VZCZCXRO1864
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSB #1119/01 3481030
ZNR UUUUU ZZH
R 141030Z DEC 07
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC 2294
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA 1797
RUEHAR/AMEMBASSY ACCRA 1690
RUEHDS/AMEMBASSY ADDIS ABABA 1820
RUEHRL/AMEMBASSY BERLIN 0426
RUEHBY/AMEMBASSY CANBERRA 1097
RUEHDK/AMEMBASSY DAKAR 1454
RUEHKM/AMEMBASSY KAMPALA 1876
RUEHNR/AMEMBASSY NAIROBI 4304
RHEHAAA/NSC WASHDC
RHMFISS/EUCOM POLAD VAIHINGEN GE
RUEHGV/USMISSION GENEVA 0947
RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK
RHEFDIA/DIA WASHDC

UNCLAS SECTION 01 OF 04 HARARE 001119 
 
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 14, 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: ZW$1,700,000:US$1;  Official: ZW#$30,000:US$1 
Sugar on the parallel market is steady at Z$2.5/2kg vs. controlled 
price of Z$247,000/2kg 
Cooking oil on the parallel market rose to Z$6million/750ml vs. 
controlled price of Z$440,000/750ml 
Cash shortage depressed fuel price to Z$3million/liter vs. 
Z$60,000/liter at controlled price 
 
----------------------------- 
On the Political/Social Front 
----------------------------- 
¶3.  ZANU-PF Congress Endorses Mugabe - As expected, the ZANU-PF 
Congress endorsed President Robert Mugabe as its candidate for 
president in next year's elections.  Mugabe, in a speech to the 
Congress, said elections would take place in March.  In a broadside 
against western interference in Zimbabwe, he indicated, as he has in 
the past, that SADC election monitors would be welcome, but not 
monitors from the West. 
 
¶4.  SADC Talks Stalled - SADC talks between ZANU-PF and the MDC 
stalled last week over MDC demands primarily for implementation of a 
new constitution before elections, postponement of the date for 
elections, and electoral reform.  See Harare 1107.  South African 
president Thabo Mbeki has reportedly recalled negotiators to South 
Africa this weekend in an attempt to break the impasse.  Both 
factions of the MDC have indicated they will at last form a 
coalition to contest the elections, and will do so with or without 
an agreement with ZANU-PF. 
 
¶5.  EU-AU Summit Fallout - The Herald trumpeted Mugabe's attendance 
at the Summit as a victory for Zimbabwe over the UK.  The lack of 
African criticism of Zimbabwe at the Summit led Mugabe and the 
ZANU-PF Congress to praise African unity.  Meanwhile, responding to 
German chancellor Angela Merkel's criticism of Zimbabwe that it 
"damages the image of the new Africa, Information Minister 
Sikhanyiso Ndlovu publicly called Merkel a "racist," a "fascist," 
and a "remnant of Nazism."  The Herald printed a cartoon (reproduced 
below) of a Swastika with Summit critics of Zimbabwe, Germany, the 
Netherlands, Denmark, and Sweden named on the Swastika's points. 
 
¶6.  Secretary Honors Zim Human Rights Defenders - Secretary Rice 
conferred the inaugural Freedom Defenders Award on Zimbabwe Lawyers 
for Human Rights (ZLHR) in Washington on December 10, International 
Human Rights Day.  The award was instituted to honor foreign 
activists and/or NGOs that demonstrate outstanding commitment to 
1wQT93Rice who remarked that in Zimbabwe "civil society remains under 
siege amid political and economic crises caused by the irresponsible 
policies of the regime."  The Secretary honored ZLHR for its 
tireless and fearless efforts "to advance democratic principles, and 
in particular, it has taken on the dangerous task of providing legal 
representation to persecuted human rights and democracy defenders." 
 The honor was well deserved.  Attacks, arrests and abductions 
continue unabated, with more than 500 instances of human rights 
abuses reported each month.  (See related text and fact sheet.)  In 
the last year, the ZLHR caseload has increased by more than 20 
percent. 
 
