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Cablegate: Zim Notes 8-15-2008

VZCZCXRO3004
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSB #0699/01 2311351
ZNR UUUUU ZZH
R 181351Z AUG 08
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC 3305
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA 2041
RUEHAR/AMEMBASSY ACCRA 2214
RUEHDS/AMEMBASSY ADDIS ABABA 2333
RUEHRL/AMEMBASSY BERLIN 0865
RUEHBY/AMEMBASSY CANBERRA 1610
RUEHDK/AMEMBASSY DAKAR 1968
RUEHKM/AMEMBASSY KAMPALA 2389
RUEHNR/AMEMBASSY NAIROBI 4821
RHEHAAA/NSC WASHDC
RHMFISS/EUCOM POLAD VAIHINGEN GE
RUEHGV/USMISSION GENEVA 1482
RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK
RHEFDIA/DIA WASHDC
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 03 HARARE 000699

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 8-15-2008

-------
SUMMARY
-------

1. Topics of the Week:

- Talks Break Off...

- Tsvangirai's Travel to SADC Summit Interrupted...

- French and Swedish Charges Threatened...

- Botswana Deports Zimbabwean Journalist...

- Soaring Inflation...

- Tobacco Deliveries Lagging...

- "Zimbabwe - Beyond Tomorrow"...

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

Parallel rate for cash shot to Z$950billion ($95 revalued):US$1

Bank transfer soared to Z$2 trillion ($200 revalued):US$1
against inter-bank average of Z$16 (revalued):US$1;

Bread on the parallel market trebled to Z$800 billion ($80
revalued);

Sugar doubled to Z$750 billion (Z$75 revalued)/2kg;

Cooking oil rose to Z$350 billion (Z$35 revalued)/750m;l

Petrol and diesel quadrupled to Z$2.2 trillion (Z$220
revalued)/liter

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

3. Talks Break Off... Negotiations between ZANU-PF and the MDC
broke off this week over failure to reach an agreement on the
allocation of executive power. MDC president Morgan Tsvangirai is
insisting he be head of government with full executive power as
prime minister, while Zimbabwean president Robert Mugabe wants to
retain power over the security forces and foreign ministry.
Tsvangirai and Mugabe are both expected to present their cases to
the SADC Summit in South Africa this weekend. With negotiators from
all sides present, it is likely negotiations will resume in South
Africa. See Harare 678 and 676.

4. Tsvangirai's Travel to SADC Summit Interrupted... Zimbabwean
officials seized passports and travel documents of Tsvangirai, MDC
secretary-general Tendai Biti, and MP-elect and MDC shadow foreign
minister Eliphas Mukonoweshuro at the Harare international airport
on August 14 as the trio prepared to travel to South Africa for the
SADC Summit. The documents were returned several hours later and
the three subsequently traveled. With Tsvangirai expected in South
Africa, it does not appear that government actions were directed by
high-level officials. Nevertheless, the incident understandably
ruffled MDC feathers. Biti was quoted by the Zimbabwe Independent
as stating that the talks with ZANU-PF were a "farce and a sham."
George Sibotshiwe told The Independent that the incident reflected
ZANU-PF's lack of sincerity. See Harare 684.


HARARE 00000699 002 OF 003


5. French and Swedish Charges Threatened... Apparent ZANU-PF
officials threatened the French and Swedish Charges d'Affaires who
were at the Rainbow Towers Hotel in Harare Tuesday evening to
ascertain the status of the negotiations. The officials told the
Charges they could not be present in the hotel, site of the
negotiations, since they were not journalists, and demanded they
leave. To avoid escalating the situation, the diplomats left. The
officials followed them to their cars, swore at them, accused them
of imperialistic meddling, and threatened to beat them. To
emphasize their point, they kicked the cars before the two Charges
drove away. The French and Swedish embassies plan to send a
diplomatic note protesting the incident; typically, the GOZ does not
respond to such protests.

6. Botswana Deports Zimbabwean Journalist... Botswana last week
deported Caesar Zvayi, a Zimbabwean journalist who had been employed
for several months as a media studies lecturer at the University of
Botswana. Before beginning work in Botswana, Zvayi had been the
Political and Features editor for The Herald, the Zimbabwean
government mouthpiece, where he had been an unabashed Mugabe
supporter and critic of the U.S. His deportation was apparently the
result of protests from journalists within Botswana who were
critical of his unbalanced journalistic stance at The Herald.
President Mugabe's Spokesperson, George Charamba, condemned the
deportation. He described Zvayi as a "fearless writer" and said he
was free to return home and "do what he does best."

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

7. Soaring Inflation... With inflation estimated at over 40
million percent and ever-rising transactions demand for cash, the
Reserve Bank of Zimbabwe (RBZ) raised the daily cash withdrawal
limit from Z$200 (US$5.70) to Z$300 (US$8.57) on August 8. Today
the new limit is worth only US$3.16 thanks to the unprecedented rate
of depreciation of the Zimbabwe dollar on the parallel cash market
from Z$35 to Z$95:US$1 in one week. Demand for foreign exchange
continues to far outstrip supply, fueled, in particular this week,
by the RBZ itself. Our bank contacts told us that RBZ runners had
been out in full force buying up forex in Harare's informal cash
market.

8. Tobacco Deliveries Lagging... Growers have delivered only 36.3
million kg of tobacco to Harare's auction floors, down from 53.7
million kg at the same time last year. It appears the largest
growers are holding back some crop in expectation that the deeply
undervalued inter-bank exchange rate at which they are paid will
improve if there is a political breakthrough. Even with late
deliveries, this year's crop of the country's top agricultural forex
earner could be considerably lower than the official estimate.
While the GOZ continues to put the crop at 75 million kg, merchants
have told us that production could be as low as 55 million kg.
Production peaked at over 200 million kg before fast-track land
reform.

9. "Zimbabwe - Beyond Tomorrow"... The American Business
Association of Zimbabwe's (ABAZ) annual BFIF-supported "Just
Business" economic forum will take place on August 21.
International speakers are flying in to address economic reform and
recovery in Zimbabwe. Among the presenters are Dr John Panzer of
the World Bank, Dr Mbui Wagacha of the African Development Bank and
Prof Caio Megale of Sao Paulo, Brazil. This year, representatives
of USAID's Southern African Global Competitiveness Hub in Gaborone,
Botswana will discuss the potential benefits of AGOA eligibility to
Zimbabwe's exporters. The Trade Hub reps will also hold breakaway
workshops specifically on textile and apparel exports to the U.S.
under AGOA, and on the export of processed and semi-processed food.

HARARE 00000699 003 OF 003


MCGEE

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