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R 021536Z FEB 09
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC 3985
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA 2181
RUEHAR/AMEMBASSY ACCRA 2593
RUEHDS/AMEMBASSY ADDIS ABABA 2715
RUEHRL/AMEMBASSY BERLIN 1202
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RHEHAAA/NSC WASHDC
RHMFISS/EUCOM POLAD VAIHINGEN GE
RUEHGV/USMISSION GENEVA 1882
RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK
RHEFDIA/DIA WASHDC
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 03 HARARE 000075 
 
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 01-30-2009 
 
----------- 
¶1.  SUMMARY 
----------- 
Topics of the week: 
 
- MDC-T to Vote Today on Whether to Join Government... 
- EU Expands Sanctions List... 
- Cholera Deaths Continue... 
- Farm Invasions Continue Despite Tribunal Ruling and BIPPAs... 
- Still No Resolution to Abduction Cases... 
- Teachers Don't Show... 
- GOZ Introduces Wildly Optimistic Budget... 
- Tobacco Output Well Below Target... 
- More Strikes Looming as Collective Bargaining Period Approaches... 
- Companies Devise Survival Strategies... 
- Zimbabwe's U.S. Dollar Inflation High But Falling... 
- Economic Tidbit of the Week... 
 
--------------------------------- 
¶2.  Price Movements-Exchange Rate 
and Selected products 
--------------------------------- 
 
Note: The near universal dollarization of the Zimbabwean economy has 
obviated the need and relevancy of tracking prices in local currency. 
In the absence of reliable government-provided economic data, Post is 
currently evaluating more useful methods of gaining economic insights 
into Zimbabwe. 
 
----------------------------- 
On the Political/Social Front 
------------------------------ 
 
¶3.  MDC-T to Vote Today on Whether to Join Government... Following 
the recommendation by the SADC Extraordinary Summit on January 26 
that ZANU-PF and te two MDC factions form a government as soon as 
possible, the MDC-T National Council will meet on January 30 to 
determine if they will endorse the SADC resolution. While the MDC-T 
issued a statement following the Summit that the SADC recommendations 
fell "far short" of their expectations, after gaining some 
concessions on the appointment of governorships, the composition of 
the proposed National Security Council, and promises to revisit the 
issues of other senior appointments, political violence, and 
ministerial allocations, prime minister-designate Morgan Tsvangirai 
appears to favor a deal. See Harare 70 
 
¶4.  EU Expands Sanctions List... The European Union stepped up 
pressure on the Mugabe government on January 26 by adding the names 
of 27 individuals and 36 companies to the list of persons and 
entities that are banned from travelling to EU countries and whose 
assets have been frozen by European financial institutions. Some of 
the newly-named individuals with close ties to the government include 
John Bredenkamp, "Billy" Rautenbach, and family members of ZANU-PF 
regime members who had been previously named. The EU also declared 
support for an investigation into illicit diamond sales in Zimbabwe. 
 
¶5.  Cholera deaths continue... As of January 29, the cholera outbreak 
had caused 3,161 deaths, with 60,400 suspected cases reported, 
according to the UN World Health Organization (WHO). For the week of 
January 18 to 24, WHO noted that while cholera cases continued to 
increase, cholera deaths and the overall case fatality rate (CFR) 
decreased from the previous week. The institutional CFR, measuring 
only cholera deaths in health facilities, declined to 1.3 percent for 
Qonly cholera deaths in health facilities, declined to 1.3 percent for 
the week, likely indicating further improvements in case management 
at cholera treatment centers. Ambassador McGee visited the UN 
Children's Fund warehouse in Harare on January 29 to officially hand 
over hygiene supplies funded by USAID's Office of U.S. Foreign 
Disaster Assistance (USAID/OFDA), including 400 metric tons of soap, 
 
HARARE 00000075  002 OF 003 
 
 
10 million water treatment tablets, 30,000 water containers, and 
30,000 buckets. 
 
¶6.  Farm Invasions Continue Despite Tribunal Ruling and BIPPAs... The 
few remaining commercial farmers in Zimbabwe continue to report 
incidences of harassment and land invasions as the government 
continues to implement the controversial land reform program first 
begun in 2000. Neither a favorable ruling by a SADC Tribunal 
declaring Zimbabwe's actions in violation of its SADC treaty 
obligations, nor Bilateral Investment Promotion and Protection 
Agreements between Zimbabwe and foreign nations have protected 
commercial farmers. See Harare 072. 
 
