VZCZCXRO2706
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSB #1057/01 3360806
ZNR UUUUU ZZH
R 010806Z DEC 08
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC 3754
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA 2132
RUEHAR/AMEMBASSY ACCRA 2463
RUEHDS/AMEMBASSY ADDIS ABABA 2588
RUEHRL/AMEMBASSY BERLIN 1081
RUEHBY/AMEMBASSY CANBERRA 1857
RUEHDK/AMEMBASSY DAKAR 2212
RUEHKM/AMEMBASSY KAMPALA 2637
RUEHNR/AMEMBASSY NAIROBI 5065
RHEHAAA/NSC WASHDC
RHMFISS/EUCOM POLAD VAIHINGEN GE
RUEHGV/USMISSION GENEVA 1729
RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK
RHEFDIA/DIA WASHDC
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 03 HARARE 001057 
 
AF/S FOR B. WALCH 
ADDIS ABABA FOR USAU 
ADDIS ABABA FOR ACSS 
NSC FOR SENIOR AFRICA DIRECTOR B.PITTMAN 
TREASURY FOR D. PETERS 
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 11-28-2008 
 
----------- 
¶1.  SUMMARY 
----------- 
 
Topics of the week: 
 
-  Negotiators Sign Constitutional Amendment 19... 
-  Treasury Department Designates More Cronies... 
-  Supreme Court Dismisses Danish Suit... 
-  Elders Turned Away... 
-  Frustrated Soldiers Trash Bank... 
-  Mbeki expresses frustration with MDC-T... 
-  Gono's Term Renewed... 
-  RBZ Directs Public Utilities To Accept Checks... 
-  RBZ Issues a One-Year Insurance and Pension Industry Bond... 
-  Russians and South Africans Snap Up Properties In Zimbabwe... 
-  Five Banks Thrown Out of Stock Exchange... 
 
--------------------------------- 
¶2.  Price Movements-Exchange Rate 
and Selected products 
--------------------------------- 
 
Parallel rate for cash doubled to Z$2,000,000:US$1 
 
Check rate shot up five-fold to Z$100 quadrillion:US$1 against 
inter-bank average of $70,198:US$1 
 
Bread on the parallel market went up to Z$2,500,000 
 
Sugar rose to Z$5,000,000/2kg 
 
Petrol and diesel rose to Z$2,000,000/liter 
 
----------------------------- 
On the Political/Social Front 
----------------------------- 
¶3.  Negotiators Sign Constitutional Amendment 19...  Negotiators of 
all three parties came to agreement on Constitutional Amendment 19 
which, when passed by Parliament, will legalize the terms of the 
power-sharing agreement signed on September 11 and September 15.  An 
online newspaper cited sources saying that the terms were based 
solely on what was contained in the agreement, and did not include 
additional provisions sought by ZANU-PF and MDC-T.  The same report 
said the amendment was based on the September 11 version of the 
power-sharing agreement, rather than the fraudulently altered 
version that was publicly signed on September 15.  An MDC-T 
spokesperson said, "We signed the draft bill but that does not mean 
we gave commitment to join the unity government before all these 
other equally important issues are resolved," referring to issues 
including the nomination of governors and other senior officials. 
 
¶4.  Treasury Department Designates More Cronies...  The U.S. 
Department of the Treasury's Office of Foreign Assets Control on 
November 25 designated four individuals with ties to the Mugabe 
government and a number of entities owned or controlled by two of 
them.  A Treasury spokesman said the financial and logistical 
support they had provided to the regime had enabled Mugabe to pursue 
policies that seriously undermine democratic processes and 
institutions in Zimbabwe.  The named individuals include John 
Bredenkamp, Muller "Billy" Rautenbach, Nalinee Joy Taveesin, and 
Mahmood Awang Kechik. 
 
¶5.  Supreme Court Dismisses Danish Suit...  Zimbabwe's Supreme Court 
dismissed a lawsuit brought by the Danish former owners of Nyahondo 
Farm in Chinhoyi who were challenging the farm seizure orchestrated 
by Brigadier-General Tapfumanei.  The Danish owners were arguing 
that the seizure violated the Bilateral Investment Protection 
 
HARARE 00001057  002 OF 003 
 
 
Agreement (BIPA) between Zimbabwe and Denmark.  The ruling could 
expose Zimbabwe to economic reprisals via the World Trade 
Organization.  Zimbabwe also has BIPAs with Austria, France, 
Germany, Malaysia, Mauritius, the Netherlands, South Africa, and 
Sweden. 
 
