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RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSB #0785/01 2520937
ZNR UUUUU ZZH
R 080937Z SEP 08
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC 3399
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA 2060
RUEHAR/AMEMBASSY ACCRA 2269
RUEHDS/AMEMBASSY ADDIS ABABA 2389
RUEHRL/AMEMBASSY BERLIN 0914
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RUEHDK/AMEMBASSY DAKAR 2022
RUEHKM/AMEMBASSY KAMPALA 2443
RUEHNR/AMEMBASSY NAIROBI 4875
RHEHAAA/NSC WASHDC
RHMFISS/EUCOM POLAD VAIHINGEN GE
RUEHGV/USMISSION GENEVA 1538
RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK
RHEFDIA/DIA WASHDC
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 03 HARARE 000785 
 
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 9-5-2008 
 
----------- 
¶1.  SUMMARY 
----------- 
 
Topics of the week: 
- Talks to Continue Monday... 
- NGO Ban Lifted... 
- Back to School, if You Can Pay... 
- MDC MPs Ejected from Swearing-in... 
- Mugabe and Tsvangirai attend Mwanawasa funeral... 
- ZBC Television turns to Korea... 
- Britain Eases Travel Advice... 
- Survey says... 
- Banks Benefiting Short-Term from State Spending... 
- Inflation Rages On... 
 -Reserve Bank Seeking Local Solution for Banknote Paper Supply... 
 
- World Bank Officials Visit Harare... 
- Tobacco Board Concedes Poor Crop... 
- Levy On Generators Scrapped... 
- Local Conglomerate Expands Outside Zimbabwe... 
 
--------------------------------------------- ---------- 
¶2.  Price Movements-Exchange Rate and Selected Products 
--------------------------------------------- ---------- 
 
Parallel rate for cash rose to Z$235:US$1 
 
Bank transfer more than doubled to Z$5500:US$1 against inter-bank 
average of Z$46.03:US$1 
 
Bread on the parallel market rose by half to Z$450 
 
Sugar almost doubled to Z$500/2kg 
 
Cooking oil remained static at Z$90/750ml 
 
Petrol and diesel rose by two-thirds to Z$500/liter 
 
----------------------------- 
On the Political/Social Front 
----------------------------- 
 
¶3. Talks to Continue Monday... Renewed ZANU-PF - MDC talks had been 
expected to resume on Thursday and Zimbabwean president Robert 
Mugabe threatened to appoint a cabinet if an agreement was not 
reached by the weekend.  MDC president Morgan Tsvangirai, however, 
decided to postpone his return to Harare after attending former 
Zambian president Mwanawasa's funeral in Lusaka and South African 
president Thabo Mbeki accordingly delayed his trip to Harare.  Mbeki 
is now planning to travel to Harare on Monday in a last-ditch effort 
to reach a deal.  The obstacle still remains an agreement on the 
distribution of executive power between Mugabe as president and 
Tsvangirai as prime minister. 
 
¶4.  NGO Ban Lifted... The Government lifted the suspension on NGO 
field operations on August 29, allowing humanitarian assistance and 
vital food aid distribution to recommence.  However, a debate 
continues among human rights and democracy-building organizations as 
to whether their activities are still "banned".  See Harare 765 and 
¶778. 
 
¶5.  Back to School, if You Can Pay... Most schools started this 
week.  Despite its illegality, many private schools are demanding 
payment in foreign currency, gas coupons, and even livestock.  See 
Harare 767. 
 
¶6.  MDC MPs Ejected from Swearing-in...  The swearing-in ceremony 
 
HARARE 00000785  002 OF 003 
 
 
for the Makoni rural council was violently interrupted on September 
2, when eight losing ZANU-PF councilor candidates arrived, demanding 
to be sworn in.  Tensions quickly rose and the 23 MDC 
councilors-elect, three MDC MPs, and their supporters were forcibly 
removed by riot police and ZANU militia that were called by the 
District Administrator.  The 16 ZANU elected councilors and the 
eight losing ZANU councilors were then sworn in.  Monica Chinamasa 
(Senator Patrick Chinamasa's wife) and David Mutasa (National 
Security Minister Didymus Mutasa's cousin) were among the eight who 
apparently appointed themselves to the council.  David Mutasa was 
then "elected" Chairman of the Council. 
 
