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RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSB #0248/01 0821236
ZNR UUUUU ZZH
R 231236Z MAR 09
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC 4270
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA 2247
RUEHAR/AMEMBASSY ACCRA 2720
RUEHDS/AMEMBASSY ADDIS ABABA 2842
RUEHRL/AMEMBASSY BERLIN 1296
RUEHBY/AMEMBASSY CANBERRA 2107
RUEHDK/AMEMBASSY DAKAR 2463
RUEHKM/AMEMBASSY KAMPALA 2890
RUEHNR/AMEMBASSY NAIROBI 5329
RHEHAAA/NSC WASHDC
RHMFISS/EUCOM POLAD VAIHINGEN GE
RUEHGV/USMISSION GENEVA 2009
RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK
RHEFDIA/DIA WASHDC

UNCLAS SECTION 01 OF 03 HARARE 000248 
 
AF/S FOR B. WALCH 
ADDIS ABABA FOR USAU 
ADDIS ABABA FOR ACSS 
NSC FOR SENIOR AFRICA DIRECTOR 
STATE PASS TO USAID FOR L.DOBBINS AND J. HARMON 
COMMERCE FOR ROBERT TELCHIN 
 
SIPDIS 
 
E.O.12958: N/A 
TAGS: PGOV PREL ASEC PHUM ECON ZI
 
SUBJECT: ZIM NOTES 03-20-2009 
 
----------- 
¶1.  SUMMARY 
----------- 
 
Topics of the week: 
 
- New Government Making Progress, But Still Lacks Unity... 
- Conspiracy Theorists Continue to Blame U.S. for Accident... 
- Minister Matinenga Takes The Witness Stand... 
- MDC Members Remain Behind Bars For Post-Funeral Violence... 
- Giving Up On O Level Exams? 
- Poor Students Must Pay To Apply For Free Tuition... 
- Finance Minister Slashes Budget... 
- Air Zimbabwe Struggling... 
- Telephone Tariffs Reduced, But Still Too High... 
- IMF Sees Some Economic Stabilization; Audits RBZ... 
- Kimberley Process Team Visits Diamond Sites... 
- Business and IMF Concerned About Wage Expectations... 
 
----------------------------- 
On the Political/Social Front 
------------------------------ 
 
¶2.  New Government Making Progress, But Still Lacks Unity... Despite 
some progress towards a reduction in political violence and a slight 
opening of democratic space, significant roadblocks within 
government remain, including the continued tenure of Reserve Bank 
Governor Gideon Gono and Attorney General Johannes Tomana. In 
addition, a lack of technical and human capacity within the 
ministries limits government's ability to effectively implement 
policies. MDC Ministers of Water Sam Nkomo (See Harare 239) and 
Economic Development Elton Mangoma (See Harare 240), confirmed the 
dire financial situation within their ministries and progress in 
navigating the new political dynamics.  For an in-depth look, see 
Harare 226. 
 
¶3.  Conspiracy Theorists Continue to Blame U.S. for Accident... 
Allegations that the U.S. is somehow responsible for the tragic car 
accident that injured Prime Minister Morgan Tsvangirai and killed 
his wife Susan continue in the local media. The state-sponsored 
media also continues to sing the ZANU-PF song calling for an end to 
sanctions.  See Harare 233. Also this week, Gideon Theron, the vice 
president of the outspoken Commercial Farmers Union, which 
represents mostly white commercial farmers, was arrested on charges 
of obstructing justice after he was taking pictures of the scene of 
the accident.  Theron lives nearby and arrived on the scene before 
police, raising suspicions about his alleged role.  On March 20, The 
Herald ran a full page article calling for an inquiry into the U.S., 
UK, and CFU role in the crash. 
 
 
¶4.  Minister Matinenga Takes The Witness Stand... Minister of 
Constitutional and Parliamentary Affairs Minister and MDC legislator 
Eric Matinenga appeared in a Mutare court on 19 March 2009.  He is 
accused of inciting violence during the run-up to last year's June 
presidential elections. 
 
¶5.  MDC Members Remain Behind Bars For Post-Funeral Violence... 
During Susan Tsvangirai's funeral, ZANU-PF youths in Buhera 
allegedly burned down the home of an MDC supporter who was attending 
the funeral on March 11.  In retaliation, a group of 15 MDC 
supporters allegedly burned down houses of several ZANU-PF 
supporters.  After the arrest of the MDC supporters, 14 of the 15 
Qsupporters.  After the arrest of the MDC supporters, 14 of the 15 
were denied bail on March 18; only a breastfeeding mother was set 
free.  Separately, 13 MDC members in Murambinda were granted bail by 
a Mutare magistrate; they are accused of extortion after asking 
ZANU-PF members who stole poultry during the run-up to the June 27 
runoff to return their property.  The ZANU-PF members accused of 
theft were never arrested. 
 
