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Viewing cable 08HARARE134, Zim Notes 2-08-2008

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Reference ID Created Released Classification Origin
08HARARE134 2008-02-15 10:55 2011-08-24 16:30 UNCLASSIFIED Embassy Harare
VZCZCXRO9312
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSB #0134/01 0461055
ZNR UUUUU ZZH
R 151055Z FEB 08
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC 2491
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA 1849
RUEHAR/AMEMBASSY ACCRA 1777
RUEHDS/AMEMBASSY ADDIS ABABA 1903
RUEHRL/AMEMBASSY BERLIN 0486
RUEHBY/AMEMBASSY CANBERRA 1180
RUEHDK/AMEMBASSY DAKAR 1537
RUEHKM/AMEMBASSY KAMPALA 1959
RUEHNR/AMEMBASSY NAIROBI 4388
RHEHAAA/NSC WASHDC
RHMFISS/EUCOM POLAD VAIHINGEN GE
RUEHGV/USMISSION GENEVA 1030
RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK
RHEFDIA/DIA WASHDC
UNCLAS SECTION 01 OF 03 HARARE 000134 
 
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 2-08-2008 
 
 
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.  Price Movements-Exchange Rate and Selected products 
Parallel rate for cash: ZW$6.4 million:US$1; Bank transfer rate: 
Z$7million; Official rate: ZW$$30,000:US$1 
Sugar steady at Z$5 million/2kg vs. controlled price of 
Z$247,000/2kg 
Cooking oil rose to Z$15.5 million/750ml vs. controlled price of 
Z$440,000/750ml 
Petrol and diesel steady at Z$10 and Z$9 million/liter respectively 
vs. Z$60,000/liter at controlled price 
 
----------------------------- 
On the Political/Social Front 
----------------------------- 
 
3.  Makoni Announces Candidacy...  Simba Makoni stunned ZANU-PF this 
week by announcing he would be a candidate for president.  As a 
rationale for his candidacy, he cited the desperate situation of the 
Zimbabwean people and the failure of national leadership.  Although 
there had been speculation about a Makoni candidacy for weeks, he 
had reportedly told President Mugabe in January that he would not 
stand for the presidency.  Makoni's immediate backers claim he has 
substantial support within ZANU-PF, particularly from the Mujuru 
faction, but he has not yet announced his backing, or whether he 
will run as an independent or as head of a new party.  After the 
announcement, ZANU-PF expelled him from the party and state media 
lashed out at him as a tool of the West.  While Makoni has offered a 
ray of hope to many Zimbabweans who have despaired of the MDC, 
particularly in light of its failure to reunify, it is too early to 
judge Makoni's strength or how the electorate will be split in a 
three-person race between Makoni, Mugabe, and Morgan Tsvangirai. See 
Harare 096. 
 
4.  MDC Reconciliation Fails...  The long-anticipated MDC 
reconciliation failed last weekend after the Tsvangirai-faction 
national council refused to adopt an agreement reached by standing 
committees of the two MDC factions on the allocation of 
parliamentary seats.  The sticking point was the Tsvangirai 
faction's demand for more seats in Bulawayo.  Both factions are now 
independently considering their next steps in the wake of Simba 
Makoni's announcement.  See Harare 100. 
 
5.  GOZ Postpones Nomination Day And Extends Voter Registration 
Period...  The government postponed the nomination date (when 
candidates must declare their intention to run and present requisite 
documentation) by a week to February 15 and extended the voter 
registration period to February 14.  The government claims it 
postponed the date in order to allow all political parties to have 
more time to submit names of their candidates.  Former Information 
Minister and current legislator Jonathan Moyo had filed a lawsuit 
against the GOZ on the basis that it had set the nomination date 
before publication of the final constitutional boundaries as 
required by the Constitution.  Moyo told embassy officials he thinks 
the GOZ rushed to extend the nomination date to avoid the 
embarrassment of an adverse court ruling; others believe the GOZ 
postponed the date in the wake of Simba Makoni's announcement in 
order to give ZANU-PF time to vet candidates and nominate 
individuals supportive of Mugabe. 
 
6.  American Surgeons Coming Back To Perform More Cleft Palate 
Surgeries...  Operation of Hope surgeons will return to Harare on 
their third visit in early April to perform free lip and cleft 
palate surgery on children. 
 
