R 021313Z JUN 08
FM AMEMBASSY HARARE
TO SECSTATE WASHDC 2971
INFO SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
AMEMBASSY ABUJA 
AMEMBASSY ACCRA 
AMEMBASSY ADDIS ABABA 
AMEMBASSY BERLIN 
AMEMBASSY CANBERRA 
AMEMBASSY DAKAR 
AMEMBASSY KAMPALA 
AMEMBASSY NAIROBI 
NSC WASHDC
EUCOM POLAD VAIHINGEN GE
USMISSION GENEVA 
JAC MOLESWORTH RAF MOLESWORTH UK
DIA WASHDC
CIA WASHDC

UNCLAS HARARE 000477 
 
ADDIS ABABA FOR USAU, 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, AF/S FOR S.HILL 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ASEC PHUM ECOM ZI
SUBJ: ZIM NOTES 5-30-2008 
 
-  ...But Remains Divided 
-  Visit to Mashonaland East Reveals Fearful Populace 
-  Government Propaganda Aimed At U.S. Ambassadors 
-  Zim First Lady Slams Opposition 
-  International NGO Operations Suspended 
-  VOA Expands Studio 7 Broadcasts 
-  PEPFAR Strategy On Track 
-  Bad Week For African Dictators 
-  Zimbabwe Dollar Swoons 
-  May Inflation Tops 1 Million Percent 
-  Tourism Prices Liberalized 
-  High Market Liquidity 
-  Cotton Crop Up 
 
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Price Movements-Exchange Rate 
and Selected Products 
----------------------------- 
 
¶2.  Parallel rate for cash diverged further, at ZW$650 million: 
US$1, from inter-bank average of Z$529 million: US$1 
Bank transfer rate jumped to: Z$800 million; official rate: 
ZW$$30,000: US$1 
 
Sugar rose to Z$800 million/2kg vs. controlled price of Z$8 
million/2kg 
 
Cooking oil increased to Z$1.3 million/750ml vs. controlled price of 
Z$9.3 million/750ml 
 
Petrol and diesel rose to Z$920million/liter vs. controlled price of 
Z$60,000/liter 
 
----------------------------- 
On the Political/Social Front 
----------------------------- 
 
¶3.  Opposition Returns To Campaign Mode...  On May 27, MDCyH!Q%~situation 
 
in Zimbabwe and outline his party's response.  Tsvangirai stated 
that over 50 people have been killed and at least 25,000 displaced 
since the March 29 elections.  In response, Tsvangirai announced the 
launch of the President's Fund for Victims of Violence, intended to 
assist Zimbabweans impacted by the recent surge in 
government-sponsored attacks.  Tsvangirai repeatedly drove home what 
appears to be the MDC's mantra for the campaigning days ahead: "The 
rebuilding of Zimbabwe begins now."  See Harare 470. 
 
¶4.  ...But Remains Divided...  On May 29, Morgan Tsvangirai and 
former independent candidate Simba Makoni held separate briefings in 
which they discussed violence, the June 27 run-off election, and 
their perspectives on a government of national unity (GNU). 
Significant differences in their respective positions indicate that 
a united opposition will not be immediately achieved.  Both deplored 
ongoing violence, but Tsvangirai laid the blame at the feet of 
ZANU-PF, while Makoni stated that both ZANU-PF and the MDC were 
responsible.  Both men called for a GNU to be convened as soon as 
possible, but Tsvangirai proposed a broad GNU under an MDC mandate, 
while Makoni suggested it be formed from all "key constituencies." 
While Tsvangirai focused on creating a benign electoral environment, 
Makoni stated that holding the contest would be disastrous for the 
Zimbabwe; he advocated a two to five year transitional government 
with elections to follow.  See Harare 473. 
 
¶5.  Visit to Mashonaland East Reveals Fearful Populace...  Mission 
staff visited the town of Murewa, scene of significant ZANU-PF 
directed violence, the day after Morgan Tsvangirai presided over a 
funeral there for MDC provincial secretary Shepherd Jani, who was 
brutally murdered last week.  Residents were visibly on edge and 
reluctant to talk.  At a nearby rural Catholic mission, medical 
staff and clergy related that the local ZANU-PF chairman, who lost 
his seat as counselor in the March 29 election, had been holding 
political meetings and threatening those who did not attend.  One 
meeting was held on the grounds of the mission over objections of 
the church and the local governor.  Mission staff also met with one 
victim of the violence - a 37-year-old woman - who had been beaten 
with sticks by a group of about 20 people, including some women. 
She and her husband were both known MDC supporters.  While doctors 
feared her husband's leg was broken, their x-ray machine had been 
broken for a month and they could not afford the imported parts to 
fix it.  Local NGOs were working to bring the couple to Harare for 
additional treatment. 
 
