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DE RUEHSB #0462/01 1441142
ZNR UUUUU ZZH
R 231142Z MAY 08
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC 2941
INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA 1973
RUEHAR/AMEMBASSY ACCRA 1996
RUEHDS/AMEMBASSY ADDIS ABABA 2117
RUEHRL/AMEMBASSY BERLIN 0662
RUEHBY/AMEMBASSY CANBERRA 1394
RUEHDK/AMEMBASSY DAKAR 1752
RUEHKM/AMEMBASSY KAMPALA 2173
RUEHNR/AMEMBASSY NAIROBI 4604
RHEHAAA/NSC WASHDC
RHMFISS/EUCOM POLAD VAIHINGEN GE
RUEHGV/USMISSION GENEVA 1257
RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK
RHEFDIA/DIA WASHDC
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 03 HARARE 000462 
 
AF/S FOR S.HILL 
ADDIS ABABA FOR USAU 
ADDIS ABABA FOR ACSS 
NSC FOR SENIOR AFRICA DIRECTOR B.PITTMAN 
TREASURY FOR D.PETERS 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 EAGR EFIN EMIN ZI
SUBJECT: ZIM NOTES May 23, 2008 
 
------------- 
¶1.  SUMMARY 
------------- 
Topics of the week: 
 
- Tsvangirai to Return 
- ZANU-PF Strategy To Maintain Power And Considerations of a GNU 
- A Compendium Of Violence 
- Media Crackdown 
- Two Union Leaders Released On Bail, Another Arrested 
- Bishop Kunonga Excommunicated 
- Police Officer Fined For Assaulting Human Rights Lawyers 
- Water Woes 
- Zimbabwe Dollar In Free-Fall 
- RBZ Suspends Mechanism For Trading Shares Between Stock Exchanges 
-- Tobacco Auctions Interrupted Over Cash Shortages 
-- Rich Platinum Claims Change Hands in Hush-Hush Deals 
-- Government Orders Prop Up Ag Equipment Manufacturer 
 
--------------------------------------------- --------- 
¶2. Price Movements-Exchange Rate and Selected products 
--------------------------------------------- --------- 
 
Parallel rate for cash diverged further, at ZW$430 million:US$1, 
from inter-bank average of Z$390 million:US$1 
Bank transfer rate jumped to: Z$530 million; 
Official rate: ZW$$30,000:US$1 
 
Sugar rose to Z$670 million/2kg vs. controlled price of Z$8 
million/2kg 
 
Cooking oil is steady at Z$750 million/750ml vs. controlled price of 
Z$9.3 million/750ml 
 
Petrol and diesel rose to Z$650million/liter vs. controlled price of 
Z$60,000/liter 
 
----------------------------- 
On the Political/Social Front 
----------------------------- 
 
¶3.  Tsvangirai to Return...  After several false starts, it appears 
that MDC leader Morgan Tsvangirai will actually return to Zimbabwe 
this weekend.  As yet, there are no definite plans as to when and 
where he will kick off the election campaign. 
 
¶4.  ZANU-PF Strategy To Maintain Power And Considerations of a 
GNU...  Ruling party ZANU-PF's strategy to maintain power centers 
around a campaign of terror in rural areas to weaken and intimidate 
the opposition, targeted attacks and intimidation of the key 
opposition officials, an information campaign to bolster ZANU-PF and 
deny the opposition access to media, restrictions on international 
election observers and intimidation of local observers, and a 
vote-rigging apparatus that will stand in stark contrast to the 
electoral structures of March 29.  With ZANU-PF concerned that it 
could lose the election despite its campaign of terror, and with the 
MDC concerned that ZANU-PF might not yield power even if it loses 
the election, there is growing talk of negotiations between the two 
parties.  If negotiations actually do take place, the obstacle to 
any agreement will be who would lead.  Tsvangirai rightly believes 
he won the election and should not have to take a back seat in a 
power-sharing arrangement.  And even if Mugabe could be persuaded to 
step down, those around him are unwilling at this point to give up 
the reigns of power and the attendant emoluments of security and 
wealth.  See Harare 453. 
 
¶5.  A Compendium Of Violence...  The Solidarity Peace Trust has 
issued a comprehensive report on Zimbabwe's post-election violence: 
"Punishing Dissent, Silencing Citizens:  The Zimbabwe Elections 
 
HARARE 00000462  002 OF 003 
 
 
2008."  The report concludes that a run-off election "is neither 
practical nor desirable" in the current environment and recommends a 
transitional government. See http://www.solidaritypeacetrust.org 
 
¶6.  Media Crackdown...  Local media watch-dog organizations reported 
the arrest or detention of at least five members of the foreign 
media and four local journalists in relation to their post-election 
reporting; many others have been harassed.  The systematic 
intimidation of journalists has included the resuscitation of old 
legal cases against journalists and the re-arrest of previously 
acquitted journalists.  The post-election period has seen a 
tightening of guidelines at the state-run Zimbabwean Broadcasting 
Corporation (ZBC) by ruling party leaders and the dismissal of the 
ZBC CEO Henry Muradzikwa for reportedly defying ministerial orders 
to deny the opposition neutral pre-election coverage.  These severe 
limits on freedom of expression are yet more evidence that the 
conditions for free and fair elections do not exist. 
 