 
HARARE 00000248  002 OF 003 
 
 
¶6.  Giving Up On O Level Exams?  Minister of Education Coltart 
decreed that given the time lost from school closures in 2008, high 
schools should start enrolling and teaching Advanced Level students 
regardless of the fact that Ordinary Level exam results from 2008 
are not yet out.  In effect this policy decision means students will 
begin advanced level subjects before knowing if they passed the 
previous levels and is an open admission that ZIMSEC will not have 
the 2008 exam results out any time soon. 
 
¶7.  Poor Students Must Pay To Apply For Free Tuition... The 
University of Zimbabwe announced on March 11 that students wishing 
to join their "cadetship scheme" should first pay a steep $150 
application fee.  Under the scheme, low-income students are granted 
fre tuition in exchange for a period of required government 
employment after graduation 
 
----------------------------------- 
On the Economic and Business Front 
---------------------------------- 
 
 
¶8.  Finance Minister Slashes Budget... MDC-T Minister of Finance 
Tendai Biti announced a revised 2009 budget of US$ 1 billion, down 
from the Acting Minister's January 2009 budget of US$1.9 billion. 
In another shot at RBZ's Governor Gono, Biti called for all public 
revenue to be directed and remitted to Treasury, and announced the 
elimination of the 5% tax on sales in foreign currency and the 
foreign currency surrender requirement-both of which had been 
payable to the RBZ.  Recurrent expenditure accounts for 80.7% of the 
budget with capital and net lending to parastatals and local 
authorities accounting for the remainder.  For the first time in 
years, there is an allowance (US$16.7 million) for interest payment 
on foreign debts.  Revenues are dominated by taxes on goods and 
services.  Biti also announced a reduction in customs duties to a 
flat rate of 40%.  Royalties and taxes on mining houses will be 
reviewed upwards to offset loss of revenue from surrender 
requirements. 
 
 
¶9.  Air Zimbabwe Struggling... Zimbabwe's national air carrier has 
become a drain on the government, requiring continuous transfusions 
of capital from the Reserve Bank to maintain safe aircraft.  While 
privatizing the airline could ensure it success, there is no 
indication that change is on the horizon.  See Harare 228 
 
¶10.  Telephone Tariffs Reduced, But Still Too High... According to 
the Postal and Telecommunications Regulatory Authority of Zimbabwe 
(POTRAZ), all telephone tariffs will be reduced by 25 to 40 percent 
pending the completion of a thorough review of tariffs.  Zimbabwe's 
telephone tariffs were very low up to the end of 2008, then rose 
significantly above those charged within the region in January 2009 
when service providers were licensed to charge in foreign currency. 
Despite this reduction, the new tariffs are still above the regional 
average largely due to the continued use of an old analog billing 
system that is not based on the units actually used. 
 
 
¶11.  IMF Sees Some Economic Stabilization; Audits RBZ... Halfway 
Q11.  IMF Sees Some Economic Stabilization; Audits RBZ... Halfway 
through its Article IV mission, the IMF told us that the Zimbabwe 
economy contracted 14 percent in 2008.  On the positive side, 
dollarization has stopped hyperinflation in its tracks and the IMF 
projected revenue between US$900 million and US$ one billion in 
¶2009.  The mission chief told diplomats that the GOZ urgently needed 
financial support to ensure social cohesion and support economic 
recovery, but such assistance was beyond the scope of the IMF to 
deliver due to arrears.  Two days into its audit of the Reserve 
Bank, IMF staff told us they had determined "significant fiduciary 
risk."  See Harare 232 
 
¶12.  Kimberley Process Team Visits Diamond Sites... A Kimberley 
 
HARARE 00000248  003 OF 003 
 
 
Process team is in Zimbabwe this week visiting diamond sites. 
Murowa Diamonds, a member of the Rio Tinto Group of Companies which 
has lobbied hard to prevent the suspension of Zimbabwe from the 
Kimberley Process and to prevent sanctioning of the Minerals 
Marketing Corporation of Zimbabwe (MMCZ) by the EU, told us the 
company flew the team to the Murowa mine for a tour, then on to the 
disputed Chiadzwa diamond field in Manicaland.  Murowa executives 
agreed to brief us on the KP visit next week.  The GOZ denies random 
killings by government agents in Chiadzwa despite significant 
evidence to the contrary. 
 
¶13.  Business and IMF Concerned About Wage Expectations... In a 
roundtable arranged by the American Business Association of Zimbabwe 
(ABAZ) for the IMF mission this week, business representatives 
wailed about pressure from employees to pay US dollar wages far 
higher than businesses can afford.  The IMF representatives found it 
"very worrying" that Zimbabweans used South Africa as their 
benchmark in wage demands, noting that Zimbabwe had a per capita 
income of less than US$1/day.  IMF staff commented that wages here 
should be a fraction of those in South Africa. 
 
----------------- 
Quote of the Week 
----------------- 
 
 
¶14.  "Ask not what other nations can do, but what Zimbabweans can do 
for themselves." -- Deputy Prime Minister Arthur Mutambara, speaking 
at the launch of the Short-Term Economic Recovery Plan (STERP). 
 
 
DHANANI