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Cablegate: Zim Notes 08-14-2009

VZCZCXRO3985
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSB #0660/01 2290858
ZNR UUUUU ZZH
R 170858Z AUG 09
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC 4812
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA 2369
RUEHAR/AMEMBASSY ACCRA 2978
RUEHDS/AMEMBASSY ADDIS ABABA 3094
RUEHRL/AMEMBASSY BERLIN 1523
RUEHBY/AMEMBASSY CANBERRA 2357
RUEHDK/AMEMBASSY DAKAR 2724
RUEHKM/AMEMBASSY KAMPALA 3142
RUEHNR/AMEMBASSY NAIROBI 5585
RHEHAAA/NSC WASHDC
RHMFISS/EUCOM POLAD VAIHINGEN GE
RUEHGV/USMISSION GENEVA 2272
RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK
RHEFDIA/DIA WASHDC

UNCLAS SECTION 01 OF 03 HARARE 000660

AF/S FOR B. WALCH
ADDIS ABABA FOR USAU
ADDIS ABABA FOR ACSS
NSC FOR SENIOR AFRICA DIRECTOR
STATE PASS TO USAID FOR L.DOBBINS AND J. HARMON
COMMERCE FOR ROBERT TELCHIN

SIPDIS

E.O.12958: N/A
TAGS: PGOV PREL ASEC PHUM ECON ZI

SUBJECT: ZIM NOTES 08-14-2009

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

Topics of the week:

- MDC and Outstanding Issues...
- New Doctor's Strike a Blow to Healthcare Efforts...
- Tsvangirai Saluted by Defense Chiefs?...
- MDC-M Pressures Speaker to Ban MPs...
- Secretary Clinton Blames Leadership for Zim Collapse...
- ILO Investigation Begins...
- UMass Revokes Mugabe's Honorary Degree...
- Investors Assured of Security of Tenure in - Zimbabwe's Mining
Sector...
- Exports Decline...
- Dollarization Slows Bank Lending...
- Grain Shortages Predicted By September 2009...
- Competition Forces the Grain Marketing Board (GMB) to Improve
Service...

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

2. MDC and Outstanding Issues... A meeting on August 13 between
principals President Robert Mugabe, Prime Minister Morgan
Tsvangirai, and Deputy Prime Minister Arthur Mutambara failed to
make progress on outstanding Global Political Agreement issues,
principally the appointments of Reserve Bank of Zimbabwe governor
Gideon Gono and Attorney General Johannes Tomana, and the failure to
swear in Roy Bennett as Deputy Minister of Agriculture. Tsvangirai
will raise these issues at a ministerial retreat the weekend of
August 22. He then plans to urge South African president Jacob
Zuma to exert pressure on Mugabe when Zuma visits Zimbabwe for an
agricultural show on August 27. Tsvangirai will also attempt to
visit a number of SADC capitals in anticipation of the SADC Summit
of Heads of State and Government in Kinshasa from September 2 to
September 8. Tsvangirai and MDC-T are increasingly concerned about
Tomana, who they blame for the selective prosecution of MDC-T MPs,
and they may be willing to strike a deal with Mugabe whereby Gono
would remain in office and Tomana would go.

3. New Doctor's Strike a Blow to Healthcare Efforts... Doctors at
major hospitals in Harare and Bulawayo began boycotting work on
August 12 to press the cash-strapped government for pay increases.
The Zimbabwe Hospital Doctors Association that represents all state
doctors wants them paid a salary of US$1,000 per month plus a US$500
allowance compared to the US$390 (US$220 of which comes from a
British relief agency) that they earn now. The association has
threatened to extend the strike to all state hospitals across the
country if their demands are not met.

4. Tsvangirai Saluted by Defense Chiefs?... Air Force commander
Perence Shiri and National Army commander Phillip Sibanda appeared
on Tuesday to break ranks with fellow top commanders by saluting
Tsvangirai during the Defense Forces Day ceremony. This potential
thawing of the frosty relationship between the military and the MDC
may come in response to last week's first meeting of the National
Security Council, of which Tsvangirai is a member. However, some
reports have suggested that the salute was actually directed at
retired General Solomon Mujuru who was seated near Tsvangirai, while
Qretired General Solomon Mujuru who was seated near Tsvangirai, while
other reports suggest it was merely part of a handshake.

