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R 200659Z JUL 09
FM AMEMBASSY HARARE
TO RUEHC/SECSTATE WASHDC 4728
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHUJA/AMEMBASSY ABUJA 2345
RUEHAR/AMEMBASSY ACCRA 2951
RUEHDS/AMEMBASSY ADDIS ABABA 3068
RUEHRL/AMEMBASSY BERLIN 1497
RUEHBY/AMEMBASSY CANBERRA 2331
RUEHDK/AMEMBASSY DAKAR 2698
RUEHKM/AMEMBASSY KAMPALA 3116
RUEHNR/AMEMBASSY NAIROBI 5559
RHEHAAA/NSC WASHDC
RHMFISS/EUCOM POLAD VAIHINGEN GE
RUEHGV/USMISSION GENEVA 2246
RUZEJAA/JAC MOLESWORTH RAF MOLESWORTH UK
RHEFDIA/DIA WASHDC

UNCLAS SECTION 01 OF 03 HARARE 000596 
 
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 07-17-2009 
 
----------- 
¶1.  SUMMARY 
----------- 
 
Topics of the week: 
 
- Constitutional Process Stumbles On... 
- MDC-T MP Suspended from Parliament... 
- ZANU-PF Ministers Implicated in Poaching Scandal... 
- Finance Minister Discusses Chiadzwa in Fiscal Assessment... 
- Top Security Chiefs Sued Over Abductions... 
- Budget Raised in Mid-Term Review... 
- Biti Unveils Measures to Increase Production... 
- Concessions Made to Strengthen Banking Sector... 
- Government to Sell Portion of Air Zimbabwe... 
- Indian Firm Invests in Ginnery and Oil Refinery... 
 
----------------------------- 
On the Political/Social Front 
------------------------------ 
 
¶2.  Constitutional Process Stumbles On...  The two-day All 
Stakeholder's Conference concluded successfully on July 14 after 
getting off to a rocky start the day before when riot police were 
called in to assert control following a disturbance caused by 
ZANU-PF youth groups and orchestrated by President Mugabe's nephew 
and ZANU-PF MP Patrick Zhuwao, Youth Minister Saviour Kasukuwere, 
and war veteran leader Joseph Chinotimba.  MDC activist Patrick 
Danga was arrested by the police while restraining Zhuwao and is 
still detained at Harare Central police station.  Despite the 
chaotic events, the constitutional process remains on track.  The 
Conference may have been salvaged by a warning issued by Prime 
Minister Tsvangirai to President Mugabe that the MDC would consider 
pulling out of the inclusive government if ZANU-PF sabotaged the 
path towards a new Constitution.  See Harare 588. 
 
¶3.  MDC-T MP Suspended from Parliament...  Zimbabwe's Parliament has 
suspended an MDC-T legislator from the House of Assembly after he 
received a 10-month prison sentence for allegedly obstructing 
justice.  Mathias Matewu Mlambo from Chipinge West was issued a 
letter by the long-tenured and ZANU-PF-aligned Clerk of Parliament, 
Austin Zvoma, informing him not to attend Parliament nor execute any 
of his official duties.  Under Zimbabwean law sitting MPs do not 
lose their functional authorities upon conviction if their case is 
on appeal; however, by not providing the Clerk with proof of his 
appeal, Mlambo opened the door to his suspension.  The Speaker of 
Parliament is confident his office can overrule the suspension. 
Mlambo is one of three MDC-T MPs who are appealing convictions the 
party believes are trumped-up and politically motivated.  See Harare 
¶585. 
 
¶4.  ZANU-PF Ministers Implicated in Poaching Scandal...  Defense 
Minister Emmerson Mnangagwa and Minister of Media and Information 
Webster Shamu were implicated in a poaching operation by a Chinese 
national who was caught with six rhino horns at a police roadblock. 
Press reports indicated that the two government ministers run their 
poaching operations from HKK Safaris, a conservancy Shamu co-owns 
with South African businessman, Charles Davy.  MDC efforts to 
inquire into the case revealed that the police superintendent who 
was in charge of the investigation had been transferred from his 
Qwas in charge of the investigation had been transferred from his 
posting at Bulawayo Central police station to a rural outpost in 
Mashonaland Central province. 
 