¶6.  Elders Turned Away...  Former U.S. President Carter, Nelson 
Mandela's wife Graca Machel, and former UN Secretary General Kofi 
Annan were denied entry into Zimbabwe last week to assess the 
humanitarian crisis.  President Mugabe's government said it stopped 
the Elders' visit because it was ill-timed coming when the country 
was busy with negotiations to form a government of national unity. 
Nonetheless, the three Elders held meetings on Zimbabwe in South 
Africa and issued somber assessments of the country's plight.  "We 
were expecting a gloomy situation, but the situation is far beyond 
what we could have imagined," said Graca Machel at a press briefing 
in Johannesburg. 
 
¶7.  Frustrated Soldiers Trash Bank...  After a day of waiting in 
lines to withdraw cash, between 60 and 70 soldiers were told on 
November 27 that there was no more cash available for withdrawal. 
The soldiers ran amok and took their anger out on the staff of the 
bank located on Samora Machel Avenue in Harare.  After beating 
several bank employees, they smashed the bank's windows before 
eventually being restrained by military police.  There were also 
reports of soldiers creating disorder at one army barracks and 
confiscating forex from citizens on the streets of Harare. 
 
¶8.  Mbeki expresses frustration with MDC-T...  In response to a 
letter from MDC Secretary General Biti dismissing the results of the 
Nov 9 SADC Summit and questioning the usefulness of discussions at 
this time, Facilitator Mbeki on November 22 wrote a 10 page letter 
to Morgan Tsvangirai, rebuking the MDC-T for lack of concern about 
the plight of Zimbabweans and excessive ties to western powers. 
 
---------------------------------- 
On the Economic and Business Front 
---------------------------------- 
 
¶9.  Gono's Term Renewed...  President Mugabe renewed Gideon Gono's 
term as governor of the Reserve Bank of Zimbabwe (RBZ) for another 
five years.  This effectively kills speculation that he would be 
sacked due to his lax monetary policies and extensive quasi-fiscal 
operations that pushed inflation through the roof.  His new term 
extends his position until December 2013.  It is not yet clear how 
difficult it would be for a new government to reverse this 
appointment; this will depend in part on whether Amendment 19 to the 
Zimbabwean constitution includes a ZANU-PF supported provision 
validating decisions made by government officials since the last 
Parliament was dissolved. 
 
¶10.  RBZ Directs Public Utilities To Accept Checks...  On November 
20, the RBZ directed parastatals to accept checks as a legitimate 
form of payment of bills in lieu of cash.  This was in direct 
response to the Zimbabwe Electricity Supply Authority's (ZESA's) 
refusal to accept payment of electric bills by check. 
 
¶11.  RBZ Issues a One-Year Insurance and Pension Industry Bond... 
On November 14, the RBZ issued a one year bond to insurance 
companies, pension funds, and other financial institutions to raise 
funds for GOZ capital projects at a 450% interest rate.  Given the 
low interest rate relative to inflation, the bond effectively 
provides the GOZ with free capital and enforces the RBZ policy that 
insurance and pension funds invest 35% of their assets in prescribed 
government investments. 
 
¶12.  Russians and South Africans Snap Up Properties In Zimbabwe... 
According to a report by the real estate group Pam Golding 
 
HARARE 00001057  003 OF 003 
 
 
Properties, Russian and South African property investors are buying 
houses in Harare.  There are few local buyers because of the 
collapse of the Zimbabwean mortgage industry. 
 
¶13.  Five Banks Thrown Out of Stock Exchange...  Following the 
tightening of trading conditions on the Zimbabwe Stock Exchange 
(ZSE), First Bank, CFX, Kingdom, NMB and ZABG were kicked out of the 
market on November 22, 2008 for failing to meet debts amounting to 
hexillions of Zimbabwe dollars.  (Note: One hexillion is the 
equivalent of US$10,000 at the current check rate.  End Note.) 
 
----------------- 
Quote of the Week 
----------------- 
 
¶14.  November 22 letter from Facilitator Mbeki to Morgan Tsvangirai: 
 "Realistically, Zimbabwe will never share the same neighborhood 
with the countries of Western Europe and North America, and 
therefore secure its success on the basis of friendship with these, 
and contempt for the decisions of its immediate African neighbors." 
 
 
 
MCGEE