VZCZCXRO3004
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSB #0699/01 2311351
ZNR UUUUU ZZH
R 181351Z AUG 08
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC 3305
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA 2041
RUEHAR/AMEMBASSY ACCRA 2214
RUEHDS/AMEMBASSY ADDIS ABABA 2333
RUEHRL/AMEMBASSY BERLIN 0865
RUEHBY/AMEMBASSY CANBERRA 1610
RUEHDK/AMEMBASSY DAKAR 1968
RUEHKM/AMEMBASSY KAMPALA 2389
RUEHNR/AMEMBASSY NAIROBI 4821
RHEHAAA/NSC WASHDC
RHMFISS/EUCOM POLAD VAIHINGEN GE
RUEHGV/USMISSION GENEVA 1482
RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK
RHEFDIA/DIA WASHDC
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 03 HARARE 000699 
 
AF/S FOR G. GARLAND 
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 8-15-2008 
 
------- 
SUMMARY 
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¶1.  Topics of the Week: 
 
 - Talks Break Off... 
 
- Tsvangirai's Travel to SADC Summit Interrupted... 
 
- French and Swedish Charges Threatened... 
 
- Botswana Deports Zimbabwean Journalist... 
 
- Soaring Inflation... 
 
- Tobacco Deliveries Lagging... 
 
- "Zimbabwe - Beyond Tomorrow"... 
 
--------------------------------------------- ---------- 
¶2.  Price Movements-Exchange Rate and Selected Products 
--------------------------------------------- ---------- 
 
Parallel rate for cash shot to Z$950billion ($95 revalued):US$1 
 
Bank transfer soared to Z$2 trillion ($200 revalued):US$1 
against inter-bank average of Z$16 (revalued):US$1; 
 
Bread on the parallel market trebled to Z$800 billion ($80 
revalued); 
 
Sugar doubled to Z$750 billion (Z$75 revalued)/2kg; 
 
Cooking oil rose to Z$350 billion (Z$35 revalued)/750m;l 
 
Petrol and diesel quadrupled to Z$2.2 trillion (Z$220 
revalued)/liter 
 
----------------------------- 
On the Political/Social Front 
----------------------------- 
 
¶3.  Talks Break Off...  Negotiations between ZANU-PF and the MDC 
broke off this week over failure to reach an agreement on the 
allocation of executive power.  MDC president Morgan Tsvangirai is 
insisting he be head of government with full executive power as 
prime minister, while Zimbabwean president Robert Mugabe wants to 
retain power over the security forces and foreign ministry. 
Tsvangirai and Mugabe are both expected to present their cases to 
the SADC Summit in South Africa this weekend.  With negotiators from 
all sides present, it is likely negotiations will resume in South 
Africa.  See Harare 678 and 676. 
 
¶4.  Tsvangirai's Travel to SADC Summit Interrupted...  Zimbabwean 
officials seized passports and travel documents of Tsvangirai, MDC 
secretary-general Tendai Biti, and MP-elect and MDC shadow foreign 
minister Eliphas Mukonoweshuro at the Harare international airport 
on August 14 as the trio prepared to travel to South Africa for the 
SADC Summit.  The documents were returned several hours later and 
the three subsequently traveled.  With Tsvangirai expected in South 
Africa, it does not appear that government actions were directed by 
high-level officials.  Nevertheless, the incident understandably 
ruffled MDC feathers.  Biti was quoted by the Zimbabwe Independent 
as stating that the talks with ZANU-PF were a "farce and a sham." 
George Sibotshiwe told The Independent that the incident reflected 
ZANU-PF's lack of sincerity.  See Harare 684. 
 
 
HARARE 00000699  002 OF 003 
 
 
¶5.  French and Swedish Charges Threatened...  Apparent ZANU-PF 
officials threatened the French and Swedish Charges d'Affaires who 
were at the Rainbow Towers Hotel in Harare Tuesday evening to 
ascertain the status of the negotiations.  The officials told the 
Charges they could not be present in the hotel, site of the 
negotiations, since they were not journalists, and demanded they 
leave.  To avoid escalating the situation, the diplomats left.  The 
officials followed them to their cars, swore at them, accused them 
of imperialistic meddling, and threatened to beat them.  To 
emphasize their point, they kicked the cars before the two Charges 
drove away.  The French and Swedish embassies plan to send a 
diplomatic note protesting the incident; typically, the GOZ does not 
respond to such protests. 
 
¶6.  Botswana Deports Zimbabwean Journalist...  Botswana last week 
deported Caesar Zvayi, a Zimbabwean journalist who had been employed 
for several months as a media studies lecturer at the University of 
Botswana.  Before beginning work in Botswana, Zvayi had been the 
Political and Features editor for The Herald, the Zimbabwean 
government mouthpiece, where he had been an unabashed Mugabe 
supporter and critic of the U.S.  His deportation was apparently the 
result of protests from journalists within Botswana who were 
critical of his unbalanced journalistic stance at The Herald. 
President Mugabe's Spokesperson, George Charamba, condemned the 
deportation.  He described Zvayi as a "fearless writer" and said he 
was free to return home and "do what he does best." 
 
---------------------------------- 
On the Economic and Business Front 
---------------------------------- 
 
¶7.  Soaring Inflation...  With inflation estimated at over 40 
million percent and ever-rising transactions demand for cash, the 
Reserve Bank of Zimbabwe (RBZ) raised the daily cash withdrawal 
limit from Z$200 (US$5.70) to Z$300 (US$8.57) on August 8.  Today 
the new limit is worth only US$3.16 thanks to the unprecedented rate 
of depreciation of the Zimbabwe dollar on the parallel cash market 
from Z$35 to Z$95:US$1 in one week.  Demand for foreign exchange 
continues to far outstrip supply, fueled, in particular this week, 
by the RBZ itself.  Our bank contacts told us that RBZ runners had 
been out in full force buying up forex in Harare's informal cash 
market. 
 
¶8.  Tobacco Deliveries Lagging...  Growers have delivered only 36.3 
million kg of tobacco to Harare's auction floors, down from 53.7 
million kg at the same time last year.  It appears the largest 
growers are holding back some crop in expectation that the deeply 
undervalued inter-bank exchange rate at which they are paid will 
improve if there is a political breakthrough.  Even with late 
deliveries, this year's crop of the country's top agricultural forex 
earner could be considerably lower than the official estimate. 
While the GOZ continues to put the crop at 75 million kg, merchants 
have told us that production could be as low as 55 million kg. 
Production peaked at over 200 million kg before fast-track land 
reform. 
 
¶9.  "Zimbabwe - Beyond Tomorrow"...  The American Business 
Association of Zimbabwe's (ABAZ) annual BFIF-supported "Just 
Business" economic forum will take place on August 21. 
International speakers are flying in to address economic reform and 
recovery in Zimbabwe.  Among the presenters are Dr John Panzer of 
the World Bank, Dr Mbui Wagacha of the African Development Bank and 
Prof Caio Megale of Sao Paulo, Brazil.  This year, representatives 
of USAID's Southern African Global Competitiveness Hub in Gaborone, 
Botswana will discuss the potential benefits of AGOA eligibility to 
Zimbabwe's exporters.  The Trade Hub reps will also hold breakaway 
workshops specifically on textile and apparel exports to the U.S. 
under AGOA, and on the export of processed and semi-processed food. 
 
HARARE 00000699  003 OF 003 
 
 
 
 
MCGEE