¶5.  Finance Minister Discusses Chiadzwa in Fiscal Assessment... 
Minister of Finance, Tendai Biti (MDC-T) briefly touched on the 
topic of Chiadzwa diamonds while addressing the mining sector in his 
fiscal address to Parliament on July 17.  Biti said that the 
government would comply with all of the recent Kimberley Process 
Certification Scheme (KPCS) recommendations to avoid suspension.  He 
also share that Mines Minister Obert Mpofu had sent the KP a letter 
 
HARARE 00000596  002 OF 003 
 
 
confirming their commitment to compliance.  Foremost among the KPCS 
recommendations was the elimination of military control over the 
area. 
 
¶6.  Top Security Chiefs Sued Over Abductions...  Zimbabwean 
political activists and a journalist abducted last year by State 
agents are suing two Cabinet ministers and a handful of security 
chiefs in Zimbabwe's High Court for a combined US$19.2 million in 
damages.  The lawsuit charges that they were unlawfully abducted, 
detained and deprived of their liberty.  The 15 plaintiffs are 
demanding US$1.2 million each.  The suit seeks compensation from the 
co-Ministers of Home Affairs, Kembo Mohadi and Giles Mutsekwa, 
Justice Minister Patrick Chinamasa, then Security Minister Didymus 
Mutasa, Police Commissioner-General Augustine Chihuri, Prisons 
Commissioner Paradzai Zimondi, and Central Intelligence Organization 
Director-General Happyton Bonyongwe. 
 
----------------------------------- 
On the Economic and Business Front 
---------------------------------- 
 
¶7.  Budget Raised in Mid-Term Review...  Finance Minister Tendai 
Biti, revised upwards the 2009 Budget from US$1 billion to US$1.361 
billion primarily due to an expected increase in unconfirmed donor 
support.  He announced that the majority of these funds will go 
towards raising civil servant salaries.  Consequently, later this 
month civil servants will begin receiving salaries in lieu of the 
US$100 monthly allowances they began getting in March.  While 
expected to be higher than the allowances, average salary figures 
were not announced.  The Zimbabwe Independent newspaper, estimated 
that the average salary might only amount to US$140 per month.  The 
GOZ also expects to be able to trim payroll numbers by carrying out 
an audit intended to eliminate "ghost workers". 
 
¶8.  Biti Unveils Measures to Increase Production...  In a move 
designed to increase capacity utilization, Biti suspended import 
duties on capital goods and pure raw materials and cut those on 
intermediate goods from 15 to 10 percent.  He also removed import 
duties on fuel, replacing it with an excise duty of US20 cents and 
US16 cents per liter for petrol and diesel.  He alluded to 
additional tax changes that will be announced in the 2010 Budget 
Statement due at the end of November 2009. 
 
¶9.  Concessions Made to Strengthen Banking Sector...  In an effort 
to improve market liquidity, Biti scrapped the five percent tax on 
bank profits and promised to review a possible cut of the current 10 
percent bank reserve requirement.  He also proposed to de-monetize 
the Zimbabwe dollar by purchasing all balances held with the 
financial sector at an estimated cost of US$6 million.  This will 
effectively put an end to the use of the Zimbabwe dollar as money, 
or in Biti's words, "putting a tombstone on the grave of the 
Zimbabwe dollar." 
 
¶10. Government to Sell Portion of Air Zimbabwe...  The Financial 
Gazette (July 16, 2009) reports that the GOZ is planning to sell 60 
percent of the national airline for an estimated US$750 million to 
Qpercent of the national airline for an estimated US$750 million to 
an un-named private operator.  If the deal goes through, the money 
will be used to replenish Air Zimbabwe's depleted fleet.  (Comment: 
The loss-making airline does not have the assets to justify even a 
fraction of this purported valuation.) 
 
¶11.  Indian Firm Invests in Ginnery and Oil Refinery...  An Indian 
firm has invested US$4 million into a ginnery and oil refinery 
factory in Glendale, 40 km north of Harare.  According to the 
managing director, the firm will operate at 50 percent capacity and 
will manufacture 500,000 liters of cooking oil by year end.  The 
ginnery plant is already operational at a rate of 60 tons of lint a 
day. 
 
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HARARE 00000596  003 OF 003 
 
 
Quote of the Week 
----------------- 
 
 
¶12.  "We are doing what we did in June, winning."  "We are doing 
away with the Prime Minister."  "Zimbabwe is liberated with blood." 
- Slogans chanted by ZANU-PF youth and war veterans during the chaos 
of the first day of the All-Stakeholder's Conference on July 13. 
 
 
DHANANI