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RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSB #0054/01 0260850
ZNR UUUUU ZZH
R 260850Z JAN 09
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC 3960
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA 2173
RUEHAR/AMEMBASSY ACCRA 2574
RUEHDS/AMEMBASSY ADDIS ABABA 2696
RUEHRL/AMEMBASSY BERLIN 1187
RUEHBY/AMEMBASSY CANBERRA 1965
RUEHDK/AMEMBASSY DAKAR 2320
RUEHKM/AMEMBASSY KAMPALA 2745
RUEHNR/AMEMBASSY NAIROBI 5173
RHEHAAA/NSC WASHDC
RHMFISS/EUCOM POLAD VAIHINGEN GE
RUEHGV/USMISSION GENEVA 1863
RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK
RHEFDIA/DIA WASHDC
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 04 HARARE 000054 
 
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 ROBERT TELCHIN 
 
SIPDIS 
 
E.O.12958: N/A 
TAGS: PGOV PREL ASEC PHUM ECON ZI
 
SUBJECT: ZIM NOTES 01-23-2009 
 
----------- 
¶1.  SUMMARY 
----------- 
 
Topics of the week: 
 
- Talks Remain Deadlocked... 
- Zimbabwe Courts Foreign Diamond Investors... 
- Zimbabweans Turn to Satellite TV to Watch U.S. Inauguration... 
- (Dis)Grace Punches Photographer... 
- Cholera Continues... 
- Budget to Consider Dollarization... 
- Lawyers Threatened... 
- Activists Launch Hunger Strike... 
- Soldiers Steal Gono's Chickens... 
- WOZA Trial Begins... 
- Passport Fees Continue to Climb Beyond Reach... 
- Court Cases Plod Along... 
- Zimbabwe's Inflation Monster Rages on... 
- The Zimbabwe Dollar Falls Sharply with the Release of Higher 
Denomination Notes... 
- ZINWA Starts Billing Companies in Foreign Currency... 
- Stock Exchange to Dollarize... 
 
--------------------------------- 
¶2.  Price Movements-Exchange Rate 
and Selected products 
--------------------------------- 
 
Parallel rate for cash skyrocketed to between Z$4 and Z$15 
trillion:US$1  (NOTE:  The cash rate is fluctuating widely depending 
on the Zimbabwean dollar denominations used.  END NOTE.) 
 
Check rate rose to Z$35 quadrillion:US$1 against inter-bank average 
of Z$30,577,532:US$1 
 
Bread on the parallel market went up to Z$15 trillion 
 
Sugar shot up to Z$45 trillion/2kg 
 
Petrol and diesel rose to Z$15 trillion/liter 
 
----------------------------- 
On the Political/Social Front 
----------------------------- 
 
¶3.  Talks Remain Deadlocked... After 12 hours of SADC-sponsored 
talks in Harare this week, no progress was made toward a 
power-sharing agreement between ZANU-PF and the MDC. The parties 
remain deadlocked over MDC demands for an equitable allocation of 
ministries, a fair share of governorships, a fair share of senior 
appointments, a jointly-administered national security council, and 
the rescission of the appointments of the Reserve Bank governor and 
the Attorney General. SADC will hold an Extraordinary Summit in 
Pretoria on January 26 to consider the issue. See Harare 48. 
 
¶4.  Zimbabwe Courts Foreign Diamond Investors... An RBZ-leaked 
report discusses governor Gono's plan to entice foreign investors to 
establish mining operations in the conflict-ridden diamond fields of 
Chiadzwa. The report's wildly optimistic forecast is that the GOZ 
could generate as much as US$1.2 billion per month in diamond 
royalties. Realistically, Chiadzwa could prove to be a temporary 
source of forex. See Harare 49. Meanwhile, the military is 
initiating efforts to displace as many as 25,000 residents from 
their homes in Chiadzwa to control the area and provide the military 
with village-based housing. See Harare 51. 
 
¶5.  Zimbabweans Turn to Satellite TV to Watch U.S. Inauguration... 
 
HARARE 00000054  002 OF 004 
 
 
Zimbabwe's only TV station, ZBC, showed an old movie on January 20 
rather than the U.S. presidential inauguration. Although some 
believe the blackout was designed to prevent Zimbabweans from seeing 
the peaceful transfer of power; others told us privately that no one 
at ZBC had "the guts" to put it on the schedule. In defiance, 
Zimbabweans flocked to restaurants and private homes - any place 
they could find a satellite TV. To date, ZBC has not shown any 
inauguration footage, including in newscasts. Many here believe 
Obama's offer to "extend a hand if you are willing to unclench your 
fist" was directed specifically at Mugabe. Notably, that quote was 
excluded from official newspaper reports on the inauguration. 
 
