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RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK
RHEFDIA/DIA WASHDC

UNCLAS SECTION 01 OF 04 HARARE 001093 
 
SIPDIS 
 
AF/S FOR S.HILL 
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 December 7, 2007 
 
¶1.  The Embassy Harare Political/Economic Section began producing 
Zim Notes in July, 2007 to present a perspective on current events 
in Zimbabwe.  Suggestions are always welcome. If you would like to 
receive Zim Notes by email, as well, please contact Frances Chisholm 
at chisholmfm@state.gov. Distribution is restricted to U.S. 
government employees. 
 
¶2.  Parallel exchange rate: ZW$2,100,000:US$1 
Official exchange rate: ZW$30,000:US$1 
Sugar on the parallel market jumped to Z$2.5 million/2kg vs. 
controlled price of Z$247,000/2kg 
Cooking oil on the parallel market - steady at Z$5 million for 750 
ml vs. controlled prince of Z$440,000/750ml 
Fuel - scarce at the nearly doubled price of Z$4 million/liter vs. 
Z$60,000/liter at controlled price and unavailable. 
 
----------------------------- 
On the Political/Social Front 
----------------------------- 
¶3. MDC Sets Conditions for SADC Agreement - MDC negotiators Tendai 
Biti and Welshman Ncube in a diplomatic briefing on Tuesday said 
that essential to an agreement were implementation before elections 
of the already agreed-upon draft constitution and an election date 
that would permit time for organizing and campaigning (Harare 1080). 
 On Wednesday, the MDC (Tsvangirai faction) issued a press release 
reporting that its National Executive Committee had met that day and 
resolved that neither an agreement nor free and fair elections would 
be possible unless the following conditions were met: 
--Introduction of a new constitution before elections; 
--Reconstitution of the Zimbabwe Electoral Commission (ZEC) which 
would be responsible for a new voters' roll and delimitation of 
constituencies; 
--Restoration of daily newspapers and freedom for journalists to 
operate; 
--Implementation of agreed-upon reforms to POSA, AIPPA, the 
Broadcasting Act, and electoral laws; 
--Unimpeded international monitoring of elections; 
--Voting by the Diaspora. 
MDC spokesperson Nelson Chamisa told the press the National 
Executive Committee would meet again on December 16 and decide 
whether to ratify any agreement reached between the MDC and ZANU-PF 
and whether to contest next year's elections. 
 
¶4. *A Farewell March? - ZANU-PF's so-called "Million Men and Women 
March" on November 28 to show support for President Robert Mugabe's 
candidacy in 2008 fell well short of expectations.  Press reports on 
the crowd size varied widely - anywhere from 10,000 to 200,000 - but 
our best guess is that around 40,000 participated, although many 
unwillingly.  To ensure a respectable showing, ZANU-PF mobilized 
nearly every available form of state transportation to bring in 
"supporters" from out of town.  There is no doubt it was the largest 
political rally in years, but only because the government has not 
afford the oppposition equal space, according to many political 
observers. 
 
In true megalomaniacal fashion, Mugabe addressed the crowd wearing a 
shirt bearing his own image.  True to his tired script, he again 
railed on Britain, blamed all the country's woes on a Western 
conspiracy, and called on Zimbabweans to identify and defeat their 
"common enemy". 
 
¶5. State of the Nation - In his 20th state of the nation address in 
Parliament on December 4 President Mugabe toned down the usual 
vitriol - at least towards the opposition - and implored Zimbabweans 
to persevere in the face of continuing challenges.  Mugabe commended 
the MDC for participating in a "new era of constructive engagement 
across the political divide."  He added that campaigning should be 
permitted in an "atmosphere of peace."   At one point Mugabe even 
admitted that some problems (e.g., predatory pricing by greedy 
 
HARARE 00001093  002 OF 004 
 
 
individuals) were homegrown.  Once again Mugabe pinned hopes of an 
economic turn around on the "Look East" policy.  Unable to resist 
taking pot shots at his detractors, he blamed Britain for a 
"sinister campaign" to isolate the country and said only "friendly 
and objective" members of the international community would be 
invited to observe elections. 
 