HARARE 00000134  002 OF 003 
 
 
 
-------------------------- 
Economic and Business News 
-------------------------- 
 
7.  Liquidity Improves On The Back Of Monetary Policy Adjustments... 
 Bank liquidity has improved on the money market with a forecast of 
about a Z$11 trillion (US$1,774,193 at Z$6.4 million:US$1) surplus 
on February 7, 2008.  A survey of most banks found them to be 
benefiting significantly from the 10 percentage point reduction in 
statutory reserve requirements and the reduction in duration from 
270 to 7 days of the zero-coupon non-negotiable certificates of 
deposit that mop up excess liquidity, announced by RBZ Governor Gono 
in his Monetary Policy Statement (MPS) of January 31.  Moreover, the 
challenges bedeviling the electronic transfer of funds system (RTGS) 
in recent weeks appear to have abated somewhat, possibly due to 
volume relief from the twenty fold increase in allowed check 
amounts, also announced in the MPS.  As a result, the market has 
been ending the day in balance and banks have not needed to resort 
to the RBZ's prohibitive accommodation rates of 1,200 and 1,650% for 
secure and unsecured borrowing respectively. 
 
8.  Colgate-Palmolive Pulls Out Of Zimbabwe...  Colgate-Palmolive 
(Zimbabwe) is shutting down its laundry detergent and fabric 
conditioner plant and pulling out of Zimbabwe.  According to the 
managing director, the past year's price control assault was the 
final blow following several downsizing exercises undertaken as the 
business environment deteriorated. 
 
9.  January Food Inflation Figures In...  A leading local 
supermarket chain shared with us its food inflation study for 
January.  Contrary to our own observations of very sharply rising 
prices, it showed the month-on-month rate of increase in prices 
having roughly halved for the baskets of both high and low-income 
earners.  The annual rate of inflation remained at around 100,000% 
across incomes. 
 
10.  Newspaper Prices Soar...  In another blow to access to 
information for making informed decisions ahead of the March 29 
elections, Zimbabweans woke up to a quadrupling of newspaper prices 
last week, only days after newspaper companies announced a reduction 
in the print run due to newsprint shortages.  The government's 
mouthpiece, The Herald, now costs Z$3 million, up from Z$900 000; 
its weekly, The Sunday Mail, shot up to Z$4 million from Z$1.2 
million.  In the independent press, The Standard rose to Z$5.6 
million from Z$I.2 million, while its sister paper The Zimbabwe 
Independent, like the Financial Gazette, is now selling at Z$7.2 
million, up from Z$1.8 million. 
 
11.  Tobacco Crop Forecast Dropping; Uncertain Outlook For Winter 
Wheat...  Commercial Farmers' Union (CFU) President Trevor Gifford 
told us this week, after completing a countrywide farm tour, that 
under the most favorable circumstances, the tobacco crop would 
probably only be about 55 million kg this year, down from 73 million 
kg last year and well off the GOZ's target of 120 million kg. 
Tobacco production peaked at 236 million kg in 2000.  On winter 
wheat, only 60% of the farmers had been paid for last year's crop 
and the foreign exchange portion of payment, promised by RBZ 
Governor Gono in his mid-term Monetary Policy Statement of October 
1, 2007, was only beginning to trickle in.  Gifford said the GOZ's 
payment track record and low controlled prices gave no confidence to 
farmers to plant wheat this coming winter. 
 
12.  Falling Seed Maize Crop... The controlled price of seed maize 
(only a fraction of the world price) and the inadequate availability 
of inputs will result in a seed maize crop of about 20,000 MT this 
year against a national requirement of 35,000 MT plus 25% carry-over 
to cover re-planting, according to our contacts at the CFU and in 
industry.  Zimbabwe, once a major seed maize exporter, will 
 
HARARE 00000134  003 OF 003 
 
 
inevitably once again be forced to import seed maize in 2008--at 
world market prices. 
 
13.  More Commercial Farms Gazetted For Acquisition...  Thirty-one 
commercial farms were listed for acquisition in a General Notice 
signed by Didymus Mutasa, Minister of State for National Security, 
Lands, Land Reform and Resettlement in the President's Office on 
February 1, 2008.   The notice transfers ownership of the acquired 
land with full title to the State with effect from the date of 
publication of the notice. 
 
14.  Basal And Top Dressing Fertilizer In Short Supply...  The FAO's 
Agriculture Coordination Working Group reported on January 31 that 
total imports of urea stood at 45,452 MT against a requirement of 
764,000 MT, and a total of 51,568 MT of basal fertilizers had been 
imported as of 25 January 2008 against a requirement of 720,000 MT. 
Fertilizer companies and primary raw material suppliers continue to 
operate below capacity due to: prices lagging behind production 
costs despite a price review in December 2007; foreign currency 
shortages; phosphate shortages; power shortages; coal shortages; 
skilled/unskilled manpower shortages; and poor and deteriorating 
rail service. 
 
15. Quote Of The Week From RBZ Governor Gono's Monetary Policy 
Statement of January 31, 2008: 
"Some would want to simply look at our current high levels of 
inflation, foreign exchange shortages and other constraints and bay 
for the blood of the Central Bank Governor, but the substance of the 
matter is that without innovativeness and thinking and acting 
outside the box, things could have been worse under the decade-long 
spell of sanctions." 
 
MCGEE