5. MDC-M Pressures Speaker to Ban MPs... Welshman Ncube, the
Secretary General of the MDC-M, issued an ultimatum calling on
Parliamentary Speaker Lovemore Moyo to ban the three MPs that the
MDC-M leaderhip has expelled from the party for indiscipline.
Ncube told a news conference in Harare on August 13 that if the
Speaker fails to declare the House of Assembly seats vacant, the

HARARE 00000660 002 OF 003


party will refer the matter to judicial authorities on corruption
grounds. The three MPs have been highly critical of party leaders
including Deputy Prime Minister Arthur Mutambara, who they accuse of
siding with ZANU-PF in the inclusive government.

6. Secretary Clinton Blames Leadership for Zim Collapse... During
a visit to South Africa where Secretary of State Hillary Clinton
pressed President Jacob Zuma on assuming a more forward role in
promoting African democracy, Clinton blamed the huge number of
Zimbabwean migrants in South Africa on leadership failures in
Harare. Meanwhile, President Mugabe used this week's burial service
for the late VP Msika as an opportunity to continue blaming the West
for Zimbabwe's woes.

7. ILO Investigation Begins... A delegation appointed by the
International Labor Organization (ILO) arrived this week to begin an
official investigation into a 2006 incident in which labor leaders
were brutally assaulted by police after staging protests against the
government. Zimbabwe Congress of Trade Unions (ZCTU) Secretary
General Wellington Chibebe and others suffered permanent injuries
from the beatings. The findings will be presented in Geneva later
this year.

8. UMass Revokes Mugabe's Honorary Degree... In a move without
precedent in the University of Massachusetts' 145 year history, the
school is revoking an honorary degree bestowed upon President Mugabe
in 1986. Mugabe was awarded the honorary Doctorate of Laws degree
for his "exemplary devotion to social justice." The revocation
follows similar moves taken by Michigan State and the UK's Edinburgh
University last year.

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

9. Investors Assured of Security of Tenure in Zimbabwe's Mining
Sector... At the fifth annual mining conference held in
Johannesburg last week, investors quizzed the Minister of Mines and
Mining Development over security of tenure and indigenization.
According to an economist at the Zimbabwe Chamber of Mines, the
Minister told the conference that the Mining Bill that proposed 51
percent shareholding was being revised and would be made more
investor friendly. The Chamber of Mines proposes lower local equity
thresholds commensurate with Zimbabweans' ability to finance the
purchase.

10. Exports Decline... Official data from the Reserve Bank of
Zimbabwe shows that the country's total exports declined by 38
percent from US$752 million in the first six months of 2008 to
US$476 million during the corresponding period of 2009. Much of the
fall was caused by a combination of a poor local operating
environment and the global financial crisis that reduced demand for
Zimbabwe's products abroad. The mining sector accounted for 44
percent of total exports and tobacco accounted for 26 percent while
manufactured exports accounted for only 14 percent.

11. Dollarization Slows Bank Lending... Reserve Bank data also
Q11. Dollarization Slows Bank Lending... Reserve Bank data also
show that Zimbabwe's banks have significantly scaled back their
lending following the demise of the Zim dollar. The banks' average
loan-to-deposit ratio in the second quarter of the year was just 36
percent, down from 62 percent during the same period in 2008. The
regional average is 79 percent. Local bankers say one reason for
the slower pace of lending is that the interbank market disappeared
along with the Zim dollar due to the local scarcity of widely
accepted USD-denominated securities to serve as collateral. Another
reason, according to the bankers, is that deposits in the banking
system now turn over more rapidly than before. These two factors
have made lending an even riskier proposition for banks.

12. Grain Shortages Predicted By September 2009... The National

HARARE 00000660 003 OF 003


Early Warning Unit (NEWU) said that the majority of the households
in its June survey are currently able to subsist from their own
grain production, though these stocks are only expected to last
until September/October 2009. The other sources of consumed grain
identified in the survey were derived from casual labor, with less
than one percent of the sampled areas indicating food aid and
remittances as major sources of grain.

13. Competition Forces the Grain Marketing Board (GMB) to Improve
Service... Following the liberalization of grain marketing, the
government owned GMB improved service delivery by paying farmers
early on a "first come-first served" basis. As of the end of July,
the parastatal had paid out US$3 million to farmers for grain
deliveries. Since June 2009, the GMB has been dispatching inputs to
its depots around the country to enable farmers to prepare for the
coming cropping season early, although the take up by farmers is
reportedly disappointing.

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

14. "Gentle firmness in the face of anger and intellectual approach
to matters which inflame the emotions of others are hallmarks of
quiet integrity." -- University of Massachusetts President David
Knapp's description of President Mugabe in 1986 after presenting him
with an honorary degree.


DHANANI

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