¶6.  Government Propaganda Aimed At U.S. Ambassador...  In a front 
page story on May 28, the government mouthpiece The Herald reported 
that "United States Ambassador to South Africa Patrick Kelly Diskin 
sneaked into Zimbabwe" from Botswana for 14 days of secret 
consultations with Ambassador McGee.  The newspaper published U.S. 
diplomatic passport and license plate numbers, which they claimed 
belonged to the Ambassador.  In reality, Patrick Diskin is USAID's 
Regional Food for Peace Program Coordinator based in Pretoria. 
Diskin was on a routine visit to assist USAID/Zimbabwe in monitoring 
the implementation humanitarian food assistance programs, which 
provided US$171 million worth of food to Zimbabwe's most vulnerable 
individuals in the last year.  The U.S. Ambassador to South Africa 
is, of course, Eric M. Bost.  The report came on the heels of May 25 
threats by Mugabe to expel Ambassador McGee if he continued to 
"meddle in Zimbabwe's internal affairs." 
 
¶7.  Zim First Lady Slams Opposition... First Lady of Zimbabwe Grace 
Mugabe took a shot at Morgan Tsvangirai during a May 28 trip to 
Mashonaland Central with her husband to meet with victims of 
political violence mostly perpetrated by, according to ZANU-PF 
propaganda, the MDC.  "Even if people vote for the MDC, Morgan 
Tsvangirai will never step foot inside the State House," she stated. 
 "He will only get to hear about what it looks like inside State 
House from people who have been there. Even if [Mugabe] loses, he 
will only leave State House to make way for someone from Zanu-PF." 
The First Lady donated building supplies, clothes, food, and money 
to affected town residents at a rally just weeks ahead of the June 
27 run-off. 
 
¶8.  International NGO Operations Suspended...  The Minister of 
Public Service, Labor, and Social Welfare, Nicolas Goche, has 
instructed the NGO CARE to suspend its humanitarian food aid 
operations indefinitely until investigations about "political 
activities" are completed.  CARE is a key implementing partner of 
USAID's food aid program.   The UN Humanitarian Coordinator in 
Harare reported to an OCHA/Donor Group meeting on May 29 that 
several additional NGOs would be called to a meeting with the 
Minister on June 2, and that it was possible they would be 
suspended.  While not completely closing down or cancelling 
agreements with NGOs, the government is showing hostility toward any 
agency that it suspects is providing material assistance to 
communities that voted against ZANU-PF in the March 29 elections. 
The current early post-harvest season should mitigate the impact of 
a suspension of food aid distributions, and no large scale 
distributions are typically conducted until August.  However, there 
are already reports of maize scarcity in some areas, and a prolonged 
suspension could have dire consequences for the beneficiaries of 
CARE and other NGOs. 
 
¶9.  VOA Expands Studio 7 Broadcasts...  In an effort to increase 
opportunities for Zimbabweans to receive independent news reports 
during the election period, VOA will begin repeat coverage of its 
highly popular Studio 7 radio broadcasts immediately following its 
normal program.  The expanded coverage will begin June 1. 
 
¶10.  PEPFAR Strategy On Track...  A May portfolio review and 
strategy appraisal by the U.S. PEPFAR Zimbabwe Team revealed that in 
spite of increasing economic degradation and political unrest, the 
HIV program and strategy are on track.  For the near term, the team 
assumes that political conditions will limit partners' abilities to 
travel to certain areas and to conduct some outreach activities. 
However, these limits are expected to wax and wane in different 
geographic areas, and overall program momentum is expected to be 
maintained in the current environment.  The team also formulated 
"good case" and "worse case" scenarios to respond to the potential 
for a changed operating environment. 
 
