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FM AMEMBASSY HARARE
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RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK
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RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 03 HARARE 000526 
 
SIPDIS 
 
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 
 
E.O.12958: N/A 
TAGS: PGOV PREL ASEC PHUM ECON EAGR EFIN EMIN ZI
SUBJECT: ZIM NOTES June 20, 2008 
 
 
--------------- 
¶1.  SUMMARY 
--------------- 
 
Topics of the week: 
 
- Harare Hit by Electoral Violence 
- Ambassador Meets SADC Observer Leader 
- Retaliation for Diplomats' Visit 
- MDC Secretary General Faces Treason Charges 
- NGOs Still Suspended 
- Hidden and Hungry at Harvest House 
- Secretary Rice Talks Zim with UNSC 
- Public Broadcaster Bans Opposition Ads 
- Journalists Fear New Hit List 
- Cargill Caught in Election Melee 
- Sinking Dollar Makes Government Skittish 
- Inflation Over Two Million Percent 
- Growing Food Insecurity 
- Misguided Policies Spawn Acute Bread Shortage 
- Seed Co Finds Profit Outside Zimbabwe 
- Quote of the Week 
 
--------------------------------------------- --------- 
¶2.  Price Movements-Exchange Rate and Selected products 
--------------------------------------------- --------- 
 
Parallel rate for cash more than doubled again to Z$7.9 billion:US$1 
against inter-bank average of Z$6.8 billion:US$1 
 
Bank transfer rate trebled to Z$1.9 trillion:US$1; official rate: 
Z$$30,000: US$1 
 
Bread rose on the parallel market from Z$2.5 billion to Z$3.5 
billion vs. controlled price of Z$400 million 
 
Sugar soared to Z$8 billion/2kg vs. controlled price of Z$8 
million/2kg 
 
Cooking oil jumped to Z$7.5 billion/750ml vs. controlled price of 
Z$9.3 million/750ml 
 
Petrol and diesel more than doubled to Z$12 billion/liter vs. 
controlled price of Z$60,000/liter 
 
----------------------------- 
On the Political/Social Front 
----------------------------- 
 
¶3.  Harare Hit by Electoral Violence...  With reports of ZANU-PF-led 
electoral violence escalating in Harare, on June 18 Ambassador McGee 
and Emboffs toured the high-density area of Epworth and found the 
MDC stronghold partially under the control of party thugs running 
re-education bases.  Embassy staff witnessed the brutality of a 
ZANU-PF youth militia first-hand when hundreds of Epworth residents 
fled a mob of young men, many in ZANU-PF t-shirts and all 
brandishing sticks, tire irons, and axes, who chased women, children 
and the elderly toward a ZANU-PF rally.  See Harare 517, and, for a 
clip of the recorded violence: 
www.cnn.com/video/#/video/world/2008/06/19/ 
mabuse.zimbabwe.violence.cnn (NOTE:  URL address divided for cable 
formatting, be sure to include the entire address when copying.) 
 
¶4.  Ambassador Meets SADC Observer Leader...  Ambassador McGee met 
June 17 with Tanki Mothae, director of the SADC Organ on Politics, 
Defense, and Security Affairs, and head of the SADC observers in 
Zimbabwe.  Mothae said there were currently close to 200 SADC 
observers in Zimbabwe and a further 150 would arrive in the next 
week.  He said he was constantly receiving reports and attempting to 
 
HARARE 00000526  002 OF 003 
 
 
verify incidents of violence.  See Harare 520. 
 
¶5.  Retaliation for Diplomats' Visit...  ZANU-PF MPs and thugs 
continue to attack MDC supporters and their families in Bindura in 
retaliation for a U.S. delegation visit on June 5.  See Harare 515. 
 
¶6.  MDC Secretary General Faces Treason Charges...  Tendai Biti 
appeared in court twice this week following his arrest on June 12. 
Biti is facing counts of treason, publishing documents prejudicial 
to the State, causing disaffection within the police, and insulting 
the President.  The treason charge is based on a document dated 
March 25 that is widely considered to be a forgery.  The document 
purports to lay out MDC plans for governing.  Biti's defense 
attorneys complained that he had been denied access to food, water, 
and his legal counsel for the first 48 hours of his imprisonment. 
Also, he was forced to write statements during a 19-hour-long 
overnight interrogation without the presence of his lawyer. 
 
¶7.  NGOs Still Suspended...  On June 13 the GOZ "clarified" that 
some NGOs, mainly those operating in health-services delivery, may 
continue their work.  The GOZ suspension of NGO-driven food aid 
programs, however, remains in effect. 
 
¶8.  Hidden and Hungry at Harvest House...  Two months into a 
government-led campaign of violence, as many as 2,400 homeless and 
hungry Zimbabweans, including at least 471 children, many of whom 
are ill, continue to seek sanctuary at Harvest House, the opposition 
MDC's Harare headquarters.  Embassy staff recently toured the site 
and saw evidence that all of these opposition supporters and their 
families fear for their lives if they return home, have no home to 
return to, or both.  In light of the NGO suspension, few resources 
are reaching this vulnerable group.  See Harare 522. 
 