¶7.  Still No Resolution to Abduction Cases... Human Rights crusader 
Jestina Mukoko is due in the High Court on January 30 where lawyers 
are pushing for her release on bail, pending a still unscheduled 
hearing in the Supreme Court on the legality of her abduction. 
Numerous court cases have been delayed, as court clerks join other 
poorly paid civil servants in unofficial strikes. Of the 21 abductees 
who have appeared in police custody, only two have been released to 
date-Tawanda Bvumo and two-year-old Nigel Mutemagau. 15 have 
testified that they were tortured in state custody. 11 are still 
missing. 
 
¶8.  Teachers Don't Show... Only a handful of government schools 
admitted students this week despite the government's mandate that 
schools open on January 27. The closures were caused by a nationwide 
boycott by the two major teachers unions, the Progressive Teachers 
Union of Zimbabwe and the Zimbabwe Teachers Association, who are 
demanding that their members be paid in foreign currency. The few 
government schools that did open had worked out arrangements with 
parents who paid between US$100 and US$200 in tuition for the term. 
The private trust schools-which charge far more-were all opened this 
week. 
 
---------------------------------- 
On the Economic and Business Front 
---------------------------------- 
 
¶9.  GOZ Introduces Wildly Optimistic Budget... Acting Minister of 
Finance Patrick Chinamasa introduced a US$1.9 billion budget to 
Parliament on January 29, amid jeering from opposition MPs. The 
Minister proposed a range of market liberalization measures. He also 
proposed the use of multiple currencies alongside the Zimbabwe dollar 
as the solution to Zimbabwe's runaway inflation. However, it is 
unclear how the GOZ can raise enough foreign exchange in taxes to 
achieve a balanced budget. Given that most companies have succumbed 
to the harsh economic environment, and over 90 percent of production 
is now done by the informal sector, it is difficult to see how the 
dollarization will succeed. Much depends on donor support. Overall, 
the budget is long on intentions but short on how to achieve the 
targets. See Harare 061. 
 
¶10.  Tobacco Output Well Below Target... Chinamasa revealed in 
yesterday's budget that tobacco output for the 2007/08 season fell to 
Qyesterday's budget that tobacco output for the 2007/08 season fell to 
a mere 45 million kg-well below the targeted 73 million kg, and down 
from the 2000 peak of 237 million kg despite massive financial 
support from the Reserve Bank of Zimbabwe. 
 
¶11.  More Strikes Looming as Collective Bargaining Period 
Approaches... With the pervasive dollarization of the economy, 
workers are demanding salary payments in foreign currency. A growing 
number of employees have joined the strike bandwagon that started 
with teachers and health workers. National Railways of Zimbabwe 
employees began a "go slow" a month ago; they were joined by postal 
service workers on January 21 and Zimbabwe National Water Authority 
employees the following day. Workers from the Apex Council 
representing public servants are considering taking industrial action 
 
HARARE 00000075  003 OF 003 
 
 
against government for failing to agree on payment of salaries in 
foreign currency. Given the dire shortage of foreign exchane, 
Zimbabwe is likely to witness widespread strikes in the short term. 
 
¶12.  Companies Devise Survival Strategies... In an effort to reduce 
costs and remain viable, agricultural manufacturer, Chemco Holdings, 
is rationalizing its business units and shutting down remote retail 
outlets. Its latest financial results reflect a 40 percent real 
decline in business activity in 2008. Meanwhile, Dunlop Zimbabwe 
Limited and National Tyre Services, both owned by Apollo Tires of 
India, have announced plans to merge as a way of hedging against the 
negative operating environment and offering increased value to 
shareholders. 
 
¶13.  Zimbabwe's U.S. Dollar Inflation High But Falling... The use of 
foreign currency alongside the Zimbabwe dollar improved the 
availability of goods in recent months, but prices were sky high for 
much of 2008. Private estimates put the U.S. dollar annual inflation 
rate in Zimbabwe at between 60 and 100 percent. In recent weeks U.S. 
dollar prices for goods have begun to fall as dollarization of the 
economy introduced more competition. 
 
¶14.  Economic Tidbit of the Week:  A mother of a student enrolled in 
a government school reported that the full school uniform for her 
primary school-aged child was US$250 this term. Last term the cost 
was the equivalent of US$75. 
 
----------------- 
Quote of the Week 
----------------- 
 
¶15.  "The time to go is now, we are ready to give you a golden 
handshake if you will quit." -- Kenyan Prime Minister Raila Odinga 
speaking on January 29 about Mugabe, while at the World Economic 
Forum in Davos, Switzerland. 
 
 
MCGEE