¶6. Practice Makes Perfect - Teachers Threaten To Strike Again - In 
what has become a quarterly exercise in futility, teachers are once 
again threatening to strike over low wages, continually eroded by 
inflation.  Raymond Majongwe, the outspoken leader of the 
Progressive Teacher's Union of Zimbabwe (PTUZ), this week demanded 
an increase in teacher's pay to ZW$318 million (about US$138) or 
teachers would not return to schools when the new term begins in 
January.  Teachers last received a raise on October 3 when their 
minimum monthly wage was increased to ZW$14 million then about US$30 
on the parallel market.  Due to skyrocketing inflation, that USD 
salary equivalent quickly diminished to about US$11 by November 23 
and about US$6 by December 5.  Majongwe told us government needs to 
get serious about retaining teachers as more workers head everyday 
for greener pastures in South Africa. See Zim Notes November 23. 
 
¶7. ZESN Dismisses Mop-Up Mobile Voter Registration Exercise As 
Ineffective - The Zimbabwe Election Support Network (ZESN) released 
a report on the "mop-up" mobile voter registration exercise that ran 
from October 26 through November 15.   It concluded that the 
registration process did not address some of the fundamental issues 
raised by the opposition and civil society after the previous 
exercise in June, which ZESN regarded as ineffective.  Among other 
observations, ZESN reported that the exercise was inadequately 
publicized, affected by power cuts, and lacked adequate simple 
resources like registration forms and film.   ZESN has called on the 
government to carry out a more comprehensive and transparent voter 
registration process.  The full ZESN report is available at: 
http://www.zesn.org.zw/newsflash_view.cfm?nfi d=8 
 
¶8. Morgan Tsvangirai Begins Nationwide Rallies - MDC President, 
Morgan Tsvangirai addressed a rally of about 10,000 people in Glen 
Norah, a Harare high density suburb, on Sunday December 2.  He 
talked about the general state of the economy, the SADC-initiated 
dialogue, and the forthcoming elections.  MDC Information Secretary, 
Nelson Chamisa told embassy officials that this was the first of 
many more rallies nationwide.  The next rally will take place in 
Nkayi, Matabeleland North, next week. 
 
--------------------------------------------- ---- 
On the Economic and Business front 
--------------------------------------------- ---- 
¶9. Cash Shortage At Crisis Level - The cash shortage that hit the 
country a few weeks ago has reached crisis level as commercial banks 
struggle to mobilize deposits. The Reserve Bank of Zimbabwe (RBZ) is 
not making the situation any easier as it supplies fewer and fewer 
bank notes to the market.  A senior executive at a major commercial 
bank told us the RBZ supplied the bank with only Z$15 billion on 
December 5, 2007 - not enough cash for even a single branch under 
normal circumstances.  The banker told us some smaller banks were 
getting no cash at all from the RBZ.  Cash-rich clients and 
supermarkets are back to selling cash to ready buyers at a 25% to 
50% commission, mitigating some of the losses they are making in 
grocery sales at monitored and controlled prices. 
 
¶10. Release Of New Bearer Cheques Still "Imminent" - RBZ Governor 
Gono called bank CEO's together on Thursday and told them that the 
rollout of new bearer cheques (not a new currency, we now 
understand) was imminent, as reported to us by one bank executive 
who attended the meeting. 
 