¶7.  Two Union Leaders Released On Bail, Another Arrested... 
Zimbabwe Congress of Trade Union (ZCTU) leaders Wellington 
Chibebe and Lovemore Matombo were released on bail after spending 
over a week in jail on charges of inciting violence.  At their 
hearing, Raymond Majongwe, General Secretary of the Progressive 
Teachers Union of Zimbabwe (PTUZ) was arrested and held for several 
hours; no charges were filed.  PTUZ has been outspoken in recent 
weeks, publicizing the targeting of teachers in rural areas and the 
negative impact of this on rural schools.  PTUZ also sponsored a 
recent full-page advertisement in The Standard which referred to 
President Mugabe as "Mr. Robert Mugabe;" it was perceived by the GOZ 
as an insult and "denigrating" to the president. 
 
¶8.  Bishop Kunonga Excommunicated...  The Anglican church 
excommunicated Bishop Kunonga, a strong supporter of President 
Mugabe, the weekend of May 17 for failing to follow church rules and 
for starting his own church.  This follows weeks of discord between 
Kunonga and the newly appointed Bishop, Sebastian Bakare; Bakare's 
services continue to experience disruptions by Zimbabwean police and 
by Kunonga who insists on sharing the Anglican cathedral while the 
courts continue to deal with Bakare's efforts to evict him. 
 
¶9.  Police Officer Fined For Assaulting Human Rights Lawyers... The 
High Court recently ordered senior police official Joel Tenderere to 
pay a total of Z$90 billion to two human rights lawyers who were 
subjected to inhuman and degrading treatment when they were arrested 
last year.  Tenderere has previously been accused of ordering 
assault and torture in other cases, including the arrest of Zimbabwe 
Congress of Trade Union leaders in 2006. 
 
¶10.  Water Woes...  The Herald reported today that ZINWA (Zimbabwe 
National Water Authority) has for the second time in 2 weeks reduced 
water production by 30% after running out of treatment chemicals. 
Two weeks ago, the authority reduced water production by 20% only to 
resume pumping at full capacity early this week before cutting down 
again yesterday. 
 
-------------------------- 
Economic and Business News 
--------------------------- 
 
¶11.  Zimbabwe Dollar In Free-Fall...  The street value of the local 
currency plummeted in the past week by 31.5% from Z$275 million:US$1 
to Z$430 million:US$1.  The Reserve Bank of Zimbabwe (RBZ) 
attributed the collapse to excess demand for foreign exchange in the 
face of low supply.  Its recent liberalization of some foreign 
exchange transactions was meant to increase exports and thus forex 
earnings, but there is a lag before the positive effect kicks in. 
Moreover, market players do not believe that the liberal foreign 
exchange regime will last, given the steep increases in the price of 
imports that it brought in.  As a result, demand for foreign 
 
HARARE 00000462  003 OF 003 
 
 
exchange has risen far higher than under normal circumstances. 
 
¶12.  RBZ Suspends Mechanism For Trading Shares Between Stock 
Exchanges... The RBZ suspended the fungibility of shares in Old 
Mutual Limited, ABC and Kingdom Meikles Africa Limited. According to 
a communication sent to the Zimbabwe Stock Exchange, shares in these 
counters will now only be brought into the country but may no longer 
be taken out as the latter entails the movement of much needed 
foreign exchange out of the country. Notwithstanding this, Old 
Mutual traded 25% firmer, ABC traded steady, and Kingdom Meikles 
rose in value. 
 
¶13.  Tobacco Auctions Interrupted Over Cash Shortages...  Business 
ground to a halt this week at the country's three auction floors 
after small-scale farmers stopped selling their crop in protest over 
non-payment.  Sales by the cash-dependent small-scale growers who 
make up about 50% of the market surpass Z$500 billion on average. 
For lack of availability of the new Z$5-50 billion "agro-cheques," 
however, these growers were only being paid out Z$5 billion in cash 
and the rest in checks (many of the farmers do not have bank 
accounts).  Large-scale growers are paid via bank transfers.  Rodney 
Ambrose, CEO of Zimbabwe Tobacco Association told us that the 
auctions were starting back up today as the "agro-cheques" became 
increasingly available. 
 
¶14.  Rich Platinum Claims Change Hands in Hush-Hush Deals...  The 
GOZ appears troublingly willing to sell the family silver, or in 
this case, platinum, in shadowy deals for short-term benefit to 
questionable investors with no experience in platinum and absent 
public tender or public scrutiny of the terms.  Desperate for forex, 
the GOZ has opted for the quick return.  See Harare 459. 
 
¶15.  Government Orders Prop Up Ag Equipment Manufacturer... The MD 
of publicly traded Steelnet (Zimbabwe), Dave McCann, told analysts 
this week that the company had generated strong profits and cash in 
the four months to April.   Two very big orders for the GOZ's Farm 
Mechanization Scheme - one for animal drawn implements and the other 
for tractor drawn - had buoyed the numbers. 
 
MCGEE