¶11.  Bad Week For African Dictators...  Ethiopia's Supreme Court 
sentenced former president Mengistu Haile Mariam to death this week 
for mass murder during his 17-year rule.  Mengistu has been living 
in comfortable exile in Zimbabwe under the protection of Robert 
Mugabe.  The international press also reported the arrest of 
Jean-Pierre Bemba, former vice president of the Democratic Republic 
of Congo, in Belgium earlier this week on a war crimes warrant from 
the International Criminal Court.  The warrant covers alleged 
offences against the civilian population of the Central African 
Republic in 2002 and 2003, including rape, torture, and outrages 
upon personal dignity. 
 
----------------------------------- 
On the Economic and Business Front 
---------------------------------- 
 
¶12.  Zimbabwe Dollar Swoons...  The local currency continued to sing 
the blues on the parallel market.  In the past week, the Zim dollar 
fell by 33.8 percent from Z$430 million: US$1 to Z$650 million: 
US$1.  Demand for foreign exchange keeps outstripping supply and the 
government is beginning to raise concerns over the rapid rate of 
depreciation.  Addressing journalists in Harare on May 27, the 
Minister of Finance stated that while the liberalization of the 
foreign exchange market had some benefits, it had also resulted in a 
number of hardships.  This is hardly surprising since the costs of 
any exchange rate depreciation are front-loaded while the benefits 
take longer to appear as economic agents wait to see whether the 
policy change will last.  As ZANU-PF enters a spending frenzy ahead 
of the presidential election runoff, we predict no let up in the 
slide over the next weeks. 
 
¶13.  May Inflation Tops 1 Million Percent...  According to the 
Zimbabwe Independent, leaked Central Statistical Office figures show 
that the official rate of inflation increased from 732,604 percent 
in April to 1,694,000 percent between May 1 and May 23.  An unnamed 
senior official in the Ministry of Finance reportedly stated that 
the government has now forecast the figure to reach between 1.8 
million and 2 million percent for the entire month of May. 
¶14.  Tourism Prices Liberalized...  Following the partial 
liberalization of the foreign exchange market, the National Incomes 
and Pricing Commission (NIPC) decontrolled prices in the tourism 
sector this month to increase viability of the players.  Prior to 
this, players were paying for their imports at the parallel rate but 
forced to use the highly overvalued official rate in terms of their 
pricing.  The private sector-led Zimbabwe Council of Tourism hailed 
the policy shift for finally taking international pricing formulae 
into account. 
 
¶15.  High Market Liquidity...  High liquidity has characterized the 
money market in recent months, with daily surpluses averaging Z$600 
trillion (US$1,721,664 at the average street rate for May).  Our 
banking contacts blame the imbalance on, among other factors, the 
quasi-fiscal (i.e. off-budget) activities of the Reserve Bank of 
Zimbabwe (RBZ)-in particular, concessionary financing; private 
companies offloading foreign exchange onto the market at the 
inter-bank rate; tobacco financing on the auction floors; and 
increased government spending prior to the impending election 
runoff.  Once again, commercial banks are bearing the cost by being 
forced to park their surpluses in 90-day non-negotiable certificates 
of deposit (NNCDs) that do not earn interest.  As a result, money 
market interest rates have remained subdued at 50-150 percent per 
annum. 
 
¶16.  Cotton Crop Up...  The preliminary forecast for 2008 seed 
cotton production is 300,000 MT, an increase of 18.1percent from 
last year's crop, according to the annual Zimbabwe Cotton and 
Products report published by the USDA FAS Global Agriculture 
Information Network.  The industry plans to expand production 
further by increasing the area planted and recruiting new farmers. 
In 2007, Zimbabwe earned over US$120 million from the export of 
about 86,000MT (395,000 bales) of cotton lint, second only to 
tobacco as an export crop.  About 300,000 small scale farmers 
produce 99.2 percent of the crop. 
 
----------------- 
Quote of the Week 
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¶17.  From Front Page Story In The Herald of May 26: 
"I am told that [Ambassador McGee] says he foughtin Vietnam; 
fighting in Vietnam does not give hi the right to be interfering in 
our domestic affirs. Tall as he is, if he continues doing that, I 
will kick him out...I am just waiting to see if hemakes one more 
step wrong. He will get out. Thisis Zimbabwe, it is not an 
extension of the Unite States." 
 
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