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R 280616Z JUL 08
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC 3221
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA 2026
RUEHAR/AMEMBASSY ACCRA 2177
RUEHDS/AMEMBASSY ADDIS ABABA 2296
RUEHRL/AMEMBASSY BERLIN 0828
RUEHBY/AMEMBASSY CANBERRA 1573
RUEHDK/AMEMBASSY DAKAR 1931
RUEHKM/AMEMBASSY KAMPALA 2352
RUEHNR/AMEMBASSY NAIROBI 4783
RHEHAAA/NSC WASHDC
RHMFISS/EUCOM POLAD VAIHINGEN GE
RUEHGV/USMISSION GENEVA 1442
RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK
RHEFDIA/DIA WASHDC
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 03 HARARE 000637 
 
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 7-25-2008 
 
----------- 
¶1.  SUMMARY 
----------- 
 
Topics of the week: 
 
- MOU Signed, Talks Started... 
- Over a Quarter of MDC MPs Targeted... 
- EU Expands Sanctions List... 
- SADC Tribunal Rules Against Zimbabwe on Land... 
- State Media Tone Down Rhetoric... 
- Zim Journalist Wins CNN Award... 
- Holding Mugabe Accountable... 
- Looming Cash Shortage... 
- Cargill's Cotton Caught in Cash Crunch... 
- Another EU Company under Boycott Pressure... 
- Nickel Production Down... 
- Zimbabwe International Book Fair Cancelled... 
 
--------------------------------------------- ---------- 
¶2.  Price Movements-Exchange Rate and Selected Products 
--------------------------------------------- ---------- 
 
Parallel rate for cash inched up to Z$110 billion:US$1 against 
inter-bank average of Z$49 billion:US$1 
 
Bank transfer rate shot to Z$780 billion:US$1; official rate: 
Z$$30,000:US$1 
 
Bread on the parallel market Z$150 billion vs. controlled price of 
Z$400 million 
 
Sugar steady at Z$300 billion/2kg vs. controlled price of Z$8 
million/2kg 
 
Cooking oil rose to Z$180 billion/750ml vs. controlled price of 
Z$9.3 million/750ml 
 
Petrol and diesel shot to Z$190 billion/liter vs. controlled price 
of Z$60,000/liter 
 
----------------------------- 
On the Political/Social Front 
------------------------------ 
 
¶3.  MOU Signed, Talks Started - Robert Mugabe, Morgan Tsvangirai, 
and Arthur Mutambara signed a Memorandum of Understanding on July 21 
laying out a framework for inter-party negotiations that started in 
South Africa on July 24.  Reaction to the MOU has varied.  While it 
has generated significant buzz, some actors in the MDC and 
Zimbabwean civil society remain deeply pessimistic. See Harare 625 
and 628. 
 
¶4.  Over a Quarter of MDC MPs Targeted - Since March 29, a dozen MDC 
legislators have been charged with crimes; others were on police 
"wanted lists" or held without charge.  Since signing of the MOU, it 
appears the MP hunt has been called off, but many MPs-elect still 
fear returning home/facing trial.  See Harare 622. 
 
¶5.  EU Expands Sanctions List - The European Union this week added 
37 people and entities to its targeted sanctions list.  While most 
of the new names are members of the military involved in 
election-related violence, the list also includes Peter Chingoka, 
the Chairman of Zimbabwe Cricket, and two hate-mongering journalists 
associated with the state-sponsored newspaper The Herald. 
 
¶6.  SADC Tribunal Rules Against Zimbabwe on Land - On July 18, the 
SADC Tribunal in Namibia ruled that the GOZ had violated the body's 
 
HARARE 00000637  002 OF 003 
 
 
December 2007 injunction against the harassment or eviction of 
several dozen white farmers.  The farmers are contesting the seizure 
of their property under fast-track land reform.  Prosecutions of 
farmers for contravening eviction orders slowed down starting in 
mid-May, but there has been no letup in disruptions on the ground. 
The Tribunal's authorizing legislation provides that once its orders 
have been breached the matter is turned over to the SADC Secretariat 
for appropriate action.  The next SADC Summit, at which action could 
be taken, will be on August 15 under South Africa's chairmanship. 
See Septel. 
 