¶7.  Coincidence? - ZLHR held its annual Human Rights Lawyer of the 
Year award banquet on December 7 at the Holiday Inn, Harare, 
conferring the honor posthumously on Lawrence Chibwe, deputy 
 
HARARE 00001119  002 OF 004 
 
 
secretary of the Law Society of Zimbabwe, after his sudden death in 
 
SIPDIS 
an automobile accident last month.  The ceremonies were difficult to 
bear not only because of the sadness of having lost a charismatic 
and dedicated human rights defender, but also because a six-person 
band at a very thinly-visited cocktail reception for Zimpapers, 
publisher of the government mouthpiece The Herald, blasted music 
from the next room throughout the proceedings. 
 
¶8.  Civic Activists Keep Up Street Pressure - In the past week, 
activists from Women of Zimbabwe Arise (WOZA) and National 
Constitutional Assembly (NCA) staged separate street demonstrations 
in Harare that resulted in beatings by police and arrests.  On 
December 7, police in Harare used batons to break up an estimated 
crowd of 300 NCA activists who were demanding a new constitution and 
protesting economic conditions.  On December 11, more than 75 
protesting WOZA members encountered similar police brutality in 
Harare. See Harare 1106 for details. 
 
¶9.  SADC Tribunal Rules In Favor Of White Zimbabwean Farmer - The 
SADC Tribunal in Windhoek ruled on December 13 in favor of Michael 
Campbell who was contesting the compulsory acquisition of his farm 
by the GOZ.  The Tribunal issued a protection order for his farm and 
ordered that the GOZ must not evict or allow the eviction of or 
interference with his farm, its owners, employees or property.  The 
interdict will hold until the Tribunal decides on the main case 
dealing with the legality of the contested expropriation.  The 
Tribunal noted in its ruling that according to relevant SADC 
Protocols on human rights, democracy, and the rule of law, SADC 
members must protect the rights of their citizens and ensure the 
rule of law.  Campbell appealed to the Tribunal after the Supreme 
Court of Zimbabwe failed to act on his case. 
 
¶10.  New Zealand Extends Zim Travel Sanctions To Adult Children - 
New Zealand announced on December 10 the extension of its travel ban 
on associates of the Mugabe regime to their adult children. 
 
¶11.  Young Poets Express Anger - A group of mostly young poets, 
calling itself Zimbabwe Poets for Human Rights, captivated an 
audience of 75 during a 2-hour poetry slam/beat session at the 
Embassy's Public Affairs Section.  Their work expressed the anger, 
despair, outrage and hope felt by many young Zimbabweans, and they 
didn't hesitate to blame Mugabe and the GOZ.  They asked why 
"students armed with nothing but their brains" are being beaten by 
cops.  Why they are to "Look East when everybody else is looking 
West," and why the rhetoric of liberation doesn't apply to young 
black Zimbabweans.  Members admitted to having been unable or afraid 
to perform in public before.  The reaction of the audience showed 
they share the same outrage and frustration. 
 
--------------------------------------------- ---- 
On the Economic and Business front 
--------------------------------------------- ---- 
¶12.  Reserve Bank Raises Reserve Requirements, Accommodation Rates 
-The RBZ raised reserve requirements for demand deposits from 45% to 
50% and for time deposits from 35% to 45% on December 7, reducing 
the amount of funds available to the banks for lending and thus bank 
revenue.  It also increased the overnight accommodation rate to 975% 
for secured borrowing (that's over one million percent annual 
compounded interest), further cutting into banks' profitability. 
Banks are already finding that the RBZ has robbed them of their 
corporate borrowers by offering new concessionary lending facilities 
(25% annual interest) across sectors.  In addition, the banks are 
facing the erosion of their deposit base as Zimbabwe's cash crisis 
deepens.  Lines for cash withdrawals snake around the city's blocks 
and cash continues to command a premium in the parallel market. 
While the RBZ's move might appear to indicate a tightening of 
monetary policy, with the other hand the Reserve Bank is flooding 
the market with its quasi-fiscal concessionary lending. 
¶13.  RBZ Governor Gono Says "Practical Solution [To Cash Crisis] On 
 