¶9.  Secretary Rice Talks Zim with UNSC...  On June 19, Secretary 
Rice and Burkina Faso Foreign Minister Djibrill Bossole co-chaired 
an informal meeting with members of the UN Security Council on 
Zimbabwe.  Rice stated that "by its actions the Mugabe regime has 
given up any pretense that the June 27 election will be allowed to 
proceed in a free and fair manner...We have reached the point where 
broader, stronger international action is needed."  FM Bossole 
called on regional stakeholders, including SADC members, to find a 
solution to the crisis. 
 
¶10.  Public Broadcaster Bans Opposition Ads...  ZBC (Zimbabwe 
Broadcasting Corporation), which has denied the opposition political 
advertising and news coverage since the March 29 elections, 
confirmed the ban on June 19.  Justice Minister Patrick Chinamasa 
defended the move, saying that international coverage favored the 
MDC and never reported the ruling party's position. 
 
¶11.  Journalists Fear New Hit List...  Journalists told our Public 
Affairs Section that they had received information on the existence 
of a "hit list" targeting independent media journalists. Frightened, 
they have adopted new survival methods, including sleeping away from 
home, to avert danger ahead of next week's election. 
 
¶12.  Cargill Caught in Election Melee...  Cargill MD Priscilla 
Mutembwa told us that the company and its employees were particular 
targets of harassment.  Youth militia shut down a Cargill cotton 
buying point in Mutoko in Mashonaland East province, decrying the 
company for being U.S.-owned and beating Cargill employees there and 
elsewhere for allegedly supporting the opposition.  Complicating the 
situation, an Indian-owned Singapore-based newcomer to Zimbabwe's 
cotton sector apparently is funding ZANU-PF in prime Cargill markets 
and contributing to the violence.  The ZANU-PF MP in Magunje 
district in rural Mashonaland West announced, incorrectly, at a 
large must-attend rally this week that Cargill was closing down, 
moving out of the area, and that the Singapore-based company would 
step into the void. 
 
HARARE 00000526  003 OF 003 
 
 
 
-------------------------- 
Economic and Business News 
-------------------------- 
 
¶13.  Sinking Dollar Makes Government Skittish...  The Zimbabwe 
dollar plummeted a further 57 percent against the greenback in the 
past week, driven by high demand for forex and uncertainty 
surrounding next week's presidential runoff election.  In an 
indication of the government's unease about the effect of the 
precipitous fall in the value of the currency on soaring inflation, 
the Reserve Bank of Zimbabwe (RBZ) issued contradictory instructions 
to banks on the exchange rate on June 18.  It initially instructed 
banks to abandon the willing buyer willing seller concept and revert 
to the official exchange rate of Z$30,000:US$1, but within an hour 
issued a retraction. 
 
¶14.  Inflation Over Two Million Percent...  Another leading 
supermarket chain has shared its internal inflation calculation with 
us: it put the m-o-m rate of price increases in May at 563 percent 
and the y-o-y rate slightly above 2 million percent. 
 
¶15.  Growing Food Insecurity...  The FAO/World Food Program Crop and 
Food Supply Assessment Mission concluded in its Special Report of 
June 18, 2008 that the number of food insecure people in Zimbabwe 
will rise from 2.04 million people in the next three months to about 
5.1 million (well over half of most estimates of the population 
size) at the height of the hungry season between January and March 
¶2009.  Production of the staple maize crop was 28 percent lower than 
in 2007, which in turn was 44 percent lower than the previous year. 
Communal farmers used to produce the bulk of the country's maize, 
but yields have fallen by about three quarters in the past ten years 
due primarily to the loss of the symbiotic relationships with former 
large-scale commercial agriculture and the demise of agro-input 
industries.  The 34-page report is available at 
http://www.fao.org/giews/ 
 
¶16.  Misguided Policies Spawn Acute Bread Shortage...  Bread 
shortages have reappeared as Zimbabwe's wheat and flour stocks 
collapse.  Wheat production has been in decline for several years. 
While farm takeovers and low prices explained much of the poor wheat 
output in the early 2000s, in more recent years, shortages of fuel, 
electricity, foreign exchange and fertilizer have predominated. 
Zimbabwe has relied on imports to fill the gap, but due to foreign 
exchange shortages they have not met the growing demand for bread. 
Nevertheless, because affordable substitutes are still available 
along with the staple maize meal, we don't foresee the shortage 
sparking "bread riots." 
 
¶17.  Seed Co Finds Profit Outside Zimbabwe...  Citing low 
government-controlled prices to producers, Seed Co Limited CEO Pat 
Devenish estimated that hybrid maize seed production in Zimbabwe's 
2008/09 growing season could be 30 percent below last year's crop. 
Having ring fenced domestic operations and expanded in the region, 
Seed Co reported that 91 percent of the past year's turnover had 
come from outside Zimbabwe, and sales had tripled in U.S. dollar 
terms. 
 
¶18.  Quote of the Week:  Emmerson Mnangagwa, Minister of Rural 
Housing and heir apparent to Mugabe, was reported in the press 
saying that Morgan Tsvangirai "likes being arrested" because of the 
international attention his arrests draw. 
 
MCGEE