¶11. Update On "Mother of All Agricultural Seasons" - The FAO-led 
Agriculture Coordination Working Group heard at its November 29 
 
HARARE 00001093  003 OF 004 
 
 
meeting that Zimbabwe's target maize seed requirement is 50,000 MT 
against 35,100 MT local seed supply, of which 28,457 MT has been 
distributed by seed houses to date.  Groundnut seed is in short 
supply; the local supply of soybean stands at 8,400 MT against a 
requirement of 12,000 MT; 1,442 MT of sorghum seed is available 
against a target quantity of 4,000 MT.  The basal fertilizer 
requirement is 720,000 MT - available stocks stand at 157,698 MT 
(excluding toll manufactured fertilizers, which mainly cover crops 
grown under contract and by corporates).  World Food Program and 
C-SAFE provided food to 4,083,383 people in November.   And, on a 
positive note, most of the country is in the "normal" or 
"above-normal" rainfall range as the summer agricultural season 
commences. 
 
¶12. Passport Fees Hiked - The Herald reported this week that the 
Registrar General's Office increased passport fees as of November 
26, to Z$5 million (US$1.90 at the parallel rate) for a regular 
application and Z$20 million (US$7.69) for issuance within 24 hours, 
up from Z$150,000 (US$0.19) and Z$1 million (US$0.38) respectively. 
An Embassy FSN who applied for a passport last month, however, told 
us he had to pay US$220 for the 24-hour service, a figure also cited 
in a local electronic financial newsletter this week. 
 
¶13. Be Independent, Electricity Regulators Told - At the fourth 
annual conference of the Regional Electricity Regulators association 
(RERA) held in Victoria Falls on November 27 and 28, Dr Frank 
Sebbowa, CEO Electricity Regulatory Authority of Uganda  chronicled 
how regulators in East Africa had succumbed to political 
interference and warned RERA members not to fall into the same trap. 
 Vinod Shrivastava, President of US-based Core International, said 
regulators should focus on a few key governance principles, namely 
commitment to high ethical standards, adoption of clear and simple 
rules for the sector, employment of skilled personnel and 
strengthening of external checks by consumers, competition 
authorities and the courts.  Roger Williams, Technical Director  of 
Zimbabwe's chrome giant ZIMASCO, reported that the company lost 
US$17 million directly from power outages and had a potential 
revenue loss of an additional US$33 million between January and 
October 2007 due to unreliable power supplies.  According to the 
Southern African Power Pool (SAPP), the region requires a total 
investment of around US$43 billion to ensure uninterrupted power 
supply in the medium to long term.  In the meantime, delegates 
agreed on the need to implement both load shedding and demand side 
management techniques. 
 
¶14. Johnson & Johnson Withdraws From Zimbabwe - Citing 
"insurmountable issues"  for most businesses in sourcing foreign 
currency, Johnson & Johnson country manager Christopher Muyeye 
informed business partners on November 28 that the company was 
withdrawing from Zimbabwe effective November 30, 2007.  Johnson & 
Johnson had already shut down its manufacturing arm and was only 
importing and distributing Johnson & Johnson products, which proved 
to be unviable without access to foreign exchange. 
 
¶15. Zimbabwe Slips Into Trade Deficit With U.S. For First Time In 
Over Decade - Zimbabwe's bilateral trade balance with the U.S. 
slipped into a cumulative annual deficit for the first time since 
1995 with the release of the Jan-Sept figures.  Total volume of 
trade (imports plus exports) rose slightly in the nine month period 
to US$112.6 million, up from US$105.1 million in the same period in 
2006, and rising for the fifth year in a row. 
 
¶16. Background Paper On The Requirements For A Future Economic 
Program - In circulation among donors in Harare is a thoughtful 
background economic paper, Progressive Zimbabwe - Sustainable Growth 
& Transformation, prepared by the Zimbabwe Institute in South Africa 
and available at:  http://www.zimbabweinstitute.org 
 
¶17. See Harare 1091 for Readout Of World Bank Nov 22-30 Mission To 
 
HARARE 00001093  004 OF 004 
 
 
Zimbabwe. 
 
¶18. Quotes Of The Week From The Financial Gazette of December 6-12, 
2007 on the Million Men and Women March: 
"I don't understand why people would march to celebrate failure." 
(Political Analyst Ibbo Mandaza) 
*And even less charitable, from former Information Minister Jonathan 
Moyo: "It was a farewell march." 
 
MCGEE