HARARE 00001119  003 OF 004 
 
 
The Way" - Gono indicated again this week that he will soon take 
measures to alleviate the cash shortage.  He is widely expected to 
lop off more zeros on new bearer cheques some time between the end 
of this week's ZANU-PF Congress and Christmas. 
¶14.  Inflation Reaches Six Digits, According To Private Account -... 
Private sector estimates of the rate of inflation in November vary 
from 80,000%, according to one leading supermarket chain, and an 
average of 126,000% across income categories according to another 
well regarded source. 
¶15.  Zimbabwe's Myriad Exchange Rates - As local currency 
availability dries up, the Zimbabwe dollar appreciated on the street 
this week to about Z$1.7 million:US$, but foreign exchange traders 
are shifting more activity into the parallel market for bank 
transfers.  The official is Z$30,000:US$, the parallel market cash 
rate is about Z$1.7 million:US$, the parallel market bank transfer 
rate ("RTGS" rate) is about Z$5.2 million:US$, the benchmark Old 
Mutual Implied Rate is about Z$4.3 million:US$, the benchmark fuel 
price is about Z$3 million:US$, and the Embassy's own current rate 
is Z$1.5 million:US$. 
¶16.  Meikles-Kingdom Merger Approved - Following uncertainties 
surrounding the merger of Meikles Africa Limited and Kingdom 
Financial Holdings Limited arising from the high valuation of 
Kingdom, Meikles shareholders approved the merger by a margin of 54 
to 46 on December 11.  Apparently the desire to satisfy looming 
indigenization requirements outweighed arguments for revaluation of 
Kingdom.  The shareholders also approved a name change to Kingdom 
Meikles Africa.  Based on combined pro-forma March 31, 2007 revenues 
of Z$369.9 billion (US$711.35 million at the parallel exchange rate 
for bank transfers), the new group will have an estimated market 
capitalization of US$250-300 million which works out to 10 percent 
of the Zimbabwe Stock Exchange market capitalization.  The merged 
companies plan to raise capital on the London Stock Exchange to 
finance investments in hotels, among other assets, in Zimbabwe and 
in the region, according to a member of the Board. 
¶17.  LonZim Raises 32.3 Million Pounds on AIM - Investor interest in 
cheap local assets, at least in foreign currency terms, appears on 
the rise.  In this connection, Lonrho set up an investment Fund, 
LonZim, in October 2007 to meet the investment demand.  According to 
Lonrho's chairman, David Lenigas, most of the initial investments 
will be in property which he called "as cheap as chips".  LonZim was 
listed on the Alternative Investment Market in London with a mandate 
to invest and operate in Zimbabwe and the Beira Corridor.  LonZim 
raised 32.3 million pound sterling from investors by selling 46.4 
million shares.  According to Bloomberg, Lonrho, which owns 39.4 
percent of LonZim, said it planned to seek a separate listing of 
LonZim shares "on a major stock exchange". 
 
¶18.  Update on "Mother Of All Agricultural Seasons" - Areas in the 
central and eastern parts of the country have accumulated more than 
200 mm of rainfall so far this agricultural season.  Much of the 
Midlands, Manicaland, Masvingo and some parts of Matebeleland South 
provinces have received more than 125% of their long-term mean 
rainfall.  However Matebeleland North (Victoria Falls), some parts 
of Mashonaland West (Kariba), and South of Midlands (Zvishavane) 
have received less than 75% of their long-term average.  Now if only 
fertilizer were available... 
 
¶19.  No Relief For Business From Price Commission - The Herald 
reported on December 8 that a meeting of the Confederation of 
Zimbabwe Industries (CZI) with the National Incomes and Price 
Commission (NIPC) ended in a stalemate after chairman Godwills 
Masimirembwa rejected proposals by business to liberalize the 
exchange rate and allow some level of free-play on pricing. 
Dismissing business presentations as "cheap", he said industry must 
produce "without excuses because cheap funds had been released for 
such purposes." 
¶20.  Cover price of The Herald Doubles - The National Income and 
Price Commission approved a 100% increase in the price of The Herald 
to Z$600,000 last week. 
 
HARARE 00001119  004 OF 004 
 
 
 
MCGEE