¶7.  Mugabe and Tsvangirai attend Mwanawasa funeral...  Both Robert 
Mugabe and Morgan Tsvangirai attend the funeral of Zambian President 
Levy Mwanawasa in Lusaka on September 3.  Mugabe surprised many by 
praising Mwanawasa as a "frank and honest man".  Mwanawasa was the 
first African president to openly criticize the Mugabe regime when 
he likened it to a "sinking titanic". 
 
¶8.  ZBC Television turns to Korea... Cash strapped state 
broadcaster, ZBC TV, launched a new programming schedule this week 
that will feature South Korean dramas and comedies, in addition to 
locally produced dramas and talk shows. The new schedule runs until 
December 2. 
 
¶9.  Britain Eases Travel Advice... Citing decreased post-election 
violence, the Foreign Office downgraded its advice against all but 
essential travel to Zimbabwe on August 27, effectively putting 
British advice in-line with U.S. guidance. 
 
¶10.  Survey says... A Gallup poll conducted before the March 29 
elections pegged Mugabe's approval rating at a pitiful 17%.  In 
contrast, Mugabe declared victory in the June 27 election with a 
whopping 86% of the vote.  See: http://www.gallup.com/poll/109963 
/Most-Zimbabweans-Disapprove- 
Their-Leadership.aspx. 
 
---------------------------------- 
On the Economic and Business Front 
---------------------------------- 
 
¶11.  Banks Benefiting Short-Term from State Spending...  The bank 
liquidity crisis of late 2007/early 2008 has abated, perversely due 
to high election-related government expenditure.  The spending has 
caused explosive growth in money supply and hyperinflation. When 
Zimbabwe returns to sound macroeconomic policies, the downside risks 
to the banking sector will be high. See Harare 773. 
 
¶12.  Inflation Rages On...  Although official statistics put 
year-on-year rate inflation for June at 11.2 million percent, 
reliable private estimates put the rate at close to 10 billion 
percent in August, with food inflation close to 8 billion percent. 
Supply side rigidities and the precipitate depreciation of the 
Zimbabwe dollar on the parallel market have been largely responsible 
for the rise. 
 
¶13.  Reserve Bank Seeking Local Solution for Banknote Paper 
Supply...  See Harare 760. 
 
¶14.  World Bank Officials Visit Harare...  Three World Bank 
officials visited Harare the week of August 18 to brief donors on 
developments related to the Multi Donor Trust Fund and to take the 
pulse of the economy.  Maputo-based country director Michael Baxter 
said the World Bank had geared up to re-engage with Zimbabwe once 
policies came right, but at the end of his visit he saw the chances 
of the Bank moving forward on Zimbabwe receding.  See Harare 777. 
 
¶15.  Tobacco Board Concedes Poor Crop...  Tobacco Industry Marketing 
 
HARARE 00000785  003 OF 003 
 
 
Board Acting CEO Dr. Andrew Matibiri told us the 2008/09 tobacco 
crop would likely be about 55 million kg, close to the 
post-independence low.  In addition, growers were holding back 
deliveries to the auction floor due to high transportation costs, 
the unfavorable inter-bank exchange rate, and dearth of inputs, even 
on the black market, for purchase with their quickly depreciating 
proceeds.  Matibiri described the state of seedbed preparation for 
next year's crop as "very poor and very late." 
 
¶16.  Levy On Generators Scrapped... The ill-advised US dollar levy 
on domestic and industrial generators introduced two weeks ago has 
been scrapped. 
 
¶17.  Local Conglomerate Expands Outside Zimbabwe...  Having expanded 
beyond its local presence in tourism, insurance, and the fertilizer 
industry, 72% of TA Holdings' balance sheet is now outside Zimbabwe 
and 50% of the company's assets are financial.  With little debt, 
Zimbabwe's second largest conglomerate, is seeking further 
acquisitions in Zimbabwe and beyond.  TA's Sable Chemicals had 
contributed 45% to the group's balance sheet as recently as four 
years ago, but under price controls the fertilizer plant is now 
operating at only 17% capacity. 
 
----------------- 
Quote of the Week 
----------------- 
 
¶18.  Crisis?  What crisis?  Information and Publicity Minister 
Sikhanyiso Ndlovu in an interview on September 2: 
"We have organizations which call themselves 'Crisis in Zimbabwe'. 
What crisis are they talking about? They are the ones who are 
encouraging the crisis, and as a government we cannot accept that." 
 
 
MCGEE