)'s call for a "final push." End
Summary.

De-Industrialization Continues
------------------------------
2. (SBU) Incredible as it sounds, Harare's fuel lines
have grown longer, often reaching 4 kilometers. In many
rural areas, motorized transport is dying out, leaving
Zimbabweans to hike as far as 30 kilometers for food
purchases or donations. There are workers whose monthly
salary will not cover a single disposable razor from
South Africa. The Reserve Bank lacks funds for imported
ink and paper to print new bank notes. Several banks
have stopped servicing cash withdrawals. Others are
limiting withdrawals to US$ 35 or stacks of Z$ 50 notes
(worth about 2 U.S. cents each/bring a shopping cart).
Even parastatal Air Zimbabwe is toying with no longer
accepting newly-worthless Zimdollars.

3. (SBU) Other than the export and financial sectors,
which are still above-water, the business community is in
deep despair. Even the GOZ's relaxing of most price
controls last week failed to inspire optimism.
Businessmen cite the GOZ's corruption, botched
normalization of fuel prices and inability to rescue an
imploding infrastructure. (The
Transportation/Communications PermSec told us most of the
National Railway of Zimbabwe's locomotives are sidelined
due to lack of spare parts.) Business reps now consider
the GOZ incapable of guiding economic reform and are
gradually joining the MDC's calls for a "final push" that
would end Robert Mugabe's 23-year rule.

Comment
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4. (SBU) This seems to represent a sea change in business
attitudes over the past months. The latest 65 percent
devaluation of the Zimdollar was a painful blow for many,
who have now abandoned hope that the GOZ can liberalize
economics but ignore politics. While they would not
welcome additional 2-3 day stayaways, businessmen seem
willing to swallow even an indefinite stayaway if it ends
this ordeal.

Sullivan

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