¶7.  State Media Tone Down Rhetoric - State media rolled back hate 
speech against Morgan Tsvangirai and the MDC this week; they even 
referred to Tsvangirai for the first time as "the opposition 
leader."  A senior journalist at The Herald told us the paper had 
edited out a diatribe against Tsvangirai and the MDC by the First 
Lady at the launch of an orphans project this week.  Attacks, 
however, on the U.S./EU for their targeted sanctions persisted. 
 
¶8.  Zim Journalist Wins CNN Award - Despite the GOZ's refusal to 
grant him a license to cover news, Hopewell Rugoh Chin'ono last week 
won the prestigious CNN-sponsored African Journalist of the Year 
competition for an uncompromising documentary on Zimbabwe's struggle 
against HIV-AIDS: "Pain in My Heart."  The documentary beat 1911 
entries from across Africa. Chin'ono has been filing news footage, 
including a recent interview with Ambassador McGee, undercover to 
international news agencies. 
 
¶9. Holding Mugabe Accountable - !Enough and Impunity Watch issued a 
discussion paper this week that highlights the legal options 
available to hold President Robert Mugabe accountable for various 
international crimes. 
www.enoughproject.org/files/reports/july_zim_ 2.pdf. 
 
¶10.  Readings on Transitional Governments - The Center for 
Contemporary Conflict's January 2006 "Strategic Insights" focused on 
transitional governments.  It looked at variety of experiences, 
including from Kosovo, Liberia, East Timor, and El Salvador.  See 
www.ccc.nps.navy.mil/si/archiveDate.asp#vol5i ssue1. 
 
----------------------------------- 
On the Economic and Business Front 
---------------------------------- 
 
¶11.  Looming Cash Shortage - Hyperinflation is driving demand for 
cash as problems of bank connectivity, the quadrillions and 
quintillions, and transaction lag discourage the use of debit cards, 
checks and bank transfers.  Barter is on the rise, along with price 
indexing to a stable currency, or outright dollarization.  Banks are 
still getting their daily cash requirement from the Reserve Bank, 
but the disruption in the supply of banknote paper combined with 
hyperinflation presage an imminent shortage.  The GOZ has responded 
with some unsustainable stopgap measures, including introduction of 
a new Z$100 billion note this week.  See Harare 627. 
 
¶12.  Cargill's Cotton Caught in Cash Crunch - Cargill has been 
unable to access enough cash to buy up its contracted cotton crop 
for the past three weeks.  In the meantime, better connected 
competitors are moving in to exploit the company's distress in a 
sector notorious for side-marketing. 
 
¶13.  Another EU Company under Boycott Pressure - Media pressure is 
mounting on the small Austrian security software company Jura JSP to 
suspend the provision of security software to Zimbabwe's banknote 
printer.  Similar pressure compelled Germany's Giesecke & Devrient 
to end delivery of banknote paper earlier this month. 
 
¶14.  Nickel Production Down - Bindura Nickel Corporation (BNC) 
 
HARARE 00000637  003 OF 003 
 
 
reported production down 37% in the year ending March 31.  Weaker 
nickel prices, the RBZ's stranglehold on earned foreign exchange, 
skills flight, and aged equipment dampened results.  The unviable 
inter-bank exchange rate and spiraling inflation will likely 
continue to hurt performance, although BNC is opening a new mine 
this year.  Nickel was Zimbabwe's fourth largest mineral export last 
year.  US$30.8 million worth of Zimbabwe nickel went to the U.S. in 
2007, according to TradStats Express.  That amount is over 40% of 
Zimbabwe's US$71.8 million in exports to the U.S. in 2007. 
 
¶15.  Zimbabwe International Book Fair Cancelled - Economic 
conditions and the loss of support from international sponsors have 
forced cancellation of this year's ZIBF.  A major publishing event 
in Africa since 1983, its demise is a significant blow to the 
African publishing industry, not to mention one more sign of 
Zimbabwe's decline. 
 
 
MCGEE