VZCZCXRO6484
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSB #0611/01 1961447
ZNR UUUUU ZZH
R 141447Z JUL 08
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC 3175
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA 2013
RUEHAR/AMEMBASSY ACCRA 2145
RUEHDS/AMEMBASSY ADDIS ABABA 2265
RUEHRL/AMEMBASSY BERLIN 0801
RUEHBY/AMEMBASSY CANBERRA 1542
RUEHDK/AMEMBASSY DAKAR 1900
RUEHKM/AMEMBASSY KAMPALA 2321
RUEHNR/AMEMBASSY NAIROBI 4752
RHEHAAA/NSC WASHDC
RHMFISS/EUCOM POLAD VAIHINGEN GE
RUEHGV/USMISSION GENEVA 1411
RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK
RHEFDIA/DIA WASHDC
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 03 HARARE 000611 
 
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 7-11-2008 
 
----------- 
¶1.  SUMMARY 
----------- 
 
Topics of the week: 
 
-  ZANU-PF-MDC Preliminary Talks Begin... 
-  Parliament to Convene... 
-  Violence Continues... 
-  Attack on Government IDP Camp... 
-  IDPs Flee to Embassy... 
-  Global Opinion of South Africa Slumps... 
-  Remittance Disbursements Capped for Lack of Hard Currency 
Notes... 
-  Grain, Vegetable Oil eficits Worsen... 
-  Back to Barter as Money Loss Value... 
 
--------------------------------------------- --------- 
¶2.  Price Movements-Exchange Rte and Selected Products 
--------------------------------------------- ---------- 
 
Parallel rate for cash nearly doubled to Z$47billion:US$1 against 
inter-bank average of Z$19 billion:US$1 
 
Bank transfer rate doubled to Z$140 billion:US$1; official rate: 
Z$$30,000:US$1 
 
Bread on the parallel market more than doubled to Z$55 billion vs. 
controlled price of Z$400 million 
 
Sugar increased fivefold to Z$250 billion/2kg vs. controlled price 
of Z$8 million/2kg 
 
Cooking oil shot to Z$90 billion/750ml vs. controlled price of Z$9.3 
million/750ml 
 
Petrol and diesel climbed to Z$50 billion/liter vs. controlled price 
of Z$60,000/liter 
 
----------------------------- 
On the Political/Social Front 
----------------------------- 
 
¶3.  ZANU-PF-MDC Preliminary Talks Begin...  For the last couple of 
weeks, MDC president Morgan Tsvangirai has insisted that 
negotiations between ZANU-PF and the MDC would not resume until 
certain conditions were met, including the involvement of the 
African Union in the mediation process, an end to violence, and the 
release of over 1,500 MDC detainees.  The government-controlled The 
Herald trumpeted inter-party talks taking place July 10 and 11 in 
South Africa as a flip flop on the part of the MDC.  The MDC 
subsequently issued a press release clarifying that the South 
African talks between ZANU-PF and representatives of the two MDC 
factions (Patrick Chinamasa and Nicholas Goche for ZANU-PF, Tendai 
Biti and Elton Mangoma for the Tsvangirai faction, and Welshman 
Ncube and Priscilla Misihairabwi-Mushongo for the MDC Mutambara 
faction) were designed to iron out the conditions set by Tsvangirai 
so that actual negotiations could take place.  See Harare 605 for 
the post-electoral state of play and status of negotiations. 
 
¶4.  Parliament to Convene...  By law, President Mugabe must convene 
Parliament by July 17.  As a result of the March 29  and June 27 
elections, the combined MDC has 110 members in the House of 
Assembly, ZANU-PF has 99, and there is one independent.  MDC should 
theoretically be able to elect the powerful House Speaker.  But 
ZANU-PF's campaign of violence has reportedly resulted in the deaths 
of two MDC parliamentarians-elect, the disappearance of one, and the 
continuing incarceration of several.  Several others are underground 
 
HARARE 00000611  002 OF 003 
 
 
since they are targeted for arrest.  While the MDC is hopeful it can 
produce a majority in Parliament next week, this is problematic; 
treatment of parliamentarians-elect will certainly be one of the 
subjects of the South African preliminary talks taking place now. 
See also Harare 605. 
 
¶5.  Violence Continues...  Since the June 27 election, violence 
appears to have subsided in Harare and ZANU-PF bases have been 
dismantled.  Apart from sporadic outbreaks, violence during the 
electoral period was never a big issue in Bulawayo and Matabeleland. 
 But ZANU-PF bases continue to exist in the rest of the country, and 
there have been serious pockets of violence in communities in the 
Mashonaland provinces, Masvingo, Midlands, and Manicaland. 
Additionally, targeting of MDC officials at all levels continues. 
See Harare 606. 
 
¶6.  Attack on Government IDP Camp...  On June 26, over 300 IDPs 
arrived at the South African Embassy in Harare seeking shelter and 
assistance.  On June 27, Election Day, following a reported 
arrangement between some international agencies and Zimbabwean 
authorities, the IDPs were relocated to a facility run by the 
Ministry of Social Welfare in Ruwa, outside Harare.  In the early 
morning hours of July 7, an unknown number of masked armed men, 
suspected to be police, raided the site and beat the IDPs.  Eight 
were hospitalized as a result of their injuries and 14 fled into the 
bush.  Zimbabwean officials blamed the opposition MDC for the 
attack.  See Harare 598 and 602. 
 
