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RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK
RHEFDIA/DIA WASHDC

UNCLAS SECTION 01 OF 03 HARARE 000040 
 
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 January 18, 2008 
 
¶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 rate for cash: ZW$3.2 million:US$1; For bank transfers: 
Z$5.2 million; Official rate: ZW$$30,000:US$1 
Sugar on the parallel market rose to Z$3 million/2kg vs. controlled 
price of Z$247,000/2kg 
Cooking oil on the parallel market steady at Z$9 million/750ml vs. 
controlled price of Z$440,000/750ml 
*Petrol rose to Z$4.4 million/liter while diesel fell to Z$3.8 
million/liter vs. Z$60,000/liter at the controlled price 
 
------------------------------ 
On the Political/Social Front 
------------------------------ 
 
¶3.  No Apparent Progress Out Of Mbeki Meeting With Mugabe... The 
press reports and Embassy contacts confirm that South African 
president Thabo Mbeki was unable to make any progress with President 
Mugabe on an agreement between ZANU-PF and the MDC during his visit 
to Harare this week.  For details, see Harare 0038. 
 
¶4.  MDC Plans "Freedom March" To Pressure Mugabe For Later 
Election...  The Morgan Tsvangirai faction of the MDC plans to stage 
a demonstration on Wednesday, January 23 in Harare to put pressure 
on the ruling party to postpone the election date and to implement a 
new constitution before the elections.  Tsvangirai's faction held 
three rallies last weekend in the high-density suburbs of Mbare, 
Dzivarasekwa and Glen View, and will hold its "star rally" on Sunday 
to build support for the demonstration.  Tsvangirai faction 
Information Director Luke Tamborenyika told embassy officials that 
the MDC hopes to attract a crowd of more than 10,000 people.  MDC 
officials met with the police and believe they will receive written 
permission to proceed.  Police contacts confirm this. 
 
¶5.  Zimbabwe Police Raid Anglican Church Services In Political Row 
Over Bishop...  The Archbishop of Canterbury condemned the former 
Anglican bishop of Harare after police used force to interrupt 
official Anglican Church services.  Police intervened because the 
services were held without the authorization of the Zimbabwean 
government.  Truncheon wielding police dragged three priests and 
several parishioners from a church where services were being 
conducted last Sunday.  The former bishop, Nolbert Kunonga, is an 
ally of President Mugabe.  The Anglican Province of Central Africa 
removed his priestly license after he illegally separated from the 
Church in December.  Kunonga has claimed the conflict was based on 
his alleged more conservative position on homosexuality.  The 
Church, on the other hand, has maintained that it revoked Kunonga's 
license because of his failure to exercise independence from the 
Mugabe government. 
 
¶6.  Education System Failing... A new school term started on January 
15, but many teachers failed to report to work despite receiving a 
1,000% pay raise.  Progressive Teachers' Union of Zimbabwe (PTUZ) 
told us many teachers left the country over the break for more 
lucrative teaching positions in South Africa, Swaziland and Malawi. 
Zimbabwe Teachers' Association (ZIMTA) pointed out that the ongoing 
cash shortage prevented many teachers from accessing enough money to 
pay for transport.  Steep inflation and the cash crisis also left 
most parents struggling to pay for school fees, supplies, uniforms, 
and food.  One local embassy employee found that hard-to-find school 
shoes had jumped from about US$10 equivalent in October to US$40 
this month.  Another colleague reported having to send his child off 
to boarding school with a large cache of food and water because the 
school could not afford to buy supplies in advance.  PTUZ is 
 
HARARE 00000040  002 OF 003 
 
 
planning to mobilize civic groups to support a national strike in 
the coming weeks to draw attention to the failing education system. 
 
¶7.  USG Recruits Secret Political Officers, According to The 
Herald...  In a front-page article on January 10, The Herald 
reported that Embassy Harare has been secretly conducting interviews 
with prospective political officers for deployment in the provinces 
ahead of the elections as part of its anti-Zimbabwe campaign.  The 
government mouthpiece followed up soon after with the Zim Notes 
cartoon of the week, shown below.  The government press has focused 
on race in several reports about Ambassador McGee; for example in 
November a The Sunday Mail columnist opined that he was "likely to 
turn out to be the 'house negro' Malcolm X wrote about." 
 
-------------------------- 
Economic and Business News 
-------------------------- 
 
¶8.  RBZ Governor Gono Relieves Cash Crisis - For Now - With New 
Notes...  After a series of policy flip-flops, RBZ Governor Gono 
released new, much higher denominated notes into the cash-starved 
market today.  The largest new note - Z$10 million - is nominally 
worth 50 times more than the largest note in circulation less than a 
month ago, yet under hyperinflation it is still only about US$2 on 
the parallel market for bank transfers.  We expect hyperinflation to 
quickly erode the benefit of this new infusion of cash as long as 
the GOZ fails to address Zimbabwe's underlying economic crisis. 
 
¶9.  Bill Extends Life of National Incomes And Prices Commission 
(NIPC)...  With the term of the NIPC due to expire next month, the 
GOZ has gazetted the National Incomes and Prices Commission 
Amendment Bill.  Its effect is to extend the life of the Commission 
which will continue to approve applications for increases in 
remuneration, rentals and service charges.  Extension of the tenure 
of the NIPC implies that most manufacturers and retailers will 
continue to find it difficult to cover their operating costs as 
approval of price increases will continue to be based on an 
arbitrary formula that has little or no bearing on actual costs 
incurred.  Consequently, we expect domestic production to contract 
further, with imports taking more space in the markets, resulting in 
more, not less, inflation. 
 
¶10.  Taps Run Dry In Harare For Lack of Electric Power... Water 
supply to Harare and Chitungwiza has deteriorated sharply since the 
Zimbabwe National Water Authority (ZINWA) took over water 
responsibility from these two City Councils two years ago. In recent 
weeks service degenerated further, with some high-density suburbs 
going without water for more than a week.  A ZINWA official 
attributed the problem to the intermittent supply of electric power 
to Harare's main waterworks.  He told us that heightened power 
shortfalls associated with ZESA's nonpayment of power from 
Mozambique had aggravated the situation.  While the ZINWA official 
maintained there would be improved pumping capacity in the next days 
with renewed power supply from Mozambique, the state-owned The 
Herald reported today that extensive vandalism on the 330 KVA power 
lines in Mozambique has cut off power imports from Zimbabwe's 
eastern neighbor. 
 
¶11.  Flooding And More Rain Forecast...  An assessment team from the 
United Nations Office for the Coordination of Humanitarian Affairs 
(OCHA) determined that more than 10,000 people have been displaced 
from their homes in Zimbabwe due to heavy rainfall since early 
December 2007.  Thousands more have been affected, mainly through 
the likely loss of their crops.  The IFRC Disaster Relief Emergency 
fund (DREF) has approved funding for the Southern Africa flood 
operation and is currently mobilizing its emergency response team to 
support the assessment process of the National Red Cross in the 
worst affected countries-Zimbabwe, Zambia and Mozambique.  Wet 
conditions are forecast to persist over the northern areas of 
 
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Zimbabwe through late January with an increase in rainfall from 
January 22. 
 
¶12. *Distortion Of Week - The Diesel Discount...  Chevron and BP 
executives told us that the parallel market in fuel was flush with 
diesel, driving down the price.  The GOZ provides diesel to farmers 
at Z$60,000/liter (just over a penny a liter on the parallel 
market).  But this year, yet again, farmers are finding it more 
lucrative, easier, and commercially less risky to sell the fuel on 
the black market - for 60 times and more as much - than pour it in 
their tractors and farm.