¶6.  (Dis)Grace Punches Photographer... While her bodyguards held 
him, First Lady Grace Mugabe repeatedly punched London Sunday Times 
photographer Richard Jones in the face outside her luxury Hong Kong 
hotel on January 15. According to the medical report, Jones suffered 
cuts and bruises caused by the First Lady's heavy diamond rings. 
Police are investigating using the hotel's video footage. An 
Australian tourist said she was "screaming, completely crazy." Known 
as "Disgrace" by many, the First Lady reportedly took US$92,000 from 
the Reserve Bank to finance her luxury vacation; her entourage's 
Hong Kong hotel stay reportedly cost more than US$2,500 per night. 
On January 16, she left Hong Kong to continue her vacation in 
Malaysia. 
 
¶7.  Cholera Continues... In the most recent update for January 
11-17, the WHO reported 6,466 new cases, 420 deaths, and a case 
fatality rate of 6.5 percent. Cumulative suspected cases now total 
more than 50,000, with 2,773 deaths as of January 22. The 
establishment of the WHO-managed cholera control center and the 
deployment of Bangladeshi diarrheal disease experts have improved 
reporting and response to the outbreak. In addition, Human Rights 
Watch released a new report this week calling on the AU to intervene 
in the government-created and perpetuated crisis. See the full 
report, "Crisis without Limits: Human Rights and Humanitarian 
Consequences of Political Repression in Zimbabwe," at: 
http://www.hrw.org/en/reports 
/2009/01/21/crisis-without-limits-0 
 
¶8.  Budget to Consider Dollarization... The Zimbabwe Independent 
reported on January 23 that Acting Finance Minister Patrick 
Chinamasa will introduce a proposed budget in the parliament on 
Thursday including dollarization. Taxes and duties would be payable 
in forex and forex payments for school fees would be allowed. 
Because of the lack of sufficient forex, coupons with U.S. dollar 
equivalents would be issued to civil servants and would be 
redeemable at specified shops. 
 
¶9.  Lawyers Threatened... Bulawayo members of Zimbabwe Lawyers for 
Human Rights (ZLHR) were threatened by unidentified men on January 
¶19. The men claimed ZLHR is working to destabilize the government by 
representing MDC bandits and criminals and blamed ZLHR for sanctions 
against members of ZANU-PF. 
 
¶10.  Activists Launch Hunger Strike... On January 21, the Save 
Zimbabwe Now campaign in Zimbabwe and South Africa launched a hunger 
strike aimed at pressuring SADC and Mugabe to resolve the political 
crisis in Zimbabwe. Fifty-five religious leaders and activists 
including Desmond Tutu and Graca Machel are participating in the 
21-day protest, although Machel is not fasting. 
 
¶11.  Soldiers Steal Gono's Chickens... Six armed soldiers reportedly 
stole 175 chickens at one of Reserve Bank governor Gideon Gono's 
farms. Soldiers - who had not been paid on time - told the farm 
manager Gono owed them money. 
 
¶12.  WOZA Trial Begins... Women of Zimbabwe Arise (WOZA) leaders 
Jenni Williams and Magodonga Mahlangu faced trial in Bulawayo on 
 
HARARE 00000054  003 OF 004 
 
 
January 22 for disturbing the peace during WOZA protests on June 19, 
2004 and October 16, 2008. Their lawyer argued the charges should be 
dropped based on Supreme Court precedent that one cannot be charged 
for disturbing the peace in connection with a peaceful 
demonstration. 
 
¶13.  Passport Fees Continue to Climb Beyond Reach... Even 
Zimbabweans with the means to travel are facing serious difficulties 
getting assports, now only available with U.S. dollars. A pssport 
now costs US$670 for an adult and US$420 or a child. 
 