¶7.  IDPs Flee to Embassy...  The GOZ's campaign of violence has 
displaced at least 33,000 Zimbabweans, and the humanitarian crisis 
remains acute.  On July 3, over 300 displaced MDC supporters sought 
shelter, food, medical care, and supplies at Embassy Harare.  In the 
absence of a coordinated humanitarian response to the crisis, 
Mission staff assisted women and children to alternative locations 
and moved the remaining men offsite the next day.  Informal networks 
of organizations and individuals have stepped in to attempt to 
assist the IDPs, most of whom remain too frightened, or without the 
means, to return to their home areas.  Exacerbating the situation, 
the "safe houses" are vulnerable to government security forces and 
food is scarce.  UN agencies are not equipped to meet the heavy 
demand for services, and, significantly, fear getting involved 
without government permission.  See Harare 598. 
 
¶8.  Global Opinion of South Africa Slumps...  Communications monitor 
Media Tenor says global opinion of South Africa has slumped 
significantly in the past year.  The report released July 8th 2008 
analyzed 96 opinion leading media in 15 countries between January 
2007 and May 2008.  The findings show coverage of recent xenophobic 
attacks and President Thabo Mbeki's stance on Zimbabwe are partly to 
blame.  The report says western media have grown increasingly 
critical of President Thabo Mbeki and South Africa's foreign policy 
especially with regards to Zimbabwe.  The report says Mbeki's 
profile internationally has become synonymous with his relationship 
with Mugabe. 
 
----------------------------------- 
On the Economic and Business Front 
---------------------------------- 
 
¶9.  Remittance Disbursements Capped for Lack of Hard Currency 
Notes...  On the heels of Giesecke & Devrient's termination of the 
supply of bank note paper to Zimbabwe, U.K.-based Travelex suspended 
its supply of foreign cash to Western Union in Zimbabwe in late 
June, apparently fearful of being tarred, like Barclays and Anglo 
American, with sustaining the Mugabe regime.  Lines for cash at 
Western Union outlets are up to 400 people long as the country's 
biggest money transfer agency caps disbursements and scrambles for 
other sources of cash. See Harare 604. 
 
HARARE 00000611  003 OF 003 
 
 
 
¶10.  Grain, Vegetable Oil Deficits Worsen...  Zimbabwe's winter 
wheat crop is 30,000 MT-less than a tenth of the local consumption 
requirement-according to the annual Zimbabwe Grain and Feed Report 
published by the USDA FAS Global Agriculture Information Network 
(GAIN).  In addition, the country faces a sizeable maize deficit 
following a poor harvest estimated at 470,000 MT.  The magnitude of 
imports needed coupled with the global rise in food prices will put 
a significant strain on the fiscus.  The GAIN Oilseeds and Products 
annual report notes that cottonseed production, which accounts for 
about half of total oilseed production, increased 27.9% in the 
2007/08 season, but soybean output dropped 35%, threatening the 
country's poultry and piggery sectors. Ironically, demand for 
cottonseed meal is in decline as Zimbabwe's commercial beef herd 
shrinks.  Domestic vegetable oil production is estimated at 32,000 
MT against a national requirement of 80,000 MT. 
 
¶11.  Back to Barter as Money Loses Value...  With year-on-year 
inflation now in the tens of millions percent, more companies are 
turning to barter to preserve value.  The Embassy's local internet 
service provider advised us formally that it is accepting payment in 
fuel coupons from selected service stations or in highly valued Old 
Mutual shares; suppliers of potatoes to Cairns Holdings Limited are 
seeking payment in fuel coupons or any other commodity that 
maintains value.  Golf club membership fees are also payable in fuel 
coupons. 
 
-------------------- 
Allegory of the Week 
-------------------- 
 
¶12.  from Imara Asset Management CEO John Legat's "Investment Notes" 
of July 2008: 
 
¶13.  The Titanic has now sunk.  There are a small number of 
lifeboats left drifting filled with shocked, injured and traumatized 
passengers.  One of the lifeboats has the Captain and his senior 
officers on board, those same people who irresponsibly drove the 
ship at high speed into the iceberg that ultimately sank the great 
ship.  As the sun begins to rise, a sense of relief is felt on the 
boats, with hope that nearby ships from Europe and America could 
soon provide assistance.  The Captain looks very concerned and 
helpless as it becomes apparent that his lifeboat is sinking.  Those 
in the other lifeboats, sensing that their help is required, look 
the other way as their boats are already full.  A chuckle is heard 
from one of them. Too bad. 
 
----------------- 
Quote of the Week 
----------------- 
 
¶14.  From interview with RBZ Governor Gono in The Herald, July 11, 
2008: 
 
"Ultimately for me, I would like the whole world and Zimbabweans in 
particular to know that I want to be counted as one of those 
patriotic sons of the soil who was there for my country, stood for 
and by my country and countrymen/women at Zimbabwe's hour of maximum 
danger, its hour of maximum need and not one who hid behind a finger 
or heap of lies, or under the desk when the country needed men and 
women to uphold its laws, preserve and promote peace and stability 
through whatever modes efforts I am able to make, and contributed to 
the preservation of the nation's legacy as defined by our present 
and departed heroes and heroines of the liberation struggle." 
 
DHANANI