¶14.  Court Cases Plod Along... On Jnuary 16, magistrates referred 
Jestina Mukoko's ase to the Supreme Court to examine the 
constituionality of her arrest. On the same day, bail for the seven 
alleged police station bombers was denie in the High Court. 
However, Justice Karwi becam the third judge to rule all seven 
should be grated access to a private health facility. On Tuesda, 
Mukoko was unexpectedly taken to a private hospital, only to be 
taken back to prison hours later, with the IV still in her arm. 
Others have not been granted the medical access dictated by court 
orders. Although the High Court reinforced a lower court order 
granting bail to two abductees, Pascal Gonzo and Tawanda Bvuma, they 
remain in prison. Separately, three white men who were arrested on 
January 6 remain in Chikurubi maximum security prison. The trio 
faces charges of training insurgents at a camp just outside Harare. 
As in other recent terrorism cases, the men were forced to give 
videotaped statements without a lawyer present. Although the State 
did not have enough evidence to present its case in their initial 
hearing on January 23, the judge granted the State two more weeks to 
investigate while the men remain at Chikurubi. 
 
---------------------------------- 
On the Economic and Business Front 
---------------------------------- 
 
¶15.  Zimbabwe's Inflation Monster Rages on... Although the GOZ has 
not released inflation figures for nearly half a year, a survey done 
by the Delegation of the European Commission to Zimbabwe, using a 
food basket of 18 products for low-income earners, put the 
year-on-year rate of inflation in 2008 at 41 quadrillion percent. As 
astronomical as the figure is, it is only a shadow of the 486 
heptillion percent calculated by a highly regarded private sector 
source that has tracked inflation here for years. 
 
¶16.  The Zimbabwe Dollar Falls Sharply with the Release of Higher 
Denomination Notes... The introduction of the ten trillion dollar 
note on January 16 resulted in another massive drop in the value of 
the local currency. Due to the lack of low denominated notes, 
different exchange rates have emerged for low and high notes. The 
ten trillion dollar note fetches the least advantageous rate for the 
Zim dollar seller. The exchange rate fell from Z$800 billion on 
January 16 to between Z$4 trillion and Z$15 trillion:US$ by January 
23, depending on denomination. 
 
¶17.  ZINWA Starts Billing Companies in Foreign Currency... 
Government anticipated that the Zimbabwe National Water Authority 
(ZINWA) would raise as much as US$20 million per month when the 
parastatal received permission in December, 2008 to bill companies 
in foreign currency. Businesses, however, are calling the new forex 
tariff of US$1 per cubic meter excessive and seeking a substantial 
reduction in the charges in line with regional best practice of 
around US30 cents per cubic meter. 
 
¶18.  Banks Call for Dollarization of Sector to Survive... The 
beleaguered banking sector is calling for the dollarization of the 
sector in line with the rest of the economy. While banks' income is 
in nearly worthless Zimbabwe dollars, their costs are increasingly 
U.S. dollar-denominated. Hardly any lending is taking place given 
 
HARARE 00000054  004 OF 004 
 
 
the harsh operating environment and the collapse of the productive 
sectors of the economy. Most banks are closing branches and sending 
employees on leave to cut costs. 
 
¶19.  Stock Exchange to Dollarize... On a related note, stockbrokers 
and investors, too, are pushing for the dollarization of the 
Zimbabwe Stock Exchange (ZSE) to pave the way for resumption of 
trading. Trading was suspended on November 21, 2008 to dampen 
inflation that was being partly driven by paper wealth created on 
the ZSE. According to the Financial Gazette newspaper, ZSE 
stakeholders, including government, agreed in principle on January 
16, 2009 to dollarize, subject to resolution of knotty issues 
including valuation of the listed companies to determine floor 
prices, and exchange control issues. 
 
------------------ 
Quotes of the Week 
------------------ 
 
¶20.  "I was celebrating with the rest of the world, but at the same 
time my own celebration of this landmark inauguration was marred by 
my sense of sorrow and frustration that this kind of democratic 
process cannot happen in my own country. I nearly wept. I don't do 
that easily."  -- Exiled Zimbabwean journalist Geoffrey Nyarota on 
the U.S. presidential inauguration 
 
¶21.  "It's how you treat your own citizens, that's where your 
legitimacy comes from...This is a lesson to our region. We came 
together to liberate ourselves, but now [we see] that power can 
pervert you to become precisely the opposite of what led you to 
become a freedom fighter." -- Graca Machel, former First Lady of 
Mozambique, wife of Nelson Mandela, and Elder, speaking at the 
launch of the Save Zimbabwe Now hunger strike in Johannesburg on 
Jan 
 
 
MCGEE